10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year endedDecember 31, 2021

Commission File Number 001-40629

CANDEL THERAPEUTICS, INC.

(Exact name of Registrant as specified in its Charter)

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (617) 916-5445

Securities registered pursuant to Section 12(b) of the Act:

Title of each class TradingSymbol(s) Name of each exchange on which registered

Common Stock, par value $0.01 per share CADL The Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐No☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐No☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The aggregate market value of voting stock held by non-affiliates of the registrant on December 31, 2021, based on the closing price of $7.82 for shares of the registrant’s common stock as reported by the Nasdaq Global Market, was approximately $106.5 million. The registrant has elected to use December 31, 2021 as the calculation date because on June 30, 2021 (the last business day of the registrant’s most recently completed second fiscal quarter), the registrant was a privately held company. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purposes.

The number of shares of registrant’s Common Stock outstanding as of March 15, 2022 was 28,691,088.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

Page

PART I

Item 1. Business 4

Item 1A. Risk Factors 52

Item 1B. Unresolved Staff Comments 104

Item 2. Properties 104

Item 3. Legal Proceedings 104

Item 4. Mine Safety Disclosures 104

PART II

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 118

Item 8. Financial Statements and Supplementary Data 118

Item 9A. Controls and Procedures 119

Item 9B. Other Information 120

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection 120

PART III

Item 10. Directors, Executive Officers and Corporate Governance 121

Item 11. Executive Compensation 126

Item 14. Principal Accounting Fees and Services 137

PART IV

Item 15. Exhibits, Financial Statement Schedules 138

Forward-Looking Statements

This Annual Report on Form 10-K, or Annual Report, contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this Annual Report, including statements regarding our future results of operations and financial position, business strategy, product candidates, clinical development plans and expectations, prospective products, product approvals, research and development costs, timing and likelihood of success, and plans and objectives of management for future operations and results, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Annual Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Annual Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under the sections in this Annual Report titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These forward-looking statements are subject to numerous risks, including, without limitation, the following:

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the timing and the success of preclinical studies and clinical trials of CAN-2409 and CAN-3110 and any other product candidates;

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the initiation of any clinical trials of CAN-2409 and CAN-3110 and any other product candidates;

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our need to raise additional funding before we can expect to generate any revenues from product sales;

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our ability to conduct successful clinical trials or obtain regulatory approval for CAN-2409 and CAN-3110 or any other product candidates that we may identify or develop;

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the ability of our research to generate and advance additional product candidates;

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the effect of the ongoing COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations;

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our ability to establish an adequate safety or efficacy profile for CAN-2409, CAN-3110 or any other product candidates that we may pursue;

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our ability to manufacture CAN-2409, CAN-3110 or any other product candidate in conformity with our specifications and the U.S. Food and Drug Administration’s (FDA) requirements and to scale up manufacturing of our product candidates to commercial scale, if approved;

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the implementation of our strategic plans for our business, any product candidates we may develop and any companion diagnostics;

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our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates any companion diagnostics;

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the rate and degree of market acceptance and clinical utility for any product candidates we may develop;

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estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

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the period we estimate to be funded by our existing financial resources;

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our ability to maintain and establish collaborations;

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the potential benefits with the continued existence of our license agreement with Mass General Brigham (MGB);

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our financial performance;

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our ability to effectively manage our anticipated growth;

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developments relating to our competitors and our industry, including the impact of government regulation; and

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our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking

statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, new risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances, or otherwise.

You should read this Annual Report and the documents that we reference in this Annual Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify that all of our forward-looking statements by these cautionary statements.

All references to "Candel", "we", "us", "our", or the "Company" mean Candel Therapeutics, Inc. and its subsidiaries.

Summary of the Material and Other Risks Associated with Our Business

Our business is subject to numerous risks and uncertainties, including those described in Part II Item 1A. “Risk Factors” in this Annual Report on Form 10-K. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:

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We are a biopharmaceutical company with a limited operating history and have not generated any revenue from product sales. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years and may never achieve or maintain profitability. Our net loss was $36.1 million and $17.7 million for the years ended December 31, 2021 and 2020, respectively.

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We will need to raise substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate some of our product development programs or commercialization efforts.

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Our business is dependent on the success of our lead product candidate, CAN-2409, as well as CAN-3110 and any other product candidates that we advance into the clinic. All of our product candidates will require additional development before we may be able to seek regulatory approval for and launch a product commercially.

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Our preclinical studies and clinical trials may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would prevent or delay development, regulatory approval, and commercialization.

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Our product candidates are based on a novel approach to the treatment of cancer, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval, if at all.

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Even if we receive marketing approval for our current or future product candidates, our current or future product candidates may not achieve broad market acceptance, which would limit the revenue that we generate from their sales.

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The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are not able to obtain, or experience delays in obtaining, required regulatory approvals, we will not be able to commercialize CAN-2409, CAN-3110 and future product candidates as expected, and our ability to generate revenue may be materially impaired.

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The FDA’s agreement to a Special Protocol Assessment with respect to the study design of our Phase 3 clinical trial of CAN-2409 in newly diagnosed localized prostate cancer in intermediate and high risk patients does not guarantee any particular outcome from regulatory review, including ultimate approval, and may not lead to a successful review or approval process.

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Some of our product candidates are being and may continue to be studied in third-party research and clinical trials sponsored by organizations or agencies other than us, or in investigator-initiated clinical trials, which means we will have minimal or no control over the conduct of such trials and which may adversely affect our ability to obtain marketing approval or certain regulatory exclusivities.

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Changes in product candidate manufacturing or formulation may result in additional costs or delay.

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The ongoing COVID-19 pandemic, which began in late 2019 and has spread worldwide, may affect our ability to complete our ongoing clinical trials and initiate and complete other preclinical studies, planned clinical trials or future clinical trials, disrupt regulatory activities, disrupt our manufacturing and supply chain, or have other adverse effects on our business and operations. In addition, the ongoing COVID-19 pandemic has caused substantial disruption in the financial markets and may adversely impact economies worldwide, both of which could result in adverse effects on our business, operations and ability to raise capital.

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If the government or third-party payors fail to provide adequate coverage, reimbursement and payment rates for our product candidates, or if health maintenance organizations or long-term care facilities choose to use therapies that are less expensive or considered a better value, our revenue and prospects for profitability will be limited.

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If the manufacturers upon which we may rely fail to produce our product candidates in the volumes that we require on a timely basis, or fail to comply with stringent regulations applicable to biopharmaceutical manufacturers, we may face delays in the development and commercialization of, or be unable to meet demand for, our product candidates and may lose potential revenues.

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The transition of our manufacturing operations to a third-party contract manufacturer may result in further delays or expenses, and we may not experience the anticipated operating efficiencies.

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Our rights to develop and commercialize certain of our product candidates are subject and may in the future be subject, in part, to the terms and conditions of licenses granted to us by third parties. If we fail to comply with our obligations under our current or future intellectual property license agreements or otherwise experience disruptions to our business relationships with our current or any future licensors, we could lose intellectual property rights that are important to our business.

PART I

Item 1. Business.

Overview

We are a late clinical stage biopharmaceutical company focused on helping patients fight cancer with oncolytic viral immunotherapies. Our engineered viruses are designed to induce immunogenic death through direct viral-mediated cytotoxicity in cancer cells, thus releasing tumor neo-antigens and creating a pro-inflammatory microenvironment at the site of injection. Our approach combines an in-depth knowledge of viral immunotherapy with extensive clinical experience across a wide range of indications. Based on the broad range of data that we have generated from our preclinical models and clinical trials using our approach, we have observed what we believe to be systemic immune response against locally injected tumors and their distant metastases. We have established two oncolytic viral immunotherapy platforms based on novel, genetically modified adenovirus and herpes simplex virus (HSV) constructs. In our clinical results to date from CAN-2409, our lead product candidate from our adenovirus platform, and CAN-3110, our lead product candidate from our HSV platform, we have observed that these candidates may have the potential to address significant unmet patient need and improve clinical outcomes in novel indications across broader patient populations.

In non-small cell lung cancer (NSCLC), we have observed monotherapy activity of CAN-2409 in a Phase 1 biomarker focused window of opportunity trial. In 2020, we initiated a Phase 2 clinical trial evaluating CAN-2409 in combination with PD-(L)1 checkpoint inhibitors for patients with inadequate response to PD-(L)1 checkpoint inhibitors. This open label trial is targeting enrollment of approximately 96 patients with stage III/IV NSCLC in three separate cohorts.The cohorts are defined based on response to checkpoint inhibitors at the time of enrollment. Patients will continue treatment with their initial checkpoint inhibitor and CAN-2409 will be added to their regimen. The primary efficacy endpoint for this trial is response rate measured by response evaluation criteria in solid tumors (RECIST) and we expect to report safety and initial clinical activity in the second quarter of 2022.

We are also evaluating CAN-2409 in newly diagnosed high-grade glioma. The FDA has granted CAN-2409 fast track designation for use in this setting in combination with standard of care surgery and chemoradiation. We intend to initiate a potential registrational Phase 3 trial in this indication in the middle of 2022.

Our most advanced product candidate, CAN-2409, is an off-the-shelf adenovirus product candidate (intended to be available as needed via prescription) combined with the prodrug valacyclovir that has generated promising clinical activity across a range of solid tumor indications, including our lead indication of prostate cancer. We are currently conducting, as part of our most advanced CAN-2409 program, a Phase 3 clinical trial in the United States under a Special Protocol Assessment, or SPA, with the U.S. Food and Drug Administration (FDA) for CAN-2409 in patients with newly diagnosed localized prostate cancer who have an intermediate- or high-risk for progression. We completed enrollment for this trial in September 2021 and we expect a final data readout in 2024.

In addition, we are advancing development of our HSV platform product candidates for solid tumor indications. Our lead HSV product candidate, CAN-3110, is currently in an ongoing investigator-initiated Phase 1 clinical trial in our initial target indication of recurrent high-grade glioma, and we reported additional biomarker results in November 2021. We are also designing novel candidates based on our HSV platform for the treatment of solid tumors.

Our oncolytic viral immunotherapy approach utilizes intratumoral administration of genetically engineered viruses to selectively induce tumor cell death and elicit an innate and adaptive anti-tumor immune response. Local delivery enables us to achieve these effects while aiming to minimize systemic toxicity. The immune cells induced by these viral immunotherapies are believed to target patients’ specific tumor antigens, potentially improving responses in immunologically “hot” tumors while at the same time infiltrating the tumor microenvironment, transforming non-inflamed “cold” tumors with limited immune response into “hot” tumors. In our data from our clinical studies in patients with cancer, we have observed increases in the expression of immune checkpoints PD-1, PD-L1 and CTLA-4 following treatment with CAN-2409 supporting the evaluation of combinations with immune checkpoint inhibitors (ICI) such as anti-PD-(L)1 that, typically, are only efficacious in patients with immunologically “hot” tumors. While our product candidates are administered directly into the tumor, we have observed systemic immune response in our preclinical studies and clinical trials that may indicate the potential of CAN-2409 and CAN-3110 to induce systemic immune response against distal, uninjected tumors, also known as an “abscopal” effect.

We believe oncolytic viral immunotherapy is among the most promising cancer treatment modalities today. Treatment with oncolytic viral immunotherapy has already been clinically validated through talimogene laherparepvec (Imlygic, Amgen), the first FDA-approved intratumoral oncolytic virus. Our goal is to further improve patient outcomes from oncolytic viral immunotherapies by selecting the optimal vector, specific transgenes and clinical indications for each

tumor type while optimizing product candidate attributes, such as high-titer formulation, intratumoral administration, and storage conditions that could potentially lower logistical barriers for patients and clinicians.

Impact of COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus, or COVID-19, a global pandemic, or the COVID-19 pandemic, which continues to spread throughout the United States and worldwide. The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition and results of operations is highly uncertain and will depend on future developments that cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and actions taken by government authorities and businesses to contain or prevent the further spread of COVID-19. For instance, a recurrence or continuation of COVID-19 cases, including new variants, could cause a more widespread or severe impact on commercial activity depending on where infection rates are highest. If we or any of the third parties with whom we engage were to experience any additional shutdowns or other prolonged business disruptions as a result of the ongoing COVID-19 pandemic, our ability to conduct our business in the manner and on the timelines presently planned could be materially or negatively affected, which could have a material adverse impact on our business, results of operations and financial condition.

We have been carefully monitoring the ongoing COVID-19 pandemic and its impact on our business and have taken important steps to help ensure the safety of our employees and their families and to reduce the spread of COVID-19. We have established a flexible work policy for all employees under which we encourage all of our employees to work from the office or home as they feel appropriate. Those employees performing or supporting business-critical operations, such as certain members of our laboratory and facilities staff are working on site on a daily basis. For those employees, who come to work at our facility, we have implemented stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID-19 pandemic. We have also maintained efficient communication with our partners and clinical sites during the COVID-19 pandemic. We have taken these precautionary steps while maintaining business continuity so that we can continue to make progress on our programs. While we have experienced delays in enrollment and site closures at certain of our third-party clinical trial sites, these delays have not had a material impact on our development timelines for our product candidates. We will continue to monitor developments as we address the disruptions and uncertainties relating to the COVID-19 pandemic. See the “Risk Factors” section for a discussion of the potential adverse impact of the COVID-19 pandemic on our business, financial condition and results of operations.

Our Pipeline

We have an advanced pipeline comprised of seven clinical trials based on our two lead product candidates, CAN-2409 and CAN-3110. In addition, we own exclusive development and commercial rights for our product candidates in major territories including the United States, Europe and Asia.

Our pipeline is set forth below:

CAN-2409, formerly known as gene mediated cytotoxic immunotherapy, or GMCI, is our most advanced product candidate. It is a replication deficient adenovirus that has been genetically modified to encode the enzyme thymidine kinase. This enzyme activates an orally administered prodrug, valacyclovir, a widely available, generally well-tolerated antiviral at the site of the tumor, generating a powerful patient-specific anti-tumor immune response. We believe there are three key aspects of the mechanism of action. First, the direct, cellular killing activity is based on the transformation of valacyclovir into a toxic nucleotide analogue that disrupts DNA synthesis and repair. This phenomenon occurs preferentially in actively dividing cancer cells, thereby providing tumor specificity. This DNA repair inhibition is also hypothesized to be the mechanistic explanation behind the encouraging pre-clinical and clinical activity of CAN-2409 in combination with radiotherapy, a treatment known to cause DNA breaks requiring repair for continued cellular survival. Second, adenoviral capsid proteins themselves also directly trigger an immunologic response through the establishment of a proinflammatory tumor microenvironment, releasing important cytokines such as GM-CSF and IL-6. We believe this contributes to the potent activation of the patient’s own immune system that plays a critical role in the CAN-2409 mechanism of action. Finally, the localized death of tumor cells releases numerous antigens that can be recognized by the patient’s own immune system, thereby training the immune system to target and destroy similar cancer cells that have spread to other sites in the body.

CAN-2409 has been administered to over 700 patients with cancer to date, over 500 of whom are in ongoing, placebo-controlled randomized trials. In total, we have conducted more than 10 clinical trials with CAN-2409 in a range of solid tumor indications. We have seen encouraging clinical activity and a favorable tolerability profile with CAN-2409 in both monotherapy and combination settings with radiotherapy, immune checkpoint inhibitor therapy, androgen deprivation therapy (ADT), chemotherapy and surgery. Based on the totality of our clinical data generated to date, we are currently pursuing indications in lung, pancreatic, brain, and prostate cancer, which we believe all have great potential to address unmet need.

In NSCLC, we have observed monotherapy activity of CAN-2409 in a Phase 1 biomarker focused, window of opportunity trial. In 2020, we initiated a Phase 2 clinical trial evaluating CAN-2409 in combination with PD-(L)1 checkpoint inhibitors for patients with inadequate response to PD-(L)1 checkpoint inhibitors. This open label trial is targeting enrollment of approximately 96 patients with stage III/IV NSCLC in three separate cohorts.The cohorts are defined based on response to checkpoint inhibitors at the time of enrollment. Cohort 1 addresses patients with stable disease. Cohort 2 enrolls patients with progressive disease after at least 18 weeks of checkpoint treatment. Cohort 3 enrolls patients whose tumors are refractory to checkpoint therapy, with progressive disease observed at their first evaluation. Patients will continue treatment with their initial checkpoint inhibitor and CAN-2409 will be added to their regimen. The primary efficacy endpoint for this trial is response rate measured by RECIST, and we expect to report safety and initial clinical activity in the second quarter of 2022.

We have also completed a Phase 1b/2 clinical trial evaluating CAN-2409 in patients with high-grade glioma. Our results demonstrated a statistically significant improvement in overall survival of approximately 3.6 months over standard of care alone (17.1 months versus 13.5 months, p=0.0417) in the overall trial population of high-grade glioma. Additionally, in a pre-specified subgroup of patients diagnosed with glioblastoma who underwent gross total surgical resection, a procedure consisting of the removal of more than 95% of the tumor, an improvement of overall survival of approximately 8.8 months over standard of care alone was demonstrated (25.1 months versus 16.3 months, p=0.0120). We are currently planning a Phase 3 trial in this indication and anticipate commencement in the middle of 2022. CAN-2409 has also received Fast Track designation for use in combination with standard of care surgery and chemoradiation to improve overall survival in adults with newly diagnosed glioblastoma. We have also received Orphan drug designation for the use of CAN-2409 for treatment of malignant brain tumors, including high-grade glioma. In addition, we have established a clinical collaboration with both Bristol-Myers Squibb Company (BMS) and the Adult Brain Tumor Consortium (ABTC), a National Cancer Institute funded cooperative group of leading brain cancer centers that facilitates the execution of novel, early-stage trials at some of the leading brain cancer treatment centers. This collaboration has provided support for our ongoing Phase 1 clinical trial in high-grade glioma patients, testing the combination of CAN-2409 and nivolumab (Opdivo, BMS). We anticipate reporting safety and initial efficacy data from this trial by the end of 2022.

We are conducting a Phase 3 clinical trial with CAN-2409 under agreement with the FDA through the SPA process in newly diagnosed localized prostate cancer in intermediate- and certain high-risk patients in combination with the standard of care that comprises radiotherapy and optional ADT. Our SPA provides FDA concurrence that our key endpoints and specific critical elements of our trial design are adequate to support a future marketing application if, among other things, we achieve the primary endpoint in the trial. The clinical trial is randomized, triple-blinded and placebo-controlled. It targeted enrollment of approximately 700 patients and was fully enrolled in September 2021 with final data readout anticipated in 2024. We have also received Fast Track designation by the FDA for the development of CAN-2409 for the treatment of localized, primary prostate cancer in combination with radiotherapy to improve the local control rate, decrease recurrence and improve disease-free survival. We expect that if the trial is successful and if we obtain FDA approval, CAN-2409 could be the first new FDA approved pharmacologic treatment available in over 30

years as a first line therapeutic for the over 100,000 patients who are newly diagnosed with localized prostate cancer each year in the United States.

We have also completed enrollment for a Phase 2 clinical trial with CAN-2409 as monotherapy in newly diagnosed prostate cancer patients under active surveillance. This trial has recruited 187 patients with low-, intermediate- and certain high-risk localized prostate cancer. We expect to announce top line data in 2023. We believe that this trial, if successful, could position CAN-2409 as a first line monotherapy treatment of patients with low- and intermediate-risk prostate cancer, thereby meaningfully expanding the addressable patient population.

Our second oncolytic viral immunotherapy platform is based on a novel, next generation, genetically modified HSV that induces tumor specific oncolysis. The HSV platform enables generation of both replication-competent and replication-deficient viral product candidates as well as capacity to clone, in the vector, up to five transgenes that will allow us to optimize our virus profile for different tumor settings. CAN-3110, our first HSV product candidate, has been engineered for enhanced specificity and tumor cell killing, while minimizing toxicity on healthy tissue. CAN-3110 was formerly known as rQNestin34.5v.2. An investigator-initiated Phase 1 clinical trial is ongoing with CAN-3110 in our initial target indication of recurrent high-grade glioma and we reported additional biomarker results in November 2021. Based on the molecular targeting of CAN-3110, we believe that it could be evaluated in an expanded range of indications in the future, such as other neurologic tumors, melanoma, gastrointestinal stromal tumors, thyroid tumors and breast cancer. In addition, we are pursuing novel solid tumor discovery programs based on our HSV platform.

Corporate History and Our Team and Investors

We were incorporated in Delaware in June 2003 as Advantagene, Inc. (Advantagene). Advantagene was built on a strong scientific foundation and developed CAN-2409 over years of research and development. In December 2019, Advantagene acquired substantially all the assets of Periphagen and in September 2020, licensed CAN-3110 from MGB. Following the combination of Advantagene with the HSV discovery platform assets acquired from Periphagen, a company focused on engineering HSV as a gene therapy vector, we formally changed our name to Candel Therapeutics, Inc. in December 2020.

We were founded and are now led by a team of renowned drug developers, oncolytic viral immunotherapy experts, oncologists, immunologists and biotech business leaders.

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Paul Peter Tak, M.D., Ph.D., FMedSci. Dr. Tak, our President and CEO, joined us in September 2020 and most recently served as President and CEO of Kintai Therapeutics, which later merged with Senda Bioscience. Prior to his position at Kintai, he served as Senior Vice President, Chief Immunology Officer, and Global Development Leader at GlaxoSmithKline, where he created a pipeline of medicines in immunology and oncology. He has also trained as an internist, immunologist, and rheumatologist at Leiden University Medical Center and served as a clinical associate professor of medicine at UCSD and professor of medicine at the AMC/University of Amsterdam. Dr. Tak also founded the gene therapy company Arthrogen and the immunometabolism company Sitryx.

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Francesca Barone, M.D., Ph.D. Dr. Barone is our Chief Scientific Officer. Dr. Barone previously served as our Vice President, Head of Research. Prior to starting at Candel, she was Vice President and Head of Experimental Medicine at Kintai Therapeutics, which later merged with Senda Bioscience. Prior to her position at Kintai, Dr. Barone held the academic position of Reader in Translational Rheumatology and Academic Director of Business Engagement for the College of Medical and Dental Sciences at the University of Birmingham. While there, she was also the Director of the laboratories for Immuno-phenotyping in the Institute of Translational Medicine. Dr. Barone earned her M.D. and completed a specialization in Rheumatology from the University of Rome, Sapienza, with merit and her Ph.D. from King’s College London.

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Nathan Caffo. Mr. Caffo isour Chief Business Officer. He was most recently the Chief Business Officer of ALX Oncology where he played a key role in the company’s initial public offering. Prior to ALX Oncology, he was the President and CEO of Presage Biosciences, a company focused on intratumoral delivery of oncology agents. To date, Mr. Caffo has raised over $300 million in equity financing over his career.

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John Canepa. Mr. Canepa is our Chief Financial Officer. He was most recently Senior Advisor, Acting CFO at Frequency Therapeutics, where he completed several public and private financings including the company’s initial public offering. Prior to his position at Frequency Therapeutics, Mr. Canepa served as CFO of Agilis Pharmaceuticals and was instrumental in its sale to PTC Therapeutics. Prior to that, he was COO and CFO of Asterand Bioscience and led its sale to a private equity group. Mr. Canepa was an audit partner at Arthur Andersen for 23 years where he led the firm’s worldwide life sciences practice.

We believe in the power of collective intelligence when tackling important challenges. We have therefore sought to involve external perspectives through the formation of our Research Advisory Board that includes eminent immunologists, drug development and oncology experts. Members of the Research Advisory Board are selected based on their ability to contribute meaningful viewpoints to Candel’s internal scientific, clinical and strategic discussions in

which they directly participate. There is no fixed term of service for Research Advisory Board members. Some Research Advisory Board members are compensated as described below.

The current members of our Research Advisory Board are as follows:

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James Allison, Ph.D., Chair of the Department of Immunology, MD Anderson Cancer Center, Director of the Parker Institute for Cancer Research, Awardee of 2018 Nobel Prize in Physiology or Medicine

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Edward J. Benz, Jr., M.D., President and CEO Emeritus, Dana-Farber Cancer Institute

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Henry Brem, M.D., Director, Department of Neurosurgery, Professor of Neurosurgery, Johns Hopkins University

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Roy Herbst, M.D., Ph.D., Chief of Medical Oncology, Yale Cancer Center

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Philip Kantoff, M.D., FormerChair, Department of Medicine, Memorial Sloan Kettering Cancer Center

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Padmanee Sharma, M.D., Ph.D., Professor of Genitourinary Medical Oncology and Immunology, MD Anderson Cancer Center

Dr. Benz is also a member of our Board of Directors.

Our Strengths

We believe our experience and capabilities in oncolytic viral immunotherapy will bring significant benefit to cancer patients who are underserved by the current standard of care, particularly in prostate and brain cancer. We believe our key strengths are:

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Deep clinical and development experience in innovative oncolytic viral immunotherapy. We are leveraging more than 20 years of development history, and have deployed our lead product candidate CAN-2409 in a range of oncology indications. These efforts have generated extensive clinical data in hundreds of patients and has driven our current development focus. We continue to leverage this depth of clinical data to select new indications of interest and to efficiently execute on our clinical development strategy. We are currently developing our two product candidates in seven clinical trials.

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Two potentially registrational trials for our CAN-2409 programs in localized prostate and high-grade glioma, indications with significant unmet need supported by its safety and tolerability profile and encouraging Phase 2 data.

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Localized prostate cancer: Current therapeutic options for early treatment of localized prostate cancer are limited and generally characterized by poor tolerability. A significant proportion of patients experience disease progression after receiving standard of care treatment. Based on our Phase 2 trial, intermediate-risk patients receiving CAN-2409 demonstrated failure rates which were 75% lower than the outcomes reported in four large, contemporaneous clinical trials in patients with comparable disease status who were treated with similar radiotherapy protocols, although this is limited because we have not conducted head-to-head studies. Based on the strength of this Phase 2 data, we are currently conducting a Phase 3 potentially registrational trial in localized prostate cancer under an SPA agreement with the FDA and expect a final data readout in 2024.

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High-grade glioma: There is presently a large unmet need in the first line patient population with current treatment options, such as temozolomide, demonstrating an overall survival benefit of only 2.5 months over radiotherapy alone. In our Phase 1b/2 clinical trial of patients with newly diagnosed high-grade glioma, we compared the administration of CAN-2409 combined with standard of care to the effects of standard of care alone. In this overall population, we demonstrated a statistically significant increase in median overall survival (mOS) of 17.1 months compared to 13.5 months observed in the standard of care arm. We believe that the beneficial effect of CAN-2409 can be further improved in the context of a precision medicine approach based on the pre-specified subgroup of patients with glioblastoma whose surgery achieved a gross total resection. In this population, CAN-2409 with standard of care demonstrated a mOS of 25.1 months compared to 16.3 months in the standard of care arm. We are pursuing this precision strategy and expect to commence our Phase 3 potentially registrational clinical trial in high-grade glioma in the middle of 2022.

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Phase2 trial of CAN-2409 in combination with immune checkpoint inhibitors in NSCLC: Immune checkpoint inhibitors have become standard of care in NSCLC. However, a majority of patients ultimately progress on these treatments. New treatment options that improve the number of patients who respond and that increase the durability of these responses are urgently needed. We have an ongoing Phase 2 trial that combines CAN-2409 with immune checkpoint inhibitors in patients with NSCLC and expect safety and initial efficacy data by the end of 2022.

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Two oncolytic viral immunotherapy platforms provide versatility and optionality to pursue a range of solid tumor indications. With our clinical stage engineered adenovirus and HSV platforms, we can

approach indications of interest through multiple modalities, expanding our potential to address patients in areas with high unmet need. For example, we are currently conducting clinical trials in two different brain cancer indications with product candidates engineered from our adenovirus and HSV platforms, CAN-2409 and CAN-3110, respectively.

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Attractive commercial profile and ownership of our programs. For each investigational product, there is an opportunity to expand into new indications ('pipeline in a product'). We currently own development and commercialization rights for our programs in major markets, including the United States, Europe and Asia, allowing us to control development and seek approval in those areas as we prepare our commercialization efforts.

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Manufacturing strategy. We expect that our cost-of-goods will be substantially lower than cell- and antibody-based therapies because of our high-yield manufacturing process. We plan to manufacture our therapeutics for commercialization using third-party manufacturers.

Our Strategy

Our goal is to develop best-in-class oncolytic viral immunotherapies to transform the lives of cancer patients. We plan to develop and commercialize our two lead product candidates, CAN-2409 and CAN-3110, for the treatment of a broad range of solid tumor indications, while continuing to build our pipeline through our discovery platform. Key elements of our strategy include the following:

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Advance the late stage development of, and seek regulatory approval for, our lead product candidate, CAN-2409, in newly diagnosed, localized prostate cancer. We are currently conducting a potentially registrational Phase 3 clinical trial in intermediate- and high-risk patients in combination with the standard of care, radiotherapy. If approved, we believe CAN-2409 could be a first-in-class drug for localized prostate cancer patients with the potential to reduce disease progression and recurrence.

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Advance the development of, and seek regulatory approval for, CAN-2409 in both monotherapy and combination therapy for high-grade glioma. We have completed a Phase 2 clinical trial that showed a statistically significant overall survival benefit of approximately 8.8 months in first line glioblastoma patients who underwent gross total resection. We plan to initiate a Phase 3 trial employing a precision medicine approach in this indication in the middle of 2022. We have also entered into a collaboration with BMS and ABTC for a Phase 1b clinical trial in high-grade glioma patients testing the combination of CAN-2409 and nivolumab (Opdivo, BMS), with safety and initial efficacy data expected by the end of 2022.

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Advance the clinical development of CAN-3110, an oncolytic HSV with tumor-specific enhanced replication potency. An investigator-initiated Phase 1 clinical trial is ongoing in recurrent glioblastoma with additional biomarker data received in November 2021. This trial will evaluate the activity of CAN-3110 in later stage disease, where we believe a replicating virus may present therapeutic advantages.

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Advancethe development of CAN-2409 in patients with inadequate responses to standard of care immune checkpoint inhibitors. A phase 2 trial that evaluates CAN-2409 in combination with immune checkpoint inhibitors is currently underway, with initial data from this open label trial expected in the second quarter of 2022.

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Continue to expand the development of CAN-2409 in other solid tumor indications, such as pancreatic cancer. We believe we can leverage our broad clinical experience to expand the development of CAN-2409 in other indications. We have initiated a Phase 2 clinical trial in patients with advanced non-metastatic pancreatic adenocarcinoma. Our experience in these indications may enable us to expand in the future into other indications.

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Leverage our HSV oncolytic viral immunotherapy platform to develop additional HSV product candidates. Our platform enables rapid vector engineering and generation of new candidates. Key attributes of HSV that allow targeted modifications to the virus are high capacity for genetic cargo, and the ability of our platform to generate both replication incompetent and competent agents depending on the demands of a particular application.

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Develop strategic partnerships to maximize the value of our current and future product candidates. In order to advance treatment options for a large number of patients, we may partner with other companies with complementary resources to maximize the value of our current and future product candidates. Such partnerships may allow us to pair CAN-2409, CAN-3110 and our future product candidates with other novel agents owned by strategic partners. Partnerships may also help realize the full potential of our product candidates in markets where we are unlikely to pursue development or commercialization on our own. We intend to maintain significant economic interest in our product candidates and selectively consider partnership opportunities.

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Develop commercial scale manufacturing of CAN-2409 at a contract manufacturer and complete our planned cGMP manufacturing facility for the manufacture of CAN-3110. We will rely on third party contract manufacturers for commercial scale manufacturing of our adenovirus product candidate, CAN-2409. We expect to develop clinical scale, fully integrated manufacturing capabilities at our facility in Needham, Massachusetts for clinical trial product supplies.

Our Market Opportunities in Localized Prostate Cancer, Non-Small Cell Lung Cancer and High-Grade Glioma

The three indications where we have the most advanced clinical trials are localized prostate cancer, non-small cell lung cancer, and high-grade glioma. These types of cancer present substantial market opportunities.

Prostate cancer is the second leading cause of cancer death among men in the United States. The prostate cancer therapy market is estimated to be approximately $9.9 billion in 2019 growing to over $16.1 billion by 2026. Although most deaths occur in patients with later stage metastatic disease, the majority of prostate cancer patients roughly 150,000 annually in the United States are initially diagnosed in the early stage of disease. Standard of care in this early, localized setting, leaves substantial need unaddressed. The primary interventions are surgery, radiotherapy and androgen deprivation therapy, also known as chemical castration. These treatments have high incidence of potentially life altering side effects, including incontinence and erectile dysfunction. There is therefore a significant unmet need for a novel treatment able to forestall or prevent progression to later stages of disease without the burdensome side effects associated with the current standard of care.

In recent years, immune checkpoint inhibitors (ICIs), specifically PD-1 directed agents, have transformed the treatment paradigm of NSCLC and become a backbone therapy for this indication. Over a half dozen immune checkpoint inhibitor products have been approved in a number of cancer indications, and there are numerous other related drug candidates in preclinical and clinical development. Global sales for ICIs in 2019 were approximately $23 billion with NSCLC, accounting for between 50% and 55% of overall sales. The commercial opportunity in NSCLC is significant. Drug treated patient populations in the US for 2020 are estimated at 75,160; 47,920 and 21,990 in first-, second- and third-line treatment, respectively. ICI use in NSCLC has become standard of care with approximately 49% of first-line patients in the United States being treated with an ICI alone or in combination with other agents.

Glioblastoma is the most common form of brain cancer, comprising approximately 90% of high-grade gliomas, and has an extremely poor prognosis. Fewer than 10% of patients survive longer than 5 years, with a median overall survival of less than 15 months. The primary standard of care treatments are surgery, radiotherapy and chemotherapy. None of these treatments offer the potential of a cure, with nearly all patients eventually succumbing to their cancer. While the annual number of drug-treatable patients with glioblastoma in the United States is approximately 16,000, limited treatment options and the substantial unmet need present a significant market opportunity. One illustrative example is the agent temozolomide, which demonstrated improvement in median overall survival of less than three months compared to standard of care, yet still generated peak annual revenue of over $1 billion.

Our Approach

Conventional cancer therapies (chemotherapy, radiotherapy and surgery) often do not eradicate 100% of the tumor cells, which often leads to tumor progression or recurrence. Deep and durable responses, therefore, are still elusive for many cancer patients. Traditionally, surgery and/or radiotherapy are used for local tumor debulking whereas chemotherapeutic agents target systemic eradication of tumor cells. These treatment modalities, however, are often limited by toxicity.

Immunotherapy is a relatively new treatment modality that has expanded the anti-cancer treatment paradigm. FDA-approved immunotherapies include cytokines, cell therapies and antibodies, including checkpoint inhibitors. Much focus has been placed on harnessing the effector T cell arm of the immune system for tumor specific immunity. Adoptive T cell therapy has shown positive results but with limited activity in solid tumors, and is not scalable for widespread use. Vaccine approaches range in complexity from peptide antigens to autologous or allogeneic tumor cell products. The advantage of the single antigen approaches is that they can be easily manufactured and produced, however, they have the fundamental disadvantage of being potentially irrelevant for a patient’s specific tumor or immune system or easily bypassed by resistant clones. Cellular vaccines are not easily scalable and allogeneic vaccines may not bear the relevant antigens expressed by a patient’s tumor. Immune checkpoint inhibitors, or ICI, such as anti-PD-1 and anti-PD-L1 antibodies, have transformed the treatment paradigm for different cancer indications. However, only approximately 15 to 40% of patients overall respond to such treatment.

We are focused on the development of oncolytic viral immunotherapy approaches, which are based on an extensive history of research. Originally, the mechanism of action of those agents was believed to be based only on the ability of the virus to induce cancer cell lysis and to resolve tumors. Later, it was demonstrated that viral immunotherapy may induce immunogenic cell death. This effect may be enhanced by the pro-inflammatory effects of the viral capsid proteins. With the dramatic emergence of ICIs and immunotherapy as a core treatment modality, the importance of the immunostimulatory aspect of viral-mediated approaches became more widely evident. The currently understood

generalized mechanism of action of oncolytic viral immunotherapies is unique in combining both an anti-tumor cytotoxic component and an immune-stimulatory component. Together, these modalities lead to an “in-situ vaccination” effect against the injected tumor followed by an effect on uninjected distant metastases.

Pairing this therapeutic approach with ICI treatment is based on a strong mechanistic rationale and has shown promise in experimental models of cancer. It has been observed that tumors that are least responsive to ICI are commonly characterized by low levels of lymphocytic infiltration and low or no PD-L1 expression levels; they are referred to as “cold” tumors. One of our areas of focus is the conversion of immunologically suppressed “cold” tumors into immunologically active “hot” tumors, thereby increasing their responsiveness to ICI.

Specific aspects of the mechanism of action of viral immunotherapy include the following:

Direct anti-tumor cytotoxic activity. Tumor specific viral mediated oncolysis is achieved by both precise delivery of the engineered virus to the tumor as well as the virus’ ability to selectively replicate within a cancer cell. Various approaches have been applied in different programs to increase the specificity and potency of viral toxicity aimed at tumor cells, including genetic modifications and use of prodrugs.

Broad stimulation of anti-tumor immunity. The immunogenic cell death driven by oncolysis results in a potent local and systemic immune stimulation with the increased expression of proinflammatory cytokines, chemokines and adhesion molecules. This, in turn, promotes the activation of both the innate and adaptive arms of the immune system in the presence of highly immunogenic viral components. This broad response commonly includes recruitment and activation of antigen-presenting cells and effector immune cells to the site of the tumor.

Priming of the immune system against tumor antigens. The lysis of cancer cells leads to the exposure of tumor-specific antigens. This early effect, combined with intratumoral immune cell infiltration and activation, leads to antigen presentation and initiation of a local adaptive immune response targeted against a set of tumor antigens expressed by the patient’s cancer cells.

Development of a systemic immune memory response. Viral immunotherapy induces the development of a long-lasting systemic immune surveillance against the antigens associated with the injected tumor, and consequently, tumor antigens expressed at metastatic sites. This, leads to a cytotoxic immune response against the distant tumor cells, also known as an abscopal effect.

Desirable clinical properties. Viral immunotherapy has attributes that are important for a cancer therapeutic. The agents are off-the-shelf, and while they have been shown to stimulate immune responses in certain patients, there is no requirement to modify them for each patient, unlike other cellular therapy approaches. The first viral immunotherapy (Imlygic, Amgen) was approved by the FDA in 2015, providing support that additional agents in this class may have similar potential. Furthermore, safety data shown in the clinical trials and the ultimate approval of Imlygic, supports the ability to combine viral immunotherapy with other agents due to the potential for fewer overlapping side effects.

Our Product Candidates: Two platforms and two clinical candidates to address diverse clinical needs

Our two platforms, one based on adenovirus and the other based on HSV, provide different and complementary sets of attributes, which allows us to utilize the product candidate that is best suited for a particular clinical application.

Key attributes across our oncolytic viral immunotherapy platforms include:

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Targeting a Wide Range of Cell Types. Product candidates from both the HSV and adenoviral platforms can transduce a diverse range of cell types, which we believe will allow us to address many different forms of cancer.

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Off-the-Shelf Product. A standardized product intended to be available as needed via prescription supports straightforward clinical administration, simplified manufacturing and supply chain management.

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Intratumoral Route of Administration. Both of our product candidates are administered by direct injection into the tumor site. This aims to maximize immune stimulation and minimize systemic toxicity, factors that are believed to be suboptimal with intravenous administration. For the indications that we selected, this is a straightforward procedure, leveraging standard of care medical procedures, such as intra-prostate injection or delivery during diagnostic (bronchoscopy) or therapeutic (neurosurgery) procedures.

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Cost-efficient Manufacturing. Both product candidates are relatively inexpensive to manufacture, particularly when compared to other biologic or cellular therapy treatments. We believe that there are several qualified contract manufacturers with experience manufacturing adenovirus and HSV products.

Key attributes of our Adenoviral platform include:

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Targeting a Wide Range of Cell Types. Adenoviruses can efficiently transduce cells from different lineages. This allows us to apply this platform to many different tumor types.

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Immunogenic Virus Particle. The adenoviral virus particles are strong simulators of the innate immune system, a property that contributes to immune activation at the site of administration.

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High-Titer Formulation. Adenovirus can be formulated at high titers, facilitating the administration of low volume doses sufficiently potent to induce strong activity, particularly in volume sensitive indications such as brain cancer.

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Product Stability. The formulation deployed in clinical trials has stability at refrigerator temperatures (4°C), supporting use at less specialized and therefore widely accessible sites such as community-based private clinics.

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Non-Replicating Design. Engineering the adenovirus to remove replication ability reduces the potential for viral shedding, something which is particularly important in clinical applications such as prostate cancer. There is no need for in vivo amplification as the virus is highly immunogenic and can be administered at high titers.

Key Attributes of our HSV platform include:

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Amenable to Engineered Modifications. Our knowledge of virus biology allows us to make modifications, such as those already present in CAN-3110 to target certain tumor types. The tumor specific replication ability of CAN-3110 is regulated by the expression of ICP34.5, a gene encoding for a protein that permits viral replication even in the presence of the interferon response that is normally able to quell viral infection. In the CAN-3110 construct, ICP34.5 expression is driven in gliomas, but not in healthy brain tissue, thereby enabling replication specifically in the context of brain tumors. We believe our HSV platform will allow us to implement additional genetic modifications to leverage the use of CAN-3110 in high-grade glioma and in other tumor types.

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Capacity for Replication. There is a strong rationale for use of a replication-competent virus that is designed to provide potent oncolysis and in vivo virus amplification in high tumor volume or less anatomically accessible tumors, such as recurrent high-grade glioma.

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Lower Immunostimulatory Potency. The engineered HSV viral particle is able to persist and replicate at the site of the tumor. This is particularly important in larger tumors formed in immune privileged, highly immunosuppressive sites; supporting the use of CAN-3110 in recurrent high-grade glioma.

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High Capacity for Genetic Cargos. Our HSV platform allows the introduction of large genetic cargos, such as multiple immunomodulatory genes that may further enhance the anti-tumor immune response.

Our Lead Product Candidate: CAN-2409

We believe the adenovirus-based CAN-2409 has advantageous properties that differentiate from other viral immunotherapies. Namely, CAN-2409:

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Has shown activity in a range of solid tumor types and in late-stage clinical trials.

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Has been dosed in hundreds of patients and has shown a favorable tolerability profile.

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Is engineered to be potently immunogenic but non-replicating with the goal of maximizing the immune response while minimizing the risk for local and systemic toxicity.

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Can be stored at 4°C, facilitating the use of CAN-2409 in out-patient clinics. This aspect is particularly favorable in indications such as prostate cancer, where patients are often monitored in individual private practices.

CAN-2409 (international non-proprietary name: aglatimagene besadenovec) is an adenovirus-based replication-deficient engineered gene construct encoding the thymidine kinase gene derived from the herpes simplex virus. It is injected directly into the tumor or target tissue. Localized injection is intended to minimize systemic toxicities associated with systemic intravenous administration, eliminating the requirement for complex immune evasion or tumor-specific targeting mechanisms, and focuses the immune response locally against the tumor, while also activating the desired systemic anti-tumoral response. The adenoviral construct is used as a vector to transport the thymidine kinase gene into the tumor cells at the site of injection. Thymidine kinase converts generic, FDA-approved anti-herpes drugs, such as ganciclovir, acyclovir and valacyclovir, which we use as prodrugs, into a toxic nucleotide analogue. These agents are widely available, inexpensive and are generally well-tolerated. Cells transduced with thymidine kinase gene undergo immunogenic cell death after exposure to these systemically administered prodrugs.

The prodrug-derived cytotoxic nucleotide analogs are designed to inhibit DNA replication and repair, leading to the death of multiplying tumor cells, and in particular of cells undergoing repair from radiation or chemotherapy damage. This oncolytic activity is immunogenic and exposes tumor antigens that can elicit a further tumor-specific immune response. Additionally, the virus itself stimulates a marked immune response.

CAN-2409: Mechanism of action - local immune activation

Key pro-inflammatory cytokines such as GM-CSF and IL-6 as well as chemokines, adhesion molecules and costimulatory molecules are locally upregulated, resulting in an inflamed (hot) tumor microenvironment, able to further enhance T cell activation.

This local effect provides a strong mechanistic rationale for the combination of oncolytic viral immunotherapy with T cell checkpoint inhibitors such as PD-1 or PD-L1 targeting antibodies. ICI agents work by unmasking the inhibitory signals provided by PD-L1 ligands on tumor cells when bound to PD-1 receptors on T cells. By blocking this suppressive signal pharmacologically, it has been demonstrated that T cells can be unleashed to attack cancer cells and that profound clinical benefit can be achieved, but this benefit accrues only to a minority of patients. It has been hypothesized that treatment results can be significantly improved by optimizing recognition of the specific tumor antigens by the patient’s adaptive immune system using oncolytic viral immunotherapy combined with the non-specific stimulation of T cells induced by ICI treatment. It appears that a duality of signals is required: releasing the checkpoint inhibition as described earlier, coupled with the provision of a positive, stimulatory signal to T cells. The efficient presentation of tumor specific antigens by MHC class I molecules to the immune system provides just such a specific, stimulatory signal. Oncolytic viral immunotherapies have been shown to facilitate such cross presentation of tumor antigens and are therefore an attractive complement to PD-1 or PD-L1 checkpoint blockade.

The immune system is highly dynamic, with continuous trafficking of different populations of immune cells throughout the body. One outcome of this is that when T cells are locally activated against tumor-specific antigens, they can act systemically to drive an efficient immune response at sites distant from the original tumor, as is illustrated schematically in the figure above. This abscopal effect may explain the significant effects observed at distant, uninjected sites demonstrated in experimental model of cancers. Abscopal effect has been shown with CAN-2409 in a mouse model of prostate cancer. The model employed RM-1, a syngeneic prostate cell line, that was implanted both in the flanks of the mice as well as systemic, via a tail vein injection to mimic metastatic disease, resulting in the emergence of lung tumor nodules. After intratumor treatment of the flank tumor masses with either CAN-2409 and systemic prodrug, alone or in combination with radiotherapy, we observed a beneficial response in both injected and uninjected metastatic tumor. Use

of CAN-2409 resulted in a 38% mean reduction in tumor volume and, in the combination arm, a reduction of 61% in tumor volume. Notably, the number of lung nodules was reduced from 20.5 in the control arm and 22.4 in the mice that received radiotherapy to 13.0 in the CAN-2409 arm, to 6.6 when CAN-2409 was combined with radiotherapy.

CAN-2409 treatment teaches the immune system how to fight cancer in injected tumor and uninjected metastases

The activity of CAN-2409 treatment has been shown to be dependent on CD8+ T cell involvement in mouse studies that evaluated permutations of CAN-2409 treatment and T cell depletion. In the figure below, experimental data show that in mice bearing AKR flank xenografts that were treated with CAN-2409 and prodrug, significant tumor growth inhibition was observed. In contrast, mice treated with the prodrug and a negative control vector showed significantly less tumor growth inhibition, providing evidence that the specific adenoviral construct of CAN-2409 is a key factor in anti-tumor activity. Moreover, when two additional arms were treated as just described but with the addition of an antibody that depleted CD8+ T cells, very little tumor growth inhibition was observed. This supports the contention that the activity of CAN-2409 treatment is directly dependent on CD8+ T cells. Furthermore, T cells from mice that were successfully treated with CAN-2409 and prodrug were shown to be sufficient to inhibit tumor growth when mixed with AKR tumor model cells and implanted subcutaneously in mouse flanks. This activity was not observed with T cells from untreated mice, from mice that were treated with a control vector that lacked the thymidine kinase gene, or when the AKR tumor cells were xenografted alone. These data are consistent with a T cell dependent mechanism of action of CAN-2409.

CAN-2409 Mechanism of action – T cell dependent anti-tumor activity

CAN-2409 Mechanism of action – Response to CAN-2409 treatment is

transferable via CD8+ T cells in mouse models of cancer

CAN-3110 and the HSV platform technology

CAN-3110 is a modified HSV with specific properties that can be leveraged in diverse clinical indications. Namely, CAN-3110:

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Is engineered to provide oncolysis through tumor replication specifically in Nestin expressing cancer cells.

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Has demonstrated statistically significant survival benefit in preclinical models of brain cancer.

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Has demonstrated a favorable tolerability profile, not reaching a dose limiting toxicity in the dose range tested in our Phase 1 trial.

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Has shown a preliminary clinical signal in a difficult to treat brain cancer population, critically defined by a highly immunosuppressive environment.

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Has been engineered to replicate in a range of other indications characterized by Nestin expression.

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Is derived from the HSV platform that also provides the potential to support expansion of our pipeline with novel agents.

CAN-3110 is an engineered oncolytic HSV where the expression of ICP34.5, the gene responsible for viral replication, has been placed under the control of a tumor-specific Nestin promoter. This modification of the viral genome enables us to maintain the function of ICP34.5, an HSV protein that allows virus replication even in the presence of a suppressive interferon response, under a strict control and only in tumor cells.

ICP34.5 is often deleted in other HSV oncolytic viruses that may be less tumor selective with an intent of achieving favorable safety profile, but this often results in weak viruses characterized by poor replication ability and an ability to generate limited immune response.

Nestin is a cytoskeletal protein that is overexpressed in glioma cells, but it is absent in the healthy adult brain. In CAN-3110, ICP34.5 expression is controlled by the Nestin promotor enabling viral replication selectively in tumor cells. This replication-competent HSV construct provides tumor-specific cytolytic activity in animal models, while sparing healthy cells. As set forth below, data with a tool analogue of CAN-3110 in a mouse model of glioma has shown survival benefit over control vectors when the agent is administered to mice at both early and late stages of tumor growth, even after tumor implantation has led to neuropathology.

CAN-3110: HSV “Nestin 34.5” construct

Shown Survival Benefit after rQNestin (CAN-3110 tool compound) treatment in mouse model of high-grade glioma

Our technology platform enables rapid HSV vector engineering and generation of new therapeutic candidates. Our platform allows rapid and precise modifications to the virus including the insertion of high cargo capacity DNA cargo cassettes, generation of both replication incompetent and competent agents, and other attributes which provide the opportunity to optimally design HSV technologies for specific therapeutic applications in oncolytic and immunotherapeutic indications. Our team has produced and released HSV vectors for multiple human clinical trials. Our HSV discovery platform allows us to feed and fill our pipeline, building on our vast experience in developing oncolytic viral immunotherapies.

Intratumoral administration

Both CAN-2409 and CAN-3110 are intentionally administered intratumorally. We believe that directly injecting these oncolytic viral immunotherapies into a patient’s cancerous tissue helps to optimize the benefit/risk for these agents to be highly immunostimulatory at the site of the tumor, whereas systemically administered agents would need to avoid detection by the body’s immune surveillance mechanisms to avoid rapid destruction before getting to the target tumor. Intratumoral administration is straightforward and feasible in the indications that we have selected. The first FDA approved oncolytic virus, Imlygic, is intratumorally administered. Although approved, this agent has had modest commercial success, with annual peak worldwide sales under $100M. These commercial results can be explained by a variety of factors. First, Imlygic treatment missed the endpoint of improved survival. Second, at the time of Imlygic’s approval, other successful treatments became available, such as immune check point inhibitors, and BRAF/MEK inhibitors. Third, Imlygic requires -70°C storage, which necessitates specialized and expensive equipment. CAN-2409, in contrast, is stable at 4°C, which is compatible with inexpensive storage refrigerators. In summary, CAN-2409 injection is aligned with clinical practice, can be stored at regular refrigerator temperatures, and cost of goods are expected to be low.

Our CAN-2409 Programs

Localized Prostate Cancer

Prostate cancer is the second leading cause of cancer deaths in men in the United States, representing a high level of medical burden and unmet need. Approximately 200,000 men in the United States are diagnosed with prostate cancer annually, with more than 30,000 deaths each year. As shown in the chart below, of the approximately 150,000 men in the United States who were diagnosed in 2020 before their prostate cancer had metastasized, roughly 105,000 are considered intermediate- or high-risk of progression and approximately 45,000 are considered to be low-risk. For the intermediate- and high-risk patients, the standard of care is radical prostatectomy and radiotherapy often in conjunction with androgen deprivation therapy or chemical castration. Weighing the balance between therapeutic efficacy and side effects linked to therapy, about 10% of the intermediate-risk patients, and approximately 40% of the low-risk patients decide, in consultation with their physicians, to adopt a close monitoring approach known as active surveillance that involves periodic imaging, biomarker evaluation and biopsies.

CAN-2409 current target patient populations in localized prostate cancer

To our knowledge, the only FDA-approved pharmacologic intervention indicated for newly diagnosed localized prostate cancer is chemical castration therapy, also known as ADT. Standard of care for localized disease is primarily surgery, radiotherapy and/or ADT. Because ADT has a potentially severe side effect profile, including impotence, hot flashes, mood changes, depression and others, these hormone treatments are reserved only for those patients that present the highest risk of localized or metastatic prostate cancer. Similarly, surgical prostatectomy can often cause urinary dysfunction and sexual dysfunction that can last years and sometimes be permanent. Approximately one-third of men with normal baseline function will report some increase in urinary symptoms and urgency after prostatectomy and the majority of men will experience some erectile dysfunction after treatment with either surgery or radiation.

As a result of PSA screening programs, a majority of patients are diagnosed at early stages of disease with low grade, low volume, asymptomatic prostate cancer. Current screening methods are inadequate to definitively identify which patients are most likely to progress. As a result of these side effects, there is a large desire to delay or prevent the need for radical treatment. As a result, many men with prostate cancer meeting the National Comprehensive Cancer Network (NCCN) guidelines for low-risk prostate cancer choose not to be treated and to undergo an intense monitoring program, known as Active Surveillance (AS), as their preferred initial course of treatment. However, within 10 years of diagnosis, between 21 and 38% of men will have developed progressive cancer and require invasive treatments. It has been reported that 21 and 41% of patients initially under AS convert to active treatment based on progression of their disease within two and five years, and approximately 17% of men undergoing AS choose to move to active treatments within 10 years of diagnosis, even in the absence of any evidence of progression, underscoring the level of concern around progression and the significant unmet need in this early line of treatment.

We believe CAN-2409 provides a significant commercial opportunity for therapeutic use in the newly diagnosed, localized prostate cancer patient population, with the goal of reducing progression or recurrence of disease without significant toxicities and with a product that can be administered at outpatient facilities.

Clinical Experience with CAN-2409 for Prostate Cancer

We have completed multiple Phase 1 clinical trials in non-metastatic prostate cancer using CAN-2409 as monotherapy and in combination with standard of care. The results of these trials provide evidence to support CAN-2409 immune activation, dosing levels and schedules as well as a favorable tolerability profile. We have administered CAN-2409 to over 700 patients with localized prostate cancer to date, of which approximately 500 are in currently ongoing, placebo-controlled randomized trials.

Monotherapy Activity

We have observed what we believe to be a clinical response with CAN-2409 as monotherapy in our Phase 1 trials. These responses have been observed in patients with prostate cancer, including patients with newly diagnosed, localized disease, as well as those whose cancer was progressing even after radiotherapy.

In newly diagnosed patients with localized prostate cancer, analysis of biopsies following monotherapy CAN-2409 treatment revealed change in glandular architecture, necrosis and increased immune cell infiltration as compared to baseline biopsy. We observed in treated samples a 4-fold increase in the number of CD8 positive T cells and a 3-fold increase in the number of CD68+ macrophages, demonstrating immune response to CAN-2409.

Induction of CD8+ tumor-infiltrating lymphocytes in Phase 1/2 prostate cancer trial

In another of our Phase 1 trials, patients whose prostate cancer had progressed following radiotherapy and that presented a persistently rising PSA level, were treated with CAN-2409 as monotherapy using six dose levels, ranging from 1x108–1x1011 viral particles. In 27 of the 36 patients recruited, a decrease in PSA levels was observed following a single cycle of CAN-2409, as measured by the best PSA decrease in serial assessments within the first 3 months after treatment. PSA, while an imperfect biomarker for prostate cancer, is still widely employed for patient management in conjunction with biopsy, as rising PSA levels, and in particular PSA doubling time are associated with disease progression. In that same trial, we observed that the PSA doubling time improved significantly (p=0.0271) from 15.9 months at baseline to 42.5 months after a single cycle of CAN-2409 administration, in this treatment resistant patient population. A subset of the patients in this trial also received second or third injection courses of CAN-2409. In the majority of those patients, a decrease from pre-administration PSA levels was again observed upon repeated injection. This dynamic is illustrated below in the inset PSA graph of “patient 19” in this trial. The orange datapoints represent PSA levels immediately prior to CAN-2409 administration. After a first dose, the patient’s PSA level dropped below baseline levels for over 10 months, at which point serial increases were observed, as expected in recurrent prostate cancer. Upon a second injection course of CAN-2409, a sequential drop in PSA was again induced, indicating potentially repeated CAN-2409 activity even in recurrent disease subsequent to an initial response.

Phase 1 trial of CAN-2409 monotherapy in prostate cancer - Best response to first injection (n=36)

Use of CAN-2409 in combination therapy

Because of the increasing prevalence of combination therapy for cancer patients, the ability to combine novel agents with standard of care treatments without overlapping toxicity is of increasing importance. We believe that the favorable tolerability profile of CAN-2409 demonstrated in our clinical trials is encouraging for our current and future development plans, in combination with other agents but also as a monotherapy in lower risk patient populations that are not willing to undergo more aggressive forms of treatment. The safety data from our Phase 2 clinical trial in prostate cancer patients treated with CAN-2409 in combination with standard of care are summarized in the table below. Of note is the absence of reported grade 4 treatment related adverse events and only single-patient incidence of grade 3 treatment related adverse events. It was anticipated that flu-like symptoms would be evident, because CAN-2409 is an adenoviral gene construct known to induce a systemic immune response. Greater than 50% of patients reported fever and/or chills often associated with viral immune activation. These symptoms, which generally manifested early and transiently, often occurred on the evening of the intratumoral administration of CAN-2409 and resolved by the following morning. The rates of the gastrointestinal adverse events are consistent with those typically reported by patients undergoing radiotherapy, which is a component of standard of care in this population.

Phase 2 prostate cancer safety data for prostate cancer patients treated with CAN-2409 in combination with standard of care

Our Phase 2 trial data informed our agreement with the FDA under the SPA for our ongoing Phase 3 clinical trial. In our Phase 2 clinical trial, we observed that intermediate-risk patients who received CAN-2409 in combination with radiotherapy had failure rates that were 75% lower than those reported in four other contemporaneous trials of similar

patient populations as shown in the table below, although this is limited because we have not conducted head-to-head studies. Where these other clinical trials reported freedom from failure rates of between 75-79%, corresponding to cumulative recurrence rates of 21-25%, CAN-2409 resulted in a 5% recurrence rate in patients with intermediate-risk prostate cancer. The median follow-up for the clinical trial of CAN-2409 was 5.7 years. Similarly, results in this clinical trial also demonstrated reduced recurrence rates in the low- and high-risk patients enrolled when compared to these other trials. Furthermore, a pathological complete response (pCR) was observed in 93% of the biopsies available at 2yrs (37%-73% in control populations). In this trial, low-risk patients achieved a PSA of < 2ng/ml in 77% of CAN-2409 treated patients versus 58% in control populations. The schema for this trial is shown below.

Completed phase 2 clinical trial of CAN-2409 combined with radiotherapy +/- androgen deprivation therapy

Freedom from failure in varying risk populations of localized prostate cancer

These were not head-to-head studies, which limits the ability to compare results.

The endpoint used in our Phase 2 trial is freedom from failure (FFF), defined by the period of time between treatment and the occurrence of a clinical or biochemical failure. Under the SPA agreement, we have selected disease-free survival (DFS) as the endpoint for our Phase 3 clinical trial. The DFS definition requires an objective detection of tumor progression. This largely overlaps with FFF as it is often triggered by detection of an increased PSA levels (i.e., biochemical failure). We have also reanalyzed our Phase 2 data using DFS parameters, supporting the implementation of DFS as endpoint in our Phase 3 trial.

Our Potentially Registrational Phase 3 Clinical Trial for Localized Prostate Cancer

We are developing CAN-2409 as a potential therapeutic option that avoids the long-term severe side effects of hormone therapy or surgical interventions. Based on the data from our clinical trials to date, we believe that CAN-2409 has the potential, if approved, to be the first product candidate approved for patients with localized prostate cancer in over 30 years. We are currently conducting a potentially registrational Phase 3 trial for CAN-2409, with agreement, under an SPA with the FDA for a single pivotal trial in newly diagnosed localized prostate cancer in intermediate and high-risk patients in combination with the standard of care, radiotherapy.

The clinical trial is targeting evaluating of over 700 patients, who are randomized 2:1.Patients will receive three investigational treatment courses of CAN-2409, each consisting of four concurrent injections of transrectal ultrasound guided administration of CAN-2409 followed by a course of oral valacyclovir. As illustrated schematically below, the first injection course is given at least 15 days but not more than 8 weeks before starting radiation. The second injection course is given 0-3 days prior to radiotherapy. The third and final injection course is delivered 15-22 days after the second injections. A fixed dose of valacyclovir is given for 14 days after each injection course. Standard of care external beam radiotherapy will be administered to patients throughout the course of the trial with optional ADT as determined by the treating physician.

Dosing scheme for CAN-2409 Phase 3 prostate cancer trial

Trial inclusion criteria are based on patients with localized prostate cancer meeting the NCCN criteria of intermediate-risk or patients presenting only one NCCN high-risk feature. NCCN intermediate-risk is defined as having at least one of the following: prostate serum antigen (PSA) of 10-20 ng/ml, Gleason Score of 7, and is staged T2b-T2c via the TNM staging system. Patients may also exhibit one high-risk characteristic that may consist of a PSA of 20+ ng/ml, a Gleason Score of 8-10, or a cancer that is up to stage T3a, but not more than one of these high-risk factors.

The SPA agreement specifically defines agreement with the FDA on the statistical design and power of the phase 3 trial, as well as the specifics of the primary endpoint definition. The SPA states that the study is adequately designed to provide the necessary data that, depending on the outcome, could support a biologics license application submission. The SPA does note the general point for all SPAs, that BLA filability and approvability are review issues and that a BLA approval will depend on the quality of actual clinical trial data, the robustness of the effect on the stated primary endpoint, the impact on the secondary endpoints, a favorable assessment of the study conduct, and analysis of safety information and other supportive data. We have approximately 50 active clinical sites for this clinical trial, and have enrolled over 700 patients, with enrollment completed in September 2021.

The primary endpoint for the clinical trial is DFS. Final results are expected in 2024. This trial has been designed to have 90% power, a hazard ratio of 0.5 and an alpha of 0.05. We are assuming a 15% improvement in the active arm (CAN-2409) as compared to placebo in the rate of events measured according to the DFS definition provided above.

A schema of this trial is set forth below.

Ongoing Phase 3 clinical trial of CAN-2409 in newly diagnosed, intermediate- and high-risk prostate cancer

Phase 2 Clinical Trial for Active Surveillance

Clinical results to date suggest that CAN-2409 as monotherapy may reduce the rates of biochemical failure for patients with localized prostate cancer. In the AS setting, we will assess whether CAN-2409 has the potential to delay or prevent tumor progression to a later stage that demands radical treatment.

The Phase 2 clinical trial is a randomized, double blind, placebo-controlled study evaluating 187 patients with localized prostate cancer undergoing AS. The trial completed enrollment in June 2019. Patients in this clinical trial were randomized 2:1, active to placebo. Patients randomized to the active arm received two investigational treatment courses of CAN-2409. The primary endpoint will assess patients’ risk of progression employing validated endpoints. We expect top line data from this clinical trial to be available in 2023. A schema of this trial is set forth below.

Fully accrued ongoing Phase 2 clinical trial of CAN-2409 in patients with prostate cancer being managed by active surveillance

High-Grade Glioma

Glioblastoma, the most common form of high-grade glioma, is a relatively rare cancer with first-line drug treated prevalent population in the United States of approximately 16,113 patients. In second- and third-line population, this number drops to 11,642 and 6,548, respectively. Fewer than 10% of patients survive more than five years past their

initial diagnosis. The median survival is under 15 months with the current standard of care. Treatment in the upfront setting is surgical resection, if possible, coupled with temozolomide and/or radiotherapy. Over half of patients are candidates for maximal surgical resection and a portion succeed, achieving removal of all visible tumor mass. This outcome is known as gross total resection. Few pharmaceutical treatment options exist for patients with high-grade glioma, with the last significant FDA approval over a decade ago. Avastin was approved in 2009, specifically for patients with recurrent glioblastoma, and approval was granted despite the absence of a survival benefit in the registrational studies. Temozolomide was approved over 20 years ago, in 1999, with no new agent significantly supplanting its use since then, further underscoring the profound unmet medical need in this condition. In the registrational clinical trials, temozolomide use only demonstrated 2.5-month overall survival benefit, yet still saw global annual sales of over $1 billion at its peak in 2010, shortly before generic products entered the market. The prognosis for glioblastoma that has recurred is even more dire. Patients have scarce treatment options. Current standard of care mainly consists of repeating first line treatment approaches or participating in a clinical trial of investigational agents. Median survival in the recurrent setting is approximately six months.

CAN-2409 for High-Grade Glioma

In our Phase 1b/2 clinical trial in newly diagnosed patients with high-grade gliomas, including the difficult-to-treat glioblastoma, CAN-2409 demonstrated a statistically significant increase in patient survival when combined with current standard of care over the current standard of care alone (surgery, radiation and temozolomide). The trial compared the overall survival of 48 enrolled patients treated at 4 clinical sites with CAN-2409 plus standard of care against a matched controlled set of 134 patients enrolled at MGB who received only standard of care. The results demonstrated that the median overall survival of patients receiving standard of care alone was 13.5 months while patients receiving CAN-2409 plus standard of care was 17.1 months (p=0.0417) (left panel in the figure below). Importantly, a pre-planned analysis on a subset of patients treated surgically with gross total resection (>95% of tumor removed) during surgery (18 patients compared to 44 in the control arm), demonstrated a median overall survival of 25.1 months in the CAN-2409 arm versus 16.3 months in the standard of care group, with approximately a 50% improvement (p=0.0120) (right panel in the figure below). In this patient population, after three years, one in three patients was alive in the CAN-2409 arm compared to 1 in 20 patients in the standard of care group. At the end of the study, three of the patients who received CAN-2409 were alive without progression after 43, 62.1 and 88.5 months.

Completed Phase 1b/2 clinical trial of CAN-2409 combined with standard of care in high-grade glioma

Overall survival of CAN-2409 combined with standard of care in high-grade glioma

In our Phase 1/2 trials in high-grade glioma, CAN-2409 was generally well tolerated, with the majority of treatment-related adverse events being grade 1 or 2, and few reports of grade 3 or 4 events.

Treatment related adverse events from the Phase 1/2 trial in high-grade glioma

We are planning a potentially registrational Phase 3 clinical trial in patients with untreated high-grade glioma. The current trial design for this Phase 3 is planned to enroll patients with glioblastoma (WHO Grade IV) intended to undergo gross total resection and standard of care chemoradiation. The primary efficacy endpoint will be overall survival, powered to 90% with a hazard ratio of 0.65 and a type I error assumption of 2.5. We anticipate the trial to commence in the middle of 2022.

CAN-2409 Checkpoint Combination Therapy for High-Grade Glioma

Based on the clinical outcomes in glioma patients treated with CAN-2409 and the biomarker evidence for CAN-2409-mediated immune stimulation, we performed preclinical studies to examine whether CAN-2409 treatment of high-grade glioma would be enhanced if combined with immune checkpoint inhibitors to increase antitumor T cell responses. Use of either an anti-PD-1 antibody or CAN-2409 alone resulted in 30%-50% long-term survival in a murine glioma model. This percentage increased to 88% when CAN-2409 and anti-PD-1 were administered together. Analysis of infiltrating T cells indicated that CAN-2409 increases the activation of tumor-infiltrating CD8+ T cells, suggesting that the activity of this combination is due to a complementary biological mechanism of the two treatment modalities.

A Phase 1 clinical trial for patients with newly diagnosed high-grade glioma examining the combination of CAN-2409 and anti-PD-1 nivolumab (Opdivo, BMS) in collaboration with BMS and ABTC has now completed enrollment. This is the first clinical trial to evaluate the combination of CAN-2409 and nivolumab in high-grade glioma patients. Combining CAN-2409 with an ICI such as anti-PD-1 may enhance anti-tumor T cell activation and expansion, with the potential for better clinical outcome.

Ongoing Phase 1 clinical trial of CAN-2409 with Opdivo in high-grade glioma

Oncolytic Viral Immunotherapy in High-Grade Glioma

Oncolytic viral immunotherapy is a description of a therapeutic modality that encompasses multiple different constructs and divergent pharmacologic strategies. Some other viral approaches in high-grade glioma have previously failed, notably the investigational oncolytic viral immunotherapy agent Toca 511 that was evaluated in a Phase 2/3 trial in glioblastoma conducted by the company Tocagen. In the case of Toca 511, we believe the similarities to CAN-2409 in glioblastoma are very limited. Toca 511 was a retroviral construct that used a different transgene, was paired with a different prodrug, and had a different development program. There are significant differences between the programs. Of note, serotype 5 adenoviral gene constructs like CAN-2409 have been demonstrated to be highly immunogenic, whereas retroviruses are less immunogenic and therefore less likely to induce a strong innate immune response. Critically, in the single arm Phase 1 trial of Toca 511 in glioblastoma, the data from the investigational agent was compared to a non-concurrently treated external control group that was poorly matched to the demographics of the investigational cohort. For example, 74% of patients in the Toca 511 cohort had a Karnofsky performance score greater than 90, whereas only 51% of patients in the comparator group had such good clinical baseline status. The result was a (false) positive comparison in the Phase 1 trial in favor of the Toca 511 treated group. Further complicating interpretation of the Phase 2/3 trial, patients received only a median of two courses of prodrug commencing 6 weeks after virus dosing. With such significant differences between programs and in the conduct of clinical trials, we believe that such failures of other oncolytic viral immunotherapies in high-grade glioma and other indications have limited bearing on the probability of success of our planned Phase 3 trial of CAN-2409 in glioblastoma.

Lung Cancer (NSCLC)

In recent years, immune checkpoint inhibitors specifically PD-1 directed agents have transformed the treatment paradigm of NSCLC and become a backbone therapy for this indication. To date, seven immune checkpoint inhibitor products have been approved in a number of cancer indications, and there are numerous other related drug candidates in preclinical and clinical development. Global sales for ICIs in 2019 were approximately $23 billion with NSCLC, accounting for between 50 and 55% of overall sales. The commercial opportunity in NSCLC is significant. Drug treated patient populations in the US for 2020 are estimated at 75,160; 47,920 and 21,990 in first-, second- and third-line treatment, respectively. ICI use in NSCLC has become standard of care with approximately 49% of first-line patients in the US being treated with an ICI alone or in combination with other agents. Nonetheless, the median overall survival is approximately 22 months.

To assess the potential for CAN-2409 to trigger immune activation and produce a “hot” tumor phenotype, we designed and completed a clinical trial in patients with surgically resectable lung cancer. In this Phase 1 trial, dose escalation of intratumoral neoadjuvant CAN-2409 was followed by tumor resection three weeks later. The specific goal was to obtain biological data to better understand the impact of CAN-2409 on the tumor microenvironment, with a specific focus on intratumoral CD8+ T cell activation and function while assessing effects on the systemic immune response. The effects of CAN-2409 were evaluated by comparing post-injection specimens to an internal control consisting of each patient’s own pre-treatment needle biopsy and blood samples, and an external cohort of matched patients who underwent standard surgical resection without CAN-2409. The results showed evidence of significant intratumoral and systemic immune activation. Selected analyses are set forth in the chart below. Analysis of peripheral blood mononuclear cells, both before and after CAN-2409 administration, demonstrate a significant increase in expression of proliferation and activation markers including HLA-DR, CD38 and Ki67 three weeks after CAN-2409 initiation. Other relevant findings in this clinical trial included an increase in some markers of T cell activation such as PD-1 and CTLA-4, which are targets of immune checkpoint inhibitors that have been approved for use in NSCLC.

CAN-2409 stimulated local and systemic T cell response in patients with NSCLC

In our NSCLC Phase 1 clinical trial, two patients experienced grade 3 dehydration with renal insufficiency, two patients presented grade 3 urinary retention and six patients were observed to have a grade 4 low lymphocyte count. Of significant interest, one patient, a 70 year old male with a 14.8cm stage IIIA sarcomatoid carcinoma, exhibited a nearly 50% decrease in tumor volume at 3 weeks after CAN-2409 monotherapy treatment. Scans from this patient are shown below. Collectively, these results lead us to believe that CAN-2409 could provide an opportunity to improve ICI response rates in patients with NSCLC by eliciting additional immune activation in lung cancer patients.

Monotherapy activity of CAN-2409 in NSCLC

CAN-2409 and Checkpoint Combination Phase 2 Clinical Trial for NSCLC in Patients with Inadequate Response to ICI

We have initiated a Phase 2 clinical trial in NSCLC patients with inadequate response to ICI that will enroll patients receiving standard of care immune checkpoint inhibitors (plus chemotherapy if indicated) across three cohorts in combination with two courses of CAN-2409 plus ICI. We believe there is an opportunity to utilize CAN-2409 immune activation to improve ICI response rates with a short-term readout.

Our open label Phase 2 trial will enroll 96 patients and we expect initial safety data, translational biomarkers and efficacy data to be presented in the second quarter of 2022. The trial schema is set forth below.

Ongoing Phase 2 trial of CAN-2409 plus ICI and standard of care chemotherapy for stage III/IV NSCLC Patients

Additional Solid Tumor Opportunity

Pancreatic Cancer

We are currently conducting an exploratory Phase 2 clinical trial for CAN-2409 in pancreatic cancer, with enrollment ongoing. We anticipate presenting interim data in 2023. In a previous Phase 1b trial, patients with pancreatic cancer treated with CAN-2409 in addition to standard of care demonstrated a greater survival duration over the expected survival of the patients treated with the existing standard of care alone in a comparison to historical trial results. Furthermore, in a number of patients where pre- and post-treatment tumor biopsies were available, a statistically significant increase in the number of CD8+ tumor infiltrating lymphocytes was observed. In addition, the study concluded that CAN-2409 was generally well-tolerated in combination with standard of care.

CAN-2409 induced of CD8+ tumor-infiltrating lymphocytes

Other Cancer Indications

In addition to patients with prostate, brain, lung and pancreatic cancer, CAN-2409 has been dosed in small early-stage exploratory clinical trials in patients with ovarian cancer, malignant pleural effusion, pediatric brain cancer and retinoblastoma, supporting the tolerability profile described above.

Our CAN-3110 Program: Recurrent Glioma

Our first HSV-based product candidate, CAN-3110, is now in an investigator-initiated Phase 1 clinical trial in recurrent glioblastoma. This clinical trial is assessing CAN-3110 and is an open-label, single center, dose-escalation clinical trial. The primary endpoint of this clinical trial is to analyze the safety of CAN-3110 use, in patients with recurrent high-grade glioma. No dose-limiting toxicities were observed in doses ranging from 1x106 to 1x1010 PFU in half-log increments. 30 patients have been treated in the initial dose escalation phase and 12 additional patients had been dosed in a dose expansion phase as of April 30, 2021.

Immunohistologic studies showed persistent presence of HSV antigen and infiltration by CD8+ cytotoxic tumor infiltrating lymphocytes post treatment, providing support for the expected mechanism of action of CAN-3110.

Oncolytic HSV infection and CD8+ T cell infiltration after CAN-3110 treatment in patients with recurrent high-grade glioma

We are particularly encouraged by the clinical course of a patient who received CAN-3110 as a monotherapy upon recurrence of glioblastoma. The patient was diagnosed with multicentric glioblastoma and initially treated with standard of care surgical resection followed by temozolomide and radiotherapy. The patient later recurred with two lesions visualized on MRI. One, in the frontal region, was at the site of the initially resected mass and is labelled “Secondary lesion” in the MRI images below. The second, larger mass was a new lesion and is labeled as “Injected lesion” in the MRI images below. The patient received CAN-3110 via stereotactic administration into the injected lesion. At day 56 post-injection, there was a visible decrease in the volume of both masses. By day 112 post-injection, the volume of both masses was further reduced and the patient was able to go back to work. The patient eventually developed a third tumor and, following a stroke secondary to a diagnostic procedure, refused further treatment, dying approximately 15 months after participation in the trial. We find this to be an encouraging case report because of the unusually favorable disease course experienced by this patient in absence of concurrent therapies. Additionally, we have observed a median overall survival of 11.7 months in our Phase 1 trial in the first 30 patients as of the cutoff date of April 21, 2021. Given the median overall survival of 6-9 months in historical clinical trials of other investigational agents in patients with recurrent high grade glioma, we believe this is encouraging evidence of clinical activity. We received additional data from this open-label trial in November 2021 and will continue to assess CAN-3110 in this clinical trial.

Ongoing Phase 1 clinical trial of CAN-3110 in patients with recurrent high-grade glioma

MRI images of patient from Phase 1 high-grade glioma trial of CAN-3110 with abscopal effect

Clinical effect on injected and uninjected lesions.

56 YOM, IDH wild-type, MGMT partially methylated, right frontal mesial lesion initially treated with gross total resection, chemoradiation. Recurrences at two sites.

This trial is complementary to our work in the first line treatment setting of high-grade glioma with CAN-2409, a non-replicating viral construct. We believe that with the larger tumor burden frequently observed in the recurrent setting and more infrequent use of surgery in this population, a replication competent viral construct such as CAN-3110 may be a more appropriate approach.

Collaborations and Other Transactions

We are a party to a number of license and collaboration agreements under which we license patents, patent applications and other intellectual property to and from third parties. These licenses impose various diligence and financial payment obligations on us. We expect to continue to enter into these types of license agreements in the future. We consider the following license and collaboration agreements to be material to our business:

Periphagen. On December 9, 2019, we entered into a series of agreements, including an exclusive license agreement, a novation agreement, an equipment purchase agreement and an intellectual property assignment agreement, collectively the Periphagen Agreements, with Periphagen, whereby we acquired certain assets and licensed certain rights (including specified patent rights and know-how, or the Licensed IP Rights) of Periphagen, primarily consisting of exclusive rights to their technology platform and a portfolio of pre-clinical, development stage virus vectors, as well as certain physical property and equipment. The primary classes of assets are HSV-derived assets expressing neurotrophin-3 (or NT-3 Assets) and other HSV-derived assets (Gene Transfer Neuro-Assets). Under the license agreement, Periphagen granted us a worldwide exclusive license with the right to grant sublicenses through multiple tiers under the Licensed IP Rights to conduct research and to develop, make, have made, use, have used, offer for sale, have sold, export and import products incorporating the Licensed IP Rights in all fields of use except the treatment, diagnosis, and prevention of nononcologic skin diseases and conditions (including use as an aesthetic).

In addition, pursuant to the Periphagen Agreements, we undertook certain commitments and obligations, including the assumption of Periphagen’s outstanding loan in the principal amount of $1,000,000 with Diamyd Medical, AB. The promissory note has a contractual interest rate of 2% compounded annually, with the outstanding balance and accrued interest due upon maturity in November 2027, with no interim installments.

In consideration for the licenses under the Periphagen Agreements, we paid Periphagen $811,000 upon signing and agreed to make the following royalty and other payments:

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NT-3 Assets: a single digit percentage of net sales of NT-3 Assets, or, if applicable, a percentage of royalties received by us in the event of a license, sublicense, assignment or other transfer to a third party for commercialization (but no greater than the original royalty percentage we would be required to pay in the event we did not license, sublicense, assign or transfer NT-3 Assets);

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Gene Transfer Neuro-Assets: a single digit percentage of net sales of Gene Transfer Neuro-Assets, or, if applicable, a percentage of royalties received by us in the event of a license, sublicense, assignment or other transfer to a third party for commercialization to treat certain conditions and diseases (but no greater than the original royalty percentage we would be required to pay in the event we did not license, sublicense, assign or transfer Gene Transfer Neuro-Assets);

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Combination Products: a certain percentage (based on the weighted average sale price of NT-3 Assets, or Gene Transfer Neuro-Assets, as applicable) of net sales of combination products; and

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Disposition Income: (i) a single digit royalty rate of certain consideration we receive for the grant of a license, assignment or other intellectual property rights related to the NT-3 Assets and (ii) if we consummate a strategic collaboration with certain specified parties to treat non-oncolygic neurological conditions and diseases, either 2nd decile (if consummated within 18 months) or mid-2nd decile to mid-3rd decile (if consummated thereafter) royalty rates of certain consideration we receive for the grant of a license, assignment or other intellectual property rights related to the Gene Transfer Neuro-Assets.

If we are required to pay royalties to a third party on any product covered under the Periphagen Agreements, we may credit such royalty payments against the royalties owed to Periphagen in the applicable country, up to a percentage reduction in the mid-2nd decile.

The exclusive license agreement with Periphagen, or the Periphagen License Agreement, requires us to use commercially reasonable efforts to complete a human proof of concept clinical trial of an NT-3 Asset, which includes certain specified clinical milestones. If we fail to use such efforts, subject to dispute and escalation provisions in the Periphagen License Agreement, then we may submit a specified payment in lieu of satisfying such obligations. If we fail to do so, Periphagen may terminate the Periphagen License Agreement for material breach.

The Periphagen License Agreement expires on the later of December 9, 2069 or the end of the Royalty Term. Upon expiration, we will have a fully paid-up, non-exclusive license to make, use, sell, offer for sale and import any products that incorporate the Licensed IP Rights. The Royalty Term means, on a product-by-product and country-by-country basis, the period starting on the first commercial sale of such product in such country and concluding on the later of (i) expiration of patent coverage under the Licensed IP Rights or regulatory exclusivity for such product in such country; or (ii) the date that a certain amount of generic competition exists in such country, provided that no Royalty Term shall exceed 30 years.

The Periphagen License Agreement may be terminated (i) by us for convenience upon 90 days’ prior written notice to Periphagen, (ii) by Periphagen if we remain in breach of the Periphagen Agreement following a cure period to remedy the breach or (iii) by Periphagen if we become bankrupt, file for bankruptcy or otherwise become insolvent or are placed in receivership.

MGB. On January 20, 2018, we entered into an exclusive option agreement, or the Option Agreement, with MGB. Pursuant to the Option Agreement, we obtained the exclusive right from MGB to negotiate an exclusive worldwide, royalty-bearing license to develop and commercialize products covered by certain MGB patents, including those patents covering CAN-3110, in the field of gene therapy and oncolytic vector therapy for the treatment or prevention of cancerous tumors in humans or animals, as such field is further detailed in the Option Agreement, or the Licensed Field. In consideration for MGB’s granting of the exclusive option, we paid MGB a non-refundable fee of $40,000.

Under the Option Agreement, we were required to use reasonable efforts to enter into a clinical trial agreement with MGB. We entered into such clinical trial agreement with MGB, or the MGB Clinical Trial Agreement, on June 19, 2018. Under the MGB Clinical Trial Agreement, we have committed to remitting up to $750,000 for the performance of a specified Phase 1 clinical trial by MGB pursuant to a protocol summary contained in the Option Agreement.

On September 15, 2020, we exercised our option and entered into an exclusive patent license agreement with MGB, or the MGB License Agreement. Under the MGB License Agreement, MGB granted to us (a) an exclusive, royalty-bearing license under certain of MGB’s patents to make, have made, use, have used, sell and have sold certain products covered by such licensed patents, or the Licensed Products and otherwise practice processes covered by such licensed patents, or Licensed Processes; and (b) a non-exclusive, royalty-bearing license under certain other of MGB’s patents to make, have made, use, have used, sell and have sold Licensed Products, but not to sell or have sold Licensed Processes. The foregoing rights are sublicensable, subject to sublicensing terms set forth in the MGB License Agreement. In connection with executing the MGB License Agreement, we paid a license issue fee of $100,000. We also agreed to reimburse MGB for all reasonable fees and expenses MGB had incurred and will incur for the preparation, filing, prosecution and maintenance of the licensed patent rights, in an amount equal to $141,268.

Under the MGB License Agreement, we are required to use commercially reasonable efforts to develop and make available to the public Licensed Products in the Licensed Field, which efforts include certain milestones detailed in the MGB License Agreement.

Under the MGB License Agreement, prior to the first commercial sale of the Licensed Products, we are required to pay MGB an annual license fee beginning on the fourth anniversary of the effective date. Following the first commercial sale of the Licensed Products, we are required to pay MGB an annual minimum royalty, which amount may be credited against earned royalties starting in the fourth year following the first commercial sale.

In addition to such annual license fee and royalty obligations, the MGB License Agreement contains cumulative milestone payments for up to a maximum amount of $39,000,000, upon the achievement of various clinical, commercial and sales milestones of clinical and commercial development and sales, certain of which milestones apply to development and sale of any Licensed Product as a monotherapy and certain of which milestones apply to development and sale of any Licensed Product in combination with another therapy modality for the treatment of solid tumors.

We are required to pay royalties to MGB upon first commercial sale of the Licensed Products, which are paid at an increasing rate as net sales increase, ranging from low single digits to high single digits. We also agreed to pay a single digit royalty rate on net sales of any products developed using certain MGB know-how but which is not covered by the licensed patent rights, or derived products.

We may reduce our royalty obligations to MGB on any product (but not derived products) by an agreed-upon percentage if we are required to pay a royalty to a third party to avoid patent infringement claims in respect of our development and commercialization of Licensed Products. The royalty rate paid to MGB may not fall below a pre-specified percentage for the sale of any product and another percentage for the sale of any derived product.

Our obligation to pay royalties to MGB expires on a country-by-country basis on the latest of (i) the date upon which there ceases to be a valid claim of patent rights as further detailed in the MGB License Agreement in such country, (ii) expiration of statutory or regulatory exclusivity in such country and (iii) 10 years after the first commercial sale.

The MGB License Agreement also requires us to pay a percentage of any non-royalty income attributable to the sublicense, including (i) 2nd decile rates if such sublicense occurs prior to dosing the first patient in a Phase 2 trial, (ii) 1st decile rates if such sublicense occurs after dosing the first patient in a Phase 2 trial but before approval of a BLA by the FDA (or the equivalent approval and regulatory body in another major market country) and (iii) single digit rates if such sublicense occurs after approval of a BLA by the FDA (or the equivalent approval and regulatory body in another major market country).

The MGB License Agreement expires on the latest of (i) the 10th anniversary of the first commercial sale in the last country which has a commercial sale, (ii) the date on which all relevant issued patents and filed patent applications have expired or been abandoned and (iii) upon the expiration of market exclusivity on the applicable product.

The MGB License Agreement may be terminated by MGB (i) if we fail to pay any amounts owed under the terms of the agreement within a specified cure period, (ii) if we fail to maintain insurance in accordance with the MGB License Agreement, (iii) if we file for bankruptcy, or (iv) if we remain in default of the MGB License Agreement for non-financial reasons following a specified cure period to remedy the breach. The MGB License Agreement may be terminated by us for convenience upon 90 days’ prior written notice.

Ventagen. On March 1, 2014, we entered into an exclusive license agreement, or the Ventagen Agreement, with Ventagen, LLC, or Ventagen. The Ventagen Agreement provides Ventagen an exclusive license, with rights to

grant sublicenses (subject to certain terms and conditions) under any worldwide patent rights and know-how owned or controlled by us during the term of the Ventagen Agreement which cover applicable technology utilizing the delivery method of the herpes derived TK protein to tumors or other tissues via a viral vector (as further specified therein), to research, use, have used, import, have imported, export, have exported, offer for sale, have sold, sell, distribute and market certain products for the prevention or treatment of cancer in humans and any use in animals (or the Field of Use), or the Licensed Products, for commercial sale and distribution within Mexico, Belize, Guatemala, Honduras, El Salvador, Costa Rica, Nicaragua, Panama, Colombia and Bolivia (or the Territory).

Under the Ventagen Agreement, Ventagen agreed to use commercially reasonable efforts to develop and commercialize Licensed Products in the Territory in the Field of Use.

Ventagen agreed to pay us $1,000,000 for research and development, which we received in 2014 and 2015, and agreed to pay us a fixed future milestone payment of $2,500,000 upon Ventagen’s achievement of a specified amount of sales of a Licensed Product, which is subject to certain reductions for our direct cost over a specified threshold.

Ventagen also agreed to purchase all of its clinical and commercial supply of Licensed Products from us required for clinical or commercial purposes at a price of cost plus a specified increase of the wholesale price of the Licensed Products, subject to a minimum and maximum price, through the end of the Royalty Term, which is defined as the period commencing on the effective date of the Ventagen Agreement and ending on a country-by-country basis on the later of (i) the last expiration date of the patent rights covering a Licensed Product, (ii) twelve years from the receipt of marketing authorization of the Licensed Product in the applicable country, or (iii) the date a generic version of a Licensed Product that is manufactured, owned or controlled by a third party is granted a market authorization. If we are unable or unwilling to manufacture supply under the terms of the Ventagen Agreement, Ventagen has the right to manufacture its own supply and will be required to pay to us a fixed fee per dose sold by Ventagen, its affiliates, agents, sublicensee or end users. We have also agreed to provide certain services to Ventagen related to Ventagen’s development plan.

The Ventagen Agreement expires on the date of the expiration of the final Royalty Term in all countries in the Territory. The Ventagen Agreement may be terminated (i) by Ventagen at will upon 30 days’ prior written notice to us, (ii) by us subject to a specified notice period if Ventagen files for bankruptcy or becomes insolvent or (iii) by us if Ventagen remains in material breach of the Ventagen Agreement following notice and a cure period to remedy the breach. Ventagen retains an irrevocable, perpetual, paid up, royalty-free license, with rights of sublicense to use, have used, lease, import and export, offer to sell, sell, have sold, product, distribute and market Licensed Products in each country in the Territory after the expiration of the Royalty Term in such country.

Certain of our current shareholders own 49.5% of the voting stock of Ventagen, but we do not hold any management position or run the day-to-day operations of Ventagen. See “Certain Relationships and Related Person Transactions.”

Competition

The development and commercialization of new product candidates is highly competitive. We face competition from major pharmaceutical, specialty pharmaceutical and biotechnology companies among others with respect to CAN-2409 and CAN-3110 and will face similar competition with respect to any product candidates that we may seek to develop or commercialize in the future. We compete in pharmaceutical, biotechnology and other related markets that develop immune-oncology therapies for the treatment of cancer. There are other companies working to develop viral immunotherapies for the treatment of cancer including divisions of large pharmaceutical and biotechnology companies of various sizes. The large pharmaceutical and biotechnology companies that have commercialized and/or are developing immuno-oncology treatments for cancer include AstraZeneca, Bristol-Myers Squibb, Gilead Sciences, Merck & Co., Novartis, Pfizer and Genentech.

Some of the products and therapies developed by our competitors are based on scientific approaches that are the same as or similar to our approach, including with respect to the use of viral immunotherapy with adenovirus and HSV. Other competitive products and therapies are based on entirely different approaches. We are aware that Oncorus, Inc., Replimune Group, Inc., Amgen Inc., Astellas Pharma, Inc, Istari Oncology Inc, Orca Therapeutics, B.V., CG Oncology, Inc, ImmVira Co., Ltd., IconOVir Bio, Inc., and FerGene, Inc., among others, are developing viral immunotherapies that may have utility for the treatment of indications that we are targeting. 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.

Many of the companies we compete against or may compete against in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials,

obtaining regulatory approvals and marketing approved drugs than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in concentration of even more resources 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, in establishing clinical trial sites and enrolling subjects for our clinical trials and in acquiring technologies complementary to, or necessary for, our programs.

We could see a reduction or elimination of our commercial opportunity if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, or are more convenient or are less expensive than any products that we or our collaborators may develop. Our competitors also may obtain FDA or foreign regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. The key competitive factors affecting the success of all our product candidates, if approved, are likely to be their efficacy, safety, convenience and price, if required, the level of biosimilar or generic competition and the availability of reimbursement from government and other third-party payors.

Commercialization

We intend to retain significant development and commercial rights to our product candidates and, if marketing approval is obtained, to commercialize our product candidates on our own, or potentially with a partner, in the United States and other regions. We currently have no sales, marketing or commercial product distribution capabilities and have no experience as a company commercializing products. We intend to build the necessary infrastructure and capabilities over time for the United States, and potentially other regions, following further advancement of our product candidates. Clinical data, the size of the addressable patient population, the size of the commercial infrastructure and manufacturing needs may all influence or alter our commercialization plans.

Manufacturing

We have established an operations leadership team with extensive experience in manufacturing biologics based on viruses, including oncolytic products and gene therapy products, and in the construction, validation, approval and operation of facilities designed to manufacture biologics. We have received proposals from and are evaluating third-party contract manufacturing organizations for commercial-scale manufacturing of our CAN-2409 product candidates. We are also currently evaluating various options for the clinical scale manufacture of our CAN-3110 product candidate, including the development of clinical-scale manufacturing capabilities in our facility in Needham, Massachusetts.

Intellectual Property

We have obtained Orphan drug designation for CAN-2409 for the treatment of glioblastoma, which makes the product candidate eligible for a period of orphan drug exclusivity, if approved in this indication, under certain conditions.

We believe that approval of our CAN-2409 and CAN-3110 product candidates under a BLA may result in 12 years of data exclusivity in the United States under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, 10 years of market exclusivity in Europe and significant durations in other markets, which would be complementary to any relevant patent exclusivity.

Through licensing and developing our own portfolio, we have rights to one issued composition of matter patent in the United States that relates to CAN-3110, which expires in 2036 and is exclusively licensed to us. We also own a patent issued in the United States that relates to a method of use of CAN-2409 in combination with other agents that expires in 2034. There are also multiple patent applications in the United States and foreign countries, that are fully or partially owned by us or are exclusively licensed to us by the inventor owners.

Government Regulation

In the United States, biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and licensure under the Public Health Service Act (PHS Act), and other federal, state, local and foreign statutes and regulations. The FD&C Act and corresponding regulations govern, among other things, the research, development, clinical trial, testing, manufacturing, quality control, approval, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, marketing, promotion, export and import, advertising, post-approval monitoring, and post-approval reporting involving biological products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals.

Further, even if we obtain the required regulatory approvals for our products, pharmaceutical companies are subject to myriad federal, state, and foreign healthcare laws, rules, and regulations governing all aspects of our operations, including, but not limited to, our relationships with healthcare professionals, healthcare institutions, distributors of our products, and sales and marketing personnel; governmental and other third-party payor coverage and reimbursement of our products; and data privacy and security. Such laws, rules, and regulations are complex, continuously evolving, and,

in many cases, have not been subject to extensive interpretation by applicable regulatory agencies or the courts. We are required to invest significant time and financial resources in policies, procedures, processes, and systems to ensure compliance with these laws, rules, and regulations, and our failure to do so may result in the imposition of substantial monetary or other penalties by federal or state regulatory agencies, give rise to reputational harm, or otherwise have a material adverse effect on our results of operations and financial condition.

United States biological products development process

The process required by the FDA before a biological product candidate may be licensed for marketing in the United States generally involves the following:

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completion of nonclinical laboratory tests and animal studies performed in accordance with FDA’s good laboratory practices, or GLPs, requirements and applicable requirements for the humane use of laboratory animals or other applicable regulations;

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submission to the FDA of an application for an investigational new drug application, or IND, which must become effective before human clinical trials may begin;

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approval of the protocol and related documentation by an IRB or ethics committee at each clinical trial site before each trial may be initiated;

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performance of adequate and well-controlled human clinical trials according good clinical practices, or to GCPs, requirements and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product candidate for its intended use;

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preparation of and submission to the FDA of a BLA for marketing approval that includes sufficient evidence of establishing the safety, purity, and potency of the proposed biological product for its intended indication, including from results of nonclinical testing and clinical trials;

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a determination by the FDA within 60 days of its receipt of a BLA to accept and file the application;

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satisfactory completion of an FDA pre-license inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with current good manufacturing practices, or cGMPs, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity;

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satisfactory completion of an FDA advisory committee review, if applicable;

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potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA in accordance with any applicable expedited programs or designations;

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payment of user fees for FDA review of the BLA (unless a fee waiver applies); and

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

Pre-clinical Studies and the IND Process

Before testing any biological product candidate in humans, the product candidate enters the preclinical testing stage. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of the product’s biological characteristics, chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs.

Prior to commencing an initial clinical trial in humans with a product candidate in the United States, an IND must be submitted to the FDA and the FDA must allow the IND to proceed. An IND is an exemption from the FD&C Act that allows an unapproved product candidate to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA allowance that such investigational product may be administered to humans in connection with such trial. Such authorization must be secured prior to interstate shipment and administration. In support of a request for an IND, the clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. An IND must become effective before human clinical trials may begin. Once submitted, the IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the IND on a full or partial clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial or part of the study can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial. The FDA also may impose clinical holds on a sponsor’s IND at any time before or during clinical trials due to, among other considerations, unreasonable or significant safety concerns, inability to assess safety concerns, lack of qualified investigators, a misleading or materially incomplete investigator brochure, study design deficiencies, interference with the conduct or completion of a study designed to be adequate and well-controlled for the same or another investigational product, insufficient quantities of investigational product, lack of effectiveness, or non-compliance. If the FDA imposes a clinical hold, studies may not recommence without FDA authorization and then only under terms authorized by the FDA.

Clinical Trials

Clinical trials involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under control of the trial sponsor. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters and criteria to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all research subjects provide informed consent. An IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the trial at least annually. The IRB must review and approve, among other things, the trial protocol and informed consent information to be provided to trial subjects. An IRB must operate in compliance with FDA regulations. An IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.

Some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee, or DSMB. This group provides authorization as to whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the trial and may recommend halting the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

Certain information about certain clinical trials must also be submitted within specific timeframes to the NIH for public dissemination on its ClinicalTrials.gov website.

Clinical trials typically are conducted in three sequential phases that may overlap or be combined:

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Phase 1. The biological product candidate is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients. These studies are designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the biological product candidate in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

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Phase 2. The biological product candidate is evaluated in a limited patient population with a specific disease or condition to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

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Phase 3. The biological product candidate is administered to an expanded patient population to further evaluate dosage, clinical efficacy, potency, and safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the product candidate and provide an adequate basis for approval and product labeling.

In March 2022, the FDA released a final guidance entitled “Expansion Cohorts: Use in First-In-Human Clinical Trials to Expedite Development of Oncology Drugs and Biologics,” which outlines how developers can utilize an adaptive trial design commonly referred to as a seamless trial design in early stages of oncology biological product development (i.e., the first-in-human clinical trial) to compress the traditional three phases of trials into one continuous trial called an expansion cohort trial. Information to support the design of individual expansion cohorts are included in IND applications and assessed by FDA. Expansion cohort trials can potentially bring efficiency to biological product development and reduce developmental costs and time.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product. These post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may also be made a condition to approval of the BLA. Failure to exhibit due diligence with regard to conducting required Phase 4 clinical trials could result in withdrawal of approval for products.

Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry and physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents with use of biological products, the Public Health Service Act, or PHS Act, emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among

other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

Both the FDA and the EMA provide expedited pathways for the development of biological product candidates for treatment of rare diseases, particularly life threatening diseases with high unmet medical need. Such biological product candidates may be eligible to proceed to registration following a single clinical trial in a limited patient population, sometimes referred to as a Phase 1/2 trial, but which may be deemed a pivotal or registrational trial following review of the trial’s design and primary endpoints by the applicable regulatory agencies. Determination of the requirements to be deemed a pivotal or registrational trial is subject to the applicable regulatory authority’s scientific judgement and these requirements may differ in the United States and the European Union.

During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.

Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives. Some trials also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board, which provides authorization for whether or not a trial may move forward at designated check points based on access to certain data from the trial and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

U.S. review and approval processes

Assuming successful the completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications. The BLA must include results of product development, laboratory and animal studies, human clinical trials, information on the manufacture and composition of the product, proposed labeling and other relevant information. The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the FDA accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review to determine if it is substantially complete before the FDA accepts it for filing. In most cases, the submission of a BLA is subject to a substantial application user fee, although the fee may be waived under certain circumstances. Under the performance goals and policies implemented by the FDA under the Prescription Drug User Fee Act, or PDUFA, for original BLAs, the FDA targets ten months from the filing date in which to complete its initial review of a standard application and respond to the applicant, and six months from the filing date for an application with priority review. The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended by FDA requests for additional information or clarification. This review typically takes twelve months from the date the BLA is submitted to the FDA because the FDA has approximately two months to make a “filing” decision. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, pure and potent for its intended use and whether the product is being manufactured in accordance with cGMP to ensure its continued safety, purity and purity. The FDA may refer applications for novel biological products or biological products that present difficult or novel questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a

Risk Evaluation and Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.

Before approving a BLA, the FDA typically will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND trial requirements and GCP requirements. To assure cGMP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production and quality control.

Under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA for a novel product (e.g., new active ingredient, new indication, etc.) must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any biological product for an indication for which orphan designation has been granted.

After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, 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. A Complete Response letter will describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the Complete Response letter without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling. In issuing the Complete Response letter, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification. The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, including to subpopulations of patients, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings, precautions or interactions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a REMS, or otherwise limit the scope of any approval. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The FDA may require one or more Phase 4 post-market trials and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing trials. In addition, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could impact the timeline for regulatory approval or otherwise impact ongoing development programs.

Orphan product designation

CADL US Equity

CADL · 10-K · period ended 2021-12-31

Item 1. Business.

CADL US Equity☆

CADL · 10-K · period ended 2021-12-31

Item 1. Business.

CADL US Equity