ITEM 1. BUSINESS
Overview
We are a clinical-stage biotechnology company dedicated to enabling
cures through therapeutics targeting mast and hemopoietic stem cells. We are focused on the development and commercialization of safer
and more effective therapeutic agents for diseases such as Chronic Spontaneous Urticaria (“CSU”), Lower to Intermediate Risk
Myelodysplastic Syndrome (“LR-MDS”) and novel conditioning regimens for stem cell transplantation and ex-vivo gene therapy,
a technique in which genetic manipulation of cells is performed outside of the body prior to transplantation.
Our drug development pipeline includes multiple product candidates
designed to target mast and/or hematopoietic stem cells. Our lead product candidate, briquilimab (formerly known as JSP191), is in clinical
development as a novel therapeutic antibody that targets mast and stem cells in various diseases and as a conditioning agent to clear
hematopoietic stem cells from bone marrow in patients prior to undergoing allogeneic stem cell therapy or stem cell gene therapy. We are
also developing engineered hematopoietic stem cells product candidates reprogrammed using mRNA delivery (“mRNA stem cell platform”)
and gene editing that have a competitive advantage over endogenous hematopoietic stem cells (“HSCs”) because they may permit
higher levels of engraftment without the need for toxic conditioning. We also plan to continue to expand our pipeline to include other
novel mast and stem cell therapies based on immune modulation, graft engineering or cell and gene therapies. Our goal is to expand the
use of therapeutic agents targeting mast and stem cells as well as to expand curative stem cell transplants and gene therapies for all
patients, including children and the elderly.
Mast cells are immune cells that play a key role
in the inflammatory response to pathogens or injury and are typically found in the skin, lungs, digestive track, conjunctiva of the eye
and the mucosal linings of the mouth and nose. Typically, mast cells are triggered by a specific antigen or antibody interaction to release
histamine, a variety of cytokines and other chemical mediators in order fight a potential infection and to recruit additional types of
immune cells to aid in the body’s response. However, with certain diseases, such as CSU, chronic inducible urticaria, allergic asthma,
prurigo nodularis and eosinophilic esophagitis, the mast cell response is dysregulated and may lead to unwanted responses such as hives,
airway constriction or conjunctivitis. Current therapeutic approaches to controlling mast cell response include anti-histamines to counteract
the release of histamine by activated mast cells and anti-IgE antibody therapy to try to eliminate the antibodies responsible for triggering
mast cell activation. We believe that new chronic therapies that target mast cells could be beneficial in treating many diseases that
are a function of mast cell dysfunction.
Myelodysplastic syndromes (“MDS”) are
a mixed group of hematological disorders characterized by decreased production of healthy blood and/or immune cells by the hematologic
stem cells and eventual progression to Acute Myeloid Leukemia (“AML”). Patients with LR-MDS are typically treated with blood
transfusions to augment poor bone marrow stem cell function or with growth factors, such as erythropoietin, to stimulate any remaining
healthy bone marrow cells to increase production of blood or immune cells. The goals of current treatments are to delay the progression
of the disease to AML and for an eventual donor stem cell transplant for eligible patients. We believe that novel approaches that directly
target the diseased stem cells in the bone marrow of MDS patients may lead to better clinical outcomes such as decreased need for blood
transfusions, decreased use of growth factors, and delayed disease progression.
Stem cell transplantation is among the most widely practiced forms
of cellular therapy and has the potential to cure a wide variety of diseases, including cancers, genetic disorders and autoimmune diseases.
A stem cell transplant procedure involves three main steps: (i) stem cells from the patient’s or donor’s bone marrow are collected;
(ii) the patient’s bone marrow is cleared of any remaining stem cells in order to make space to receive new transplanted stem cells,
which is known as conditioning; and (iii) the new stem cells are transplanted into the patient via infusion where they fasten to, or engraft
in, the bone marrow and grow into the blood and immune cells that form the basis of reset and rebuilt blood and immune systems. Transplants
are either allogeneic or autologous, depending on the source of the new stem cells for the transplant. In an allogeneic transplant, patients
receive cells from a stem cell donor. In an autologous transplant, the patient’s own stem cells are used. Autologous transplants
also include stem cell gene therapies, where cells are collected from the patient, edited to either enable a functioning gene or correct
a defective gene, and then transplanted into the patient via infusion.
Currently, patients must receive highly toxic
and potentially life-threatening conditioning agents to prepare their bone marrow for transplantation with either donor stem cells
or their own gene-edited stem cells. Younger, fitter patients capable of surviving these toxic side effects are typically given
myeloablative, or high-intensity, conditioning whereas older or less fit patients are typically given reduced intensity, but still
toxic, conditioning which leads to less effective transplants. These toxicities include a range of acute and chronic effects to the
gastrointestinal tract, kidneys, liver, lung, endocrine and neurologic tissues. Depending upon the conditioning regimen, fitness of
the patient, and compatibility between the donor and recipient, the risk of transplant-related mortality ranges from 10% to more
than 50% in older patients. Less toxic ways to condition patients have been developed to enable transplant for older patients or
those with major comorbidities, but these regimens risk less potent disease elimination and higher rates of disease relapse. Even
though stem cell therapy can be one of the most powerful forms of disease cure, these limitations of non-targeted conditioning
regimens have seen little innovation over the past decade. We believe that novel targeting approaches to stem cell conditioning have
the potential to reduce toxicities associated with current regimens and expand the use of allogeneic and gene modified transplant in
multiple diseases.
Our lead product candidate, briquilimab, is a monoclonal
antibody designed to block stem cell factor (“SCF”) from binding to and signaling through the CD117 receptor on mast and stem
cells. The SCF/CD117 pathway is a survival signal for mast and stem cells and we believe that blocking this pathway may lead to depletion
of these cells from skin and bone marrow environments. Currently, we are developing briquilimab as chronic therapy for CSU and LR-MDS.
We are also developing briquilimab as a one-time conditioning therapy in various stem cell transplant settings such as severe combined
immunodeficiency (“SCID”) for which we are currently conducting a Phase 1/2 clinical trial in patients who have failed a previous
stem cell transplant. Briquilimab is also being studied by our academic and institutional partners, Stanford University and National Institutes
of Health (“NIH”), in other transplant settings, including Fanconi Anemia (“FA”), sickle cell disease (“SCD”),
chronic granulomatous disease (“CGD”) and GATA-2 Type MDS.
We are planning to evaluate briquilimab as a therapeutic
in patients with CSU, a disorder of mast cells in the skin. Patients with CSU experience swelling, redness and itching of the skin that
lasts at least six weeks due to either an unknown cause, Type I autoimmunity with Immunoglobulin E antibodies (“IgE”) against
self or Type IIb autoimmunity with activating antibodies directed at mast cells. The U.S. Food and Drug Administration (the “FDA”)-approved
drug therapy for CSU includes second generation H1-antihistamines for first line use followed by consideration for use of omalizumab,
a monoclonal antibody directed at circulating IgE. The biologic rationale for both of these therapies is based on modulating mast cell
response. Antihistamines work to counteract the effects of histamine that is released from activated mast cells and omalizumab is designed
to reduce IgE, which are thought to trigger mast cell activation. Based on preclinical and human healthy volunteer clinical data showing
that briquilimab can deplete mast cells from the skin, we believe that briquilimab could be effective therapy for CSU patients. We intend
to study briquilimab monotherapy in CSU patients who are refractory to anti-histamine therapy.
We also plan to evaluate briquilimab as a therapeutic
for certain patients with proliferative disorders of hematopoietic stem cells. MDS is a heterogeneous disorder of the bone marrow that
typically occurs in an older population and can progress to AML. The Revised International Prognostic Scoring System (“IPSS-R”)
is a clinical assessment tool used to evaluate risk and prognosis of newly diagnosed patients. Patients with IPSS-R scores of low or very
low are not typically referred for a stem cell transplant due to the risk of transplant-related toxicities from current conditioning regiments,
infection and Graft vs Host Disease (“GvHD”) outweighing the patient’s expected survival with drug therapies. These
patients typically suffer from anemia, thrombocytopenia or neutropenia and are given drug therapies such as an erythropoiesis stimulating
agent (“ESA”) to stimulate production of new cells to correct their blood deficiency. However, these agents do not target
the diseased hematopoietic stem cell and patients who become refractory to ESA are dependent on routine blood transfusions, which are
associated with poor survival rates. ESA-refractory lower-risk MDS patients have few treatment options and are a clinical unmet need.
Briquilimab
and other anti-CD117 monoclonal antibodies have been shown to deplete normal and diseased MDS human hematopoietic stem cells in clinical
and pre-clinical studies. In studies of non-human primates (“NHPs”) and healthy human volunteers, administration of a single
dose of briquilimab resulted in depletion of healthy hematopoietic stem cells followed by recovery in approximately six weeks. Additional
recent clinical data in MDS patients undergoing stem cell transplants showed depletion of hematopoietic stem cells after administration
of briquilimab alone. By depleting diseased and healthy hematopoietic stem cells, we believe that briquilimab may allow for preferential
recovery of healthy hematopoietic stem cells and restoration of normal hematopoiesis. We intend to study briquilimab monotherapy in lower-risk
MDS patients with documented cytopenia who are refractory to ESA
therapy.
We are also developing briquilimab for SCID. Due
to genetic errors at birth, SCID patients do not possess fully functional immune systems, which results in chronic infections, failure
to thrive and significantly decreased lifespans. If available, these patients are typically given a transplant from a close relative with
the goal of allowing healthy donor stem cells to establish in the patient’s bone marrow, leading to production of normal immune
cells. However, stem cell transplants are not universally successful. SCID patients with poor transplant outcomes are typically dependent
on external therapies such as intravenous immunoglobin (“IVIG”) and often have poor immunity, leading to chronic infections
and decreased lifespans. SCID patients who fail transplant are not usually given a second transplant due to their fragile health and the
significant toxicities of current conditioning agents.
We are currently conducting an open label Phase 1/2 clinical trial
in SCID patients with a history of a prior allogeneic transplant for SCID but with poor graft outcomes. The primary goals of the study
are to evaluate the safety of briquilimab in this population and to assess successful donor transplantation leading to improved immune
function. Based on preliminary results from the ongoing trial, we believe briquilimab has demonstrated the ability to enable engraftment
of donor HSCs as a single agent as determined by donor chimerism, or the percentage of bone marrow cells in the patient that are of donor
origin after transplant. Seven out of the first ten T cell-negative, B cell-negative (“T-B-”) SCID patients with prior allogeneic
transplant achieved donor engraftment, naïve donor T cell production and demonstrated preliminary clinical improvement after
re-transplantation using briquilimab-only conditioning. No briquilimab treatment-related serious adverse events (“SAEs”) have
been reported to date and pharmacokinetics have been consistent with earlier studies in healthy volunteers. We expect to complete enrollment
in this Phase 1/2 clinical trial in 2023.
The FDA has granted rare pediatric disease designation to briquilimab
as a conditioning treatment for patients with SCID. In addition, both the FDA and the European Medicines Agency (“EMA”) have
granted orphan drug designation to briquilimab for conditioning treatment prior to hematopoietic stem cell transplantation.
We also are evaluating briquilimab in an open label Phase 1 clinical
trial of donor stem cell transplant in patients with MDS or AML. The primary endpoints are to evaluate the safety, tolerability and pharmacokinetic
parameters of briquilimab. In this clinical trial, 0.6 mg/kg briquilimab-based conditioning was well tolerated in all 31 MDS/AML patients
as of December 31, 2022. Furthermore, it led to successful engraftment as demonstrated by sustained blood neutrophil count of >500
x 10^6 / L (Wolff 2002) in all 31 patients. Additionally, at one year post-transplant, eight of the twelve AML patients on study were
alive and disease-free, without trace evidence of leukemic cells, or minimal residual disease (“MRD”) as detected by cytogenetics,
flow cytometry or next-generation sequencing, a secondary endpoint of the clinical study. No briquilimab-related SAEs have been reported.
Among the twelve AML patients, three patients had disease relapse and one patient came off study due to late onset Grade 3 acute GvHD.
We expect to present additional data from this study, including data from the MDS patients, in 2023.
We have entered into a clinical collaboration with Stanford University
(“Stanford”) to study briquilimab-based conditioning in patients with FA with
bone marrow failure and who are eligible for stem cell transplant. This study is currently open for patient recruitment. The first two
patients enrolled in this study have been transplanted and show 100% donor myeloid chimerism, a measurement of transplant efficacy, along
with recovery of normal blood counts. We are also collaborating with the NIH to conduct clinical trials of briquilimab-based conditioning
in patients with SCD, with CGD and with GATA-2 mutated MDS. The first three patients in the SCD study have shown full myeloid chimerism
and increased production of hemoglobin compared to their pre-transplant baseline. We believe that briquilimab may also be useful for conditioning
in allogenic transplant for other diseases beyond which we are currently studying, including autoimmune diseases. We also believe that
targeted briquilimab-based conditioning may improve the efficacy and safety of gene therapies.
Our mRNA stem cell platform is designed to overcome key limitations
of stem cell transplant and stem cell gene therapy. By using mRNA delivery and/or gene editing, we believe we can reprogram donor or gene
corrected stem cells to have a transient proliferative and survival advantage over the patient’s existing cells. We believe our
initial preclinical experiments demonstrate that multiple different mRNAs can be used to improve engraftment of modified stem cells. One
example is mRNA stem cell grafts that express certain variants of CXCR4, a cell surface protein involved in cellular homing to the bone
marrow, which may lead to improved stem cell homing and engraftment in the bone marrow. Another example includes expression of a modified
stem cell factor receptor that can lead to cell line proliferation independent of SCF concentration, enabling our mRNA stem cell grafts
to outcompete unmodified HSCs through better survival and engraftment. Also, since briquilimab only blocks signaling through the SCF receptor,
these mRNA stem cell grafts are not affected by briquilimab when used in combination. Other initial experiments have shown that mRNA can
be used to express these receptor variants on the cell surface. We have also identified other potential receptor modifications that prevent
the binding of briquilimab but retain the ability to bind SCF, therefore allowing the mRNA stem cell grafts to proliferate normally even
in the presence of briquilimab.
We intend to become a fully integrated discovery, development and
commercial company in the field of mast and stem cell therapeutics. We are developing our product candidates to be used individually or,
in some cases, in combination with one another. For example, we believe our pipeline could be tailored to the patient-specific disease
so that a patient may receive more than one of our therapies as part of his or her individual allogeneic or gene-edited stem cell therapy.
Our goal is to advance our product candidates through regulatory approval and bring them to the commercial market based on the data from
our clinical trials and communications with regulatory agencies and payor communities. We expect to continue to advance our pipeline and
innovate through our research platform.
We have an exclusive license agreement with Amgen Inc. (“Amgen”)
for the development and commercialization of the briquilimab monoclonal antibody in all indications and territories worldwide. We also
have an exclusive license agreement with Stanford for the right to use briquilimab in the clearance of stem cells prior to the transplantation
of HSCs. We also entirely own the intellectual property for our mRNA stem cell platform, which has been internally developed.
Our Product Pipeline
We are developing a portfolio of novel product candidates that
we believe have the potential to meaningfully improve chronic mast and stem cell therapy for patients with certain blood disorders and
autoimmune diseases. Additionally, we believe our product candidates have the potential to allow more patients with debilitating or life-threatening
diseases to access a one-time, transformative blood and immune reset through transplant with better outcomes and reduced risk of toxicity
and mortality versus current technologies. We are developing our product candidates so that they can be used individually or in combination
with one another, such that patients may receive more than one of our therapies as part of their individual transplant journey. In addition
to our first set of clinical product candidates, we are in the process of identifying several other potential candidates from our mRNA-modified
hematopoietic stem cell platform.
Briquilimab
We believe briquilimab is a unique, humanized,
monoclonal antibody that targets the underlying biology of mast cell and stem cell survival pathways to potentially improve the efficacy
and safety of hematopoietic stem cell transplantation. Briquilimab is in development as a chronic therapy in CSU and LR-MDS, as well as
a conditioning agent to clear hematopoietic stem cells from the bone marrow prior to transplant. Briquilimab binds to human CD117, a receptor
for SCF, which is expressed on the surface of mast cells and hematopoietic stem and progenitor cells. The interaction of SCF and CD117
is required for mast and stem cells to survive. By blocking SCF from binding to CD117 and disrupting critical survival signals, briquilimab
leads to the depletion of mast cells in the skin and stem cells in the bone marrow. Briquilimab is in development as a conditioning agent,
both as a single agent and in combination with existing agents depending on the need in a particular transplant setting.
Briquilimab as a Primary Therapeutic for Disorders of Mast
Cells
Mast cells are primary cells of the immune system
derived from hematopoietic stem cells in the bone marrow. Mast cells store a number of different chemical mediators such as tryptase,
histamine, interleukins and heparin in granules found throughout the cell. When triggered by an allergen specific to membrane-bound IgE
antibodies, the mast cells are activated and release the content of the granules into the surrounding tissue. These chemical mediators
attract other immune cells to help with any response as well as produce a local allergic reaction consisting of inflammation, swelling,
contraction of smooth muscle and increased mucus secretion. Mast cells are usually long-lived and found at boundaries to the external
environment such as the skin, mucosal surfaces of the gut and lungs and eye.
Dysfunctional regulation and activation of mast
cells is thought to be a significant driver of multiple diseases, including urticarias, asthma, prurigo nodularis, allergic eye disease
and others. Each of these diseases has been shown to have local concentrations of mast cells, cellular response consistent with mast cell
degranulation and disease modification with use of anti-histamines. Unfortunately, currently approved agents targeting mast cells in these
diseases are ineffective in many patients, leading to continued high disease burden.
Briquilimab blocks signaling on the CD117 receptor by inhibiting the binding of SCF, the
ligand for the CD117 receptor. The interaction of SCF/CD117 on mast cells is critical for development, proliferation and survival. Without
continued signaling through CD117, mast cells will undergo apoptosis and die. We have shown that a subcutaneous dosing of briquilimab
leads to depletion of mast cells in the skin of healthy human volunteers for at least 29 days after a single administration. We believe
that depletion of mast cells in the skin of patients with urticaria or prurigo nodularis and in the lungs of patients with allergic asthma
has the potential to lead to improved disease control for those patients without adequate response to current therapies.
We intend to study briquilimab monotherapy in patients
with CSU who are refractory to second generation anti-histamine agents. We plan to file an investigational new drug (“IND”)
application with the FDA in the second quarter of 2023 with a potential study start in the third quarter of 2023.
Briquilimab
as a Primary Therapeutic for Proliferative Disorders of the Stem Cells
A transforming event in hematopoietic stem cells
can produce several different malignancies. Cancer stem cells can self-renew, have a prolonged survival rate and have the ability to give
rise to cells with more differentiated characteristics. The idea that cancer is primarily driven by a smaller population of stem cells
has important implications. For instance, many chemotherapies can shrink tumors or deplete downstream differentiated cells, but if the
chemotherapies do not kill the cancer stem cells, the tumor will grow back.
It has been shown that HSCs are the disease-initiating
cells in cancers like MDS and that these pathogenic MDS HSCs outcompete normal HSCs present in the bone marrow of affected patients. Furthermore,
these disease-initiating HSCs express CD117 and anti-CD117 antibodies can target and eradicate these pathogenic cells. This is especially
significant in a disease like MDS where available therapies either lack disease-modifying activity or possess off-target toxicity, which
prevents their use in older and/or fragile individuals who comprise most of the patients affected by MDS. Development of anti-CD117 monoclonal
antibodies, which might be safely used to target MDS clones, would represent a major step forward for the treatment of this disease.
We plan to evaluate briquilimab as a therapeutic for certain MDS patients.
The IPSS-R is a clinical assessment tool used to evaluate risk and prognosis of newly diagnosed patients. Patients with IPSS-R scores
of low or very low are not typically referred to stem cell transplant due to the risk of transplant-related toxicities from current conditioning
regiments, infection and GvHD outweighing the patient’s expected survival with drug therapies. These patients typically suffer from
anemia, thrombocytopenia or neutropenia and are given drug therapies such as an ESA to stimulate production of new cells to correct their
blood deficiency. However, these agents do not target the diseased hematopoietic stem cell and patients who become refractory to ESA are
dependent on routine blood transfusions, which are associated with poor survival rates. ESA refractory lower-risk MDS patients have few
treatment options and are a clinical unmet need.
Briquilimab and other anti-CD117 monoclonal antibodies have been shown
to deplete normal and diseased MDS human hematopoietic stem cells in clinical and pre-clinical studies. In studies in NHPs and healthy
human volunteers, administration of a single dose of briquilimab resulted in depletion of healthy hematopoietic stem cells followed by
recovery in approximately six weeks. Dr. Wendy Pang demonstrated at Stanford that briquilimab is capable of depleting MDS HSCs in vivo
in a xenografted mouse model. New data from our MDS/AML trial of briquilimab as a conditioning agent have revealed that the antibody can
have a direct depletion effect on CD34+CD45RA-CD117+ cells prior to administration of fludarabine or radiation. By depleting diseased
and healthy hematopoietic stem cells, we believe that briquilimab may allow for preferential recovery of healthy hematopoietic stem cells
and restoration of normal hematopoiesis.
We intend to study briquilimab monotherapy in lower-risk
MDS patients with documented cytopenia who are refractory to ESA therapy. We plan to run the primary treatment study under the existing
new drug application for MDS/AML and anticipate enrollment to begin in this single arm clinical trial in the first half of 2023.
mRNA Stem Cell Platform
Our mRNA stem cell grafts are designed to overcome
key limitations of allogeneic donor and autologous gene-edited stem cell transplants. By delivering mRNA or modifying DNA, leading to
expression of a modified receptor or protein, we can reprogram donor or gene-edited stem cells to have a transient proliferative and survival
advantage over the patient’s existing cells to permit higher levels of engraftment without the need for toxic conditioning of the
patient. mRNA stem cell grafts have the potential to eliminate the need for donor T-cells, B-cells and NK-cells which are needed in unmodified
donor HSC grafts to permit robust engraftment but can lead to GvHD, where the donor cells attack the patient’s tissues, resulting
in the need for long-term immunosuppression therapies.
Our Strategy
Our goal is to bring curative allogeneic and autologous hematopoietic cell transplant (“HCT”) and gene therapy to more people by developing compounds that can make it safer and more effective.
As part of our strategy, we aim to:
Build a leading biotechnology company to
enable cures via immune modulation, graft engineering and cell and gene therapies. We are bringing together a team of biotech
veterans, leading academic institutions and a strong syndicate of healthcare-focused investors to achieve our vision of developing improved
therapeutics for mast and stem cell diseases and improved stem cell transplantation.
Advance the development of briquilimab as
a chronic therapeutic targeted at mast and stem cell diseases. We are targeting disorders of mast and stem cells, including CSU
and LR-MDS, with briquilimab as a repeat dose therapy. We believe that briquilimab may also be effective in other diseases of the mast
or stem cell and we may consider expanding our efforts in additional indications.
Continue to develop briquilimab as a novel,
targeted pre-transplant conditioning agent enabling more efficacious and safer HCT. Starting with our lead product candidate,
briquilimab, we are advancing the field of HCT to address effective and safe pre-transplant conditioning in hematologic monogenic and
malignant disorders as well as in autoimmune disease and gene therapy. Our initial focus is on SCID, AML, MDS and autologous gene-edited
stem cell transplants.
Advance our mRNA platform to overcome the
limitations of current allogeneic and autologous gene-edited stem cell transplants. We are developing enhanced stem cell therapies
with transient proliferative advantages, which we believe may translate to superior efficacy and reduced GvHD compared to current standard
of care therapies in allogenic and autologous gene therapy transplants.
Commercialize our product candidates to expand
the use of effective and safe mast and stem cell therapies for patients and physicians in our target markets. If approved, we
plan to bring our product candidates to the American, European and Japanese markets, focusing on the top physicians and accredited transplant
centers and hospital-based prescribers who administer the majority of mast and stem cell therapies.
Form and strengthen strategic collaborations
with leading industry and academic organizations to further develop our pipeline, unlock the commercial potential of our portfolio and
provide enabling technologies for gene therapy collaborators. We intend to continue collaborations with our existing partners
and enter new strategic partnerships to develop additional candidates, generate evidence, and commercialize new products in the field
of mast and stem cell therapies.
Our History and Team
Jasper was founded by Dr. Judith Shizuru, Professor of Medicine
and Pediatrics at Stanford University, and Dr. Susan Prohaska, a Stanford-trained immunologist, stem cell biologist and drug developer,
with the goal of bringing curative hematopoietic stem cell transplantation to more people by making it safer and more effective. We unite
technologies from Stanford University and Amgen via expertise in stem cell transplantation, stem cell biology and drug development. Building
on bone marrow niche-clearing technology from Stanford and with our lead compound briquilimab, Dr. Shizuru initiated a clinical program
funded by the California Institute for Regenerative Medicine to safely condition patients with SCID prior to hematopoietic cell transplantation.
We have assembled a management team of experienced biopharma industry
veterans. With this leadership, we believe we are well positioned to achieve our vision of revolutionizing hematopoietic cell transplantation
with safer conditioning regimens. Ron Martell, our Chief Executive Officer, is an experienced biopharma veteran who has extensive experience
in cellular therapies and oncology drug development. Prior to joining Jasper, Mr. Martell served as the President and CEO of MorphImmune,
Inc., a private platform company advancing a highly specific targeting technology that uses a ligand-linked payload to reprogram the immune
system. Previously, he was President and CEO of Nuvelution Pharma. He was also Co-Founder and Executive Chairman of Indapta, Orca Bio
and Co-Founder and CEO of Achieve Life Sciences, where he led the merger of the company with Oncogenex. Mr. Martell has served as the
CEO of three public biopharmaceutical companies, including Sevion and NeurogesX, and has overseen billions of dollars in industry transactions.
Earlier in his career, Mr. Martell served as Senior Vice President of Commercial Operations at ImClone Systems, where he was instrumental
in deals with Bristol-Myers Squibb and Merck KGaA and built ImClone Systems’ worldwide operations to market and commercialize Erbitux®.
He also served in various leadership positions with Genentech where, as Group Manager, Oncology, he was responsible for building the company’s
oncology franchise, including the launch of Herceptin® and Rituxan®.
Members of our management team have held leadership
positions at companies that have successfully discovered, developed, and commercialized therapies for various cancers and devastating
rare diseases. These companies include Roche, Johnson & Johnson, Genentech, Bristol-Myers Squibb, Imclone, Amgen, Portola, Alexion
and many others.
Background on Hematopoietic Stem Cell Therapy
HCT is among the most widely practiced forms of
cellular therapy and has the potential to cure a wide variety of diseases. Currently, its use is limited to patients with severe disease
burden due to the toxicities of current non-targeted conditioning regimens and the limitations of the transplant grafts themselves.
Stem cell transplants first require identification
of a suitable donor and collection of the donor’s stem cells, typically from blood. Then chemotherapy or radiation-based conditioning
is used to clear the patient’s bone marrow of existing diseased stem cells in order to make space to receive new transplanted stem
cells. Finally, the donor or gene corrected stem cells are infused into the patient where they engraft into the bone marrow and produce
new blood and immune cells that form the basis of a reset and rebuilt blood and immune system. All transplants are categorized as either
autologous or allogeneic, depending on the source of the new stem cells for the transplant.
In an autologous transplant, which is used for conditions
such as multiple myeloma, non-Hodgkin’s lymphoma and certain autoimmune diseases, the patient’s own stem cells are used. Autologous
transplants also include stem cell gene therapies, in which cells are collected from the patient, edited to either insert a functioning
gene into, or correct a defective gene within, such cells and then such cells are transplanted into the patient via infusion.
In an allogeneic transplant, used for conditions such as acute
leukemias, MDS, genetic diseases and certain autoimmune diseases, patients receive cells from a stem cell donor. The preferred donor is
a biological relative who has a well-matched immune system. The second option is a matched unrelated donor identified through a bone marrow
donor registry. Transplant outcomes are not optimal with mismatched donors.
Current State of Conditioning Regimens
Currently, patients must receive highly toxic, potentially
life-threatening and non-specific conditioning agents to prepare their bone marrow for transplantation with either donor stem cells or
their own gene-edited stem cells. Current conditioning agents are genotoxic and are associated with major toxicities and adverse events
such as oral mucositis, sepsis, veno-occlusive disease, bacteremia, pulmonary fibrosis, and GvHD in the near term. In the long term, patients
must be counseled against risk of infertility of up to 70% and risk of secondary cancers of 5-10% after chemotherapy conditioning. Additionally,
there is a treatment-related mortality risk associated with current conditioning regimens that ranges from 10% to more than 50% in older
patients. Other limitations of chemotherapy-based conditioning include incomplete engraftment, transplant ineligibility and prolonged
hospitalization.
Current State of Hematopoietic Stem Cell Grafts
Hematopoietic stem cell grafts currently have limitations
around failed or poor engraftment with the risk of clinical relapse. Furthermore, GvHD is a high-risk short- and long-term adverse event
associated with HCT as a result of donor T-cells, B-cells and NK-cells which are needed in unmodified donor HSC grafts to permit robust
engraftment. Donor immune cells may react to the patient’s tissues as foreign leading to GvHD whereas newly produced immune cells
are trained by the patient’s body to not act against the patient’s own cells. Due to this risk, patients also need to undergo
long-term immunosuppression.
Our Solution and Product Candidates
We are developing briquilimab as a conditioning agent that could
significantly expand the eligible patient population for both allogeneic and autologous gene edited hematopoietic stem cell therapies
in addition to our mRNA engineered hematopoietic stem cells that could result in better transplant efficacy with reduced complications.
Currently, approximately 20,000 patients receive allogeneic and autologous gene therapy transplants each year in the major global markets
(the United States, the United Kingdom, France, Germany, Spain, Italy and Japan), and we believe this may grow to 80,000 patients with
safe conditioning and more effective grafts.
Briquilimab is a targeted anti-CD117 (stem cell factor receptor)
antibody which we are currently evaluating in two clinical trials for conditioning prior to stem cell transplant in patients with SCID
or with MDS/AML. Briquilimab is designed to bind to CD117 with a greater affinity than SCF. By blocking signaling of the stem cell factor
receptor, briquilimab may lead to depletion of stem cell from the bone marrow. Briquilimab was also designed to minimize any interaction
with the immune system thereby reducing the risk of immune activation via mast cells or other pathways normally activated by antibodies.
We believe these attributes will allow briquilimab
to potentially be used as a monotherapy or in combination to deplete normal and diseased stem cells. The blocking of SCF by briquilimab
may remove a critical survival signal on stem cells that leads to their depletion in the bone marrow. Furthermore, the mechanism of action
(“MOA”) of briquilimab on stem cells may be synergistic with other disruptors of stem cell survival such as radiation, azacytidine,
and CD47. Our clinical strategy in SCD, AML and Higher Risk MDS aims to exploit this potentially synergistic mechanism to combine briquilimab
and low dose radiation to fully clear both diseased and normal stem cells prior to transplantation of donor cells.
The monoclonal antibody isotype and other modifications of briquilimab
were also chosen carefully to retain high affinity binding to the CD117 receptor and SCF signal blockade without recruiting other immune
cells that could lead to receptor activation, mast cell degranulation or other off-target toxicities. For example, simply changing briquilimab
from an IgG1 isotype to an IgG2 isotype would result in less potent inhibition of CD117, potentially decreasing the effect on mast and
stem cell depletion. This finding and other data demonstrate that not all anti-CD117 antibodies behave equally or have the same MOA.
Other known approaches to target CD117, such as anti-CD117 antibodies
linked to a toxin, may have off-target toxicity. In contrast to briquilimab, which provides a transient SCF signal blockade, a toxin linked
anti-CD117 antibody requires internalization by CD117 expressing cells leading to cell death. Any CD117 expressing cell including stem
cells, mast cells, germ cells and melanocytes may be affected by this mechanism. Furthermore, the complexity of an antibody-drug conjugate
molecule adds to the manufacturing, clinical and regulatory risks of the drug development process, especially for a novel linker/payload
combination that may be subject to different regulatory and Chemistry, Manufacturing and Controls reviews.
Preclinical Transplant Data for Briquilimab — General
We conducted a preclinical study to determine if NHP HSCs are sufficiently
similar to human HSCs to allow use of the same phenotype assays used in human studies to evaluate the effect of briquilimab on NHP hematopoiesis.
This study tested, by flow cytometry, a technique used to measure physical and chemical characteristics of a population of cells, whether
homologous subsets of NHP bone marrow express the same cellular markers as human HSCs (CD34, CD90, and CD117), and if the human antibody
reagents used to identify these markers could also be used for NHP HSCs. Bone marrow samples (or bone marrow aspirates) of NHPs and humans
were stained with the antibody reagents directed against human CD34, CD90, and CD117. HSCs in both human and NHP bone marrow were phenotypically
identified using the anti-human antibodies against CD34 and CD90. A high percentage of human and NHP cells expressing CD34 and CD90 (also
CD34+ and CD90+) also express CD117. Overall, we believe these data support the use of human antibody reagents for CD34 and CD90 to assess
the effect of briquilimab on hematopoiesis in NHP in vitro and in vivo studies.
Figure 1: Briquilimab binds CD117 on CD34+CD90- and CD34+CD90+
cells in human and NHP bone marrow. Left panel: flow cytometric analysis of HSCs fluorescently labelled for CD34 and CD90. Right panel:
the identified CD34+CD90- and CD34+CD90+ cells are then fluorescently labelled with 104D2 and briquilimab. Briquilimab and 104D2 non-competitively
labeled the same population suggesting these antibodies bind different epitopes of NHP and human CD117.
Non-clinical studies in NHPs conducted at Stanford by Hye-Sook
Kwon, Ph.D., now our Director, Biology and Translational Research, demonstrated briquilimab’s ability to deplete bone marrow HSCs
in a large animal model (Figure 2). Non-clinical studies in “humanized” mice demonstrated both depletion of human HSCs and
engraftment of allogeneic donor HSCs. These studies supported the potential for briquilimab to deplete human stem cells prior to stem
cell transplant in the IND filings for the ongoing clinical trials designed to assess the safety
and efficacy of briquilimab in HSC transplants.
Figure 2: Representative flow cytometry analysis for cells fluorescently
labeled with CD34 and CD90 on days 0, 10, and 42 post administration of 1.0 mg/kg briquilimab. CD34+ stem cells in the bone marrow of
this NHP are transiently depleted. HSC depletion lasted up to 21 days in most animals and more than 42 days in one NHP receiving the highest
dose.
Briquilimab for Severe Combined Immunodeficiency
SCID is a genetically heterogeneous group of over
20 monogenic conditions of the immune system characterized by the lack of normal T lymphocyte development, in addition to deficiencies
of B cells, NK cells, or both in some forms which is currently curable only by hematopoietic cell transplant. The incidence of SCID is
estimated at one in 80,000 live births across all ethnic groups. Due to the toxicities associated with the chemotherapy regimens used
in standard allogeneic HCT to deplete endogenous HSC, some centers do not use conditioning regimens. SCID patients who undergo unconditioned
HCT have relatively improved overall survival but often experience incomplete immune reconstitution characterized by inadequate T cell
numbers and/or ongoing deficiency of B cell humoral immunity. This issue occurs more frequently in those patients who do not have a human
leukocyte antigen-matched donor and who therefore receive T cell depleted haploidentical donor grafts.
Patients who receive full or reduced doses of busulfan (a DNA damaging
drug) tend to engraft well and have full lymphocyte reconstitution. However, due to busulfan’s off-target toxic effects, these patients
experience both short- and long-term complications. Since these patients receive busulfan as infants, they experience chronic complications
such as growth retardation, cognitive defects, craniofacial abnormalities, liver toxicity, seizures and endocrine defects, including infertility,
and increased cancer risk.
Pre-clinical Data for Briquilimab for Severe Combined Immunodeficiency
The ability of briquilimab to deplete human hematopoiesis was evaluated
in humanized immune deficient mice that were stably engrafted with human hematopoietic grafts at Stanford by Aaron Logan, M.D., Ph.D.,
et al. The mice were treated with a single dose of either 0.5 or 3.0 mg/kg briquilimab. No significant differences in depletion of human
cells and HSCs after six weeks of treatment were noted between the two dose levels of briquilimab. After a single treatment with briquilimab,
mice were depleted of human cells in peripheral blood and bone marrow. Human HSCs and progenitor cells (CD45+CD34+CD117+) in the bone
marrow were substantially decreased for six weeks after treatment with briquilimab.
To model human transplantation with a briquilimab-based conditioning
regimen, humanized immune deficient mice that had been stably engrafted with human hematopoietic cells underwent a second transplant using
conditioning with briquilimab with or without the addition of an anti-CD52 antibody (alemtuzumab) that depletes human lymphocytes. The
second human HSC graft was from a different donor and hence, was allogeneic to the first human graft. This second donor graft was transduced
with a lentiviral vector to express the marker green fluorescence protein (“GFP”) to allow assessment of its engraftment.
CD34+ GFP marked cells were injected into untreated control mice or mice that had been treated 23 – 25 days previously with briquilimab
with or without anti-CD52. After six weeks, the blood of these secondarily transplanted mice was evaluated for evidence of GFP-marked
second donor cells.
Figure 3: Briquilimab in addition to an anti-CD52 antibody demonstrated
the highest level of engraftment. Engraftment was demonstrated by human CD45+ cells marked to express GFP.
Mice pre-treated with briquilimab and anti-CD52
demonstrated the highest level of engraftment, with 67% (six of nine) of human CD45+ cells also expressing GFP. In mice treated only with
briquilimab, 43% (three of seven) were GFP positive. In control mice pre-treated with anti-CD52 alone, no mice (zero of seven) showed
GFP expression, while 10% (one of ten) of the control mice not given any pre-treatment showed GFP expression (Figure 3).
We believe that this study can serve as a preclinical
proof of concept of briquilimab conditioning enhanced engraftment with CD34+ progenitor cells in mice, suggesting it may be efficacious
in an analogous clinical setting. Briquilimab appeared to be particularly effective in this setting when used along with an anti-CD52
antibody, which used a separate lymphodepleting agent to suppress rejection by the immune competent first allograft.
Clinical Data for Briquilimab for Severe Combined Immunodeficiency
We have an ongoing Phase 1/2 dose escalation open
label clinical trial to evaluate briquilimab as the sole conditioning agent to achieve HSC engraftment in patients undergoing transplant
for SCID. The primary endpoint in Phase 1 is to assess the safety and tolerability of briquilimab as a conditioning agent in SCID patients.
The two primary efficacy endpoints in Phase 2 are the proportion of patients achieving adequate donor HSC engraftment and the proportion
of patients achieving naïve CD4+ T cell production greater than or equal to 85 cells/uL, a level expected to provide immune reconstitution,
during weeks 36 to 104 post-transplant. Secondary endpoints include durability of naïve T cell production, incidence and severity
of GvHD, hematopoietic recovery and pharmacokinetic properties of briquilimab. Patients receive a single intravenous infusion of briquilimab
on study day 0 in one of four dose cohorts: 0.1 mg/kg, 0.3 mg/kg, 0.6mg/kg or 1.0 mg/kg. Patients will be followed for five years following
transplant. This trial is currently open for enrollment at multiple clinical trial sites in the United States.
Other studies of SCID patients have shown functional
T and B cell reconstitution in patients achieving long-term myeloid donor chimerism of at least 3%. SCID patients who fail to achieve
durable donor cell engraftment from a first transplant may not be candidates for a second transplant using current conditioning agents
due to the toxicity of the conditioning regimen and fragile nature of most SCID patients. These patients may remain on medically supportive
immune therapies such as intravenous immunoglobulin (“IVIG”) or receive an unconditioned “boost” transplant of
donor cells which does not lead to sustained production of new immune cells.
We believe briquilimab has enabled immune reconstitution
for patients based on naïve CD4+ T-cell levels and has shown clinical benefit in T-B- SCID patients in a re-transplant setting. Patients
have shown resolution of chronic infections, independence from or reduction of IVIG therapy and antibody response to vaccine challenge.
Through December 31, 2022 in this open label clinical trial, ten T-B- SCID re-transplant patients have been treated in the ongoing SCID
Phase 1/2 study. Seven of the ten transplanted patients have shown engraftment of donor cells and production of functional immune cells
with up to three years of follow up. No briquilimab treatment-related SAEs have been reported through December 31, 2022 in this clinical
trial.
We expect to complete enrollment in the Phase 1/2 clinical trial
in 2023.
Briquilimab for Stem Cell Transplant in Acute Myeloid Leukemia and
Myelodysplastic Syndrome
AML is a cancer of the blood and bone marrow, diagnosed
in about 42,000 patients annually within the major global markets. It is primarily a disease of the elderly and is the most common type
of acute leukemia diagnosed in adults. Patients with AML are deemed eligible for stem cell transplantation based on criteria which includes
patient fitness (age and comorbidities) and response to initial treatment, comprising of about 40% of newly diagnosed AML patients. However,
stem cell transplants are administered to approximately 40% of the eligible patient population due to current challenges with highly toxic
conditioning regimens. Currently, approximately 8,000 patients with AML receive a stem cell transplant annually in the major global markets.
MDS is a group of disorders of the bone marrow
where hematopoietic stem cells fail to properly differentiate into mature blood cells, leading to low blood cell count. Approximately
29,000 patients are diagnosed with MDS annually in the major global markets. Of all newly diagnosed MDS patients, about 35% have intermediate
to higher-risk disease and about 30% of those are eligible for HCT based on age, comorbidities and blast count. However, about 60% of
MDS patients do not receive transplants, even though they are otherwise eligible, due to the current challenges with highly toxic conditioning
regimens. Currently, approximately 2,500 patients with MDS receive HCT each year.
HCT offers the only known potentially curative
therapy for many forms of AML and for MDS. Standard of care conditioning regimens can be divided into three groups: myeloablative conditioning,
reduced intensity conditioning and non-myeloablative conditioning. Myeloablative conditioning with high dose busulfan, high dose melphalan
or high dose radiation is the most aggressive approach and is associated with the lowest rates of disease relapse. However, due to significant
toxicities, including treatment-related mortality, this approach is reserved for the most fit and younger patients. Reduced intensity
conditioning with lower dose busulfan or lower dose melphalan can be used for a wider group of patients, but due to substantial toxicities,
many patients remain ineligible. Non-myeloablative conditioning with low dose radiation (200 – 450 cGy, or centigray, a unit of
radiation of exposure) is well tolerated but is associated with lower rates of successful donor chimerism and increased relapse rates
compared to myeloablative or reduced-intensity conditioning.
Due to their age and co-morbidities, older (60
years and older) and less fit MDS and AML patients are typically unable to tolerate more intensive therapy and the toxicities associated
with such treatments, and thus, have a worse prognosis than younger, fitter patients. Thus, safe and effective conditioning prior to HCT
represents an unmet medical need for MDS and AML patients.
Preclinical Data for Briquilimab for Myelodysplastic Syndrome
Preclinical studies of immune deficient mice engrafted
with MDS HSCs from patients with “high-risk and very high-risk disease” per IPSS-R criteria conducted at Stanford by Wendy
Pang, M.D., Ph.D., now our Senior Vice President of Research and Translational Medicine, demonstrate the utility of anti-CD117 antibodies
in the treatment of MDS. Mice xenografted with higher-risk MDS HSCs were treated with anti-human CD117 monoclonal antibody (“mAb”),
SR-1 (the parent clone to briquilimab). Initial studies showed administration of either SR-1 or briquilimab resulted in well-tolerated
and sustained depletion of MDS cells obtained from lower-risk MDS patients. Treatment of mice xenografted with higher-risk MDS HSCs cells
resulted in transient depletion (Figure 4). Given the transient depletion of higher-risk MDS cells, studies were conducted to determine
whether an anti-CD117 antibody followed by a normal human HSC allograft would lead to long-term disease amelioration of higher-risk disease.
Results showed greater than 95% cytogenetically normal CD45+ cells 12 weeks after allograft transplant (Figure 4).
Figure 4: (A) CD117 mAb depletes MDS stem cells
as demonstrated by decreasing HSC chimerism over time. (B) Normal stem cell engraftment occurs after stem cell depletion as shown by greater
than 95% cytogenetically normal CD45+ cells 12 weeks after transplant in four higher-risk MDS-xenografted mice. (C) Normal blood formation
results after stem cell engraftment with human cell lineages for T cells (CD3+), B cells (CD19+) and myeloid cells (CD13/33+) in the bone
marrow of the four high-risk mice.
Mice xenografted with MDS HSCs from lower-risk or higher-risk patients
were treated with SR-1 concurrently with an anti-mouse CD117 mAb, ACK2, to suppress endogenous mouse HSCs, and then transplanted with
normal human UCB. Twelve weeks after this UCB HSC transplantation, both human myeloid and lymphoid cells like T cells and B cells were
observed in the bone marrow (Figure 4), indicative of successful engraftment and sustained hematopoiesis by healthy UCB HSCs for both
risk categories. Fluorescence in situ hybridization studies assessing clonal cytogenetic abnormalities confirmed that human CD45+ cells
in both groups were predominantly (greater than 95%) cytogenetically normal in all SR-1 treated and UCB HSC engrafted mice. In contrast,
MDS xenografted mice treated with the control antibody showed a persistence of high levels of MDS cells (greater than 95%) and were without
second donor HSC engraftment.
Clinical Data for Briquilimab for Acute Myeloid Leukemia and Myelodysplastic
Syndrome
We have an ongoing open label Phase 1 clinical trial
to evaluate the safety and tolerability of briquilimab conditioning, in combination with low dose radiation (200-300 cGy) and fludarabine,
in patients with AML or MDS undergoing blood stem cell transplantation. At clinical trial entry for the dose finding portion, all patients
were transplant eligible but most still had evidence of measurable residual disease (MRD positive) as detected by cytogenetics, flow cytometry
or next-generation sequencing. The dose of briquilimab is 0.6 mg/kg, fludarabine is administered at 30 mg/m2/day on transplant days -4,
-3, and -2, and total body irradiation (“TBI”) is delivered at 200 or 300 cGy on the day of transplant. The primary endpoints
are to evaluate the safety, tolerability and pharmacokinetic parameters of briquilimab. Secondary endpoints include depletion of host
HSCs, donor engraftment, donor chimerism, MRD clearance, non-relapse mortality, event-free survival and overall survival. Enrolled patients
will be followed for one year. The overall study duration is anticipated to be approximately two years.
We have completed enrollment in this Phase 1 study.
31 MDS/AML patients have been enrolled. There were no briquilimab-related SAEs. All patients demonstrated a
reduction of neutrophil counts (“ANC”) below 500/uL following a single infusion of briquilimab (0.6 mg/kg) in combination
with 200-300 cGy TBI and three days of 30 mg /m2/day fludarabine. Neutrophils are the most
common type of white blood cell and are the first cells to engraft. Following transplant, all patients showed successful donor engraftment
as evidenced by a recovery of neutrophil counts exceeding 500/uL in 13-24 days (Figure 5).
Figure 5: Neutrophil depletion and recovery in
patients of the Phase 1 MDS/AML clinical trial. All patients demonstrated ANC greater than 500/uL within 13-24 days after transplant.
Subanalysis
of the first twelve AML patients, median age of 70 years and all of whom were at least one year post-transplant, showed 67% relapse free
survival, 75% overall survival and 8% non-relapse mortality at one year post-transplant. Nine of the twelve AML patients entered the trial
with MRD, detected by either flow cytometry or next generation sequencing, and six of these patients no longer had evidence of MRD at
one year post-transplant, with median time to MRD clearance of 90 days post-transplant (Figure 6). 67% of the AML patients are alive and
without evidence of AML MRD at one year post-transplant. The trial has completed enrollment. We expect to present additional data from
this study, including data from the MDS patients, in 2023.
Figure 6: Briquilimab MDS/AML Phase 1 preliminary
clinical results in the first twelve AML patients.
No briquilimab-related
SAEs have been reported, including no cases of oral mucositis, no cases of veno-occlusive disease. Among the 31 patients enrolled to date,
there have been four cases of grade 2 acute GvHD, one case of late onset grade 3 GvHD, four cases of mild chronic GvHD and four cases
of moderate chronic GvHD. SAEs have been reported in twenty patients, including infections, cardiovascular events, disease progression
or relapse and secondary graft failure, which is loss of a previously functioning graft. None were related to treatment as determined
by the investigator.
Briquilimab for Fanconi Anemia
FA is a rare but serious blood disorder that prevents
bone marrow from making sufficient new red blood cells. It can also cause the bone marrow to make abnormal blood cells. FA typically presents
at birth or early in childhood between five and ten years of age. Ultimately, it can lead to serious complications, including bone marrow
failure, severe aplastic anemia and cancers such as AML and MDS. Treatment may include blood transfusions or medicine to create more red
blood cells, but HCT is the only cure. Briquilimab for FA patients is being evaluated in a clinical trial collaboration with Stanford.
Stanford has reported data for the first two patients, showing 100% donor myeloid chimerism and recovery of normal blood counts. Additional
enrollment is ongoing.
Briquilimab for Sickle Cell Disease
SCD is an inherited blood disorder that affects
the hemoglobin protein in red blood cells that delivers oxygen to tissues and organs. Approximately 300,000 infants are born with SCD
annually worldwide, and the number of cases is expected to significantly increase. Currently, HCT is the only cure available for SCD.
Allogeneic transplants as well as new autologous gene-edited transplants both currently rely on myeloablative conditioning with either
busulfan or melphalan. We believe briquilimab could be a significant advance for patients, replacing these current agents which are known
to be genotoxic and associated with limited efficacy and serious adverse effects, including veno-occlusive disease, infertility and secondary
malignancies. Briquilimab for SCD patients is currently being evaluated in a clinical trial collaboration with the National Heart, Lung,
and Blood Institute (“NHLBI”). The NHLBI has reported data for the first three patients in this study, showing 100% donor
myeloid chimerism at 30 days and increased levels of hemoglobin versus pre-transplant baseline. Additional enrollment is ongoing.
Briquilimab for Chronic Granulomatous Disease
CGD is a rare, inherited disease of the immune system that develops
in infancy or early childhood and results in severe and sometimes life-threatening infections. Allogeneic hematopoietic stem cell transplant
is a proven cure for CGD. However, its use is limited because of the associated serious adverse effects and limited efficacy of current
conditioning agents used to deplete stem cells in preparation for transplantation. Briquilimab for CGD patients will be evaluated in a
clinical trial collaboration with the National Institute of Allergy and Infectious Diseases. Enrollment in this study is ongoing.
Briquilimab for GATA-2 MDS
GATA-2 MDS is a type of MDS characterized by mutations in the GATA-2
gene resulting in complex phenotypes including increased risk of infection, deficiencies of immune cells such as B- and NK-cells and overall
poor prognosis. Allogeneic stem cell transplant may be used to cure these patients; however, use of current conditioning agents can be
difficult due to the fragile health status of these patients. Briquilimab-based conditioning for GATA-2 MDS patients will be evaluated
in a clinical trial collaboration with the National Cancer Institute (“NCI”). We expect this study to start enrollment in
2022.
Briquilimab for Gene Therapy
Every gene therapy in academia or industry that
modifies HSCs also requires pre-transplant conditioning to make space in the patient’s bone marrow for the gene therapy to engraft.
These types of gene therapies address a broad range of disease including heme disorders (e.g., SCD, beta thalassemia, FA), immune disorders
(e.g., SCID, CGD, leukocyte adhesion deficiency), lysosomal storage disorders (e.g., Fabry, Gaucher, Pompe), neurologic disorders (e.g.,
frontotemporal dementia, amyotrophic lateral sclerosis) and bone disorders (e.g., infant malignant osteoporosis) to name a few. Toxic
alkylators like busulfan are still the standard conditioning regimens on which these gene therapies rely. As a result, their curative
benefit is limited to patients that can tolerate the conditioning. Furthermore, gene therapy trials have also been halted by the FDA due
to secondary malignancies discovered in study patients, which is a well-known risk of genotoxic conditioning. We believe that a briquilimab
based conditioning regimen may be an effective alternative to toxic alkylators like busulfan
for conditioning prior to the infusion of gene modified stem cells and are exploring potential studies for this use.
mRNA-Modified Hematopoietic Stem Cell Therapy
Our mRNA platform includes multiple approaches
to developing product candidates that are currently in preclinical development and are designed to overcome key limitations of allogeneic
and autologous gene-edited stem cell grafts. By using mRNA delivery or gene editing we believe we can reprogram allogeneic donor or gene-edited
stem cells to have a transient proliferative and survival advantage, potentially leading to higher engraftment rates and reduced or eliminated
GvHD by elimination of co-transplanted donor immune cells in allogeneic transplants.
We are evaluating multiple approaches to use
mRNA to increase engraftment of HSCs. One approach is to increase expression of CXCR4, a cell surface protein involved in cellular homing
to the bone marrow. Another approach is to use mRNA to transiently increase expression of known variants of the stem cell factor receptor
that signal independent of ligand (stem cell factor) concentration. Another approach in preclinical development is to use mRNA delivery
or gene editing to express a variant of the stem cell factor receptor that is resistant to briquilimab. We are also working on other
approaches to increase stem cell competitiveness that are not related to stem cell factor receptor signaling or cellular homing.
Initial in vitro experimental results in human
cell lines show that expression of a constitutively active variant of the stem cell factor receptor can lead to cell line proliferation
independent of stem cell factor concentration. In addition, these variant cells are not affected by briquilimab since the engineered
cells proliferate independent of receptor signaling. Other in vitro experiments have shown that mRNA can be used to express these receptor
variants and other target proteins, such as CXCR4, transiently on the cell surface. We have also identified potential receptor modifications
that will keep stem cell factor binding intact but decrease or eliminate briquilimab binding.
In the setting of autologous gene edited stem
cells, these technologies could lead to faster and more complete engraftment of edited cells without the need for toxic conditioning.
Depending on the Jasper technology used, additional infusions of gene-modified cells may potentially be given to patients with low or
fading responses to target protein production.
In the setting of allogeneic transplant, pure stem
cell grafts can be used in place of today’s replete or modified grafts. Similar to the autologous setting, we believe these technologies
can lead to faster and more complete engraftment of donor stem cells without the need for toxic conditioning. In addition, by eliminating
the need for donor passenger lymphocytes to drive engraftment, we can potentially eliminate the risk of GvHD and the need for long-term
immune suppression. If approved, this approach may also increase the potential for use of partially matched grafts and expand the potential
donor pool available for any given patient.
We are currently conducting an in-vivo preclinical
assessment of various mRNA stem cell product constructs and plan to present data in 2023.
Opportunity Areas
There are other conditions and potential applications for briquilimab
and the mRNA platform. We have assessed the existing therapeutic mast cell market, proliferative disorders of the stem cell and stem cell
transplant market on a per-indication basis to estimate the potential number of patients that could benefit from our product candidates.
Mast Cell Disorders
Mast cells may also be the key cellular target for
other inflammatory or autoimmune diseases such as chronic inducible urticaria (“CIndU”), prurigo nodularis, eosinophilic esophagitis,
allergic asthma or inflammatory bowel disease. Similar to CSU, CIndU is characterized by development of hives and/or angioedema and redness
in the skin. Unlike CSU, the trigger for CIndU patients can be diagnosed by assessment of various common provocations such as cold, heat,
pressure, vibration and others. CIndU is thought to affect over one million patients in the United States, France, Germany, Italy, Spain
and the United Kingdom. Approximately 40% of these patients’ CIndU is not controlled by first line anti-histamines and these patients
could be eligible for biologic therapy depending on disease severity.
Prurigo Nodularis is also a disease that manifests
in the skin. Patients develop severe itch and firm bumps on the skin, called nodules, that may lead to loss of sleep and bleeding due
to scratching. Degranulation of mast cells in the skin is thought to trigger peripheral sensory neurons in the skin leading to itch. Various
medications are used to treat Prurigo Nodularis including anti-itch creams and topical steroids. For cases that remain uncontrolled physicians
may prescribe anti-histamines or biologics such as dupilumab.
Eosinophilic esophagitis is an immune disorder leading
to build up of eosinophils in the esophagus and causes difficulty in eating, chronic reflux and/or the sensation of heartburn. Along with
the buildup of eosinophils, there is typically buildup of other immune cells in the affected area including mast cells, basophils and
lymphocytes. Patients may be treated with changes to diet, use of proton pump inhibitors, antihistamines and dupilumab.
Allergic asthma is a form of asthma triggered by specific allergens that leads
to constriction of smooth muscles in the airways, cellular infiltration of various immune mediators and excess production of mucus. Patients
with allergic asthma may have an increased number of mast cells in the bronchi and may be responsive to agents that modulate mast cell
response, including anti-histamines and anti IgE monoclonal antibody therapy.
Hematopoietic Stem Cell-Based Gene Therapies
The combination of stem cell transplantation and
gene therapy has shown the potential to correct pathological genetic mutations but also the same limitations as unmodified stem cell transplantation,
which include the toxicities of current conditioning agents. Furthermore, stem cell gene therapy requires larger doses of genetically
modified stem cells for proper engraftment. We believe our product candidates can improve the field of stem cell gene therapy and address
currently identified challenges.
In the United States alone, over 100,000 patients
suffer from SCD, while about 52,000 patients are affected in the major markets in Europe. Approximately 58,000 patients from this pool
are eligible for HCT or gene therapy as they have severe SCD.
Approximately 2,700 patients in the United States
suffer from beta-thalassemia and about 16,000 in the European Union suffer from it annually. Approximately 70% of these patients can be
classified to have beta-thalassemia major and, of that patient population, about 20%, or 2,600 patients, are eligible for stem cell transplant.
Agreements with Amgen
In November 2019, we entered into a worldwide exclusive
license agreement with Amgen for briquilimab (formerly AMG-191 and JSP191) that also includes translational science and materials from
Stanford University. We were assigned and accepted Amgen’s rights and obligations, effective November 21, 2019, for the Investigator
Sponsored Research Agreement (“ISRA”), entered into in June 2013, between Amgen and The Board of Trustees of the Leland
Stanford Junior University (“Stanford”) and Quality Agreement between Amgen and Stanford, effective as of October 7, 2015.
Under the ISRA, we received an option to negotiate a definitive license with Stanford for rights to certain Stanford intellectual property
related to the study of briquilimab in exchange for an option exercise fee of $1.0 million, payable over a two-year period (the “Option”).
We exercised the Option to Stanford docket S06-265 “Antibody-based clearance of endogenous stem cell niches prior to transplantation
of bone marrow or hematopoietic stem cells (c-kit)” granted by Stanford under the ISRA on June 2, 2020. As a result, we have worldwide
exclusive rights to develop and commercialize briquilimab. The issued U.S. patents would be expected to expire in 2027, absent any applicable
patent term extensions.
License Agreement with Stanford
In March 2021, we entered into an exclusive license agreement with
respect to the use of briquilimab from the Stanford Office of Technology Licensing to license U.S. Patent Application Serial Number 60/856,435,
filed Nov. 3, 2006, and U.S. Patent Application Serial Number 12/447,634 (publication number US 2010/0226927 Al) and know-how for the
purpose of depleting endogenous blood stem cells in patients for whom hematopoietic cell transplantation is indicated.
Intellectual Property
Our success depends in part on our ability to obtain
and maintain proprietary protection for our product candidates and other discoveries, inventions, trade secrets and know-how that are
critical to our business operations. It also depends in part on our ability to operate without infringing the proprietary rights of others,
and in part, on our ability to prevent others from infringing our proprietary rights. We have a series of in-licensed patents outlined
below with an additional pending patent application in the United States.
In-licensed Amgen Portfolio
We have exclusively licensed a patent family from Amgen
applicable to our targeted conditioning program that contains patents and applications directed to humanized c-kit antibody. As of February
26, 2023, this patent portfolio includes three issued U.S. patents and one European patent, as well as granted patents in Australia, Canada,
Japan, and Mexico, and pending patent applications in Europe and Hong Kong. The issued U.S. and European patents would be expected to
expire in 2027, absent any applicable patent term extensions.
In-licensed Stanford Portfolio
We have an exclusive license in the field of use of briquilimab for the
purpose of depleting endogenous blood stem cells in patients for whom hematopoietic cell transplantation is indicated to a patent family
from Stanford University applicable to targeted conditioning that contains patents and applications directed to immunodepletion of endogenous
stem cell niche prior to hematopoietic stem cell transplantation. As of February 26, 2023, this patent portfolio includes one issued U.S.
patent and two European patents, as well as pending U.S., European and Hong Kong patent applications. The issued U.S. and European patents
would be expected to expire in 2027, absent any applicable patent term extensions.
Jasper Portfolio
We own eleven patent families directed to compositions
and/or methods for hematopoietic stem cell transplantation, and one patent family directed to other methods of treating certain hematopoietic
malignancies. These patent families include ten U.S. provisional applications, one U.S. utility application and three PCT applications.
Any patents that grant from these applications would be expected to expire in 2042 or 2044, absent any applicable patent term extensions.
Additional Intellectual Property
We also rely on trade secrets, including know-how,
confidential information, unpatented technologies and other proprietary information, to strengthen or enhance our competitive position,
and prevent competitors from reverse engineering or copying our technologies. We maintain, as trade secrets, information relating our
product candidates currently in development, as well as information related to our business strategy and business methods. However, trade
secrets and confidential know-how are difficult to protect. To avoid inadvertent and improper disclosure of trade secrets, and to avoid
the risks of former employees using these trade secrets to gain future employment, it is our policy to require employees, consultants
and independent contractors to assign to us all rights to intellectual property they develop in connection with their employment with
or services for us. We also protect our existing and developing intellectual property expressly through confidentiality provisions in
agreements with third parties. There can be no assurance, however, that these agreements will be self-executing or otherwise provide meaningful
protection for our trade secrets or other intellectual property or proprietary information, or adequate remedies in the event of unauthorized
use or disclosure of such trade secrets or other intellectual property or proprietary information. We also seek to preserve the integrity
and confidentiality of our trade secrets and other confidential information by maintaining physical security of our premises and physical
and electronic security of our information technology systems. While we have confidence in the measures we take to protect and preserve
our trade secrets, such measures can be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets
may otherwise become known or be independently discovered by competitors.
We intend to pursue additional intellectual property
protection to the extent we believe it would advance our business objectives, which may include objectives within and outside the United
States. Despite our efforts to protect our intellectual property rights these rights may not be respected in the future or may be circumvented
or challenged (and potentially invalidated) in a legal proceeding in any jurisdiction where we have intellectual property rights. In addition,
the laws of various foreign countries may not afford the same protections or assurances to the same extent as the laws in the United States.
See the section titled “Risk Factors — Risks Related to Our Intellectual Property” for additional information regarding
these and other risks related to intellectual property.
Competition
The industry we operate is in highly competitive
and dynamic, subject to rapid technological change. We have competition in the market for both our product candidates and may face competition
from large pharmaceutical and biotechnology companies, smaller pharmaceutical and biotechnology companies, specialty pharmaceutical companies,
generic drug companies, academic institutions, government agencies, research institutions and others. We believe that our intellectual
property, proprietary scientific knowledge, development experience and partnerships will provide us with competitive advantages in the
market we operate in.
We are aware of competing stem cell transplant and
conditioning products and adjacent therapies, not limited to small molecules, biologics and cell therapies, that address the same domain
of conditions we are targeting. The following list of competitors indicate companies that are directly competing with our two product
candidates.
Competitors for our briquilimab CD117 targeted therapeutic program
include the following:
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Celldex Therapeutics, Inc., which is developing an antibody to CD117 that is being studied in mast cell diseases; |
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Acelyrin, Inc., which is developing an antibody to CD117 for mast cell diseases; |
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Third Harmonic, Inc., which is developing small molecule inhibitors to CD117 for mast cell diseases; |
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Allakos, Inc., which is developing an antibody to Siglec-8 for mast cell diseases; |
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Novartis, Inc., which is developing a small molecule inhibitor to Bruton’s Tyrosine Kinase for mast cell diseases; |
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Sanofi Aventis, Inc., which is developing an antibody to the Interleukin 4 receptor for mast cell diseases; |
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Gilead Sciences, Inc., which is developing an antibody to CD117 that may be used in combination with an antibody to CD47 for stem cell transplants; |
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Actinium Pharmaceuticals, Inc., which is developing an antibody to CD45 that is fused to iodine-131 radioisotope for stem cell transplant; |
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Beam Therapeutics, Inc., which is developing an antibody to CD117 that may be used in combination with their gene modified stem cells for gene therapy; and |
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Molecular Templates Inc., which is developing an antibody to CD45 that
is fused to an engineered Shiga-like toxin for stem cell transplant. |
Competitors for our mRNA-modified stem cell therapy program include
the following:
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Vor Biopharma, Inc., which is developing treatment-resistant marrow cells that enable CD33 targeted therapy; |
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Sana Biotechnology, Inc., which is developing hypoimmune cells designed to evade rejection and enable persistence of differentiated cells; |
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Ensoma Inc., which is developing viral vectors for delivery of cell modification payload in vivo; |
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Orca Bio, which is developing precision allogeneic cell therapy products meant to safely and effectively replace a patient’s blood and immune system; and |
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Beam Therapeutics, Inc., which is developing stem cells designed to
evade binding to their CD117 antibody for gene therapy. |
Sales and Marketing
We do not currently have sales and marketing infrastructure to support
commercial launch of our product candidates, if approved. We may build such capabilities in North America prior to potential launch of
briquilimab. Outside of North America, we may rely on licensing, co-sale and co-promotion agreements with strategic partners for the commercialization
of our product candidates. If we build a commercial infrastructure to support marketing in North America, such commercial infrastructure
could be expected to include a targeted sales force supported by sales management, internal sales support, an internal marketing group
and distribution support. To develop the appropriate commercial infrastructure internally, we would have to invest financial and management
resources, some of which would have to be deployed prior to any confirmation that briquilimab will be approved.
Research and Development
We invest significantly in our research and development
efforts, to discover and validate therapeutics while improving our processes and approach to drug making. We strive to progress candidates
that can address unmet or underserved clinical needs and favor programs with well-validated targets and defined regulatory approval paths.
Our R&D team has played key roles in discovering and developing a number of promising candidates over the past 20 plus years while
at Jasper, and while at Johnson & Johnson, AstraZeneca, Bristol-Myers Squibb, Portola, Amgen, Alexion and others.
They have leveraged experience, insights and capabilities to optimize development, along with fostering collaboration with external partners
to innovate and expand into potential additional indications. Our current development-stage portfolio consists of two product candidates
discovered through collaboration and our internal research efforts.
Manufacturing
We do not currently own or operate any manufacturing facility. We rely
on contract manufacturing organizations to produce our drug candidates in accordance with cGMP regulations for use in our clinical studies.
The manufacture of pharmaceuticals is subject to extensive cGMP regulations, which impose various procedural and documentation requirements
and govern all areas of record keeping, production processes and controls, personnel and quality control. Under our license agreement
with Amgen, we have received a substantial amount of drug product to support initiation of our planned clinical trials of briquilimab.
In November 2019, we entered into development and manufacturing agreements with Lonza relating to the manufacturing of briquilimab and
product quality testing. The facility of Lonza in Slough, United Kingdom is responsible for production and testing of drug substance.
The facility of Lonza in Stein, Switzerland is responsible for production and testing of drug product. Labelling, packaging and storage
of finished drug product is provided by PCI Pharma Services, in San Diego, California. Our agreement with Lonza includes certain limitations
on our ability to enter into supply arrangements with any other supplier without Lonza’s consent. In addition, Lonza has the right
to increase the prices it charges us for certain supplies depending on a number of factors, some of which are outside of our control.
Government Regulation
Government authorities in the United States, at
the federal, state and local level, and in other countries and jurisdictions, including the European Union, extensively regulate, among
other things, the research, development, testing, manufacture, pricing, reimbursement, sales, quality control, approval, packaging, storage,
recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import and export
of pharmaceutical products, including biological products. The processes for obtaining marketing approvals in the United States and in
foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities,
require the expenditure of substantial time and financial resources.
Licensure and Regulation of Biologics in the United States
In the United States, our product candidates are
regulated as biological products, or biologics, under the Public Health Service Act (“PHSA”) and the Food, Drug, and Cosmetic
Act (“FDCA”) and its implementing regulations and guidance. The failure to comply with the applicable U.S. requirements at
any time during the product development process, including preclinical testing, clinical testing, the approval process, or post-approval
process, may subject an applicant to delays in the conduct of the study, regulatory review, and approval, and/or administrative or judicial
sanctions.
An applicant seeking approval to market and distribute
a new biologic in the United States generally must satisfactorily complete each of the following steps:
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preclinical laboratory tests, animal studies, and formulation studies all performed in accordance with the FDA’s good laboratory practice (“GLP”) regulations; |
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completion of the manufacture, under cGMP conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; |
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submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin; |
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approval by an IRB representing each clinical site before each clinical trial may be initiated; |
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performance of adequate and well-controlled human clinical trials to establish the safety, potency, and purity of the product candidate for each proposed indication, in accordance with cGCPs; |
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preparation and submission to the FDA of a biologics license application (“BLA”) for a biologic product requesting marketing for one or more proposed indications, including submission of detailed information on the manufacture and composition of the product in clinical development and proposed labelling; |
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review of the product by an FDA advisory committee, where appropriate or if applicable; |
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satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods, and controls are adequate to preserve the product’s identity, strength, quality, and purity; |
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satisfactory completion of any FDA audits of the preclinical studies and clinical trial sites to assure compliance with GLP, as applicable, and good clinical practices (“GCP”), and the integrity of clinical data in support of the BLA; |
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payment of user Prescription Drug User Fee Act (“PDUFA”) securing FDA approval of the BLA and licensure of the new biologic product; and |
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compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (“REMS”) and any post-approval studies or other post-marketing commitments required by the FDA. |
Preclinical Studies and Investigational New Drug Application
Before testing any biologic product candidate in
humans, the product candidate must undergo preclinical testing. Preclinical tests include laboratory evaluations of product chemistry,
formulation and stability, as well as studies to evaluate the potential for efficacy and toxicity in animal studies. The conduct of the
preclinical tests and formulation of the compounds for testing must comply with federal regulations and requirements. The results of the
preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application.
An IND is an exemption from the FDCA that allows
an unapproved product candidate to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA
authorization to administer such investigational product to humans. The IND automatically becomes effective 30 days after receipt by the
FDA, unless before that time the FDA raises concerns or questions about the product or conduct of the proposed clinical trial, including
concerns that human research subjects will be exposed to unreasonable health risks. In that case, the IND sponsor and the FDA must resolve
any outstanding FDA concerns before the clinical trials can begin or recommence.
As a result, submission of the IND may result in
the FDA not allowing the trials to commence or allowing the trial to commence on the terms originally specified by the sponsor in the
IND. If the FDA raises concerns or questions either during this initial 30-day period, or at any time during the IND review process, it
may choose to impose a partial or complete clinical hold. Clinical holds are imposed by the FDA whenever there is concern for patient
safety, may be a result of new data, findings, or developments in clinical, preclinical, and/or chemistry, manufacturing, and controls
or where there is non-compliance with regulatory requirements. This order issued by the FDA would delay either a proposed clinical trial
or cause suspension of an ongoing trial, until all outstanding concerns have been adequately addressed and the FDA has notified the company
that investigations may proceed. This could cause significant delays or difficulties in completing our planned clinical trial or future
clinical trials in a timely manner.
Human Clinical Trials in Support of a BLA
Clinical trials involve the administration of the
investigational product candidate to healthy volunteers or patients with the disease or condition to be treated under the supervision
of a qualified principal investigator in accordance with GCP requirements. Clinical trials are conducted under protocols detailing, among
other things, the objectives of the trial, inclusion and exclusion criteria, the parameters to be used in monitoring safety, and the effectiveness
criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part
of the IND.
A sponsor who wishes to conduct a clinical trial
outside the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. When a foreign clinical
trial is conducted under an IND, all FDA IND requirements must be met unless waived. When a foreign clinical trial is not conducted under
an IND, the sponsor must ensure that the trial complies with certain regulatory requirements of the FDA in order to use the trial as support
for an IND or application for marketing approval. Specifically, the FDA requires that such trials be conducted in accordance with GCP,
including review and approval by an independent ethics committee and informed consent from participants. The GCP requirements encompass
both ethical and data integrity standards for clinical trials. The FDA’s regulations are intended to help ensure the protection
of human subjects enrolled in non-IND foreign clinical trials, as well as the quality and integrity of the resulting data. They further
help ensure that non-IND foreign trials are conducted in a manner comparable to that required for clinical trials in the United States.
Further, each clinical trial must be reviewed and
approved by an IRB either centrally or individually at each institution at which the clinical trial will be conducted. The IRB will consider,
among other things, clinical trial design, patient informed consent, ethical factors, the safety of human subjects, and the possible liability
of the institution. An IRB must operate in compliance with FDA regulations. The FDA, IRB, or the clinical trial sponsor may suspend or
discontinue a clinical trial at any time for various reasons, including a finding that the clinical trial is not being conducted in accordance
with FDA requirements or that the participants are being exposed to an unacceptable health risk. Clinical testing also must satisfy extensive
GCP rules and the requirements for informed consent.
Additionally, some clinical trials are overseen
by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board (“DSMB”).
This group may recommend continuation of the trial as planned, changes in trial conduct, or cessation of the trial at designated check
points based on certain available data from the trial to which only the DSMB has access.
Clinical trials typically are conducted in three
sequential phases, but the phases may overlap or be combined. Additional studies may be required after approval.
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Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion, and pharmacodynamics in healthy humans or, on occasion, in patients, such as cancer patients. |
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Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose tolerance and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials. |
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Phase 3 clinical trials proceed if the Phase 2 clinical trials demonstrate that a dose range of the product candidate is potentially effective and has an acceptable safety profile. Phase 3 clinical trials are undertaken within an expanded patient population to further evaluate dosage, provide substantial evidence of clinical efficacy, and further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites. A well-controlled, statistically robust Phase 3 trial may be designed to deliver the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to appropriately label a biologic; such Phase 3 studies are referred to as “pivotal.” |
In some cases, the FDA may approve a BLA for a product
but require the sponsor to conduct additional clinical trials to further assess the product’s safety and effectiveness after licensure.
Such post-approval trials are typically referred to as Phase 4 clinical trials. These studies are used to gain additional experience from
the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved
under accelerated approval regulations. If the FDA approves a product while a company has ongoing clinical trials that were not necessary
for approval, a company may be able to use the data from these clinical trials to meet all or part of any Phase 4 clinical trial requirement
or to request a change in the product labeling. The failure to exercise due diligence with regard to conducting Phase 4 clinical trials
could result in withdrawal of approval for products.
Information about applicable clinical trials must
be submitted within specific timeframes to the NIH for public dissemination on its ClinicalTrials.gov website.
Compliance with cGMP Requirements
Before approving a BLA, the FDA typically will inspect
the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing
processes and facilities are in full compliance with cGMP requirements and adequate to assure consistent production of the product within
required specifications. The PHSA emphasizes the importance of manufacturing control for products like biologics whose attributes cannot
be precisely defined.
Manufacturers and others involved in the manufacture
and distribution of products must also register their establishments with the FDA and certain state agencies. Both domestic and foreign
manufacturing establishments must register and provide additional information to the FDA upon their initial participation in the manufacturing
process. Any product manufactured by or imported from a facility that has not registered, whether foreign or domestic, is deemed misbranded
under the FDCA. Establishments may be subject to periodic unannounced inspections by government authorities to ensure compliance with
cGMPs and other laws. Inspections must follow a “risk-based schedule” that may result in certain establishments being inspected
more frequently. Manufacturers may also have to provide, on request, electronic or physical records regarding their establishments. Delaying,
denying, limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated.
Review and Approval of a BLA
The results of product candidate development, preclinical
testing, and clinical trials, including negative or ambiguous results as well as positive findings, are submitted to the FDA as part of
a BLA requesting a license to market the product. The BLA must contain extensive manufacturing information and detailed information on
the composition of the product and proposed labeling as well as payment of a user fee. Under federal law, the submission of most BLAs
is subject to an application user fee. The sponsor of a licensed BLA is also subject to an annual program fee. Certain exceptions and
waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a
waiver for certain small businesses.
The FDA has 60 days after submission of the application
to conduct an initial review to determine whether it is sufficient to accept for filing based on the agency’s threshold determination
that it is sufficiently complete to permit substantive review. Once the submission has been accepted for filing, the FDA begins an in-depth
review of the application. Under the goals and policies agreed to by the FDA under the PDUFA, the FDA has ten months in which to complete
its initial review of a standard application and respond to the applicant, and six months for a priority review of the application. The
FDA does not always meet its PDUFA goal dates for standard and priority BLAs. The review process may often be significantly extended by
FDA requests for additional information or clarification. The review process and the PDUFA goal date may be extended by three months if
the FDA requests or if the applicant otherwise provides additional information or clarification regarding information already provided
in the submission within the last three months before the PDUFA goal date.
Under the PHSA, the FDA may approve a BLA if it
determines that the product is safe, pure, and potent, and the facility where the product will be manufactured meets standards designed
to ensure that it continues to be safe, pure, and potent. On the basis of the FDA’s evaluation of the application and accompanying
information, including the results of the inspection of the manufacturing facilities and any FDA audits of preclinical and clinical trial
sites to assure compliance with GCPs, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes
commercial marketing of the product with specific prescribing information for specific indications. If the application is not approved,
the FDA will issue a complete response letter, or CRL, which will contain the conditions that must be met in order to secure final approval
of the application, and when possible will outline recommended actions the sponsor might take to obtain approval of the application. Sponsors
that receive a CRL may submit to the FDA information that represents a complete response to the issues identified by the FDA.
The FDA may also refer the application to an advisory
committee for review, evaluation, and recommendation as to whether the application should be approved. In particular, the FDA may refer
applications for novel biologic products or biologic products that present difficult questions of safety or efficacy to an advisory committee.
Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates,
and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the
recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
If the FDA approves a new product, it may limit
the approved indication(s) for use of the product. It may also require that contraindications, warnings, or precautions be included in
the product labeling. In addition, the FDA may call for post-approval studies, including Phase 4 clinical trials, to further assess the
product’s efficacy and/or safety after approval. The agency may also require testing and surveillance programs to monitor the product
after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms, including
REMS, to help ensure that the benefits of the product outweigh the potential risks. REMS can include medication guides, communication
plans for healthcare professionals, and elements to assure safe use.
Expedited Review Programs
The FDA is authorized to expedite the review of
BLAs in several ways. Under the Fast Track program, the sponsor of a product candidate may request the FDA to designate the product for
a specific indication as a Fast Track product concurrent with or after the filing of the IND. Candidate products are eligible for Fast
Track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet
medical needs for the condition. Fast Track designation applies to the combination of the product candidate and the specific indication
for which it is being studied. In addition to other benefits, such as the ability to have greater interactions with the FDA, the FDA may
initiate review of sections of a Fast Track application before the application is complete, a process known as rolling review.
Any product candidate submitted to the FDA for marketing,
including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such
as breakthrough therapy designation, priority review and accelerated approval.
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Breakthrough therapy designation. To qualify for the breakthrough therapy program, product candidates must be intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence must indicate that such product candidates may demonstrate substantial improvement on one or more clinically significant endpoints over existing therapies. The FDA will seek to ensure the sponsor of a breakthrough therapy product candidate receives intensive guidance on an efficient drug development program, intensive involvement of senior managers and experienced staff on a proactive, collaborative and cross-disciplinary review and rolling review. |
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Priority review. A product candidate is eligible for priority review if it treats a serious condition and, if approved, it would be a significant improvement in the safety or effectiveness of the treatment, diagnosis or prevention compared to marketed products. The FDA aims to complete its review of priority review applications within six months as opposed to 10 months for standard review. |
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Accelerated approval. Drug or biologic products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval. Accelerated approval means that a product candidate may be approved on the basis of adequate and well controlled clinical trials establishing that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity and prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biologic product candidate receiving accelerated approval perform adequate and well controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials. |
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Regenerative advanced therapy. With passage of the 21st Century Cures Act (the “Cures Act”) in December 2016, Congress authorized the FDA to accelerate review and approval of products designated as regenerative advanced therapies. A product is eligible for this designation if it is a regenerative medicine therapy that is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product candidate has the potential to address unmet medical needs for such disease or condition. The benefits of a regenerative advanced therapy designation include early interactions with the FDA to expedite development and review, benefits available to breakthrough therapies, potential eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints. |
None of these expedited programs change the standards
for approval but they may help expedite the development or approval process of product candidates.
Post-Approval Regulation
If regulatory approval for marketing of a product
or new indication for an existing product is obtained, the sponsor will be required to comply with all regular post-approval regulatory
requirements as well as any post-approval requirements that the FDA have imposed as part of the approval process. The sponsor will be
required to report certain adverse reactions and production problems to the FDA, provide updated safety and efficacy information and comply
with requirements concerning advertising and promotional labeling requirements. Manufacturers and certain of their subcontractors are
required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections
by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMP regulations, which impose certain
procedural and documentation requirements upon manufacturers. Accordingly, the sponsor and its third-party manufacturers must continue
to expend time, money, and effort in the areas of production and quality control to maintain compliance with cGMP regulations and other
regulatory requirements.
A
product may also be subject to official lot release, meaning that the manufacturer is required to perform certain tests on each lot of
the product before it is released for distribution. If the product is subject to official lot release, the manufacturer must submit samples
of each lot, 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, to the FDA. The FDA may in addition perform certain confirmatory tests on lots of some
products before releasing the lots for distribution. Finally, the FDA will conduct laboratory research related to the safety, purity,
potency, and effectiveness of pharmaceutical products.
Once
an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained
or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse
events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may
result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess
new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among
other things:
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restrictions on the marketing or manufacturing of the
product, complete withdrawal of the product from the market or product recalls; |
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fines, warning letters or holds on post-approval clinical
trials; |
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refusal of the FDA to approve pending applications
or supplements to approved applications, or suspension or revocation of product license approvals; |
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product recall, seizure or detention, or refusal to
permit the import or export of products; or |
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injunctions or the imposition of civil or criminal
penalties. |
Pharmaceutical
products may be promoted only for the approved indications and in accordance with the provisions of the approved label. Although healthcare
providers may prescribe products for uses not described in the drug’s labeling, known as off-label uses, in their professional
judgment, drug manufacturers are prohibited from soliciting, encouraging or promoting unapproved uses of a product. The FDA and other
agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly
promoted off-label uses may be subject to significant liability.
The
FDA strictly regulates the marketing, labeling, advertising, and promotion of prescription drug products placed on the market. This regulation
includes, among other things, standards and regulations for direct-to-consumer advertising, communications regarding unapproved uses,
industry-sponsored scientific and educational activities, and promotional activities involving the Internet and social media. Promotional
claims about a drug’s safety or effectiveness are prohibited before the drug is approved. After approval, a drug product generally
may not be promoted for uses that are not approved by the FDA, as reflected in the product’s prescribing information.
If
a company is found to have promoted off-label uses, it may become subject to adverse public relations and administrative and judicial
enforcement by the FDA, the Department of Justice or the Office of the Inspector General of the Department of Health and Human Services,
as well as state authorities. This could subject a company to a range of penalties that could have a significant commercial impact, including
civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes drug products.
The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has also requested
that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
Regulation
and Procedures Governing Approval of Medicinal Products in the European Union
In
order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements
of other countries and jurisdictions regarding quality, safety, and efficacy, and governing, among other things, clinical trials, marketing
authorization, commercial sales, and distribution of drug products. Whether or not it obtains FDA approval for a product, an applicant
will need to obtain the necessary approvals by the comparable foreign regulatory authorities before it can commence clinical trials or
marketing of the product in those countries or jurisdictions. Specifically, the process governing approval of medicinal products in the
European Union generally follows the same lines as in the United States. It entails satisfactory completion of preclinical studies and
adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication. It also
requires the submission to the relevant competent authorities of a marketing authorization application (“MAA”) and granting
of a marketing authorization by these authorities before the product can be marketed and sold in the European Union.
Clinical
Trial Approval
Pursuant
to Clinical Trials Directive 2001/20/EC and the Directive 2005/28/EC on GCP, a system for the approval of clinical trials in the European
Union was implemented through national legislation of the member states. Under this system, an applicant must obtain approval from the
competent national authority of a European Union member state in which the clinical trial is to be conducted, or in multiple member states
if the clinical trial is to be conducted in a number of member states. Furthermore, the applicant may only start a clinical trial at
a specific site after the competent ethics committee has issued a favorable opinion. The clinical trial application must be accompanied
by an investigational medicinal product dossier with supporting information prescribed by Directive 2001/20/EC and Directive 2005/28/EC
and corresponding national laws of the member states and further detailed in applicable guidance documents.
In
April 2014, the European Union adopted a new Clinical Trials Regulation (EU) No 536/2014, which became effective on January 31, 2022.
It overhauled the current system of approvals for clinical trials in the European Union. Specifically, the new legislation, which is
directly applicable in all member states, is aimed at simplifying and streamlining the approval of clinical trials in the European Union.
For instance, the new Clinical Trials Regulation provides for a streamlined application procedure via a single-entry point, the Clinical
Trials Information System (“CTIS”), and strictly defined deadlines for the assessment of clinical trial applications.
The
conduct of all clinical trials commenced in the European Union prior to January 31, 2022 will continue to be bound by the previously
applicable provisions. However, if a clinical trial continues for more than three years after January 31, 2022, the Clinical Trials Regulation
will at that time begin to apply to the clinical trial. As of January 31, 2023, all new trial authorizations must be applied for under
the Clinical Trials Regulation and utilize CTIS.
Marketing
Authorization
To
obtain a marketing authorization for a product under the European Union regulatory system, an applicant must submit an MAA, either under
a centralized procedure administered by the EMA or one of the procedures administered by competent authorities in European Union Member
States (decentralized procedure, national procedure, or mutual recognition procedure). A marketing authorization may be granted only
to an applicant established in the European Union. Regulation (EC) No 1901/2006 provides that prior to obtaining a marketing authorization
in the European Union, an applicant must demonstrate compliance with all measures included in an EMA approved Pediatric Investigation
Plan (“PIP”) covering all subsets of the pediatric population, unless the EMA has granted a product specific waiver, class
waiver, or a deferral for one or more of the measures included in the PIP.
The
centralized procedure provides for the grant of a single marketing authorization by the European Commission that is valid for all European
Union member states. Pursuant to Regulation (EC) No. 726/2004, the centralized procedure is compulsory for specific products, including
for medicines produced by certain biotechnological processes, products designated as orphan medicinal products, advanced therapy products
and products with a new active substance indicated for the treatment of certain diseases, including products for the treatment of cancer.
For products with a new active substance indicated for the treatment of other diseases and products that are highly innovative or for
which a centralized process is in the interest of patients, the centralized procedure may be optional. Manufacturers must demonstrate
the quality, safety, and efficacy of their products to the EMA, which provides an opinion regarding the MAA. The European Commission
grants or refuses marketing authorization in light of the opinion delivered by the EMA.
Under
the centralized procedure, the CHMP established at the EMA is responsible for conducting an initial assessment of a product. Under the
centralized procedure in the European Union, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops when
additional information or written or oral explanation is to be provided by the applicant in response to questions of the CHMP. Accelerated
evaluation may be granted by the CHMP in exceptional cases, when a medicinal product is of major interest from the point of view of public
health and, in particular, from the viewpoint of therapeutic innovation. If the CHMP accepts such a request, the time limit of 210 days
will be reduced to 150 days, but it is possible that the CHMP may revert to the standard time limit for the centralized procedure if
it determines that it is no longer appropriate to conduct an accelerated assessment.
Coverage,
Pricing, and Reimbursement
Significant
uncertainty exists as to the coverage and reimbursement status of any product candidates for which we may seek regulatory approval by
the FDA or other government authorities. In the United States and markets in other countries, patients who are prescribed treatments
for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of
the associated healthcare costs. Patients are unlikely to use any product candidates we may develop unless coverage is provided and reimbursement
is adequate to cover a significant portion of the cost of such product candidates. Even if any product candidates we may develop are
approved, sales of such product candidates will depend, in part, on the extent to which third-party payors, including government health
programs in the United States such as Medicare and Medicaid, commercial health insurers, and managed care organizations, provide coverage,
and establish adequate reimbursement levels for, such product candidates. The process for determining whether a payor will provide coverage
for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once
coverage is approved. Third-party payors are increasingly challenging the prices charged, examining the medical necessity, and reviewing
the cost-effectiveness of medical products and services and imposing controls to manage costs. Third-party payors may limit coverage
to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a particular
indication.
In
order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic
studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain
FDA or other comparable marketing approvals. Nonetheless, product candidates may not be considered medically necessary or cost-effective.
A decision by a third-party payor not to cover any product candidates we may develop could reduce physician utilization of such product
candidates once approved and have a material adverse effect on our sales, results of operations and financial condition. Additionally,
a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further,
one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage and reimbursement
for the product, and the level of coverage and reimbursement can differ significantly from payor to payor. Third-party reimbursement
and coverage may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment
in product development. In addition, any companion diagnostic tests require coverage and reimbursement separate and apart from the coverage
and reimbursement for their companion pharmaceutical or biological products. Similar challenges to obtaining coverage and reimbursement
applicable to pharmaceutical or biological products will apply to any companion diagnostics.
The
containment of healthcare costs also has become a priority of federal, state and foreign governments and the prices of pharmaceuticals
have been a focus in this effort. Governments have shown significant interest in implementing cost-containment programs, including price
controls, restrictions on reimbursement, and requirements for substitution of generic products. Adoption of price controls and cost-containment
measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit a company’s
revenue generated from the sale of any approved products. Coverage policies and third-party reimbursement rates may change at any time.
Even if favorable coverage and reimbursement status is attained for one or more products for which a company or its collaborators receive
marketing approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
If
we obtain approval in the future to market in the United States any product candidates we may develop, we may be required to provide
discounts or rebates under government healthcare programs or to certain government and private purchasers in order to obtain coverage
under federal healthcare programs such as Medicaid. Participation in such programs may require us to track and report certain drug prices.
We may be subject to fines and other penalties if we fail to report such prices accurately.
Outside
the United States, ensuring adequate coverage and payment for any product candidates we may develop will face challenges. Pricing of
prescription pharmaceuticals is subject to governmental control in many countries. Pricing negotiations with governmental authorities
can extend well beyond the receipt of regulatory marketing approval for a product and may require us to conduct a clinical trial that
compares the cost-effectiveness of any product candidates we may develop to other available therapies. The conduct of such a clinical
trial could be expensive and result in delays in our commercialization efforts.
In
the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be
marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare
the cost-effectiveness of a particular product candidate to currently available therapies (so called health technology assessments) in
order to obtain reimbursement or pricing approval. For example, the European Union provides options for its member states to restrict
the range of products for which their national health insurance systems provide reimbursement and to control the prices of medicinal
products for human use. European Union member states may approve a specific price for a product, or they may instead adopt a system of
direct or indirect controls on the profitability of the company placing the product on the market. Other member states allow companies
to fix their own prices for products but monitor and control prescription volumes and issue guidance to physicians to limit prescriptions.
Recently, many countries in the European Union have increased the amount of discounts required on pharmaceuticals and these efforts could
continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced
by many countries in the European Union. The downward pressure on healthcare costs in general, particularly prescription products, has
become intense. As a result, increasingly high barriers are being erected to the entry of new products. Political, economic, and regulatory
developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained.
Reference pricing used by various European Union member states, and parallel trade (arbitrage between low-priced and high-priced member
states), can further reduce prices. 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 products, if approved in those countries.
Healthcare
Law and Regulation
Healthcare
providers and third-party payors play a primary role in the recommendation and prescription of drug products that are granted marketing
approval. Arrangements with providers, consultants, third-party payors, and customers are subject to broadly applicable fraud and abuse,
anti-kickback, false claims laws, patient privacy laws and regulations and other healthcare laws and regulations that may constrain our
business and/or financial arrangements. Restrictions under applicable federal and state healthcare laws and regulations, include the
following:
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the U.S. federal Anti-Kickback Statute, which prohibits,
among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving, or providing remuneration,
directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order
or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program
such as Medicare and Medicaid; |
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the federal civil and criminal false claims laws, including
the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly
presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious, or fraudulent or
knowingly making, using, or causing to made or used a false record or statement to avoid, decrease, or conceal an obligation to pay
money to the federal government; |
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the FCPA, which prohibits companies and their intermediaries
from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business
or otherwise seeking favorable treatment; and |
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the federal transparency requirements known as the
federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to
report annually to the CMS within the U.S. Department of Health and Human Services, information related to payments and other transfers
of value made by that entity to physicians, as defined by such law, and teaching hospitals, as well as ownership and investment interests
held by physicians and their immediate family members. |
Further,
some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and
the relevant compliance guidance promulgated by the federal government in addition to requiring pharmaceutical manufacturers to report
information related to payments to physicians and other healthcare providers or marketing expenditures. In addition, certain state and
local laws require the registration of pharmaceutical sales representatives in the jurisdiction. State and foreign laws also govern the
privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often
are not preempted by the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), thus complicating
compliance efforts.
Employees
and Human Capital
As of December 31, 2022, we employed 35 full-time employees. The 35
full-time employees were engaged in research and development, operations, finance, and business development. Eleven employees held Ph.D.
degrees; one held M.D. degrees; and one held a VMD. Our employees are not represented by labor unions or covered under any collective
bargaining agreements. We consider our relationship with our employees to be good.
Our
human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing
and additional employees. The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees,
consultants and directors through the granting of stock-based compensation awards.
Facilities
We lease approximately 13,400 square feet of space
for our headquarters in Redwood City, California under an agreement that expires in August 2026. Thereafter, at our option, we may extend
the term for an additional five years to August 2031. We believe that our existing facilities are adequate to meet our current needs,
and that suitable additional alternative spaces will be available in the future on commercially reasonable terms.
Indemnification
and Insurance
Our
business exposes us to potential liability including, but not limited to, potential liability for (i) non-compliance with applicable
laws and regulations, and (ii) employment-related claims. In certain circumstances, we may also be liable for the acts or omissions of
others, such as suppliers of goods or services.
We
attempt to manage our potential liability to third parties through contractual protection (such as indemnification and limitation of
liability provisions) in our contracts and through insurance. The contractual indemnification provisions vary in scope and generally
do not protect us against all potential liabilities. In addition, in the event that we seek to enforce such an indemnification provision,
the indemnifying party may not have sufficient resources to fully satisfy its indemnification obligations or may otherwise not comply
with its contractual obligations.
We
currently maintain insurance coverage with limits we believe to be appropriate. The coverage provided by such insurance may not be adequate
for all claims made, and such claims may be contested by applicable insurance carriers.
Organization
We
were organized as a corporation under the laws of the State of Delaware on August 13, 2019 under the name “Amplitude Healthcare
Acquisition Corporation”. On September 24, 2021, we consummated the previously announced Business Combination (pursuant to the
Business Combination Agreement, dated May 5, 2021, by and among AMHC, Merger Sub and Old Jasper). Pursuant to the terms of the Business
Combination Agreement, a Business Combination or Reverse Recapitalization for accounting purposes between AMHC and Old Jasper was effected
through the merger of Merger Sub with and into Old Jasper with Old Jasper surviving as AMHC’s wholly-owned subsidiary. In connection
with the Business Combination, AMHC changed its name from Amplitude Healthcare Acquisition Corporation to Jasper Therapeutics, Inc.
Website
Access to SEC Filings
We
file annual, quarterly and special reports, proxy statements and other information with the SEC. The SEC maintains an Internet website
at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC, including Jasper. We maintain an Internet website at www.jaspertherapeutics.com. The information contained on our website
or that can be accessed through our website does not constitute a part of this report. We make available, free of charge through our
Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after
we electronically file or furnish this information to the SEC.
ITEM
1A. RISK FACTORS
Investing
in our common stock involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described
below before deciding whether to invest in our common stock. Before you make a decision to buy our securities, in addition to the risks
and uncertainties discussed above under “Cautionary Note Regarding Forward-Looking Statements”, you should carefully
consider the specific risks set forth herein. If any of these risks actually occur, it may materially harm our business, financial condition,
liquidity and results of operations. As a result, the market price of our securities could decline, and you could lose all or part of
your investment. Additionally, the risks and uncertainties described below are not the only risks and uncertainties that we face. Additional
risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect
our business.
Risk
Factor Summary
Below
is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address
all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face,
can be found below and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other
filings with the SEC before making an investment decision regarding our common stock.
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Risks Related to Our Financial Position and Need for
Additional Capital, including, among others, that: |
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We have incurred significant net losses and negative
operating cash flows since our inception. We expect to incur net losses for the foreseeable future and may never achieve or maintain
profitability. |
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We will need substantial additional funding, which
may not be available on acceptable terms, or at all. If we are unable to raise capital when needed, we would be forced to delay,
reduce or eliminate our research and product development programs or future commercialization efforts. |
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Risks Related to Discovery, Development, Manufacturing
and Commercialization, including, among others, that: |
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We are substantially dependent on the success of our most advanced
product candidate, briquilimab. If we are unable to complete development of, obtain approval for and commercialize our product candidates,
including briquilimab, in a timely manner or at all, our business will be harmed. |
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We may not be successful in our efforts to identify,
develop and commercialize additional product candidates. If these efforts are unsuccessful, we may never become a commercial stage
company or generate any revenues. |
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We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. |
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Our mRNA stem cell platform is a novel technology that is not yet clinically
validated for human use. The approaches we are taking to create mRNA stem cell grafts are unproven and may never lead to marketable products. |
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If any of our product candidates cause serious adverse
events, undesirable side effects or unexpected characteristics, such events, side effects or characteristics could delay or prevent
regulatory approval of the product candidate, limit our commercial potential or result in significant negative consequences following
any potential marketing approval. |
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Results of preclinical studies and early clinical trials
may not be predictive of results of future clinical trials, and such results do not guarantee approval of a product candidate by
regulatory authorities. In addition, our clinical trials to date have been limited in scope, and results received to date may not
be replicated in expanded or additional future clinical trials. |
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We have never obtained regulatory approval for a drug,
may never receive regulatory approval for any of our product candidates, and may therefore never generate revenues from product sales. |
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We face significant competition in an environment of
rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop
therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully
market or commercialize our product candidates. |
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Risks Related to Regulatory
Review, including, among others, that: |
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If clinical trials of our product candidates fail to
demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may
incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization
of such product candidates. |
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Stem cell transplant is a high-risk procedure
with curative potential that may result in complications or adverse events for patients in our clinical trials or for patients that
use any of our product candidates, if approved. |
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Risks Related to Our Relationships with Third Parties,
including, among others, that: |
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We rely on third parties to conduct our preclinical and clinical trials and will rely on them to perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed. |
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We
currently rely on a single manufacturer for our clinical supply of our product candidates. In the event of a loss of this
manufacturer, or a failure by such manufacturer to comply with the FDA regulations, we may not be able to find an alternative
source on commercially reasonable terms, or at all. In addition, third-party manufacturers and any third-party collaborators
may be unable to successfully scale-up manufacturing of our current or future product candidates in sufficient quality and quantity,
which would delay or prevent us from developing our product candidates and commercializing approved products, if any. |
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Risks Related to Our Intellectual Property, including,
among others, that: |
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We are highly dependent on intellectual property licensed
from third parties, and termination of any of these licenses could result in the loss of significant rights, which would harm our
business. |
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Our commercial success depends on our ability to obtain,
maintain and protect our intellectual property and proprietary technology. |
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Risks Related to Ownership of Our Common Stock and
Warrants, including, among others, that we will incur significant increased expenses and administrative burdens as a public company,
which could negatively impact our business, financial condition and results of operations. |
Risks
Related to Our Financial Position and Need for Additional Capital
We
have incurred significant net losses and negative operating cash flows since our inception. We expect to incur net losses for the foreseeable
future and may never achieve or maintain profitability.
We are a clinical-stage biotechnology company dedicated
to enabling cures through therapeutics targeting mast and hematopoietic stem cells and have a limited operating history. Investment in
biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant
risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval
and become commercially viable. We have no products approved for commercial sale and have not generated any revenue from product sales
to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. As a result,
we are not profitable and have incurred losses and negative operating cash flows in each period since our inception. For the years
ended December 31, 2022 and 2021, we reported net losses of $37.7 million and $30.6 million, respectively. For the years
ended December 31, 2022 and 2021, we reported negative operating cash flows of $45.9 million and $33.7 million, respectively.
As of December 31, 2022, we had an accumulated deficit of $105.1 million. We have devoted all of our efforts to organizing and staffing
our company, business and scientific planning, raising capital, acquiring and developing technology, identifying potential product candidates,
undertaking research and preclinical studies of potential product candidates, developing manufacturing capabilities and evaluating a clinical
path for our pipeline programs. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable
future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our
product candidates.
The
net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially
if and as we:
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continue the clinical development of briquilimab in chronic diseases such as Chronic Spontaneous Urticaria (“CSU”), Lower to Intermediate Risk Myelodysplastic Syndrome (“LR-MDS”) and other indications; |
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continue the open label Phase 1/2 clinical trial for briquilimab
for Severe Combined Immunodeficiency (“SCID”), and the open label Phase 1 clinical trial for briquilimab in patients
with myelodysplastic syndrome (“MDS”) or acute myeloid leukemia (“AML”); |
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continue our current research programs and development
of other potential product candidates from our current research programs; |
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seek to identify additional product candidates and
research programs; |
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initiate preclinical testing and clinical trials for
any other product candidates we identify and develop; |
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maintain, expand, enforce, defend and protect our intellectual
property portfolio, and provide reimbursement of third-party expenses related to our patent portfolio; |
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seek marketing approvals for any product candidates
that successfully complete clinical trials; |
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ultimately establish a sales, marketing and distribution
infrastructure to commercialize any product candidates for which we may obtain marketing approval; |
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adapt our regulatory compliance efforts to incorporate
requirements applicable to any approved product candidates; |
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further develop our genome engineering capabilities; |
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hire additional research and development and clinical
personnel; |
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hire commercial personnel and advance market access
and reimbursement strategies; |
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add operational, financial and management information
systems and personnel, including personnel to support our product development; |
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acquire or in-license product candidates, intellectual
property and technologies; |
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develop or in-license manufacturing and distribution
technologies; |
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should we decide to do so and receive approval for
any of our product candidates, build and maintain, or purchase and validate, commercial-scale manufacturing facilities designed
to comply with current Good Manufacturing Practices (“cGMP”) requirements; and |
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incur additional legal, accounting and other expenses
in operating as a public company. |
As
a company, we have not completed clinical development of any product candidate and expect that it will be several years, if ever,
before we have a product candidate ready for commercialization. To become and remain profitable, we must develop and, either directly
or through collaborators, eventually commercialize a product or products with significant market potential. This will require us to be
successful in a range of challenging activities, including identifying product candidates, completing preclinical testing and clinical
trials of product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing and selling those products
for which we may obtain marketing approval and satisfying any post-marketing requirements.
We
may never succeed in these activities and, even if we do, may never generate revenues that are significant or large enough to achieve
profitability. Our product candidates and research programs are currently only in the early stages of development. Because of the numerous
risks and uncertainties associated with developing product candidates, we are unable to predict the extent of any future losses or when
we will become profitable, if at all. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly
or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to
raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value
of our company could also cause you to lose all or part of your investment.
We
will need substantial additional funding, which may not be available on acceptable terms, or at all. If we are unable to raise capital
when needed, we would be forced to delay, reduce or eliminate our research and product development programs or future commercialization
efforts.
We expect to spend substantial amounts of cash
to conduct further research and development and preclinical testing and clinical trials of our product candidates, to seek regulatory
approvals for our product candidates and to launch and commercialize any product candidates for which we receive regulatory approval.
Furthermore, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial
additional funding in order to maintain our continuing operations. If we are unable to raise capital when needed or on attractive terms,
we would be forced to delay, reduce or eliminate our research and product development programs or future commercialization efforts. As
of December 31, 2022, our cash and cash equivalents were $38.3 million and we had an accumulated deficit of $105.1 million. Although we
raised total estimated net proceeds of $101.4 million in January 2023 in connection with the issuance and sale of 69,000,000 shares of
our common stock in an underwritten public offering and the issuance and sale of 2,337,496 shares pursuant to the ATM Prospectus Supplement
(as defined below), we will need to raise additional financing to continue our products’ development for the foreseeable future,
and will continue to need to do so until we become profitable. Our future financing requirements will depend on many factors, including:
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the initiation, progress, timing, costs and results
of preclinical studies and clinical trials for our product candidates, including any COVID-19-related delays or other effects
on our development programs; |
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the costs of continuing to build our technology platform,
including in-licensing additional genome engineering technologies for use in developing our product candidates; |
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the costs of developing, acquiring or in-licensing additional
targeted therapies to use in combination with briquilimab and other product candidates we may develop; |
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the costs of preparing, filing and prosecuting patent
applications, maintaining and enforcing our intellectual property and proprietary rights and defending intellectual property-related claims
in the United States and internationally; |
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the number and characteristics of product candidates
that we develop or may in-license; |
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our ability to establish and maintain collaborations
on favorable terms, if at all; |
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the achievement of milestones or occurrence of other
developments that trigger payments under any collaboration agreements we enter into; |
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the outcome, timing and cost of meeting regulatory requirements established
by the U.S. Food and Drug Administration (“FDA”), the European Medical Agency (the “EMA”) and other comparable
foreign regulatory authorities; |
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the cost and timing of completion of commercial-scale outsourced
manufacturing activities; |
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the cost of establishing sales, marketing and distribution
capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize
our products on our own; and |
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the costs of operating as a public company. |
Conducting preclinical testing and clinical trials
is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or
results required to obtain marketing approval and achieve product sales. In addition, even if we successfully develop product candidates
and those are approved, we may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products
that we do not expect to be commercially available for several years, if at all. Accordingly, we will need to continue to rely
on additional financing to achieve our business objectives.
We
currently have an effective universal shelf registration statement on Form S-3, which we filed with the SEC on October 7, 2022, and
which was declared effective on October 18, 2022 and will expire on October 18, 2025 (the “Shelf Registration
Statement”). Pursuant to the Shelf Registration Statement, we may offer from time to time up to an aggregate of $150.0 million
of securities, including any combination of common stock, preferred stock, debt securities, warrants, rights, units and depositary
shares. On November 10, 2022, we entered into a Controlled Equity OfferingSM Sales Agreement with Cantor Fitzgerald
& Co. (the “Agent”), pursuant to which we may offer and sell through or to the Agent, as sales agent or principal,
shares of common stock from time to time (the “ATM Offering”). On November 10, 2022, we filed under the Shelf
Registration Statement a prospectus supplement with the SEC in connection with the ATM Offering (the “ATM Prospectus
Supplement”), pursuant to which we may offer pursuant to the ATM Offering shares of our common stock having an aggregate
offering price of up to $15.5 million. No securities were sold pursuant to the Shelf Registration Statement and the ATM Prospectus
Supplement as of December 31, 2022. In January 2023, we issued and sold 2,337,496 shares of common stock pursuant to the ATM
Prospectus Supplement for total estimated net proceeds of $4.5 million. In January 2023, we issued and sold 69,000,000 shares of our
common stock in an underwritten public offering pursuant to the Shelf Registration Statement for total estimated net proceeds of
$96.9 million pursuant to an underwriting agreement with Credit Suisse Securities (USA) LLC, William Blair & Company, L.L.C. and
Oppenheimer & Co. Inc., as the representatives of the several underwriters named therein.
As of March 1, 2023,
approximately $10.9 million remains allocated and available under the ATM Prospectus Supplement and approximately $31.0 million
remains available and unallocated under the Shelf Registration Statement.
If we raise additional capital by issuing equity
securities, the percentage ownership of our existing stockholders may be reduced, and accordingly these stockholders may experience substantial
dilution. We may also issue equity securities that provide for rights, preferences and privileges senior to those of our common stock.
Given our need for cash and that equity issuances are the most common type of fundraising for similarly situated companies, the risk of
dilution is particularly significant for our stockholders.
Any additional fundraising efforts may divert our
management from our day-to-day activities, which may adversely affect our ability to develop and commercialize product candidates.
We cannot be certain that additional funding will be available on acceptable terms, or at all. We have no committed source of additional
capital and, if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly
delay, scale back or discontinue the development or commercialization of product candidates or other research and development initiatives.
Our license agreements and any future collaboration agreements may also be terminated if we are unable to meet the payment or other obligations
under the agreements. We could be required to seek collaborators for product candidates at an earlier stage than otherwise would be desirable
or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to product
candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.
Our management believes that our existing cash
and cash equivalents as of December 31, 2022, together with the cash proceeds received upon the closing of the public offering in January
2023, will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Annual Report on Form 10-K. However, we will
need to raise additional financing to continue our products’ development for the foreseeable future, and will continue to need to
do so until we become profitable. If we are unable to obtain funding when and as needed on a timely basis, we may be required to significantly
curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate, or
be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our
business, financial condition and results of operations. Any of the above events could significantly harm our business, prospects, financial
condition and results of operations and cause the price of our common stock to decline.
We have a limited operating history and no history of commercializing
pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability.
We are a clinical stage company. Old Jasper was founded and commenced
operations in March 2018. Our operations to date have been limited to organizing and staffing our company, business planning, raising
capital, acquiring and developing our technology, identifying potential product candidates and undertaking preclinical studies and clinical
trials. Although we have initiated clinical trials for briquilimab, we have not yet demonstrated an ability to successfully complete clinical
trials of our product candidates; obtained marketing approvals; manufactured a commercial-scale medicine or therapy, or arranged for a
third party to do so on our behalf; or conducted sales and marketing activities necessary for successful commercialization. Typically,
it takes about 10 to 15 years to develop a new medicine from the time it is discovered to when it is available for
treating patients. Consequently, any predictions we make about our future success or viability may not be as accurate as they could be
if we had a longer operating history.
In addition, as a young business, we may encounter
unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition at some point
from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful
in such a transition.
We have never generated revenue from product sales and may never
be profitable.
Our ability to generate revenue from product sales
and achieve profitability depends on our ability, alone or with collaborators, to successfully complete the development of, and obtain
the regulatory approvals necessary to commercialize, product candidates. We do not anticipate generating revenues from product sales for
the next several years, if ever. Our ability to generate future revenue from product sales depends heavily on our, or our future
collaborators’, ability to successfully:
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identify product candidates and complete research and preclinical and clinical development of any product candidates we may identify; |
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seek and obtain regulatory and marketing approvals for any product candidates for which we complete clinical trials; |
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launch and commercialize any product candidates for which we obtain regulatory and marketing approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; |
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qualify for coverage and adequate reimbursement by government and third-party payors for any product candidates for which we obtain regulatory and marketing approval; |
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develop, maintain, and enhance a sustainable, scalable, reproducible, and transferable manufacturing process for the product candidates we may develop; |
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establish and maintain supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and the market demand for any product candidates for which we obtain regulatory and marketing approval; |
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obtain market acceptance of product candidates as viable treatment options; |
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address competing technological and market developments; |
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implement internal systems and infrastructure, as needed; |
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negotiate favorable terms in any collaboration, licensing or other arrangements into which we may enter, and perform our obligations in such arrangements; |
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maintain, protect, enforce, defend and expand our portfolio of intellectual property rights, including patents, trade secrets and know-how, in the United States and internationally; |
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avoid and defend against third-party interference, infringement and other intellectual property claims in the United States and internationally; and |
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attract, hire and retain qualified personnel. |
Even if one or more of the product candidates we
develop are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product
candidate. Our expenses could increase beyond expectations if we are required by the FDA, the EMA or other regulatory authorities to perform
clinical and other studies in addition to those that we currently anticipate.
Many of the factors listed above are beyond our
control, and could cause us to experience significant delays or prevent us from completing the development of our product candidates,
obtaining regulatory approvals or commercializing our product candidates. Even if we do achieve profitability, we may not be able to sustain
or increase profitability on a quarterly or annual basis. A failure to become or remain profitable could result in a decline in the value
of our company and could also cause you to lose all or part of your investment.
As a result of our history of losses and negative cash flows
from operations, we will need to raise additional financing to continue our products’ development.
Our history of operating losses and negative cash flows from operations
combined with our anticipated use of cash to fund operations raised substantial doubt about our ability to continue as a going concern
beyond the 12-month period reported by us and our auditors in prior periods. While management believes that our existing cash
and cash equivalents as of December 31, 2022, together with the cash proceeds received upon the closing of the public offering in January
2023, will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Annual Report on Form 10-K, we will need to raise additional financing to continue our
products’ development for the foreseeable future, and will continue to need to do so until we become profitable. Our future viability
as an ongoing business is dependent on our ability to generate cash from our operating activities or to raise additional capital to finance
our operations.
The perception that we might be unable to continue
as a going concern may also make it more difficult to obtain financing for the continuation of our operations on terms that are favorable
to us, or at all, and could result in the loss of confidence by investors and employees. Our consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty. If we are unable to continue as a going concern, we may
have to liquidate our assets and may receive less than the value at which those assets are carried on our consolidated financial statements,
and it is likely that our investors will lose all or a part of their investment.
Our ability to utilize our net operating loss carryforwards and
certain other tax attributes to offset taxable income or taxes may be limited.
As of December 31, 2022, we had net operating
loss carryforwards for federal income tax purposes of $68.8 million that can be carried forward indefinitely. As of December 31,
2022, we had net operating loss carryforwards for state income tax purposes of $120.0 million that begin to expire in 2038.
Portions of these net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under
the legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (the “Tax Act”), as modified by the Coronavirus
Aid, Relief, and Economic Security Act (the “CARES Act”), U.S. federal net operating losses incurred in taxable years
beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal net operating losses
in taxable years beginning after December 31, 2020 is limited. It is uncertain how various states will respond to the Tax Act
and the CARES Act. For state income tax purposes, there may be periods during which the use of net operating loss carryforwards is suspended
or otherwise limited, which could accelerate or permanently increase state taxes owed. In addition, under Sections 382 and 383
of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation
undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership
over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change
tax attributes to offset its post-change income or taxes may be limited. Our existing net operating loss carryforwards may be subject
to limitations arising out of previous ownership changes and we may be limited as to the amount that can be utilized each year as a result
of such previous ownership changes, including the Business Combination and related transactions. In addition, future changes in our stock
ownership, including future offerings, as well as other changes that may be outside of our control, could result in additional ownership
changes. We have completed a Section 382 analysis covering taxable periods from its inception through the year ended December 31,
2021. We experienced an ownership change on November 21, 2019 for both federal and California tax purposes related to its Series A
redeemable convertible preferred stock financing. Any net operating loss generated for taxable periods in 2018 and through November 21,
2019 in excess of $2.87 million will be permanently limited for California tax purposes. We reduced our California net operating
loss deferred tax assets balance by the permanently limited amount of $0.6 million. There would be no permanent loss of federal net
operating loss based on the limits. We experienced an additional ownership change on September 24, 2021; however, we do not expect there
are additional tax attributes that will expire unused before the expiration periods. There is a full valuation allowance for net deferred
tax assets, including net operating loss carryforwards for the year ended December 31, 2022.
Our business could be adversely affected by the effects of health
pandemics or epidemics, including the current COVID-19 pandemic and future outbreaks of the disease, in regions where we or third parties
on which we rely have concentrations of clinical trial sites or other business operations.
Our business could be adversely affected by the effects of health pandemics
or epidemics, including the current COVID-19 pandemic and future outbreaks of the disease, including any variants thereof. For example,
enrollment in clinical trials may be delayed. Although we have reopened our offices and some employees have transitioned back to working
on site, there is a lack of uniformity of restrictions and requirements among our clinical trial sites, and future restrictions could
be imposed. This uncertainty and the evolving nature of policies and restrictions may negatively impact productivity, disrupt our business
and further delay clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions
and other limitations on our ability to conduct our business in the ordinary course, which could negatively impact our business, operating
results and financial condition.
The spread of COVID-19, which has caused a broad impact globally, may
affect us economically. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to
assess or predict, it has resulted in significant disruption of global financial markets. This disruption, if sustained or recurrent,
could make it more difficult for us to access capital, which could in the future negatively affect our liquidity. In addition, a recession
or market correction resulting from the spread of COVID-19 or the global impacts thereof could materially affect our business and the
value of our common stock. These effects could have an adverse impact on our operations.
Business disruptions caused by natural or man-made disasters, acts of
war or other hostilities could seriously harm our future revenues and financial condition and increase our costs and expenses generally.
Our corporate headquarters are located in the San Francisco
Bay Area, a region known for seismic activity. Our suppliers may also experience a disruption in their business as a result of natural
or man-made disasters. A significant natural or man-made disaster, such as an earthquake, prolonged or repeated power outage, hurricane,
flood, fire, drought or other extreme weather events and changing weather patterns, which are increasing in frequency due to the impacts
of climate change, could severely damage or destroy our headquarters or facilities or the facilities of our manufacturers or suppliers,
which could have a material and adverse effect on our business, financial condition and results of operations. In addition, terrorist
acts, acts of war or the outbreak of hostilities against the U.S. or other countries globally, could cause damage or disruption to us,
our employees, facilities, partners and suppliers, which could have a material adverse effect on our business, financial condition and
results of operations.
Risks Related to Discovery, Development, Manufacturing and Commercialization
We are substantially dependent on the success of our most advanced
product candidate, briquilimab. If we are unable to complete development of, obtain approval for and commercialize our product candidates,
including briquilimab, in a timely manner or at all, our business will be harmed.
Our future success is dependent on our ability to timely advance and
complete clinical trials, obtain marketing approval for and successfully commercialize our product candidates. We are not permitted to
market or promote briquilimab or any other product candidate before we receive marketing approval from the FDA and comparable foreign
regulatory authorities, and we may never receive such marketing approvals.
The success of our product candidates will depend on
several factors, including the following:
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the acceptance of individual investigational review boards (“IRBs”)
and scientific review committees at each clinical trial site as to the adequacy of the preclinical data package to support clinical development
of briquilimab and their overall general agreement with the use of briquilimab in the intended patient population in the intended manner; |
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the willingness of clinical investigators to place patients in the clinical trials, and the willingness of patients to enroll in a clinical trial studying a first-in-human cell therapy; |
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the initiation and successful patient enrollment and completion of
additional clinical trials of briquilimab in CSU and LR-MDS on a timely basis; |
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the frequency and severity of adverse events in the clinical trials; |
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the successful and timely completion of our ongoing Phase 1/2 clinical
trial of briquilimab for the treatment of SCID; |
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maintaining and establishing relationships with contract research organizations
(“CROs”) and clinical sites for the clinical development of briquilimab both in the United States and internationally; |
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successful completion of toxicology studies, biodistribution studies and minimally efficacious dose studies in animals, where applicable; |
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successful completion of clinical trials, under the FDA’s current Good Clinical Practices (“cGCPs”) and the FDA’s current Good Laboratory Practices; |
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effective investigational new drug (“IND”) applications or Clinical Trial Authorizations that allow commencement of our planned clinical trials or future clinical trials for our product candidates; |
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the results of clinical trials conducted by third parties in hematopoietic cell transplant (“HCT”) if such trials result in changes to the standard of care for HCT or otherwise cause us to change our clinical trial protocols; |
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the efficacy, safety and tolerability profiles that are satisfactory to the FDA, EMA or any comparable foreign regulatory authority for marketing approval; |
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the timely receipt of marketing approvals for our product candidates from applicable regulatory authorities; |
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the extent of any required post-marketing approval commitments to applicable regulatory authorities; |
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the maintenance of existing or the establishment of new supply arrangements
with third-party suppliers and manufacturers for clinical development of briquilimab; |
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the maintenance of existing, or the establishment of new, scaled production
arrangements with third-party manufacturers to obtain finished products that are appropriate for commercial sale of briquilimab, if it
is approved; |
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obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the United States and internationally; |
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a continued acceptable safety profile following any marketing approval; |
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commercial acceptance by patients, the medical community and third-party payors; |
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our ability to obtain coverage and adequate reimbursement from third-party payors for our products, and patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement; and |
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our ability to compete with other treatments. |
We do not have complete control over many of these factors, including
certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and
the manufacturing, marketing, distribution and sales efforts of any future collaborator. If we are not successful with respect to one
or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize
briquilimab, which would materially harm our business. If we do not receive marketing approvals for briquilimab, we may not be able to
continue our operations.
We may not be successful in our efforts to identify, develop and
commercialize additional product candidates. If these efforts are unsuccessful, we may never become a commercial stage company or
generate any revenues.
The success of our business depends primarily upon our ability to identify,
develop and commercialize additional product candidates based on, or complementary with, our technology platform. While we are currently
initiating clinical trials in LR-MDS and CSU this year, are currently conducting a Phase 1/2 clinical trial of briquilimab as a conditioning
agent prior to allogenic transplant for SCID patients, and are planning a registrational package of briquilimab as a conditioning agent
prior to allogenic re-transplant in SCID patients, our other product development programs, including our mRNA stem cell platform, are
still in the research or preclinical stage of development. Our research programs may fail to identify additional product candidates
for clinical development for a number of reasons. Our research methodology may be unsuccessful in identifying potential product candidates,
our potential product candidates may be shown to have harmful side effects in preclinical in vitro experiments or animal model studies,
they may not show promising signals of efficacy in such experiments or studies or they may have other characteristics that may make the
product candidates impractical to manufacture, unmarketable or unlikely to receive marketing approval. The historical failure rate for
product candidates is high due to risks relating to safety, efficacy, clinical execution, changing standards of medical care and other
unpredictable variables. In addition, although we believe our technology platform will position us to rapidly expand our portfolio of
product candidates beyond our current product candidates, our ability to expand our portfolio may never materialize.
If any of these events occur, we may be forced to abandon
our research or development efforts for a program or programs, which would have a material adverse effect on our business, financial condition,
results of operations and prospects. Research programs to identify new product candidates require substantial technical, financial and
human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful,
which would be costly and time-consuming.
We may expend our limited resources to pursue
a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or
for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we focus
on research programs and product candidates that we identify for specific indications among many potential options. As a result, we may
forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial
potential. For example, on January 10, 2023, we announced, as part of an overall portfolio prioritization, that we will focus on the development
of our lead product candidate, briquilimab (formerly known as JSP191), in chronic mast and stem cell diseases as well as a conditioning
agent for stem cell transplant in rare diseases. This portfolio includes a new program as a therapeutic for patients with CSU, along with
our existing programs for briquilimab as a therapeutic for patients with LR-MDS and as a conditioning agent for stem cell transplant in
patients with sickle cell disease, Fanconi anemia or severe combined immunodeficiency. Our resource allocation decisions may cause us
to fail to capitalize on viable commercial medicines or profitable market opportunities. Our spending on current and future research and
development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do
not accurately evaluate the commercial potential or target market for a particular product candidate (including briquilimab), we may relinquish
valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have
been more advantageous for us to retain sole development and commercialization rights to such product candidate. Any such event could
have a material adverse effect on our business, financial condition, results of operations and prospects.
Our mRNA stem cell platform is a novel technology that is not yet
clinically validated for human use. The approaches we are taking to create mRNA stem cell grafts are unproven and may never lead to marketable
products.
We are developing mRNA stem cell grafts for transplant
into the human body. Although there have been significant advances in the field of use of RNA or DNA to edit cells ex vivo prior to transplant
in recent years, these technologies have only more recently been applied to HSCs, and our approach is new and unproven. The scientific
evidence to support the feasibility of developing mRNA stem cell grafts is both preliminary and limited. Successful development of mRNA
stem cell grafts by us will require solving a number of challenges, including:
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obtaining regulatory authorization from the FDA and other regulatory authorities; |
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identifying appropriate molecular or genetic targets for modification within HSCs; |
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developing and deploying consistent and reliable processes for procuring cells from consenting third-party donors, isolating HSCs from such donor cells, modifying target molecules within such HSCs, storing and transporting the resulting mRNA stem cell grafts for therapeutic use and finally infusing these mRNA stem cell grafts into patients; |
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utilizing these mRNA stem cell graft product candidates in combination or in sequence with companion therapeutics, which may increase the risk of adverse side effects; |
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avoiding potential complications of mRNA stem cell graft transplants, including failure to engraft, rejection by host or lack of functionality, any of which could result in serious side effects or death; |
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educating medical personnel regarding the potential side effect profile of our product candidates, particularly those that may be unique to our mRNA stem cell grafts; |
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understanding and addressing variability in the quality of a donor’s cells, which could ultimately affect our ability to manufacture product in a reliable and consistent manner; |
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developing processes for the safe administration of mRNA stem cell
graft product candidates, including long-term follow-up and registries, for all patients who receive these product candidates; |
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relying on third parties to find suitable healthy donors; |
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manufacturing product candidates to our specifications and in a timely manner to support our clinical trials and, if approved, commercialization; |
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sourcing clinical and, if approved by applicable regulatory authorities, commercial supplies for the materials used to manufacture and process product candidates; |
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developing a manufacturing process and distribution network that can provide a stable supply with a cost of goods that allows for an attractive return on investment; and |
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establishing sales and marketing capabilities ahead of and after obtaining any regulatory approval to gain market acceptance, and obtaining coverage, adequate reimbursement and pricing by third-party payors and governmental healthcare programs. |
We may decide to alter or abandon our initial mRNA stem cell grafts
platform as new data become available and we gain experience in developing mRNA stem cell grafts. We cannot be sure that our programs
will yield satisfactory products that are safe and effective, scalable or profitable in our initial indication or any other indication
we pursue.
Moreover, actual or perceived safety issues, including
as a result of adverse developments in our mRNA stem cell graft platform or in genome engineering programs undertaken by third parties
or of the adoption of novel approaches to treatment, may adversely influence the willingness of subjects to participate in our clinical
trials, or, if one of our product candidates is approved by applicable regulatory authorities, of physicians to subscribe to the novel
treatment mechanics or of patients to provide consent to receive a novel treatment despite its regulatory approval. The FDA or other applicable
regulatory authorities may require specific post-market studies or additional information that communicates the benefits or risks of our
products. New data may reveal new risks of our product candidates at any time prior to or after regulatory approval.
If any of our product candidates cause serious adverse events, undesirable
side effects or unexpected characteristics, such events, side effects or characteristics could delay or prevent regulatory approval of
the product candidate, limit our commercial potential or result in significant negative consequences following any potential marketing
approval.
Undesirable side effects or adverse events caused by briquilimab and
our other product candidates, and our mRNA stem cell platform or other cell-based companion therapeutics we may develop, could cause us
or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial
of regulatory approval by the FDA or comparable foreign regulatory authorities. Results of our clinical trials could reveal a high and
unacceptable severity and prevalence of side effects or unexpected characteristics. Treatment-related side effects could also affect patient
recruitment or the ability of enrolled patients to complete the trials or result in potential product liability claims.
There have been no clinical trials of our mRNA stem cell platform.
In the genetic medicine field, there have been several significant adverse events from genetically engineered treatments in the past,
including reported cases of leukemia and death. There can be no assurance that our mRNA stem cell grafts will not cause undesirable side
effects, as improper modification of a patient’s DNA could lead to lymphoma, leukemia or other cancers, or other aberrantly functioning
cells.
A significant risk in any genetically engineered product
candidate is that “off-target” gene alterations may occur, which could cause serious adverse events, undesirable side effects
or unexpected characteristics. Although we and others have demonstrated the ability to improve the specificity of gene alterations in
a laboratory setting, we cannot be certain that off-target alterations will not occur in any of our planned or future clinical trials,
and the lack of observed side effects in preclinical studies does not guarantee that such side effects will not occur in human clinical
trials.
If any product candidates we develop are associated
with serious adverse events, undesirable side effects or unexpected characteristics, we may need to abandon their development or limit
development to certain uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are
less prevalent, less severe or more acceptable from a risk-benefit perspective, any of which would have a material adverse effect on our
business, financial condition, results of operations, and prospects. Many product candidates that initially showed promise in early stage
testing have later been found to cause side effects that prevented further clinical development of the product candidates.
Results of preclinical studies and early clinical trials may not
be predictive of results of future clinical trials, and such results do not guarantee approval of a product candidate by regulatory authorities.
In addition, our clinical trials to date have been limited in scope, and results received to date may not be replicated in expanded or
additional future clinical trials.
The outcome of preclinical studies and early clinical
trials may not be predictive of the success of later clinical trials, and interim results of clinical trials do not necessarily predict
success in the results of completed clinical trials. There can be no assurance that any of our current or future preclinical and clinical
trials will ultimately be successful or support further preclinical or clinical development of any of our product candidates. Many companies
in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive
results in earlier development, and we could face similar setbacks. The design of a clinical trial can determine whether its results will
support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced.
Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless
failed to obtain regulatory approval for their product candidates. In addition, preclinical and clinical data are often susceptible to
varying interpretations and analyses, which may delay, limit or prevent regulatory approval. In addition, regulatory delays or rejections
may be encountered as a result of many factors, including changes in regulatory policy during the period of product development. Any such
adverse events may cause us to delay, limit or terminate planned clinical trials, any of which would have a material adverse effect on
our business, financial condition, results of operations and prospects.
In some instances, there can be significant variability
in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes
in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the
dosing regimen and other clinical trial procedures and the rate of dropout among clinical trial participants. If we fail to receive positive
results in clinical trials of our product candidates, the development timeline and regulatory approval and commercialization prospects
for our most advanced product candidate, and, correspondingly, our business and financial prospects would be negatively impacted.
If we experience delays or difficulties in the enrollment of patients
in clinical trials, the cost of developing product candidates could increase and our receipt of necessary regulatory approvals could be
delayed or prevented.
Patient enrollment is a significant factor in the timing of clinical
trials. The timing of our clinical trials depends, in part, on the speed at which we can recruit patients to participate in our trials.
We or our collaborators may not be able to continue clinical trials for briquilimab or any other product candidates we identify or develop
if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA,
the EMA or other analogous regulatory authorities outside the United States, or as needed to provide appropriate statistical power
for a given trial. Patients may be unwilling to participate in our clinical trials because of negative publicity from adverse events related
to the biotechnology, gene therapy or genome engineering fields, competitive clinical trials for similar patient populations, clinical
trials in competing products or for other reasons. As a result, the timeline for recruiting patients, conducting trials and obtaining
regulatory approval of product candidates may be delayed.
Patient enrollment is also affected by other factors,
including:
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severity of the disease under investigation; |
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size of the patient population and process for identifying patients; |
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design of the trial protocol; |
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availability and efficacy of approved medications for the disease under investigation; |
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availability of genetic testing for potential patients; |
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ability to obtain and maintain patient informed consent; |
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risk that enrolled patients will drop out before completion of the trial; |
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eligibility and exclusion criteria for the trial in question; |
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perceived risks and benefits of the product candidate under trial; |
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perceived risks and benefits of genome engineering as a treatment approach; |
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perceived risks and benefits of the companion therapeutics that may
be administered in combination or in sequence with briquilimab; |
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efforts to facilitate timely enrollment in clinical trials; |
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potential disruptions caused by the COVID-19 pandemic, including difficulties in initiating clinical sites, enrolling and retaining participants, diversion of healthcare resources away from clinical trials, travel or quarantine policies that may be implemented, and other factors; |
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patient referral practices of physicians; |
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ability to monitor patients adequately during and after treatment; |
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proximity and availability of clinical trial sites for prospective patients, especially for those conditions that have small patient pools; |
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the requirement for HCT to be performed in centers that specialize in this procedure; and |
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changes to diagnostic technologies, methodologies or criteria used to identify HCT patients at high risk for relapse. |
In addition, our clinical trials will compete with
other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will
reduce the number and types of patients available to us because some patients who have opted to enroll in our trials may instead opt to
enroll in a trial being conducted by a competitor. We may conduct some of our clinical trials at the same clinical trial sites that some
of our competitors use, which will reduce the number of patients who are available for our clinical trials at such clinical trial sites.
Enrollment delays in our clinical trials may result in increased development
costs for briquilimab or any other product candidates we may develop, which would cause the value of our company to decline and limit
our ability to obtain additional financing. If we or our collaborators have difficulty enrolling a sufficient number of patients to conduct
our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an
adverse effect on our business, financial condition, results of operations and prospects.
We have never obtained regulatory approval for a drug, may never
receive regulatory approval for any of our product candidates, and may therefore never generate revenues from product sales.
As a company, we have never obtained regulatory approval for, or commercialized,
a drug. It is possible that the FDA may refuse to accept any or all future product candidates for substantive review or may conclude after
review of our data that our application is insufficient to obtain regulatory approval for any current or future product candidates. If
the FDA does not approve any future product candidates, it may require that we conduct additional costly clinical, preclinical or manufacturing
validation studies before the FDA will reconsider one or more of our applications. Depending on the extent of these or any other FDA-required
studies, approval of any product candidates or other application that we submit may be significantly delayed, possibly for several years,
or may require us to expend more resources than we have available. Any failure or delay in obtaining regulatory approvals would prevent
us from commercializing briquilimab or any other product candidate, generating revenues and achieving and obtaining or sustaining profitability.
It is also possible that additional studies, if performed and completed, may not be considered sufficient by the FDA to approve any new
drug application or other application we submit. If any of these outcomes occur, we may be forced to abandon the development of our product
candidates, which would materially adversely affect our business and could potentially cause us to cease operations. We face similar risks
for our applications in foreign jurisdictions.
Our commercial success depends upon attaining significant market
acceptance of our product candidates, if approved, among physicians, patients, healthcare payers and operators of major clinics, and we
may not be successful in attaining such market acceptance.
Even with the requisite approvals from the FDA in the
U.S., the EMA in the European Union and other regulatory authorities internationally, the commercial success of our product candidates
will depend, in part, upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community.
Any product that we commercialize may not gain acceptance by physicians, patients, health care payors and others in the medical community.
If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable.
Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources,
including our management’s time and financial resources, and may not be successful. Ethical, social and legal concerns about genetic
medicines generally and genome engineering technologies specifically could result in additional regulations restricting or prohibiting
the marketing of our product candidates. Even if any product candidate we develop receives marketing approval, it may nonetheless fail
to gain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community. The degree of market
acceptance of any product candidate we develop, if approved for commercial sale, will depend on a number of factors, including:
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the efficacy and safety of such product candidate as demonstrated in clinical trials; |
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the efficacy and safety of other products that are used in combination or in sequence with our product candidates; |
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the potential and perceived advantages of our product candidates compared to alternative treatments; |
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the limitation to our targeted patient population and limitations or warnings contained in approved labeling by the FDA or other regulatory authorities; |
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the ability to offer our products for sale at competitive prices; |
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convenience and ease of administration compared to alternative treatments; |
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the clinical indications for which the product candidate is approved by the FDA, the EMA or other regulatory agencies; |
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public attitudes regarding genetic medicine generally and genome engineering technologies specifically; |
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the willingness of the target patient population to try novel biologics and of physicians to prescribe these treatments, as well as their willingness to accept an intervention that involves the alteration of the patient’s gene; |
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product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; |
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relative convenience and ease of administration; |
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the strength of marketing and distribution support; |
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availability of third-party coverage and sufficiency of reimbursement; and |
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the prevalence and severity of any side effects. |
Even if a product candidate is approved, such product
may not achieve an adequate level of acceptance, we may not generate significant product revenues, and we may not become profitable.
If we are unable to establish effective marketing and sales capabilities
or enter into agreements with third parties to market and sell our product candidates, if approved, we may not be able to effectively
market and sell our product candidates, if approved, or generate product revenues.
We have limited marketing capabilities and limited
experience in the sale, marketing or distribution of pharmaceutical products. In addition, we do not have a large sales, promotion and
marketing budget. As a result of our limited marketing capabilities, to achieve commercial success for any approved product for which
we retain sales and marketing responsibilities, we must either develop a sales and marketing organization or outsource these functions
to third parties. In the future, we may choose to build a focused sales, marketing and commercial support infrastructure to sell, or participate
in sales activities with our collaborators for, some of our product candidates if and when they are approved.
Factors that may inhibit our efforts to commercialize
our product candidates on our own include:
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our inability to recruit and retain adequate numbers of effective sales, marketing, reimbursement, customer service, medical affairs and other support personnel; |
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the inability of sales personnel to obtain access to physicians or educate adequate numbers of physicians on the benefits of prescribing any future products; |
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the inability of reimbursement professionals to negotiate arrangements for formulary access, reimbursement and other acceptance by payors; |
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restricted or closed distribution channels that make it difficult to distribute our product candidates to segments of the patient population; |
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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and |
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unforeseen costs and expenses associated with creating an independent commercialization organization. |
We may not be successful in entering into arrangements
with third parties to commercialize our product candidates or may be unable to do so on terms that are favorable to us. We may have little
control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products
effectively. If we do not establish commercialization capabilities successfully, either on our own or in collaboration with third parties,
we will not be successful in commercializing our product candidates.
We face significant competition in an environment of rapid technological
change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer
or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize
our product candidates.
The development and commercialization of new drug and biologic products
is highly competitive. Moreover, the genome engineering, autoimmune and oncology fields are characterized by rapidly changing technologies,
significant competition and a strong emphasis on intellectual property. We will face competition with respect to briquilimab and any other
product candidates that we develop or commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies
and biotechnology companies worldwide. Potential competitors also include academic institutions, government agencies and other public
and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research,
development, manufacturing and commercialization.
There are a number of large pharmaceutical and biotechnology
companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications
for which we have product candidates and research programs. Some of these competitive products and therapies are based on scientific approaches
that are the same as or similar to our approach, and others are based on entirely different approaches. Any product candidates that we
successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future
that are approved to treat the same diseases for which we may obtain approval for our product candidates. This may include other types
of therapies, such as small molecule, antibody and/or protein therapies.
Many of our current or potential competitors, either
alone or with their collaboration partners, may have significantly greater financial resources and expertise in research and development,
manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we
do. Mergers and acquisitions in the pharmaceutical, biotechnology and gene therapy industries may result in even more resources being
concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors,
particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting
and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical
trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity could be reduced
or eliminated if our competitors develop and commercialize product candidates that are safer, more effective, have fewer or less severe
side effects, are more convenient or are less expensive than our product candidates or that would render our product candidates obsolete
or non-competitive. Our competitors also may obtain FDA or other regulatory approval for their product candidates more rapidly than we
may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter
the market. Additionally, technologies developed by our competitors may render our product candidates uneconomical or obsolete, and we
may not be successful in marketing any product candidates against competitors.
Competitors of briquilimab for our conditioning program for CD-117,
a receptor for stem cell factor (“SCF”) that is expressed on the surface of hematopoietic stem and progenitor cells, include
the following:
| ● | Celldex
Therapeutics, Inc., which is developing an antibody to CD117 that is being studied in mast cell diseases; |
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Acelyrin, Inc., which is developing an antibody to CD117 for mast cell diseases; |
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Third Harmonic, Inc., which is developing small molecule inhibitors to CD117 for mast cell diseases; |
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Allakos, Inc., which is developing an antibody to Siglec-8 for mast cell diseases; |
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Novartis, Inc., which is developing a small molecule inhibitor to Bruton’s Tyrosine Kinase for mast cell diseases; |
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Sanofi Aventis, Inc., which is developing an antibody to the Interleukin 4 receptor for mast cell diseases; |
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Gilead Sciences, Inc., which is developing an antibody to CD117 that may be used in combination with an antibody to CD47 for stem cell transplants; |
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Actinium Pharmaceuticals, Inc., which is developing an antibody to CD45 that is fused to iodine-131 radioisotope for stem cell transplant; |
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Beam Therapeutics, Inc., which is developing an antibody to CD117 that may be used in combination with their gene modified stem cells for gene therapy; and |
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Molecular Templates Inc., which is developing an antibody to CD45 that is fused to an engineered Shiga-like toxin for stem cell transplant. |
Competitors for our mRNA-modified stem cell therapy
program include the following:
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Vor Biopharma, Inc., which is developing treatment-resistant marrow cells that enable CD33 targeted therapy; |
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Sana Biotechnology, Inc., which is developing hypoimmune cells designed to evade rejection and enable persistence of differentiated cells; |
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Ensoma Inc., which is developing viral vectors for delivery of cell modification payload in vivo; |
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Orca Bio, which is developing precision allogeneic cell therapy products meant to safely and effectively replace a patient’s blood and immune system; and |
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Beam Therapeutics, Inc., which is developing stem cells designed to evade binding to their CD117 antibody for gene therapy. |
Adverse public perception of genetic medicines, and genome engineering
in particular, may negatively impact regulatory approval of, and/or demand for, our potential products.
Some of our mRNA stem cell grafts or other cell-based
therapeutics we develop may be created by altering the human genome. The clinical and commercial success of our potential products will
depend in part on public understanding and acceptance of the use of genome engineering for the prevention or treatment of human diseases.
Public attitudes may be influenced by claims that genome engineering is unsafe, unethical or immoral, and, consequently, our current or
future product candidates may not gain the acceptance of the public or the medical community. Adverse public attitudes may adversely impact
our ability to enroll clinical trials. Moreover, our success will depend upon physicians prescribing, and their patients being willing
to receive, treatments that involve the use of product candidates in lieu of, or in addition to, existing treatments with which they are
already familiar and for which greater clinical data may be available.
In addition, genome engineering technology is subject to public debate
and heightened regulatory scrutiny due to ethical concerns relating to the application of genome engineering technology to human embryos
or the human germline. For example, in the United States, germline alteration for clinical application has been expressly prohibited
since enactment of a December 2015 FDA ban on such activity. Prohibitions are also in place in the United Kingdom, across most
of Europe, in China and many other countries around the world. In the United States, the National Institutes of Health (“NIH”)
has announced that the agency would not fund any use of gene engineering technologies in human embryos, noting that there are multiple
existing legislative and regulatory prohibitions against such work, including the Dickey-Wicker Amendment, which prohibits the use of
appropriated funds for the creation of human embryos for research purposes or for research in which human embryos are destroyed. Adverse
events in our preclinical studies or clinical trials or those of our competitors or of academic researchers utilizing genome engineering
technologies, even if not ultimately attributable to product candidates we may identify and develop, and the accompanying publicity could
result in increased governmental regulation, unfavorable public perception, potential regulatory delays in the testing or approval of
potential product candidates we may identify and develop, stricter labeling requirements for those product candidates that are approved
and a decrease in demand for any such product candidates.
If product liability lawsuits are brought against us, we may incur
substantial liabilities and may be required to limit commercialization of our product candidates.
We face an inherent risk of product liability exposure
related to the testing in human clinical trials of our product candidates and will face an even greater risk if we commercially sell any
products that we may develop. For example, we may be sued if our product candidates cause, or are perceived to cause, injury or are found
to be otherwise unsuitable during clinical trials, manufacturing, marketing or sale. Any such product liability claims may include allegations
of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or
a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves
against claims that our product candidates or products caused injuries, we could incur substantial liabilities or be required to limit
commercialization of our product candidates. Even a successful defense would require significant financial and management resources. Regardless
of merit or eventual outcome, liability claims may result in:
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the inability to commercialize any products that we may develop; |
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decreased demand for our product candidates or products that we may develop; |
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injury to our reputation and significant negative media attention; |
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withdrawal of clinical trial participants; |
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significant time and costs to defend the related litigation; |
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substantial monetary awards to trial participants or patients; and |
Although we maintain product liability insurance coverage,
it may not be adequate to cover all liabilities that we may incur. We anticipate that we will need to increase our insurance coverage
as we continue clinical trials and if we successfully commercializes any product. Insurance coverage is increasingly expensive. We may
not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Our product candidates are complex and difficult to manufacture.
We could experience delays in satisfying regulatory authorities or production problems that result in delays in our development or commercialization
programs, limit the supply of our product candidates, or otherwise harm our business.
Our product candidates require processing steps that
are more complex than those required for most chemical and other biological pharmaceuticals. Moreover, unlike chemical and other biological
pharmaceuticals, the physical and chemical properties of a gene-engineered cell therapies cannot be fully characterized. As a result,
assays of the finished product candidate may not be sufficient to ensure that the product candidate will perform in the intended manner.
Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing
failures that result in lot failures, product recalls, product liability claims, insufficient inventory or potentially delay progression
of our clinical trials. If we successfully develop product candidates, we may encounter problems achieving adequate quantities and quality
of clinical-grade materials that meet FDA, EMA or other comparable applicable foreign standards or specifications with consistent and
acceptable production yields and costs. In addition, our product candidates will require complicated delivery modalities, such as electroporation,
which will introduce additional complexities into the manufacturing process.
mRNA stem cell grafts consist of engineered human cells,
and the process of manufacturing such product candidates is complex, concentrated with a limited number of suppliers, highly regulated
and subject to numerous risks. Manufacturing such product candidates involves harvesting cells from a donor or from the patient, altering
the cells ex vivo using genome engineering technology, cryopreservation, storage and eventually shipment and infusing the cell
product into the patient’s body. Our manufacturing process will be susceptible to product loss or failure, or product variation
that may negatively impact patient outcomes, due to logistical issues associated with the collection of starting material from the donor,
shipping such material to the manufacturing site, shipping the final product back to the clinical trial recipient, preparing the product
for administration, infusing the patient with the product, manufacturing issues or different product characteristics resulting from the
differences in donor starting materials, variations between reagent lots, interruptions in the manufacturing process, contamination, equipment
or reagent failure, improper installation or operation of equipment, vendor or operator error, inconsistency in cell growth and variability
in product characteristics. our manufacturing process, like that of a number of other cell therapy companies, is also characterized by
limited numbers of suppliers, and in some cases sole source suppliers, with the manufacturing capabilities and know-how to create or source
the materials, such as donor marrow cells and electroporation machines, used in our cell manufacturing. While we pursue multiple sources
for the critical components of our manufacturing process, we may not be successful in securing these additional sources at all or on a
timely basis. If microbial, viral or other contaminations are discovered in our product candidates or in any of the manufacturing facilities
in which our product candidates or other materials are made, such manufacturing facilities may need to be closed for an extended period
of time to investigate and remedy the contamination.
In addition, the FDA, the EMA and other regulatory
authorities may require us to submit samples of any lot of approved product together with the protocols showing the results of applicable
tests at any time. Under some circumstances, the FDA, the EMA or other regulatory authorities may require that we not distribute a lot
until the agency authorizes its release. Slight deviations in the manufacturing process, including those affecting quality attributes
and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Lot failures or
product recalls could cause us to delay clinical trials or product launches, which could be costly to us and otherwise harm our business,
financial condition, results of operations and prospects.
Moreover, the clinical development of our product candidates depends
on the availability of certain materials and agents used in our clinical trials. Specifically, our clinical trial protocols for briquilimab-based
conditioning include the administration of fludarabine, and the FDA recently reported a shortage of fludarabine. Any failure or delays
by us or by our clinical sites to obtain sufficient quantities of fludarabine or other components and agents necessary for the conduct
of our clinical trials, may delay our ability to enroll and treat patients in, or complete, our current or future clinical trials of our
product candidates on time, if at all.
Some of the raw materials that we anticipate will be
required in our manufacturing process are derived from biologic sources. Such raw materials are difficult to procure and may be subject
to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in
the manufacture of our product candidates could adversely impact or disrupt the commercial manufacturing or the production of clinical
material, which could materially harm our development timelines and our business, financial condition, results of operations and prospects.
If we or any contract research organizations, contract manufacturers
or suppliers that we engage fail to comply with environmental, health and safety laws and regulations, we could become subject to fines
or penalties or incur costs that could have a material adverse effect on the success of our business.
We and any contract research organizations, contract
manufacturers and suppliers we engage are subject to numerous federal, state and local environmental, health and safety laws, regulations
and permitting requirements, including those governing laboratory procedures; the generation, handling, use, storage, treatment and disposal
of hazardous and regulated materials and wastes; the emission and discharge of hazardous materials into the ground, air and water; and
employee health and safety. Our operations involve the use of hazardous and flammable materials, including chemicals and biological and
radioactive materials. Our operations also produce hazardous waste. We generally contract with third parties for the disposal of these
materials and wastes. Although we believe that our and such third parties’ procedures for handling, storing and disposing of these
materials and waste comply with legally prescribed standards, we cannot eliminate the risk of contamination or injury from these materials.
In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages,
and any liability could exceed our resources. Under certain environmental laws, we could be held responsible for costs relating to any
contamination at our current or past facilities and at third-party facilities. We also could incur significant costs associated with civil
or criminal fines and penalties.
Compliance with applicable environmental laws and regulations
may be expensive, and current or future environmental laws and regulations may impair our product development and research efforts. In
addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. Although we maintain
workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from
the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not carry specific
biological or hazardous waste insurance coverage, and our property, casualty and general liability insurance policies specifically exclude
coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination
or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials
or regulatory approvals could be suspended, which could have a material adverse effect on our business, financial condition, results of
operations and prospects.
In addition, we may incur substantial costs in order
to comply with current or future environmental, health and safety laws, regulations and permitting requirements. For example, our products
are considered to contain genetically modified organisms or cells, which are regulated in different ways depending upon the country in
which preclinical research or clinical trials are conducted. These current or future laws, regulations and permitting requirements may
impair our research, development or production efforts. Failure to comply with these laws, regulations and permitting requirements also
may result in substantial fines, penalties or other sanctions or business disruption, which could have a material adverse effect on our
business, financial condition, results of operations and prospects.
Any third-party contract research organizations, contract
manufacturers and suppliers we engage will also be subject to these and other environmental, health and safety laws and regulations. Liabilities
they incur pursuant to these laws and regulations could result in significant costs or an interruption in operations, which could have
a material adverse effect on our business, financial condition, results of operations and prospects.
Risks Related to Regulatory Review
If clinical trials of our product candidates fail to demonstrate
safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional
costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates.
Before obtaining marketing approval from regulatory authorities for
the sale of briquilimab and any other product candidates we identify and develop, we must complete preclinical development and then conduct
extensive clinical trials to demonstrate the safety and efficacy of such product candidates in humans. Clinical testing is expensive,
difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical
trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success
of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and
clinical data are often susceptible to varying interpretations and analyses. Many companies that have believed their product candidates
performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their product
candidates.
We and our collaborators, if any, may experience numerous
unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or
commercialize any product candidates, including:
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delays in reaching a consensus with regulators on trial design; |
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regulators, IRBs, independent ethics committees or scientific review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; |
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delays in reaching or failing to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective CROs and clinical trial sites; |
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clinical trials of product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development or research programs; |
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difficulty in designing well-controlled clinical trials due to ethical considerations that may render it inappropriate to conduct a trial with a control arm that can be effectively compared to a treatment arm; |
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difficulty in designing clinical trials and selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood; |
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the number of patients required for clinical trials of briquilimab
and any other product candidates we may develop may be larger than we anticipate; enrollment of suitable participants in these clinical
trials, which may be particularly challenging for some of the rare genetically defined diseases we are targeting in our most advanced
programs, may be delayed or slower than we anticipate; or patients may drop out of these clinical trials at a higher rate than we anticipate; |
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; |
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regulators, IRBs or independent ethics committees may require that we or our investigators suspend or terminate clinical research or clinical trials for various reasons, including noncompliance with regulatory requirements, a finding of undesirable side effects or other unexpected characteristics, or that the participants are being exposed to unacceptable health risks or after an inspection of our clinical trial operations or trial sites; |
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the cost of clinical trials may be greater than we anticipate; |
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the supply or quality of product candidates or other materials necessary to conduct clinical trials may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of product candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions; |
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delays in having patients complete participation in a trial or return for post-treatment follow-up; |
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clinical trial sites dropping out of a trial; |
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selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; |
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occurrence of serious adverse events associated with product candidates that are viewed to outweigh their potential benefits; |
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occurrence of serious adverse events in trials of the same class of agents conducted by other sponsors; and |
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changes in regulatory requirements and guidance that require amending or submitting new clinical protocols. |
If we or our collaborators, if any, are required to
conduct additional clinical trials or other testing of product candidates beyond those that we currently contemplate, if we or our collaborators
are unable to successfully complete clinical trials or other testing of product candidates, or if the results of these trials or tests
are not positive or are only modestly positive or if there are safety concerns, we or our collaborators may:
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be delayed in obtaining marketing approval for any such product candidates or not obtain marketing approval at all; |
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obtain approval for indications or patient populations that are not as broad as intended or desired; |
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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings; |
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be subject to changes in the way the product is administered; |
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be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; |
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have regulatory authorities withdraw or suspend their approval of the product or impose restrictions on its distribution in the form of a Risk Evaluation and Mitigation Strategy (“REMS”) or through modification to an existing REMS; |
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experience damage to our reputation. |
Product development costs will also increase if we
or our collaborators experience delays in clinical trials or other testing or in obtaining marketing approvals. We do not know whether
any clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical
trial delays also could shorten any periods during which we may have the exclusive right to commercialize product candidates, could allow
our competitors to bring products to market before we do and could impair our ability to successfully commercialize product candidates,
any of which may harm our business, financial condition, results of operations and prospects.
Further, disruptions at the FDA and other agencies
may prolong the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect
our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory
agencies, including the FDA, have furloughed critical employees and stopped critical activities. If a prolonged government shutdown occurs,
it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material
adverse effect on our business.
Stem cell transplant is a high-risk procedure with curative potential
that may result in complications or adverse events for patients in our clinical trials or for patients that use any of our product candidates,
if approved.
Stem cell transplant has the potential to cure patients
across multiple diseases, but its use carries with it risks of toxicity, serious adverse events and death. Because many of our therapies
are used to prepare or treat patients undergoing stem cell transplant, patients in our clinical trials or patients that use any of our
product candidates may be subject to many of the risks that are currently inherent to this procedure. In particular, stem cell transplant
involves certain known potential post-procedure complications that may manifest several weeks or months after a transplant and
that may be more common in certain patient populations. For example, up to 20% of patients with inherited metabolic disorders treated
with a transplant experience primary engraftment failure, resulting in severe complications, including death. Another example is autoimmune
cytopenia, a known and severe frequent complication of the transplant procedure in patients with non-malignant diseases, such as inherited
metabolic diseases, that can result in death. There is also a risk of graft-versus-host disease, a potentially serious complication in
which the grafted cells attack and damage the patient’s healthy cells, which can be severe and sometimes life-threatening. If these
or other serious adverse events, undesirable side effects, or unexpected characteristics are identified during the development of any
of our product candidates, we may need to limit, delay or abandon our further clinical development of those product candidates, even if
such events, effects or characteristics were the result of stem cell transplant or related procedures generally, and not directly or specifically
caused or exacerbated by our product candidates. All serious adverse events or unexpected side effects are continually monitored per the
clinical trial’s approved protocol. If serious adverse events are determined to be directly or specifically caused or exacerbated
by our product candidates, we would follow the trial protocol’s requirements, which call for our data safety monitoring committee
to review all available clinical data in making a recommendation regarding the trial’s continuation.
Failure to obtain marketing approval in foreign jurisdictions would
prevent any product candidates we develop from being marketed in such jurisdictions, which, in turn, would materially impair our ability
to generate revenue.
In order to market and sell any product candidates
we develop in the European Union and many other foreign jurisdictions, we or our collaborators must obtain separate marketing approvals
and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional
testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval
process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many
countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved
for sale in that country. We or our collaborators may not obtain approvals from regulatory authorities outside the United States
on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions,
and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries
or jurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize
our product candidates in any jurisdiction, which would materially impair our ability to generate revenue.
Additionally, we could face heightened risks with respect
to seeking marketing approval in the United Kingdom as a result of the recent withdrawal of the United Kingdom from the European Union
on December 31, 2020, commonly referred to as Brexit. Pursuant to the formal withdrawal arrangements agreed between the United Kingdom
and the European Union, the United Kingdom withdrew from the European Union, effective December 31, 2020. On December 24, 2020,
the United Kingdom and European Union entered into a Trade and Cooperation Agreement. The agreement sets out certain procedures for approval
and recognition of medical products in each jurisdiction.
Since the regulatory framework for pharmaceutical products
in the United Kingdom covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization,
commercial sales, and distribution of pharmaceutical products is derived from European Union directives and regulations, Brexit could
materially impact the future regulatory regime that applies to products and the approval of product candidates in the United Kingdom.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from
commercializing any product candidates in the United Kingdom and/or the European Union and restrict our ability to generate revenue and
achieve and sustain profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval
in the United Kingdom and/or the European Union for any product candidates, which could significantly and materially harm our business.
Even if we complete the necessary clinical trials, we cannot predict
when, or if, we will obtain regulatory approval to commercialize our product candidates in the United States or any other jurisdiction,
and any such approval may be for a more narrow indication than we seek.
We cannot commercialize a product candidate until the
appropriate regulatory authorities have reviewed and approved the product candidate. Even if our product candidates meet their safety
and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or we
may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority
recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government
regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development,
clinical trials and the review process.
Regulatory authorities also may approve a product candidate
for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or
a REMS. These regulatory authorities may require labeling that includes precautions or contra-indications with respect to conditions
of use, or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities
may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates. Any
of the foregoing scenarios could materially harm the commercial prospects for our product candidates and materially adversely affect our
business, financial condition, results of operations and prospects.
Marketing approval by the FDA in the United States,
if obtained, does not ensure approval by regulatory authorities in other countries or jurisdictions. In addition, clinical trials conducted
in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee
regulatory approval in any other country. Approval processes vary among countries and can involve additional product candidate testing
and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs
for us and require additional preclinical studies or clinical trials, which could be costly and time-consuming. Regulatory requirements
can vary widely from country to country and could delay or prevent the introduction of our product candidates we may develop in those
countries. The foreign regulatory approval process involves all of the risks associated with FDA approval. We do not have any product
candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory
approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain
required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability
to realize the full market potential of our product candidates will be unrealized.
Even if we obtain regulatory approval of any of our product candidates,
the approved products may be subject to post-approval studies and will remain subject to ongoing regulatory requirements. If we fail to
comply, or if concerns are identified in subsequent studies, our approval could be withdrawn, and our product sales could be suspended.
If we are successful at obtaining regulatory approval for briquilimab
or any of our other product candidates, regulatory agencies in the U.S. and other countries where a product will be sold may require
extensive additional clinical trials or post-approval clinical trials that are expensive and time-consuming to conduct. These studies
may be expensive and time-consuming to conduct and may reveal side effects or other harmful effects in patients that use our therapeutic
products after they are on the market, which may result in the limitation or withdrawal of our drugs from the market. Alternatively, we
may not be able to conduct such additional trials, which might force us to abandon our efforts to develop or commercialize certain product
candidates. Even if post-approval studies are not requested or required, after our products are approved and are on the market, there
might be safety issues that emerge over time that require a change in product labeling, additional post-market studies or clinical trials,
imposition of distribution and use restrictions under a REMS or withdrawal of the product from the market, which would cause our revenue
to decline.
Additionally, any products that we may successfully
develop will be subject to ongoing regulatory requirements after they are approved. These requirements will govern the manufacturing,
packaging, marketing, distribution, and use of our products. If we fail to comply with such regulatory requirements, approval for our
products may be withdrawn, and product sales may be suspended. We may not be able to regain compliance, or we may only be able to regain
compliance after a lengthy delay, significant expense, lost revenues and/or damage to our reputation.
The regulatory landscape that will govern our product candidates
is uncertain; regulations relating to more established cellular therapy products are still developing, and changes in regulatory requirements
could result in delays or discontinuation of development of our product candidates or unexpected costs in obtaining regulatory approval.
The FDA and other governing bodies may disagree with our regulatory plan, and we may fail to obtain regulatory approval of our product
candidates.
Because our product candidates and technology platform
involve genetic and cellular engineering, we are subject to many of the challenges and risks that other genetically engineered biologics
and cellular therapies face, including:
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regulatory requirements or guidance regarding the requirements governing genetic and cellular engineering products have changed and may continue to change in the future; |
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to date, only a limited number of products that involve genetic or cellular engineering have been approved globally; |
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improper modulation of a gene sequence, including unintended alterations or insertion of a sequence into certain locations in a patient’s chromosomes, could lead to cancer, other aberrantly functioning cells or other diseases, as well as death; |
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corrective expression of a missing protein, or deletion of an existing protein, in patients’ cells could result in the protein or cell being recognized as foreign, and lead to a sustained immunological reaction against the expressed protein or expressing cells, which could be severe or life-threatening; |
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regulatory agencies may require extended follow-up observation periods of patients who receive treatment using genetic or cellular engineering products including, for example, the FDA’s recommended 15-year follow-up observation period for these patients, and we will need to adopt such observation periods for our product candidates if required by the relevant regulatory agency, which could vary by country or region; and |
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the fields of genetic and cellular engineering are subject to a number of intellectual property disputes. |
The regulatory requirements that will govern any mRNA stem cell grafts
or other novel genetically engineered product candidates we develop may change. Within the broader genetic medicine field, we are aware
of a limited number of gene therapy products that have received marketing authorization from the FDA and the EMA. Even with respect
to more established products that fit into the categories of gene therapies or cell therapies, the regulatory landscape is still developing.
Regulatory requirements governing gene therapy products and cell therapy products have changed frequently and will likely continue to
change in the future. Moreover, there is substantial, and sometimes uncoordinated, overlap in those responsible for regulation of existing
gene therapy products and cell therapy products. For example, in the United States, the FDA has established the Office of Tissues
and Advanced Therapies (“OTAT”) within its Center for Biologics Evaluation and Research (“CBER”) to consolidate
the review of gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its
review. In addition to FDA oversight and oversight by IRBs under guidelines promulgated by the NIH, gene therapy clinical trials are also
subject to review and oversight by an institutional biosafety committee (“IBC”), a local institutional committee that reviews
and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. Before a clinical study can begin
at any institution, that institution’s IRB and its IBC assess the safety of the research and identify any potential risk
to public health or the environment. While the NIH guidelines are not mandatory unless the research in question is being conducted at
or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other
institutions not otherwise subject to the NIH guidelines voluntarily follow them. Moreover, serious adverse events or developments in
clinical trials of gene or cellular therapy product candidates conducted by others may cause the FDA or other regulatory bodies to initiate
a clinical hold on our clinical trials or otherwise change the requirements for approval of any of our product candidates. Although the
FDA decides whether individual gene or cellular therapy protocols may proceed, the review process and determinations of other reviewing
bodies can impede or delay the initiation of a clinical trial even if the FDA has reviewed the trial and approved its initiation.
The same applies in the European Union. The EMA’s
Committee for Advanced Therapies (“CAT”) is responsible for assessing the quality, safety and efficacy of advanced-therapy
medicinal products. The role of the CAT is to prepare a draft opinion on an application for marketing authorization for a cell or gene
therapy or other novel therapeutic medicinal candidate that is submitted to the Committee for Medicinal Products for Human Use (“CHMP”)
before CHMP adopts its final opinion. In the European Union, the development and evaluation of an advanced therapeutic medicinal product
must be considered in the context of the relevant European Union guidelines. The EMA may issue new guidelines concerning the development
and marketing authorization for these medicinal products and require that we comply with these new guidelines. As a result, the procedures
and standards applied to gene and cell therapy products may be applied to our mRNA stem cell grafts, but that remains uncertain at this
point.
Adverse developments in post-marketing experience or
in clinical trials conducted by others of gene therapy products, cell therapy products or products developed through the application of
a genome engineering technology may cause the FDA, the EMA and other regulatory bodies to revise the requirements for development or approval
of our mRNA stem cell grafts may develop or limit the use of products utilizing genome engineering technologies, either of which could
materially harm our business. In addition, the clinical trial requirements of the FDA, the EMA and other regulatory authorities and the
criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity,
novelty and intended use and market of the potential products. The regulatory approval process for novel product candidates, such as our
mRNA stem cell grafts, can be more expensive and take longer than for other, better known or more extensively studied pharmaceutical or
other product candidates. Regulatory agencies administering existing or future regulations or legislation may not allow production and
marketing of products utilizing genome engineering technology in a timely manner or under technically or commercially feasible conditions.
In addition, regulatory action or private litigation could result in expenses, delays or other impediments to our product candidate development,
research programs or the commercialization of resulting products.
The regulatory review committees and advisory groups
described above and the new guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies
or trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and
commercialization of these treatment candidates, or lead to significant post-approval limitations or restrictions. Currently, OTAT requires
a 15-year follow-up for each patient who receives a genetically engineered cell or gene therapy. This requirement applies to all
patients treated in trials during clinical development prior to approval. Following approval, such prolonged follow-up could continue
to be required. As we advance our product candidates and research programs, we will be required to consult with these regulatory and advisory
groups and to comply with applicable guidelines. If we fail to do so, we may be required to delay or discontinue development of our mRNA
stem cell grafts and any other product candidates we identify and develop.
Interim “top-line” and preliminary results from our clinical
trials that we may announce or publish from time to time may change as more patient data become available and are subject to audit and
verification procedures that could result in material changes in the final data.
From time to time, we may publish interim top-line or preliminary results
from our preclinical studies and clinical trials, which are based on a preliminary analysis of then-available data, and the results and
related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study
or trial. In particular, we have announced, and may in the future announce, interim results from our ongoing, open label Phase 1/2
and Phase 1 clinical trials of briquilimab. Interim results from clinical trials that we may complete are subject to the risk that
one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary
or top-line results also remain subject to audit and verification procedures that may result in the final data being materially different
from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final
data are available. Differences between preliminary or interim data and final data could significantly harm our business prospects and
may cause the trading price of our common stock to fluctuate significantly.
Further, others, including regulatory agencies, may
not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of
data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product
candidate or product and us in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical
trial is based on what is typically extensive information, investors or others may not agree with what we determine is material or otherwise
appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant
with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our
business. If the interim, topline or preliminary data that we report differ from actual results, or if others, including regulatory authorities,
disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which
could harm our business, operating results, prospects or financial condition.
Negative public opinion of gene therapy and increased regulatory
scrutiny of gene therapy and genetic research may adversely impact public perception of our future product candidates.
Our potential therapeutic products involve introducing
genetic material into patients’ cells. The clinical and commercial success of our potential products will depend in part on public
acceptance of the use of gene therapy and gene regulation for the prevention or treatment of human diseases. Public attitudes may be influenced
by claims that gene therapy and gene regulation are unsafe, unethical or immoral, and, consequently, our products may not gain the acceptance
of the public or the medical community. Adverse public attitudes may adversely impact our ability to enroll clinical trials. Moreover,
our success will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of product
candidates we may develop in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater
clinical data may be available.
More restrictive government regulations or negative
public opinion would have a negative effect on our business or financial condition and may delay or impair the development and commercialization
of our product candidates or demand for any products once approved. For example, in 2003, trials using early versions of murine gamma-retroviral
vectors, which integrate with, and thereby alter, the host cell’s DNA, have led to several well-publicized adverse events, including
reported cases of leukemia. Adverse events in our clinical trials, even if not ultimately attributable to our product candidates, and
the resulting publicity could result in increased governmental regulation, unfavorable public perception, potential regulatory delays
in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved, and
a decrease in demand for any such product candidates. The risk of cancer remains a concern for gene therapy, and we cannot assure that
it will not occur in any of our planned or future clinical trials. In addition, there is the potential risk of delayed adverse events
following exposure to gene therapy products due to persistent biological activity of the genetic material or other components of products
used to carry the genetic material. If any such adverse events occur, commercialization of our product candidates or further advancement
of our clinical trials could be halted or delayed, which would have a negative impact on our business and operations.
We may seek Fast Track or other accelerated review designations for
some or all of our product candidates. We may not receive such designation, and even for those product candidates for which we do, it
may not lead to a faster development or regulatory review or approval process, and will not increase the likelihood that product candidates
will receive marketing approval.
We may seek Fast Track or other accelerated review
designations for some or all of our other product candidates. If a drug or biologic is intended for the treatment of a serious or life-threatening
condition or disease, and nonclinical or clinical data demonstrate the potential to address an unmet medical need, the product may qualify
for FDA Fast Track designation, for which sponsors must apply. If granted, a Fast Track or other accelerated review designation makes
a product candidate eligible for more frequent interactions with the FDA to discuss the development plan and clinical trial design, as
well as rolling review of the application, which means that we can submit completed sections of our marketing application for review prior
to completion of the entire submission. Marketing applications of product candidates with a Fast Track or other accelerated review designation
may qualify for priority review under the policies and procedures offered by the FDA, but a Fast Track or other accelerated review designation
does not assure any such qualification or ultimate marketing approval by the FDA. The FDA has broad discretion with respect to whether
or not to grant this designation. Thus, even if we believe a particular product candidate is eligible for this designation, the FDA may
decide not to grant it. Moreover, even if we do receive a Fast Track or another accelerated review designation, we or our collaborators
may not experience a faster development process, review or approval compared to conventional FDA procedures. In addition, the FDA may
withdraw a Fast Track or other accelerated review designation if it believes that the designation is no longer supported by data from
our clinical development program.
We may seek priority review designation for our product candidates,
but we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review
or approval process.
If the FDA determines that a product candidate offers
a treatment for a serious condition and, if approved, the product would provide a significant improvement in safety or effectiveness,
the FDA may designate the product candidate for priority review. A priority review designation means that the goal for the FDA to review
an application is six months, rather than the standard review period of ten months. The FDA has broad discretion with respect
to whether or not to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible
for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily mean
a faster development or regulatory review or approval process or necessarily confer any advantage with respect to approval compared to
conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or at
all.
A Breakthrough Therapy Designation by the FDA, even if granted for
any of our product candidates, may not lead to a faster development or regulatory review or approval process, and it does not increase
the likelihood that our product candidates will receive marketing approval.
We may seek a Breakthrough Therapy Designation for
our product candidates if the clinical data support such a designation for one or more product candidates. A breakthrough therapy is defined
as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening
disease or condition and preliminary clinical evidence indicates that the drug, or biologic, may demonstrate substantial improvement over
existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor
of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective
control regimens. Drugs and biologics designated as breakthrough therapies by the FDA may also be eligible for accelerated approval.
Designation as a breakthrough therapy is within the
discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough
therapy, the FDA may disagree and determine not to make such designation. In any event, the receipt of a Breakthrough Therapy Designation
for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under
non-expedited FDA review procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product
candidates qualify as breakthrough therapies, the FDA may later decide that the product no longer meets the conditions for such qualification.
The regenerative medicine advanced therapy (“RMAT”) designation
by the FDA for any of our product candidates may not lead to a faster development or regulatory review or approval process, and it does
not increase the likelihood that our product candidates will receive marketing approval.
We may seek an RMAT designation for our product candidates
if the clinical data support such a designation for one or more product candidates. An RMAT is defined as cell and gene therapies, therapeutic
tissue engineering products, human cell and tissue products, and combination products using any such therapies or products. Gene therapies,
including genetically modified cells that lead to a durable modification of cells or tissues may meet the definition of a regenerative
medicine therapy. The RMAT program is intended to facilitate efficient development and expedite review of RMATs, which are intended to
treat, modify, reverse, or cure a serious or life-threatening disease or condition and for which preliminary clinical evidence indicates
that the drug has the potential to address unmet medical needs for such disease or condition. A biologics license application for a regenerative
medicine therapy that has received RMAT designation may be eligible for priority review or accelerated approval. An RMAT may be eligible
for priority review if it treats a serious condition and, if approved, would provide a significant improvement in the safety or effectiveness
of the treatment of the condition. An RMAT may be eligible for accelerated approval through surrogate or intermediate endpoints reasonably
likely to predict long-term clinical benefit or reliance upon data obtained from a meaningful number of sites. Benefits of such designation
also include early interactions with the FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated
approval. A regenerative medicine therapy with RMAT designation that is granted accelerated approval and is subject to post-approval requirements
may fulfill such requirements through the submission of clinical evidence from clinical trials, patient registries, or other sources of
real world evidence, such as electronic health records; the collection of larger confirmatory data sets; or post-approval monitoring of
all patients treated with such therapy prior to its approval.
Designation as an RMAT is within the discretion of
the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a RMAT, the FDA may
disagree and instead determine not to make such designation. In any event, the receipt of RMAT designation for our product candidates
may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures
and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify for RMAT designation,
the FDA may later decide that the biological products no longer meet the conditions for such qualification.
We may not be able to obtain orphan drug exclusivity for one or more
of our product candidates, and even if we do, that exclusivity may not prevent the FDA or EMA from approving other competing products.
Under the Orphan Drug Act of 1983, the FDA
may designate a product as an orphan drug if it is a drug or biologic intended to treat a rare disease or condition. A similar regulatory
scheme governs approval of orphan products by the EMA in the European Union. Generally, if a product candidate with an orphan drug designation
subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a
period of marketing exclusivity, which precludes the FDA or EMA from approving another marketing application for the same product for
the same therapeutic indication for that time period. The applicable period is seven years in the United States and ten years
in the European Union. The exclusivity period in the European Union can be reduced to six years if a product no longer meets the
criteria for orphan drug designation, in particular if the product is sufficiently profitable so that market exclusivity is no longer
justified.
In order for the FDA to grant orphan drug exclusivity
to one of our products, the FDA must find that the product is indicated for the treatment of a condition or disease with a patient population
of fewer than 200,000 individuals annually in the United States. The FDA may conclude that the condition or disease for which we
may seek orphan drug exclusivity does not meet this standard. Even if we obtain orphan drug exclusivity for a product, that exclusivity
may not effectively protect the product from competition because different products can be approved for the same condition. In particular,
the concept of what constitutes the “same drug” for purposes of orphan drug exclusivity remains in flux in the context of
gene therapies, and the FDA issued recent draft guidance suggesting that it would not consider two genetic medicine products to be different
drugs solely based on minor differences in the transgenes or vectors within a given vector class. In addition, even after an orphan drug
is approved, the FDA can subsequently approve the same product for the same condition if the FDA concludes that the later product is clinically
superior in that it is shown to be safer, more effective or makes a major contribution to patient care. Orphan drug exclusivity may also
be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure
sufficient quantity of the product to meet the needs of the patients with the rare disease or condition.
In 2017, Congress passed the FDA Reauthorization Act of 2017
(the “FDARA”). FDARA, among other things, codified the FDA’s pre-existing regulatory interpretation to require that
a drug sponsor demonstrate the clinical superiority of an orphan drug that is otherwise the same as a previously approved drug for the
same rare disease in order to receive orphan drug exclusivity. Under omnibus legislation signed by President Trump on December 27,
2020, the requirement for a product to show clinical superiority applies to any drug and biologic that received orphan drug designation
before enactment of FDARA in 2017 but has not yet been approved or licensed by the FDA. We do not know if, when, or how the FDA may
change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business. Depending
on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.
Disruptions at the FDA and other government agencies caused by funding
shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise
prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively
impact our business.
The ability of the FDA to review and approve new products
can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the
FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the
FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result.
In addition, government funding of other government agencies that fund research and development activities is subject to the political
process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new
biologics or modifications to cleared or approved biologics to be reviewed and/or approved by necessary government agencies, which would
adversely affect our business. For example, over the last several years, including for 35 days beginning on December 22,
2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have furloughed critical
FDA employees and stopped critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of
the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Separately, in response to the COVID-19 pandemic, on
March 10, 2020, the FDA announced its intention to postpone most inspections of foreign manufacturing facilities, and on March 18,
2020, the FDA temporarily postponed routine surveillance inspections of domestic manufacturing facilities. Subsequently, on July 10,
2020, the FDA announced its intention to resume certain on-site inspections of domestic manufacturing facilities subject to a risk-based
prioritization system. Increased cases associated with a COVID-19 variant led the FDA to again pause inspections, although the FDA announced
in February 2022 that it would resume routine domestic surveillance inspections and that it would proceed with certain foreign surveillance
inspections where country conditions permit. Regulatory authorities outside the United States may adopt similar restrictions or other
policy measures in response to the COVID-19 pandemic. If a prolonged government shutdown occurs, or if global health concerns continue
to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities,
it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions,
which could have a material adverse effect on our business.
Risks Related to Our Relationships with Third Parties
We rely on third parties to conduct our preclinical and clinical
trials and will rely on them to perform other tasks for us. If these third parties do not successfully carry out their contractual duties,
meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize
our product candidates and our business could be substantially harmed.
Although we have recruited a team that has experience
with clinical trials, as a company, we have limited experience in conducting clinical trials. Moreover, we do not have the ability to
independently conduct preclinical studies and clinical trials, and we have relied upon, and plan to continue to rely upon, medical institutions,
clinical investigators, contract laboratories and other third parties, or our CROs, to conduct preclinical studies and future clinical
trials for our product candidates. We expect to rely heavily on these parties for execution of preclinical and future clinical trials
for our product candidates and control only certain aspects of their activities. Nevertheless, we will be responsible for ensuring that
each of our preclinical and clinical trials is conducted in accordance with the applicable protocol, legal and regulatory requirements
and scientific standards and our reliance on CROs will not relieve us of our regulatory responsibilities. For any violations of laws and
regulations during the conduct of our preclinical studies and clinical trials, we could be subject to warning letters or enforcement action
that may include civil penalties up to and including criminal prosecution.
We and our CROs will be required to comply with regulations,
including cGCPs for conducting, monitoring, recording and reporting the results of preclinical and clinical trials to ensure that the
data and results are scientifically credible and accurate and that the trial patients are adequately informed of the potential risks of
participating in clinical trials and their rights are protected. These regulations are enforced by the FDA, the Competent Authorities
of the Member States of the European Economic Area and comparable foreign regulatory authorities for any drugs in clinical development.
The FDA enforces cGCP regulations through periodic inspections of clinical trial sponsors, principal investigators and trial sites. If
we or our CROs fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the
FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
We cannot assure you that, upon inspection, the FDA will determine that any of our future clinical trials will comply with cGCPs. In addition,
our clinical trials must be conducted with product candidates produced in accordance with the requirements in the FDA’s current
cGMPs requirements. Our failure or the failure of our CROs to comply with these regulations may require us to repeat clinical trials,
which would delay the regulatory approval process and could also subject us to enforcement action.
Although we intend to design our planned clinical trials
for our product candidates, for the foreseeable future CROs will conduct all of our planned clinical trials. As a result, many important
aspects of our development programs, including their conduct and timing, will be outside of our direct control. Our reliance on third
parties to conduct future preclinical studies and clinical trials will also result in less day-to-day control over the management
of data developed through preclinical studies and clinical trials than would be the case if we were relying entirely upon our own staff.
If any of our relationships with these third-party
CROs terminate, we may not be able to enter into arrangements with alternative CROs. If CROs do not successfully carry out their contractual
duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they
obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any preclinical
studies or clinical trials with which such CROs are associated with may be extended, delayed or terminated. In such cases, we may not
be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our financial results and
the commercial prospects for our product candidates in the subject indication could be harmed, our costs could increase and our ability
to generate revenue could be delayed.
We currently rely on a single manufacturer for our clinical supply
of our product candidates. In the event of a loss of this manufacturer, or a failure by such manufacturer to comply with FDA regulations,
we may not be able to find an alternative source on commercially reasonable terms, or at all. In addition, third-party manufacturers and
any third-party collaborators may be unable to successfully scale-up manufacturing of our current or future product candidates in sufficient
quality and quantity, which would delay or prevent us from developing our product candidates and commercializing approved products, if
any.
We do not have any manufacturing facilities at the
present time. We currently rely on third-party manufacturers, including Lonza Sales AG (“Lonza”) as a single source supplier,
for the manufacture and supply of our materials for preclinical studies, and expect to continue to do so for future clinical testing and
for commercial supply of briquilimab and any other product candidates that we may develop and for which we or our collaborators obtain marketing
approval. Our agreement with Lonza includes certain limitations on our ability to enter into supply arrangements with any other supplier
without Lonza’s consent. In addition, Lonza has the right to increase the prices it charges us for certain supplies depending on
a number of factors, some of which are outside of our control. We may be unable to maintain or establish any agreements with third-party
manufacturers or suppliers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers
or suppliers, reliance on third-party manufacturers entails additional risks, including:
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the possible breach of the manufacturing or supply agreement by the third party; |
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the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and |
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reliance on the third party for regulatory compliance, quality assurance, safety and pharmacovigilance and related reporting. |
In addition, pursuant to our Exclusive License Agreement with Amgen
Inc., Lonza Biologics, Inc. has been engaged to manufacture briquilimab for us. The agreement provides that in the event we wish to change
the manufacturer of briquilimab to a different party, we must obtain Amgen Inc.’s prior consent. As a result, our ability to obtain
any alternative supplier of briquilimab may be further limited.
Third-party manufacturers may not be able to comply
with cGMP regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party
manufacturers or suppliers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions,
civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of product candidates or products,
operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products and harm
our business, financial condition, results of operations and prospects.
Our product candidates may compete with other product
candidates and products for access to manufacturing facilities and other supplies. There are a limited number of manufacturers that operate
under cGMP regulations and that might be capable of manufacturing for us. Also, prior to the approval of our product candidates, we would
need to identify a contract manufacturer that could produce our products at a commercial scale and that could successfully complete FDA
pre-approval inspection and inspections by other health authorities. Agreements with such manufacturers or suppliers may not be available
to us at the time we would need to have that capability and capacity.
Any performance failure on the part of our existing
or future manufacturers or suppliers, or any decision by a manufacturer or supplier to remove our products from the market or restrict
access to our products, could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant
or guaranteed supply for many of the materials we currently use in our clinical trials or preclinical studies, and we may have difficulty
or be unable to establish alternative sources of these materials.
We may enter into collaborations with third parties for the research,
development and commercialization of certain product candidates we may develop. If any such collaborations are not successful, we may
not be able to capitalize on the market potential of those product candidates.
We may seek third-party collaborators for the research,
development and commercialization of certain product candidates we may develop. If we enter into any such arrangements with any third
parties, we will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development
or commercialization our product candidates. Our ability to generate revenues from these arrangements will depend on our collaborators’
abilities to successfully perform the functions assigned to them in these arrangements. We cannot predict the success of any collaboration
that we enter into.
Collaborations involving our current or future product
candidates or research programs pose numerous risks to us, including the following:
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Collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities. |
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Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing. |
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Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours. |
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Collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such products. |
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Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation. |
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Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources. |
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We may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control; and |
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Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated. |
If our collaborations do not result in the successful
development and commercialization of product candidates, or if one of our collaborators terminates our agreement with us, we may not receive
any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under
these agreements, our development of product candidates could be delayed, and we may need additional resources to develop product candidates.
In addition, if one of our collaborators terminates its agreement with us, we may find it more difficult to find a suitable replacement
collaborator or attract new collaborators, and our development programs may be delayed or the perception of us in the business and financial
communities could be adversely affected. All of the risks relating to product development, regulatory approval and commercialization described
in this Annual Report on Form 10-K apply to the activities of our collaborators.
These relationships, or those like them, may require
us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing
stockholders, or disrupt our management and business.
If we are not able to establish collaborations on commercially reasonable
terms, we may have to alter our development and commercialization plans.
Our product development and research programs and the
potential commercialization of briquilimab or any other product candidates we may develop will require substantial additional cash to fund
expenses. For some of the product candidates we may develop, we may decide to collaborate with other pharmaceutical and biotechnology
companies for the development and potential commercialization of those product candidates.
We would face significant competition in seeking appropriate
collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the
collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s
evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the
FDA, the EMA or similar regulatory authorities outside the United States, the potential market for the subject product candidate,
the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the
existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without
regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product
candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more
attractive than the one with us.
We may also be restricted under existing collaboration
agreements from entering into future agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming
to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical
companies that have resulted in a reduced number of potential future collaborators.
We may not be able to negotiate collaborations on a
timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate
for which we are seeking to collaborate, reduce or delay our development program or one or more of our other development programs, delay
our potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development
or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization
activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we
do not have sufficient funds, we may not be able to develop product candidates or bring them to market and generate product revenue.
Risks Related to Our Intellectual Property
We are highly dependent on intellectual property licensed from third
parties, and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
We are dependent on the patents, know-how and proprietary
technology licensed from third parties for the development and, if approved, commercialization of briquilimab. Any termination of these licenses,
or a finding that such intellectual property lacks legal effect, could result in the loss of significant rights and could harm our ability
to commercialize our current or future product candidates.
For example, we rely on our worldwide exclusive license
agreement with Amgen Inc., whereby we license a patent portfolio from Amgen Inc. applicable to our targeted conditioning program that
contains patent families directed to humanized C-kit antibody. We also rely on our license agreement with Stanford, whereby we license
a patent portfolio applicable to our targeted conditioning and Stem Cell Graft programs that contains patent families directed to immunodepletion
of endogenous stem cell niche for engraftment.
Each of our license agreements with third parties impose
certain obligations on us, including obligations to use diligent efforts to meet development thresholds and payment obligations. Non-compliance
with such obligations may result in termination of the respective license agreement or in legal and financial consequences. If any of
our licensors terminates its respective license agreement, we may not be able to develop or commercialize briquilimab or any other product
candidates covered by these agreements. Termination of our license agreements or reduction or elimination of our rights under them may
result in us having to negotiate a new or reinstated agreement, which may not be available to us on equally favorable terms, or at all,
which may mean we are unable to develop, commercialize or sell the affected product candidate or may cause us to lose our rights under
the agreement.
In addition, our licensors may make decisions in prosecuting,
maintaining, enforcing and defending any licensed intellectual property rights that may not be in our best interest. Moreover, if our
licensors take any action with respect to any licensed intellectual property rights, for example, any licensed patents or patent applications,
that results in a successful challenge to the licensed intellectual property by a third party, such patents may be invalidated or held
to be unenforceable, and we may lose our rights under such patents, which could materially harm our business.
Further, the agreements under which we currently license
intellectual property from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations.
Accordingly, disputes may arise between us and our licensors regarding intellectual property subject to a license agreement. The resolution
of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant
intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements
on acceptable terms, or are insufficient to provide us with the necessary rights to use the intellectual property, we may be unable to
successfully develop and commercialize the affected product candidates.
Our commercial success depends on our ability to obtain, maintain
and protect our intellectual property and proprietary technology.
Our commercial success depends in large part on our
ability to obtain, maintain and protect intellectual property rights through patents, trademarks and trade secrets in the United States
and other countries with respect to our proprietary product candidates. If we do not adequately protect our intellectual property rights,
competitors may be able to erode, negate or preempt any competitive advantage we may have, which could harm our business and ability to
achieve profitability.
To protect our proprietary position, we own and have
in-licensed certain intellectual property rights, including certain issued patents and patent applications, and have filed and may file
provisional and non-provisional patent applications in the United States or abroad related to our product candidates that are important
to our business. Provisional patent applications are not eligible to become issued patents until, among other things, we file a non-provisional
patent application within 12 months of the filing of one or more of our related provisional patent applications. If we do not
timely file non-provisional patent applications, we may lose our priority date with respect to our provisional patent applications and
any patent protection on the inventions disclosed in our provisional patent applications. While we intend to timely file non-provisional
patent applications relating to our provisional patent applications, we cannot predict whether any such patent applications will result
in the issuance of patents that provide us with any competitive advantage. Moreover, the patent application and approval process is expensive
and time-consuming. We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in
a timely manner.
The patent application, prosecution, and enforcement
processes are subject to numerous risks and uncertainties, and there can be no assurance that we, our licensors, or any of our future
collaborators will be successful in protecting our product candidates by obtaining, defending, and/or asserting patent rights. These risks
and uncertainties include the following:
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the U.S. Patent and Trademark Office (the “USPTO”) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case; |
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patent applications may not result in any patents being issued; |
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patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable or otherwise may not provide any competitive advantage; |
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our competitors, many of whom have substantially greater resources and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with or eliminate our ability to make, use, and sell our potential product candidates; |
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there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; and |
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countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates. |
In some instances, agreements through which we license
intellectual property rights may not give us control over patent prosecution or maintenance, so that we may not be able to control which
claims or arguments are presented, how claims are amended, and may not be able to secure, maintain or successfully enforce necessary or
desirable patent protection from those patent rights. We cannot be certain that patent prosecution and maintenance activities by our licensors
have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents.
Moreover, some of our in-licensed patents and patent
applications may be, and some of our future owned and licensed patents may be, co-owned with third parties. If we are unable to obtain
an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able
to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology.
In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties,
and such cooperation may not be provided to us.
The patent protection we obtain for our product candidates may not
be sufficient enough to provide us with any competitive advantage or our patents may be challenged.
Our owned and licensed patents and pending patent applications,
if issued, may not provide us with any meaningful protection or may not prevent competitors from designing around our patent claims to
circumvent our patents by developing similar or alternative technologies or therapeutics in a non-infringing manner. For example, a third
party may develop a competitive product that provides benefits similar to one or more of our product candidates but falls outside the
scope of our patent protection or license rights. If the patent protection provided by the patents and patent applications we hold or
pursue with respect to our product candidates is not sufficiently broad to impede such competition, our ability to successfully commercialize
our product candidates could be negatively affected, which would harm our business. Currently, a significant portion of our patents and
patent applications are in-licensed, though similar risks would apply to any patents or patent applications that we now own or may own
or in-license in the future.
It is possible that defects of form in the preparation
or filing of our patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims,
inventorship, claim scope or requests for patent term adjustments. If we or our partners, collaborators, licensees or licensors, whether
current or future, fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced
or eliminated. If our partners, collaborators, licensees or licensors, are not fully cooperative or disagree with us as to the prosecution,
maintenance or enforcement of any patent rights, such patent rights could be compromised. If there are material defects in the form, preparation,
prosecution or enforcement of our patents or patent applications, such patents may be invalid and/or unenforceable, and such applications
may never result in valid, enforceable patents. Any of these outcomes could impair our ability to prevent competition from third parties,
which may have an adverse impact on our business.
In addition, the determination of patent rights with
respect to clinical compositions of matter and treatment methods commonly involves complex legal and factual questions, which are dependent
upon the current legal and intellectual property context, extant legal precedent and interpretations of the law by individuals. As a result,
the issuance, scope, validity, enforceability and commercial value of our patent rights are characterized by uncertainty.
Changes in either the patent laws or interpretation
of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent
protection. In addition, the laws of foreign countries may not protect our rights to the same extent or in the same manner as the laws
of the United States. For example, patent laws in various jurisdictions, including significant commercial markets such as Europe,
restrict the patentability of methods of treatment of the human body more than U.S. law does. If these changes were to occur, they
could have a material adverse effect on our ability to generate revenue.
Pending patent applications cannot be enforced against
third parties practicing the technology claimed in such applications unless and until a patent issues from such applications. Assuming
the other requirements for patentability are met, currently, the first party to file a patent application is generally entitled to the
patent. However, prior to March 16, 2013, in the United States, the first party to invent was entitled to the patent. Publications
of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States
and other jurisdictions are not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be
certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first
to file for patent protection of such inventions. Similarly, we cannot be certain that parties from whom we do or may license or purchase
patent rights were the first to make relevant claimed inventions, or were the first to file for patent protection for them. If third parties
have filed prior patent applications on inventions claimed in our patents or applications that were filed on or before March 15,
2013, an interference proceeding in the United States can be initiated by such third parties to determine who was the first to invent
any of the subject matter covered by the patent claims of our applications. If third parties have filed such prior applications after
March 15, 2013, a derivation proceeding in the United States can be initiated by such third parties to determine whether our
invention was derived from theirs.
Moreover, because the issuance of a patent is not
conclusive as to its inventorship, scope, validity or enforceability, our owned and licensed patents or pending patent applications may
be challenged in the courts or patent offices in the United States and abroad. There is no assurance that all of the potentially
relevant prior art relating to our patents and patent applications has been found. If such prior art exists, it may be used to invalidate
a patent, or may prevent a patent from issuing from a pending patent application. For example, such patent filings may be subject to a
third-party submission of prior art to the USPTO, or to other patent offices around the world. Alternately or additionally, we may become
involved in post-grant review procedures, oppositions, derivation proceedings, ex parte reexaminations, inter parties review, supplemental
examinations, or interference proceedings or challenges in district court, in the United States or in various foreign patent offices,
including both national and regional, challenging patents or patent applications in which we have rights, including patents on which we
rely to protect our business. For example, the two European patents we have licensed from Stanford are currently being opposed. An adverse
determination in these oppositions or any other challenges to our patents or patent applications may result in loss of the patent or in
patent claims being narrowed, invalidated or held unenforceable, in whole or in part, or in denial of the patent application or loss or
reduction in the scope of one or more claims of the patent application, any of which could limit our ability to stop others from using
or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and
products. In addition, given the amount of time required for the development, testing and regulatory review of new product candidates,
patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Issued patents that we have or may obtain or license
may not provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive
advantage. Our competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing
manner. Our competitors may also seek approval to market their own products similar to or otherwise competitive with our products. Alternatively,
our competitors may seek to market generic versions of any approved products or pursue similar strategies in the United States or
other jurisdictions, in which they claim that patents owned or licensed by us are invalid, unenforceable or not infringed. In these circumstances,
we may need to defend or assert our patents, or both, including by filing lawsuits alleging patent infringement. In any of these types
of proceedings, a court or other agency with jurisdiction may find our patents invalid or unenforceable, or that our competitors are competing
in a non-infringing manner. Thus, even if we have valid and enforceable patents, these patents still may not provide protection against
competing products or processes sufficient to achieve our business objectives. Any of the foregoing could have a material adverse effect
on our business, financial condition, results of operations and prospects.
Other parties have developed or may develop technologies
that may be related to or competitive with our approach, and may have filed or may file patent applications and may have been issued or
may be issued patents with claims that overlap or conflict with our patent applications, either by claiming the same materials, formulations
or methods, or by claiming subject matter that could dominate our patent position. In addition, certain parts or all of the patent portfolios
licensed to us are, or may be, licensed to third parties and such third parties may have or may obtain certain enforcement rights. If
the scope of the patent protection we or our licensors obtain is not sufficiently broad, we may not be able to prevent others from developing
and commercializing technology and products similar or identical to ours. The degree of patent protection we require to successfully compete
in the marketplace may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us to gain
or keep any competitive advantage. We cannot provide any assurances that any of our licensed patents have, or that any of our pending
owned or licensed patent applications that mature into issued patents will include, claims with a scope sufficient to protect our product
candidates or otherwise provide any competitive advantage, nor can we provide any assurance that our licenses will remain in force.
In addition, there are situations in which noncompliance
can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the
relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are
not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize
and submit formal documents.
Obtaining and maintaining our patent protection depends on compliance
with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent
protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees on any issued patent are due to be paid to
the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent
agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application
process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable
rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in
partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse
of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits,
non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able to enter
the market earlier than would otherwise have been the case, which would have a material adverse effect on our business, financial condition,
results of operations, and prospects.
If we are unable to protect the confidentiality of our trade secrets,
our business and competitive position may be harmed.
In addition to the protection afforded by patents,
we rely upon trade secret protection, know-how and continuing technological innovation to develop and maintain our competitive position.
We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our contractors,
collaborators, scientific advisors, employees and consultants and invention assignment agreements with our consultants and employees.
However, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may not comply with
their terms. The assignment of intellectual property rights under these agreements may not be self-executing or the assignment agreements
may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine
the ownership of what we regard as our intellectual property. In addition, we may not be able to prevent the unauthorized disclosure or
use of our technical know-how or other trade secrets by the parties to these agreements despite the existence of confidentiality agreements
and other contractual restrictions. Monitoring unauthorized uses and disclosures is difficult and we do not know whether the steps we
have taken to protect our proprietary technologies will be effective. If any of the contractors, collaborators, scientific advisors, employees
and consultants who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate
remedies for any such breach or violation. As a result, we could lose our trade secrets. Enforcing a claim against a third party that
illegally obtained and is using our trade secrets, like patent litigation, is expensive and time-consuming and the outcome is unpredictable.
In addition, courts outside the United States are sometimes less willing or unwilling to protect trade secrets. Any of the foregoing
could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Moreover, our trade secrets could otherwise become
known or be independently discovered by our competitors or other third parties. Competitors and other third parties could attempt to replicate
some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights,
design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights.
If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have
no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If our trade
secrets are not adequately protected or sufficient to provide an advantage over our competitors, our competitive position could be adversely
affected, as could our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient
recourse against third parties for misappropriating our trade secrets.
If our trademarks and trade names are not adequately protected, then
we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our current or future trademarks or trade names may
be challenged, infringed, circumvented or declared generic or descriptive or determined to be infringing on other marks. We may not be
able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we need for name recognition
by potential partners or customers in our markets of interest. Our company name and logo, as well as our product candidate names “briquilimab”, “JSP191”,
and “JSP502”, are not registered trademarks. If we seek to register any of our trademarks, during trademark registration proceedings,
we may receive rejections of our applications by the USPTO or in other foreign jurisdictions. Although we would be given an opportunity
to respond to those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in comparable agencies in
many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered
trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings.
If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and
our business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors. Although
these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse
of our trademarks and tradenames by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks
and trade names.
Moreover, any name we have proposed to use with our
product candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register
it, as a trademark. Similar requirements exist in Europe. The FDA typically conducts a review of proposed product names, including an
evaluation of potential for confusion with other product names. If the FDA (or an equivalent administrative body in a foreign jurisdiction)
objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to
identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties
and be acceptable to the FDA. Furthermore, in many countries, owning and maintaining a trademark registration may not provide an
adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark. At times, competitors or other third
parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading
to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered
trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. If we assert trademark
infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom
we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease
use of such trademarks.
We may not be successful in acquiring or in-licensing necessary rights
to key technologies underlying briquilimab or any future product candidates we may develop.
We currently have rights to intellectual property,
through licenses from third parties, to develop briquilimab, and we expect to seek to expand our intellectual property footprint related to
our product candidate pipeline in part by in-licensing the rights to key technologies. The future growth of our business will depend in
part on our ability to in-license or otherwise acquire the rights to develop additional product candidates and technologies. Although
we have succeeded in licensing technologies from third-party licensors, including Amgen Inc. and Stanford, in the past, we can give no
assurance that we will be able to in-license or acquire the rights to other technologies relevant to our product candidates from third
parties on acceptable terms or at all.
In order to market our product candidates, we may find
it necessary or prudent to obtain licenses from such third-party intellectual property holders. However, it may be unclear who owns the
rights to intellectual property we wish to obtain, or we may be unable to secure such licenses or otherwise acquire or in-license intellectual
property rights from third parties that we identify as necessary for product candidates we may develop and technology we employ. For example,
we employ a range of genome engineering technologies that are owned by third parties in our preclinical studies, as well as to manufacture
the supply of mRNA stem cell grafts or other cell therapies used for clinical trials and, if approved, for commercialization of our product
candidates. We currently conduct our preclinical research and clinical trials under 35 U.S.C. § 271(e)(1), which provides a
safe harbor from patent infringement for uses of patented technology reasonably related to the development and submission of information
under a federal law which regulates the manufacture, use, or sale of drugs.
The licensing or acquisition of third-party intellectual
property rights is a highly competitive area, and other companies may pursue strategies to license or acquire third-party intellectual
property rights that we may consider attractive or necessary. Such companies may have a competitive advantage over us, e.g., due to their
size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to
be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual
property rights on terms that would allow us to make an appropriate return on our investment or at all. If we are unable to successfully
obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may
have to abandon development of the relevant program or product candidate, which could have a material adverse effect on our business,
financial condition, results of operations and prospects.
Even if we were able to obtain such a license, it could
be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could
require us to make substantial licensing and royalty payments. If we are unable to obtain a necessary license to a third-party patent
on commercially reasonable terms, we may be unable to commercialize our product candidates or such commercialization efforts may be significantly
delayed, which could in turn significantly harm our business.
Third-party claims of intellectual property infringement, misappropriation
or other violations may prevent or delay our product discovery and development efforts and have a material adverse effect on our business.
Our commercial success depends in part on us avoiding
infringement, misappropriation and other violations of the patents and proprietary rights of third parties. There is a substantial amount
of litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as
administrative proceedings for challenging patents, including interference and reexamination proceedings before the USPTO or oppositions
and other comparable proceedings in foreign jurisdictions. Recently, under U.S. patent reform, new procedures including inter
partes review and post grant review have been implemented. This reform will bring uncertainty to the possibility of challenge to our
patents in the future. Numerous U.S.-and foreign-issued patents and pending patent applications, which are owned by third parties, exist
in the fields in which we are developing our product candidates, and third parties may allege they have patent rights encompassing our
product candidates, technologies or methods. Third parties may assert that we are employing their proprietary technology without authorization
and may file patent infringement claims or lawsuits against us, and if we are found to infringe such third-party patents, we may be required
to pay damages, cease commercialization of the infringing technology or obtain a license from such third parties, which may not be available
on commercially reasonable terms or at all.
There may be third-party patents with patent rights
to materials, formulations, methods of manufacture or methods of treatment related to the use or manufacture of our product candidates.
Because patent applications can take many years to issue, there may be currently pending patent applications which may later result
in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that
use of our technologies infringes upon these patents. Further, we or our licensors may fail to identify even those relevant third-party
patents that have issued or may incorrectly interpret the relevance, scope or expiration of such patents. The scope of a patent claim
is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation
of the relevance or scope of a patent or a pending application may be incorrect. If any third-party patents were held by a court of competent
jurisdiction to cover the manufacturing process of our product candidates, materials used in or formed during the manufacturing process
or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless
we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or
unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our materials,
formulations or methods, including without limitation, combination therapy or patient selection methods, the holders of any such patent
may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent
expires or is finally determined to be held invalid or unenforceable.
Parties making claims against us may seek and obtain
injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidates.
Defense of these claims, regardless of their merit, would involve substantial litigation expense and would involve a substantial diversion
of employee resources from our business. We may not have sufficient resources to bring these actions to a successful conclusion, which
may result in significant cost and may impede our inability to pursue any affected products or product candidates. There could also be
public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors
perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock.
In the event of a successful claim of infringement
against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain
one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial
time and monetary expenditure.
Some intellectual property that we have in-licensed may have been
discovered through government-funded programs and thus may be subject to federal regulations such as “march-in” rights, certain
reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our exclusive rights and
limit our ability to contract with non-U.S. manufacturers.
Any of the intellectual property rights that we have
licensed or may license in the future and that have been generated through the use of U.S. government funding are subject to certain
federal regulations. As a result, the U.S. government may have certain rights to intellectual property embodied in our current or
future product candidates pursuant to the Bayh-Dole Act of 1980 (“Bayh-Dole Act”). These U.S. government rights
in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license
to use inventions for any governmental purpose. In addition, the U.S. government would have the right to require us to grant exclusive,
partially exclusive, or non-exclusive licenses to any such intellectual property rights to a third party if it determines that:
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adequate steps have not been taken to commercialize the invention; |
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government action is necessary to meet public health or safety needs; or |
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government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). |
The U.S. government also has the right to take
title to such intellectual property rights if we, or the applicable licensor, fail to disclose the invention to the government and fail
to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government-funded
program is also subject to certain reporting requirements, compliance with which may require us or the applicable licensor to expend substantial
resources. We cannot be certain that our current or future licensors will comply with the disclosure or reporting requirements of the
Bayh-Dole Act at all times, or be able to rectify any lapse in compliance with these requirements.
In addition, the U.S. government requires that
any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the
United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable
but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture
substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference
for U.S. manufacturers may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual
property. To the extent any of our current or future intellectual property is generated through the use of U.S. government funding,
the provisions of the Bayh-Dole Act may similarly apply.
We may become involved in lawsuits to protect or enforce our patents
or other intellectual property, which could be expensive, time-consuming and unsuccessful.
Competitors may infringe our patents, trademarks, copyrights
or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can
be expensive and time-consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against
perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition
to counterclaims asserting that our patents are invalid or unenforceable, or both. In any patent infringement proceeding, there is a risk
that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to
stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the
court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the
invention at issue on the grounds that our patent claims do not cover the invention. An adverse outcome in a litigation or proceeding
involving our patents could limit our ability to assert our patents against those parties or other competitors, and may curtail or preclude
our ability to exclude third parties from making and selling similar or competitive products. Any of these occurrences could adversely
affect our competitive business position, business prospects and financial condition. Similarly, if we assert trademark infringement claims,
a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark
infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.
Even if we establish infringement, the court may decide
not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate
remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there
is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements
of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results
to be negative, it could have a material adverse effect on the price of shares of our common stock. Moreover, there can be no assurance
that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years
before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the
attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. Any of the
foregoing may have a material adverse effect on our business, financial condition, results of operations and prospects.
We may not be able to protect our intellectual property rights throughout
the world.
Filing, prosecuting, maintaining, defending and enforcing
patents on our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property
rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws
of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.
Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States,
or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors
may use our technologies in jurisdictions where we have not obtained patent protection to develop their own drugs and may export otherwise
infringing drugs to territories where we have patent protection, but enforcement rights are not as strong as those in the United States.
These drugs may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient
to prevent them from competing.
Many companies have encountered significant problems
in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of some countries do not favor the
enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our
patents generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our
efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and
our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any
lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.
Many countries have compulsory licensing laws under
which a patent owner may be compelled under specified circumstances to grant licenses to third parties. In addition, many countries limit
the enforceability of patents against government agencies or government contractors. In those countries, we may have limited remedies
if patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those
patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around
the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license, which
could adversely affect our business, financial condition, results of operations, and prospects.
If we do not obtain patent term extension and data exclusivity for
briquilimab or any other product candidates we may develop, our business may be materially harmed.
Depending upon the timing, duration and conditions
of any FDA marketing approval of our product candidates, one or more of our U.S. patents may be eligible for limited patent term
extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments,
and similar legislation in the European Union. The Hatch-Waxman Amendments permit a patent term extension of up to five years for
a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory
review process. However, we may not receive an extension if we fail to exercise due diligence during the testing phase or regulatory review
process, fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy
applicable requirements. Moreover, the length of the extension could be less than we request. Only one patent per approved product can
be extended; the extension cannot extend the total patent term beyond 14 years from approval; and only those claims covering
the approved drug, a method for using it or a method for manufacturing it may be extended. If we are unable to obtain patent term extension
or the term of any such extension is less than we request, the period during which we can enforce our patent rights for the applicable
product candidate will be shortened, and our competitors may obtain approval to market competing products sooner. As a result, our revenue
from applicable products could be reduced. Further, if this occurs, our competitors may take advantage of our investment in development
and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case, and our
competitive position, business, financial condition, results of operations, and prospects could be materially harmed.
Third parties may assert that our employees or consultants have wrongfully
used or disclosed confidential information or misappropriated trade secrets.
We employ individuals who were previously employed
at universities or other biopharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that
our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to
claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual
property, including trade secrets or other proprietary information, of a former employer or other third parties. We may also be subject
to claims that patents and applications that we may file to protect inventions of our employees or consultants are rightfully owned by
their former employers or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any
such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful
in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Any of the foregoing would harm our business, financial condition, results of operations, and prospects.
Changes in U.S. patent law or the patent law of other countries or
jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.
The U.S. has enacted and implemented wide-ranging patent
reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection
available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty
with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value
of patents, once obtained. Depending on actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing
patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we have licensed
or that we might obtain in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions or changes
in the governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations
may weaken our ability to obtain new patents or to enforce patents that we have licensed or that we may obtain in the future. For example,
the complexity and uncertainty of European patent laws have also increased in recent years. In Europe, a new unitary patent system will
likely be introduced by the end of 2023, which would significantly impact European patents, including those granted before the introduction
of such a system. Under the unitary patent system, European applications will soon have the option, upon grant of a patent, of becoming
a Unitary Patent which will be subject to the jurisdiction of the Unitary Patent Court (“UPC”). As the UPC is a new court
system, there is no precedent for the court, increasing the uncertainty of any litigation. Patents granted before the implementation of
the UPC will have the option of opting out of the jurisdiction of the UPC and remaining as national patents in the UPC countries. Patents
that remain under the jurisdiction of the UPC will be potentially vulnerable to a single UPC-based revocation challenge that, if successful,
could invalidate the patent in all countries who are signatories to the UPC. We cannot predict with certainty the long-term effects of
any potential changes.
Risks Related to Other Legal Compliance Matters
If any of our product candidates are approved, an unfavorable reimbursement
determination in any of the major markets could have a negative impact on us. Further, an unfavorable change in such regimes (e.g., price
controls) could have a negative impact on us.
The regulations that govern marketing approvals, pricing,
and reimbursement for new medicines vary widely from country to country. In the U.S., recently enacted legislation may significantly change
the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require
approval of the sale price of a medicine before it can be marketed. In many countries, the pricing review period begins after marketing
or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental
control even after initial approval is granted. As a result, we might obtain marketing approval for a medicine in a particular country,
but then be subject to price regulations that delay our commercial launch of the medicine, possibly for lengthy time periods, and negatively
impact the revenues we are able to generate from the sale of the medicine in that country. Adverse pricing limitations may hinder our
ability to recoup our investment in one or more product candidates, even if any product candidates we may develop obtain marketing approval.
Our ability to commercialize any medicines successfully
also will depend in part on the extent to which reimbursement for these medicines and related treatments will be available from government
health administration authorities, private health insurers, and other organizations. 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. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party
payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. For example, in
May 2019, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule to allow Medicare Advantage
Plans the option of using step therapy, a type of prior authorization for Medicare Party B drugs, beginning January 1, 2020. This
final rule codified CMS’s policy change that was effective January 1, 2019.
Congress and the Biden administration have each
indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. Individual states in
the U.S. have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product
pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost
disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk
purchasing. See the discussion below under the heading “The prices of prescription pharmaceuticals in the United States and
foreign jurisdictions are subject to considerable legislative and executive actions and could impact the prices we obtain for our
products, if and when licensed” for additional detail.
At the state level, legislatures have become increasingly
aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing. Some
of these measures include price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost
disclosure and transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing.
In addition, regional health care 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 health care programs. Also, 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 medicine that we commercialize and, if reimbursement
is available, the level of reimbursement. Reimbursement may impact the demand for, or the price of, any product candidate for which we
obtain marketing approval. If reimbursement is not available or is available only to limited levels, we may not be able to successfully
commercialize any product candidate for which we obtain marketing approval.
There may be significant delays in obtaining reimbursement
for newly approved medicines, and coverage may be more limited than the purposes for which the medicine is approved by the FDA or similar
regulatory authorities outside the U.S. Moreover, eligibility for reimbursement does not imply that any medicine will be paid for
in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement
levels for new medicines, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates
may vary according to the use of the medicine and the clinical setting in which it is used, may be based on reimbursement levels already
set for lower cost medicines and may be incorporated into existing payments for other services. Net prices for medicines 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 medicines from countries where they may be sold at lower prices than in the U.S. Any such reductions
could negatively impact our net product sales, if any of our product candidates are ever approved.
Any product candidate for which we obtain marketing approval could
be subject to restrictions or withdrawal from the market, and we may be subject to substantial penalties if we fail to comply with regulatory
requirements or if we experience unanticipated problems with our medicines, when and if any of them are approved.
The FDA and other regulatory agencies closely regulate
the post approval marketing and promotion of medicines to ensure that they are marketed only for the approved indications and in accordance
with the provisions of the approved labeling. The FDA and other regulatory agencies impose stringent restrictions on manufacturers’
communications regarding off label use, and if we do not market our medicines for their approved indications, we may be subject to enforcement
action for off label marketing by the FDA and other federal and state enforcement agencies, including the Department of Justice. Violation
of the Federal Food, Drug, and Cosmetic Act and other statutes, including the False Claims Act, relating to the promotion and advertising
of prescription products may also lead to investigations or allegations of violations of federal and state healthcare fraud and abuse
laws and state consumer protection laws.
In addition, later discovery of previously unknown
problems with our medicines, third-party manufacturers, or manufacturing processes, or failure to comply with regulatory requirements,
may yield various results, including:
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restrictions on such medicines, manufacturers, or manufacturing processes; |
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restrictions on the labeling or marketing of a medicine; |
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restrictions on the distribution or use of a medicine; |
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requirements to conduct post marketing clinical trials; |
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receipt of warning or untitled letters; |
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withdrawal of the medicines from the market; |
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refusal to approve pending applications or supplements to approved applications that we submit; |
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fines, restitution, or disgorgement of profits or revenue; |
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suspension or withdrawal of marketing approvals; |
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suspension of any ongoing clinical trials; |
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refusal to permit the import or export of our medicines; |
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injunctions or the imposition of civil or criminal penalties. |
Any government investigation of alleged violations
of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of
any event or penalty described above may inhibit our ability to commercialize any product candidates we develop and adversely affect our
business, financial condition, results of operations, and prospects.
Additionally, if any of our product candidates receives
marketing approval, the FDA could require it to adopt a Risk Evaluation and Mitigation Strategy, to ensure that the benefits outweigh
its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and
a communication plan to healthcare practitioners. Furthermore, if we or others later identify undesirable side effects caused by any of
our product candidates, several potentially significant negative consequences could result, including:
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regulatory authorities may suspend or withdraw approvals of such product candidate; |
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regulatory authorities may require additional warnings on the label; |
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we may be required to change the way such product candidate is administered or conduct additional clinical trials; |
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we could be sued and held liable for harm caused to patients; and |
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our reputation may suffer. |
Our relationships with healthcare providers, including physicians,
and third-party payors will be subject to applicable anti-kickback, fraud and abuse, anti-bribery and other healthcare laws and regulations,
which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future
earnings.
Healthcare providers and third-party payors play a
primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and
future arrangements with healthcare providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and
other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research
as well as market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and
state healthcare laws and regulations, including certain laws and regulations applicable only if we have marketed products, include, but
are not limited to, the following:
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the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering, or providing any remuneration (including any kickback, bribe or certain rebates), directly or indirectly, in cash or in kind, to induce, or in return for, either the referral of an individual, for the purchase, lease, order or recommendation of any item, good, facility or service for which payment may be made, in whole or in part, under federal healthcare programs, such as Medicare and Medicaid. 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; |
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federal false claims, including the False Claims Act that can be enforced through whistleblower actions, false statements and civil monetary penalties laws, which prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds or knowingly making, or causing to be made, a false record or statement material to a false or fraudulent claim to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; |
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the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which, prohibits, among other things, executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false, fictitious, or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; |
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the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; |
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the federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug marketing, prohibits manufacturers from marketing such products for off-label use and regulates the distribution of samples; |
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federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; |
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the federal Physician Payments Sunshine Act, which 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 certain exceptions) to report annually to the CMS within the U.S. Department of Health and Human Services, information related to payments or other transfers of value made during the previous year to physicians, (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, such obligations include payments and other transfers of value provided in the previous year to certain other healthcare professionals, including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives; and |
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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may be broader in scope and apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers. |
Some state laws also require pharmaceutical companies
to comply with specific compliance standards, restrict financial interactions between pharmaceutical companies and healthcare providers
or require pharmaceutical companies to report information related to payments to health care providers or marketing expenditures. Certain
state laws also require the reporting of information related to drug pricing. Further, certain state and local laws require the registration
of pharmaceutical sales representatives.
Efforts to ensure that our business arrangements with
third parties will comply with applicable healthcare laws and regulations will involve substantial costs. Given the breadth of the laws
and regulations and evolving government interpretations of the laws and regulations, governmental authorities may possibly conclude that
our business practices, including certain of our advisory board arrangements with physicians, some of whom are compensated in the form
of stock or stock options, may not comply with healthcare laws and regulations. If our operations are found to be in violation of any
of the laws described above or any other government regulations that apply to us, we may be subject to significant penalties, including
administrative, civil and criminal penalties, damages, fines, disgorgement, exclusion from participation in government health care programs,
such as Medicare and Medicaid, imprisonment, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished
profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our business,
financial condition, results of operations, and prospects.
The European Union has strict laws governing the provision
of benefits or advantages to healthcare professionals in order to induce or encourage the prescription, recommendation, endorsement, purchase,
supply, order or use of medicinal products. Such laws and associated codes of practice set out the rules and requirements that the provision
of hospitality, sponsorship, gifts and promotional items must meet before they can be accepted by healthcare professionals. The provision
of benefits or advantages to healthcare professionals is also governed by the national anti-bribery laws of European Union Member States.
Infringement of these laws could result in substantial fines and imprisonment.
Payments made to healthcare professionals in certain
European Union Member States may be publicly disclosed. Moreover, agreements with healthcare professionals often must be the subject of
prior notification and approval by the healthcare professionals’ employer, his or her competent professional organization, and/or
the regulatory authorities of the individual European Union Member States. These requirements are provided in the national laws, industry
codes, or professional codes of conduct applicable in the European Union Member States. Failure to comply with these requirements could
result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.
Healthcare and other reform legislation, may increase the difficulty
and cost for us and any collaborators we may have to obtain marketing approval of and commercialize briquilimab and any other product candidates
we may develop and affect the prices we, or they, may obtain.
In the United States and some foreign jurisdictions,
there have been, and continue to be, ongoing efforts to implement legislative and regulatory changes regarding the healthcare system.
Such changes could prevent or delay marketing approval of briquilimab and any other product candidates that we may develop, restrict or regulate
post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval. Although
we cannot predict what healthcare or other reform efforts will be successful, such efforts may result in more rigorous coverage criteria,
in additional downward pressure on the price that we, or our future collaborators, may receive for any approved products or in other consequences
that may adversely affect our ability to achieve or maintain profitability.
Within the United States, the federal government
and individual states have aggressively pursued healthcare reform, as evidenced by the passing of the ACA and the ongoing efforts to modify
or repeal that legislation. The ACA substantially changed the way healthcare is financed by both governmental and private insurers and
contains a number of provisions that affect coverage and reimbursement of drug products and/or that could potentially reduce the demand
for pharmaceutical products such as increasing drug rebates under state Medicaid programs for brand name prescription drugs and extending
those rebates to Medicaid managed care and assessing a fee on manufacturers and importers of brand name prescription drugs reimbursed
under certain government programs, including Medicare and Medicaid. Other aspects of healthcare reform, such as expanded government enforcement
authority and heightened standards that could increase compliance-related costs, could also affect our business. There are, and may continue
to be, judicial challenges, including review by the United States Supreme Court. We cannot predict the ultimate content, timing or
effect of any changes to the ACA or other federal and state reform efforts. There is no assurance that federal or state healthcare reform
will not adversely affect our future business and financial results, and we cannot predict how future federal or state legislative, judicial
or administrative changes relating to healthcare reform will affect our business.
Federal and state governments have shown significant
interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls,
waivers from Medicaid drug rebate law requirements, restrictions on reimbursement and requirements for substitution of generic products
for branded prescription drugs. The private sector has also sought to control healthcare costs by limiting coverage or reimbursement or
requiring discounts and rebates on products. We are unable to predict what additional legislation, regulations or policies, if any, relating
to the healthcare industry or third party coverage and reimbursement may be enacted in the future or what effect such legislation, regulations
or policies would have on our business. Any cost containment measures could significantly decrease the available coverage and the price
we might establish for our potential products, which would have an adverse effect on our net revenues and operating results.
Legislative and regulatory proposals have been made
to expand post-approval requirements and restrict sales and promotional activities for biotechnology products. We cannot be sure whether
additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations for biological products will be
changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased
scrutiny by the U.S. Congress of the FDA’s approval and decision-making processes may significantly delay or prevent marketing
approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.
The prices of prescription pharmaceuticals in the United States
and foreign jurisdictions are subject to considerable legislative and executive actions and could impact the prices we obtain for our
products, if and when licensed.
The prices of prescription pharmaceuticals have also
been the subject of considerable discussion in the United States. To date, there have been several recent U.S. congressional
inquiries and proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing,
review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government
program reimbursement methodologies for products. To those ends, in October 2020, the FDA issued final guidance that describes procedures
drug manufacturers can follow to facilitate importation of prescription drugs, including biological products, that are FDA-approved, manufactured
abroad, authorized for sale in any foreign country, and originally intended for sale in that foreign country.
At the state level, individual states are increasingly
aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including
price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency
measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health
care organizations 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 health care programs. These measures could reduce the ultimate demand
for our products, once approved, or put pressure on our product pricing. We expect that additional state and federal healthcare reform
measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare
products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
In the European Union, similar political, economic
and regulatory developments may affect our ability to profitably commercialize our product candidates, if approved. In markets outside
of the United States and the European Union, reimbursement and healthcare payment systems vary significantly by country, and many
countries have instituted price ceilings on specific products and therapies. In some countries, particularly the countries of the European
Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental
authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval
in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidates to other
available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory
levels, our business could be harmed, possibly materially.
In addition, on August 16,
2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, includes policies that are designed
to have a direct impact on drug prices and reduce drug spending by the federal government, which shall take effect in 2023. Under the
Inflation Reduction Act of 2022, Congress authorized Medicare beginning in 2026 to negotiate lower prices for certain costly single-source
drug and biologic products that do not have competing generics or biosimilars. This provision is limited in terms of the number of pharmaceuticals
whose prices can be negotiated in any given year and it only applies to drug products that have been approved for at least 9 years and
biologics that have been licensed for 13 years. Drugs and biologics that have been approved for a single rare disease or condition are
categorically excluded from price negotiation. Further, the new legislation provides that if pharmaceutical companies raise prices in
Medicare faster than the rate of inflation, they must pay rebates back to the government for the difference. The new law also caps Medicare
out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year.
Our employees, principal investigators, consultants and commercial
partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and
insider trading.
We are exposed to the risk of fraud or other misconduct
by our employees, consultants and commercial partners, and, if we commence clinical trials, our principal investigators. Misconduct by
these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the European Union and
other jurisdictions, provide accurate information to the FDA, the EMA and other regulatory authorities, comply with healthcare fraud and
abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized
activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and
regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict
or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions
with the FDA, the EMA or other regulatory authorities, which could result in regulatory sanctions and cause serious harm to our reputation.
We have adopted a code of conduct applicable to all of our employees, but it is not always possible to identify and deter employee misconduct,
and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses
or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions
could have a significant impact on our business, financial condition, results of operations and prospects, including the imposition of
significant fines or other sanctions.
Laws and regulations governing any international operations we may
have in the future may preclude us from developing, manufacturing and selling certain product candidates outside of the United States
and require us to develop and implement costly compliance programs.
We may be subject to numerous laws and regulations
in each jurisdiction outside of the United States in which we may operate. The creation, implementation and maintenance of international
business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties
is required.
The Foreign Corrupt Practices Act (the “FCPA”),
prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of value, directly or
indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity
in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are
listed in the United States to comply with certain accounting provisions requiring us to maintain books and records that accurately
and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system
of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the Department
of Justice. The SEC is involved with enforcement of the books and records provisions of the FCPA.
Similarly, the U.K. Bribery Act 2010 has
extra-territorial effect for companies and individuals having a connection with the United Kingdom. The U.K. Bribery Act prohibits
inducements both to public officials and private individuals and organizations. Compliance with the FCPA and the U.K. Bribery Act
is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular
challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other
hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have
been deemed to be improper payments to government officials and have led to FCPA enforcement actions.
Various laws, regulations and executive orders also
restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information
classified for national security purposes, as well as certain products and technical data relating to those products. Our expansion outside
of the United States has required, and will continue to require, us to dedicate additional resources to comply with these laws, and
these laws may preclude us from developing, manufacturing or selling certain product candidates outside of the United States, which
could limit our growth potential and increase our development costs. The failure to comply with laws governing international business
practices may result in substantial penalties, including suspension or debarment from government contracting. Violation of the FCPA can
result in significant civil and criminal penalties. Indictment alone under the FCPA can lead to suspension of the right to do business
with the U.S. government until the pending claims are resolved. Conviction of a violation of the FCPA can result in long-term disqualification
as a government contractor. The termination of a government contract or relationship as a result of our failure to satisfy any of our
obligations under laws governing international business practices would have a negative impact on our operations and harm our reputation
and ability to procure government contracts. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for
violations of the FCPA’s accounting provisions.
Compliance with global privacy and data security requirements could
result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply
with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business,
financial condition and results of operations.
The regulatory framework for the collection, use, safeguarding,
sharing, transfer, and other processing of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable
future. Globally, virtually every jurisdiction in which we operate has established its own data security and privacy frameworks with which
we must comply. For example, the collection, use, disclosure, transfer, or other processing of personal data regarding individuals in
the European Union, including personal health data, is subject to the EU General Data Protection Regulation (the “GDPR”),
which took effect across all member states of the European Economic Area (the “EEA”) in May 2018. The GDPR is wide-ranging
in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health
and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals
regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing
notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR increases our obligations with
respect to clinical trials conducted in the EEA by expanding the definition of personal data to include coded data and requiring changes
to informed consent practices and more detailed notices for clinical trial subjects and investigators. In addition, the GDPR imposes strict
rules on the transfer of personal data to countries outside the European Union, including the United States, and, as a result, increases
the scrutiny that clinical trial sites located in the EEA should apply to transfers of personal data from such sites to countries that
are considered to lack an adequate level of data protection, such as the United States. The GDPR also permits data protection authorities
to require destruction of improperly gathered or used personal information and/or impose substantial fines for violations of the GDPR,
which can be up to four percent of global revenues or 20 million Euros, whichever is greater, and it also confers a private right
of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain
compensation for damages resulting from violations of the GDPR. In addition, the GDPR provides that European Union member states
may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data.
Further, Brexit has led and
could also lead to legislative and regulatory changes and may increase our compliance costs. As of January 1, 2021 and the expiry of transitional
arrangements agreed to between the United Kingdom and the European Union, data processing in the United Kingdom is governed by a United
Kingdom version of the GDPR (combining the GDPR and the Data Protection Act 2018), exposing us to two parallel regimes, each of which
authorizes similar fines and other potentially divergent enforcement actions for certain violations. On June 28, 2021, the European Commission
adopted an Adequacy Decision for the United Kingdom, allowing for the relatively free exchange of personal information between the European
Union and the United Kingdom, however, the European Commission may suspend the Adequacy Decision if it considers that the United Kingdom
no longer provides for an adequate level of data protection. Other jurisdictions outside the European Union are similarly introducing
or enhancing privacy and data security laws, rules and regulations.
Similar actions are either in place or under way
in the United States. There are a broad variety of data protection laws that are applicable to our activities, and a wide range of
enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general
consumer protection laws. The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security
protections for consumers. New laws also are being considered at both the state and federal levels. For example, the California Consumer
Privacy Act — which went into effect on January 1, 2020 — is creating similar risks and obligations as
those created by the GDPR, though the California Consumer Privacy Act does exempt certain information collected as part of a clinical
trial subject to the Federal Policy for the Protection of Human Subjects (the Common Rule). As of January 1, 2023, the California Consumer
Privacy Act (as amended by the California Privacy Rights Act) is in full effect, with enforcement by California’s dedicated privacy
enforcement agency expected to start later in 2023. While California was first among the states in adopting comprehensive data privacy
legislation similar to the GDPR, many other states are following suit. For example, four other states have adopted such laws, taking effect
from January 1, 2023 (in Virginia) and throughout the next year in Utah, Colorado, and Connecticut. Many other states are considering
similar legislation. A broad range of legislative measures also have been introduced at the federal level. Accordingly, failure to comply
with federal and state laws (both those currently in effect and future legislation) regarding privacy and security of personal information
could expose us to fines and penalties under such laws. There also is the threat of consumer class actions related to these laws and the
overall protection of personal data. This is particularly true with respect to data security incidents, and sensitive personal information,
including health and biometric data. Even if we are not determined to have violated these laws, government investigations into these issues
typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and business.
Given the breadth and depth of changes in data
protection obligations, preparing for and complying with these requirements is rigorous and time intensive and requires significant resources
and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors
or consultants that process or transfer personal data collected in the European Union. The GDPR, new state privacy laws and other changes
in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal
information from our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms,
may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing business, and could
lead to government enforcement actions, private litigation and significant fines and penalties against us and could have a material adverse
effect on our business, financial condition and results of operations.
We and our partners may be subject to stringent privacy laws, information
security laws, regulations, policies and contractual obligations related to data privacy and security, and changes in such laws, regulations,
policies or how they are interpreted or changes in contractual obligations could adversely affect our business.
There are numerous U.S. federal and state data
privacy and protection laws and regulations that apply to the collection, transmission, processing, storage and use of personally-identifying
information, which among other things, impose certain requirements relating to the privacy, security and transmission of personal information.
The legislative and regulatory landscape for privacy and data protection continues to evolve in jurisdictions worldwide, and there has
been an increasing focus on privacy and data protection issues with the potential to affect our business. Failure to comply with any of
these laws and regulations could result in enforcement action against us, including fines, imprisonment of company officials and public
censure, claims for damages by affected individuals, damage to our reputation and loss of goodwill, any of which could have a material
adverse effect on our business, financial condition, results of operations or prospects.
If we are unable to properly protect the privacy and
security of health-related information or other sensitive or confidential information in our possession, we could be found to have breached
our contracts. Further, if we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security standards,
we could face significant administrative, civil and criminal penalties. Enforcement activity can also result in financial liability and
reputational harm, and responses to such enforcement activity can consume significant internal resources. In addition, state attorneys
general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy
of state residents.
Previously enacted state laws in California seek to impose
gender and diversity quotas for boards of directors of public companies headquartered in California.
In September 2018, California enacted Senate
Bill 826 (“SB 826”), which generally required public companies with principal executive offices in California to have at least
two female directors on its board of directors if the company has at least five directors, and at least three female directors on its
board of directors if the company has at least six directors. On May 13, 2022, the Los Angeles Superior Court declared SB 826 unconstitutional
and, although the California Secretary of State has directed counsel to file an appeal of decision, the State of California is currently
precluded from enforcing SB 826.
Additionally, on September 30, 2020, California enacted
Assembly Bill 979 (“AB 979”), which generally required public companies with principal executive offices in California to
include specified numbers of directors from “underrepresented communities”. A director from an “underrepresented community”
means a director who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian,
Alaska Native, gay, lesbian, bisexual or transgender. By December 31, 2021, each public company with principal executive offices in California
was required to have at least one director from an underrepresented community. By December 31, 2022, a public company with more than four
but fewer than nine directors would have been required to have a minimum of two directors from underrepresented communities, and a public
company with nine or more directors would have been required to have a minimum of three directors from underrepresented communities. On
April 1, 2022, the Los Angeles Superior Court declared AB 979 unconstitutional and, although the California Secretary of State has filed
a notice of appeal in the case, the State of California is currently precluded from enforcing AB 979.
If the State of California successfully appeals the court decisions
regarding SB 826 or AB 979, we cannot assure that we can recruit, attract and/or retain qualified members of the board and meet gender
or diversity quotas as previously required by SB 826 or AB 979, and our board of directors does not currently satisfy the quota
previously required under SB 826. A failure to comply with any such quota requirement could result in fines from the California Secretary
of State, and our reputation may be adversely affected.
Investors’ expectations of our performance
relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
There is an increasing focus
from certain investors, employees, regulators and other stakeholders concerning corporate responsibility, specifically related to environmental,
social and governance (“ESG”) factors. Some investors and investor advocacy groups may use these factors to guide investment
strategies and, in some cases, investors may choose not to invest in our company if they believe our policies relating to corporate responsibility
are inadequate. Third-party providers of corporate responsibility ratings and reports on companies have increased to meet growing investor
demand for measurement of corporate responsibility performance, and a variety of organizations currently measure the performance of companies
on such ESG topics, and the results of these assessments are widely publicized. Investors, particularly institutional investors, use these
ratings to benchmark companies against their peers and if we are perceived as lagging with respect to ESG initiatives, certain investors
may engage with us to improve ESG disclosures or performance and may also make voting decisions, or take other actions, to hold us and
our board of directors accountable. In addition, the criteria by which our corporate responsibility practices are assessed may change,
which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. If we elect
not to or are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are
inadequate.
We may face reputational damage
in the event our corporate responsibility initiatives or objectives do not meet the standards set by our investors, stockholders, lawmakers,
listing exchanges or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third-party
rating services. A low ESG or sustainability rating by a third-party rating service could also result in the exclusion of our common stock
from consideration by certain investors who may elect to invest with our competition instead. Ongoing focus on corporate responsibility
matters by investors and other parties as described above may impose additional costs or expose us to new risks. Any failure or perceived
failure by us in this regard could have a material adverse effect on our reputation and on our business, share price, financial condition,
or results of operations, including the sustainability of our business over time.
In addition, the SEC has announced
proposed rules that, among other matters, will establish a framework for reporting of climate-related risks. To the extent the proposed
rules impose additional reporting obligations, we could face increased costs. Separately, the SEC has also announced that it is scrutinizing
existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege our
existing climate disclosures are misleading or deficient.
Risks Related to Employee Matters, Managing Growth and Information Technology
If we lose key management personnel, or if we fail to recruit additional
highly skilled personnel, our ability to continue developing and to identify and develop new or next generation product candidates will
be impaired, which could result in delays in the development process, loss of market opportunities, make us less competitive and have
a material adverse effect on our business, financial condition and results of operations.
Our ability to compete in the highly competitive biotechnology
and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel.
We are highly dependent on our management, particularly our Chief Executive Officer, the members of our executive team, and key scientific
and medical personnel employees. The loss of the services of any of our executive officers, key employees, and scientific and medical
advisors, and our inability to find suitable replacements, could result in delays in product development and harm our business.
We conduct our operations at our facility in the San Francisco Bay
Area. This region is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for
skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms
or at all. In addition, regulation or legislation impacting the workforce, such as the proposed rule published by the Federal Trade Commission
which would, if issued, generally prevent employers from entering into non-compete with employees and require employers to rescind existing
non-competes, may lead to increased uncertainty in hiring and competition for talent.
To induce valuable employees to remain at our company,
in addition to salary and cash incentives, we have provided stock options that vest over time. The value to employees of stock options
that vest over time may be significantly affected by movements in our stock price that are beyond our control, and may at any time be
insufficient to counteract more lucrative offers from other companies. Despite our efforts to retain valuable employees, members of our
management, scientific and development teams may terminate their employment with us on short notice. In addition, we may experience employee
turnover as a result of the ongoing “great resignation” occurring throughout the U.S. economy, which has impacted job market
dynamics. New hires require training and take time before they achieve full productivity. New employees may not become as productive as
we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals. Although we have employment agreements
with our key employees, these agreements provide for at-will employment, which means that any of our employees could leave our employment
at any time, with or without notice. We do not maintain “key man” insurance policies on the lives of these individuals or
the lives of any of our other employees. Our success also depends on our ability to continue to attract, retain and motivate highly skilled
junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel.
We and our management have a limited track record as an operating
company. Failures in the operational execution of the expected business plans may have a material impact on our commercial prospects.
Further, if we are not able to attract and retain highly-qualified personnel, we may not be able to successfully implement our business
strategy.
Our management team has worked together for only a
limited period of time and has a limited track record of executing our business plan as a team. In addition, we have recently filled a
number of positions in our finance and accounting staff. Accordingly, certain key personnel have only recently assumed the duties and
responsibilities they are now performing, and it is difficult to predict whether our management team, individually and collectively, will
be effective in operating our business. These changes may cause speculation and uncertainty regarding our commercial prospects and may
cause or result in:
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disruption of our business or distraction of our employees and management; |
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difficulty in recruiting, hiring, motivating, and retaining talented and skilled personnel; |
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stock price volatility; and |
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difficulty in negotiating, maintaining, or consummating business or strategic relationships or transactions. |
If we are unable to mitigate these risks or to attract
and retain highly qualified personnel, our revenue, operating results and financial condition may be adversely impacted.
We will need to grow the size of our organization, and we may experience
difficulties in managing this growth.
As of December 31, 2022, we had 35 full-time employees. As our
development, manufacturing and commercialization plans and strategies develop and we continue our operations as a public company, we expect
to need and are actively recruiting additional managerial, operational, sales, marketing, financial and other personnel. Future growth
would impose significant added responsibilities on members of management, including:
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identifying, recruiting, integrating, maintaining and motivating additional employees; |
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managing our internal development efforts effectively, including the clinical, FDA and international regulatory review process for our product candidates, while complying with our contractual obligations to contractors and other third parties; and |
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improving our operational, financial and management controls, reporting systems and procedures. |
Our future financial performance and our ability to
commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management
may also have to divert a disproportionate amount of time to managing these growth activities.
We currently rely, and for the foreseeable future will
continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including
substantially all aspects of regulatory approval, clinical management and manufacturing. We cannot assure you that the services of independent
organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified
replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services
provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able
to obtain regulatory approval of our product candidates or otherwise advance our business. We cannot assure you that we will be able to
manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors,
or if we are not able to effectively build out new facilities to accommodate this expansion, we may not be able to successfully implement
the tasks necessary for further development and commercialization of our product candidates and, accordingly, may not achieve our research,
development and commercialization goals.
Our insurance policies may be inadequate and potentially expose us
to unrecoverable risks.
We have limited director and officer insurance and
commercial insurance policies. Any significant insurance claims would have a material adverse effect on our business, financial condition
and results of operations. Insurance availability, coverage terms and pricing continue to vary with market conditions. We endeavor to
obtain appropriate insurance coverage for insurable risks that we identify; however, we may fail to correctly anticipate or quantify insurable
risks; we may not be able to obtain appropriate insurance coverage; and insurers may not respond as we intend to cover insurable events
that may occur. We have observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate
insurance. Such conditions have resulted in higher premium costs, higher policy deductibles and lower coverage limits. For some risks,
we may not have or maintain insurance coverage because of cost or availability.
Our internal computer systems, or those of our third-party vendors,
collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of
our product development programs, compromise sensitive information related to our business or prevent us from accessing critical information,
potentially exposing us to liability or otherwise adversely affecting our business.
Our internal computer systems and those of our current
and any future third-party vendors, collaborators and other contractors or consultants are vulnerable to damage or interruption from computer
viruses, computer hackers, malicious code, employee theft or misuse, denial-of-service attacks, sophisticated nation-state and nation-state-supported
actors, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we seek to protect
our information technology systems from system failure, accident and security breach, if such an event were to occur and cause interruptions
in our operations, it could result in a disruption of our development programs and our business operations, whether due to a loss of our
trade secrets or other proprietary information or other disruptions. For example, the loss of clinical trial data from future clinical
trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
If we were to experience a significant cybersecurity breach of our information systems or data, the costs associated with the investigation,
remediation and potential notification of the breach to counter-parties and data subjects could be material. In addition, our remediation
efforts may not be successful. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology
and cybersecurity infrastructure, we could suffer significant business disruption, including transaction errors, supply chain or manufacturing
interruptions, processing inefficiencies, data loss or the loss of or damage to intellectual property or other proprietary information.
Although we take such steps to help protect confidential
and other sensitive information from unauthorized access or disclosure, our information technology and infrastructure may be vulnerable
to attacks by hackers or viruses, failures, or breaches due to third-party action, employee negligence or error, malfeasance, or other
incidents or disruptions. For example, we could be the target of phishing attacks seeking confidential information regarding our employees.
Furthermore, while we have implemented data privacy and security measures in an effort to comply with applicable laws and regulations
relating to privacy and data protection, some health-related and other personal information or confidential information may be transmitted
to us by third parties, who may not implement adequate security and privacy measures, and it is possible that laws, rules and regulations
relating to privacy, data protection, or information security may be interpreted and applied in a manner that is inconsistent with our
practices or those of third parties who transmit health-related and other personal information or confidential information to us.
To the extent that we or these third parties are found
to have violated such laws, rules or regulations or that any disruption or security breach were to result in a loss of, or damage to,
us or our third-party vendors’, collaborators’ or other contractors’ or consultants’ data or applications, or
inappropriate disclosure of confidential or proprietary information, we could incur liability including litigation exposure, penalties
and fines, we could become the subject of regulatory action or investigation, our competitive position could be harmed and the further
development and commercialization of our product candidates could be delayed. Any of the above could have a material adverse effect on
our business, financial condition, results of operations or prospects.
Unstable market and economic conditions may have serious adverse
consequences on our business, financial condition and share price.
As widely reported, global credit and financial markets
have experienced volatility and disruptions in the past several years and especially in 2020, 2021 and 2022 due to the impacts of
the COVID-19 pandemic, and, more recently, the ongoing conflict between Ukraine and Russia and the global impact of restrictions and sanctions
imposed on Russia, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic
growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurances that further deterioration
in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected
by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current
equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive.
Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth
strategy, financial performance and share price and could require us to delay or abandon clinical development plans.
The impact of the Russian invasion of Ukraine
on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations.
The short and long-term implications of Russia’s invasion of
Ukraine are difficult to predict at this time. We continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent
institution of sanctions against Russia by the United States and several European and Asian countries may have on the global economy in
general, on our business and operations and on the businesses and operations of our suppliers and other third parties with which we conduct
business. For example, the continuing conflict has resulted and may continue to result in increased inflation, escalating energy prices
and constrained availability, and thus increasing costs, of raw materials. We will continue to monitor this fluid situation and develop
contingency plans as necessary to address any disruptions to our business operations as they develop. To the extent the war in Ukraine
may adversely affect our business as discussed above, it may also have the effect of heightening many of the other risks described herein.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation; disruptions to our technology
infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and
relations; disruptions in global supply chains; and constraints, volatility, or disruption in the capital markets, any of which could
negatively affect our business and financial condition.
Risks Related to Ownership of Our Common Stock and Warrants
If our operations and performance do not meet the expectations of
investors or securities analysts or for other reasons, the market price of our securities may decline, and the market price of our common
stock may continue to be volatile.
Any of the factors listed below could have a negative
impact on your investment in our securities, and our securities may trade at prices significantly below the price you paid for them. In
such circumstances, the trading price of our securities may not recover and may experience a further decline.
Factors affecting the trading price of our securities
may include:
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adverse regulatory decisions; |
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any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; |
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impacts of the ongoing COVID-19 pandemic and related restrictions; |
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ongoing conflict between Ukraine and Russia and the global impact of restrictions and sanctions imposed on Russia and the impact thereof
on the markets generally, including any adverse effects on macroeconomic conditions such as inflation; |
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the commencement, enrollment or results of any future clinical trials we may conduct, or changes in the development status of our product candidates; |
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adverse results from, delays in or termination of clinical trials; |
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unanticipated serious safety concerns related to the use of our product candidates; |
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lower than expected market acceptance of our product candidates following approval for commercialization; |
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changes in financial estimates by us or by any securities analysts who might cover our stock; |
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changes in the market valuations of similar companies; |
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stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biopharmaceutical industry; |
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publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
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announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures; |
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announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; |
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investors’ general perception of our business or management; |
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recruitment or departure of key personnel; |
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overall performance of the equity markets; |
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disputes or other developments relating to intellectual property rights, including patents, litigation matters and our ability to obtain, maintain, defend, protect and enforce patent and other intellectual property rights for our technologies; |
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significant lawsuits, including patent or stockholder litigation; |
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proposed changes to healthcare laws in the U.S. or foreign jurisdictions, or speculation regarding such changes; |
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general political and economic conditions; and |
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other events or factors, many of which are beyond our control. |
In addition, the stock market in general, Nasdaq and
pharmaceutical companies in particular have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of these companies. The trading price of our common stock is, and is likely to continue to be, volatile.
For example, from September 24, 2021, the date of the closing of the Business Combination, to December 31, 2022, our closing stock price
ranged from $0.46 to $16.42 per share. Broad market and industry factors may negatively affect the market price of our securities, regardless
of our actual operating performance. As a result of this volatility, our stockholders may not be able to sell their common stock at or
above the prices at which they purchased their shares. Moreover, in the past, stockholders have initiated class action lawsuits against
pharmaceutical and biotechnology companies following periods of volatility in the market prices of these companies’ stock. Such
litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources
from our business.
Insiders have substantial control over us, which could limit your
ability to affect the outcome of key transactions, including a change of control.
As of December 31, 2022, our directors and executive
officers and their affiliates beneficially owned approximately 28.8% of the outstanding shares of our common stock. As a result, these
stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval,
including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company
or our assets. This concentration of ownership may have the effect of delaying or preventing a change in control of our company or discouraging
a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change in control would benefit
our other stockholders. This significant concentration of ownership may also adversely affect the trading price for our common stock because
investors often perceive disadvantages in owning stock in companies with controlling stockholders.
We have incurred and will continue to incur significant increased expenses
and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations.
We face increased legal, accounting, administrative and other costs
and expenses as a public company. The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations
subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and
regulations promulgated and to be promulgated thereunder, and the securities exchanges, impose additional reporting and other obligations
on public companies. Compliance with public company requirements increases costs and makes certain activities more time-consuming. A number
of those requirements require us to carry out activities we had not done previously. For example, we have adopted new charters for our
board committees and adopted some new disclosure controls and procedures. In addition, expenses associated with SEC reporting requirements
will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if a material weakness
or significant deficiency is identified in the internal control over financial reporting), we could incur additional costs rectifying
those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of us. It is also more expensive
to obtain director and officer liability insurance. Risks associated with our status as a public company may make it more difficult to
attract and retain qualified persons to serve on our board of directors or as executive officers. The additional reporting and other obligations
imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and
administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used
to expand our business and achieve strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional
changes in governance and reporting requirements, which could further increase costs.
If we fail to comply with the continued
listing requirements of the Nasdaq Capital Market, our common stock may be delisted and the price of our common stock and our ability
to access the capital markets could be negatively impacted.
We must continue to satisfy
the Nasdaq Capital Market’s continued listing requirements, including, among other things, a minimum closing bid price requirement
of $1.00 per share for 30 consecutive business days. If a company fails for 30 consecutive business days to meet the $1.00 minimum closing
bid price requirement, The Nasdaq Stock Market LLC (“Nasdaq”) will send a deficiency notice to the company, advising that
it has been afforded a “compliance period” of 180 calendar days to regain compliance with the applicable requirements.
A delisting of our common
stock from the Nasdaq Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material
reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing
sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors and employees.
On November 3, 2022, we received written notice from Nasdaq indicating
that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement
for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A),
we were provided with an initial period of 180 calendar days, or until May 2, 2023, to regain compliance. On January 18, 2023, we received
a letter from Nasdaq notifying us that we regained full compliance with Nasdaq Listing Rule 5550(a)(2) after the closing bid price of
our common stock had been at $1.00 per share or greater for ten consecutive business days from January 3, 2023 through January 17, 2023.
Even though we have regained compliance with the Nasdaq Capital Market’s minimum closing bid price requirement,
there is no guarantee that we will remain in compliance with such listing requirements or other listing requirements in the future. Any
failure to maintain compliance with continued listing requirements of the Nasdaq Capital Market could result in delisting of our common
stock from the Nasdaq Capital Market and negatively impact our company and holders of our common stock, including by reducing the willingness
of investors to hold our common stock because of the resulting decreased price, liquidity and trading of our common stock, limited availability
of price quotations and reduced news and analyst coverage. Delisting may adversely impact the perception of our financial condition, cause
reputational harm with investors, our employees and parties conducting business with us and limit our access to debt and equity financing.
Our failure to timely and effectively implement controls and procedures
required by Section 404(a) of the Sarbanes-Oxley Act could negatively impact our business.
Absent an applicable exemption, we are required to
provide a management’s attestation on internal controls over financial reporting, and we were not previously required to do this
as a private company. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly
more stringent than those required of us when we were a privately held company. Management may not be able to effectively and timely implement
controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements. If we are not able
to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, we may not be able
to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences
and could harm investor confidence and the market price of our securities.
We are an “emerging growth company” within the meaning
of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies,
it could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance
of other public companies.
We are an “emerging growth company” as
defined in Section 2(a)(19) of the U.S. Securities Act of 1933, as amended (the “Securities Act”), as modified by
the JOBS Act. As such, we are eligible for and intend to take advantage of certain exemptions from various reporting requirements applicable
to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including,
but not limited to, (a) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, (b) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (c) exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We
will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (a) following November
22, 2024, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to
be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million
as of the last business day of our most recently completed second fiscal quarter; and (ii) the date on which we have issued
more than $1.00 billion in non-convertible debt securities during the prior three-year period. We cannot predict whether investors
will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive
as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be; there
may be a less active trading market for our securities; and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act
exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that
a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies
but any such an election to opt out is irrevocable. We have opted to take advantage of the exemption for complying with new or revised
accounting standards within the same time periods as private companies, which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our consolidated financial statements with
another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Even after we no longer qualify as an emerging growth
company, we may continue to qualify as a “smaller reporting company,” which would allow us to continue to take advantage of
many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements. If we cease to be an emerging growth company and do not qualify as a smaller reporting company,
we will no longer be able to take advantage of certain exemptions from reporting discussed above, including not being able to take advantage
of extended transition periods for the adoption of new or modified accounting standards, and, absent other exemptions or relief available
from the SEC, we will also be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act
if we are no longer a non-accelerated filer at such time. We will incur additional expenses in connection with such compliance, and our
management will need to devote additional time and effort to implement and comply with such requirements.
If securities or industry analysts do not publish or cease publishing
research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely,
the price and trading volume of our securities could decline.
The trading market for our common stock will be influenced
by the research and reports that industry or financial analysts publish about us or our business. Securities and industry analysts do
not currently, and may never, publish research on us. If no or few analysts commence coverage of us, the trading price of our securities
would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations
of our securities, the price of our securities could decline. If one or more of these analysts cease to cover our securities, we could
lose visibility in the market for our securities, which in turn could cause the price of our securities to decline.
Future sales, or the perception of future sales, by us or our stockholders
in the public market, the issuance of rights to purchase our common stock, including pursuant to the Equity Incentive Plan and the ESPP,
and future exercises of registration rights could result in the additional dilution of the percentage ownership of our stockholders and
cause the market price for our common stock to decline.
The sale of shares of our common stock, convertible
securities or other equity securities in the public market, or the perception that such sales could occur, could harm the prevailing market
price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for
us to sell equity securities in the future at a time and at a price that we deem appropriate. In addition, if we sell shares of our common
stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also
result in material dilution to our existing stockholders, and new investors could gain rights, preferences, and privileges senior to the
holders of our common stock.
Pursuant to the Jasper Therapeutics, Inc.
2021 Equity Incentive Plan (the “Equity Incentive Plan”), which became effective on September 23, 2021, we are
authorized to grant equity awards to our employees, directors and consultants. In addition, pursuant to the Jasper Therapeutics,
Inc. 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective on September 23, 2021, we are
authorized to sell shares to our employees. As of February 28, 2023, 2,796,855 shares and 1,249,573 shares of our common stock are
reserved for future issuance under the Equity Incentive Plan and the ESPP, respectively. In addition, the Equity Incentive Plan and
ESPP provide for annual automatic increases in the number of shares reserved thereunder, in each case, beginning on January 1,
2022. As a result of such annual increases, our stockholders may experience additional dilution, which could cause the price of our
common stock to fall.
On March 14, 2022, the
Compensation Committee of our board of directors adopted the 2022 Inducement Equity Incentive Plan (the “2022 Inducement Plan”).
As of February 28, 2023, 201,841 shares of our
common stock are available for future issuance under the 2022 Inducement Plan. The 2022 Inducement Plan has not been and will not be
approved by our stockholders. Under the 2022 Inducement Plan, we can grant nonstatutory stock options, restricted stock awards, stock
appreciation rights, restricted stock units, performance awards and other awards, but only to an individual, as a material inducement
to such individual to enter into employment with us or an affiliate of ours, who (i) has not previously been an employee or director of
ours or (ii) is rehired following a bona fide period of non-employment with us.
As of December 31, 2022, options to purchase an aggregate of 6,169,180
shares of our common stock and restricted stock units with respect to an aggregate of 2,617,445 shares were outstanding, and we have granted
additional options to purchase shares of our common stock after this date.
Pursuant to the Amended and Restated Registration
Rights Agreement entered into in connection with the Business Combination, certain of our stockholders can demand that we register their
registrable securities under certain circumstances and will each also have piggyback registration rights for these securities. In addition,
we are required to file and maintain an effective registration statement under the Securities Act covering such securities and certain
of our other securities. We filed a registration statement on October 18, 2021, which was first amended on March 29, 2022 and further
amended on October 7, 2022, in order to satisfy the foregoing obligations and we have currently registered for resale an aggregate of
36,019,362 shares of our common stock, including up to 4,999,863 shares of our common stock issuable upon exercise of our outstanding
warrants. The registration of these securities permits the public sale of such securities, subject to certain contractual restrictions
on transfer imposed by the Amended and Restated Registration Rights Agreement and the Business Combination Agreement, which contractual
restrictions on transfer terminated on March 23, 2022. The presence of these additional shares of our common stock trading in the public
market may have an adverse effect on the market price of our securities.
In the future, we may also issue our securities in
connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition
could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection
with investments or acquisitions may result in additional dilution to our stockholders.
Because there are no current plans to pay cash dividends on our common
stock for the foreseeable future, you may not receive any return on investment unless you sell shares of our common stock for a price
greater than that which you paid for it.
We may retain future earnings, if any, for future operations,
expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and
pay dividends as a public company in the future will be made at the discretion of our board of directors and will depend on, among other
things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of
directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding
indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our common stock unless you
sell your shares of our common stock for a price greater than that which you paid for it.
Anti-takeover provisions in our Certificate of Incorporation and
under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts
by our stockholders to replace or remove our current management.
Our Second Amended and Restated Certificate of Incorporation
(our “Certificate of Incorporation”) contains provisions that could delay or prevent a change of control of us or changes
in our board of directors that our stockholders might consider favorable. Some of these provisions include:
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a board of directors divided into three classes serving staggered three-year terms, such that not all members of our board of directors will be elected at one time; |
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a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; |
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a requirement that special meetings of stockholders be called only by the chairman of our board of directors, the chief executive officer, the president, or by a majority of the total number of authorized directors; |
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advance notice requirements for stockholder proposals and nominations for election to our board of directors; |
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a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; |
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a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our Certificate of Incorporation; and |
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the authority of our board of directors to issue preferred stock on terms determined by our board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of our common stock. |
In addition, because we are incorporated in the State
of Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware (“DGCL”),
which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These anti-takeover
provisions and other provisions in our Certificate of Incorporation and Second Amended and Restated Bylaws (our “Bylaws”)
could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiate actions that
are opposed by our then-current board of directors and could also delay or impede a merger, tender offer, or proxy contest involving us.
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of
your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes
in our board of directors could cause the market price of our common stock to decline.
Our Certificate of Incorporation provides that the Court of Chancery
of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit
our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Certificate of Incorporation provides that the
Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory
or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action or proceeding asserting a claim
of breach of a fiduciary duty owed by any of our current or former directors, officers, or other employees to us or our stockholders;
(iii) any action or proceeding asserting a claim against us or any of our current or former directors, officers, or other employees,
arising out of or pursuant to any provision of the DGCL, our Certificate of Incorporation or Bylaws; (iv) any action or proceeding
to interpret, apply, enforce, or determine the validity of our Certificate of Incorporation or Bylaws; (v) any action or proceeding
as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim
against us or any of our directors, officers, or other employees governed by the internal affairs doctrine, in all cases to the fullest
extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22
of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly,
both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions
and the threat of inconsistent or contrary rulings by different courts, among other considerations, our Certificate of Incorporation provides
that the federal district courts of the United States of America shall be exclusive forum for resolving any complaint asserting a
cause of action arising under the Securities Act, including all causes of action asserted against any defendant named in such complaint.
While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek
to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously
assert the validity and enforceability of the exclusive forum provisions of our Certificate of Incorporation. This may require significant
additional costs associated with resolving such action in other jurisdictions, and the provisions may not be enforced by a court in those
other jurisdictions.
These exclusive forum provisions may limit a stockholder’s
ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees
and may discourage these types of lawsuits. In addition, a stockholder that is unable to bring a claim in the judicial forum of its choosing
may be required to incur additional costs in the pursuit of actions that are subject to these exclusive forum provisions, particularly
if the stockholder does not reside in or near Delaware. Furthermore, the enforceability of similar choice of forum provisions in other
companies’ certificates of incorporation or bylaws has been challenged in legal proceedings, and it is possible that a court could
find these types of provisions to be inapplicable or unenforceable. If a court were to find the exclusive forum provision contained in
our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated
with resolving such action in other jurisdictions, all of which could seriously harm our business.
Any exercise of the outstanding warrants to purchase shares of our
common stock would increase the number of shares eligible for future resale in the public market and result in dilution
to our stockholders.
Outstanding warrants to purchase an aggregate of 4,999,883 shares of
our common stock became exercisable in accordance with the terms of the Warrant Agreement, dated November 19, 2019, between Continental
Stock Transfer & Trust Company, as warrant agent, and us (the “Warrant Agreement”) commencing on October 24,
2021 (the “Public Warrants”). As of December 31, 2022, Public Warrants to purchase 4,999,863 shares of our common stock were
outstanding. The exercise price of these Public Warrants is $11.50 per share. To the extent such Public Warrants are exercised, additional
shares of our common stock will be issued, which will result in dilution to the holders of our common stock and increase the number of
shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such
Public Warrants may be exercised could adversely affect the prevailing market prices of our common stock. However, there is no guarantee
that the Public Warrants will ever be in the money prior to their expiration, and as such, the Public Warrants may expire worthless. See
below risk factor, “The Public Warrants may never be in the money, they may expire worthless and the terms of the Public Warrants
may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants approve of such amendment.”
The Public Warrants may never be in the money, they may expire worthless
and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding
Public Warrants approve of such amendment.
The Public Warrants were issued in registered form
under the Warrant Agreement. The Warrant Agreement provides that the terms of the Public Warrants may be amended without the consent of
any holder to cure any ambiguity or correct any defective provision or correct any mistake, but requires the approval by the holders of
at least 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders
of Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least
50% of the then-outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants
with the consent of at least 50% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the Public Warrants, convert the Public Warrants into cash, shorten the exercise
period, or decrease the number of shares of our common stock purchasable upon exercise of a Public Warrant.
We may redeem your unexpired Public Warrants prior to their exercise
at a time that is disadvantageous to you, thereby making your Public Warrants worthless.
We have the ability to redeem outstanding Public Warrants
at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant, provided that the last
reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for share subdivisions, share dividends, rights
issuances, subdivisions, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30-trading-day period
ending on the third trading day prior to the date we send the notice of redemption to the warrantholders. If and when the Public
Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities
for sale under all applicable state securities laws. Redemption of the outstanding Public Warrants could force you to: (i) exercise
your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (ii) sell your
Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants; or (iii) accept the
nominal redemption price that, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less
than the market value of your Public Warrants.
In addition, we may redeem your Public Warrants at
any time after they become exercisable and prior to their expiration at a price of $0.10 per Public Warrant upon a minimum of 30 days’
prior written notice of redemption; provided that holders will be able to exercise their Public Warrants prior to redemption for a number
of our common stock determined based on the redemption date and the fair market value of our common stock. The value received upon exercise
of the Public Warrants (1) may be less than the value the holders would have received if they had exercised their Public Warrants
at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Public Warrants.