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Item 1. Business

2022-03-15 compared with 2021-03-16 · 382 added, 568 removed, 565 unchanged (63% of the section changed)

We are an innovative clinical-stage biotechnology company pioneering the development of dual-sided fusion proteins as an entirely new class of biologic medicine.

We believe our approach has the potential to fundamentally transform the therapeutic modulation of the immune system.

We have created a novel approach to immune-modulation by designing biologics with structural characteristics that are not achievable by existing therapeutic modalities.

We have created a novel approach to immune modulation by designing biologics with structural characteristics that are not achievable by existing therapeutic modalities, including monoclonal or bispecific antibodies.

Compounds derived from our proprietary Agonist Redirected Checkpoint, or ARC, platform simultaneously inhibit checkpoint molecules and activate costimulatory molecules within a single therapeutic.

Our initial product candidates are designed to be differentiated therapeutics addressing molecular targets that are well characterized and scientifically validated in immuno-oncology but are underexploited by current treatment modalities.

Our lead, wholly owned product candidate, SL-172154, has been rationally designed to simultaneously inhibit the CD47/SIRPα checkpoint interaction to restore an anti-tumor immune response and to activate the CD40 costimulatory receptor to bolster an immune response.

We are currently conducting a Phase 1 clinical trial evaluating SL-172154 in patients with ovarian cancer and we expect to announce initial data from the dose-escalation portion of this trial in the second half of 2021.

Additionally, we have initiated a second Phase 1 trial evaluating SL-172154 in patients with cutaneous squamous cell carcinoma, or CSCC, or head and neck squamous cell carcinoma, or HNSCC, and we expect to announce initial data from the dose-escalation portion of this trial in the first half of 2022.

Our second product candidate, SL-279252, which is being developed in collaboration with Takeda Pharmaceuticals, or Takeda, has been rationally designed to simultaneously inhibit the PD-1/PD-L1 interaction and activate the OX40 receptor.

We are evaluating SL-279252 in a Phase 1 clinical trial in patients with advanced solid tumors and lymphoma, and we expect to announce data from the dose-escalation portion of the trial in the second half of 2021.

In addition to our clinical-stage ARC product candidates, we possess a deep pipeline of preclinical immuno-oncology product candidates.

Our lead product candidate, SL-172154, is designed to simultaneously inhibit the CD47/SIRPα macrophage checkpoint interaction and activate the CD40 costimulatory receptor to induce an antitumor immune response.

Coupling CD40 activation with CD47 inhibition differentiates SL-172154 from all other clinical-stage CD47/SIRPα inhibitors in development, and in our published preclinical studies, SL-172154 resulted in superior antitumor immunity as compared to certain CD47/SIRPα inhibitors.

We are pursuing a broad clinical development strategy in both hematologic and solid tumors, with multiple ongoing clinical trials.

SL-172154 is in an ongoing Phase 1 clinical trial for the treatment of patients with ovarian cancer.

In addition to our clin ical trials in solid tumors, we are also evaluating SL-172154 in an ongoing Phase 1 clinical trial for the treatment of patients with certa in hematologic malignancies, including acute myeloid leukemia, or AML, and higher-risk myelodysplastic syndromes, or HR-MDS.

We believe our clinical development plan will provide both first-in-class and best-in-class development opportunities for SL-172154.

Our second product candidate, SL-279252, is designed to simultaneously inhibit the PD-1/PD-L1 interaction and activate the OX40 costimulatory receptor and is in an ongoing Phase 1 clinical trial in patients with advanced solid tumors.

In November 2021, at the 36 th annual meeting of the Society for Immunotherapy of Cancer, or the SITC Meeting, we announced initial clinical data from our ongoing Phase 1 clinical trials for SL-172154 in ovarian cancer and for SL-279252 in advanced solid tumors and lymphoma.

We believe that these data generated in human cancer patients have demonstrated that the unique protein engineering and physical properties of the ARC platform have led to a differentiated profile in terms of safety and on-target immune activation as compared to monoclonal or bispecific antibodies.

In addition to our clinical-stage ARC product candidates, we possess a deep pipeline of preclinical immuno-oncology candidates.

As an example, SL-9258, an ARC in preclinical development, is designed to inhibit the TIGIT/PVR checkpoint interaction while simultaneously activating HVEM and LTβ costimulatory receptors.

Furthermore, our expertise in dual-sided fusion proteins has led to the development of a second novel platform technology.

We call this our gamma delta T cell engager, or GADLEN, platform.

We plan to nominate a third clinical product candidate from our preclinical pipeline in 2022.

Longer-term, we are pursuing additional disease areas, including autoimmune diseases, where our dual-sided fusion protein platforms may provide advantages over current treatment modalities.

Cancer is characterized by the uncontrolled proliferation of abnormal cells.

The immune system typically recognizes and eliminates abnormal cells.

However, cancer cells have the ability to evade the immune system through the expression of checkpoint molecules, which ward off an anti-tumor immune response that would otherwise lead to elimination of cancer cells.

In an effort to leverage the immune system to promote an anti-tumor response, researchers have developed checkpoint inhibitor therapies, including anti-CTLA-4, anti-PD-1, and anti-PD-L1 antibodies, which have represented a revolutionary milestone in the treatment of cancer.

These therapies generate deep and durable responses, translating into meaningful clinical benefit and have become the cornerstone of treatment paradigms for many cancers.

However, the clinical benefit is limited to a minority of patients.

This limitation highlights the need for novel modalities that may benefit a greater number of patients, such as a compound that simultaneously inhibits checkpoint molecules while activating costimulatory molecules to generate a beneficial immune response.

Driven by an increasing understanding of tumor biology, it is now well-established that the activation of costimulatory molecules can generate a more effective immune response where current checkpoint inhibitors have failed.

To date, there has been limited clinical success in combining the inhibition of checkpoints with the activation of trimeric costimulatory molecules.

We believe these efforts have had limited success due to the structural mismatch between existing bivalent antibodies and the trimeric costimulatory receptors of the tumor necrosis factor, or TNF, receptor superfamily, such as CD40 and OX40.

TNF activation and downstream signaling require the assembly of three receptor molecules, or trimerization.

Existing bivalent antibodies can only bind to two TNF receptors and are thus unable to trimerize TNF receptors, leading to weak signaling.

Additionally, administration of two separate antibodies, which distribute in the body independent of one another, does not guarantee colocalization of their mechanisms of activity.

Coupling the costimulatory effect of CD40 activation with CD47 inhibition differentiates SL-172154 from other CD47/SIRPα inhibitors in clinical development.

In clinical studies, we believe that SL-172154 has further differentiated from other CD47/SIRPα inhibitors both in terms of safety and tolerability, and has demonstrated evidence of potent CD40 activation in human cancer patients.

We are conducting a Phase 1 clinical trial evaluating SL-172154 in patients with platinum-resistant ovarian cancer.

In November 2021, at the SITC Meeting, we a nnounced initial data from 15 patients in the first four dose-escalation cohorts from the monotherapy dose-escalation portion of this trial.

These data demonstrated that SL-172154 was well tolerated through 3 mg/kg, with no treatment-related grade 3 or greater adverse events.

Near-complete target occupancy on leukocytes was observed for both CD47 and CD40 at 3 mg/kg.

We also observed pharmacodynamic activity, including dose-dependent margination of CD40 expressing leukocytes from the peripheral blood and dose-dependent increases in cytokines, such as IL-12, that are associated with antitumor immunity.

Monotherapy dose escalation is ongoing.

We plan to initiate combination clinical trials in parallel due to the observation of monotherapy immunologic activity across the current dose range.

We plan to initiate a Phase 1B clinical trial evaluating SL-172154 in combination with liposomal doxorubicin in patients with platinum-resistant ovarian

cancer in 2022.

We expect to announce additional data from the ongoing Phase 1A monotherapy dose-escalation trial and initial data from the Phase 1B combination trial in the first half of 2023.

We have conducted a Phase 1 clinical trial in patients with cutaneous squamous cell carcinoma, or CSCC, or head and neck squamous cell carcinoma, or HNSCC, to evaluate the intratumoral administration of SL-172154.

We expect to announce data from this trial in the first half of 2022.

In addition to evaluating SL-172154 in solid tumors, we have expanded our evaluation of SL-172154 to include hematologic malignancies.

We are conducting a Phase 1A/B clinical trial in patients with AML and HR-MDS, wherein patients will be enrolled into either a monotherapy Phase 1A or combination Phase 1B cohort in a staggered parallel design.

In AML, we intend to study SL-172154 in combination with azacitidine and venetoclax.

In HR-MDS and TP53 mutant AML, we intend to study SL-172154 in combination with azacitidine.

We expect to announce initial data from this Phase 1A/B trial in the first half of 2023.

We also intend to continue to assess other drug combination opportunities for SL-172154 in ovarian cancer and other solid tumors, as well as hematologic malignancies.

Our second product candidate, SL-279252, is designed to simultaneously inhibit the PD-1/PD-L1 interaction and activate the OX40 receptor.

We are evaluating SL-279252 in a Phase 1 clinical trial in patients with advanced solid tumors.

In November 2021, at the SITC Meeting, we announced initial data from 43 patients from the first ten dose levels of this clinical trial.

These data demonstrated initial monotherapy antitumor activity in patients who previously failed checkpoint inhibitors, at doses of 1 mg/kg or greater.

Data through 6 mg/kg demonstrated that SL-279252 was well tolerated, and we observed pharmacodynamic activity, including dose-dependent margination of OX40+ lymphocytes from the peripheral blood.

We are currently dosing at 12 mg/kg and plan to continue dose escalation to 24 mg/kg.

We expect to announce additional data from this clinical trial in the second half of 2022.

We are leveraging our proprietary ARC and GADLEN platforms to discover and develop dual-sided, bi-functional fusion protein product candidates.

We own, or have exclusively licensed, the intellectual property rights to our product candidates.

The following table highlights our clinical-stage product candidates:

In addition to our clinical-stage ARC product candidates, we possess a deep pipeline of preclinical immuno-oncology candidates.

As an example, SL-9258 is designed to inhibit the interaction between TIGIT and its known ligands, including PVR, PVRL2, PVRL3, and NECTIN-4, while simultaneously activating HVEM and LTβ receptors with two preformed LIGHT trimers.

With the addition of HVEM and LTβ receptor activation, we believe this compound is a highly differentiated TIGIT inhibitor.

Utilizing a proprietary animal model of PD-1 acquired resistance, SL-9258 demonstrated differentiation from antibody-mediated TIGIT blockade in its ability to overcome checkpoint inhibitor acquired resistance.

The following table highlights the preclinical programs from which we may select our next clinical candidates:

Our ARC Platform

Our proprietary ARC platform has the potential to create therapeutics that can dramatically change the way we treat cancer and other diseases.

We developed the ARC platform to address the need for a single therapeutic that consolidates multiple immune functions.

Compounds developed from our ARC platform simultaneously block immune checkpoint receptors and activate costimulatory molecules in the tumor necrosis factor, or TNF, superfamily.

The functional domains of ARC compounds are derived from native human proteins, rather than antibody binding domains.

This enables the rapid generation of new constructs, given that the starting template for distinct ARC compounds is the human genome.

Therefore, an ARC compound can be taken from the conception stage to a manufactured purified protein in approximately six weeks, whereas it can take approximately six months to reach the same stage for an antibody therapeutic candidate.

This rapid reduction in discovery processing time, has allowed us to generate more than 400 unique, dual-sided fusion proteins.

Structure of an ARC Compound

Our proprietary ARC platform is designed to overcome the limitations of existing bivalent antibodies.

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Additionally, ARC compounds possess a structure that matches the native structure of the target receptors and colocalizes both mechanisms of activity within the immune synapse to promote a coordinated immune response.

We designed the ARC platform as a modular scaffold wherein three principal components are fused together, comprising a human Type 1 extracellular domain protein, an optimized, proprietary Fc domain, and a human Type 2 extracellular domain protein.

As shown in Figure 1 below, one end of the ARC compound consists of a checkpoint receptor domain and the opposite end consists of a TNF ligand domain, connected by an optimized, proprietary scaffold such as an Fc domain.

We design ARC compounds to self-assemble into a hexameric structure, as shown in Figure 1 below, comprising six distinct checkpoint receptor domains and six distinct TNF ligand domains, which form two trimerized costimulatory ligand domains.

The hexameric structure of an ARC compound facilitates clusters of binding domains

thus leveraging the strength of multiple individual binding interactions, known as affinity, into a greater collective strength of all binding interactions, known as avidity.

We designed ARC compounds to self-assemble into a hexameric structure, as shown in Figure 1 below, comprising six distinct checkpoint receptor domains and six distinct TNF ligand domains, which importantly form two trimerized costimulatory ligand domains.

Figure 1—Structural Properties of ARC Compounds

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Initially, our efforts are concentrated on three broad target families:

• Immune Checkpoints.

Immune checkpoints include a variety of receptor/ligand pairs that inhibit immune responses and are utilized by many cancers as a defense against anti-tumor immune responses.

The blockade of immune checkpoints, such as CD47/SIRPα, PD-1/PD-L1, and TIGIT/PVR, has the potential to restore anti-tumor immune responses and improve survival in cancer patients.

• TNF Superfamily.

The TNF superfamily consists of multiple structurally related receptors, such as CD40, OX40, 4-1BB, DR5, CD30, LTßR, and HVEM, as well as ligands that orchestrate the induction, magnitude, quality, and duration of immune responses.

Individual TNF receptor/ligand pairs exhibit distinct expression patterns on immune cell subsets and can fine-tune both myeloid cell- and lymphocyte-mediated immunity.

Cytokines, chemokines, and interleukins include a broad range of soluble molecules that control a wide array of biological responses, including inflammation and immunity.

We believe our platform’s ability to block or activate these pathways, including CSF1R/CSF1/IL-34 and TGFBR2/ TGF-ß and specific cytokines, expands our addressable target universe and potential therapeutic indications.

While therapeutic inhibition of immune checkpoints has been shown to improve overall survival in a minority of cancer patients, combining immune checkpoint blockade with activation of TNF superfamily receptors, or modulation of cytokines may deepen responses and increase the number of cancer patients that benefit from immunotherapy.

immune checkpoints, TNF superfamily costimulatory receptors, and cytokines.

We believe that the following features represent the key advantages offered by compounds developed with the ARC platform:

• Matching native structure of TNF receptors

TNF receptors and ligands require trimerization, or assembly into groups of three, for efficient signaling.

A hexameric ARC compound contains two trimerized TNF ligand domains, which directly activate trimeric TNF receptors, thus overcoming the structural limitations of bivalent antibodies.

• Target specificity, high affinity, and high avidity

ARC compounds incorporate twelve distinct binding domains, six for each of the two targets, enabling high-avidity and durable binding to specific cell surface targets.

• Replacing tumor immune evasion with potent immune stimulation

ARC compounds are designed to simultaneously reverse a tumor’s immune evasion and amplify anti-tumor immune responses locally within the tumor microenvironment.

In preclinical models, the ability of our ARC compounds to colocalize checkpoint inhibition and costimulation demonstrated superior anti-tumor response as compared to the administration of separate antibody therapies.

• Versatility

Modularity of the ARC platform enables production of thousands of potential therapeutic candidates across oncology, autoimmune diseases, and other disease areas .

• Speed from concept to compound to clinic

The ARC platform allows for a significantly compressed development timeline from “Concept to Compound to Clinic,” which has enabled us to generate over 300 unique, dual-sided fusion proteins and two clinical-stage assets in less than four years.

• Accelerated lead selection process

We are able to identify and select optimal therapeutic constructs during the design and discovery phase of product candidate development through the rational pairing of optimized domains, enabling the efficient transition from discovery to the clinic.

The rapid development path of ARC compounds permits systematic and simultaneous comparison of multiple ARC compound variants prior to lead selection.

We believe these collective advantages create the potential for the capital-efficient identification and pursuit of differentiated product candidates.

We are also leveraging our expertise and intellectual property to build novel platforms beyond our ARC platform, where dual-sided fusion proteins may provide advantages over existing therapeutic antibodies.

One such platform is our Gamma Delta T Cell Engager platform, known as GADLEN.

A majority of T cells in the human body bear an alpha beta T cell receptor, which recognizes tumor antigens via major histocompatibility complex, or MHC, molecules.

Some cancer cells reduce the expression of MHC molecules, rendering those cancer cells invisible to most alpha beta T cells.

Gamma delta T cells represent approximately 2% to 5% of the total T cell population and, unlike alpha beta T cells, are not dependent on MHC molecules to recognize and kill tumor cells.

The therapeutic utilization of gamma delta T cells represents a novel approach for the treatment of cancer.

This approach may be particularly beneficial in targeting tumors that are not addressable by alpha beta T cells.

Additionally, as immunotherapies that stimulate alpha beta T cell-dependent immune responses are increasingly utilized across cancer treatment paradigms, the proportion of patients who may become refractory to alpha beta T cell-mediated therapies will also increase over time, creating an absence of effective treatment options that may be addressed by the utilization of gamma delta T cells.

While we believe compounds developed with our ARC and GADLEN platforms may provide significant key advantages, we are in an early stage of development using novel technologies and cannot assure you that our approach will lead to the development of marketable products.

For example, SL-279252 is in Phase 1 development and although data as of February 3, 2021 has shown it has been well tolerated, with no dose-limiting toxicities observed, additional data from any of our dual-sided fusion protein product candidates may result in unanticipated safety and efficacy outcomes or unexpected biological interactions that could delay or prevent their development.

Moreover, we are aware that others have experienced limited clinical success when attempting to combine the inhibition of checkpoint molecules with the activation of trimeric costimulatory molecules.

We believe this limited success is attributable to a structural mismatch between the bivalent antibodies and trimeric costimulatory receptors, which we have attempted to address in the design of our ARC platform compounds.

We are leveraging our proprietary ARC and GADLEN platforms to discover and develop dual-sided, bi-functional fusion protein product candidates.

We own or have exclusively licensed the intellectual property rights to our product candidates.

The following table highlights our two clinical-stage assets that have been derived from our ARC platform:

Our lead product candidate, SL-172154, simultaneously inhibits CD47 and activates the CD40 receptor.

We believe SL-172154 has the potential to offer a differentiated approach to targeting CD47.

Other approaches solely focus on activating the innate immune system by blocking the CD47 macrophage “don’t eat me” signal.

In addition to inhibiting CD47, SL-172154 is designed to bridge the innate and adaptive immune response by subsequently activating CD40 signaling to upregulate antigen presentation machinery.

In preclinical studies of SL-172154, we observed superior tumor rejection as compared to CD47 and CD40 antibodies, a durable receptor occupancy, a dose-dependent lymphocyte migration into lymphoid tissues and no occurrence of anemia.

We are conducting a Phase 1 clinical trial of SL-172154 administered by intravenous injection in patients with ovarian, fallopian tube, and peritoneal cancers, referred to collectively as ovarian cancer, and we expect to announce initial data from the dose-escalation portion of this trial in the second half of 2021.

We are also conducting a second Phase 1 clinical trial of SL-172154 administered by intratumoral injection in patients with CSCC or HNSCC and we expect to announce initial data from the dose-escalation portion of this trial in the first half of 2022.

These tumors were selected due to their particularly high expression of CD47, a high presence of macrophages in the tumor microenvironment, a lack of effective treatment options for these indications, and rational combination strategies.

Our second product candidate, SL-279252, being developed in collaboration with Takeda, simultaneously inhibits PD-1 and activates the OX40 receptor.

We believe SL-279252 has the potential to offer a differentiated approach to targeting PD-1 and OX40, as compared to existing antibody therapies, either as individual monotherapies or in combination.

To date, antibodies targeting OX40 have not demonstrated sufficient efficacy in clinical trials, a result that we believe is due to a structural mismatch between bivalent antibodies and trimeric OX40 receptors.

The unique hexameric structure of SL-279252 is designed to more effectively bind to and activate OX40 receptors, leading to optimized signaling and resulting in T cell activation and proliferation.

Together, these properties are intended to replace PD-L1-mediated immune inhibition with OX40 costimulation to synergistically enhance anti-tumor response.

In preclinical models, compared to the combination of anti-PD-1 and OX40-agonist antibodies, SL-279252 demonstrated superior tumor reduction and lymphocyte proliferation and migration to tissues.

Our ongoing Phase 1 trial is evaluating SL-279252 in patients with advanced solid tumors and lymphoma.

We expect to announce data from the dose-escalation portion of this trial in the second half of 2021.

Takeda has an exclusive option to license SL-279252 prior to initiation of a Phase 2 clinical trial.

In addition to our lead product candidates, we have an extensive discovery pipeline consisting of over 300 unique fusion proteins that we have manufactured and characterized in both in vitro and in vivo studies.

We intend to nominate additional lead candidates in oncology, as well as autoimmune disease, to further broaden our pipeline.

In accordance with our prioritization strategy, we intend to develop these compounds as data emerge that clinically validate the targets.

Our long-term plan also includes the development of product candidates for novel targets.

We plan to nominate clinical product candidates from our ARC or GADLEN platforms.

We anticipate submitting an additional Investigational New Drug Application, or IND, in both 2021 and 2022.

The following table highlights the preclinical programs from which we may select our next clinical candidates to be developed independently or in collaboration with a partner:

Our management team and Board possess decades of experience in cancer immunotherapy, autoimmune disease, targeted therapeutics, protein engineering, biologics manufacturing, clinical development, regulatory strategy, and commercialization.

Members of our team were involved with, or led, drug development programs leading to the approval of drugs including Votrient, Tafinlar, Mekinist, Enbrel, Nucala, Valtrex, Arranon, Tykerb, Avastin, Revlimid, Pomalyst, and others.

Our team members have held senior leadership positions at leading companies including GlaxoSmithKline, Celgene, Pfizer, Novartis, Takeda, Alexion, Medarex, Amgen, Merck KGaA, OSI Pharmaceuticals, and Reata Pharmaceuticals.

Our goal is to become the world leader in the discovery, development, and commercialization of dual-sided, bi-functional fusion proteins for the treatment of cancer and autoimmune diseases.

We plan to achieve this by utilizing our proprietary ARC and GADLEN platforms to create novel therapeutics to treat patients who lack effective treatment options.

Key elements of our strategy include:

• Rapidly advancing our clinical-stage ARC product candidates, SL-172154 and SL-279252, through clinical development and marketing approval.

SL-172154, our lead wholly owned program, is currently in a Phase 1 trial for the treatment of ovarian cancer.

We are also conducting a second Phase 1 trial for the treatment of CSCC and HNSCC.

We expect to announce initial data from the dose-escalation portion of the SL-172154 trial in patients with ovarian cancer in the second half of 2021 and initial data from the dose-escalation portion of the SL-172154 trial in patients with CSCC or HNSCC in the first half of 2022.

We intend to study SL-172154 in hematologic malignancies and further development may include other solid tumors.

SL-279252, which we are developing in collaboration with Takeda, is also in a Phase 1 trial for the treatment of advanced solid tumors and lymphoma.

We expect to announce data from the dose-escalation portion of the SL-279252 trial in the second half of 2021.

If the data obtained in these trials are highly compelling, accelerated registration paths and other regulatory designations will be discussed with regulatory agencies.

However, any such determination will be made in the sole discretion of such regulatory agencies and there can be no guarantee that any of our product candidates will be granted a differentiated regulatory path or designation.

• Leveraging our ARC and GADLEN platforms to rapidly advance additional product candidates into clinical development.

Our platforms allow us to rapidly identify and develop pipeline product candidates.

Since our inception in 2016, we have generated more than 300 unique, dual-sided fusion proteins.

Our initial focus is on targets that are well characterized and scientifically validated in immuno-oncology but are underexploited by current treatment modalities.

Longer-term, we plan to pursue novel targets in immuno-oncology and also pursue additional diseases areas, including autoimmune diseases, where our dual-sided fusion proteins may provide advantages as compared to current treatment modalities.

• Continuing to augment our fusion protein manufacturing capabilities.

We are pioneers in the field of therapeutic bi-functional fusion proteins.

Manufacturing these biologic drugs involves substantial internally-developed know-how and trade secrets.

To date, we have invested major resources in the development and optimization of our purification process, as well as other aspects of the manufacturing process.

We intend to continue investing in our internal

manufacturing capabilities so as to provide sufficient supply for our clinical trials and eventually scale production up to meet commercial requirements.

The continual improvement of our manufacturing capabilities will be important to driving efficiency, maintaining high standards of quality control, and ensuring that investigators, physicians, and patients have adequate access to our products, once approved.

• Collaborating with leading biopharmaceutical companies.

Similar to our collaboration agreement with Takeda, we intend to broaden the global reach of our bi-functional fusion protein platforms by selectively collaborating with leading biopharmaceutical companies.

We intend to retain significant economic and commercial rights to our programs in key geographic areas that are core to our long-term strategy.

• Deepening our intellectual property portfolio to continue to protect our platform technologies and product candidates.

We have built a global intellectual property portfolio consisting of patents and patent applications, trade secrets, trademarks, and know-how to protect the product candidates developed from our bi-functional fusion protein platforms.

We plan to expand our intellectual property portfolio as we continue to advance and develop existing product candidates and platforms, as well as create novel platform technologies .

• Building on our culture of R&D excellence and continuing to out-innovate ourselves.

Our people, and the culture that we foster, have been instrumental to our success.

We have assembled a world-class team of professionals whose track records include the successful development of several commercial products at major biopharmaceutical companies.

The expertise that we have assembled has enabled us to develop two novel platforms to date and will allow us to maintain our leadership position in the field of bi-functional fusion proteins.

Overview of Immuno-oncology Therapeutics

Over the past decade, a growing understanding of the molecular mechanisms that allow cancer cells to evade detection by the immune system has led to the advent of immuno-oncology, a treatment paradigm that seeks to stimulate or supplement a person’s own immune system to selectively attack cancer cells.

Immune responses are initiated through antigen presentation by innate immune cells, including macrophages, and dendritic cells.

The ensuing adaptive immune response is mediated by T cells.

Both innate and adaptive immune responses are governed by the balance of signals that inhibit the immune response, or checkpoint pathways, and signals that accelerate the immune response, or costimulatory pathways.

Checkpoint inhibition is focused on releasing the “brakes” on the immune system to allow T cells to recognize and eradicate tumors.

In certain types of tumors, checkpoint inhibitors have demonstrated higher response rates, improved overall survival, and a better safety profile as compared to other available treatments.

One subset of checkpoint inhibitors, PD-1 inhibitors, achieved $19.4 billion in global sales in 2019 and are expected to garner over $36.0 billion in global annual sales by 2024.

Checkpoint inhibitors have demonstrated clinical benefit for a subset of cancer patients, but there remains room for improvement.

It is estimated that less than 13% of all cancer patients in the United States respond to checkpoint inhibitors.

Approximately 44% of U.S.

patients with cancer are eligible for checkpoint inhibitor therapies and only 28% of these patients respond to therapy, underscoring the lack of effective treatment options.

Multiple mechanisms contribute to preventing anti-tumor activity and, consequently, it is critical to simultaneously modulate several immune processes in order to circumvent the various adaptations tumors employ to evade the immune system.

One such approach has been to activate costimulatory molecules in combination with checkpoint inhibition.

One prominent class of costimulatory molecules is the TNF superfamily, which includes many receptors such as CD40 and OX40.

The diversity of receptors within the TNF superfamily allows the immune system to fine-tune the magnitude, quality and duration of specific immune responses.

This diversity can be leveraged to purposefully build therapeutics to modulate the specific TNF pathways which are most relevant for the underlying disease biology.

While many TNF receptor agonist antibodies have been developed and tested in human clinical trials, most have been discontinued after Phase 1 testing and only in a rare instance have they advanced to pivotal studies.

As shown in Panel A of Figure 2 below, activation of TNF receptors, such as OX40, and downstream signaling requires the assembly of three receptor molecules, or trimerization.

While many TNF receptor agonist antibodies have been developed and tested in human clinical trials, most have been discontinued prior to pivotal studies due to toxicity.

As shown in Panel A of Figure 2 below, activation of TNF receptors, such as CD40, and downstream signaling requires the assembly of three receptor molecules, or trimerization.

As shown in Panel B of Figure 2 below, there is a structural mismatch between bivalent antibody therapeutics and trimeric TNF receptors.

Traditional bivalent antibodies can only bind to two TNF receptors and are thus unable to individually trimerize a TNF receptor, leading to weak signaling of TNF pathways.

In order for TNF receptor agonist antibodies to trimerize a TNF receptor, multiple antibodies must be cross-linked through Fc receptors located on accessory cells.

For TNF receptor agonist antibodies to trimerize a TNF receptor, multiple antibodies must be cross-linked through Fc receptors located on accessory cells.

This mechanism becomes less effective at increasing antibody doses due to saturation of TNF receptors and Fc receptors independently of each other.

Consequently, there is no free Fc receptor available to cross-link the TNF receptor bound antibody.

This effect manifests in clinical trials as an atypical dose-response relationship.

As shown in Panel C of Figure 2, ARCs are designed to self-assemble two sets of TNF trimers which induces trimerization of TNF receptor targets and drive a costimulatory signal.

This effect manifests in clinical trials as an atypical dose-response relationship, known as a “bell-shaped” dose-response curve, wherein any signs of immune activation initially increase with dose but then subsequently decrease at higher doses.

As shown in Panel C of Figure 2, ARCs are designed to self-assemble into two sets of TNF trimers, which induces trimerization of TNF receptor targets and drives a costimulatory signal.

Figure 2—Antibody Therapies Lead to Inefficient TNF Pathway Activation

Additionally, expression levels of TNF superfamily receptors fluctuate throughout the course of a patient’s immune response and vary from patient to patient.

For example, OX40 could be expressed in 2% of a patient’s T cells prior to inducing an immune response, but could rise to 25% of T cells shortly following induction of an immune response.

Effective trimerization of a TNF receptor such as OX40 requires a sub-saturating dose of an existing TNF receptor antibody in order to avoid ineffective signaling.

However, an optimal sub-saturating dose cannot be accurately determined given the fluctuation of TNF receptor expression throughout the course of a patient’s immune response and the variation in TNF receptor expression from patient to patient.

The need remains for a molecule that does not require exogenous Fc receptor-mediated cross-linking in order to induce trimerization of TNF receptor targets and drive a costimulatory signal.

Our ARC Platform

Our proprietary Agonist Redirected Checkpoint, or ARC, platform has the potential to create therapeutics that can dramatically change the way we treat cancer and other diseases.

We developed the ARC platform to address the need for a single therapeutic that consolidates multiple immune functions.

Compounds developed from our ARC platform simultaneously block immune checkpoint receptors and activate costimulatory molecules.

Structure of an ARC Compound

A vector carrying a sequence of the dual-sided construct is then transfected into mammalian cells, which are used as the ARC production cell line.

Once purified, the proteins secreted by the cell then self-assemble via a step-wise process, first dimerizing via disulfide bonds in the Fc domain, followed by trimerization on the costimulatory factor ligand domains, as shown in Figure 3 below.

Figure 3—Assembly Process for ARC Compounds

As shown on the left in Figure 4 below, these components form a compound with a unique hexameric structure, incorporating six distinct binding domains for each of two targets, for a total of twelve binding sites.

This property endows each ARC compound with the ability to bind multiple targets with higher affinity and avidity than is achievable by antibody-based therapeutics.

The image on the right in Figure 4 below provides a high-resolution electron micrograph representing a birds-eye view of SL-279252, with the six white spots representing each of the six OX40L binding domains of the compound.

Figure 4—Structure of the ARC Compound SL-279252

The functional domains of ARC compounds are derived from native human proteins, rather than antibody binding domains.

This enables the rapid generation of new constructs, given that the starting template for distinct ARC compounds is the human genome.

This rapid reduction in discovery processing time, has allowed us to generate more than 300 unique, dual-sided fusion proteins.

Despite the strong scientific rationale for activating the TNF receptor superfamily for the treatment of cancer, clinical trials evaluating existing bivalent antibodies have failed to demonstrate meaningful clinical benefit, which we believe is due to the structural mismatch between bivalent antibodies and the native trimeric structure of TNF receptors.

As shown in Figure 5 below, the hexameric structure of our ARC compounds uniquely allows for effective binding and activation of trimeric receptors without the need for Fc receptor-mediated cross-linking.

Figure 5—ARC Compounds Uniquely Facilitate Trimerization

Beyond its unique ability to effectively activate the TNF receptor superfamily, we believe the ARC compound possesses several additional advantages over existing antibody therapeutics.

Unlike IgG and IgM antibodies, which can only bind to a single target, an ARC compound can bind to two distinct targets.

While bispecific antibodies can also bind to two unique targets, they do so in a monovalent fashion, whereas ARC compounds can do so in a multivalent fashion.

The hexameric structure of an ARC compound represents a differentiated approach, including two sets of six binding domains, allowing for high-avidity binding to two distinct targets.

The ARC platform thus enables the synergistic colocalization of checkpoint blockade and costimulatory molecule activation, which has been shown in vitro and in vivo to be superior on several measures to co-administration of two separate bivalent antibodies or single-sided fusion proteins.

Figure 6 below compares our ARC compound with several antibody formats, including IgG antibodies, bispecific antibodies, and IgM antibodies:

Figure 6—Comparative Attributes of Antibodies and ARC Compounds

Hexameric Structure and Checkpoint/Costimulatory Colocalization of ARC Compounds Provide Enhanced Anti-Tumor Activity Compared to Existing Antibodies

We employ a rigorous preclinical framework designed to help us select only the most promising product candidates for clinical development.

Before advancing an ARC product candidate into clinical development, both human and mouse variants for each product candidate are generated and systematically evaluated in parallel through a battery of analytical assays, comparing the anti-tumor activity of an ARC product candidate to antibodies targeting the same pathways in head-to-head in vitro and in vivo animal studies.

For example, as shown in Figure 7 below, we evaluated the anti-tumor activity of murine SIRPα-Fc-CD40L in the left panel, and murine PD-1-Fc-OX40L in the right panel, against antibodies targeting the same pathways.

Individual mice with rapidly growing tumors were treated with checkpoint blocking antibodies and costimulatory agonist antibodies, either alone or in combination, in comparison with the corresponding ARC compounds.

The dosing regimen was fixed in these studies across all groups to facilitate a controlled comparison of the efficacy of each treatment.

These results demonstrate that ARC compounds were able to control tumor growth in mice to a greater degree than the corresponding existing antibodies, either alone or in combination.

The primary columns in Figure 7 below represents the number of mice that rejected the primary tumor.

The re-challenge columns in Figure 7 below represents the number of mice that rejected the primary tumor and were also capable of rejecting a second tumor challenge without repeat treatment.

For example, of the five mice that rejected their primary tumors after treatment with murine SIRPα-Fc-CD40L, three had demonstrated a durable, adaptive immune response by rejecting a second tumor challenge without the administration of an additional dose.

We believe the superior tumor control in mice treated with ARC compounds is due to the colocalization of a trimerized TNF ligand to the site of checkpoint blockade and is a distinguishing characteristic that we expect will be observed across the platform.

Figure 7—ARC Compounds Show Significantly Enhanced Anti-Tumor Activity as Compared to Antibody Controls

Once we have established the anti-tumor activity of an ARC product candidate, the next phase of preclinical development consists of additional in vitro studies further comparing the ARC product candidate against benchmark antibodies targeting the same pathways.

For example, we used a standard potency assay previously used to support the approval of anti-PD-1 antibodies.

This assay compared the amount of interleukin-2, or IL-2, secreted by lymphocytes following treatment with staphylococcal enterotoxin B , or SEB, a bacterial toxin, in the presence of SL-279252 and other anti-PD-1 or OX40 agonist antibodies.

Secretion of IL-2 by human lymphocytes is an indicator of adaptive immune activation.

As shown in Figure 8 below, when primary human lymphocytes were exposed to the anti-PD-1 antibodies nivolumab and pembrolizumab in the presence of SEB, both anti-PD-1 antibodies stimulated a dose-dependent increase in the concentration of IL-2 in the cell cultures.

In contrast, tavolixizumab, an OX40 agonist antibody, did not stimulate an increase in the concentration of measured IL-2 in the cell cultures, and did not increase the quantity of IL-2 secretion stimulated by nivolumab or pembrolizumab alone.

We believe the lack of activity of tavolixizumab in this assay is due to the dependence of the antibody on Fc receptor mediated cross-linking for activity.

SL-279252 also stimulated dose-dependent increases in the concentration of IL-2 secreted by human lymphocytes in the cultures, and a higher concentration of IL-2 was observed in cultures treated with SL-279252 than with nivolumab or pembrolizumab.

These data indicate that SL-279252 is a more potent stimulator of IL-2 secretion by human lymphocytes as compared to nivolumab or pembrolizumab.

In addition to the two assay systems described above, we utilize a multitude of other criteria to further assess preclinical safety and efficacy.

Figure 8— In Vitro Potency Assay for PD-1 Biologics

Primary human peripheral blood mononuclear cells, or PBMC, were harvested and treated with SEB and SL-279252 and benchmark antibody controls.

Because antibodies contain two target binding domains, molar comparisons to ARC compounds were made on the basis of a matched number of ARC binding sites, using the molecular weight of a dimeric ARC.

Once ARC product candidates demonstrate superior performance as compared to the relevant antibody comparators in both mouse tumor models and human in vitro assays, we may advance our ARC product candidates to studies in non-human primates, or NHP.

To date, we have evaluated eight different ARC compounds in NHP and have observed unique on-target activity between ARC compounds.

As an example, NHP treated with SL-172154 were observed to have dose-dependent migration of CD40+ lymphocytes from the peripheral blood into secondary lymphoid organs including the lymph nodes and spleen.

We observed extensive expansion of lymphoid-rich cells in the spleen from a NHP treated with SL-172154 as compared to a control from the same study.

In contrast to SL-172154, NHP treated with SL-279252 were observed to have dose-dependent migration of lymphocytes to the liver, gastrointestinal tract, and lungs.

In addition, we observed infiltration of both local lymph nodes and the areas surrounding blood vessels in the lung of a NHP treated with SL-279252, as compared to a control animal from the same study.

To our knowledge, similar observations have not been reported in NHP studies utilizing TNF-agonist antibodies.

We believe these observations, which were accompanied by serum cytokine changes, provide evidence of on-target biology driven by ARC compound-mediated stimulation of CD40 or OX40.

We believe that by systematically evaluating ARC compounds targeting clinically validated checkpoints through a series of preclinical studies comparing ARC compounds to the relevant benchmark antibodies, we are able to prioritize ARC product candidates that are best positioned to provide a clinical benefit.

Versatility of the Platform

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We utilize our understanding of disease pathology and immune dysfunction to identify pairings of optimal targets within a single therapeutic.

Examples of notable targets that we are currently utilizing, or may in future elect to utilize, our ARC compounds are described in the table below.

Potential Targets for ARC Compounds

In addition to targeting immune checkpoints and TNF superfamily receptors, we are also targeting cytokines, which are largely responsible for promoting and regulating an immune response.

Cytokines are proteins synthesized and secreted by immune cells and which mediate immune stimulation or suppression, thereby driving autoimmune diseases and participating in immune evasion and progression of cancers.

In cancer, cytokines such as IL-2 and interferons have been shown to stimulate antitumor immune response, whereas cytokines such as TGF-ß, CSF1, and IL-34 have been shown to promote tumor progression.

In autoimmune diseases, IL-6 and TNFa are highly implicated in disease development and progression.

We have leveraged the versatility of our ARC platform to construct ARC compounds that target cytokines implicated in cancer as well as cytokines implicated in autoimmune diseases.

For example, SL-115154 binds soluble CSF1 and IL-34 and simultaneously activates CD40 receptors.

Some of our early-stage product candidates bind TGF-ß and simultaneously activate a variety of costimulatory receptors.

Similar to our cancer product candidates, our autoimmune product candidates are designed to influence disease pathways by simultaneously trapping inflammatory signals and promoting immunosuppressive functions.

Our GADLEN Platform

Our expertise in engineering dual-sided, bi-functional fusion proteins has enabled the development of our Gamma Delta T Cell Engager, or GADLEN, platform to leverage gamma delta T cells for the treatment of cancer.

We expect to nominate a lead product candidate from our GADLEN platform in 2021 to support our clinical-stage pipeline in 2022 and beyond.

The therapeutic utilization of gamma delta T cells represents a novel approach for the treatment of cancer.

This approach may be particularly beneficial in targeting tumors that are not addressable by alpha beta T cells.

Additionally, as immunotherapies that stimulate alpha beta T cell-dependent immune response are increasingly utilized across cancer treatment paradigms, we expect the proportion of patients who will become refractory to alpha beta T cell-mediated therapies will also increase over time, creating an absence of effective treatment options that may be addressed by the utilization of gamma delta T cells.

A majority of T cells in the human body bear an alpha beta T cell receptor, which recognizes tumor antigens presented on major histocompatibility complex, or MHC, molecules.

Some cancer cells reduce the expression of MHC molecules or tumor antigens, rendering those cancer cells invisible to most alpha beta T cells.

The predominant gamma delta T cell population in the peripheral blood expresses the V gamma 9 / V delta 2 T cell receptor, and is activated by a heterodimer consisting of butyrophilin 2A1 and butyrophilin 3A1.

In other tissues and tumors, however, the most abundant gamma delta T cells express other V gamma and V delta T cell receptor chains, and are activated by distinct butyrophilin heterodimers.

For example, where traditional T cell engager therapeutics targeting CD3 may indiscriminately activate T cells systemically, we believe that gamma delta T cell engagers may allow for the specific activation of tissue-resident gamma delta T cell subsets with a potentially improved safety profile in comparison to CD3-directed T cell engagers.

Our GADLEN platform has the potential to expand the range of addressable indications for cancer immunotherapy and treat historically difficult to treat patients.

We have leveraged our expertise in engineering dual sided bi-functional fusion proteins to develop a suite of heterodimerized butyrophilin proteins connected to antigen-targeted single chain antibody fragments.

GADLEN compounds are comprised of two distinct fusion protein chains, and an engineered Fc linker domain that facilitates heterodimerization between the two chains.

As shown in the left panel of Figure 9 below, the assembled GADLEN compound contains the extracellular domains of heterodimerized butyrophilin proteins on one side and is linked to tumor antigen specific single chain antibody fragments on the opposite side.

The gamma delta T cell receptors recognize and are activated by specific butyrophilin protein heterodimers.

Thus, the GADLEN construct is designed to facilitate targeting of specific gamma delta T cells to tumor cells expressing a defined antigen, as shown in the right panel of Figure 9 below.

Figure 9—GADLEN Platform Overview

To demonstrate the feasibility of the GADLEN approach, a murine GADLEN construct was developed incorporating a butyrophilin 1, or BTNL1, and butyrophilin 6, or BTNL 6, heterodimer and an scFv domain targeting the CD19 antigen.

In both mice and humans, gamma delta T cells represent approximately 2% to 5% of the total T cell population, as shown in Figure 10 in a murine model.

We treated mice on Days 0, 3, and 6 with the murine GADLEN, mBTNL1/6-Fc-CD19scFv.

We observed dose-dependent expansion of the endogenous gamma delta T cell compartment to approximately 12% of all T cells 24 hours after the second treatment.

Concurrent with expansion, mBTNL1/6-Fc-CD19scFv also caused activation of murine gamma delta T cells, as demonstrated by upregulation of the CD69 activation marker, shown in Figure 10.

Murine B cells express CD19, and therefore were a potential target of gamma delta T cells following treatment with mBTNL1/6-Fc-CD19scFv.

Accordingly, we observed depletion of the endogenous B cell compartment concurrent with gamma delta T cell expansion and activation following treatment with mBTNL1/6-Fc-CD19scFv, as shown in Figure 10.

Importantly, when mice with established CD19+ tumors were treated with mBTNL1/6-Fc-CD19scFv, dose-dependent reduction in tumor growth and rejection was observed.

We believe these studies indicate that GADLEN compounds enable therapeutic modulation of gamma delta T cells in vivo, and that GADLEN compounds may be designed to activate tissue-restricted populations of endogenous gamma delta T cells to target specific tumor antigens in both solid and liquid tumors.

Figure 10—Dose Dependent Gamma T Cell Expansion, Activation, and Killing Activity Following Administration of the GADLEN Compound mBTNL1/6-Fc-CD19scFv

Our goal is to become the world leader in the discovery, development, and commercialization of dual-sided, bi-functional fusion proteins for the treatment of cancer and autoimmune diseases.

We plan to achieve this by utilizing our proprietary ARC and GADLEN platforms to create novel therapeutics to treat patients who lack effective treatment options.

Key elements of our strategy include:

• Rapidly advancing our clinical-stage ARC product candidates, SL-172154 and SL-279252, through clinical development and marketing approval

• Leveraging our ARC and GADLEN platforms to rapidly advance additional product candidates into clinical development

• Continuing to augment our fusion protein manufacturing capabilities

• Collaborating with leading biopharmaceutical companies

• Building on our culture of R&D excellence and continuing to out-innovate ourselves

• Deepening our intellectual property portfolio to continue to protect our platform technologies and product candidates

Our ARC Product Candidates

We believe the collective advantages of our ARC platform, and our internal capabilities and scientific expertise allow for the capital-efficient identification and pursuit of differentiated product candidates.

Our lead product candidates, SL-172154 and SL-279252, are designed to address molecular targets that are well-characterized and clinically validated in immuno-oncology, but are under-exploited by current treatment modalities.

A Dual CD47/SIRPα Blocking and CD40-Activating ARC Compound

Our lead product candidate, SL-172154, simultaneously inhibits CD47 and activates the CD40 receptor.

In preclinical studies of SL-172154, we have observed no occurrence of anemias, a durable receptor occupancy, and dose-dependent lymphocyte migration into lymphoid tissues.

We are conducting a Phase 1 clinical trial of SL-172154 administered by intravenous injection in patients with ovarian, fallopian tube, and peritoneal cancers, collectively referred to as ovarian cancer.

We are also conducting a second Phase 1 clinical trial of SL-172154 administered by intratumoral injection in patients with CSCC or HNSCC.

For the ongoing Phase 1 clinical trial evaluating SL-172154 in ovarian cancer patients, we expect to announce initial data from the dose-escalation portion of the trial in the second half of 2021.

For the ongoing Phase 1 clinical trial evaluating SL-172154 in CSCC and HNSCC patients, we expect to announce initial data from the dose-escalation portion of the trial in the first half of 2022.

Improving upon Existing Therapeutics Targeting CD47/SIRPα

In order for CD47/SIRPα blockade to effectively inhibit tumor growth, the CD47/SIRP α “don’t eat me” signal must be blocked and an “eat me” signal must be present to stimulate macrophage-mediated phagocytosis.

While CD47 and SIRP α therapeutics have demonstrated anti-tumor activity in a range of tumor types including diffuse large B-cell lymphoma, or DLBCL, myelodysplastic syndrome, acute myeloid leukemia, gastric cancer, and ovarian cancer, we believe there are a number of factors that limit the potential of existing antibody therapeutics.

For example, antibodies that block the CD47 “don’t eat me” signal and provide an “eat me” signal via the Fc domain, can result in toxicities including anemia and other cytopenias, which have been observed clinically with magrolimab, TTI-621, and SRF231.

In preclinical studies in NHP, administration of the CD47 blocking antibody known as magrolimab, or 5F9-G4, caused blood hemoglobin concentrations to drop into the transfusion range for most animals that received a dose of 1 mg/kg or greater.

We believe these observations were due to residual effector function in the Fc domain of magrolimab, which caused red blood cell destruction following binding of CD47 on red blood cells.

This has limited development of these antibodies in the absence of the low-dose priming regimen developed for magrolimab.

Other CD47 blocking agents, including the SIRPα-Fc fusion protein known as ALX-148, contain an Fc domain that does not bind Fc receptors, and therefore blocks CD47 without providing an “eat me” signal that leads to anemia or other cytopenias.

While the avoidance of cytopenias is a major benefit of CD47 targeted therapies that do not engage Fc receptors, in order for those agents to provide anti-tumor benefit they must be paired with a strategy that directs macrophages to specifically “eat” tumor cells.

These tumor-targeted “eat me” signals can be provided by ADCP-competent antibodies, such as rituximab, cetuximab, or trastuzumab, that bind to tumor antigens.

Antibody-dependent cellular phagocytosis, or ADCP, is a highly regulated process in which an antibody binds to and marks a target, in this case a tumor cell, for phagocytosis.

In addition, natural “eat me” signals can be induced by certain chemotherapies that increase expression of calreticulin, a well-established “eat me” signal expressed on the surface of cells marked for phagocytosis, on the surface of tumor cells.

Preclinical studies have shown that the anti-tumor response to CD47/SIRPα blockade is completely dependent upon macrophage engagement of an adaptive immune response following tumor cell phagocytosis, specifically following engagement and activation of CD8+ T cells.

Thus, strategies that not only enhance innate immunity via CD47/SIRPα blockade, but also enhance an adaptive immune response may be synergistic.

To our knowledge, there are no other CD47/SIRPα targeted agents in clinical development that include a second functional domain to enhance antigen presentation to an adaptive immune response.

Our Approach to Bridging Innate and Adaptive Immunity by Simultaneously Targeting CD47 and CD40

While most competing CD47 and SIRPα programs solely focus on activating the innate immune system by inhibiting CD47, SL-172154 is designed to bridge the innate and adaptive immune response by simultaneously blocking the CD47 macrophage “don’t eat me” signal and activating CD40 signaling.

We believe that incorporating a CD40 agonist domain into a CD47 blocking therapeutic will stimulate macrophages not to just “eat” tumor cells, but will also drive those macrophages to more effectively present the tumor antigens that they have consumed to T cells.

As shown in Figure 11 below, when macrophages consume tumor cells in the setting of CD47/SIRPα blockade, they must then digest and display tumor antigens on their surface to catalyze an adaptive, T cell-mediated immune response.

Macrophage consumption of tumor cells is critical to the mechanism of CD47/SIRPα blockade, but T cells are responsible for tumor shrinkage.

Thus, strategies that enhance the processing and display of tumor antigens on the surface of macrophages and other antigen presenting cells are likely to enhance the effectiveness of CD47/SIRPα blockade.

CD40 is a TNF receptor expressed by antigen-presenting cells, including macrophages.

Stimulation of CD40 substantially enhances antigen presentation and subsequent T cell-activation by antigen-presenting cells.

Accordingly, we have demonstrated in preclinical studies that the stimulation of CD40 in coordination with CD47/SIRPα blockade using murine SIRPα-Fc-CD40L controls tumor growth and improves survival to a greater degree than either CD47- or CD40-targeted antibodies either alone or in combination, and these effects were attributed to enhanced tumor cell killing by T cells.

Figure 11—Mechanism of Action of SL-172154

Clinical Data to Date

In November 2021, at the SITC Meeting, we presented data from the dose-escalation portion of our ongoing Phase 1A trial of SL-172154 as monotherapy in heavily pretreated platinum-resistant ovarian cancer patients.

As of a September 15, 2021 data cutoff, we had enrolled a total of 15 patients across four dose levels ranging from 0.1 mg/kg to 3 mg/kg.

Dose escalation was conducted according to the Modified Toxicity Probability Interval-2 trial design.

Patients received SL-172154 on either a weekly schedule or, after doses on day one, day eight, and day 15, a bi-weekly schedule.

The patients treated as of September 15, 2021 were heavily pretreated with a median of five prior lines of systemic therapies.

SL-172154 has been generally well tolerated.

Specifically, we did not observe dose-limiting hemolytic anemia, thrombocytopenia or other cytopenias (toxicities which have limited the development of some CD47 inhibitors) through the 3 mg/kg dose level.

We believe that SL-172154 may have a differentiated safety profile, which may be due to the lack of an Fc gamma receptor binding Fc domain.

We have observed high levels of target occupancy of SL-172154 on both CD47 and CD40 through 3 mg/kg.

As shown in Figure 3, we observed preferential binding of SL-172154 to CD47+ leukocytes compared to red blood cells.

Binding to leukocytes approached near-full CD47 target occupancy at doses of 1 mg/kg or greater.

Figure 3—CD47 Targets Occupancy of SL-172154 on White Blood Cells and Red Blood Cells

We have also observed unique pharmacodynamic effects consistent with on-target CD40 activation.

Immediately post-infusion of SL-172154, a rapid, dose-dependent margination of CD40+ B cells and monocytes from the circulation was observed, as shown in Panel A and Panel B of Figure 4.

We also observed an increase in B cell activation markers CD86 and CD95 following each infusion of SL-172154, as shown in Panel C of Figure 4.

Additionally, increases in on-target cytokines such as IL-12, CCL2, CCL3, CCL4 and CCL22 have been observed following each infusion of SL-172154.

No evidence of a bell-shaped dose response curve was observed through 3 mg/kg, a dose at which high levels of CD40 target occupancy were observed.

Figure 4—CD40 Activation of SL-172154 with Dose-Dependent Margination and Activation B Cells

In paired biopsies collected from our ongoing clinical trials, we have observed increases in CD68+ macrophages as well as both CD40 and MHC Class II activation markers in the tumor microenvironment, consistent with induction of an innate immune response.

Additionally, we have seen an increase in PD-L1 expression by the combined positive score, suggesting that the increase in tumor-infiltrating CD8+ T cells induced a local interferon response.

We have also observed increases in Ki67+ CD8 T cells and the Granzyme B+ CD8 T cells.

These findings are consistent with the postulated mechanism of action of SL-172154:

simultaneous CD47 inhibition and CD40 activation bridging an innate to adaptive immune response.

As of October 7, 2021, 14 of the 15 patients treated with SL-172154 in platinum-resistant ovarian cancer had a post-baseline scan at eight weeks and were evaluable for efficacy.

Four patients had stable disease as best response including one patient with stable disease of 16 weeks or greater at 0.3 mg/kg and nine had progressive disease.

We are continuing monotherapy dose escalation at the next dose level of 10 mg/kg.

Clinical Development Strategy

We are currently conducting a Phase 1 clinical trial evaluating the intravenous administration of SL-172154 in patients with ovarian cancer and a second Phase 1 trial evaluating the intratumoral administration of SL-172154 in patients with CSCC or HNSCC.

The primary objective of each Phase 1 trial is to assess the safety and tolerability of SL-172154.

The secondary objectives include evaluation of the pharmacokinetic and pharmacodynamic profiles as well as the anti-tumor activity of SL-172154.

We expect to identify the recommended Phase 2 dose for SL-172154 as a monotherapy.

We expect to provide initial data from the monotherapy dose-escalation portion of our intravenous and intratumoral Phase 1 trials in the second half of 2021 and the first half of 2022, respectively.

A Phase 1 clinical trial of SL-172154 administered intravenously is being conducted in patients with advanced ovarian, fallopian tube, and primary peritoneal cancers, collectively referred to as ovarian cancer.

Patients have relapsed and are ineligible for further platinum-based therapies.

We believe that ovarian cancer represents an indication that lacks effective treatment options.

Ovarian cancer expresses the highest levels of CD47 of any solid tumor and is a tumor type with a high presence of macrophages, which express CD40.

In the Phase 1A dose-escalation portion of the trial, three or more patients will be enrolled through each of five dose levels.

Following the identification of a recommended Phase 2 dose, or RP2D, for monotherapy, we plan to evaluate SL-172154 in two Phase 1B expansion cohorts in ovarian cancer, including in combination with cetuximab, an ADCP-competent antibody targeting EGFR, and in combination with doxorubicin.

We conducted a study with an academic collaborator to investigate the expression of EGFR on tumor biopsies from ovarian cancer patients.

From a total of 594 biopsies analyzed, the majority were greater than 50% positive for EGFR.

Doxorubicin is a standard of care chemotherapy that stimulates upregulation of calreticulin on tumor cells.

We anticipate enrolling a total of approximately 70 patients across the dose-escalation and expansion portions of the trial.

As of March 16, 2021, SL-172154 has been well tolerated.

Treatment-related adverse events have been reported in some patients, but there have been no reported dose-limiting toxicities, or Grade 3 or higher treatment-related adverse events.

A maximum tolerated dose has not been reached.

An overview of the initial clinical development strategy for evaluating SL-172154 administered intravenously in patients with advanced ovarian cancer is below:

Figure 12 —Initial Clinical Development Strategy of SL-172154 in Ovarian Cancer

We are also conducting a Phase 1 trial of SL-172154 administered intratumorally in patients with locally advanced or metastatic CSCC and HNSCC not amenable to further treatment with surgery, radiation, or standard systemic therapies.

In the Phase 1A dose-escalation portion of the study, three or more patients will be enrolled through each of four dose levels.

Following the identification of a monotherapy RP2D, we plan to evaluate SL-172154 in one or more Phase 1B expansion cohorts in combination with cetuximab or one or more other combinations.

As of March 16, 2021, the drug has been well tolerated.

A maximum tolerated dose has not been reached.

We anticipate enrolling a total of approximately 45 patients across the dose-escalation and expansion portions of the trial.

An overview of the initial clinical development strategy for evaluating SL-172154 administered intratumorally in patients with locally advanced or metastatic CSCC and HNSCC is below:

Figure 13—Initial Clinical Development Strategy of SL-172154 in CSCC and HNSCC

Following the completion of Phase 1 development, we plan to select one or more combination regimens, routes of administration and tumor types to advance into Phase 2 development.

Beyond the two combinations in ovarian cancer described above, we believe there are other rational combination partners for both the treatment of ovarian cancer and other solid tumors, as well as in hematologic malignancies.

We intend to study SL-172154 in hematologic malignancies and further development may include other solid tumors.

We believe that SL-172154 is a highly differentiated CD47 inhibitor with potential for both best-in-class and first-in-class development opportunities.

We are conducting Phase 1 clinical trials evaluating the administration of SL-172154 in both solid tumors and hematologic malignancies.

As a class, CD47 inhibitors are being developed in combination with other agents that potentiate phagocytosis and initiate an immune response, such as chemotherapy, ADCP-competent antibodies, antibody drug conjugates, and others.

Ovarian Cancer

Ovarian cancer expresses the highest levels of CD47 of any solid tumor and is a tumor type with a significant infiltration of macrophages, which express CD40.

We believe this makes ovarian cancer particularly well-suited to the investigation of SL-172154.

We are conducting a Phase 1 clinical trial of SL-172154 administered intravenously in patients with advanced ovarian, fallopian tube, and primary peritoneal cancers, collectively referred to as ovarian cancer.

Patients that are eligible for this trial have relapsed after standard-of-care therapies and are ineligible for further platinum-based therapies.

The primary objective of this trial is to assess the safety and tolerability of SL-172154.

The secondary objectives include evaluation of the pharmacokinetic and pharmacodynamic profiles and the antitumor activity of SL-172154.

In the ongoing Phase 1A monotherapy dose-escalation trial, three or more patients will be enrolled through each of the dose levels until a maximum tolerated dose or maximum administered dose is defined.

In parallel, we plan to evaluate SL-172154 in a Phase 1B combination dose-escalation and dose-expansion trial in platinum-resistant ovarian cancer in combination with liposomal doxorubicin.

Liposomal doxorubicin is a standard-of-care chemotherapy for this patient population.

According to the literature and our internally generated data, liposomal doxorubicin upregulates calreticulin, an endogenous “eat me” signal, on the surface of tumor cells.

We believe that liposomal doxorubicin is an attractive combination partner due to the observed upregulation of calreticulin, which led to potentiation of SL-172154-mediated ovarian cancer cell phagocytosis in in vitro studies .

Furthermore, because the overall response rate of this patient population to liposomal doxorubicin is approximately 10%, there is significant opportunity for improved response rates in combination with SL-172154, wherein we believe the contribution of SL-172154 will be discernible.

We are evaluating additional combination opportunities in ovarian cancer.

We expect to announce additional data from the ongoing Phase 1A monotherapy dose-escalation trial and initial data from the Phase 1B combination trial in the first half of 2023.

Cutaneous Squamous Cell Carcinoma and Head and Neck Squamous Cell Carcinoma

We conducted a Phase 1 trial of SL-172154 administered intratumorally in patients with locally advanced or metastatic CSCC and HNSCC not amenable to further treatment with surgery, radiation, or standard systemic therapies.

The primary objective of this trial was to assess the safety and tolerability of SL-172154.

The secondary objectives included evaluation of the pharmacokinetic and pharmacodynamic profiles and the antitumor activity of SL-172154.

Based on the totality of the safety and biomarker data collected to date in our ongoing Phase 1A clinical trial in ovarian cancer patients, we have decided to focus development of SL-172154 as an intravenously administered product candidate.

Thus, as of February 24 2022, we ceased enrollment and are in the process of closing this trial.

In addition, we experienced enrollment and operational challenges associated with intratumoral administration trials (which have been exacerbated by the COVID-19 pandemic), further supporting the decision to pursue a registrational strategy via intravenous administration.

Overall, SL-172514 was well tolerated in this trial;

we did not observe dose-limiting toxicities and did not reach a maximum tolerated dose.

We expect to announce data from this trial in the first half of 2022.

We may continue further development in HNSCC and/or CSCC in an intravenous administration trial of SL-172154 following selection of a recommended Phase 2 dose in our ovarian cancer trial.

Acute Myeloid Leukemia and Higher-Risk Myelodysplastic Syndrome

We are conducting a Phase 1A/B clinical trial for SL-172154 in patients with AML and HR-MDS.

This ongoing Phase 1 clinical trial will evaluate the safety, tolerability, pharmacokinetics, antitumor activity, and pharmacodynamic effects of SL-172154, as both monotherapy and in combination.

In AML, we plan to evaluate SL-172154 in combination with both azacitidine and venetoclax.

In both HR-MDS and TP53 mutant AML, we plan to evaluate SL-172154 in combination with azacitidine.

We have initiated the monotherapy Phase 1A dose escalation portion of this trial.

We plan to conduct the Phase 1B dose escalation portion of this trial of SL-172154 in combination with azacitidine in a parallel staggered manner.

Monotherapy dose-escalation and initial dose-escalation combination cohorts are anticipated to be in a heavily pretreated, predominantly refractory patient population.

Once a recommended dose and schedule have been determined in combination with azacitidine, we plan to enroll patients in expansion cohorts in combination with azacitidine, with or without venetoclax, depending on the indication.

As a class, CD47 inhibitors have demonstrated clinical activity in both AML and HR-MDS.

We see an opportunity for

SL-172154 to continue to differentiate from other compounds in the field due to the combined effects of CD47 blockade and CD40 costimulation.

Specifically, we believe that our preclinical and initial clinical data from our ongoing Phase 1A clinical trial in ovarian cancer indicate that SL-172154 may differentiate from other CD47/SIRPα inhibitors in one or more of the following ways:

• Improved overall response rate due to CD40-mediated activation of both innate and adaptive immunity

• Improved response durability due to enhanced CD40-mediated activation of adaptive immunity

• Differentiated safety profile due to the absence of dose-limiting anemia or thrombocytopenia

We expect to announce initial combination data from this trial in the first half of 2023.

To date, we have experienced delays in our clinical trials of SL-172154 because of the ongoing COVID-19 pandemic.

In particular, we have experienced:

delays with certain third-party vendors supporting this trial, including third-party manufacturers;

difficulty procuring sufficient quantities of raw materials required for our manufacturing processes;

delays as a result of some patients choosing to forego one or more doses in our clinical trials;

and staffing shortages at many clinical trial sites.

We expect to continue to experience some or all of these delays in the future.

Preclinical Experience

Our lead product candidate, SL-172154, simultaneously inhibits CD47 and activates the CD40 receptor.

The pairing of a CD40 agonist domain to a CD47 inhibitory domain was selected based on prior publications which demonstrated that tumor rejection in the setting of CD47 inhibition was dependent upon a T cell mediated adaptive immune response.

Agents which only block the interaction between CD47 and SIRPα do not directly activate T cell mediated adaptive immunity, but instead function to enable macrophage mediated phagocytosis of tumor cells.

Antigen presenting cells, including macrophages, express CD40.

Stimulation of CD40 on antigen presenting cells is known to improve the efficiency of antigen presentation and activation of T cell mediated adaptive immunity, including antitumor immunity.

To date, we have conducted extensive preclinical studies of SL-172154 that have demonstrated the following:

• Specific binding to CD47 and CD40 with high picomolar affinity

• A significant increase in macrophage-mediated phagocytosis of tumor cells

• Durable receptor occupancy to CD47 expressing cells

• Dose-dependent CD40-mediated pharmacodynamic activity

• The activation of antigen presenting cells by a CD40-induced type I interferon response

• Dose-dependent increases in IL-2 by human lymphocytes

• Dose-dependent increases in multiple anti-cancer cytokines in both non-human primates and by human lymphocytes

• Dose-dependent activation of a CD8+ T cell response, which was responsible for tumor cell killing

Taken together, these data demonstrate the potential ability of SL-172154 to activate and bridge the adaptive and innate immune responses.

In in vitro studies, murine SIRPα-Fc-CD40L was shown to bind CD47 and CD40 with high, picomolar affinity.

As predicted from the hexameric structure of the compound, the CD40L domain stimulated CD40 signaling in the absence of Fc receptor cross-linking.

In in vivo studies, administration of murine SIRPα-Fc-CD40L resulted in dose-dependent activation of antigen presenting cells.

• Superior tumor rejection as compared to CD47 inhibitory antibodies, CD40 agonist antibodies, or the combination thereof, in mouse tumor models

Taken together, we believe these data demonstrate the potential ability of SL-172154 to activate and bridge the adaptive and innate immune responses.

We performed standard in vitro tumor cell phagocytosis assays to demonstrate whether SL-172154 enhanced macrophage-mediated phagocytosis of various tumor cell lines, both alone and in combination with tumor-targeted ADCP-competent antibodies.

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After two hours, the proportion of tumor cells phagocytosed by human macrophages was determined and reported as the phagocytosis index.

CD40 is known to stimulate proliferation of B cells and CD4+ T cells from human PBMC in the presence of cross-linked anti-CD40 antibodies or CD40L.

To evaluate this effect, CD8+ T cell-depleted PBMC were isolated from a total of 50 different human blood donors and cultured in the presence of a dose-titration of SL-172154.

As shown in Figure 15 below, as compared to both positive and negative controls, soluble SL-172154 stimulated dose-dependent proliferation of human PBMC over seven days.

In addition, SL-172154 was observed to stimulate a dose-dependent increase in the number of IL-2 secreting PBMC on day eight, which is a downstream indicator of CD40 activation.

Figure 15 — In Vitro Human PBMC Proliferation and Activation Assay

CD8-depleted PBMC from 50 distinct human blood donors, each indicated as a single spot in each figure, were cultured with media only, the positive control KLH, the non-activating control Exenatide, or 0.3, 3, 30, or 300 nM of SL-172154.

On Days 5, 6, and 7, proliferation was assessed via 3 H-Thymidine incorporation as shown in the left panel, and on Day 8, IL-2 positive cells were assessed by ELISpot as shown in the right panel.

We conducted dose-range finding and repeat dose GLP toxicity studies in NHP to evaluate the safety and pharmacologic effects of SL-172154.

We conducted dose-range finding and repeat dose toxicity studies in nonhuman primates, or NHP, to evaluate the safety and pharmacologic effects of SL-172154.

In these studies, SL-172154 was administered as five once-weekly doses across a dose range of 0.1 mg/kg to 40 mg/kg, followed by a recovery period.

Data from these studies indicated that SL-172154 induced a potent immune response in NHP.

Figure 16 below shows dose-dependent saturation of CD47 positive red blood cells, which was durable for greater than seven days.

In addition, SL-172154 bound CD40-expressing B cells in the peripheral blood and stimulated a dose-dependent migration of lymphocytes from the peripheral blood within 24 hours of treatment, as shown in Figure 17 below.

Figure 6 below shows dose-dependent saturation of CD47+ red blood cells, which was durable for greater than seven days.

In addition, SL-172154 bound CD40-expressing B cells in the peripheral blood and stimulated a dose-dependent migration of lymphocytes from the peripheral blood within 24 hours of treatment.

We believe these data are supportive of either a once weekly or every other week dosing schedule.

Histology samples demonstrated that the post-dose decreases in peripheral blood lymphocytes were accompanied by accumulation of proliferating lymphocytes in lymph nodes and spleen.

Histology samples demonstrated that the post-dose decreases in peripheral blood lymphocytes were accompanied by accumulation of proliferating lymphocytes in lymph nodes, spleen and bone marrow.

Whereas other CD47-targeted agents are administered at super-saturating doses, which we believe is intended to establish a concentration gradient that facilitates passive diffusion into tissues, we believe these data suggest that SL-172154 may be actively transported into tissues via CD40 binding, which may lead to a unique dosing profile in humans.

Administration of SL-172154 was also associated with dose-dependent post-treatment increases in multiple serum cytokines, such as CCL2, as shown in Figure 17 below.

The observed toxicities were consistent with cytokine release syndrome.

Administration of SL-172154 was also associated with dose-dependent post-treatment increases in multiple serum cytokines, such as CCL2.

Overall, SL-172154 was well tolerated;

however, at the higher dose levels, we observed toxicities that were consistent with cytokine release syndrome in the setting of an anti-drug antibody response, which is expected in NHP because SL-172154 is a human protein construct.

No evidence of anemia was observed.

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SL-172154 occupancy on red blood cell CD47 is plotted as the proportion of total CD47 expression minus the proportion of CD47 detected using an antibody that is prevented from binding when CD47 is occupied by SL-172154.

Figure 17—Post-dose Cytokine Release and Rapid Post-dose Migration of Lymphocytes from the Blood

Cynomolgus monkeys were treated with SL-172154 on Day 1, 8, and 15 with 0.1 mg/kg, 1 mg/kg, 10 mg/kg, and 40 mg/kg of SL-172154 or a vehicle control.

Serum cytokine concentrations were collected and the pre- and post-dose concentrations of CCL2, IL-8, and CXCL9 are indicated in the left panel.

Pre- and post-dose lymphocyte counts were obtained on Day 15 prior to the third dose, and on Day 16 approximately 24 hours after the third dose.

The number of peripheral blood lymphocytes was observed to decrease in a dose-dependent manner following the Day 15 dose, and is plotted in the right panel above as the percent decrease in peripheral blood lymphocytes on Day 16 as compared to Day 15.

Each data point indicates an individual animal.

A Dual PD-1 Blocking and OX40-Activating ARC Compound

Our second product candidate, SL-279252, is a dual-sided, bi-functional fusion protein that both inhibits PD-1 and acts as an agonist for the OX40 costimulatory receptor.

We are currently evaluating SL-279252 in a global Phase 1 dose-escalation and dose-expansion clinical trial in patients with advanced solid tumors and lymphoma.

We expect to report data from the dose-escalation portion of this trial in the second half of 2021.

Shortcomings of Existing PD-1/PD-L1 Inhibition Strategies

Programmed cell death protein 1, or PD-1, is a cell surface protein present on T cells and other white blood cells.

It binds to two ligands, PD-L1 and PD-L2, which can be expressed by tumor cells as well as other immune cells in the tumor microenvironment.

When PD-L1 binds to PD-1, the resulting PD-1 signaling limits the capacity of T cells to kill tumor cells.

Anti-PD-1 antibodies disrupt binding of PD-1 to PD-L1 to restore baseline tumor cell-killing activity of T cells.

PD-1/PD-L1 antibodies have achieved significant clinical and commercial success, a majority of patients with cancer do not benefit from this class of therapy, as evidenced by a response rate of 35% or less in patients with melanoma, NSCLC, bladder cancer, HNSCC, and other cancers.

A limitation of anti-PD-1/PD-L1 antibodies is their inability to provide a signal that directly amplifies the ability of T cells to kill tumor cells.

Achieving this enhanced tumor-killing effect necessitates the introduction of a distinct mechanism to complement checkpoint blockade.

One such approach is the stimulation of costimulatory receptors.

Most current approaches attempt to simultaneously exploit both pathways by co-administering anti-PD-1/PD-L1 antibodies with costimulatory receptor agonists.

However, these attempts have not been successful in clinical trials, which we believe is due to the structural mismatch between existing bivalent antibodies and the trimeric TNF receptor superfamily.

Our Approach to Enhancing PD-1 Blockade by Simultaneously Targeting OX40

While other programs sought to block PD-1 and activate OX40 signaling by administering multiple therapeutics, SL-279252 seeks to do so colocalized within a single therapeutic and within the immune synapse.

Importantly, unlike the bivalent structure of existing antibodies, the hexameric structure of SL-279252 is designed to effectively trimerize and directly activate OX40 receptors.

In preclinical studies, SL-279252 was found to be a highly potent stimulator of an adaptive immune response, and also demonstrated greater anti-tumor activity than anti-PD-1 antibodies or OX40-agonist antibodies, either alone or in combination.

Figure 18— SL-279252 Enables Simultaneous Blockade of PD-1 and Activation of OX40 Signaling

Our second product candidate, SL-279252, is a dual-sided, bi-functional fusion protein that both inhibits the PD-/PD-L1 interaction and activates the OX40 costimulatory receptor.

We are evaluating SL-279252 in an ongoing Phase 1 dose-escalation clinical trial in patients with advanced solid tumors.

Clinical Data Observed to Date

In November 2021, at the SITC Meeting, we presented data from the dose-escalation portion of our ongoing Phase 1 clinical trial as monotherapy in late-stage solid tumor cancer patients.

As of June 11, 2021 we had enrolled a total of 43 patients from the first ten dose levels, ranging from 0.0001 mg/kg to 6 mg/kg.

Dose escalation was conducted according to the keyboard design.

Patients received SL-279252 on either a weekly or bi-weekly basis with a 28-day cycle.

The patients treated as of June 11, 2021, were heavily pretreated with a median of three prior lines of systemic therapies and 58% were checkpoint inhibitor experienced.

As of our latest safety data cutoff date of January 19, 2022, SL-279252 has been observed to be well tolerated and has demonstrated monotherapy antitumor activity in some PD-1 inhibitor experienced patients during dose escalation at doses of 1 mg/kg and higher.

Dose escalation is continuing in a primarily PD-1/L1 inhibitor experienced patient population.

Treatment-related adverse events, including immune-related events, have been reported in some patients.

To date, we have observed no Grade 4 or Grade 5 adverse events, and we have not observed any dose-limiting toxicities.

A maximum tolerated dose has not been reached.

As of June 11, 2021, preliminary pharmacodynamic activity has been evaluated in patients treated across a dose range of 0.0001 mg/kg to 6 mg/kg.

Increases in the number of proliferating CD8+ central memory and effector memory T cells were observed in the peripheral blood of some patients at higher peak SL-279252 concentrations corresponding to doses of 1.0 mg/kg or greater.

Post-dose receptor occupancy on OX40+ lymphocytes was observed in a dose-dependent fashion, and the total number of OX40+ cells in the blood declined rapidly post-infusion of SL-279252.

We believe the post-infusion decreases in OX40+ lymphocytes provides evidence of on-target activation.

In NHP, similar post-infusion decreases in lymphocytes were associated with migration of lymphocytes into tissues.

As of June 11, 2021, preliminary pharmacokinetic activity has been evaluated across a dose range of 0.0001 to 6 mg/kg.

A linear increase in SL-279252 Cmax and AUC was observed up to 3.0 mg/kg, while a greater than proportional increase in AUC was observed at 6.0 mg/kg, suggesting potential target saturation at 6 mg/kg.

Within subject exposure was similar on Days 1, 15 and 29, indicating no accumulation or time-dependent changes in pharmacokinetics on either schedule.

The preliminary half-life is approximately 23 hours.

As of October 20, 2021, the best response to therapy has been one confirmed partial response, or PR, in a patient with ocular melanoma who remained on treatment for greater than one year.

This patient was heavily pretreated, with four prior systemic regimens and had progressed on prior PD-1 and CTLA-4 checkpoint inhibitor therapies.

In addition, stable disease, or SD, was seen in an additional 12 patients.

In five of these patients, SD was sustained for greater than 24 weeks.

One unconfirmed PR was observed in a patient with mucosal melanoma of the vulvar who had also progressed on prior PD-1 and CTLA-4 checkpoint inhibitor therapies.

Clinical Development Strategy

In collaboration with Takeda, we are currently conducting a Phase 1 dose-escalation and dose-expansion trial of SL-279252 in patients with advanced solid tumors and lymphoma.

We are currently dosing at 12 mg/kg and plan to continue dose escalation to 24 mg/kg in our Phase 1 trial of SL-279252 in patients with advanced solid tumors and we are primarily selecting for patients with PD-L1 expressing tumors.

The primary objective of the Phase 1 trial is to assess the safety and tolerability of SL-279252.

The secondary objectives include evaluation of the pharmacokinetic and pharmacodynamic profiles as well as the anti-tumor activity of SL-279252.

We are evaluating anti-tumor response according to immune Response Evaluation Criteria in Solid Tumors or Response Evaluation Criteria in Lymphoma 2017.

The secondary objectives include evaluation of the pharmacokinetic and pharmacodynamic profiles as well as the antitumor activity of SL-279252.

We are evaluating antitumor response according to immune Response Evaluation Criteria in Solid Tumors or Response Evaluation Criteria in Lymphoma 2017.

These are standard, widely-accepted criteria to evaluate tumor response in oncology clinical trials.

An RP2D and schedule will be identified for SL-279252 following the completion of the Phase 1 trial.

We expect to provide data from the dose-escalation portion of this Phase 1 trial in the second half of 2021.

Patients with relapsed, advanced, or metastatic solid tumors or lymphoma who have received standard of care therapies, including anti-PD-1/PD-L1 antibodies, are eligible to enroll in the trial.

In the dose-escalation portion of this trial, patients will be treated at each of ten dose levels ranging from 0.0001 mg/kg to 6 mg/kg.

Patient samples will be evaluated to determine the pharmacokinetic profile, receptor occupancy on PD-L1 and OX40 peripheral blood immune phenotyping, changes in immune cell infiltration in tumor biopsies, and evidence for elevation in multiple serum cytokines.

Following completion of the dose-escalation portion of the trial, a dose and schedule will be selected for evaluation in up to two expansion cohorts.

As of February 3, 2021, we have enrolled patients through the top dose level of 6 mg/kg in the dose-escalation portion of this trial.

We are currently enrolling additional patients at the top three dose levels.

We anticipate treating a total of approximately 80 patients in the dose-escalation and dose-expansion portions of this clinical trial.

An overview of the Phase 1 trial design evaluating SL-279252 in patients with advanced solid tumors and lymphoma is below:

Figure 19—Phase 1 Trial Design of SL-279252

As of February 3, 2021, patients have received treatment with SL-279252 up to a dose of 6 mg/kg in the dose-escalation portion of the Phase 1 trial.

Overall, SL-279252 has been observed to be well tolerated as of February 3, 2021.

Treatment-related adverse events, including immune-related events, have been reported in some patients, but there have not been any dose-limiting toxicities.

A maximum tolerated dose has not been reached.

Preliminary pharmacokinetic activity has been evaluated across a dose range of 0.0001 to 6 mg/kg.

Exposure of SL-279252 as determined by the maximum peak drug concentration, or Cmax, and the area under the curve, or AUC, increased with dose-escalation in a linear fashion.

The pharmacokinetic profile consists of a distribution phase and an elimination phase.

We believe this distribution phase indicated rapid binding to the target receptors.

Following repeat dosing, a consistent Cmax and AUC was observed without evidence of accelerated drug clearance.

The volume of distribution of drug indicated that SL-279252 distributed beyond the circulatory compartment into tissues.

Preliminary pharmacodynamic activity has also been evaluated in patients treated across a dose-range of 0.0001 to 3 mg/kg.

Post-dose receptor occupancy on OX40-positive lymphocytes was observed in a dose-dependent fashion, and the total number of OX40-positive cells in the blood declined rapidly post-infusion of SL-279252.

We believe the post-infusion decreases in OX40-positive lymphocytes provides evidence of on-target biology.

In NHP, similar post-infusion decreases in lymphocytes were associated with migration of lymphocytes into tissues.

We expect to select a dose and schedule (either weekly or bi-weekly) to advance into the expansion cohorts, and to report safety, pharmacokinetic and pharmacodynamic data from the dose-escalation portion of this clinical trial in the second half of 2021.

We expect to begin enrolling patients in one or more dose-expansion cohorts in the second half of 2021.

Adverse events, or AEs, were classified according to National Cancer Institute Common Terminology Criteria for Adverse Events (NCI-CTCAE—version 5.0).

As of February 3, 2021, treatment-related AEs have been reported in 16 patients.

One patient experienced a Grade 3 treatment-related AE, 7 patients experienced Grade 2 treatment-related AEs, and 12 patients experienced Grade 1 treatment-related AEs.

No treatment-related Grade 4 or 5 adverse events, treatment-related serious adverse events or dose limiting toxicities have been reported.

To date, we have experienced delays in our clinical trial of SL-279252 as a result of the ongoing COVID-19 pandemic, including delays with certain third-party vendors supporting this trial and difficulty procuring sufficient quantities of raw materials required for our manufacturing processes.

We temporarily paused enrollment of patients for our clinical trial of SL-279252 between March and May 2020 and we resumed enrollment in June 2020.

As a result of public health guidance measures in the locations of our clinical trial sites, some patients have chosen, and may choose to forego in the future one or more doses in our clinical trials, due to challenges faced by such patients in travelling to our clinical trial sites, which may negatively affect the study results.

Preclinical Experience

In our preclinical studies in mice with rapidly growing tumors, murine PD-1-Fc-OX40L achieved superior tumor growth inhibition and improved survival compared with an anti-PD-1 antibody and an OX40 agonist antibody, either alone or in combination, as shown in Figure 7 above.

We conducted dose-range finding and repeat dose GLP toxicity studies in NHP to evaluate the safety and pharmacologic effects of SL-279252.

In these studies, SL-279252 was administered as five once-weekly doses, across a dose range of 0.1 mg/kg to 100 mg/kg.

Data from these studies indicated that SL-279252 induced a potent immune response in NHP.

Figure 20 below shows a dose-dependent expansion in the total number of lymphocytes in NHP and post-dose migration of lymphocytes into specific tissue sites, including the liver, the lung, and the GI tract.

Figure 21 below shows increased serum cytokine concentrations, including IL-6 and IL-10, following repeated administration of SL-279252.

Figure 20—Lymphocyte Expansion Between Weekly SL-279252 Treatments and Rapid Post-dose Migration of Lymphocytes from the Blood

Cynomolgus monkeys were treated on Day 1, 8, and 15 with 10 mg/kg, 40 mg/kg, and 80 mg/kg of SL-279252.

Pre- and post-dose lymphocyte counts were obtained on Day 1 prior to the first dose and on Day 15 prior to the third dose.

The fold increase in total lymphocytes in the peripheral blood from Day 1 to Day 15 is plotted on the left panel for each dosing group.

Within 24 hours of SL-279252 treatment on Day 15, the number of peripheral blood lymphocytes was observed to decrease in a dose-dependent manner.

The percent decrease in peripheral blood lymphocytes from the third dose on Day 15 to Day 16 is shown on the right panel.

Each data point indicates an individual animal.

Figure 21—Increased Serum Cytokine Concentrations Following Administration of SL-279252

Cynomolgus monkeys were treated on Day 1, 8, 15, 22 and 29 with 10 mg/kg, 40 mg/kg, and 80 mg/kg of SL-279252.

Serum cytokine concentrations were collected and the pre- and post-dose concentrations of IL-6 and IL-10 are indicated in the panel above for the 40mg/kg dose group following repeated administration.

We expect to provide additional data from the dose-escalation portion of this Phase 1 trial in the second half of 2022.

Given the way that the PD-1 inhibitor landscape has evolved, the development path for SL-279252 is first in PD-1 relapsed and refractory patients.

To date, we have experienced delays in our clinical trial of SL-279252 because of the ongoing COVID-19 pandemic.

In particular, we have experienced:

delays with certain third-party vendors supporting this trial, including third-party manufacturers;

difficulty procuring sufficient quantities of raw materials required for our manufacturing processes;

delays as a result of some patients choosing to forego one or more doses in our clinical trials;

and staffing shortages at many clinical trial sites.

We expect to continue to experience some or all of these delays in the future.

Our GADLEN Platform

Our expertise in engineering dual-sided, bi-functional fusion proteins has enabled the development of our GADLEN platform to leverage gamma delta T cells for the treatment of cancer.

The therapeutic utilization of gamma delta T cells represents a novel approach for the treatment of cancer.

This approach may be particularly beneficial in targeting tumors that are not addressable by alpha beta T cells.

Additionally, as immunotherapies that stimulate alpha beta T cell-dependent immune response are increasingly utilized across cancer treatment paradigms, we expect the proportion of patients who will become refractory to alpha beta T cell-mediated therapies will also increase over time, creating an opportunity for therapeutics which harness the antitumor activity of gamma delta T cells.

A majority of T cells in the human body bear an alpha beta T cell receptor, which recognizes tumor antigens presented on major histocompatibility complex, or MHC, molecules.

Some cancer cells reduce the expression of MHC molecules or tumor antigens, rendering those cancer cells invisible to most alpha beta T cells.

The predominant gamma delta T cell population in the peripheral blood expresses the V gamma 9 / V delta 2 T cell receptor and is activated by a heterodimer consisting of butyrophilin 2A1 and butyrophilin 3A1.

Thus, therapeutics which are designed to display a heterodimer of butyrophilin 2A1 and 3A1 may provide a means of modulating gamma delta T cells in vivo.

GADLEN compounds are comprised of two distinct fusion protein chains, and an engineered Fc linker domain that facilitates heterodimerization between the two chains.

As shown in the left panel of Figure 7 below, the assembled GADLEN compound contains the extracellular domains of heterodimerized butyrophilin proteins on one side and is linked to tumor antigen specific single chain antibody fragments on the opposite side.

The gamma delta T cell receptors recognize and are activated by specific butyrophilin protein heterodimers.

Thus, the GADLEN construct is designed to facilitate targeting of specific gamma delta T cells to tumor cells expressing a defined antigen, as shown in the right panel of Figure 7 below.

Figure 7—GADLEN Platform Overview

In both mice and humans, gamma delta T cells represent approximately 2% to 5% of the total T cell population, as shown in Figure 10 in a murine model.

We treated mice on Days 0, 3, and 6 with the murine GADLEN, mBTNL1/6-Fc-CD19scFv.

We observed dose-dependent expansion of the endogenous gamma delta T cell compartment to approximately 12% of all T cells 24 hours after the second treatment.

Concurrent with expansion, mBTNL1/6-Fc-CD19scFv also caused activation of murine gamma delta T cells, as demonstrated by upregulation of the CD69 activation marker, shown in Figure 10.

Murine B cells express CD19, and therefore were a potential target of gamma delta T cells following treatment with mBTNL1/6-Fc-CD19scFv.

Importantly, when mice with established CD19+ tumors were treated with mBTNL1/6-Fc-CD19scFv, dose-dependent reduction in tumor growth and rejection was observed.

Figure 8—Dose Dependent Gamma T Cell Expansion, Activation, and Killing Activity Following Administration of the GADLEN Compound mBTNL1/6-Fc-CD19scFv

To characterize the types of gamma delta T cell subsets that reside within different tumor types, we performed single cell RNA sequencing of patient tumor tissues, including multiple colorectal, melanoma, and non-small cell lung cancer patient tumors to identify the prevalent gamma delta T cell subsets in each tumor type.

As a result of this analysis, we have advanced a number of preclinical GADLEN candidates comprised of butyrophilin heterodimers and tumor antigen specific targeting domains for a number of antigens with therapeutic relevance for both hematologic and solid tumors.

Our preclinical findings with these GADLEN compounds have also revealed that gamma delta T cells, like alpha beta T cells, require costimulation through either costimulatory or natural cytoxicity receptors (NCR) for efficient T cell receptor activation.

The data generated to date suggest these signals can be provided by the tumor cells that express costimulatory ligands and stress ligands that enable efficient activation of gamma delta T cell receptors via GADLEN compounds.

In alignment with our strategy to leverage our expertise to build and expand novel platforms beyond our ARC platform, where dual-sided fusion proteins may provide advantages over existing therapeutic antibodies, we continue to invest in and advance our GADLEN platform.

Collaboration and License Agreements

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The Collaboration Agreement was subsequently amended in April 2018, October 2018 and March 2020.

Pursuant to the Collaboration Agreement, we are required to use our commercially reasonable efforts to conduct preclinical and Phase 1 clinical trials for two molecules, PD-1-Fc-OX40L and CSF1R-Fc-CD40L, and Takeda has an exclusive option to license one or both of these clinical-stage ARC compounds for a specified amount of time up to and following the conclusion of each respective Phase 1 trial.

While we are currently evaluating PD-1-Fc-OX40L in a Phase 1 clinical trial, we have not yet conducted a Phase 1 clinical trial for CSF1R-Fc-CD40L.

During the development phase of the Collaboration Agreement, we may not, by ourselves or through a third party, develop or commercialize a compound, molecule, or product that targets both PD-1 and OX40L, or a compound, molecule, or product that targets both CSF1R and CD40L.

Further, pursuant to the Collaboration Agreement, we agreed to conduct certain preclinical studies on four additional preclinical ARC molecules, and Takeda had an option to license up to two of the four preclinical molecules.

We completed our research and development activities related to the four preclinical molecules and delivered a final report to Takeda.

Takeda elected to not exercise this option, and Takeda’s option period for such molecules has now lapsed.

As a result, the Collaboration Agreement is terminated as to the four preclinical molecules and Takeda does not have any rights to participate in the development or commercialization of such molecules.

Under the Collaboration Agreement, Takeda is granted a right of first negotiation to enter into licenses for each molecule within a specified class of ARC molecules.

To exercise its right of first negotiation, Takeda will be required to provide a notice within a specified time, and if the parties do not conclude a license agreement within a set timeframe, we will be entitled to enter into licenses with third parties, subject to certain conditions.

As of December 31, 2020, under the Collaboration Agreement, we have received approximately $78.4 million in option payments, milestone payments, and expense reimbursements from Takeda.

If Takeda exercises its exclusive option to license one or both of the clinical-stage ARC compounds (PD-1-Fc-OX40L and CSF1R-Fc-CD40L), we will enter into a license agreement with Takeda with respect to such compound.

Any such license agreement would, among other things, require Takeda to use its commercially reasonable efforts to develop the licensed compound and seek approval for the compound.

In addition, Takeda would be solely responsible to use its commercially reasonable efforts, at its cost, to develop, manufacture, and commercialize the licensed ARC compounds.

If both ARC compounds are licensed, we would be entitled to additional payments of up to an aggregate of $450 million in clinical, regulatory, and sales milestone payments.

In addition, we would be eligible for tiered royalty payments on net sales of licensed products at percentages ranging from the high single digits to sub-teens, subject to specified reductions, during the royalty term.

If Takeda exercises its option to enter into a license agreement, the royalty term with respect to the licensed product would extend, on a country-by-country basis, from the period commencing on the first commercial sale of the product in such country and ending on the later of (i) the expiration of the last to expire of the valid claims on the applicable licensed patent rights covering the product in such country or (ii) the tenth anniversary of the first commercial sale of the product in such country.

Unless sooner terminated, the Collaboration Agreement will continue until the later of (a) the earlier of (i) the 90th day following delivery of a report detailing certain results of the SL-279252 Phase 1 clinical trial and (ii) the exercise by Takeda of its right to an exclusive license with respect to SL-279252, and (b) the earlier of (i) the 90th day following delivery of a report detailing certain results of the SL-115154 Phase 1 clinical trial and (ii) the exercise by Takeda of its right to an exclusive license with respect to SL-115154.

The Collaboration Agreement was

mutually terminated pursuant to the termination agreement, or the Termination Agreement, dated November 8, 2021.

Under the terms of the Termination Agreement, we are not required to satisfy any remaining performance obligations, we will not make any payments to or receive any future milestone or royalty payments from Takeda, and all options to license and rights of first negotiation held by Takeda under the Collaboration Agreement were terminated.

The remaining deferred revenue was recognized as revenue in the fourth quarter of 2021.

Heat License Agreement

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Under the Heat License Agreement, Heat was required to conduct certain research and development services under a mutually-agreed upon research and development plan and Heat was eligible to receive financial support from us for these efforts.

Effective March 2017, Heat completed all research and development services under the Heat License Agreement and assigned to us three patent applications and all data derived from the research and development activities, referred to

collectively as the Research Services Inventions.

Pursuant to the terms of the Heat License Agreement, we are obligated to use commercially reasonable efforts to diligently research and develop at least one product covered by the Fusion Protein Patent Rights, including the obligation to file an IND application for such product.

Our development efforts to date, including the development of SL-279252 and certain other ARC compounds, satisfy these obligations.

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Purification of ARC compounds initially utilizes affinity chromatography directed to the Fc domain for capture, and subsequent chromatography steps are designed to remove process-related impurities including CHO derived DNA and proteins.

To date, we have obtained bulk drug substance, or BDS, for each of our product candidates from a single-source third-party contract manufacturer.

We maintain a long-term master services agreement with KBI Biopharma, Inc., or KBI, pursuant to which we may purchase BDS and other products on a per project basis.

To date, we have manufactured bulk drug substance, or BDS, for our product candidates utilizing the services of one third-party contract manufacturer, KBI Biopharma, Inc., or KBI, with whom we maintain a master service agreement, pursuant to which we may manufacture BDS through KBI on a per project basis.

We may terminate the master services agreement at any time for convenience in accordance with the terms of the agreement.

Either KBI or we may also terminate the master services agreement with respect to an uncured breach by the other party in accordance with the terms of the agreement.

The agreement includes confidentiality and intellectual property provisions to protect our proprietary rights related to our product candidates.

Given the complexity of manufacturing our dual-sided, bi-functional fusion proteins, our increased need for manufacturing driven by multiple clinical trial programs, and the challenges faced by biologics manufacturing facilities during the COVID-19 pandemic, we are actively working to make arrangements to procure redundant supply, including engaging with additional third-party manufacturers to identify suitable additional suppliers and building out a facility to support internal process development activities and cGMP manufacturing.

We do not currently have arrangements in place for redundant supply.

These agreements include confidentiality and intellectual property provisions to protect our proprietary rights related to our product candidates.

the COVID-19 pandemic, we are actively working to make arrangements to procure redundant supply, including engaging with additional third-party manufacturers to identify suitable additional suppliers and building out a facility to support internal process development activities and cGMP manufacturing.

We have recently entered into a master service agreement with Abzena Plc, pursuant to which we may manufacture BDS on a per project basis.

We expect to continue to devote significant resources to process development and optimization of the manufacture of our product candidates.

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These generally include immune cell redirecting therapeutics (e.g., T cell engagers), adoptive cellular therapies (e.g., CAR-Ts), antibody drug conjugates, targeted radiopharmaceuticals, targeted immunotoxin, and targeted cancer vaccines.

With respect to our lead wholly owned product candidate, SL-172154, we are aware of other competing clinical-stage therapeutics that target the CD47 pathway or the CD40 pathway, which include, but are not limited to magrolimab, ALX148, TTI-621, TTI-622, DSP107, and APX005M.

With respect to our lead product candidate, SL-172154, we are aware of other competing clinical-stage therapeutics that target the CD47 pathway or the CD40 pathway, which include, but are not limited to magrolimab, ALX148, TTI-621, TTI-622, DSP107, and APX005M.

With respect to our second lead product candidate, SL-279252, we are aware of other competing clinical-stage therapeutics, that target the PD-1 pathway or the OX40 pathway, which include, but are not limited to PF-04518600, BMS-986178, INBRX-106, pembrolizumab, nivolumab, avelumab, and atezolizumab.

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Our competitors also may obtain FDA or foreign 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 or our collaborators are able to enter the market.

The key competitive factors affecting the success of all our product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the effectiveness of companion diagnostics, if required, the level of biosimilar or generic competition, and the availability of reimbursement from government and other third-party payors.

The key competitive factors affecting the success of all our product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the effectiveness of

companion diagnostics, if required, the level of biosimilar or generic competition, and the availability of reimbursement from government and other third-party payors.

Intellectual Property

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In the future, we may decide to apply for restoration of patent term for one of our currently owned or licensed patents to extend its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant biologics license application.

Intellectual property related to our most advanced programs is summarized below.

We generally file patent applications directed to our key technologies and programs in an effort to secure our intellectual property positions.

As of February 1, 2021, we exclusively licensed ten U.S.

patents and about 25 pending non-provisional patent applications (U.S.

and foreign), and we owned two U.S.

patents, about 60 pending non-provisional patent applications (U.S.

and foreign), about ten pending Patent Cooperation Treaty, or PCT, applications, and various provisional patent applications covering our key programs and pipeline.

The intellectual property portfolio for our most advanced programs as of February 1, 2021, is summarized below.

Prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the U.S.

As of February 1, 2022, we own or exclusively license (i) more than 15 patents and more than 15 pending non-provisional patent applications in the United States and (ii) 3 patents and more than 120 pending patent applications in jurisdictions outside of the United States.

We also own additional pending provisional patent applications in the United States and pending international patent applications

filed under the Patent Cooperation Treaty, or PCT.

Patent prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the U.S.

Patent and Trademark Office and other patent offices may be significantly revised before issuance, if granted at all.

The patent portfolio for our ARC platform is based upon our in-licensed patent portfolio, which includes patents and patent applications directed generally to compositions of matter, pharmaceutical compositions, and methods of treatment.

The earliest provisional patent application relating to the ARC platform was filed in October 2015.

Patent applications are pending in the United States and various foreign jurisdictions and regions, including Australia, Brazil, Canada, China, Europe, Hong Kong, Indonesia, Israel, India, Japan, Korea, Mexico, Malaysia, Philippines, Russia, Saudi Arabia, Singapore, Thailand, Ukraine, and Vietnam.

Patent applications in this family, if granted, are expected to expire in 2036, without taking potential patent term extensions or patent term adjustment into account.

To date, the in-licensed ARC platform patent portfolio has been prosecuted in the United States to generate issued U.S.

patents on various product candidates and preclinical product candidates as outlined below.

The Company also owns two PCT applications covering subgenera of ARC compounds relevant to different cellular types.

Patent applications in this family, if granted, are expected to expire in 2040, without taking potential patent term extensions or patent term adjustment into account.

GADLEN Platform

The patent portfolio for our GADLEN platform is based upon our owned patent portfolio, which includes patent applications directed generally to compositions of matter, pharmaceutical compositions, and methods of treatment.

We have one pending PCT application and two pending U.S.

applications to date, with various foreign patent filings planned.

Patent applications in this family, if granted, are expected to expire in 2040, without taking potential patent term extensions or patent term adjustment into account.

SL-172154 Product Candidate

The patent portfolio for our SL-279252 product candidate is based upon our owned and in-licensed patent portfolio, which includes patents and patent applications directed generally to compositions of matter, pharmaceutical compositions, and methods of treatment.

We have two granted patents in the United States, from the in-licensed patent portfolio, covering compositions of matter of a genus of molecules, and the SL-279252 product candidate molecule specifically, pharmaceutical compositions, and methods of treating cancer.

Patent applications in this family, if granted, are expected to expire in 2036, without taking potential patent term extensions or patent term adjustment into account.

Pending coverage, the Company-owned patent portfolio that relates to our SL-279252 product candidate also includes methods of treatment with various combination agents (one pending PCT application).

Patent applications in this family, if granted, are expected to expire in 2039, without taking potential patent term extensions or patent term adjustment into account.

Takeda holds an exclusive option to these patent families in connection with the Collaboration Agreement discussed elsewhere herein.

As of February 1, 2022, we own or exclusively license (i) 2 patents and 5 pending non-provisional patent applications in the United States and (ii) 3 patents and more than 35 pending patent applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan) that relate to SL-172154.

These patents and applications originate from several different patent families.

Patents granted in a family generally directed to compositions and methods of treating cancer are expected to expire in the United States in 2036, without taking potential patent term extension or patent term adjustment into account.

Patents granted in other families, generally directed to methods of treating cancer with various combination agents, are expected to expire in the United States in 2038 and 2039, depending on the family and without taking potential term extension or patent term adjustment into account.

The terms of individual patents granted in jurisdictions outside of the United States depends on the legal term for patents in those jurisdictions.

SL-279252 Product Candidate

The patent portfolio for our SL-172154 product candidate is based upon our owned and in-licensed patent portfolio, which includes patents and patent applications directed generally to compositions of matter, pharmaceutical compositions, and methods of treatment.

We have two granted patents in the United States, from the in-licensed patent portfolio, covering compositions of matter of a genus of molecules, and the SL-172154 product candidate specifically, pharmaceutical compositions, and methods of treating cancer.

Patent applications in this family, if granted, are expected to expire in 2036, without taking potential patent term extensions or patent term adjustment into account.

Pending coverage, the Company-owned patent portfolio that relates to our SL-172154 product candidate also includes methods of treatment with various combination agents (one pending PCT application, and pending applications in the United States, Canada, China, Europe, and Japan).

Patent applications in these families, if granted, are expected to expire in 2038 or 2039, without taking potential patent term extensions or patent term adjustment into account.

Preclinical Product Candidates

The Company also has taken steps to protect various preclinical product candidates.

The Company owns or exclusively licenses various granted U.S.

patents, and pending U.S., foreign and PCT applications covering ARC compounds that may develop into product candidates.

Six licensed U.S.

granted patents and one Company-owned U.S.

granted patent cover PD-1-, CSF1R-, TIM3-, SIRP1a-, FLT3L, and TIGIT-based ARC compounds, with OX40L, CD40L, and 4-1BBL, covering compositions of matter of a genus of compounds, and the preclinical product candidates specifically, pharmaceutical compositions, and methods of treating.

Patent applications in these families, if granted, are expected to expire in 2038 or 2039, without taking potential patent term extensions or patent term adjustment into account.

As of February 1, 2022, we own or exclusively license (i) 2 patents and 1 pending non-provisional patent application in the United States (ii) 3 patents and more than 35 pending patent applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan) that relate to SL-279252.

These patents and applications originate from two different patent families.

Patents granted in another family, generally directed to methods of treating cancer with various combination agents, are expected to expire in the United States in 2039, without taking potential patent term extension or patent term adjustment into account.

The terms of individual patents granted in jurisdictions outside of the United States depends on the legal term for patents in those jurisdictions.

As of February 1, 2022, we own or exclusively license (i) more than 15 patents and 15 pending non-provisional patent applications in the United States and (ii) 3 patents and more than 100 pending patent applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan) that relate to the ARC platform.

As of February 1, 2022, these include patents and/or patent applications related to SL‑172154 and SL-279252 (described above) and other ARC compounds combining TIM3, PD‑1, SIRPα, TIGIT, CSF1R, VSIG8, or FLT3L with OX40, CD40L, 4-1BBL, or LIGHT.

These patents and applications originate from several different patent families.

Patents granted in families generally directed to compositions and methods of treating cancer are expected to expire in the United States in 2036, 2038, 2039, and 2040, depending on the family and without taking potential patent term extension or patent term adjustment into account.

Patents granted in other families, generally directed to methods of treating cancer with various combination agents, are expected to expire in the United States in 2038, 2039, and 2040, depending on the family and without taking potential patent term extension or patent term adjustment into account.

The terms of individual patents granted in jurisdictions outside of the United States depends on the legal term for patents in those jurisdictions.

GADLEN Platform

As of February 1, 2022, we (i) own 2 patents and 1 pending non-provisional patent application in the United States and (ii) more than 10 pending patent applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan) that relate to the GADLEN platform.

These patents and applications originate from a family generally directed to compositions and methods of treating cancer.

Patents granted in this family are expected to expire in the United States in 2040, without taking potential patent term extension or adjustment into account.

Trademark Protection

As of February 1, 2021, we owned a registered trademark for “ARC” and a pending trademark for “GADLEN” with the U.S.

As of February 1, 2022, we own a registered trademark and an allowed application for “ARC” and an allowed application for “GADLEN” with the U.S.

Patent and Trademark Office.

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We paid Heat an initial license fee of $50,000, and we are obligated to pay Heat fees upon receipt of certain sublicensing income, achievement of certain milestones, and royalties upon sales of commercial products.

The Heat license provides us rights in the patent family that arose from PCT/US16/54598 and is the source of ten granted U.S.

patents, and about 25 pending applications in the United States and various foreign jurisdictions and regions, including Australia, Brazil, Canada, China, Europe, Hong Kong, Indonesia, Israel, India, Japan, Korea, Mexico, Malaysia, Philippines, Russia, Saudi Arabia, Singapore, Thailand, Ukraine, and Vietnam.

The Heat license provides us rights in the patent family including PCT/US16/54598.

As of February 1, 2022, that family includes (i) 10 patents and 3 pending non-provisional patent applications in the United States, and (ii) 2 patents and more than 25 pending applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan).

We control prosecution, maintenance, and enforcement of this family of patents and patent applications.

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Biologics Regulation

In the United States, biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act, or FDCA, and the Public Health Service Act, and other federal, state, local, and foreign statutes and regulations.

In the United States, biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act, or FDCA, and the Public Health Service Act, or PHSA, and other federal, state, local, and foreign statutes and regulations.

The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following:

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An IND must become effective before human clinical trials may begin.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises safety concerns or questions about the proposed clinical trial.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day

period, raises safety concerns or questions about the proposed clinical trial.

In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin.

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The submission of a BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.

In addition, under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and

The Food and Drug Administration Safety and Innovation Act requires that a sponsor who is planning to submit a marketing application for a biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial pediatric study plan, or PSP, within sixty days after an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA.

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Fast track designation applies to the combination of the product and the specific indication for which it is being studied.

The sponsor of a fast track product has opportunities for more frequent interactions with the review team during product development and, once a BLA is submitted, the product may be eligible for priority review.

a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.

The sponsor of a fast track product has opportunities for more frequent interactions with the review team during product development and, once a BLA is submitted,

the product may be eligible for priority review.

A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.

A product intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review.

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Orphan drug designation must be requested before submitting a BLA.

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the

After the FDA grants

orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

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The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.

Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

Physicians may prescribe legally available

products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Failure to comply with these requirements can result in, among other things, adverse publicity,

warning letters, corrective advertising and potential civil and criminal penalties.

Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Such off-label uses are common across medical specialties.

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Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic 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 biologic.

A product shown to be biosimilar or interchangeable with an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness for the reference product

for approval, which can potentially reduce the cost and time required to obtain approval to market the product.

A product shown to be biosimilar or interchangeable with an FDA-approved reference

biological product may rely in part on the FDA’s previous determination of safety and effectiveness for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product.

Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.

In September 2021, the FDA issued two guidance documents intended to inform prospective applicants and facilitate the development of proposed biosimilars and interchangeable biosimilars, as well as to describe the FDA’s interpretation of certain statutory requirements added by the BPCIA.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.

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In July 2018, the FDA announced an action plan to encourage the development and efficient review of biosimilars, including the establishment of a new office within the agency that will focus on therapeutic biologics and biosimilars.

On December 20, 2020, Congress amended the Public Health Services Act, or PHSA, as part of the COVID-19 relief bill to further simplify the biosimilar review process by making it optional to show that conditions of use proposed in labeling have been previously approved for the reference product, which used to be a requirement of the application.

On December 20, 2020, Congress amended the PHSA as part of the COVID-19 relief bill to further simplify the biosimilar review process by making it optional to show that conditions of use proposed in labeling have been previously approved for the reference product, which used to be a requirement of the application.

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

Starting in March 2020, certain products currently approved as drugs under the FDCA, such as insulin and human growth hormone, will be deemed to be biologics under the PHSA, which means they may face competition through the biosimilars pathway and they will not be eligible for the twelve-year period of exclusivity granted to new BLAs.

As of March 2020, certain products previously approved as drugs under the FDCA, such as insulin and human growth hormone, are now deemed to be biologics under the PHSA, which means they may face competition through the biosimilars pathway and are not be eligible for the twelve-year period of exclusivity granted to new BLAs.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

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Such laws include, without limitation:

the federal Anti-Kickback Statute, the federal False Claims Act, HIPAA and similar foreign, federal and state fraud, abuse and transparency laws.

The federal Anti-Kickback Statute, or AKS, prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program.

the federal Anti-Kickback Statute, or AKS;

the federal False Claims Act, or FCA;

HIPAA and similar foreign, federal and state fraud, abuse and transparency laws.

The AKS prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program.

The term remuneration has been interpreted broadly to include anything of value.

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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.

Civil and criminal false claims laws, including the federal False Claims Act, or FCA, and civil monetary penalty laws, which can be enforced through civil whistleblower or qui tam actions, prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment of federal government funds, including in federal healthcare programs, that are false or fraudulent.

Civil and criminal false claims laws, including the FCA, and civil monetary penalty laws, which can be enforced through civil whistleblower or qui tam actions, prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment of federal government funds, including in federal healthcare programs, that are false or fraudulent.

Pharmaceutical and other healthcare companies have been prosecuted under these laws for engaging in a variety of different types of conduct that caused the submission of false claims to federal healthcare programs.

Under the AKS, for example, a claim resulting from a violation of the AKS is deemed to be a false or fraudulent

claim for purposes of the FCA.

Under the AKS,

for example, a claim resulting from a violation of the AKS is deemed to be a false or fraudulent claim for purposes of the FCA.

The FCA imposes mandatory treble damages and per-violation civil penalties up to approximately $23,000.

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The FDCA addresses, among other things, the design, production, labeling, promotion, manufacturing, and testing of drugs, biologics and medical devices, and prohibits such acts as the introduction into interstate commerce of adulterated or misbranded drugs or devices.

Public Health Service Act also prohibits the introduction into interstate commerce of unlicensed or mislabeled biological products.

The PHSA also prohibits the introduction into interstate commerce of unlicensed or mislabeled biological products.

federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information related to payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

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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 Federal Trade Commission Act.

In addition, certain state and non-U.S.

laws, such as the EU General Data Protection Regulation (Regulation (EU) 2016/679), or GDPR, govern the privacy and security of personal information, including health-related information, in certain circumstances.

In addition, state laws govern the privacy and security of personal information, including health-related information, in certain circumstances.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

For example, the CCPA, which went into effect on January 1, 2020, creates new data privacy obligations for covered companies and provides new privacy rights to California residents.

In Europe, the GDPR went into effect in May 2018 and increased responsibility and liability in relation to personal data that we process.

For example, it imposes a number of strict obligations and restrictions on the ability to process (which includes collection, analysis and transfer) personal data of individuals within the EU and in Iceland, Norway, and Liechtenstein (together with the EU the European Economic Area, or EEA), including health data from clinical trials and adverse event reporting.

The GDPR also includes requirements relating to the consent of the individuals to whom the personal data relate, the information provided to the individuals prior to processing their personal data or personal health data, notification of data processing obligations to the national data protection authorities, and the security and confidentiality of the personal data.

Further, the GDPR prohibits the

transfer of personal data to countries outside of the EU that are not considered by the European Commission to provide an adequate level of data protection except if the data controller meets specific requirements such as the use of standard contractual clauses, or SCC, issued by the EU Commission.

In this respect, recent legal developments in Europe have created complexity and compliance uncertainty regarding certain transfers of personal data from the EEA.

For example, on July 16, 2020, the Court of Justice of the European Union in its Schrems II decision invalidated the Privacy Shield under which personal data could be transferred from the EEA to United States entities who had self-certified under the Privacy Shield scheme.

The European Data Protection Board has adopted draft recommendations for data controllers and processors who export personal data to third countries regarding supplementary measures to ensure compliance with the GDPR when transferring personal data outside of the European Union.

These recommendations were submitted to public consultation until December 21, 2020, however it is unclear when and in which form these recommendations will be published in final form.

Moreover, it is uncertain whether the SCC will also be invalidated by the European courts or legislature.

Also in light of this uncertainty, the EU Commission has published a draft implementing decision on new SCC that, however, has not yet been officially adopted.

Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater.

Further, there is an increasing number of individuals whose personal data was processed to raise civil liability claims asserting non-compliance with the obligations under the GDPR.

Data protection authorities from the different EU Member States may still implement certain variations, enforce the GDPR and national data protection laws differently, and introduce additional national regulations and guidelines, which adds to the complexity of processing personal data in the EU.

Guidance developed at both EU level and at the national level in individual EU Member States concerning implementation and compliance practices is often updated or otherwise revised.

There is, moreover, a growing trend towards required public disclosure of clinical trial data in the EU which adds to the complexity of obligations relating to processing health data from clinical trials.

Such public disclosure obligations are provided in the new Regulation (EU) No 536/2014, EMA disclosure initiatives and voluntary commitments by industry.

Failing to comply with these obligations could lead to government enforcement actions and significant penalties against us, harm to our reputation, and adversely impact our business and operating results.

The uncertainty regarding the interplay between different regulatory frameworks, such as the Regulation (EU) No 536/2014 and the GDPR, further adds to the complexity that we face with regard to data protection regulation.

On December 24, 2020 the EU and the UK reached agreement on the EU-UK Trade and Cooperation Agreement that with respect to data protection provides for a further transition period of up to six months as of January 1, 2021 to enable the European Commission to complete its adequacy assessment of the UK’s data protection laws.

Accordingly personal data may continue to be transferred freely between the EU and UK during that specified period.

If no adequacy decision has been adopted by the EU Commission during such period, or if the UK makes changes to its data protection legal framework that is in place as of January 1, 2021 without the EU's consent, the transfer of personal data from the EU to the UK will only be permissible if EU data exporters take further steps to ensure adequacy for the protection of personal data, which may expose us to further compliance risk.

Additionally, following the UK's withdrawal from the European Union and the EEA, companies have to comply also with the UK’s data protection laws (including the GDPR as incorporated into UK national law), the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

Coverage and Reimbursement

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Decisions regarding whether to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.

Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor.

Further, no uniform policy for coverage and reimbursement

exists in the United States, and coverage and reimbursement can differ significantly from payor to payor.

Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations.

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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.

In addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage

and reimbursement for their companion pharmaceutical or biological products.

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.

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In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded health care programs, and increased governmental control of drug pricing.

The ACA, which was enacted in March 2010, substantially changed the way healthcare is financed by both governmental and private insurers in the United States, and significantly affected the pharmaceutical industry.

The Affordable Care Act, or the ACA, which was enacted in March 2010, substantially changed the way healthcare is financed by both governmental and private insurers in the United States, and significantly affected the pharmaceutical industry.

The ACA contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.

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

For example, the Tax Act was enacted, which, among other things, removes penalties for not complying with ACA’s requirement to carry health insurance, known as the “individual mandate,” effective January 1, 2019.

For example, the Tax Act was enacted, which, among other things, removes penalties for not complying with the ACA’s requirement to carry health insurance, known as the “individual mandate,” effective January 1, 2019.

Since the enactment of the Tax Act, there have been additional amendments to certain provisions of the ACA.

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District Court Judge that the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act.

The Supreme Court agreed to hear the case and a decision is expected by the Spring of 2021.

It is unclear how this and other efforts to repeal, replace or otherwise modify the ACA will impact reimbursement of pharmaceutical and biological products.

The Supreme Court heard the case but overturned the decision on the basis that the plaintiffs lacked standing and did not address the constitutionality.

The Supreme Court’s decision left open the opportunity for additional challenges to the ACA.

Other legislative changes have been proposed and adopted since the ACA was enacted, including automatic aggregate reductions of Medicare payments to providers of 2% per fiscal year as part of the federal budget sequestration under the Budget Control Act of 2011.

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In addition, the Bipartisan Budget Act of 2018, among other things, amended the Medicare Act (as amended by the ACA) to increase the point-of-sale discounts that manufacturers must agree to offer under the Medicare Part D coverage discount program from 50% to 70% off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs being covered under Medicare Part D.

Moreover, there has recently 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 and enacted federal and state measures designed to, among other things, reduce the cost of prescription drugs, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

For example, in May 2019, CMS adopted a final rule allowing Medicare Advantage Plans the option to use step therapy for Part B drugs, permitting Medicare Part D plans to apply certain utilization controls to new starts of five of the six protected class drugs, and requiring the Explanation of Benefits for Part D beneficiaries to disclose drug price increases and lower cost therapeutic alternatives beginning January 1, 2021.

methodologies for drug products.

In October 2020, the FDA issued guidance describing procedures for manufacturers to facilitate the importation of FDA-approved biologics manufactured abroad and originally intended for sale in a foreign country into the United States.

Additionally, on November 20, 2020, CMS issued an interim final rule implementing a Most Favored Nation (MFN) model that would cap the price Medicare can pay for a drug to the lowest price paid in an economically comparable country within the Organization for Economic Cooperation and Development.

The rule was slated to take effect on January 1, 2021, but federal courts have temporarily enjoined implementation of this rule, and the CMS has indicated that the MFN model will not be implemented without further rulemaking proceeding.

It is unclear whether or how the Biden administration will move

forward with the rule.

But if the new administration implements the rule in its current form and the rule survives judicial scrutiny, the MFN model will subject certain physician-administered drugs or biologicals identified by CMS as having the highest annual Medicare Part B spending to an alternative payment methodology based on international reference prices, with the list of products to be updated annually to add more products and products not to be removed absent limited circumstances.

Although the Biden administration has stayed the effective dates of some last-minute drug price regulations issued by the Trump administration, Congress and the Biden administration have each indicated that they will continue to seek new legislative and/or administrative measures to control drug costs.

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Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.

Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application, or a CTA, much like the IND prior to the commencement of human clinical trials.

Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

The requirements and process governing the conduct of clinical trials, including requirements to conduct additional clinical trials, product licensing, safety reporting, post-authorization requirements, marketing and promotion, interactions with healthcare professionals, pricing and reimbursement may vary widely from country to country.

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Regulation in the European Union

European Data Laws

The collection and use of personal health data and other personal information in the European Union is governed by the provisions of the European General Data Protection Regulation (EU) 2016/679, or the GDPR, which came into force in May 2018, and related implementing laws in individual EU Member States.

Under the GDPR, personal data can only be transferred to countries outside the EU Member States and the three additional European Economic Area, or EEA, countries (Norway, Iceland and Liechtenstein) that have adopted a national law implementing the GDPR if such cross-border transfers comply with specific conditions.

The GDPR imposes a number of strict obligations and restrictions on the ability to collect, analyze and transfer personal data of individuals within the EU and in the EEA, including health data from clinical trials and adverse event reporting.

The GDPR also includes requirements relating to (i) the consent of the individuals to whom the personal data relates, (ii) the information provided to such individuals prior to processing their personal data, (iii) data processing obligations to the national data protection authorities and (iv) the security and confidentiality of the personal data.

EU Member States may also impose additional requirements.

The GDPR increased responsibility and liability in relation to personal data that we process.

Failure to comply with the requirements of the GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines for noncompliance (up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater);

other administrative penalties and a number of criminal offenses (punishable by uncapped fines) for organizations and, in certain cases, their directors and officers;

and civil liability claims from individuals whose personal data was processed.

Guidance developed at both the EU level

and at the national level in individual EU Member States concerning implementation and compliance practices are regularly updated or otherwise revised.

Moreover, there is a growing trend towards required public disclosure of clinical trial data in the EU, which adds to the complexity of obligations relating to processing health data from clinical trials.

Such public disclosure obligations are provided in the new EU Clinical Trials Regulation, European Medical Agency, or the EMA, disclosure initiatives and voluntary commitments by industry.

Failure to comply with these obligations could lead to government enforcement actions and significant penalties against us, harm to our reputation, and adversely impact our business and operating results.

The uncertainty regarding the interplay between different regulatory frameworks, such as the EU Clinical Trials Regulation and the GDPR, further adds to the complexity that we face with regard to data protection regulation.

With regard to the transfer of data from the EU to the United Kingdom, or UK, personal data may now freely flow from the EU to the UK since the UK is deemed to have an adequate data protection level.

Such adequacy decisions include a ‘sunset clause’ which entails that the decisions will automatically expire four years after their entry into force (June 2025).

Following the UK's withdrawal from the EU and the EEA, companies also have to comply with the UK’s data protection laws (including the GDPR as incorporated into UK national law).

Penalties under this regime are up to the greater of £17.5 million or 4% of global turnover.

Drug and Biologic Development Process

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The Clinical Trials Regulation introduces a complete overhaul of the existing regulation of clinical trials for medicinal products in the EU.

Currently it is not expected to come into force before December 2021.

Under the current regime, before a clinical trial can be initiated, it must be approved in each EU Member State where there is a site at which the trial is to be conducted.

It entered into force on January 31, 2022.

Under the current regime, which will expire after a transition period of three years (as outlined below in more detail), before a clinical trial can be initiated, it must be approved in each EU Member State where there is a site at which the trial is to be conducted.

The approval must be obtained from two separate entities:

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The Clinical Trials Regulation also aims to streamline and simplify the rules on safety reporting, and introduces enhanced transparency requirements such as mandatory submission of a summary of the clinical trial results to the EU Database.

The coming into effect of the Clinical Trials Regulation has been

postponed several times due to technical difficulties with the underlying IT systems that are still ongoing, but currently the “go live” of these systems and, accordingly, the coming into force of the regulation, is planned for December 2021.

After several postponements of the effective date of the Clinical Trials Regulation, or CTR, due to technical difficulties with the underlying IT systems, the “go live” date of these systems and, accordingly, the coming into force of the regulation, occurred on January 31, 2022.

The CTR foresees a three-year transition period.

Member States will work in CTIS immediately after the system has gone live.

For one year, until January 31, 2023, clinical trial sponsors can still choose whether to submit an initial clinical trial application in line with the current system (Clinical Trials Directive) or via CTIS.

After January 31, 2023, submission of initial clinical trial applications via CTIS becomes mandatory and by January 31, 2025, all ongoing trials approved under the current Clinical Trials Directive will be governed by the new Clinical Trials Regulation and have to be transitioned to CTIS.

Under both the current regime and the new Clinical Trials Regulation, national laws, regulations, and the applicable Good Clinical Practice and Good Laboratory Practice standards must also be respected during the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, or ICH, guidelines on Good Clinical Practice, or GCP, and the ethical principles that have their origin in the Declaration of Helsinki.

During the development of a medicinal product, the European Medical Agency, or EMA, and national regulators within the EU provide the opportunity for dialogue and guidance on the development program.

During the development of a medicinal product, the EMA and national regulators within the EU provide the opportunity for dialogue and guidance on the development program.

At the EMA level, this is usually done in the form of scientific advice, which is given by the Committee for Medicinal Products for Human Use, or CHMP, on the recommendation of the Scientific Advice Working Party, or SAWP.

A fee is incurred with each scientific advice procedure, but is significantly reduced for designated orphan medicines.

A fee is incurred with each scientific advice procedure, but is significantly reduced for

designated orphan medicines.

Advice from the EMA is typically provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical testing and clinical studies, and pharmacovigilance plans and risk-management programs.

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MAs have an initial duration of five years.

The authorization may subsequently be renewed for an unlimited period on the basis of a reevaluation of the risk-benefit balance unless the EC or the national competent authority grants only a five-year renewal on justified grounds relating to pharmacovigilance.

renewal on justified grounds relating to pharmacovigilance.

Applications for renewal must be made to the EMA at least nine months before the five-year period expires.

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However, a generic product cannot launch until two years later (or a total of 10 years after the first marketing authorization in the EU of the innovator product), or three years later (or a total of 11 years after the first marketing authorization in the EU of the innovator product) if the marketing authorization holder obtains marketing authorization for a new indication with significant clinical benefit within the eight-year data exclusivity period.

Additionally, another noncumulative one-year period of data exclusivity can be added to the eight years of data exclusivity where an application is made for a new indication for a well-established substance, provided that significant pre-clinical or clinical studies were carried out in relation to the new indication.

Another year of data exclusivity may be added to the eight years, where a change of classification of a pharmaceutical product has been authorized on the basis of significant pre-trial tests or clinical trials (when examining an application by another applicant for or holder of market authorization for a change of classification of the same substance the competent authority will not refer to the results of those tests or trials for one year after the initial chance was authorized).

Additionally, another noncumulative one-year period of data exclusivity can be added to the eight years of data exclusivity where an application is made for a new indication for a well-established substance, provided that significant preclinical or clinical studies were carried out in relation to the new indication.

Products may not be granted data exclusivity since there is no guarantee that a product will be considered by the European Union’s regulatory authorities to include a NCE.

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During the 10-year period of market exclusivity, with a limited number of exceptions, the regulatory authorities of the EU Member States and the EMA may not accept applications for marketing authorization, accept an application to extend an existing marketing authorization or grant marketing authorization for other similar medicinal products for the same therapeutic indication.

A similar medicinal product is defined as a medicinal product containing a similar active substance or substances as contained in a currently authorized orphan medicinal product, and which is intended for the same therapeutic indication.

A similar medicinal product is defined as a medicinal product containing a similar active substance or substances as

contained in a currently authorized orphan medicinal product, and which is intended for the same therapeutic indication.

An orphan medicinal product can also obtain an additional two years of market exclusivity for an orphan-designated condition when the results of specific studies are reflected in the Summary of Product Characteristics, or SmPC, addressing the pediatric population and completed in accordance with a fully compliant PIP.

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Failure by us or by any of our third-party partners, including suppliers, manufacturers and distributors to comply with EU laws and the related national laws of individual EU Member States governing the conduct of clinical trials, manufacturing approval, marketing authorization of medicinal products and marketing of such products, both before and after grant of marketing authorization, statutory health insurance, bribery and anti-corruption or other applicable regulatory requirements may result in administrative, civil or criminal penalties.

These penalties could include delays or refusal to authorize the conduct of clinical trials or to grant marketing authorization, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the marketing authorization, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

variation of the marketing authorization, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

The holder of a marketing authorization for a medicinal product must also comply with EU pharmacovigilance legislation and its related regulations and guidelines, which entail many requirements for conducting pharmacovigilance, or the assessment and monitoring of the safety of medicinal products.

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Direct-to-consumer advertising of prescription-only medicines is also prohibited in the European Union.

Violations of the rules governing the

promotion of medicinal products in the European Union could be penalized by administrative measures, fines and imprisonment.

Violations of the rules governing the promotion of medicinal products in the European Union could be penalized by administrative measures, fines and imprisonment.

These laws may further limit or restrict the advertising and promotion of our products to the general public and may also impose limitations on its promotional activities with healthcare professionals.

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Other Markets

The EU and the United Kingdom have concluded a trade and cooperation agreement, or TCA, which has been provisionally applicable since January 1, 2021.

The TCA was ratified by the UK Parliament on December 30, 2020 and awaits the final agreement of the remaining 27 EU member states.

The TCA includes provisions affecting pharmaceutical businesses, including the mutual recognition of Good Manufacturing Practice, or GMP, inspections of manufacturing facilities for medicinal products and GMP documents issued.

The UK formally left the EU on January 31, 2020 and the transition period, during which EU laws continued to apply to the UK, expired on December 31, 2020.

This means EU laws now only apply to the UK in respect of Northern Ireland as laid out in the Protocol on Ireland and Northern Ireland.

Following the end of the transition period, the EU and the UK concluded the TCA, which applied provisionally from January 1, 2021 and entered into force on May 1, 2021.

The TCA includes provisions affecting the life sciences sector (including on customs and tariffs) but areas for further discussion between the EU and the UK remain.

Some specific provisions concerning pharmaceuticals are in place, including the mutual recognition of Good Manufacturing Practice, or GMP, and issued GMP documents.

The TCA does not, however, contain wholesale mutual recognition of UK and EU pharmaceutical regulations and product standards.

In addition, the UK government has introduced the Medicines and Medical Devices Bill 2019 – 2021 which addresses, among others, the fields of human medicines and clinical trials of human medicines.

The purpose of the bill is to enable existing regulatory frameworks to be updated including the Human Medicines Regulations 2012, the Medicines for Human Use (Clinical Trials) Regulations 2004, the Medicines (Products for Human Use) Regulations 2016 and limited parts of the Medicines Act 1968.

The bill has been agreed by both Houses of the UK Parliament and it currently awaits Royal Assent, which is the final stage before a bill becomes law.

Since January 1, 2021, the EU laws which have been transposed into UK law through secondary legislation continue to be applicable in the UK as “retained EU law.” As there is no general power to amend these regulations, the UK government has enacted the Medicines and Medical Devices Act 2021.

The purpose of the act is to enable the existing regulatory frameworks in relation to human medicines, clinical trials of human medicines, veterinary medicines and medical devices to be updated.

The powers under the act may only be exercised in relation to specified matters and must safeguard public health.

Specified provisions of the Medicines and Medical Devices Act 2021 entered into force on February 11, 2021.

The remaining provisions came into effect within two months of February 11, 2021 or will otherwise come into effect as stipulated in subsequent statutory instruments.

The Medicines and Medical Devices Act 2021 supplements the UK Medical Devices Regulations 2002, or the UK Regulations, which are based on the EU Medical Devices Directive as amended to reflect the UK’s post-Brexit regulatory regime.

Notably, the UK Regulations do not include any of the revisions that have been made by the EU Medical Devices Regulation (EU) 2017/745, which, since May 26, 2021, now applies in all EU Member States.

The UK’s Medicines and Healthcare products Regulatory Agency, or MHRA, conducted a comprehensive consultation between September and November 2021 on proposals to develop a new UK regime for medical devices in the UK.

The proposals include more closely aligning definitions for medical devices and in vitro medical devices with internationally recognized definitions and changing the classification of medical devices according to levels or risk.

The proposals are intended to improve patient and public safety and increase the appeal of the UK market.

The new regime is planned to come into force on July 1, 2023, which will align with the date from which the UK is due to stop accepting CE marked medical devices and require UK Conformity Assessed marking.

It is envisaged that, in Northern Ireland, the amended regime could run in parallel with any existing or future EU rules in accordance with the Protocol on Ireland and Northern Ireland.

For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

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As of December 31, 2021, Shattuck employed 85 full-time employees at two locations in the United States, including Austin, TX and Durham, NC.

The Durham facility includes an approximately 6,000 square foot annex where a pilot plant facility is under construction to support in-house cGMP manufacturing.

During 2021, we expanded our capabilities across the two sites by hiring 37 new employees.

These employees were hired to support our clinical development, preclinical research and development, and efforts associated with operating as a public company.

We expect to continue to hire additional employees in 2021 and beyond with a focus on expanding our in-house general and administrative functions, as well as increasing expertise and bandwidth in clinical and preclinical research and development.

We expect to continue to hire additional employees in 2022 and beyond with a focus on increasing expertise and bandwidth in preclinical and clinical research and development and in-house process development and manufacturing, as well as expanding our in-house general and administrative functions.

The Company continually evaluates business needs and opportunities, with a hiring philosophy that balances in-house expertise with outsourced services.

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Shattuck supports our employees’ further development with individualized development plans, mentoring, coaching, group training and conference attendance.

Response to COVID-19

Throughout the COVID-19 pandemic, Shattuck has supported our employees and government efforts to curb the effects of COVID-19 through a multifaceted communication, infrastructure, and behavior modification and enforcement effort by:

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

• Decreasing density and increasing physical distancing in workspaces for employees working onsite by scheduling adjustments and adding work from home flexibility;

• Adjusting attendance policies to encourage those who are sick to stay home;

• Implementing protocols to address actual and suspected COVID-19 cases and potential exposure and

• Implementing mask policies at our facilities.

Research and Development

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Our corporate offices are located at 500 W.

11th Street, Suite 100, Austin, Texas 78703 and 21 Parmer Way, Suite 200, Durham, North Carolina 27709 and our telephone number is (919) 864-2700.

5th Street, Suite 1200, Austin, Texas 78701 and 21 Alexandria Way, Suite 200, Durham, North Carolina 27709 and our telephone number is (512) 900-4690.

Our website address is www.shattucklabs.com.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business