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Item 1. Business

2025-03-27 compared with 2024-02-29 · 429 added, 535 removed, 434 unchanged (69% 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 have created a novel approach to immune modulation by designing biologics with structural characteristics that may not be achievable by existing therapeutic modalities, including monoclonal or bispecific antibodies.

Our ARC® platform was designed to simultaneously inhibit checkpoint molecules and activate costimulatory molecules with a single therapeutic as a potential treatment for cancer.

We also have at varying stages of preclinical development, dual-sided fusion proteins, distinct from our Agonist Redirected Checkpoint (“ARC”) platform, that have therapeutic potential in autoimmune and inflammatory diseases, among other therapeutic areas.

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 solid and hematologic tumors, with multiple ongoing clinical trials.

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

W e are also evaluating SL-172154 in an ongoing Phase 1B clinical trial for the treatment of patients with certa in hematologic malignancies, including acute myeloid leukemia (“AML”), and higher-risk myelodysplastic syndromes (“HR-MDS”).

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

We believe that data shared to date in human cancer patients demonstrate 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, demonstrated by unique pharmacodynamic findings, as compared to monoclonal or bispecific antibodies.

Further, clinical data generated with our ARC platform has guided our preclinical research efforts to further expand our pipeline, and we are advancing certain potential product candidates through preclinical development.

We expect to nominate one or more additional product candidates to our clinical pipeline in the future, potentially for indications outside of oncology, by selecting product candidates where there is an expectation of monotherapy efficacy and where our scientific and protein engineering expertise has led to a product candidate with advantages over current treatment modalities.

In February 2024, we announced a strategic collaboration and license agreement (the “Ono Agreement”) with Ono Pharmaceutical Co., Ltd.

(“Ono”) in which we will lead research and preclinical development of certain compounds selected by Ono from our pipeline of bifunctional fusion proteins to a pair of prespecified targets for potential treatment of autoimmune and inflammatory diseases.

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 pharmacodynamic evidence of potent CD40 activation in human cancer patients.

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

We completed the Phase 1A dose-escalation portion of this clinical trial in 2023 and are currently enrolling patients in the Phase 1B expansion cohorts evaluating SL-172154 in combination with azacitidine in frontline HR-MDS or frontline TP53 mutant (“TP53m”) AML.

In AML patients without TP53 mutations (“TP53 wild type”, or “TP53wt”), we intend to study SL-172154 in combination with azacitidine and venetoclax.

In December 2023, we shared initial data from both the HR-MDS and TP53m AML Phase 1B combination cohorts.

In the frontline HR-MDS cohort, as of the data cutoff date of December 1, 2023, out of 14 evaluable patients, five patients achieved a complete response (“CR”) and f our patients achieved a marrow complete response (“mCR”).

In the frontline TP53m AML cohort, as of the data cutoff date of December 1, 2023, out of 11 evaluable patients, two patients achieved a CR, and another patient achieved a complete response with incomplete hematologic recovery (“ CRi”) and was taken to allogeneic hematopoietic stem cell transplantation (“allo-HSCT”).

As of the cutoff date of December 1, 2023, SL-172154 had an acceptable safety and tolerability profile at 3 mg/kg in combination with azacitidine.

After completing enrollment in the initial Phase 1B combination expansion cohorts in HR-MDS or TP53m AML patients in 2023, and on the basis of the encouraging

initial data, we are further expanding both cohorts to generate additional data and to inform our subsequent clinical trial plans.

We expect to announce additional data from the HR-MDS and TP53m AML Phase 1B combination cohorts mid-year 2024.

We are also conducting a Phase 1B clinical trial evaluating SL-172154 in patients with platinum-resistant ovarian cancer (“PROC”) .

This Phase 1B clinical trial contains two combination expansion cohorts combining SL-172154 with either pegylated liposomal doxorubicin (“PLD”), or mirvetuximab soravtansine (“mirvetuximab” or, “Elahere”).

In November 202 3 , we announced initial data from our ongoing Phase 1B clinical trial expansion cohort evaluating SL-172154 in combination with PLD.

As of the data cutoff date of October 31, 2023, we had 11 patients evaluable for response, and we observed one confirmed partial response (“PR”) and two unconfirmed PRs.

As of the data cutoff of October 31, 2023, SL-172154 had an acceptable safety and tolerability profile at 3 mg/kg in combination with PLD.

We expect to announce additional data from the Phase 1B cohort in combination with PLD mid-year 2024 and initial data from the Phase 1B cohort in combination with mirvetuximab mid-year 2024.

The following table highlights our clinical-stage pipeline:

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

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.

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 (“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.

ARC compounds consolidate checkpoint blockade and immune costimulation within a single therapeutic.

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 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

The unique dual-sided structure of our ARC compounds allows us to simultaneously and effectively target a wide array of pathways for the creation of a deep and differentiated product pipeline.

We utilize our understanding of disease pathology and immune dysfunction to identify pairings of optimal domains.

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

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

• Target specificity, high affinity, and high avidity

• Replacing tumor immune evasion with potent immune stimulation

• Versatility

• Speed from concept to compound to clinic

• Accelerated lead selection process

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

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 (“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.

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, 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.

We believe that the totality of our clinical data generated to date, from multiple ARC-derived product candidates and across multiple indications, provide strong evidence that our ARC compounds can uniquely activate members of the TNF

superfamily by addressing certain structural properties of these receptors.

For example, our clinical data demonstrate that high levels of receptor occupancy of CD40 are achievable with an ARC, and that the “bell shaped” dose-response curve observed with antibodies was not seen in humans treated with SL-172154.

Instead, we believe that the pharmacodynamic data indicate that SL-172154 may more effectively activate CD40-dependent pharmacodynamic effects in human cancer patients, in a manner that allows this pathway to be appropriately drugged and may provide benefit in the treatment of cancer patients.

Figure 2—Antibody Therapies Lead to Inefficient TNF Pathway Activation

Versatility of the Platform

The modularity of our dual-sided fusion protein platforms, including our ARC platform, facilitates a vast repertoire of potential dual-sided fusion proteins that can be synthesized and developed.

In the human genome, there are more than 1,400 Type 1 membrane proteins, which are characterized by an extracellular amino terminal domain, and more than 450 Type 2 membrane proteins, which are characterized by an extracellular carboxy terminal domain.

ARC compounds are assembled from any combination of Type 1 and Type 2 membrane proteins and, therefore, have significant diversity, with more than 630,000 possible combinations.

Within this vast set of possible combinations, we have chosen to focus initially on three classes of targets that have already shown significant clinical relevance for the treatment of cancer comprising immune checkpoints, the TNF superfamily, and cytokines.

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

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 platform and protein engineering expertise to create novel therapeutics to treat patients who lack effective treatment options.

We are a biotechnology company specializing in the development of potential treatments for inflammatory and immune-mediated diseases.

We are developing a potentially first-in-class antibody for the treatment of inflammatory bowel disease ("IBD") and other inflammatory and immune-mediated diseases.

Our expertise in protein engineering and the development of novel tumor necrosis factor ("TNF") receptor therapeutics come together in our lead program, SL-325, which we believe could be a first-in-class death receptor 3 ("DR3") antagonist antibody.

SL-325 is a high-affinity DR3 blocking monoclonal antibody.

In our head-to-head preclinical studies, SL-325 blocked TL1A binding to DR3 better than sequence equivalents of leading TL1A blocking antibodies.

We believe that the underlying biological differences in the expression of DR3 and TL1A, and the design characteristics of SL-325, may allow SL-325 to achieve best-in-class clinical remission rates in patients with IBD due to a more complete and durable blockade of the clinically validated DR3/TL1A pathway.

TL1A is the sole known signaling ligand for DR3, and TL1A does not signal through any other receptors.

Thus, we believe that the clinical safety profile of TL1A blocking antibodies generated to date in clinical trials conducted by other parties derisks the clinical safety profile for DR3 blockade.

The lack of toxicity of SL-325 in our recently completed non-human primate (“NHP”) toxicology study also suggests a potentially favorable clinical safety profile.

We engineered SL-325 to lack any Fc gamma receptor binding function, and SL-325 has not shown any evidence to date of antibody dependent cellular cytotoxicity or cellular phagocytosis, which further supports a potentially derisked safety profile.

We have demonstrated that SL-325 binds an epitope on DR3 that does not trigger receptor-mediated endocytosis, and the binding of SL-325 to DR3 was shown to be highly durable in our preclinical assays.

Because DR3 is expressed on circulating, peripheral blood lymphocytes, we are able to directly measure DR3 receptor occupancy (“RO”), and our preclinical studies suggest that blockade may last for at least one month as a result of the properties of SL-325 and the stable expression of DR3.

The RO and pharmacokinetic (“PK”) profile of SL-325 suggests extended dosing intervals, which we intend to further characterize in our upcoming Phase 1 clinical trial.

Finally, the human protein decoy receptor 3 (“DcR3”) neutralizes soluble TL1A, Fas Ligand and LIGHT, which all induce a proinflammatory immune response.

DcR3 serves as a sink for these proteins, tempering the proinflammatory immune signaling.

Thus, it is desirable to block DR3, but not DcR3, to preserve the natural anti-inflammatory role of DcR3.

SL-325 binds to DR3 but not to DcR3.

DR3 has a distinct expression pattern from TL1A, and, consequently, blocking the receptor may allow a more complete and durable blockade of the axis, which we believe will translate to improved efficacy in patients with IBD.

DR3 and TL1A have distinct expression patterns within the gastrointestinal tract (“GI”) of patients with IBD, including both ulcerative colitis (“UC”) and Crohn’s disease (“CD”).

The cells within the GI tract that are capable of expressing TL1A include tissue resident antigen presenting cells and other non-hematopoietic cells.

While TL1A is not usually expressed, when antigen presenting cells are exposed to inflammatory signals, a wave of TL1A mRNA expression begins, which peaks within 12 hours and ceases within 24 hours.

In contrast, DR3 is stably expressed, primarily by lymphocytes both in the peripheral blood and in tissues.

Direct comparison of TL1A and DR3 expression in the GI tracts of patients with IBD shows that TL1A is only upregulated in the actively inflamed areas of the GI tract.

In contrast, DR3 is more abundant than TL1A and is upregulated in both actively inflamed parts of the GI tissue and in the adjacent non-inflamed tissue.

The absence of TL1A in the non-inflamed areas of the bowel eliminates the mechanism through which TL1A blocking antibodies would be retained in non-inflamed areas of the GI tract.

Because inflammation observed in UC and CD can wax and wane in different areas of the bowel over time, stable blockade of DR3 may reduce the spread of inflammation and may contribute to higher rates of clinical and endoscopic remission than what TL1A blocking antibodies have achieved to date.

We are planning initial clinical development of SL-325 in patients with IBD, including UC and CD.

The clinical success of several TL1A blocking antibodies to date suggests that SL-325 may have monotherapy disease modifying activity early in clinical development.

As described above, we believe that targeting DR3 may be more efficacious than targeting TL1A in patients with IBD.

We expect to file an Investigational New Drug ("IND") application for SL-325 in the third quarter of 2025, and we expect to complete enrollment in the Phase 1 clinical trial in the second quarter of 2026.

Future clinical trials may explore the efficacy of SL-325 in other inflammatory and immune-mediated diseases where the DR3/TL1A axis is implicated.

Our lead product candidate, SL-325, is a monoclonal antibody that is designed to bind to DR3 and inhibit its interaction with its ligand, TL1A.

We have completed an IND-enabling, good laboratory practices (“GLP”) toxicity study to evaluate the safety and tolerability of SL-325 in NHPs.

We plan to conduct a single ascending dose and multiple ascending dose Phase 1 clinical trial in healthy volunteers to evaluate the safety, tolerability, and pharmacokinetics of SL-325, and to establish the Phase 2 dose and dosing schedule.

We expect to file an IND in the third quarter of 2025, and we expect to complete enrollment in the Phase 1 clinical trial in the second quarter of 2026.

In addition to SL-325, we are developing SL-425, a half-life extended version of SL-325.

We are also developing multiple preclinical DR3-based bispecific antibodies, which are designed to inhibit both the DR3/TL1A axis and another biologically relevant target for the treatment of patients with IBD.

The following table highlights our pipeline:

Our goal is to develop first-in-class immune therapies that improve the quality of life and extend the survival of patients with debilitating and deadly inflammatory and immune-mediated diseases.

We plan to achieve this by utilizing our experience in developing TNF receptor agonist and antagonist therapies, our protein design and engineering expertise, and our proven track record of advancing novel biologics into clinical development.

Key elements of our strategy include:

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

• Leveraging our ARC platform to rapidly advance additional product candidates into clinical development

• Applying our clinical learnings from our ARC platform in oncology to identify, develop, and advance novel fusion protein compounds in autoimmune and inflammatory diseases, among other therapeutic areas

• Continuing to augment our fusion protein manufacturing capabilities

• Rapidly advancing SL-325 into and through clinical development and marketing approval;

• Leveraging our leading position with DR3 blocking antibodies to advance additional bispecific antibody candidates into clinical development;

• Applying our protein engineering and TNF receptor biology expertise to identify, develop, and advance novel biologic compounds in inflammatory and immune-mediated diseases;

• Continuing to augment our internal research and technical operations capabilities;

• Collaborating with leading biopharmaceutical companies;

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

• Building on our culture of research and development excellence;

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

Our ARC Product Candidate

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

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, antibody-dependent cellular phagocytosis (“ADCP”)-competent antibodies, antibody drug conjugates, and others.

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.

We believe that our preclinical and initial clinical data from both our Phase 1A and Phase 1B clinical trials in PROC and Phase 1A/B clinical trial in HR-MDS and AML 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 toxicities due to anemia or thrombocytopenia

Acute Myeloid Leukemia and Higher-Risk Myelodysplastic Syndromes

Clinical Data to Date

In December 2023, we announced initial data from the Phase 1B portion of our ongoing Phase 1A/B clinical trial evaluating SL-172154 in combination with azacitidine in frontline HR-MDS and TP53m AML.

As of the data cutoff date of December 1, 2023, we had enrolled 22 patients with previously untreated HR-MDS.

14 of these patients were evaluable for response (13 of whom had TP53m or deletion), of which five patients achieved a CR, four patients achieved a mCR (three with hematologic improvement in at least one lineage), and two patients achieved stable disease (“SD”) (both with hematologic improvement in at least one lineage).

Figure 3 below depicts both the interim maximum percent reductions in bone marrow blasts from baseline and the interim best response in individual patients with HR-MDS as of December 1, 2023.

Figure 3 — Interim Response Assessment & Percent Reductions in Bone Marrow Blasts in HR-MDS Patients

As of the data cutoff date of December 1, 2023, we had enrolled 14 patients with previously untreated TP53m AML.

11 of these patients were evaluable for response, and two patients had achieved a CR and another patient achieved a CRi and was taken to allo-HSCT.

Seven additional patients with stable disease had blast reductions, five of which had recovery of platelets or neutrophils and remain on study and their response may improve.

Blast count reductions were observed in 100% of these patients.

One patient died during the first cycle.

The left panel of Figure 4 below, depicts the kinetics of bone marrow blast reductions from baseline in individual patients with TP53m AML as of December 1, 2023.

The right panel of Figure 4 below depicts both the interim maximum percent reductions in bone marrow blasts from baseline and the interim best response in individual patients with TP53m AML as of December 1, 2023.

Figure 4 — Kinetics of Bone Marrow Blast Reduction and Interim Response Assessment in TP53 Mutant AML Patients

As of the data cutoff date of December 1, 2023, SL-172154 had an acceptable safety and tolerability profile.

Infusion-related reactions (“IRRs”) were the most common SL-172154 related treatment-emergent adverse events (“TEAEs”).

In the HR-MDS and TP53m AML cohorts, IRRs were reported in seven patients (32%) and seven patients (50%) respectively.

Grade 3 or 4 adverse events (“AEs”) related to SL-172154 were reported in four patients (18%) in HR-MDS and two patients (14%) in TP53m AML, including;

IRR (2), aspartate aminotransferase (“AST”) increased (1), alanine aminotransferase (“ALT”) increased (1), fatigue (1), hypoxia (1), pneumonia (1), chondrocalcinosis (1), and febrile neutropenia (1).

There were no reports of destructive anemia.

In the TP53m AML expansion cohort, there was one Grade 5 AE of cardiac arrest reported in one patient with history of coronary artery disease, recent arrhythmia, and hypokalemia in the setting of amiodarone use.

In the HR-MDS cohort, there were no Grade 5 AEs related to SL-172154 reported.

Additionally, in December 2023, in a poster at the American Society for Hematology annual meeting, we announced data from the Phase 1A parallel staggered dose escalation trial of SL-172154 as monotherapy and in combination with azacitidine in primarily relapsed/refractory (“R/R”) AML and HR-MDS patients.

As of the data cut-off date of September 15, 2023, 32 adult patients with R/R AML or HR-MDS received SL-172154 as monotherapy or in combination with azacitidine in the parallel staggered dose-escalation portion of a Phase 1A/B clinical trial.

Patients had a median of two prior lines of therapy.

An additional five subjects with frontline TP53m HR-MDS received SL-172154 with azacitidine.

We observed a monotherapy response in a heavily pre-treated R/R AML patient.

This patient achieved a morphologic leukemia-free state and subsequently proceeded to allo-HSCT.

Anti-tumor activity was also observed in combination with azacitidine in previously untreated TP53m HR-MDS patients.

Out of four evaluable previously untreated TP53m HR-MDS patients, there was one CR and one mCR.

Two patients, one with mCR and one with SD, proceeded to allo-HSCT.

Additionally, we observed SL-172154 bound to both healthy immune cells and myeloid blast cells in bone marrow biopsies collected after intravenous infusion of SL-172154, as shown in Figure 5 below.

Figure 5 — SL-172154 Binding to Leukemic Blasts, T Cells and Monocytes in Patient Bone Marrow Biopsies

Clinical Development Strategy and Upcoming Milestones

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 with azacitidine.

We completed the Phase 1A dose-escalation portion of this trial and subsequently completed enrollment in the initial Phase 1B expansion cohorts in combination with azacitidine in TP53m AML and HR-MDS patients during 2023.

The Phase 1A dose-escalation portion of our clinical trial was primarily conducted in patients with R/R AML or HR-MDS, included both monotherapy SL-172154 cohorts and SL-172154 plus azacitidine combination cohorts, and supported selection of 3 mg/kg as the appropriate dose to explore in the Phase 1B expansion cohorts.

The initial Phase 1B expansion cohorts were conducted in patients with previously untreated TP53m AML or HR-MDS, using the 3 mg/kg dose of SL-172154 in combination with azacitidine.

Based on the initial safety and efficacy profile, we amended the protocol for both the TP53m AML and HR-MDS cohorts to add additional patients to strengthen our confidence in the safety and efficacy profile and to further inform our future clinical trial plans.

In TP53wt AML, we plan to evaluate SL-172154 in combination with both azacitidine and venetoclax.

Azacitidine plus venetoclax is the standard of care for frontline TP53wt AML patients.

We believe there may be an opportunity for the addition of SL-172154 to azacitidine plus venetoclax to differentiate from the current standard of care.

We expect to announce additional data from the Phase 1B expansion cohorts in previously untreated TP53m AML and HR-MDS, including safety, objective response rates and initial response durability mid-year in 2024.

Platinum-Resistant Ovarian Cancer

Clinical Data to Date

In November 2023, we announced initial data from our ongoing Phase 1B combination clinical trial evaluating SL-172154 in combination with PLD in PROC.

As of the data cutoff date of October 31, 2023, we had enrolled 16 patients with PROC.

11 of these patients were evaluable for efficacy, and we observed one confirmed PR and two unconfirmed PRs.

Patients had a median of 1.5 prior lines of systemic therapy, 88% were resistant to treatment with frontline platinum, 47% had bulky disease measuring >5 cm, and 56% were pre-treated with bevacizumab.

As of the cutoff date, the patient population treated was similar to the population enrolled in the Pfizer-sponsored JAVELIN Ovarian 200 clinical trial (results published in 2021), wherein PLD monotherapy provided an overall response rate of 4%.

Another clinical trial, the Roche-sponsored Aurelia trial (subgroup analysis published in 2014), provided for a 7.8% overall response rate for PLD monotherapy.

Figure 6 below depicts the interim best percent change in the size of the target lesion, as well as interim best response, in individual patients with PROC, as of October 31, 2023.

Figure 6 — Interim Response Assessment and Percent Change in Tumor Diameter in PROC Patients Treated with SL-172154 in Combination with PLD

As of the cutoff date of October 31, 2023, SL-172154 in combination with PLD had an acceptable safety profile and is consistent with the safety profile of the individual agents.

Among the 16 treated patients, the most common SL-172154-related AEs were IRRs, nausea, fatigue, headache and neutropenia, mostly in Grades 1 or 2.

SL-172154-related AEs in Grades 3 or 4 were observed in six patients:

anemia (n=2), AST increased (n=2), neutropenia (n=2), ALT increased (n=1), embolism (n=1) and thrombocytopenia (n=1).

SL-172154-related IRRs occurred in four patients but were manageable and did not prevent the completion of dosing or lead to discontinuation.

There were no Grade 5 adverse events.

In June 2023, in a poster presented at the American Society of Clinical Oncology annual meeting, we announced data from our Phase 1A monotherapy dose escalation clinical trial in PROC As of the data cutoff of January 3, 2023, 27 patients with PROC had been enrolled, with ovarian (70%), fallopian tube (15%) or primary peritoneal (15%) cancer.

These patients had a median of four prior systemic therapies (range two to nine).

As of a data cutoff date of January 3, 2023, 10 mg/kg was defined as the maximum administered dose, and a maximum tolerated dose was not reached.

As of the data cutoff of January 3, 2023, SL-172154 as monotherapy had an acceptable safety and tolerability profile.

We observed a single dose-limiting toxicity of elevated liver enzymes in a single patient at the 10mg/kg dose level.

We also frequently observed infusion-related reactions, which were manageable by slowing the rate of infusion and/or by the administration of certain premedication(s).

Grade 3/4 treatment-related AEs in greater than one patient were AST increased (G3) and lymphopenia (G4), each in 2 patients (7%);

all were fully resolved with no dose modifications.

There were no fatal AEs, no AEs that led to drug discontinuation and no events of cytokine release syndrome.

The frequency of IRR events increased with increasing dose, and slowing the rate of infusion was utilized for mitigation.

Importantly, however, we have not observed dose-limiting toxicities due to hemolytic anemia, thrombocytopenia or other cytopenias (toxicities which have limited the development of some CD47 inhibitors).

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.

Clinical Development Strategy and Upcoming Milestones

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.

We completed the Phase 1A monotherapy dose-escalation clinical trial in patients with PROC in 2023.

In this clinical trial, we reached a maximum administered dose of 10 mg/kg.

We did not reach a maximum tolerated dose.

Also in 2023, we completed initial enrollment to the Phase 1B dose-expansion portion of our clinical trial in PROC evaluating SL-172154 in combination with PLD.

We have selected a starting dose of 3 mg/kg of SL-172154 in this trial.

Our protocol allows for further dose escalation in the combination, if warranted.

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

According to the literature, PLD upregulates calreticulin, an endogenous “eat me” signal, on the surface of tumor cells.

Consequently, we believe that PLD is an attractive combination partner due to upregulation of calreticulin and induction of immunogenic cell death.

In in vivo preclinical studies, we observed improved anti-tumor activity with the combination of PLD and SL-172154 compared to PLD alone or SL-172154 alone.

Furthermore, because the overall response rate of this patient population to PLD is approximately 4-8%, there is significant opportunity for improved response rates in combination with SL-172154, wherein we believe the contribution of SL-172154 will be discernible.

In addition to our combination strategy of SL-172154 in combination with PLD, we are evaluating SL-172154 in a Phase 1B combination dose-escalation and dose-expansion clinical trial in PROC in combination with mirvetuximab soravtansine, marketed by AbbVie, Inc (“AbbVie”) as Elahere.

Mirvetuximab soravtansine is an antibody-drug conjugate (“ADC”) targeting folate receptor alpha (“FRα”) which provides for both direct tumor cell killing as well as enhanced macrophage phagocytosis through binding with Fc gamma receptors, and has received accelerated approval for PROC patients whose tumors are shown to be FRα positive, defined as ≥75%, as determined by the VENTANA FOLR1 (FOLR1-2.1) Assay, using the PS2+ scoring method.

Pre-clinical studies have shown that both of these mechanisms may be complementary to the mechanism of SL-172154 by enhancing the activity of macrophages to phagocytose FRα- expressing ovarian cancer cells, and that SL-172154 may broaden the activity of mirvetuximab soravtansine, particularly for patients with tumors that express lower levels of FRα.

We intend to enroll patients with broader FRα expression, including those with “high” (greater than ≥75% of tumor cells staining with 2+ intensity), “medium” (≥50% to <75% of tumor cells staining with 2+ intensity), and “low” (≥25% to <50% of tumor cells staining with 2+ intensity) expression of FRα, as determined by the VENTANA FOLR1 (FOLR1-2.1) Assay, using the PS2+ scoring method.

Based on our preclinical data, we believe that the addition of SL-172154 to mirvetuximab soravtansine will increase responses rates in the “medium” and “low” expressors of FRα and/or potentially provide a more durable response across the entire spectrum of FRα expressors.

We expect to announce data for both the PLD and mirvetuximab soravtansine combination trials in 2024.

We expect to announce data, including topline overall response rate and an initial look at duration of response, from the Phase 1B combination clinical trial with PLD mid-year 2024.

We also expect to announce initial data from the Phase 1B combination clinical trial with mirvetuximab soravtansine mid-year 2024.

SL-172154 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 multiple anti-cancer cytokines in both non-human primates and by human lymphocytes

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

• 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.

As shown in Figure 7 below, consistent with the mechanism of action of CD47 blocking agents, SL-172154 significantly enhanced the ability of macrophages to phagocytose tumor cells in the presence of tumor-targeted ADCP-competent antibodies.

Additionally, SL-172154 potentiated macrophage-mediated phagocytosis of tumor cells that expressed calreticulin, a well-established “eat me” signal expressed on the surface of cells marked for phagocytosis.

Figure 7 — Tumor Phagocytosis Activity of SIRPα-Fc-CD40L with or without ADCP-competent Antibodies

Human monocyte derived macrophages were co-cultured with HCC1954, A431, HCC827, or Caov-3 cells in the presence of an IgG negative control, SL-172154, an ADCP-competent tumor-targeted antibody, including Trastuzumab or Cetuximab, or the combination of SL-172154 and the ADCP-competent tumor-targeted antibody.

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

We also performed standard in vitro tumor cell phagocytosis assays to demonstrate whether SL-172154 enhanced macrophage-mediated phagocytosis across a range of tumor cells expressing varying levels of FRα expression, both alone and

in combination with mirvetuximab soravtansine, an ADC composed of a FRα-binding antibody, cleavable linker, and the maytansinoid payload DM4, a potent tubulin-targeting agent, designed to kill the targeted cancer cells.

As shown in Figure 8 below, consistent with the mechanism of action of CD47 blocking agents, SL-172154 significantly enhanced the ability of macrophages to phagocytose tumor cells in the presence of mirvetuximab soravtansine.

Figure 8 — In Vitro Tumor Phagocytosis Activity of SIRPα-Fc-CD40L with or without Mirvetuximab Soravtansine

Ovarian cancer cells KB, IGROV1, or MES-OV, that express varying levels of cell surface FRα were cultured with human monocyte derived macrophages in the presence of a vehicle control, SL-172154, mirvetuximab soravtansine, or the combination of SL-172154 and mirvetuximab soravtansine.

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

Preclinical Research and Development

Our facility in Durham, North Carolina, houses our research laboratory as well as our technical operations group.

This includes both expertise and infrastructure to advance novel biologics from discovery to cell line development, analytical and process development, and into production in our manufacturing pilot plant facility.

These internal capabilities have enabled development of additional potential product candidates from our ARC platform in oncology indications.

Further, these capabilities have led to collaborations with outside institutions, such as our studies to understand mechanisms of acquired resistance to checkpoint inhibitors with Memorial Sloan Kettering Cancer Center, Cancer Research UK, and Astra Zeneca, which were published in Cancer Cell in January 2024.

In addition, we have produced and studied multiple dual-sided fusion proteins for non-oncology indications, including dual-sided TNFR2-Fc, CTLA4-Fc and GLP1-Fc fusion proteins.

Another collaboration with Moderna was published in Cancer Research in February 2024, wherein the feasibility of delivering certain dual-sided fusion proteins as lipid-encapsulated mRNA was studied.

This work has informed our internal plans for advancing certain dual-sided fusion proteins in non-oncology indications, wherein mRNA/LNP based delivery methods may provide pharmacokinetic, pharmacodynamic and pharmacoeconomic advantages in comparison to traditional, intravenous delivery of recombinant proteins for chronic, non-lethal diseases.

Finally, the ARC platform was generated based on the goal of linking an immune checkpoint inhibitor to a TNF superfamily ligand.

This expertise in TNF ligand and receptor biology has provided a basis to develop other potential product candidates to inhibit certain TNF receptors, including TNFRSF25.

Our Lead Product Candidate:

TL1A (also known as TNFSF15) is a costimulatory ligand in the tumor necrosis factor superfamily, which activates immune responses through binding a single receptor, DR3 (also known as TNFRSF25).

TL1A was identified as the ligand for DR3 in 2002, and aberrant activation of DR3 signaling by TL1A has been implicated in a variety of diseases, including UC, CD, psoriatic arthritis, rheumatoid arthritis, asthma, multiple sclerosis, and other inflammatory and immune-mediated diseases.

Several single nucleotide polymorphisms (“SNPs”) in TL1A have been shown to significantly increase the risk of humans developing both UC and CD.

This genetic linkage contributed to the selection of IBD for initial clinical trials for TL1A blocking antibodies.

Three different TL1A blocking antibodies have demonstrated an improvement in complete remission rates in third-party randomized, placebo controlled, Phase 2 clinical trials in patients suffering from UC.

Each of these antibodies (tulisokibart, duvakitug, and RO7790121) have provided placebo-adjusted clinical remission rates of between 23-28% following induction therapy, in trials that included patients who had previously failed biologic therapies.

Although a biomarker selection strategy enriching for patients with SNPs in TL1A has been explored, similar rates of clinical response have been observed in patients lacking such SNPs, suggesting that TL1A mediated activation of DR3 contributes to disease pathology regardless of an inborn genetic predisposition.

The placebo-adjusted clinical remission rates observed to date with these TL1A blocking antibodies could surpass the monotherapy clinical remission rates observed with anti-TNFα, anti-IL23 and anti-α4β7 blocking antibodies if confirmed in one or more of the ongoing third-party Phase 3 clinical trials.

If confirmed, antibodies targeting the DR3/TL1A signaling pathway could achieve significant commercial penetration in the IBD landscape, which is projected to increase from a $23 billion market in 2023 to a $34 billion market in 2030.

Rationale for Targeting DR3 Instead of TL1A

For certain immune pathways, there is a clear rationale to target either a receptor or ligand because of binding promiscuity.

For example, soluble TNFα primarily interacts with TNFR2, whereas TNFR2 can bind lymphotoxin in addition to both soluble and membrane associated TNFα.

Other receptor:ligand pairs are selective, including DR3/TL1A, wherein there are no known alternate signaling receptors for TL1A or verified alternate ligands for DR3.

There are significant differences in the tissue localization and expression pattern of TL1A and DR3, which suggest that blocking DR3 may provide more potent inhibition of TL1A mediated DR3 signaling than blocking TL1A.

TL1A is an inducible inflammatory ligand mainly expressed by tissue-resident antigen presenting cells, but also endothelial cells.

In the absence of inflammation, TL1A is generally not expressed.

When innate immune signals, such as bacterial proteins or immune complexes, are present, transcription of TL1A is rapidly induced, peaking within 12 hours and ceasing within approximately 24 hours.

This pulse of transcription leads to a wave of TL1A protein expression on the cell membrane, which is then subsequently self-regulated through the presence of a membrane-proximal protease cleavage site, which liberates the extracellular domain from the membrane, thereby limiting its immune stimulatory potential.

In addition, humans evolved a soluble decoy receptor, DcR3, to neutralize and facilitate degradation of this cleaved TL1A.

This pattern of expression explains the relative absence of TL1A on cells found in the blood, and presence of TL1A at sites of active inflammation, but not adjacent non-inflamed tissue.

Whereas TL1A is a short-lived, inducible ligand, DR3 is stably and constitutively expressed, primarily by antigen-experienced lymphocytes.

In patients with UC and CD, DR3 is known to be more abundant than TL1A, and to be evenly upregulated both within actively inflamed tissue and the adjacent uninflamed tissue.

Complete suppression of TL1A signaling with current TL1A blocking antibodies may be challenging because these antibodies must maintain high local concentrations within tissues by passive diffusion in order to immediately neutralize newly expressed TL1A given the locally high abundance of DR3.

In contrast, achieving complete suppression of DR3 signaling may present a lesser challenge due to the stable expression of DR3 by lymphocytes found both in the peripheral blood and throughout the gastrointestinal tract of patients with UC and CD.

Given this, we believe that targeting DR3, instead of TL1A, may allow for a more complete and durable blockade of the DR3/TL1A axis, leading to greater efficacy in patients with UC and CD.

Another potential advantage of targeting DR3 instead of TL1A relates to the expected immunogenicity profile of each of these agents.

High rates of immunogenicity have been observed with current TL1A blocking antibodies in clinical trials.

A source of this immunogenicity includes the binding and stabilization of soluble TL1A, leading to substantial increases in the serum concentration of total TL1A in patients following treatment with TL1A blocking antibodies.

These immune complexes between anti-TL1A antibodies and soluble TL1A are likely a cause of anti-drug antibody formation in patients.

Because DR3 is a membrane-restricted receptor, and SL-325 was engineered to bind an epitope on DR3 that is not found on DcR3, immune complex formation is not expected with SL-325.

SL-325 Antibody Attributes

We believe that an ideal DR3 blocking antibody should possess the following attributes:

• Very high affinity binding to DR3

• Binds to an epitope that is not shared with DcR3

• Binds to an epitope that does not cause receptor mediated endocytosis of DR3 from the cell surface

• Directly interferes with the binding of a TL1A trimer to a DR3 trimer

• Directly interferes with TL1A mediated trimerization of DR3

We developed SL-325 with these attributes in mind.

SL-325 specifically binds to human DR3 with a 1.3 picomolar affinity and a slow off-rate.

Our preclinical studies demonstrate that SL-325 does not cause internalization of DR3, and the combination of a slow off-rate and lack of receptor mediated endocytosis suggests that SL-325 may achieve durable binding to DR3 in vivo .

The epitope on DR3 bound by SL-325 is not shared with DcR3, and no binding of SL-325 to DcR3 has been observed.

This suggests that DcR3 will retain the ability to neutralize and facilitate degradation of soluble TL1A even after patients are treated with SL-325.

The design of SL-325 is shown in Figure 1 below.

Figure 1—SL-325 Overview

Preclinical potency assays have demonstrated that SL-325 prevents both the trimer-to-trimer interaction between TL1A and DR3, and the trimerization of DR3 in response to TL1A.

Additionally, SL-325 was engineered to lack Fcγ receptor binding to eliminate the potential for antibody mediated cellular cytotoxicity or antibody mediated cellular phagocytosis of DR3 expressing cells.

SL-325 was designed to fundamentally address the therapeutic and DR3/TL1A axis limitations of TL1A blocking antibodies.

As a first-in-class DR3 blocking antibody, we believe SL-325 has the desired attributes, demonstrated by our nonclinical studies, necessary to move into clinical development.

SL-325 is expected to enter a Phase 1 clinical trial in the second half of 2025 and may emerge as a best-in-class inhibitor of the DR3/TL1A axis due to SL-325’s potential to provide a more complete and durable blockade of DR3 signaling than is achievable with TL1A blocking antibodies.

Preclinical Experience

GLP Non-Human Primate Study

We conducted an IND-enabling GLP toxicology study with SL-325 in NHPs, evaluating safety, tolerability, PK, and immunogenicity.

These data were shared at the 20 th Congress of the European Crohn’s and Colitis Organization on February 20, 2025.

Naïve cynomolgus macaques each received three doses of intravenous SL-325 (vehicle, 1 mg/kg, 10 mg/kg or 100 mg/kg dose groups), with each dose administered two weeks apart.

No infusion related reactions, changes in serum chemistry values, or evidence of other toxicities or organ dysfunction (by gross or histopathology) were observed.

The No Observed Adverse Effect Level from this GLP toxicology study was determined to be the top dose administered dose of 100 mg/kg.

As shown in Figure 2 below, full and durable DR3 RO was observed in peripheral blood lymphocytes at doses of 1 mg/kg or higher within two hours of infusion, throughout the 14-day inter-dose interval (all dose groups), and for the 28-day interval for the animals in the recovery group (100 mg/kg dose level).

Following administration of SL-325, we observed no proliferation or activation of DR3 expressing CD4+ or Treg cells, confirming a lack of agonism of DR3.

Figure 2—SL-325 Receptor Occupancy in NHP Study

PK data collected in the NHP study was used to generate a population PK model to predict SL-325 exposure in humans at different dose levels and dosing intervals.

Data collected from our GLP NHP study suggest that 1 µg/mL trough concentrations are required to maintain full RO on peripheral blood lymphocytes.

As shown in Figure 3 below, population PK models suggest that 1 µg/mL trough concentrations are likely to be exceeded if SL-325 is administered at the 3 mg/kg dose level, every eight weeks during the maintenance phase of treatment.

We will further characterize the PK profile in humans during our upcoming, planned Phase 1 clinical trial, which will further inform on the dose and dosing schedule to be advanced into Phase 2 clinical trials.

Our goal is to select a dose and dosing schedule that maintains SL-325 concentrations in human peripheral blood exceed the threshold required to maintain full DR3 receptor occupancy.

Figure 3— SL-325 Population PK Modelling

In summary, our in vitro functional activity and GLP NHP toxicology study results indicate SL-325 is a high-affinity DR3 blocking antibody, with no evidence of toxicity or residual agonism in cynomolgus macaques.

Additional data gathered from the NHP study suggests that full DR3 RO was maintained when the serum concentration of SL-325 remained above approximately 1 µg/mL, and when combined with SL-325’s PK profile, we believe are supportive of prolonged dosing intervals in human patients.

Preclinical In-Vitro Characterization

We characterized the DR3 binding and antagonistic properties of SL-325 in a series of in vitro assays and these data were presented in a poster at the Crohn’s & Colitis Congress 2025 Annual Meeting on February 7, 2025.

As shown in Figure 4 below, the binding affinity of SL-325 to recombinant human DR3 has been determined to be 1.36 picomolar by surface plasmon resonance (“SPR”).

We designed SL-325 to bind an epitope that does not bind to the decoy receptor, DcR3, and no binding to DcR3 has been observed.

SL-325 was confirmed to cross-react with cynomolgus macaque DR3 with an approximately 10-fold lower EC50.

SL-325 does not cross-react to mouse DR3.

Figure 4—SL-325 Binding Affinity by SPR

As shown in Figure 5 below, SL-325 blocked recombinant TL1A binding to DR3 with an IC50 of 0.056 nM and 0.80 nM by MSD and FACS, respectively, which was equal to or better than the benchmark anti-TL1A monoclonal antibodies.

Additionally, we have demonstrated in certain in vitro blocking assays that SL-325 directly interferes both with TL1A trimer to DR3 trimer binding and trimerization of native DR3 expressed in mammalian cells.

Figure 5—SL-325 Blocks TL1A Binding to DR3 and Trimerization of DR3

As shown in Figure 6 below, when healthy human donor or IBD-patient peripheral blood mononuclear cells (“PBMCs”) were stimulated with CD3/CD28 with soluble or cell-surface expressed TL1A, SL-325 potently blocked secretion of key pro-inflammatory cytokines, such as TNFα and IFNγ.

In the absence of TL1A, neither soluble nor plate-bound SL-325 caused DR3 activation either alone or upon stimulation of PBMCs with CD3/28.

Figure 6—SL-325 Blocks TL1A-Induced Activation of IBD Patient PBMCs

SL-325 was also evaluated in a primary human intestinal epithelial cell model to assess gastrointestinal toxicity and its ability to protect the intestinal barrier from damage caused by inflammatory immune cells.

In the intestinal model, SL-325 treatment blocked TL1A-induced cytokine production by immune cells and preserved epithelial barrier integrity, demonstrating its potential efficacy in IBD settings.

Research Programs

We maintain a strong research organization that has developed a diverse pipeline of preclinical compounds.

One of our guiding principles for considering additional pipeline candidates is a preference for compounds that we expect to have monotherapy activity early in clinical development.

DR3 Bispecific Antibodies

In addition to SL-325 and SL-425, we are developing a series of bispecific antibodies targeting DR3 and other clinically validated targets.

The future of biologic therapy for both UC and CD is widely believed to include blockade of multiple inflammatory pathways, and the mechanism of DR3/TL1A inhibition is known to be non-redundant with the mechanism of other clinically validated targets.

Several attempts have been made to develop bispecific antibodies targeting TL1A, including a TL1A and TNFα blocking antibody known as AMG966.

As discussed above, TL1A blocking antibodies stabilize serum TL1A as a result of immune complex formation between soluble TL1A and anti-TL1A antibodies.

These immune complexes are believed to contribute to the high rates of ADA formation with TL1A blocking monoclonal antibodies.

In the case of AMG966, the bispecific antibody was shown to stabilize both soluble TL1A and TNFα, which led to large immune complex formation and the rapid development of high-titer neutralizing ADA responses in patients treated in a phase 1 clinical trial.

AMG966 was discontinued as a result of this immunogenicity.

Because DR3 is a membrane-restricted target, immune complex formation is not expected either for SL-325, SL-425, or DR3 directed bispecific antibodies.

Nomination of a lead bispecific candidate from our preclinical pipeline is expected in 2025.

TRIM7 Program

Through a series of studies, which were recently published in Cancer Cell, we gained an understanding of cellular targets which appear to play a pivotal role in determining acquired resistance ("AR") to immune checkpoint blockade.

We reported that aberrant interferon (“IFN”) regulation in the setting of AR suggests that tumor cell intrinsic mechanisms have conferred a growth advantage despite the presence of immune-mediated pressure unleashed by PD-1/L1 antibody blockade.

Analysis of transcripts progressively upregulated during acquisition of AR in vivo and transcripts upregulated by IFN exposure of isolated AR cell lines in vitro identified the E3 ubiquitin ligase TRIM7 as a candidate mediator of the AR phenotype.

Interestingly, TRIM7 is required for cell proliferation downstream of KRAS signaling as well.

We have developed small molecule inhibitors ("SMI") designed to the TRIM7 PRY/SPRY viral-pocket domain, where binding specificity was confirmed using mass spectrometry analysis.

These SMI suppressed proliferation of tumor cells as monotherapy both in vitro and in vivo using preclinical models, as reported during an oral presentation at the American Association for Cancer Research Annual Meeting in 2024.

We are advancing lead TRIM7 inhibitors through preclinical development as future internal pipeline candidates in oncology.

Collaboration and License Agreements

Strategic Collaboration and Option Agreement with Ono Pharmaceutical Co., Ltd.

On February 9, 2024, we entered into the Ono Agreement, effective February 13, 2024, pursuant to which we and Ono will collaborate in the research and preclinical development of certain prespecified compounds directed toward a pair of targets selected by Ono from our pipeline of bifunctional fusion proteins (the “Development Compounds”).

We are primarily responsible for carrying out the research activities in accordance with a mutually agreed upon research plan (the “Research Plan”), subject to the oversight of a joint research committee consisting of representatives from both parties.

Pursuant to the Ono Agreement, we granted to Ono an exclusive option (the “Option”) to obtain an exclusive, sublicensable license to research, develop, manufacture and commercialize multiple products resulting from the Development Compounds in any therapeutic area worldwide.

The option period will extend from the effective date of the Ono Agreement until 90 days after we deliver our final report pursuant to the Research Plan, and following any exercise of the Option, Ono will be responsible for further development and commercialization of the Development Compounds.

In connection with entering into the Ono Agreement and conducting the Research Plan, we are entitled to receive up to $9 million consisting of an initial upfront payment and additional amounts payable upon the achievement of certain milestones specified in the Research Plan.

Additionally, Ono has agreed to pay for all of our costs and expenses incurred in conducting the Research Plan.

In the event Ono exercises the Option for the Development Compounds, we are entitled to receive licensing, clinical and regulatory, and commercial milestone payments of up to $217.5 million upon the exercise of the Option, the achievement of certain specified clinical and regulatory milestones and commercial milestones and, in addition, a tiered percentage royalty on global net sales ranging from mid-single digits to low double digits.

Royalties are payable by Ono on a licensed product-by-licensed product and country-by-country basis for a maximum of ten years after the first commercial sale of such licensed product in such country.

The Ono Agreement may be terminated by mutual agreement of both parties or by either us or Ono upon an uncured material breach of the Ono Agreement or the insolvency of the other party.

Ono may terminate the Ono Agreement at any time upon 90 days’ written notice to us.

If Ono exercises such termination right, Ono will pay all of our costs up through the date of termination.

In addition, after the conditions to exercise the Option have been met, we may terminate the Ono Agreement if Ono discontinues its development or commercialization efforts and other conditions are met.

The foregoing description of the Ono Agreement does not purport to be complete and is qualified in its entirety by reference to the Ono Agreement.

We intend to file the Ono Agreement as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

On February 9, 2024, we entered into a strategic collaboration and license agreement (the “Ono Agreement”) with Ono Pharmaceutical Co., Ltd.

(“Ono”), effective February 13, 2024, pursuant to which we and Ono were to collaborate in the research and preclinical development of certain compounds.

On September 30, 2024, we and Ono mutually agreed to terminate the Ono Agreement.

Following the mutual termination, the Company is no longer required to satisfy any remaining performance obligations and will not receive any future research activity reimbursements or upfront, milestone, or royalty payments from Ono.

All options and licenses held by Ono under the Ono Agreement were terminated.

Clinical Trial Collaboration and Supply Agreement with ImmunoGen

1 unchanged sentence

(“ImmunoGen”).

Pursuant to the Clinical Trial Collaboration Agreement, ImmunoGen will supply us with a sufficient quantity of mirvetuximab soravtansine for use in our Phase 1B combination cohort evaluating SL-172154 in combination with mirvetuximab soravtansine in patients with PROC,(the “Study”).

We will bear all other costs associated with the conduct of the Study, except that ImmunoGen will reimburse us for $2.0 million of the costs we incur.

We have sole authority over the design, conduct, and control of the Study.

We will provide ImmunoGen with a final study report (the “Final Study Report”), relating to the Study promptly following completion thereof.

Unless sooner terminated, the term of the Clinical Trial Collaboration Agreement continues until the delivery of the Final Study Report.

We may terminate earlier upon 60 days’ written notice for any reason;

provided, that if the Study is underway at the time of such notice, such termination will only be effective 60 days following the parties’ mutual agreement on a written plan for the winddown or termination of the Study.

ImmunoGen may terminate earlier if it believes, in good faith, that mirvetuximab soravtansine is being used in the Study in an unsafe manner or that the Study may unreasonably affect patient safety.

In addition, either party may terminate the agreement due to a material breach by the other party (subject to a cure period), if either party determines in good faith, based on a review of the clinical data or other information, that the Study poses imminent danger to patients, if a regulatory authority takes any action that causes it to be unreasonable for, or otherwise prevents, the terminating party from supplying its compound for the Study, or if a party withdraws any applicable regulatory approval for its compound or discontinues development of its compound for any reason.

Pursuant to the Clinical Trial Collaboration Agreement, ImmunoGen supplied us with mirvetuximab soravtansine for evaluation in a clinical trial combining mirvetuximab soravtansine with SL-172154.

In February 2024, ImmunoGen was acquired by AbbVie.

Kopfkino License Agreement

We are party to an Exclusive License Agreement (as amended, “the Kopfkino License Agreement”), with Kopfkino IP, LLC (“Kopfkino”).

Pursuant to the Kopfkino License Agreement, we have (1) a worldwide, sublicensable exclusive license to research, develop, manufacture, and commercialize products under three provisional patent applications, including all patents issuing from such applications (the “Fusion Protein Patent Rights”) and (2) a worldwide, sublicensable nonexclusive license to research, develop, manufacture, and commercialize certain know-how related to the Fusion Protein Patent Rights.

We originally entered into the Kopfkino License Agreement in June 2016 with Scorpius Holdings, Inc.

(“Scorpius”) (f/k/a Nighthawk Biosciences, Inc.

f/k/a Heat Biologics Inc.).

The Kopfkino License Agreement was subsequently amended in November 2016, December 2016, and March 2017.

In January 2024, Scorpius assigned its right, title and interest in and under the Kopfkino License Agreement, along with the underlying patents and patent applications, to Kopfkino.

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

Effective March 2017, Scorpius completed all research and development services under the Kopfkino 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 Kopfkino 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 Investigational New Drug (“IND”) application for such product.

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

In addition, we are to provide annual reports to Kopfkino on or before the anniversary of the effective date of the Kopfkino License Agreement to inform Kopfkino of our progress.

Unless sooner terminated or extended, the term of the Kopfkino License Agreement continues until the later of (1) 20 years following the effective date, and (2) the expiration of the last-to-expire royalty term.

Either party may terminate the agreement due to a material breach by the other party (subject to a 90-day cure period) or if the other party files for bankruptcy.

In the event we terminate the Kopfkino License Agreement due to a material breach by Kopfkino, Kopfkino must assign to us all right, title, and interest in the patent rights licensed under the Kopfkino License Agreement.

In addition to an upfront payment of $50,000, which we made in 2016, and a payment of $100,000 upon the successful completion of the first Phase 1 clinical trial, which we made in 2023, the Kopfkino License Agreement requires us to make further payments to Kopfkino in the future of up to $20.5 million in the aggregate for the achievement of specified development, regulatory, and commercial sale milestones for certain licensed products.

We are also required to pay Kopfkino a percentage of certain upfront fees or other non-royalty payments that are not tied to milestone events which we receive in connection with certain sublicenses of the Fusion Protein Patent Rights.

We are also required to pay Kopfkino a royalty on all worldwide net sales by us, our affiliates, and sublicenses of certain licensed products in the low single digits.

Royalties are payable, on a product-by-product and country-by-country basis, commencing on the first commercial sale of such product and continuing until the last-to-expire valid patent claim to the licensed patent rights that cover such product in that country.

On October 1, 2024, we announced that we were discontinuing clinical development of SL-172154.

On December 3, 2024, we and AbbVie agreed to mutually terminate the Clinical Trial and Collaboration Agreement upon the completion of wind-down of the clinical trial combining mirvetuximab soravtansine with SL-172154.

We anticipate completing wind-down of the study in the second half of 2025.

Manufacturing and Supply

By working with third-party vendors to conduct activities in compliance with current Good Manufacturing Practices (“cGMP”) we have invested significant resources to identify and scale up a suitable manufacturing process for our product candidates and ARC compounds, including SL-172154.

Currently, ARC compounds are produced by mammalian cell lines commonly used in the manufacture of monoclonal antibodies, including Chinese hamster ovary (“CHO”) cells.

SL-172154 has achieved cell culture titer greater than four grams per liter, and another ARC compound has achieved titers exceeding seven grams per liter.

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 manufactured bulk drug substance (“BDS”) for our product candidates utilizing the services of a limited number of third-party contract manufacturers, with whom we maintain master service agreements, pursuant to which we may manufacture BDS on a per project basis.

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

These contract manufacturers, or we, may also terminate the master services agreements with respect to an uncured breach by the other party in accordance with the terms of the agreement.

These agreements include 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 and our increased need for manufacturing driven by multiple clinical trial programs, we work to ensure that we have arrangements with multiple contract manufacturers to reduce the risk of single-source procurement of BDS.

Additionally, in 2022, we completed the build out of an in-house facility to support our cell line development, manufacturing process development, analytical assay development, and non-GMP manufacturing activities.

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

We believe that we have developed a manufacturing process for SL-172154 suitable for Phase 3 clinical trials and for supply of commercial drug product.

A cGMP batch has not yet been initiated or completed using this improved process, however we expect that tech transfer of the manufacturing process and validation of a series of analytical methods required for release of drug substance and drug product to support Phase 3 clinical trials will be completed over the course of 2024 and into 2025.

To our knowledge, no other company has successfully scaled up commercial manufacturing of dual-sided, bi-functional fusion proteins.

Due to the novelty of our product candidates, we may face challenges in developing large-scale manufacturing processes.

Moreover, the nature of biologic medicines could create challenges for the stability of the drug substance.

While these and other challenges may result in timeline delays and higher costs, we believe that we will have sufficient BDS to support our current clinical trial programs.

By working with third-party vendors to conduct activities in compliance with current Good Manufacturing Practices (“cGMP”), we have invested significant resources to identify and scale up a suitable manufacturing process for our product candidates, including SL-325.

Currently, SL-325 is produced by mammalian cell lines commonly used in the manufacture of monoclonal antibodies, including Chinese hamster ovary cells.

We manufacture bulk drug substance (“BDS”) for SL-325 utilizing the services of a single third-party contract manufacturer, Kemwell Biopharma Private Limited (“Kemwell”), with whom we maintain a master service agreement, pursuant to which Kemwell manufactures BDS 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 party 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.

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

We expect to continue to devote significant resources to process development and optimization of the manufacture of our product candidates, including potential DR3-based bispecific antibodies.

All of our product candidates are manufactured from a master cell bank of that protein’s production cell line.

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Each master cell bank is or will be stored in two independent locations, and we intend to produce working cell banks for each product candidate later in product development.

It is possible that we could lose multiple

cell banks from multiple locations and have our manufacturing severely impacted by the need to replace the cell banks.

It is possible that we could lose multiple cell banks from multiple locations and have our manufacturing severely impacted by the need to replace the cell banks.

However, we believe we have adequate backup should any particular cell bank be lost in a catastrophic event.

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

While we believe that our technology, development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including large pharmaceutical and biotechnology companies, academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for the research, development, manufacturing, and commercialization of cancer therapies.

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

We compete in the segments of the pharmaceutical, biotechnology, and other related markets that develop cancer therapies.

There are many other companies that have commercialized or are developing cancer therapies, including large pharmaceutical and biotechnology companies, such as AstraZeneca/MedImmune, Bristol Myers Squibb, Merck, Novartis, Pfizer, Roche/Genentech and Gilead.

We face significant competition from pharmaceutical and biotechnology companies that target specific tumor-associated antigens using immune cells or other cytotoxic modalities.

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 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, evorpacept, lemzoparlimab TTI-621, TTI-622, DSP107, and APX005M.

It is possible that the competitive landscape for CD47 inhibitors may change over the course of 2024 as the sponsors of these compounds are no longer providing guidance to potential approvals, including magrolimab, TTI-621 and TTI-622.

We compete in the segments of the pharmaceutical, biotechnology, and other related markets that develop therapies for immune-mediated diseases.

There are many other companies that have commercialized or are developing therapies for immune-mediated diseases, including large pharmaceutical and biotechnology companies, such as Abbvie, Johnson & Johnson, Merck, Novartis, Pfizer, Roche/Genentech, Sanofi, Teva and Takeda.

With respect to our lead product candidate, SL-325, we are aware of other clinical-stage therapeutics that target the TL1A/DR3 axis, including, but not limited to, ABS-101 in development by Absci Corporation, duvakitug in development by Teva Pharmaceutical Industries Ltd., FH-M701 in development by FutureGen Biopharmaceutical Co., Ltd., RO7790121 in

development by Hoffmann-La Roche Ltd, SPY002 in development by Spyre Therapeutics, Inc., tulisokibart in development by Merck & Co., Inc., and XmAb942 in development by Xencor, Inc.

Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do.

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Our future commercial success depends, in part, on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions, and know-how related to our business, including our platform technologies and product candidates, defend and enforce our intellectual property rights, in particular our patents rights, preserve the confidentiality of our trade secrets, and operate without infringing, misappropriating, or violating the valid and enforceable patents and proprietary rights of third parties.

Our ability to stop third parties from making, using, selling, offering

to sell, or importing our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.

Our ability to stop third parties from making, using, selling, offering to sell, or importing our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.

The patent positions of biotechnology companies like ours are generally uncertain and can involve complex legal, scientific, and factual issues.

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In the United States, the term of a patent that covers an FDA-approved drug or biologic may be eligible for Patent Term Extension in order to restore the period of a patent term lost during the premarket FDA regulatory review process.

The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) permits a Patent Term Extension of up to five years beyond the natural expiration of the patent (but the total patent term, including the extension period, must not exceed 14 years following FDA approval).

The Drug Price Competition and Patent Term Restoration Act of 1984 permits a Patent Term Extension of up to five years beyond the natural expiration of the patent (but the total patent term, including the extension period, must not exceed 14 years following FDA approval).

The term extension period granted on a patent covering a product is typically one-half the time between the effective date of a clinical investigation involving human beings is begun and the submission date of an application, plus the time between the submission date of an application and the ultimate approval date.

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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, 2024, we own or exclusively license (i) more than 25 patents and more than 20 pending non-provisional patent applications in the United States and (ii) 20 patents and more than 150 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 (“PCT”).

As of March 1, 2025, we own one pending international patent application, filed under the Patent Cooperation Treaty, one pending non-provisional patent application, filed in the United States, and six pending provisional applications, filed in the United States, that relate to DR3.

We also own or exclusively license other patents and patent applications related to other technologies and programs, including legacy programs.

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

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

SL-172154 Product Candidate

As of February 1, 2024, we own or exclusively license (i) 6 patents and 6 pending non-provisional patent applications in the United States and (ii) 11 patents and more than 25 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, 2039, and 2042, 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.

As of February 1, 2024, we own or exclusively license (i) more than 20 patents and 15 pending non-provisional patent applications in the United States and (ii) 11 patents and more than 125 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.

These include patents and/or patent applications related to SL‑172154 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, 2040, and 2042, 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.

Trademark Protection

As of February 1, 2024, we own a registered trademark for “ARC” with the U.S.

We plan to register trademarks in connection with our biological products.

Licensed Intellectual Property from Kopfkino IP, LLC

We are party to the Kopfkino License Agreement, with Kopfkino.

Under the Kopfkino License Agreement, we have an exclusive (as to the patent rights), non-transferable, sublicensable, worldwide, royalty-bearing, non-field restricted license to certain patent rights and know-how, including rights related to the ARC platform.

We are obligated to pay Kopfkino fees upon receipt of certain sublicensing income, achievement of certain milestones, and royalties upon sales of commercial products.

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

As of February 1, 2024, that family includes (i) 11 patents and 1 pending non-provisional patent applications in the United States, and (ii) 11 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.

We originally entered into the Kopfkino License Agreement in June 2016 with Scorpius.

The agreement was subsequently amended in November 2016, December 2016, and March 2017.

In January 2024, Scorpius assigned its right, title, and interest in and under the Kopfkino License Agreement, along with the underlying patents and patent applications, to Kopfkino.

Government Regulation

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We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.

Generally, before a new therapeutic product can be marketed, considerable data demonstrating a biological product candidate’s quality, safety, purity and potency, or a small molecule drug candidate’s quality, safety and efficacy, must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

For biological product candidates, potency is similar to efficacy and is interpreted to mean the specific ability or capacity of the product, as indicated by appropriate laboratory tests or by adequately controlled clinical data obtained through the administration of the product in the manner intended, to effect a given result.

Failure to comply with the applicable U.S.

requirements at any time during the product development process, approval process or post-marketing may subject an applicant to administrative or judicial sanctions.

These sanctions could include, among other actions, the FDA’s refusal to approve pending applications from the sponsor, withdrawal of an approval, a clinical hold, untitled or warning letters, product recalls or market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminal penalties.

Any agency or judicial enforcement action could have a material adverse effect on our company and our products or product candidates.

Biologics Regulation

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

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, and local statutes and regulations requires the expenditure of substantial time and financial resources.

Failure to comply with the applicable U.S.

requirements at any time during the product development process, approval process or following approval may subject an applicant to administrative action and judicial sanctions.

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

• completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices (“GLP”) regulation;

• completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current GLP regulation;

• submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made;

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• FDA review and approval of a BLA to permit commercial marketing of the product for particular indications for use in the United States.

Preclinical and Clinical Development

Prior to beginning the first clinical trial with a product candidate, we must submit an IND to the FDA.

Prior to beginning any clinical trial with a product candidate in the United States, we must submit an IND to the FDA.

An IND is a request for authorization from the FDA to administer an investigational new drug product to humans.

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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 a partial or full clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin.

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.

Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

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The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition.

These studies are designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

These studies are designed to test the safety, dosage tolerance, absorption, metabolism and

distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.

Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

The investigational product is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple

geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

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Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND.

When a foreign clinical study is conducted under an IND, all IND requirements must be met unless waived.

When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain FDA regulatory requirements in order to use the study as support for an IND or application for marketing approval or licensure, including that the study was conducted in accordance with GCP, including review and approval by an independent ethics committee and use of proper procedures for obtaining informed consent from subjects, and the FDA is able to validate the data from the study through an onsite inspection if the FDA deems such inspection necessary.

The GCP requirements encompass both ethical and data integrity standards for clinical studies.

BLA Submission and Review

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In both standard and priority reviews, the review process may also be extended by FDA requests for additional information or clarification.

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

The FDA reviews a BLA to determine, among other things, whether a product is safe, pure and potent and the facility in which it is manufactured, processed, packed or held meets standards designed

to assure the product’s continued safety, purity and potency.

The FDA may convene an advisory committee to provide clinical insight on application review questions.

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In issuing the Complete Response letter, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification.

The FDA may delay or refuse

approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed.

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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.

A product can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product, including involvement of senior managers.

Any marketing application for a biologic submitted to the FDA for approval, including a product with a fast track designation and/or breakthrough therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval.

A product is eligible for priority review if it has the potential to provide a significant improvement in safety or effectiveness of the treatment, diagnosis or prevention of a serious disease or condition.

For original BLAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (as compared to ten months under standard review).

Additionally, products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

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Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

In 2017, the FDA established a new regenerative medicine advanced therapy (“RMAT”) designation as part of its implementation of the 21st Century Cures Act.

The RMAT designation program is intended to fulfill the 21st Century Cures Act requirement that the FDA facilitate an efficient development program for, and expedite review of, any drug that meets the following criteria:

In addition, the FDA currently requires as a

condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

In 2017, the FDA established a new regenerative medicine advanced therapy (“RMAT”) designation as part of its implementation of the 21st Century Cures Act (“the Cures Act”).

The RMAT designation program is intended to fulfill the Cures Act requirement that the FDA facilitate an efficient development program for, and expedite review of, any drug that meets the following criteria:

(i) the drug qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions;

drug is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition;

(ii) the drug is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition;

and (iii) preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition.

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Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites.

Once approved, when appropriate, the FDA can permit fulfillment of post-approval requirements under accelerated approval through:

When appropriate, the FDA can permit fulfillment of post-approval requirements for an RMAT that has received accelerated approval through:

the submission of clinical evidence, preclinical studies, clinical trials, patient registries or other sources of real world evidence such as electronic health records;

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or post-approval monitoring of all patients treated with the therapy prior to approval.

Fast track designation, breakthrough therapy designation, priority review and RMAT designation do not change the standards for approval but may expedite the development or approval process.

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.

A product is eligible for priority review if there is evidence it has the potential to provide a significant improvement in the treatment, diagnosis or prevention of a serious disease or condition.

Fast track designation, breakthrough therapy designation, RMAT designation and priority review do not change the standards for approval but may expedite the development or approval process.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

In May 2018, the Right to Try Act established a new regulatory pathway to increase access to unapproved, investigational treatments for patients diagnosed with life-threatening diseases or conditions who have exhausted approved treatment options and who are unable to participate in a clinical trial.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States for which there is no reasonable expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug or biologic.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act of 1983, the FDA may grant orphan drug designation to a product candidate intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or 200,000 or more individuals in the United States for which there is no reasonable expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that product candidate.

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 FDA.

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

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

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusive approval (or exclusivity), which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusive approval (or exclusivity), which means that the FDA may not approve any other applications, including a full BLA, to market the same product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity by means of greater effectiveness, greater safety or providing a major contribution to patient care or if the holder of the orphan drug exclusivity cannot assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application fee.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan drug designation.

In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

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Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.

As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

After a BLA is approved for a biological product, the product also may be subject to official lot release.

If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot.

The FDA also may perform certain confirmatory tests on lots of some products before releasing the lots for distribution by the manufacturer.

In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, and potency or effectiveness of biologics.

After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval.

There also are continuing user fee requirements, under which the FDA assesses an annual program fee for each product identified in an approved BLA.

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Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented.

FDA regulations also require

investigation and correction of any deviations from cGMPs and impose reporting requirements upon us and any third-party manufacturers that we may decide to use.

FDA regulations also require investigation and correction of any deviations from cGMPs and impose reporting requirements upon us and any third-party manufacturers that we may decide to use.

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMPs and other aspects of regulatory compliance.

The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including AEs of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;

imposition of post-market studies or clinical studies to assess new safety risks;

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The FDA closely regulates the marketing, labeling, advertising and promotion of biologics.

A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label.

A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the

provisions of the approved label.

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

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The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Regulation of Diagnostic Tests

Our drug candidates may require use of a diagnostic to identify appropriate patient populations for our product candidates.

These diagnostics, often referred to as companion diagnostics, are medical devices, often in vitro devices, which provide information that is essential for the safe and effective use of a corresponding drug.

In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.

Unless an exemption applies, diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution.

The two primary types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and premarket approval (“PMA approval”).

We expect that any companion diagnostic developed for our drug candidates will utilize the PMA pathway.

PMA applications must be supported by valid scientific evidence, which typically requires extensive data, including technical, preclinical, clinical and manufacturing data, to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device.

For diagnostic tests, a PMA application typically includes data regarding analytical and clinical validation studies.

As part of its review of the PMA, the FDA will conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the Quality System Regulation, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures.

FDA review of an initial PMA may require several years to complete.

If the FDA evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter or an approvable letter, which usually contains a number of conditions that must be met in order to secure the final approval of the PMA.

If the FDA’s evaluation of the PMA or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter.

A not approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA approvable.

The FDA may also determine that additional clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are

conducted and then the data submitted in an amendment to the PMA.

Once granted, PMA approval may be withdrawn by the FDA if compliance with post approval requirements, conditions of approval or other regulatory standards is not maintained or problems are identified following initial marketing.

On August 6, 2014, the FDA issued a final guidance document addressing the development and approval process for “ In Vitro Companion Diagnostic Devices.” According to the guidance, for novel drugs such as our drug candidates, a companion diagnostic device and its corresponding drug should be approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product labeling.

The guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a drug generally will be considered an investigational device, unless it is employed for an intended use for which the device is already approved or cleared.

If used to make critical treatment decisions, such as patient selection, the diagnostic device generally will be considered a significant risk device under the FDA’s Investigational Device Exemption (“IDE”) regulations.

Thus, the sponsor of the diagnostic device will be required to comply with the IDE regulations.

According to the guidance, if a diagnostic device and a drug are to be studied together to support their respective approvals, both products can be studied in the same investigational study, if the study meets both the requirements of the IDE regulations and the IND regulations.

The guidance provides that depending on the details of the study plan and subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE.

Biosimilars and Reference Product Exclusivity

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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.

The FDA has issued 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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At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

The first biologic product submitted under the abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against other biologics submitted under the abbreviated approval pathway for the lesser of (i) one year after the first commercial marketing, (ii) eighteen months after approval if there is no legal challenge, (iii) eighteen months after the resolution in the applicant’s favor of a lawsuit challenging the biologics’ patents if an application has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-month period.

A reference biologic is granted twelve years of exclusivity from the time of first licensure of the reference product.

The first biologic product submitted under the abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against other biologics submitted under the abbreviated approval pathway for the lesser of (i) one year after the first commercial marketing, (ii) 18 months after approval if there is no legal challenge, (iii) 18 months after the resolution in the applicant’s favor of a lawsuit challenging the biologics’ patents if an application has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-month period.

A biological product can also obtain pediatric market exclusivity in the United States.

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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

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.

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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As discussed below, the Inflation Reduction Act of 2022 (“IRA”) is a significant new law that intends to foster generic and biosimilar competition and to lower drug and biologic costs.

Patent Term Extension

In the United States, after a BLA is approved, owners of relevant drug patents may apply for up to a five-year patent extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory process.

The allowable patent term extension is typically calculated as one-half the time between, the latter of the effective date of an IND and issue date of the patent for which extension is sought, and the submission date of a BLA, plus the time between BLA submission date and the BLA approval date up to a maximum of five years.

The time can be shortened if the FDA determines that the applicant did not pursue licensure with due diligence.

The total patent term after the extension may not exceed 14 years from the date of product licensure.

Only one patent applicable to a licensed biological product is eligible for extension and only those claims covering the product, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent in question.

However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements.

Some, but not all, foreign jurisdictions possess patent term extension or other additional patent exclusivity mechanisms that may be more or less stringent and comprehensive than those of the United States.

Other Healthcare Laws and Compliance Requirements

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Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.

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 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.

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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 $27,000.

HIPAA created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program, including private third-party payors, and making false statements relating to healthcare matters.

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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 various healthcare professionals including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Beginning on January 1, 2023, California Assembly Bill 1278 requires California physicians and surgeons to notify patients of Open Payments.

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 the Centers for Medicaid & Medicare Services (“CMS”) information related to payments or other transfers of value to various healthcare professionals including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Beginning on January 1, 2023,

California Assembly Bill 1278 requires California physicians and surgeons to notify patients of the Open Payments database established under the federal Physician Payments Sunshine Act.

We are also subject to federal price reporting laws and federal consumer protection and unfair competition laws.

Federal price reporting laws require manufacturers to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/ or discounts on approved products.

Federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers.

We are also subject to additional similar U.S.

state and foreign law equivalents of each of the above federal laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating compliance efforts.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply, we

may be subject to penalties, including, without limitation, civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply, we may be subject to penalties, including, without limitation, civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.

Data Privacy and Security

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In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations, govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.

For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations imposes privacy, security, and breach notification obligations on certain health care providers, health plans, and health care clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve using, disclosing, creating, receiving, maintaining, or transmitting individually identifiable health information for or on behalf of such covered entities.

The requirements imposed by HIPAA and HITECH on covered entities and business associates include entering into agreements that require business associates protect PHI provided by the covered entity against improper use or disclosure, among other things;

For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health (“HITECH”), and their respective implementing regulations imposes data privacy, security, and breach notification obligations on certain health care providers, health plans, and health care clearinghouses, known as covered entities, as well as their business associates and their covered subcontractors that perform certain services that involve using, disclosing, creating, receiving, maintaining, or transmitting individually identifiable protected health information (“PHI”) for or on behalf of such covered entities.

These requirements imposed by HIPAA and the HITECH Act on covered entities and business associates include entering into agreements that require business associates protect PHI provided by the covered entity against improper use or disclosure, among other things;

following certain standards for the privacy of PHI, which limit the disclosure of a patient’s past, present, or future physical or mental health or condition or information about a patient’s receipt of health care if the information identifies, or could reasonably be used to identify, the individual;

ensuring the confidentiality, integrity, and availability of all PHI created, received, maintained, or transmitted in electronic form, to identify and protect against reasonably anticipated threats or impermissible uses or disclosures to the security and integrity of such PHI;

and reporting of such breaches of PHI to individuals and regulators.

Significant civil and criminal fines and other penalties may be imposed for violating HIPAA.

and reporting of breaches of PHI to individuals and regulators.

Entities that are found to be in violation of HIPAA may be subject to significant civil, criminal, and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.

A covered entity or business associate is also liable for civil money penalties for a violation that is based on an act or omission of any of its agents, which may include a downstream business associate, as determined according to the federal common law of agency.

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To the extent that we submit electronic healthcare claims and payment transactions that do not comply with the electronic data transmission standards established under HIPAA and HITECH, payments to us may be delayed or denied.

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

In addition, state health information privacy laws, such as California’s Confidentiality of Medical Information Act and Washington’s My Health My Data Act, govern the privacy and security of health-related information, specifically, may apply even when HIPAA does not and impose additional requirements.

Even when HIPAA and state health information privacy laws do not apply, according to the FTC and state Attorneys General, 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 and state consumer protection laws.

In addition, certain state laws, such as the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CCPA”), govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA in various ways.

Numerous other states have passed similar laws, but many differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

The CCPA applies to personal data of consumers, business representatives, and employees,

and imposes obligations on certain businesses that do business in California, including to provide specific disclosures in privacy notices, and affords rights to California residents in relation to their personal information.

Health information falls under the CCPA’s definition of personal information where it identifies, relates to, describes, or is reasonably capable of being associated with or could reasonably be linked, directly or indirectly, with a particular consumer or household - unless it is subject to HIPAA - and is included under a new category of personal information, “sensitive personal information,” which is offered greater protection.

The numerous other comprehensive privacy laws that have passed or are being considered in other states, as well as at the federal and local levels, also exempt some data processed in the context of clinical trials;

but others exempt covered entities and business associates subject to HIPAA altogether, further complicating compliance efforts, and increasing legal risk and compliance costs for us and the third parties upon whom we rely.

Additionally, our use of artificial intelligence and machine learning may be subject to laws and evolving regulations regarding the use of artificial intelligence and machine learning, controlling for data bias, and anti-discrimination.

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 California Consumer Privacy Act of 2018 (“CCPA”), as amended by the California Privacy Rights Act of 2020 (“CPRA”), which went into effect on January 1, 2020, creates new data privacy obligations for covered companies and provides new privacy rights to California residents.

The CCPA/CPRA applies to personal data of consumers, business representatives, and employees, and imposes obligations on certain businesses that do business in California, including to provide specific disclosures in privacy notices, rights to California residents in relation to their personal information.

Health information falls under the CCPA/CPRA’s definition of personal information where it identifies, relates to, describes, or is reasonably capable of being associated with or could reasonably be linked with a particular consumer or household—unless it is subject to HIPAA—and is included under a new category of personal information, “sensitive personal information,” which is offered greater protection.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Coverage and Reimbursement

In the United States and markets in other countries, patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment.

Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance.

Our ability to successfully commercialize our product candidates will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations.

Even if coverage is provided, the approved reimbursement amount may not be high enough to allow it to establish or maintain pricing sufficient to realize a sufficient return on its investment.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.

Significant uncertainty exists as to the coverage and reimbursement status of any pharmaceutical or biological product for which we obtain regulatory approval.

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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.

As a result, the coverage determination process is

often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

Factors payors consider in determining reimbursement are based on whether the product is a covered benefit under its health plan, safe, effective and medically necessary, cost-effective and neither experimental nor investigational.

Third-party payors are increasingly challenging the prices charged for medical products and services, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical or biological products, medical devices and medical services, in addition to questioning safety and efficacy.

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government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products.

The IRA provides CMS with significant new authorities intended to curb drug costs and to encourage market competition.

The IRA provides CMS with significant new authorities intended to curb drug costs and to encourage

market competition.

For the first time, CMS will be able to directly negotiate prescription drug prices and to cap out-of-pocket costs.

Each year, CMS will select and negotiate a preset number of high-spend drugs and biologics that are covered under Medicare Part B and Part D that do not have generic or biosimilar competition.

These price negotiations will begin in 2023.

The IRA also provides a new “inflation rebate” covering Medicare patients that will take effect in 2023 and is intended to counter certain price increases in prescriptions drugs.

The inflation rebate provision will require drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Part B and Part D increases faster than the rate of inflation.

On August 29, 2023, HHS announced the list of the first ten drugs subject to price negotiations.

These price negotiations occurred in 2024.

In January 2025, CMS announced a list of 15 additional Medicare Part D drugs that will be subject to price negotiations.

The IRA also provides a new “inflation rebate” covering Medicare patients that took effect in 2023 and is intended to counter certain price increases in prescriptions drugs.

The inflation rebate provision requires drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Part B and Part D increases faster than the rate of inflation.

To support biosimilar competition, beginning in October 2022, qualifying biosimilars may receive a Medicare Part B payment increase for a period of five years.

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Notwithstanding these provisions, the IRA’s impact on commercialization and competition remains largely uncertain.

In addition, net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the U.S.

Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products.

We cannot be sure that reimbursement will be available for any product candidate that we may commercialize and, if reimbursement is available, the level of reimbursement.

In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and timely.

Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs.

Finally, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

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

For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies.

A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates.

Historically, products launched in the European Union do not follow price structures of the U.S.

and generally prices tend to be significantly lower.

Healthcare Reform

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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.

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.

These reductions went into effect in April 2013 and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional action is taken by Congress.

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.

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, the IRA, among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program.

Other legislative changes have been proposed and adopted since the ACA was enacted, including automatic aggregate reductions of Medicare payments to providers of on average 2% per fiscal year as part of the federal budget sequestration under the Budget Control Act of 2011.

These reductions went into effect in April 2013 and, due to subsequent legislative amendments, will remain in effect until 2032 unless additional action is taken by Congress.

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, which went into effect on January 1, 2021.

In response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMS Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care.

It is unclear whether the models will be utilized in any health reform measures in the future.

Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act.

On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights.

While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.

Notwithstanding the IRA, continued legislative and enforcement interest exists in the United States with respect to specialty drug pricing practices.

Specifically, we expect regulators to continue pushing for transparency to drug pricing, reducing the cost of prescription drugs under Medicare, reviewing the relationship between pricing and manufacturer patient programs, and reforming government program reimbursement methodologies for drugs.

Individual states in the U.S.

have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain drug access and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing.

Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, financial condition, results of operations and prospects.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.

This could reduce the ultimate demand for its drugs or put pressure on its drug pricing, which could negatively affect our business, financial condition, results of operations and prospects.

Other Government Regulation Outside of the United States

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The GDPR imposes a number of strict obligations and restrictions on the ability to process, including collecting, analyzing and transferring, personal data of individuals, in particular with respect to health data from clinical trials and adverse event reporting.

The GDPR includes requirements relating to the legal basis of the processing (such as consent of the individuals to whom the personal data relates), the information provided to the individuals prior to processing their personal data, the notification obligations to the national data protection authorities, and the security and confidentiality of the personal data.

The GDPR includes requirements relating to the legal basis of the processing (such as consent of the individuals to whom the personal data relates), the information provided to the individuals prior to processing their personal data, the personal data breaches which may have to be notified to the national data protection authorities and data subjects, the measures to be taken when engaging processors, and the security and confidentiality of the personal data.

EU Member States may also impose additional requirements in relation to health, genetic and biometric data through their national legislation.

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Among the appropriate safeguards that can be used, the data exporter may use the standard contractual clauses (“SCCs”).

With regard to the transfer of data from the EEA to the US, on July 10, 2023, the European Commission adopted its adequacy decision for the EU-US Data Privacy Framework.

On the bases of the new adequacy decision, personal data can flow from the EEA to US companies participating in the framework.

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 of 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, as well as civil liability claims from individuals whose personal data was processed.

When relying on SCCs, data exporters are also required to conduct a transfer risk assessment to verify if anything in the law and/or practices of the third country may impinge on the effectiveness of the SCCs in the context of the transfer at stake and, if so, to identify and adopt supplementary measures that are necessary to bring the level of protection of the data transferred to the EU standard of essential equivalence.

Where no supplementary measure is suitable, the data exporter should avoid, suspend or terminate the transfer.

With regard to the transfer of data from the EEA to the United States, on July 10, 2023, the EC adopted its adequacy decision for the EU-US Data Privacy Framework.

On the basis of the new adequacy decision, personal data can flow from the EEA to U.S.

companies participating in the framework.

With regard to the transfer of data from the EU to the United Kingdom (“UK”), personal data may freely flow from the EEA to the UK since the UK is deemed to have an adequate data protection level.

However, the adequacy decisions include a ‘sunset clause’ which entails that the decisions will automatically expire four years after their entry into force, unless renewed.

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 of 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 for organizations and, in certain cases, their directors and officers, as well as civil liability claims from individuals whose personal data was processed.

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 the

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

Furthermore, there is a growing trend towards the 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 (EU) No.

Furthermore, there are specific requirements relating to processing health data from clinical trials, including public disclosure obligations provided in the EU Clinical Trials Regulation No.

536/2014 (“CTR”), European Medicines Agency (“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 CTR and the GDPR, further adds to the complexity that we face with regard to data protection regulation.

With regard to the transfer of personal data from the EEA to the United Kingdom (“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.

However, the adequacy decisions include a ‘sunset clause’ which entails that the decisions will automatically expire four years after their entry into force, unless renewed.

Additionally, 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 UK GDPR, as defined in section 3(10) (as supplemented by section 205(4)) of the Data Protection Act 2018 (the “DPA 2018”) (“UK GDPR”), the DPA 2018, and related data protection laws in the UK).

Separately to the fines that can be imposed by the GDPR, the UK regime has the ability to impose fines up to the greater of £17.5 million or 4% of global turnover.

Following the UK’s withdrawal from the EU and the EEA, companies are subject to specific transfer rules under the UK regime;

personal data may flow freely from the UK to the EEA, since the EEA is deemed to have an adequate data protection level for purposes of the UK regime.

These UK international transfer rules broadly mirror the GDPR rules.

On February 2, 2022, the UK Secretary of State laid before the UK Parliament the international data transfer agreement (“IDTA”) and the international data transfer addendum to the European Commission’s standard contractual clauses for international data transfers (“Addendum”) and a document setting out transitional provisions.

Additionally, 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 UK GDPR (as defined in section 3(10) (as supplemented by section 205(4))) of the Data Protection Act 2018 (the “DPA 2018”), the DPA 2018, and related data protection laws in the UK).

Separate from the fines that can be imposed by the GDPR, the UK regime has the ability to fine up to the greater of £17.5 million or 4% of global turnover.

Companies are subject to specific transfer rules under the UK regime which broadly mirror the GDPR rules.

On February 2, 2022, the UK Secretary of State laid before the UK Parliament the international data transfer agreement (“IDTA”) and the international data transfer addendum to the EC’s standard contractual clauses for international data transfers (“Addendum”) and a document setting out transitional provisions.

The IDTA and Addendum came into force on March 21, 2022 and replaced the old SCCs for the purposes of the UK regime.

However, the transitional provisions, adopted with the IDTA and the Addendum, provide that contracts concluded on or before September 21, 2022 on the basis of any old SCCs continue to provide appropriate safeguards for the purpose of the UK regime until March 21, 2024, provided that the processing operations that are the subject matter of the contract remain unchanged and reliance on those clauses ensures that the transfer of personal data is subject to appropriate safeguards.

Regarding transfers from the UK to the EEA, personal data may flow freely since the EEA is deemed to have an adequate data protection level for purposes of the UK regime.

With regard to the transfer of personal data from the UK to the United States, the UK government has adopted an adequacy decision for the United States (the “UK-US Data Bridge”), which came into force on October 12, 2023.

The UK-US Data Bridge recognizes the United States as offering an adequate level of data protection where the transfer is to a U.S.

company participating in the EU-US Data Privacy Framework and the UK Extension to the EU-US Data Privacy Framework.

company participating in the EU-US Data Privacy Framework and the UK Extension.

Drug and Biologic Development Process

Regardless of where they are conducted, all clinical trials included in applications for marketing authorization for human medicines in the European EU/EEA must have been carried out in accordance with EU regulations.

Regardless of where they are conducted, all clinical trials included in applications for marketing authorization (“MA”) for human medicines in the EU/EEA must have been carried out in accordance with EU regulations.

This means that clinical trials conducted in the EU/EEA have to comply with EU clinical trial legislation but also that clinical trials conducted outside the EU/EEA have to comply with ethical principles equivalent to those set out in the EEA, including adhering to international good clinical practice and the Declaration of Helsinki.

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The CTR replaced the Clinical Trials Directive 2001/20/EC, (“Clinical Trials Directive”) and introduced a complete overhaul of the existing regulation of clinical trials for medicinal products in the EU.

Under the former regime, which will expire after a transition period of one or three years, respectively, 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 clinical trial is to be conducted.

Under the former 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 clinical trial is to be conducted.

The approval must be obtained from two separate entities:

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A more unified procedure will apply under the new CTR.

A sponsor will be able to submit a single application for approval of a clinical trial through a centralized EU clinical trials portal.

A sponsor will be able to submit a single application for approval of a clinical trial through a centralized EU clinical trials portal (the “Clinical Trials Information System” or “CTIS”).

One national regulatory authority (the reporting EU member state proposed by the applicant) will take the lead in validating and evaluating the application consult and coordinate with the other concerned EU Member States.

If an application is rejected, it may be amended and resubmitted through the EU

clinical trials portal.

If an application is rejected, it may be amended and resubmitted through the EU clinical trials portal.

If an approval is issued, the sponsor may start the clinical trial in all concerned EU Member States.

However, a concerned EU member state may in limited circumstances declare an “opt-out” from an approval and prevent the clinical trial from being conducted in such member state.

The CTR 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 (“CTIS”).

The CTR foresees a three-year transition period.

EU Member States will work in CTIS immediately after the system has gone live.

On January 31, 2023, submission of initial clinical trial applications via CTIS became mandatory, and by January 31, 2025, all ongoing trials approved under the former Clinical Trials Directive will need to comply with the CTR and have to be transitioned to CTIS.

Since January 31, 2023, submission of initial clinical trial applications via CTIS is mandatory and CTIS serves as the single entry point for submission of clinical trial-related information and data.

By January 31, 2025, all ongoing trials approved under the former Clinical Trials Directive will need to comply with the CTR and have to be transitioned to CTIS.

On July 19, 2023, the EC published guidance concerning the steps to be taken in this transition.

This guidance provides, among other things, that (i) documentation which was previously assessed will not be reassessed, (ii) templates that were developed and endorsed by the EU Clinical Trials Expert Group to provide compliance with the CTR do not need to be updated and (iii) there is no need to retrospectively create a site suitability form, which are only necessary for new trial sites.

Under both the former regime and the new CTR, national laws, regulations, and the applicable GCP and GLP 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 guidelines on GCP and the ethical principles that have their origin in the Declaration of Helsinki.

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Drug Marketing Authorization

In the European Union, medicinal products, including advanced therapy medicinal products (“ATMPs”), are subject to extensive pre- and post-market regulation by regulatory authorities at both the European Union and national levels.

ATMPs comprise gene therapy products, somatic cell therapy products and tissue engineered products, which are genes, cells or tissues that have undergone substantial manipulation and that are administered to human beings in order to cure, diagnose or prevent diseases or regenerate, repair or replace a human tissue.

Pursuant to the ATMP Regulation, the Committee on Advanced Therapies (“CAT”) is responsible in conjunction with the CHMP for the evaluation of ATMPs.

The CHMP and CAT are also responsible for providing guidelines on ATMPs.

These guidelines provide additional guidance on the factors that the EMA will consider in relation to the development and evaluation of ATMPs and include, among other things, the preclinical studies required to characterize ATMPs manufacturing and control information that should be submitted in a In the EU and in Iceland, Norway and Liechtenstein (together the EEA) after completion of all required clinical testing, pharmaceutical products may only be placed on the market after obtaining a Marketing Authorization (“MA”).

In the EEA, after completion of all required clinical testing, pharmaceutical products may only be placed on the market after obtaining a MA.

To obtain an MA of a drug under European Union regulatory systems, an applicant can submit an MAA through, amongst others, a centralized or decentralized procedure.

To be used or sold in the UK, a drug must have an effective MA obtained by a centralized application through EMA or a national application.

National applications are governed by the Human Medicines Regulations (SI 2012/1916) (“HMRs”).

Applications are made electronically through the Medicines and Healthcare products Regulatory Agency (“MHRA”)

Submissions Portal.

The process from application to authorizations generally takes up to 210 days, excluding time taken to provide any additional information or data required by the MHRA.

On August 30, 2023, the MHRA published detailed guidance on its recently announced new International Reliance Procedure (“IRP”) for MAAs.

The IRP applies since January 1, 2024 and replaces existing EU reliance procedures to apply for authorizations from seven international regulators (e.g.

Health Canada, Swiss Medic, FDA, EMA, among others).

The IRP allows medicinal products approved in other jurisdictions that meet certain criteria to undergo a fast-tracked MHRA review to obtain and/or update a MA in the UK.

Applicants can submit initial MAAs to the IRP but the procedure can also be used throughout the lifecycle of a product for post-authorization procedures including line extensions, variations and renewals.

Centralized Authorization Procedure

The centralized procedure provides for the grant of a single MA that is issued by the EC following the scientific assessment of the application by the EMA that is valid for all EU Member States as well as in the three additional EEA Member States.

The centralized procedure is compulsory for specific medicinal products, including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products, ATMPs and medicinal products with a new active substance indicated for the treatment of certain diseases (AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases).

For medicinal products containing a new active substance not yet authorized in the EEA before May 20, 2004 and indicated for the treatment of other diseases, medicinal products that constitute significant therapeutic, scientific or technical innovations or for which the grant of a MA through the centralized procedure would be in the interest of public health at EU level, an applicant may voluntarily submit an application for a marketing authorization through the centralized procedure.

Under the centralized procedure, the CHMP established at the EMA, is responsible for conducting the initial assessment of a drug.

The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization.

The centralized procedure provides for the grant of a single MA that is issued by the EC following the scientific assessment of the application by the European Medicines Agency (“EMA”) that is valid for all EU Member States as well as in the three additional EEA Member States (Norway, Iceland, and Liechtenstein).

The centralized procedure is compulsory for specific medicinal products, including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products, advanced therapy medicinal products (gene therapy, somatic cell therapy, or tissue engineered medicines) and medicinal products with a new active substance indicated for the treatment of certain diseases (HIV/AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases).

Under the centralized procedure, the Committee for Medicinal Products for Human Use (“CHMP”) established at the EMA, is responsible for conducting the initial assessment of a drug.

The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing MA.

Under the centralized procedure, the timeframe for the evaluation of an MAA by the EMA’s CHMP is, in principle, 210 days from receipt of a valid MAA.

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Upon request, the CHMP can reduce the time frame to 150 days if the applicant provides sufficient justification for an accelerated assessment.

The CHMP will provide a positive opinion regarding the application only if it meets certain quality, safety and efficacy

requirements.

The CHMP will provide a positive opinion regarding the application only if it meets certain quality, safety and efficacy requirements.

This opinion is then transmitted to the EC, which has the ultimate authority for granting MA within 67 days after receipt of the CHMP opinion.

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(ii) they can be authorized under a decentralized procedure where an applicant applies for simultaneous authorization in more than one EU member state;

or (iii) they can be authorized in an EU member state in accordance with that state’s national procedures and then be authorized in other EU countries by a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization (mutual recognition procedure).

The decentralized procedure permits companies to file identical MA applications for a medicinal product to the competent authorities in various EU Member States simultaneously if such medicinal product has not received marketing approval in any EU Member State before.

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The competent authority of a single EU Member State, the reference member state, is appointed to review the application and provide an assessment report.

The competent authorities of the other EU Member States, the concerned member states, are subsequently required to grant a marketing authorization for their territories on the basis of this assessment.

The competent authorities of the other EU Member States, the concerned member states, are subsequently required to grant a MA for their territories on the basis of this assessment.

The only exception to this is where the competent authority of an EU Member State considers that there are concerns of potential serious risk to public health, the disputed points are subject to a dispute resolution mechanism and may eventually be referred to the EC, whose decision is binding for all EU Member States.

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An updated RMP must be submitted:

(i) at the request of EMA or a national competent authority, or (ii) whenever the risk-management system is modified, especially as the result of new information being received that may lead to a significant change to the benefit-risk profile or as a result of an important pharmacovigilance or risk-minimization milestone being reached.

benefit-risk profile or as a result of an important pharmacovigilance or risk-minimization milestone being reached.

The regulatory authorities may also impose specific obligations as a condition of the MA.

Since October 20, 2023, all RMPs for centrally authorized products are published by the EMA, subject to only limited redactions.

Since October 20, 2023, all RMPs for centrally authorized products are published by the EMA, subject only to limited redactions.

MA Validity Period

Marketing Authorizations have an initial duration of five years.

MAs have an initial duration of five years.

After these five years, the authorization may subsequently be renewed on the basis of a reevaluation of the risk-benefit balance.

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Applications for renewal must be made to the EMA at least nine months before the five-year period expires.

Additionally, the holder of a MA for an ATMP must put in place and maintain a system to ensure that each individual product and its starting and raw materials, including all substances coming into contact with the cells or tissues it may contain, can be traced through the sourcing, manufacturing, packaging, storage, transport and delivery to the relevant healthcare institution where the product is used.

Any authorization which is not followed by the actual placing of the drug on the EU market (in case of centralized procedure) or on the market of the authorizing member state within three years after authorization ceases to be valid.

For the UK, the period of three years during which the drug has not been marketed in Great Britain will be restarted from the date of conversion to a Great Britain MA.

Conversion refers to the procedure by which, as of January 1, 2021, MAs granted on the basis of a centralized procedure in the EU are only valid in Northern Ireland but not in Great Britain, whereas, prior EU authorizations have all been automatically converted into UK MAs effective in Great Britain only.

On the other hand, for the EU, in the case the drug has been marketed in the UK, the placing on the UK market before the end of the period starting when the UK left the EU on January 31, 2020 and ending on December 31, 2020 (the Brexit Transition Period) will be taken into account.

If, after the end of the Brexit Transition Period, the drug is not placed on any other market of the remaining member states of the EU, the three year period will start running from the last date the drug was placed on the UK market before the end of the Brexit Transition Period.

Advanced Therapy Medicinal Products

In the EU, medicinal products, including advanced therapy medicinal products (“ATMPs”) are subject to extensive pre-and post-market regulation by regulatory authorities at both the EU and national levels.

Pursuant to Regulation (EC) No 1394/2007, the Committee for Advanced Therapies (CAT) is responsible in conjunction with the CHMP for the evaluation of ATMPs.

The CHMP and CAT are also responsible for providing guidelines on ATMPs.

Although such guidelines are not legally binding, compliance with them is often necessary to gain and maintain approval for product candidates.

In addition to the mandatory RMP, the holder of a MA for an ATMP must put in place and maintain a system to ensure that each individual product and its starting and raw materials, including all substances coming into contact with the cells or tissues it may contain, can be traced through the sourcing, manufacturing, packaging, storage, transport and delivery to the relevant healthcare institution where the product is used.

Exceptional Circumstances/Conditional Approval

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(i) the benefit/risk balance of the product is positive, (ii) it is likely that the applicant will be in a position to provide the comprehensive clinical data, (iii) unmet medical needs will be fulfilled by the grant of the MA and (iv) the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required.

A conditional MA must be renewed annually.

Once a conditional MA has been granted, the MA holder must fulfil specific obligations within defined timelines.

A conditional MA is valid for one year and must be renewed annually, but it can be converted into a standard MA once the MA holder fulfills the obligations imposed and the complete data confirm that the medicine’s benefits continue to outweigh its risks.

Data and Market Exclusivity

As in the United States, it may be possible to obtain a period of market and / or data exclusivity in the EU that would have the effect of postponing the entry into the marketplace of a competitor’s generic, hybrid or biosimilar product (even if the pharmaceutical product has already received a MA) and prohibiting another applicant from relying on the MA holder’s pharmacological, toxicological and clinical data in support of another MA for the purposes of submitting an application,

obtaining MA or placing the product on the market.

New Chemical Entities (“NCE”) approved in the EU qualify for eight years of data exclusivity and 10 years of marketing exclusivity.

Innovative medicinal products, referred to as New Chemical Entities (“NCE”), approved in the EU qualify for eight years of data exclusivity and 10 years of marketing exclusivity.

An additional non-cumulative one-year period of marketing exclusivity is possible if during the data exclusivity period (the first eight years of the 10-year marketing exclusivity period), the MA holder obtains an authorization for one or more new therapeutic indications that are deemed to bring a significant clinical benefit compared to existing therapies.

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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 change was authorized).

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.

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 an NCE.

Even if a compound is considered to be a NCE and the MA applicant is able to gain the prescribed period of data exclusivity, another company nevertheless could also market another version of the medicinal product if such company can complete a full MAA with their own complete database of pharmaceutical tests, preclinical studies and clinical trials and obtain MA of its product.

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The current draft envisages e.g., a shortening of the periods of data exclusivity, however, there is currently neither a final version of this draft nor a date for its entry into force.

While the European Parliament adopted its approving position on the reform on April 10, 2024, no further required legislative steps have been taken since.

Orphan Designation and Exclusivity

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In addition, Orphan Drug Designation can be granted if, for economic reasons, the medicinal product would be unlikely to be developed without incentives and if there is no other satisfactory method approved in the European Union of diagnosing, preventing, or treating the condition, or if such a method exists, the proposed medicinal product is a significant benefit to patients affected by the condition.

An application for orphan drug designation (which is not a marketing authorization, as not all orphan-designated medicines reach the authorization application stage) must be submitted first before an application for marketing authorization of the medicinal product is submitted.

The applicant will receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted, and sponsors must submit an annual report to EMA summarizing the status of development of the medicine.

An application for orphan drug designation (which is not a MA, as not all orphan-designated medicines reach the authorization application stage) must be submitted first before an application for MA of the medicinal product is submitted.

The applicant will receive a fee reduction for the MAA if the orphan drug designation has been granted, but not if the designation is still pending at the time the MA is submitted, and sponsors must submit an annual report to EMA summarizing the status of development of the medicine.

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

Designated orphan medicines are eligible for conditional marketing authorization.

The EMA’s Committee for Orphan Medicinal Products, reassesses the orphan drug designation of a product in parallel with the review for a marketing authorization;

for a product to benefit from market exclusivity it must maintain its orphan drug designation at the time of marketing authorization review by the EMA and approval by the EC.

Additionally, any marketing authorization granted for an orphan medicinal product must only cover the therapeutic indication(s) that are covered by the orphan drug designation.

Upon the grant of a marketing authorization, orphan drug designation provides up to ten years of market exclusivity in the orphan indication.

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.

Designated orphan medicines are eligible for conditional MA.

The EMA’s Committee for Orphan Medicinal Products reassesses the orphan drug designation of a product in parallel with the review for a MA;

for a product to benefit from market exclusivity it must maintain its orphan drug designation at the time of MA review by the EMA and approval by the EC.

Additionally, any MA granted for an orphan medicinal product must only cover the therapeutic indication(s) that are covered by the orphan drug designation.

Upon the grant of a MA, orphan drug designation provides up to ten years of market exclusivity in the orphan indication.

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 MA accept an application to extend an existing MA or grant a MA 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.

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141/2000 on orphan medicinal products.

When the period of orphan market exclusivity for an indication ends, the orphan drug designation for that indication expires as well.

When the period of orphan market exclusivity for an

indication ends, the orphan drug designation for that indication expires as well.

Orphan exclusivity runs in parallel with normal rules on data exclusivity and market protection.

Additionally, a marketing authorization may be granted to a similar medicinal product (orphan or not) for the same or overlapping indication subject to certain requirements.

Additionally, a MA may be granted to a similar medicinal product (orphan or not) for the same or overlapping indication subject to certain requirements.

In the UK, following the post-Brexit transition period, a system for incentivizing the development of orphan medicines was introduced.

Overall, the requirements for orphan designation largely replicate the requirements in the EU and the benefit of market exclusivity has been retained.

Products with an orphan designation in the EU can be considered for an orphan MA in Great Britain, but a UK-wide orphan MA can only be considered in the absence of an active EU orphan designation.

The MHRA will review applications for orphan designation at the time of a MA, and will offer incentives, such as market exclusivity and full or partial refunds for MA fees to encourage the development of medicines in rare diseases.

Pediatric Development

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The MAA for the medicinal product must include the results of all pediatric clinical trials performed and details of all information collected in compliance with the approved PIP, unless a waiver or a deferral has been granted, in which case the pediatric clinical trials may be completed at a later date.

Medicinal products that are granted an MA on the basis of the pediatric clinical trials conducted in accordance with the approved PIP are eligible for a six month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity.

Medicinal products that are granted a MA on the basis of the pediatric clinical trials conducted in accordance with the approved PIP are eligible for a six month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity.

This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the approved PIP are developed and submitted.

An approved PIP is also required when a MA holder wants to add a new indication, medicinal form or route of administration for a medicine that is already authorized and covered by intellectual property rights.

In the UK, the MHRA has published guidance on the procedures for UK Paediatric Investigation Plans (“PIPs”) which, where possible, mirror the submission format and requirements of the EU system.

EU PIPs remain applicable for Northern Ireland and EU PIPs agreed by the EMA prior to January 1, 2021 have been adopted as UK PIPs.

PRIME Designation

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Products from small-and medium-sized enterprises may qualify for earlier entry into the PRIME scheme than larger companies on the basis of compelling non-clinical data and tolerability data from initial clinical trials.

Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and potentially accelerated marketing authorization application assessment once a dossier has been submitted.

Importantly, once a candidate medicine has been selected for the PRIME scheme, a dedicated contact point and rapporteur from the CHMP or from CAT are appointed facilitating increased understanding of the product at EMA’s Committee level.

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Similar to the United States, both MA holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA, the EC and/or the competent regulatory authorities of the EU Member States.

This oversight applies both before and after grant of manufacturing licenses and marketing authorizations.

This oversight applies both before and after grant of manufacturing licenses and MAs.

It includes control of compliance with EU good manufacturing practices rules, manufacturing authorizations, pharmacovigilance rules and requirements governing advertising, promotion, sale, and distribution, recordkeeping, importing and exporting of medicinal products.

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, MA of medicinal products and marketing of such products, both before and after grant of MA, 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 MA, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the MA, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

The holder of a MA 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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If the EMA has concerns that the risk benefit profile of a product has varied, it can adopt an opinion advising that the existing MA for the product be suspended, withdrawn or varied.

The agency can advise that the MA holder be obliged to conduct post-authorization Phase 4 safety studies.

The agency can advise that the MA holder be obliged to conduct post-authorization Phase IV safety studies.

If the EC agrees with the opinion, it can adopt a decision varying the existing MA.

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The manufacturing process for pharmaceutical products in the European Union is highly regulated and regulators may shut down manufacturing facilities that they believe do not comply with regulations.

Manufacturing requires a manufacturing authorization, and the manufacturing authorization holder must comply with various requirements set out in the applicable EU laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC (repealed by Directive 2017/1572 on January 31, 2022), Regulation (EC) No 726/2004 and the European Commission Guidelines for cGMP.

These requirements include compliance with EU cGMP standards when manufacturing pharmaceutical products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the European Union with the intention to import the active pharmaceutical ingredients into the European Union.

These requirements include compliance with EU GMP standards when manufacturing pharmaceutical products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the European Union with the intention to import the active pharmaceutical ingredients into the European Union.

Amendments or replacements of at least Directive 2001/83/EC and Regulation (EC) No 726/2004 are part of the reform proposal for European pharmaceutical legislation.

Similarly, the distribution of pharmaceutical products into and within the European Union is subject to compliance with the applicable EU laws, regulations and guidelines, including the requirement to hold appropriate authorizations for distribution granted by the competent authorities of the EU Member States.

The manufacturer or importer must have a qualified person who is responsible for certifying that each batch of product has been manufactured in accordance with cGMP, before releasing the product for commercial distribution in the European Union or for use in a clinical trial.

Manufacturing facilities are subject to periodic inspections by the competent authorities for compliance with cGMP.

The manufacturer or importer must have a qualified person who is responsible for certifying that each batch of product has been manufactured in accordance with GMP, before releasing the product for commercial distribution in the European Union or for use in a clinical trial.

Manufacturing facilities are subject to periodic inspections by the competent authorities for compliance with GMP.

Sales and Marketing Regulations

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The SmPC is the document that provides information to physicians concerning the safe and effective use of the medicinal product.

It forms an intrinsic and integral part of the marketing authorization granted for the medicinal product.

It forms an intrinsic and integral part of the MA granted for the medicinal product.

Promotion of a medicinal product that does not comply with the SmPC is considered to constitute off-label promotion.

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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.

EU regulation with regards to dispensing, sale and purchase of medicines has generally been preserved in the UK following Brexit, through the HMRs.

However, organizations wishing to sell medicines online need to register with the MHRA.

Following Brexit, the requirements to display the common logo no longer apply to UK-based online sellers, except for those established in Northern Ireland.

Anti-Corruption Legislation

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Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

Regulation in the UK and Other Markets

The UK formally left the EU on January 31, 2020.

EU laws now only apply to the UK in respect of Northern Ireland as laid out in the Protocol on Ireland and Northern Ireland and as amended by the Windsor Framework agreed by the UK and EU on February 27, 2023.

Amongst other things, the Windsor Framework sets out a long-term set of arrangements for the supply of medicines into Northern Ireland.

From January 1, 2025, medicines will need to be approved and licensed on a UK-wide basis by the UK’s Medicine and Healthcare products Regulatory Agency (“MHRA”), with medicines using the same packaging and labelling across the UK.

The EMA will have no role in approving or licensing new drugs for provision in Northern Ireland.

The EU and the UK have agreed on a trade and cooperation agreement (“TCA”), which includes provisions affecting the life sciences sector (including on customs and tariffs).

There are some specific provisions concerning pharmaceuticals, including the mutual recognition of cGMP, inspections of manufacturing facilities for medicinal products and issued cGMP documents.

In the UK, the pharmaceutical sector is recognized as being particularly vulnerable to corrupt practices, some of which fall within the scope of the Bribery Act 2010.

Due to the Bribery Act 2010’s far-reaching territorial application, the potential penalized act does not have to occur in the UK to become within its scope.

If the act or omission does not take place in the UK, but the person’s act or omission would constitute an offense if carried out there and the person has a close connection with the UK, an offense will still have been committed.

The Bribery Act 2010 is comprised of four offenses that cover (i) individuals, companies and partnerships that give, promise or offer bribes, (ii) individuals, companies and partnerships that request, agree to receive or accept bribes, (iii) individuals, companies and partnerships that bribe foreign public officials and (iv) companies and partnerships that fail to prevent persons acting on their behalf from paying bribes.

The penalties imposed under the Bribery Act 2010 depend on the offense committed, harm and culpability and penalties range from unlimited fines to imprisonment for a maximum term of ten years and in some cases both.

Regulations in the UK and Other Markets

The UK formally left the EU on January 31, 2020 and EU laws now only apply to the UK in respect of Northern Ireland as laid out in the Protocol on Ireland and Northern Ireland and as amended by the Windsor Framework sets out a long-term set of arrangements for the supply of medicines into Northern Ireland.

The EU and the UK agreed on a trade and cooperation agreement (“TCA”), which includes provisions affecting the life sciences sector (including on customs and tariffs).

There are some specific provisions concerning pharmaceuticals, including the mutual recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP issued documents.

The TCA does not, however, contain wholesale mutual recognition of UK and EU pharmaceutical regulations and product standards.

The UK government has adopted the Medicines and Medical Devices Act 2021 (“MMDA”) to enable the UK’s regulatory frameworks to be updated following the UK’s departure from the EU.

The UK government has adopted the Medicines and Medical Devices Act 2021 (the “MMDA”) to enable the UK’s regulatory frameworks to be updated following the UK’s departure from the EU.

The MMDA introduces regulation-making, delegated powers covering the fields of human medicines, clinical trials of human medicines, veterinary medicines and medical devices.

The MHRA has since been consulting on future regulations for medicines and medical devices in the UK.

Drug Marketing Authorizations

To be used or sold in the UK, a drug must have an effective marketing authorization obtained by a centralized application through EMA or a national application.

National applications are governed by the Human Medicines Regulations (SI 2012/1916) (“HMRs”).

Applications are made electronically through the MHRA Submissions Portal.

The process from application to authorizations generally takes up to 210 days, excluding time taken to provide any additional information or data required by the MHRA.

On August 30, 2023, the MHRA published detailed guidance on its recently announced new International Reliance Procedure (“IRP”) for MAAs.

Effective January 1, 2024, the IRP took effect and replaces existing EU reliance procedures to apply for authorizations from seven international regulators (e.g.

Health Canada, Swiss Medic, FDA, EMA, among others).

The IRP allows medicinal products approved in other jurisdictions that meet certain criteria to undergo a fast-tracked MHRA review to obtain and/or update a marketing authorization in the UK or Great Britain.

For the UK, the period of three years during which the drug has not been marketed in Great Britain will be restarted from the date of conversion to a Great Britain marketing authorization.

Orphan Designation

In the UK, since January 1, 2021, a system for incentivizing the development of orphan medicines was introduced.

Overall, the requirements for orphan designation largely replicate the requirements in the EU and the benefit of market exclusivity has been retained.

Products with an orphan designation in the EU can be considered for an orphan marketing authorization in Great Britain, but a UK-wide orphan marketing authorization can only be considered in the absence of an active EU orphan designation.

The MHRA will review applications for orphan designation at the time of a marketing authorization, and will offer incentives, such as market exclusivity and full or partial refunds for marketing authorization fees to encourage the development of medicines in rare diseases.

Pediatric Development

In the UK, the MHRA has published guidance on the procedures for UK Paediatric Investigation Plans (“PIPs”) which, where possible, mirror the submission format and requirements of the EU system.

EU PIPs remain applicable for Northern Ireland and EU PIPs agreed by the EMA prior to January 1, 2021 have been adopted as UK PIPs.

Sales and Marketing Regulation

EU regulation with regards to dispensing, sale and purchase of medicines has generally been preserved in the UK after its exit from the EU, through the HMRs.

However, organizations wishing to sell medicines online need to register with the MHRA.

The requirements to display the common logo no longer apply to UK-based online sellers, except for those established in Northern Ireland.

The MMDA supplements the UK Medical Devices Regulations 2002 (the “Regulations”), which are based on the EU Medical Devices Directive as amended to reflect the United Kingdom’s post-Brexit regulatory regime.

Notably, the Regulations do not include any of the revisions that have been made by the EU Medical Devices Regulation (EU) 2017/745, which has gained full application in all EU Member States since May 26, 2021 but is not applicable in the UK as “retained law”.

Additionally, the MHRA launched a comprehensive consultation in 2021 with proposals to amend the regulatory framework for medical devices in the United Kingdom.

The stated objectives of the proposals include expansion of the scope of the Regulations (for example, by expanding the in vitro diagnostic medical device definition to include software and other products, including products without an intended medical purpose but with similar functioning and risk profiles) and potentially through use of internationally recognized definitions (for example, by excluding products that contain viable biological substances and excluding food), remove trade barriers, further the availability of medical devices and improve the favorability of the UK market.

The consultation period closed on November 25, 2021 and on June 26, 2022, the MHRA published a response to its consultation, which sets out the proposed new UK regulatory framework for medical devices and in vitro diagnostic medical devices.

The proposals are intended to improve patient safety and public health through appropriate regulatory oversight, improve the traceability of medical devices, improve the regulation of the rules governing software and AI as medical devices and introduce alternative routes to market to ensure the UK aligns with any superior international best practices.

Core aspects of the new framework are expected to apply from July 1, 2025 with appropriate transitional measures and the introduction of secondary legislation.

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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If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical trials, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Additional Regulation

In addition to the foregoing, local, state and federal laws regarding such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business.

These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations.

If our operations result in contamination of the environment or expose individuals to hazardous or biohazardous substances, we could be liable for damages, environmental remediation, and/or governmental fines.

We believe that we are in material compliance with applicable environmental laws and occupational health and safety laws that continued compliance therewith will not have a material adverse effect on our business.

We cannot predict, however, how changes in these laws may affect our future operations.

We may incur significant costs to comply with such laws and regulations now or in the future.

Human Capital Management

As of December 31, 2024, we employed 44 full-time employees at two locations in the United States, in Austin, TX and Durham, NC.

We may hire additional employees in 2024 and beyond with a focus on increasing expertise and bandwidth in preclinical and clinical research and development, in-house process development and manufacturing, and clinical operations to support potential later-stage clinical trials.

We may hire additional employees in 2025 and beyond with a focus on increasing expertise and bandwidth in clinical research and development, in-house process development and manufacturing, and clinical operations to support potential later-stage clinical trials.

We continue to evaluate business needs and opportunities, with a hiring philosophy that seeks to balance in-house expertise with outsourced services, and management of overall operating expense.

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We support our employees’ further development with individualized development plans, mentoring, coaching, group training and conference attendance.

Research and Development

Research and development expenses for the years ended December 31, 2023 and 2022 were $74.3 million and $82.9 million, respectively.

Corporate Information

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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