UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended December 31, 2025
Commission
File Number: 001-40789
CALIDI
BIOTHERAPEUTICS, INC.
(Exact
name of registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
(Address of principal executive offices) (Zip Code)
(858)794-9600
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share CLDI NYSE American LLC
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 Section 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 issuer 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, a 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. (Check one):
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
(Do not check if a 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. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes
☐ No ☒
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 and non-voting common stock held by non-affiliates of the registrant as of June 30, 2025 (the last business
day of the registrant’s most recently completed second fiscal quarter) was approximately $8.0 million.
As
of March 20, 2026, there were 10,895,725 shares of registrant’s common stock outstanding, excluding 150,000 non-voting common stock
held in escrow.
Documents
incorporated by reference:None.
CALIDI
BIOTHERAPEUTICS, INC.
FORM
10-K ANNUAL REPORT
For
the Fiscal Year Ended December 31, 2025
Table
of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 1
SELECTED DEFINITIONS 3
SUMMARY OF RISK FACTORS 4
PART I 6
ITEM 1. BUSINESS 6
ITEM 1A. RISK FACTORS 35
ITEM 1B. UNRESOLVED STAFF COMMENTS 91
ITEM 1C. CYBERSECURITY 91
ITEM 2. PROPERTIES 92
ITEM 3. LEGAL PROCEEDINGS 93
ITEM 4. MINE SAFETY DISCLOSURES 94
PART II
ITEM 6. RESERVED 95
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 107
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 107
ITEM 9A CONTROLS AND PROCEDURES 107
ITEM 9B. OTHER INFORMATION 108
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENTS INSPECTIONS 108
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 108
ITEM 11. EXECUTIVE COMPENSATION 115
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 135
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 136
FINANCIAL STATEMENTS F-1
i
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities
Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These forward-looking statements
include, among other things, statements regarding our and our management team’s expectations, hopes, beliefs, intentions or strategies
regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified
by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,”
“estimate,” “forecast,” “project,” “continue,” “could,” “may,”
“might,” “possible,” “potential,” “predict,” “should,” “would,”
“will,” “seek,” “target,” and other similar words and expressions, but the absence of these words
does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements
about:
● our ability to realize the expected benefits of the Business Combination;
● our ability to maintain the listing of our securities on the NYSE American;
● our market opportunity;
● our ability to retain or recruit officers, key employees and directors;
● the impact of governmental laws and regulations; and
The
forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments
and their potential effects on our business. There can be no assurance that future developments affecting our business will be those
that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control)
or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these
forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled
“Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties
emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the effect of all such risk
factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from
those contained in any forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of the
assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
The
forward-looking statements made by us in this report speak only as of the date of this report. Except to the extent required under the
federal securities laws and rules and regulations of the Securities and Exchange Commission (“SEC”), we disclaim any obligation
to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect
the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested
by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.
Unless
the context otherwise requires, “we,” “us,” “our,” “registrant,” or “Registrant,”
“Calidi,” “Calidi Biotherapeutics,” and the “Company” refer to Calidi Biotherapeutics, Inc., a Delaware
corporation (f/k/a First Light Acquisition Group, Inc., a Delaware corporation), and its consolidated subsidiaries following the Business
Combination. Unless the context otherwise requires, references to “FLAG” refer to First Light Acquisition Group, Inc., a
Delaware corporation, prior to the Business Combination. Unless the context otherwise requires, references to “Calidi NV”
means Calidi Biotherapeutics (Nevada), Inc. (formerly Calidi Biotherapeutics, Inc.), a Nevada corporation and our wholly-owned subsidiary.
SELECTED
DEFINITIONS
Unless
the context otherwise requires or has otherwise been defined, the following defined terms shall have the meaning set forth below.
“anchor
investors” means certain unaffiliated qualified institutional buyers or institutional accredited investors who have each entered
into an Investment Agreement pursuant to which such anchor investors have purchased in the aggregate 12,106 founder shares from our
Sponsor and Metric at approximately $0.003 per share;
“Business
Combination” means the business combination of FLAG with Calidi pursuant to the terms and conditions of the Merger Agreement;
“Bylaws”
means the Amended and Restated Bylaws, as amended, in effect as of the date of this report;
“Calidi”
or “Calidi Biotherapeutics” means Calidi Biotherapeutics, Inc., a Delaware corporation;
“Charter”
or “Second Amended and Restated Certificate of Incorporation” means the Second Amended and Restated Certificate of
Incorporation in effect.
“Closing”
means the closing of the Merger and all of the transactions contemplated by the Merger Agreement in accordance with the terms of the
Merger Agreement;
“Closing
Date” means the date on which the Business Combination was consummated which occurred on September 12, 2023;
“common
stock” or “Common Stock” means Calidi Common Stock following the Business Combination, with the rights and preferences
and subject to the terms and conditions set forth in the Charter;
“DGCL”
means the Delaware General Corporation Law, as amended;
“Exchange
Act” means the Securities Exchange Act of 1934, as amended;
“FLAG”
means First Light Acquisition Group, Inc., a Delaware corporation;
“Investment
Agreement” means each of the investment agreements entered into between our Sponsor, Metric and the anchor investors pursuant
to which such anchor investors have purchased in the aggregate 12,106 founder shares from our Sponsor and Metric at approximately $0.003
per share;
“Insiders”
are to, collectively, certain prior directors and officers of FLAG, including Thomas A. Vecchiolla, Michael J. Alber, Michael Reuttgers,
William J. Fallon, and Jeanne Tisinger;
“Metric”
means Metric Finance Holdings I, LLC, a Delaware limited liability company and an affiliate of Guggenheim Securities, LLC;
“Calidi
Common Stock” means, following the consummation of the Business Combination, the common stock, par value $0.0001 per share,
of Calidi Biotherapeutics, Inc.
“Registration
Rights Agreements” mean certain agreements requiring the Company to register the holders’ shares of common stock with
the Securities and Exchange Commission consisting of that certain (i) Amended And Restated Registration Rights Agreement dated September
12, 2023; (ii) Voting and Lock-Up Agreement dated as of January 9, 2023, and amended on April 12, 2023, and (iii) Series B Preferred
Stock Investors’ Rights Agreement dated June 16, 2023.
“Series
B Financing” means the equity financing contemplated by the Securities Purchase Agreements between Calidi Biotherapeutics,
Inc., and Jackson Investment Group, LLC and Calidi Cure, LLC, dated June 16, 2023, to secure commitments for the purchase of Series B
Convertible Preferred Stock of Calidi.
“Sponsor”
means First Light Acquisition Group, LLC, a Delaware series limited liability company.
“Sponsor
Shares” means 46,060 shares of common stock (net of cancellations from the original 47,917 shares of common stock sold) in
the aggregate originally sold to the Sponsor and Metric at $0.003 per share, and subsequently sold to the anchor investors at the same
purchase price or transferred other shareholders as an inducement to complete and finance the Business Combination.
SUMMARY
OF RISK FACTORS
The
following is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not
address every aspect of our risk factors, all of the risks that we face, or other factors not presently known to us or that we currently
believe are immaterial. As a result, the below summary risks do not contain all of the information that may be important to you, and
you should read the summary risks together with the more detailed and complete discussion of risks set forth under the heading “Risk
Factors” in Part I, Item 1A of this annual report, as well as elsewhere in this Annual Report and our other filings with the U.S.
Securities and Exchange Commission (SEC), before making investment decisions regarding our common stock. Additional risks, beyond those
summarized below or discussed elsewhere in this Annual Report, may apply to our activities or operations as currently conducted or as
we may conduct them in the future or in the markets in which we operate or may in the future operate.
Consistent
with the foregoing, we are exposed to a variety of risks, including risks associated with the following:
Risks
Related to Our Business, Financial Position and Capital Requirements
Risks
Related to Product Development
Risks
Related to Government Regulation and Commercialization of Our Product Candidates
Risks
Related to Legal and Compliance Matters
Risks
Related to Our Reliance on Third Parties
Risks
Related to Intellectual Property
Risks
Related to Ownership of Our Common Stock
PART
I
ITEM
1 – BUSINESS
Overview
We
are a publicly traded biotechnology company pioneering the development of targeted therapies with the potential to deliver genetic
medicines to distal sites of disease. Our proprietary RedTail platform features an engineered enveloped oncolytic virus designed for
systemic delivery and targeting of metastatic sites. This advanced enveloped technology is intended to shield the virus from immune
clearance, allowing virotherapy to effectively reach tumor sites, induce tumor lysis, and deliver potent genetic medicine(s) to
metastatic locations. We expect to file an investigational new drug (“IND”) application for a Phase I trial by the end of 2026 with CLD-401, the first compound from the
RedTail platform, delivering IL-15 superagonist to the tumor microenvironment (“TME”).
Our
RedTail platform is the culmination of over a decade of work around genetic engineering of viruses and allows for the systemic administration
of a proprietarily-modified oncolytic virus that can:
● Survive in circulation and home to metastatic tumor sites;
● Only replicates in tumor cells;
● Induce immuogenic kill in tumor cells and immune priming in the TME; and
● Enhance oncolytic viral amplification inside the allogeneic cells; and
Oncolytic
viruses have been pursued as therapeutic platforms in oncology because of their ability to preferentially infect and replicate within
cancer cells, resulting in both direct lysis of the tumor cells as well as activation of an antitumor immune response, while leaving
normal, healthy cells unharmed. Despite the promises of oncolytic viruses, a major obstacle against their therapeutic use has been their
rapid elimination by the patient’s immune system; this has meant that oncolytic viruses have been largely relegated to being used
for local delivery to tumors but have not been successful in patients with extensive metastatic disease. The only approved oncolytic
virus therapy is T-VEC (Imlygic®), a modified herpes simplex virus (“HSV”) for the treatment of patients with melanoma given intratumorally.
We
have been working on oncolytic viruses for over a decade. Our NeuroNova investigational drug candidate is currently in a Phase 1 trial
being run and funded by our partner, City of Hope, in an investigator-initiated trial and we have an open IND for a Phase 1 trial for
our SuperNova investigational drug candidate (CLD-201). In July 2025 we were granted Fast Track Designation to CLD-201 by the U.S. Food
and Drug Administration (“FDA”) for the treatment of patients with soft tissue sarcoma. The platforms used in NeuroNova and SuperNova use
oncolytic viruses embedded in stem cells to facilitate initial viral amplification and expansion at the tumor sites. This approach has
shown substantial benefit over unprotected virus in preclinical studies of intratumoral delivery, but stem cell encapsulation does not
allow for systemic delivery of virus to tumor metastases in animal models. The size of the stem cells prohibited efficient dissemination
into metastatic sites.
More
recently, we used the learnings from NeuroNova and SuperNova to create RedTail, a novel oncolytic viral platform that avoids immune clearance
allowing for systemic delivery. RedTail utilizes a proprietary form of enveloped virus with genetic modifications, including engineered
expression of CD55 on the enveloped virus, to avoid immune clearance. The virus used in RedTail has been further proprietarily engineered
to specifically replicate only in tumor tissue where the virus also has the ability to deliver genetic medicines to the tumor microenvironment.
Because the virus is not encapsulated in stem cells, it is thousands of times smaller than the NeuroNova or SuperNova products and disseminates
efficiently into metastatic sites in syngeneic animal models. In addition, the virus can be engineered to express genetic medicines while
replicating in the tumor.
CLD-401,
the first lead derived from the RedTail platform. CLD-401 is enveloped and overexpressed CD55 on its outer membrane. It is tropic for
tumor cells and, when replicating, expresses IL-15 superagonist at high concentrations in the tumor microenvironment. In animal models,
CLD-401 can be given systemically and clear metastatic sites in syngeneic tumor mouse models with demonstrated enhanced biological efficacy.
The combination of the RedTail virus with its genetic payload drives complete tumor eradication in the tumor models compared to the RedTail
virus alone. We believe that RedTail, given its systemic administration and targeting to metastatic sites and its delivery of genetic
medicines, represents a major advancement in the space of oncolytic virus in oncology. The company is developing additional leads from
the RedTail platform including compounds that simultaneously express a bispecific T-cell engager (“TCE”) and a T-cell activator as well
as compounds for use outside of oncology.
Our
Strategy
Our
strategy is to pioneer next generation targeted therapies with the potential to deliver genetic medicines to distal
sites of disease. We intend to achieve this strategy by:
Our
Product Candidates
RedTail
for Metastatic Solid Tumors
The
RedTail platform utilizes an engineered vaccinia virus enveloped by a cell membrane and engineered to express CD55. In syngeneic animal
models, the RedTail virus is capable of being systemically administered and homing to metastatic sites. The RedTail virus can be further
engineered to induce expression of a genetic medicine at the site of tumor metastases. Metastatic solid tumors involve cancer cells that
break away from where they first formed (primary cancer) and travel through the blood or lymph system to form new tumors, known as metastatic
tumors, in other parts of the body.
The
lead compound from the RedTail platform is CLD-401. In syngeneic animal models, CLD-401 is capable of homing to metastatic tumor sites
after systemic administration. Once at the tumor sites, CLD-401 can induce lytic cell death of tumor cells and induce high levels of
IL-15 superagonist expression restricted to the metastatic tumor sites.
CLD-201
(SuperNovaTM) for Solid Tumors (Breast Cancer, Sarcoma, and Head and Neck)
CLD-201
is composed of CAL1 vaccinia virus (AKA ACAM1000 or ACAM2000) loaded into the allogeneic AD-MSC cell line VP-001 and is our first internally
developed product candidate utilizing our SuperNovaTM Platform targeting multiple solid tumors (Breast Cancer, Sarcoma,
and Head and Neck). Based on our pre-clinical studies, we believe CLD-201 has therapeutic potential for the treatment of multiple solid
tumors such as, head and neck cancer, breast cancer and sarcoma. Our IND application was approved by the FDA in April 2025 for the clinical
development of CLD-201 and in July 2025 we were granted Fast Track Designation to CLD-201 by the FDA for the treatment of patients with
soft tissue sarcoma.
CLD-101
(NeuroNovaTM) for Newly Diagnosed High Grade Glioma (“HGG”)
CLD-101
is our product candidate utilizing our NeuroNovaTM Platform targeting HGG. Our partner, Northwestern University, has an open IND
for a Phase 1b/2 clinical trial.
CLD-101
(NeuroNovaTM) for Recurrent HGG
Our
partner City of Hope is conducting clinical studies on CLD-101 utilizing our NeuroNovaTM Platform for the indication
of recurring HGG using the same allogeneic neural stem cell bank and oncolytic adenovirus being used in our clinical trials for newly
diagnosed HGG discussed above. City of Hope dosed the first patient in May 2023 in a Phase 1 clinical trial with CLD-101 for recurring
HGG. This program is supported by a grant from CIRM awarded to the City of Hope.
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 our RedTail, NeuroNovaTM, and SuperNovaTM
product candidates 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, Inc., Merck &
Co., Novartis, Pfizer and Genentech, Inc.
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 oncolytic viruses. Other competitive products and therapies
are based on entirely different approaches. We are aware that Oncorus, Inc., Replimune Group, Inc., Amgen Inc., ImmVira Co., Ltd.,
IconOVir Bio, Inc., Candel Therapeutics, Inc., CG Oncology, Inc., Genelux Corporation, Imugene Limited, Viromissile, Oncolytics
Biotech 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 other regulatory approval for their products more rapidly than we may
obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the
market. 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.
Manufacturing
The
manufacturing process of extracellular enveloped viruses and allogeneic cell product candidates involves a series of complex and
precise steps. A critical component of our success in this area will be through our research collaboration with our subsidiary,
StemVac. The StemVac team has decades of deep experience in process and assay development and optimization of virus and cell-based
and enveloped oncolytic virus manufacturing of advanced therapeutic biological products. The development services provided by
StemVac are highly specialized to meet our needs in developing a cost- and time-effective program as compared to services provided
by an outsourced entity. We are engaged in developing scalable processes for both upstream and downstream for oncolytic virus, stem
cells and final products containing both oncolytic virus cells and enveloped oncolytic viruses. We believe our processes will have
the potential to facilitate the generation of targeted therapies with the potential to deliver genetic medicines to distal sites of disease.
We
have assembled a management team with extensive experience in developing and manufacturing biological, viral and gene therapies. We have
strong in-house process development capabilities for oncolytic viruses cell banks and combinatory products and are currently leveraging
external CDMOs to implement our in-house developed processes to produce drug substance and drug product. We require that our CDMOs produce
drug substance and finished drug product in accordance with Current Good Manufacturing Practices (“CGMPs”) and all other applicable laws and regulations. We maintain agreements with our manufacturers that include
confidentiality and intellectual property provisions to protect our proprietary rights related to our product candidates. We do not have
long-term supply arrangements in place with our CDMOs.
We
currently do not own or operate any manufacturing facilities. For our CLD-101 product candidate, we procured the neural stem cell bank
from City of Hope and we extended the cell bank at a commercial ready CDMO. The master virus seed for NeuroNova oncolytic virus production
(“CRAd-S-pk7”) was procured from Northwestern University and an extended master virus bank was manufactured at City of Hope.
For our CLD-201 product candidate, the AAA cell bank, VP-001, was produced by VetStem Biopharma. The CAL1virus for CLD-201 was manufactured
at Genscript ProBio in China. Pilot and/or initial GMP batches for both product candidates (CLD-101 and CLD-201), should those programs
advance, are anticipated to be produced by an early-stage CDMO on an as-need basis.
We
continue to invest in our internal development capabilities to establish critical in-house manufacturing expertise to support our
pipeline of product candidates. We expect to continue to invest in building proprietary processes that will enable us to be at a
competitive advantage when manufacturing product candidates for our clinical programs. In the near term, we intend to continue to
rely on third party CDMOs while we evaluate whether to establish our own CGMP manufacturing facilities for the production of
CGMP-grade material in order to secure our supply chain for clinical studies and commercialization.
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 limited 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.
Intellectual
Property
Our
commercial success depends in large part on our ability to obtain and maintain patent protection in the U.S. and other major oncology
markets and countries for our investigational products, to operate without infringing valid and enforceable patents and proprietary rights
of others, and to prevent others from infringing on our proprietary or intellectual property rights. We seek to protect our proprietary
position by (1) filing, in the U.S. and certain other regions/countries (including the EU), patent applications intended to cover our
investigational products, and maintaining any issued patents in our major markets; (2) maintaining and advancing, and where possible
expanding, existing patents and patent applications covering the composition-of-matter of our investigational products, their methods
of use and related discoveries, their formulations and methods of manufacture, and related technologies, inventions and improvements
that may be commercially important to our business; and (3) filing, in the U.S. and certain other regions/countries, new patent applications
on novel therapeutic uses of our investigational products. We may also rely on trade secrets and know-how to protect aspects of our business
that are not amenable to, or that we do not consider appropriate for, patent protection, and which is difficult to reverse engineer.
We seek to protect our confidential information in part through confidentiality agreements with third parties, including corporate partners,
collaborators, and vendors. If our trade secrets or confidential information are known or independently discovered by competitors, or
if we enter into disputes over ownership of inventions, our business or results of operations could be adversely affected. We also intend
to take advantage of regulatory protection afforded through data exclusivity, market exclusivity and patent term extensions where available.
We may also seek to rely on regulatory protection afforded through Orphan Drug Designation.
Our
strategy includes filing for patent protection of our intellectual property we consider important to our business in jurisdictions that
include the United States, Europe, and Japan and other jurisdictions we consider commercially relevant to protect our ability to market
our product candidates. We believe that our issued patents, and pending patent applications cover our technology platforms and product
candidates until approximately 2045.
Our
patent portfolio currently includes five main patent families to protect our current development programs and secure our next generation
programs for the use of stem cell-mediated immunotherapy and oncolytic viral therapy for the treatment of cancer. We, however, are allowing
patents and pending applications in two of the families (see below) to lapse by non-payment of annuities and/or failure to respond to
official actions in order to focus on the more recently filed applications that comprehensively cover the Red Tail program. The patent
families that are being allowed to lapse are the families directed to 1) Combination Immunotherapy Approach for Treatment of Cancer,
and 2) Cell-Based Vehicles for Potentiation of Viral Therapy. We believe the remaining patent coverage for our SuperNova program
is sufficiently robust to prevent any intellectual property challenges.
The
more recently filed applications, which are directed to the “Red Tail” technology, include modified vaccinia viruses designed
for systemic administration, and will provide protection until 2045, and possibly beyond. This newest patent family
(the fifth family) is directed to modified vaccinia viruses that have advantageous properties, including serum resistance for systemic
administration. These applications focus on the serum resistant (EEV) form of the viruses and modifications thereof. Two PCT applications
are pending. The applications describe and claim the viruses, the modifications of the viruses that enhance serum resistance, modifications
of the outer membrane of the viruses; and other aspects of the technology. Methods for manufacturing the viruses also are included, as
are modified cells for culturing the viruses to enhance properties of the viruses. The two PCT applications comprehensively describe
and claim all aspects of the “Red Tail” virus program.
The
second family of patents, Smallpox Vaccine for Cancer Treatment, encompasses the use of adipose-derived stromal vascular
fraction stem cells and other types of cells to deliver oncolytic viruses in autologous and allogeneic settings for the treatment of
all cancer tumor types and has potential patent coverage until at least 2038. Claims encompassing use of other stem cells to deliver
the smallpox vaccine virus also have been issued. We believe this patent family encompasses the delivery of the treatment by any route
of administration.
The
fourth patent family, Enhanced Systems for Cell-Mediated Oncolytic Viral Therapy, encompasses the use of an improved
method to potentiate and deliver all naturally occurring and armed viruses using stem cells, named SuperNovaTM and
has potential patent coverage until at least 2039. SuperNovaTM is composed of live cells, cell-derived factors,
amplified viruses, as well as viral-encoded immunomodulators and recombinant proteins that act immediately upon administration. The
pending patent applications also encompass the delivery of the treatment by any route of administration and protection of our single
cryopreserved vial for use in hospital settings. This fourth patent family has been filed in the US, Australia, Canada, China,
Eurasia, Europe, India, Japan, and S. Korea, also encompasses next generation engineered vaccinia viruses encoding additional
therapeutic protein-based immunotherapies (checkpoint inhibitors, co-stimulators, cytokines, antiangiogenetic, and others). Patents
have issued in the US, Japan, Eurasia, and Canada.
Further,
we and our subsidiaries own or have rights to trademarks, trade names and service marks that we use in connection with the operation
of our business, including “Calidi,” Calidi Biotherapeutics,” “SuperNova, “NeuroNova,” “SNV-1,”
“SNV,” “NNV,” “NNV1,” and “NNV2.”
License
Agreements
Northwestern
University
On
June 7, 2021, we entered into a sublicensable license agreement with Northwestern University (“Northwestern”) (the “Northwestern
Agreement”) for the exclusive commercialization rights to the IND and with a non-exclusive license to data generated from
Northwestern’s phase 1 clinical trial treating malignant glioma patients with an engineered oncolytic adenovirus delivered by neural
stem cells (“NSC-CRAd-S-pk7”). Under the Northwestern Agreement, among other rights, Northwestern granted to us a
worldwide, twelve-year exclusive license for the commercial development of NSC-CRAd-S-pk7 or other oncolytic viruses for therapeutic
and preventive uses in oncology and a right of reference to Northwestern’s IND application which relates to the treatment of newly
diagnosed HGG, and right of reference to Northwestern’s IND 17365. In exchange, we paid Northwestern an upfront payment of $400,000
cash and a best-efforts commitment to fund up to $10 million towards a phase 2 clinical trial of NSC-CRAd-S-pk7 or other oncolytic
viruses. We also agreed to share twenty percent (20%) of any sublicensing revenue we may generate and a 1% assignment or transfer fee
for any consideration received following our assignment to rights to any third party.
The
agreement has a term of 12 years unless further extended by mutual agreement. We have the right to terminate the agreement upon 90 days
written notice for any reason. Northwestern has the right to terminate the agreement at any time if the license to all patents and patent
applications claiming priority to U.S. Provisional Patent Application 61/780,752 (the “Patent Rights License”) entered into with the University
of Chicago (on behalf of itself, City of Hope, and the University of Alabama at Birmingham) is no longer in effect, unless the Patent
Rights License is breached by the University of Chicago, City of Hope, or the University of Alabama, or if we have engaged in any criminal
or unethical behavior or have untaken an action adverse to Northwestern. Either party has a right to terminate the agreement upon the
breach of the other party that is not cured within 90 days after notice of the breach is provided. Northwestern has the right to immediately
terminate the agreement in the event we file a petition in bankruptcy, make any general assignment for the benefit of creditors, or a
receiver is appointed to take custody or control of our property.
On
October 14, 2021, we entered into a worldwide, non-exclusive, sublicensable royalty free Material License Agreement to license the NSC-CRAd-S-pk7
oncolytic virus materials which we intend to use to continue advancing our research, development and commercialization efforts. Northwestern
retained the rights to the material not transferred and to non-exclusively license the materials for Non-Commercial Research and has
agreed not to grant further commercial licenses during the term of the agreement. We paid Northwestern a one-time license fee of $100,000
in exchange for the transferred materials. The agreement has a term of 12 years. We have a right to terminate the agreement for any reason
upon 90 days written notice. Either party has the right to terminate the agreement upon the material breach by the other party unless
such breach is cured within a 90 day notice period. Northwestern may immediately terminate the agreement upon written notice if we file
a petition, or a petition is filed against us, under any bankruptcy or insolvency law, if we make any general assignment for the benefit
of creditors, or a receiver is appointed to take possession or control of our property.
On
December 15, 2024, we entered into an Investigator-Initiated Clinical Trial Agreement for Northwestern to conduct a clinical trial (the
“CTA”) under the protocol referenced “A Phase I Study of Repeated Neural Stem Cell Based Virotherapy in Combination
with N-Acetylcysteine amid and Standard Radiation and Chemotherapy for Newly Diagnosed High Grade Glioma” (the “Study”).
In connection with the Study, Northwestern granted Calidi a non-exclusive, transferable and sublicensable license to use all available
de-identified data collected from the Study, including, but not limited to, survival data, patient pathology, and immune studies data
for the purpose of product development and regulatory filings. We shall have the right of reference to the IND that is being used by
Northwestern for the Study. Northwestern agrees to provide a letter of authorization and right of reference to Calidi for Calidi’s
right of reference to and including, without limitation, all content, data and previous human experience, in the NU IND 17365. In consideration
of the data use license granted by Northwestern to Calidi under the CTA, Calidi provided to Northwestern required quantities of the study
drug. Calidi is further required to pay Northwestern the following: a non-creditable and non-refundable one-time milestone payment of
$250,000 upon reaching an aggregate of $2,000,000 of net sales of a licensed product; (b) a non-creditable and nonrefundable one-time
milestone payment of $500,000 upon reaching an aggregate of $10,000,000 of net sales of a licensed product; and (c) sublicensing royalty
of twenty percent (20%) of any sublicensing revenue resulting from the grant of rights hereunder. This sublicensing royalty shall be
cumulative, meaning it shall be imposed only once with respect to a single unit of sublicensing revenue, regardless of whether the sublicensing
revenue derives from the CTA, or the June 7, 2021 Northwestern Agreement described above, or both. Calidi is further required to pay
a 1% assignment or transfer fee for any consideration received following our assignment to rights to any third party.
The
license provides commercial exclusivity for a period of 12 years unless so long as Calidi maintains the Patent Rights Licensed (described
in the June 7, 2021, license) unless the Patent Rights License is terminated for a material breach by the University of Chicago, City
of Hope, or University of Alabama at Birmingham, Northwestern reserves the rights for itself to use the licensed data for any purpose
and to provide the licensed data to any third party solely for non-commercial research purposes.
The
CTA shall terminate upon the completion of the parties’ Study-related activities. Either party has the right to terminate the Study
upon thirty (30) days prior written notice to the other. The Study may also be terminated immediately at any time for cause, which includes
the following: material breach by either party, which cannot be cured within 90 days of the breach notification; the Patent Rights License
described in the June 7, 2021 license is no longer in effect, except in the case of breach by University of Chicago, City of Hope, or
University of Alabama at Birmingham; Calidi has engaged in any criminal or unethical behavior; Calidi’s bankruptcy; and if it is
determined by the Study’s principal-investigator, Northwestern’s Institutional Review Board or Scientific Review Committee,
or the Food and Drug Administration that the Study is inappropriate, impractical, or inadvisable to continue, in order to protect the
Study subjects’ rights, welfare, and safety.
University
of Chicago
On
July 22, 2021, we entered into an exclusive license agreement with the University of Chicago for patents jointly owned by the University
of Chicago. City of Hope and University of Alabama at Birmingham (the “University of Chicago Agreement”) for patents
covering cancer therapies using an oncolytic adenovirus loaded into allogeneic neural stem cells for the treatment of HGG. Pursuant to
the University of Chicago Agreement, University of Chicago transferred its IND to us for the commercial development of a licensed product,
as defined in the University of Chicago Agreement. This agreement grants to us commercial sublicensable exclusive license to neural stem
cells with the adenovirus known as CRAd-S-pk7 for oncolytic virotherapy, as well as a non-exclusive license to associated know-how. The
University of Chicago reserves the right to practice the licensed patents, or to license the patents to third parties, solely for non-commercial
purposes.
Under
the University of Chicago Agreement, we paid an upfront fee of $180,000 in cash and issued 347 shares of our common stock. The University
of Chicago Agreement requires us to pay an annual maintenance fee of $10,000 until the first commercial sale. The University of Chicago
Agreement also provides for us to pay a percentage of net sales, the royalties of which can be reduced by 50% with certain royalty stacking
provisions if royalties are also to be paid to third-parties, generated for any product that falls within a valid claim of the licensed
patents for specific periods of between 2% and 6%; 2% for net sales generated for any product sold in any country without a valid claim
and to pay up to $18.7 million if all of the following milestones are achieved during the clinical trials and post commercialization
of the licensed product:
● Commencement of a Phase 2 clinical trial with a Licensed Product ($800,000);
● Commencement of a Phase 3 clinical trial with a Licensed Product ($1,800,000);
● First Submission of an NDA, BLA for a Licensed Product ($2,500,000);
● First Commercial Sale of a Licensed Product ($3,600,000); and
As
of the date of the issuance of these condensed consolidated financial statements, it is not probable that we will incur these payments.
In
addition to the foregoing, we have also agreed to twenty percent (20%) of sublicense revenue we may generate. Calidi is further required
to pay the lesser of $1,000,000 or 1% assignment or transfer fee for any consideration received following our assignment to rights to
any third party.
The
term of the University of Chicago Agreement will expire on the later of: (i) the expiration date of the last to expire of the Licensed
Patents; and (ii) ten (10) years from the First Commercial Sale, unless earlier terminated pursuant to the terms of this Agreement. University
of Chicago (“University”) has the right to terminate the agreement upon 21 days written notice for our failure to make any
payment when due, with the right to cure the default by payment before the expiration of the notice period. University also has the right
to immediately terminate the agreement if we fail to achieve development milestones within the time frame contemplated by the agreement.
Furthermore, University has the right to terminate the agreement if we are in material breach of any other obligation under the agreement
not specified above upon 30 days written notice unless we cure the breach within the notice period. In addition, if we file a petition
under any bankruptcy or insolvency law, and such petition is not dismissed within 60 days of such filing, the agreement will automatically
terminate at the end of such 60-day period unless University provides us with written notice that the agreement will not terminate. Upon
our liquidation or dissolution, the agreement will automatically terminate. If we fail to begin commercial sales of a Licensed Product
within 8 years, University may terminate the agreement anytime thereafter on written notice. We have the right to terminate the agreement
for any reason upon written notice to university and the agreement will terminate at the end of the Calendar Quarter following the Calendar
Quarter during which we provided our notice of termination.
Collaboration
Agreement with Personalized Stem Cells, Inc.
On
April 9, 2020, we entered into a collaboration and license agreement with Personalized Stem Cells, Inc. (the “PSC Agreement”).
Under the terms of the PSC Agreement, we provided two tested SVF cell line banks for use in a Covid-19 Project for use in the generation
of a Master Cell Bank (“MCB”) by Personalized Stem Cells, Inc. (“PSC”). Fifty percent (50%) ownership of the MCB would be retained by PSC
for use in clinical trials for the treatment of Covid-19 and we are entitled to retain the other 50% ownership in the MCB to pursue our
development of our product candidates. We are also entitled to full access and use of all clinical data from the Covid-19 Project for
our use in developing our product candidates. The agreement is for an unspecified term, but can be terminated by either party upon the
material breach of the other party if such breach is not cured within a 30 day written notice period, or immediately upon written notice
if the breach is incapable of being cured. We contributed $100,000 in cost towards the manufacturing of the MCB by PSC.
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.
U.S.