10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2022

Commission File Number 001-41583

Coya 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: (800) 587-8170

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 $0.0001 per share COYA The Nasdaq Stock Market 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 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. ☐

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). ☐

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

As of June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, there was no established public market for the registrant’s common stock. The registrant’s common stock began trading on the Nasdaq Capital Market on December 29, 2022. Accordingly, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price of the registrant’s common stock as of the registrant’s most recently completed second fiscal quarter cannot be determined.

The number of shares of Registrant’s common stock outstanding as of March 16, 2023 was 9,947,915.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the 2023 annual meeting of stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year ended December 31, 2022, are incorporated by reference in Part III of this Form 10-K.

Table of Contents

Page

PART I

Item 1. Business 2

Item 1A. Risk Factors 39

Item 1B. Unresolved Staff Comments 78

Item 2. Properties 78

Item 3. Legal Proceedings 78

Item 4. Mine Safety Disclosures 78

PART II

Item 6. [Reserved] 79

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 89

Item 8. Financial Statements and Supplementary Data 89

Item 9A. Controls and Procedures 89

Item 9B. Other Information 90

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 90

PART III

Item 10. Directors, Executive Officers and Corporate Governance 91

Item 11. Executive Compensation 91

Item 14. Principal Accounting Fees and Services 91

PART IV

Item 15. Exhibits and Financial Statement Schedules 92

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements made under the headings “Summary,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K contain forward-looking statements that reflect our plans, beliefs, expectations and current views with respect to, among other things, future events and financial performance.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often characterized by the use of words such as “believe,” “can,” “could,” “potential,” “plan,” “predict,” “goals,” “seek,” “should,” “may,” “may have,” “would,” “estimate,” “continue,” “anticipate,” “intend,” “expect” or by discussions of strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from historical results or any future results, performance or achievements expressed, suggested or implied by such forward-looking statements. These include, but are not limited to, statements about:

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our ability to develop, obtain regulatory approval for and commercialize our product candidates;

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the timing of future investigational new drug (“IND”) submissions, initiation of preclinical studies and clinical trials, and timing of expected clinical results for our product candidates;

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our success in early preclinical studies, which may not be indicative of results obtained in later studies or clinical trials;

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the outbreak of the novel strain of coronavirus disease, COVID-19, which could adversely impact our business, including our preclinical studies and any future clinical trials;

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the potential benefits of our product candidates;

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our ability to identify patients with the diseases treated by our product candidates, and to enroll patients in clinical trials;

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the success of our efforts to expand our pipeline of product candidates and develop marketable products through the use of our therapeutic modalities;

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our expectations regarding collaborations and other agreements with third parties and their potential benefits;

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our ability to obtain, maintain and protect our intellectual property;

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our reliance upon intellectual property licensed from third parties;

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our ability to identify, recruit and retain key personnel;

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our expected use of net proceeds from our initial public offering and the sufficiency of such net proceeds, together with our cash and cash equivalents, to fund our operations;

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our financial performance;

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developments or projections relating to our competitors or our industry;

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the impact of laws and regulations;

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our expectations regarding the time during which we will be an emerging growth company under the JOBS Act; and

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other factors and assumptions described in this Annual Report on Form 10-K under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Our Business”, and elsewhere in this Annual Report on Form 10-K.

These statements are based on our historical performance and on our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them. The inclusion of this forward-looking information should not be regarded as a representation by us, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Forward-looking statements made in this Annual Report on Form 10-K speak only as of the date of this Annual Report on Form 10-K, and we undertake no obligation to update them in light of new information or future events, except as required by law.

You should carefully consider the above factors, as well as the factors discussed elsewhere in this Annual Report on Form 10-K, including under “Risk Factors,” before deciding to invest in our securities. The factors identified above should not be construed as an exhaustive list of factors that could affect our future results and should be read in conjunction with the other cautionary statements that are included in this Annual Report on Form 10-K. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. If any of these trends, risks or uncertainties actually occurs or continues, our business, revenue and financial results could be harmed, the trading prices of our securities could decline and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

PART I

ITEM 1.BUSINESS

All references in this report to "Coya," the "Company," "we," "us," or "our" mean Coya Therapeutics, Inc. unless stated otherwise or the context otherwise indicates.

Overview

We are a clinical-stage biotechnology company focused on developing proprietary medicinal products to modulate the function of regulatory T cells (“Tregs”). Tregs are a subpopulation of T-lymphocytes consisting of CD4+CD25high hFOXP3+ cells that suppress inflammatory responses. Tregs and their transcription factors are essential to maintain homeostasis by regulating autoimmune and inflammatory responses and maintaining self-tolerance in mammals. Treg dysfunction is an important component in the pathophysiology of serious neurodegenerative, autoimmune, and metabolic diseases, for which we believe new and effective therapies are urgently needed.

Tregs were discovered in 1995 by Dr. Shimon Sakaguchi and since their discovery, multiple lines of research have contributed to elucidate Treg biology and their role in health and disease. Initial scientific evidence revealed the key mechanisms linking the function of Tregs to autoimmune and chronic inflammatory diseases. Following these key discoveries, the role of Tregs was also identified in progressive neurogenerative diseases.

Understanding the biology of healthy Tregs and the role of dysfunctional Tregs across different disease categories, has made this subset of T lymphocytes a relevant therapeutic target, which we believe may provide new treatments for serious diseases.

Since our inception in 2020, we have generated preclinical and clinical data in multiple models and diseases. Our autologous Treg cell therapy program has completed Phase 1 and Phase 2a studies in amyotrophic lateral sclerosis, or ALS. The clinical data from these initial studies has served as an important confirmation of the immunomodulatory properties of Tregs and their potential therapeutic benefits. These studies have also significantly expanded our own foundational knowledge of the biological activity of Tregs, which we believe will be critical for the design of our future clinical and preclinical studies, the selection of future targeted diseases and the overall advancement of our development pipeline.

Our initial developmental programs are focused on neurodegenerative, chronic inflammatory, autoimmune, and metabolic diseases of high unmet medical need. Our diversified candidate pipeline includes both ex vivo and in vivo approaches intended to restore the suppressive and immunomodulatory functions of Tregs. Our product candidate pipeline is based on our three therapeutic modalities: (1) Treg-enhancing biologics; (2) Treg-derived exosomes; and (3) autologous Treg cell therapy. The product candidates utilizing our Treg-enhancing biologics are collectively referred to as the “300 Series.” The product candidates utilizing our Treg-derived exosomes are collectively referred to as the “200 Series.” The product candidates utilizing our autologous Treg cell therapy are collectively referred to as the “100 Series.” Currently, our 300 Series product candidates include COYA 301 and COYA 302, our 200 Series product candidates include COYA 201 and COYA 206, and our 100 Series product candidate is COYA 101.

We believe our product candidate pipeline has the potential to address the unmet need of serious diseases in multiple therapeutic areas. Our multiple development programs, which we are conducting simultaneously, may reduce the risk profile of our operations and enhances our chance of achieving regulatory approval and commercialization for one or multiple of our product candidates.

Our business strategy is to advance our multiple therapeutic modalities and product candidates simultaneously, which we believe sets the foundation for accomplishing multiple development milestones overtime, with the goal of ultimately delivering new and effective products for patients and their families.

Initial Public Offering

On January 3, 2023, we closed our initial public offering of 3,050,000 shares of our common stock and accompanying warrants to purchase up to 1,525,000 shares of common stock. The warrants were offered and sold at the rate of one warrant for every two shares of common stock purchased in the offering, with each full warrant having an exercise price of $7.50 per share. Each share of common stock and accompanying warrant were sold at a combined offering price of $5.00, for gross proceeds of approximately $15.25 million, before deducting underwriting discounts and offering expenses (the “IPO”). We granted the underwriters a 30-day over-allotment option to purchase up to an additional 290,000 shares of common stock and/or warrants to purchase 145,000 shares of common stock at the initial public offering price, less the underwriting discount. On January 25, 2023, we sold an additional 237,804 shares of common stock and accompanying warrants to purchase up to 145,000 shares of common stock upon the underwriters’ exercise in part of their over-allotment option for additional gross proceeds of approximately $1.15 million, before deducting underwriting discounts and offering expenses. Our shares of common stock began trading on the Nasdaq Capital Market under the ticker symbols “COYA” on December 29, 2022.

Our Pipeline

The core of our approach and strategy is to leverage our three Treg-modifying therapeutic modalities to advance the standard of care for neurodegenerative and autoimmune diseases. Building on our initial findings from our autologous Treg cell therapy modality, our goal is to offer patients therapies that improve outcomes of neurodegenerative, autoimmune, and metabolic diseases.

Our Strategy

Our strategy is to discover, develop, manufacture, and commercialize proprietary medicinal products that enhance the function of Tregs. We intend for our product candidates to address unmet medical needs, principally in neurodegenerative, autoimmune, and metabolic diseases.

We believe we can differentiate ourselves from other Treg companies by combining our understanding of Treg cell biology and the diseases where Treg cellular dysfunction is considered a likely driver of pathology with our three distinct therapeutic modalities: (i) Treg-enhancing biologics, (ii) Treg-derived exosomes, and (iii) autologous Treg cell therapy.

Key elements of our strategy include:

Advance the development COYA 301. Our goal is to advance COYA 301, our biologic product candidate, for the treatment of frontotemporal dementia ("FTD") by initiating IND-enabling studies, followed by clinical trials. FTD is a relatively rare form of dementia that impacts younger individuals, for which no treatment is currently available.

Advance the development of COYA 302. Our goal is to advance COYA 302, a biologic product candidate combination that aims to suppress inflammation via administration of a fusion protein in conjunction with COYA 301, a biologic that aims to enhance Treg function. We believe this combination has synergistic impacts in enhancing Treg function. We aim to develop this combination in ALS and other neurodegenerative and autoimmune diseases.

Leverage our in-licensed technology to advance our Treg exosome therapies. We expect to begin developing the next generation of our Treg exosome therapies (COYA 206) utilizing technology we have in-licensed from Carnegie Mellon University which we believe may enable Treg exosomes to be homed to proteins of interest while delivering select payload into targeted cells. We believe COYA 206 provides a material advantage to our Treg-derived exosome therapeutic modality by allowing targeting of these exosomes to proteins of interest. There are diseases that may be driven by certain proteins and the ability to home in on these proteins may make COYA 206 more selective to that condition. Obtaining preclinical data illustrating this targeted approach is an important initiative for us.

Continue to develop our cell therapy product through Phase 2. Our goal is to advance COYA 101, our autologous cell therapy for the treatment of amyotrophic lateral sclerosis ("ALS"), into Phase 2b clinical trials, provided we receive

non-dilutive funding in the form of a grant from a government organization, or by partnering with an established pharmaceutical company. We currently anticipate that grant funding, or other non-dilutive funding, in the amount of approximately $3 million would be sufficient to begin advancing COYA 101 into a Phase 2b trial. This amount is an estimate and may be subject to change.

Expand our pipeline by identifying and developing additional product candidates and identifying additional target indications. We intend to develop other biologics and biologic combinations intended to ameliorate inflammation and lack of self-tolerance that characterize certain neurodegenerative, and autoimmune diseases.

Selectively enter into new discovery relationships with premier research institutions and commercial partners. We expect to have ongoing discussion with third-party pharmaceutical companies about their interest in partnering with us for the ongoing development and commercialization of certain of our development programs.

Expand our manufacturing capabilities. Continue ongoing development and optimization of our manufacturing capabilities of Treg cellular therapeutics, exosomes, engineered exosomes, and biologics.

Regulatory T cells (Tregs)

In 1995, a subpopulation of suppressor T cells was identified that expressed CD4 and was named regulatory T cells (Tregs). CD4 is found on the surface of certain cells and plays a key role in maintaining homeostasis, a state of balance among all the body systems needed for the body to survive and function correctly, in the immune system. CD4+ T cells are commonly divided into two distinct lineages: Treg cells and conventional T helper (Th) cells (Pro-Inflammatory Cells).

Conventional Th cells are crucial in shaping the immune response, whether it is protection against a pathogen, a cytotoxic attack on tumor cells, or an unwanted response to self-antigens in the context of autoimmunity. Th cells control the adaptive immune system. The adaptive immune system includes the effectors cells of the cellular immune responses, the T lymphocytes, which mature in the thymus, and antibody-producing cells, the B lymphocytes, which arise in the bone marrow. Th cells control the adaptive immune system by activating, in an antigen-specific fashion, other effector cells such as CD8+ cytotoxic T cells (which are important for immune defense against intracellular pathogens), B cells (that are responsible for producing antibodies), and macrophages (white blood cells that stimulate the action of other immune system cells). By functioning in an antigen-specific fashion, the Th cell is capable of stimulating an immune response.

Tregs main function is the suppression and termination of pro-inflammatory immune responses. Tregs suppress both innate and adaptive immune reactions detrimental to the host, downregulate pro- inflammatory cytokine (a type of protein that is made by certain immune and non-immune cells and has an effect on the immune system) production, and can suppress the activation/expansion of CD4+CD25- effector T lymphocytes (Teffs). Immune homeostasis is reached when there is a balance between the number of functional Tregs and pro-inflammatory T cells. See the below figure for a visual representation:

The Significant Role of Tregs in Neurodegenerative, Autoimmune, and Metabolic Diseases

Dysfunctional Tregs underlie many diseases, and this cellular dysfunction is driven by the chronic inflammatory environment and high levels of oxidative stress commonly observed in numerous diseases. Additionally, the degree of Treg dysfunction is associated with the severity and progression of serious and life-threatening conditions, for which we believe new and effective therapies are urgently needed.

Since the discovery of Tregs in 1995, we have continued the development and research of Tregs by leveraging the scientific discoveries of Dr. Stanley Appel and his research team at Houston Methodist Hospital (“Methodist”) in Houston, Texas. We have entered into an exclusive Patent and Know How License Agreement with Methodist, and we continue to work with them in support of their research through an exclusive Sponsored Research Agreement.

Recent scientific evidence from Dr. Appel demonstrates that dysregulation of the immune system negatively impacts the severity and progression of neurodegenerative conditions. We believe Dr. Appel’s work demonstrates the role of Treg dysfunction in serious conditions such as ALS, Alzheimer’s disease (“AD”), and FTD.

In particular, Dr. Appel discovered that Tregs are both reduced in numbers and function in these patients suffering from neurodegenerative diseases, and more marked reduction could be associated with more rapid disease progression. In addition, scientific evidence indicates an association between Treg dysfunction and the pathophysiology of autoimmune and metabolic conditions, such as liver inflammation and fibrosis and systemic sclerosis (“SSc”), also known as scleroderma.

An increased ratio of pro-inflammatory T cells to functional Tregs leads to a disrupted immune homeostasis. See the below figure for a visual representation:

Our Biologics Therapeutic Modality (the 300 Series)

Our growing expertise and clinical experience decoding Treg biology and the critical role of Tregs in the pathophysiology of neurodegenerative, autoimmune, and metabolic diseases, provide the basis for the research and development of innovative biologics and biologic combinations intended to enhance Treg function in vivo for the treatment of diseases of high unmet medical need.

COYA 301

COYA 301, our low-dose interleukin 2 (IL-2) product candidate, is a biologic for subcutaneous administration intended to enhance Treg function and expand Treg numbers in vivo for the treatment of FTD, an orphan disease of high unmet need. We believe

an increased ratio of functional Tregs shifts the balance in vivo in favor of anti-inflammatory Tregs to pro-inflammatory cells. See the below figure for a visual representation:

We are developing biologics and biologic combinations intended to ameliorate the inflammation and lack of self-tolerance that characterize certain neurodegenerative and autoimmune diseases, by increasing Treg suppressive and immunomodulatory functions.

COYA 301’s subcutaneous administration allows patients to be dosed in their homes, which we believe provides convenience and pharmacoeconomic advantages over existing products requiring administration in a hospital setting.

Overview of FTD

FTD is a group of disorders that occur when nerve cells in the frontal and temporal lobes of the brain are lost. This causes the lobes to shrink. FTD can affect behavior, personality, language, and movement. These disorders are among the most common dementias that strike at younger ages. Symptoms typically start between the ages of 40 and 65, but FTD can strike younger adults and those who are older. FTD affects men and women equally, and its prevalence in the United States is about 60,000 cases. There are no currently approved products to prevent, cure or slow the progression of FTD. In light of the severe nature of FTD and the high unmet need due to the lack of treatments, our strategy is to simultaneously develop COYA 301 for the treatment of FTD. We believe this maximizes our chances of developing a successful product candidate. As the development of each of these product candidates progresses, we will periodically assess which product candidate or candidates presents our best opportunity for clinical success and will adjust our strategy accordingly.

As in other types of dementia, mounting evidence supports the role of neuroinflammation in the progression of FTD, including cortical inflammation and cell activation. In addition, available data suggest an overlap between FTD and autoimmune disease in patients with altered blood glycoproteins.

Development Status

We are conducting chemistry, manufacturing, and controls ("CMC") activities and IND-enabling toxicology studies to support the filing of an IND application and the initiation of clinical trials to evaluate the safety and efficacy of COYA 301 for the treatment of FTD. We expect to begin the initial Phase 1 clinical trial in 2023 which will evaluate the safety, pharmacokinetics, and biological activity of COYA 301.

We believe data from the FTD development program may support the development of COYA 301 for additional indications, administered as monotherapy or as adjunctive therapy to current standard of care. In preclinical in vitro testing, COYA 301 has shown an ability to enhance Treg function and to restore immune system homeostasis. We conducted studies in 2021 that show that Treg suppressive function is significantly decreased in FTD compared to healthy controls. Scientific evidence demonstrates that COYA 301 plays a key role in the development, expansion, activity, and survival of Tregs. This study was designed to evaluate Treg function in patients with FTD and was conducted by Dr. Appel and his team at Houston Methodist Hospital in 2021. This was a non-interventional study in which no treatment was administered, therefore efficacy and safety endpoints were not part of the assessment. The study included 22 patients and 13 matching healthy controls. Demographics of FTD patients and controls were comparable for age and sex. Mean (SD) age in the FTD group was 67.6 (8.2) years compared to 68.4 (7.5) in the controls. The proportion of women in the FTD group was 59% and 54% in the controls.

Treg percent suppressive function on the proliferation of responder T lymphocytes was assessed by 3H-thymidine incorporation. Difference in Treg suppressive function between groups was determined using one-way ANOVA. This was an non-interventional study and no investigational treatment was administered, and no study subject experienced a serious adverse event. Results of a study conducted by Dr. Stanley Appel and his team at The Houston Methodist Hospital show that Treg suppressive function in FTD

patients was significantly lower compared to healthy subjects (Table 1, which is based on our internally generated data); which we believe is unsurprising given that the homeostasis of the immune system is negatively impacted in FTD.

Table 1.

Percentage Treg Suppressive Function in FTD and Healthy Subjects

FTD (N=22) Healthy Controls (N=13)

We believe our preclinical data, in connection with the data from this non-interventional clinical study in FTD patients, support that enhancing Tregs’ suppressive function may have the potential to reduce the pro-inflammatory response driving neurodegeneration and disease progression in FTD.

We intend to explore partnerships with other pharmaceutical and biotechnology companies that own strategic compounds that could potentially be suitable candidates for safe and effective new combination therapies with COYA 301.

COYA 302

Our second biologic product candidate, COYA 302, is a biologic combination for subcutaneous and/or intravenous administration intended to enhance Treg function while depleting T effector function and activated macrophages. COYA 302 is a combination of COYA 301 (low-dose IL-2) and the fusion protein CTL4-Ig. These two mechanisms may be additive or synergistic in suppressing inflammation. We believe the immunomodulatory fusion protein selectively inhibits the activation of pro-inflammatory effector T cells and macrophages, downregulating the secretion of pro-inflammatory cytokines, while COYA 301 enhances and expands Tregs in vivo. The combination of these two approaches is intended to further shift the balance in favor of anti-inflammatory Tregs to pro-inflammatory cells in vivo. See the below figure for a visual representation:

Development Status

We are conducting CMC activities and IND-enabling toxicology studies to support the filing of an IND and the initiation of industry-sponsored clinical trials of COYA 302 for the treatment of ALS. We expect to begin a Phase 2 clinical trial in ALS in the second half of 2023 which will evaluate the safety, pharmacokinetics, biological activity, and efficacy of COYA 302.

In vitro assays, done in an in vitro clinical study conducted by Dr. Appel and his team at Houston Methodist Hospital (using commercially available products) showed that ex vivo expanded human Tregs exhibited greater suppression of T responder (“Tresp”) proliferation after exposure to the fusion protein component of COYA 302. In a separate assay, the addition of the fusion protein to ex vivo expanded human Tregs showed incremental suppression in the production of IL-6 by M1 proinflammatory macrophages.

Following the in vitro testing, COYA 302 was evaluated in two open-label proof of concept academic clinical studies, also conducted by Dr. Appel and his team at Houston Methodist Hospital using commercially available products. The first study was conducted in three patients with Alzheimer’s disease. Patients received COYA 302 over a four-month period and were assessed for cognitive status, Treg suppression function, and safety and tolerability. Cognitive function was measured with the Mini-Mental State Examination (MMSE) test, and patients exhibited a stable or slightly improved MMSE score at the end of the study, compared to

baseline. Consistent with the positive observation in cognitive status, the three patients showed an increase in their Treg suppressive function over the course of the treatment with COYA 302, compared to baseline values prior to initiation of treatment. In addition, COYA 302 was well tolerated, no serious adverse events were reported, and no patient discontinued the study due to safety reasons. This study was not powered to assess statistical significance.

The results of second open-label study in four patients with amyotrophic lateral sclerosis (ALS) were presented by Dr. Appel on March 21, 2023, at a Company webcast and at the 2023 Muscle Dystrophy Association (MDA) Clinical & Scientific Conference in Dallas, Texas. Study assessments included functional status, as measured by the Revised ALS Functional Rating Scale (ALSFRS-R), regulatory T cell (Treg) suppressive function and numbers, serum biomarkers, and safety and tolerability. Study patients were treated with COYA 302 for 48 weeks (treatment phase) and were followed for additional 8 weeks after completion of the treatment phase (follow-up period). The ALSFRS-R scoring range is 0 to 48, with higher scores representing a better functional status.

Study data showed no decline or minimal decline at 24 and 48 weeks, respectively, after initiation of treatment in this group of patients that were experiencing a mean decline of -1.1 points/month in their ALSFRS-R score prior to initiation of treatment with COYA 302. The mean (±SD) ALSFRS-R scores at week 24 (33.75 ±3.3) and week 48 (32 ±7.8) after initiation of treatment were not statistically different compared to the ALSFRS-R score at baseline (33.5 ±5.9), indicating significant amelioration in the progression of the disease.

COYA 302: ALS Progression Over 48 Weeks

In addition, COYA 302 significantly enhanced Treg suppressive function at 24 weeks and 48 weeks. Treg suppressive function, expressed as percentage of inhibition of proinflammatory T cell proliferation, showed a statistically significant increase over the course of the treatment period and was significantly reduced at the end of the 8-week post-treatment follow-up period. Treg suppressive function at 24 weeks (79.9±9.6) and 48 weeks (89.5±4.1) were significantly higher compared to baseline (62.1±8.1) (p<0.01), suggesting enhanced and durable Treg suppressive function over the course of treatment. In contrast, Treg suppressive function (mean ±SD) was significantly decreased at the end of the 8-week follow-up period compared to end-of-treatment at week 48 (70.3±8.1 vs. 89.5±4.1, p <0.05). The study also evaluated serum biomarkers of inflammation, oxidative stress, and lipid peroxides. The available data up to 16 weeks after initiation of treatment suggest a decrease of these biomarker levels, which is consistent with the observed enhancement of Treg function. The evaluation of the full biomarker data is ongoing.

COYA 302 Increased Treg Suppressive Function In Vivo

COYA 302 Increased Treg Number In Vivo

COYA 302 Lowered Lipid Peroxide Biomarkers (interim data)

From the clinical safety perspective, COYA 302 appeared to be well tolerated over the 48-week treatment period. The most common adverse event was mild injection-site reactions. No patient discontinued the study, and no deaths or other serious adverse events were reported.

Our Treg-Derived Exosomes Therapeutic Modality (the 200 Series)

We are developing a Treg-derived exosome therapeutic modality consisting of both allogeneic Treg-derived exosomes and antigen derived Treg-directed exosomes that we believe may have unique advantages due to their nanosized (having dimensions limited to nanometers) and non-cell characteristics and to the potential for customization. Treg-derived exosomes are manufactured following the expansion and conversion of Tregs. The Treg exosomes are nanovesicles, tiny sacs released by cells that carry chemical messages between cells, produced by the Tregs and released to the bloodstream and different tissues to communicate with other cells, including pro-inflammatory T and B cells. Treg exosomes contain different types of cargo, such as proteins, lipids, and nucleic acids, and have suppressive contact-mediated receptors and proteins that are typically present on the parent Tregs, allowing them to efficiently modulate the immune and inflammatory responses.

We have filed intellectual property claims on the contents of the exosomes, namely the micro RNAs that are reproducibly represented from batch to batch. Many of these micro RNAs confer anti-inflammatory functionality as a mechanism of action and we believe may explain the exosomes’ immunomodulatory function. The exosome field is an emerging and new area at present and understanding the functional aspects of the exosomes is an important but evolving regulatory aspect. We have filed intellectual property claims for compositions of matter that teach the reproducible micro RNA contents. To date, no patents have been issued.

We have developed technology to collect large volumes of Treg exosomes from the tissue culture media that is utilized in the Treg conversion and expansion process. One of the potential limitations of anti-inflammatory Treg cells is that they could be susceptible to the noxious, pro-inflammatory environment observed in some serious and progressive conditions, with the possibility of being converted to a dysfunctional Treg phenotype. Because Treg exosomes are not cells and are end-stage differentiated, they cannot be phenotypically changed, which is the shifting from a type of cell to another type of cell, by the inflammatory environment. In addition, Treg exosomes’ very small size (between 30-200 nm) makes them able to readily reach sites of inflammation and cross biological barriers in the body, including the blood-brain barrier. See the below image for a visual representation of a Treg exosome.

We believe our data demonstrates the anti-inflammatory activity of Treg exosomes in in vitro assays and in vivo animal models of acute inflammation and ALS, following intravenous and intranasal administration. Further, we believe our research demonstrates that Treg exosomes exhibit greater anti-inflammatory potency than mesenchymal exosomes, as demonstrated in research recently published in the journal Frontiers of Immunology. Mesenchymal exosomes are extracellular vesicles that are derived from mesenchymal stem cells which are a heterogeneous population of cells that are isolated from various tissues, including bone marrow, adipose tissue, umbilical cords, and even urine.

We believe these Treg exosomes may provide an extensive arsenal of suppressive signaling components and anti-inflammatory mediators that are potentially able to suppress pro-inflammatory cascades in the body, including the brain.

While we maintain internal preclinical research and development activities in exosomes generally, we are simultaneously investigating alternative exosome technologies developed by academic institutions or commercial enterprises which we may be able to access, through external partnerships, licensing, and/or strategic collaborations.

COYA 201

Our allogeneic Treg exosome product candidate, COYA 201, is being developed following Treg conversion and expansion from healthy donors. We believe the manufacturing process under GMP conditions to date has shown consistent batch-to-batch comparability and adequate long-term stability. In addition, we believe the proprietary manufacturing and cryopreservation processes are highly efficient and will be able to supply a 12-month treatment for five patients from a single manufacturing run.

We believe that our Treg exosome modality for allogeneic use allows targeting multiple indications in the neurodegenerative, autoimmune, and metabolic therapeutic categories.

In evaluations of our Treg exosome product in a preclinical lupus nephritis model in mice, COYA 201 was administered at different dose levels and was well tolerated, and no fatalities were observed at the administered dose of 1x1010 exosomes (low dosage level). However, as part of this dose-escalation study, as a result of toxicity when administered in extremely high doses (1x1011 exosomes, or ten times the low dosage level) administered twice weekly, death in six animals (out of a total of 12) was observed. Dose escalation studies are standard in the early development of new treatments and the assessment of the “maximum tolerated dose” and

identification of the dose that produces lethality in 50% of animals, are also common studies in early preclinical development. The primary endpoint of this study was proteinuria (amount of protein in urine) to assess renal function. The primary endpoint was not met. Currently, the side effect profile of our product candidates in humans is unknown. We continue to evaluate different potential indications to advance the development of COYA 201 into clinical studies. Following the completion of the preclinical studies in different animal models of disease, we will evaluate the data to potentially conduct further preclinical studies and to select a potential clinical indication for human studies.

COYA 201 was also evaluated in a mouse model of scleroderma.

Overview of Scleroderma

Scleroderma, also known as systemic sclerosis, is an autoimmune disease affecting the skin and other organs of the body, meaning that the body’s immune system is causing inflammation and other abnormalities in these tissues. There are two main types of scleroderma: localized scleroderma and systemic scleroderma. Systemic scleroderma is the most serious form of the disease, and can affect the skin, muscles, joints, blood vessels, lungs, kidneys, heart and other organs. Localized scleroderma usually affects only the skin, although it can affect the muscles, joints and bones. It does not affect internal organs.

Development Status

We conducted a preclinical study in a well-established animal model of systemic scleroderma, intended to evaluate the biological activity and potential efficacy of COYA 201 administered intravenously and intranasally. This study involved a bleomycin induced systemic scleroderma mouse model. The overall study design involved 15 animals/group, in 4 groups- vehicle, low dose exosome, high dose exosome, and saline. The endpoints measured included skin punch weight, skin histopathology, and lung histopathology. We are currently evaluating the results from this initial animal study and will use the data to guide the next steps for this development program.

COYA 201 has been tested in an in vitro humanized model of hepatic inflammation and fibrosis.

Overview of Hepatic Inflammation and Fibrosis

Because the liver plays a central role in metabolism of lipids and glucose, liver inflammation is closely related to metabolic disorders such as nonalcoholic fatty liver disease (“NAFLD”), which affects up to 40% of Western adult populations. NAFLD includes

a spectrum of diseases ranging from isolated hepatic steatosis to nonalcoholic steatohepatitis (“NASH”), the progressive form of the disease characterized by inflammation, cellular injury, and fibrosis, which can lead to cirrhosis and hepatocarcinoma.

The accumulation of lipid deposits in hepatocytes leads to production of proinflammatory cytokines that triggers the development of liver inflammation and fibrosis. Tregs play a critical role in regulating inflammatory processes in NASH, while T helper type 17 (“Th17”) might functionally oppose Treg-mediated responses.

Therefore, we believe Treg exosomes may have the potential to effectively modulate the inflammatory processes by enhancing anti-inflammatory mechanisms and modifying the pathogenesis of the disease.

Development Status

We have conducted an initial preclinical study in a human liver microtissue model designed for the study of mechanisms of induction of liver inflammation and fibrosis and in vitro screening of drug efficacy. The model includes all the critical liver cells and inducers needed to recapitulate the inflamed liver disease state and serves as a powerful model for drug discovery and development. This cellular liver model involves co-culture of primary human hepatocytes, Kupffer cells, liver endothelial cells, and stellate cells and was evaluated across multiple groups, vehicle control, low dose exosomes, high dose exosomes, and saline solution. The primary objective of this initial study was to evaluate the biological activity of COYA 201 by assessing inflammation, measured by the levels of released pro-inflammatory cytokines, and fibrosis, measured by the release of procollagen by the hepatic cells. Following the establishment of the liver microtissues, the system was fed with high sugar, high insulin, and free fatty acids for 10 days. Samples for assessment of cytokines were collected on Day 5 of the study, and samples for assessment of procollagen were collected on Days 7 and 10. We observed a significant decrease (p <0.05) in the secretion of pro-inflammatory cytokines, including interleukin 8 (IL-8), tumor necrosis factor alpha (TNFα), and macrophage inflammatory protein 1 alpha (MIP-1α), compared to the untreated controls. We also observed a significant increase (p <0.0001) in the secretion of the anti-inflammatory cytokine interleukin 10 (IL-10), compared to the untreated control. In addition, we observed a mild decrease in procollagen that did not reach statistical significance, when compared to controls. The study met its primary objective by demonstrating that COYA 201 was biologically active in this model. Results from this study will guide the next steps in the early development of this program.

COYA 206

As part of our Treg exosome development programs, we are developing our next generation of antigen directed Treg-derived exosome product candidates and in June 2022 we executed an option agreement allowing us to acquire exclusive worldwide rights to a novel and proprietary technology enabling exosome engineering from Carnegie Mellon University (the “Carnegie Mellon Option Agreement”).

The Carnegie Mellon Option Agreement involves the intellectual property rights to the research, development, and manufacturing of exosome-polymer hybrids (“EPHs”), a tether-based exosome functionalization strategy that enables Treg exosomes to be homed to proteins of interest, while delivering select payloads into targeted cells. See the below image for a visual representation of a tethering exosome.

Functionalized exosomes with an immunomodulatory protein, FasL, have demonstrated their biological activity both in vitro and in vivo. FasL-functionalized exosomes, when bioprinted on a collagen matrix, allows spatial induction of cell death in tumor cells and, when injected in mice, suppresses proliferation of pro-inflammatory T cells.

Schematic Representation of Functionalized Targeted Treg Exosomes

We believe this proprietary technology sets the foundation to produce targeted Treg exosome therapeutics that are directed to epitopes, the part of an antigen molecule to which an antibody attaches itself, and proteins of interest, while delivering growth factors, drugs or other cargo, representing an innovative technology that could be advantageous relative to other Treg directed therapeutic modalities.

We are working on the characterization of the EPHs and are planning to do target validation following completion of this work to select product candidates and indications for future development.

Our Autologous Regulatory T Cells (Tregs) Therapeutic Modality (the 100 Series)

COYA 101

Our autologous Treg cell therapy product candidate COYA 101 has completed Phase 1 and Phase 2a studies and we believe the data from these trials provide us the information needed to design a well-powered and well-controlled confirmatory clinical study to evaluate the safety and efficacy of COYA 101 for the treatment of ALS.

Our cell therapy technology is being developed to address Treg dysfunction in the context of the pathophysiology driven by chronic neuroinflammation in patients with neurodegenerative diseases. COYA 101 is being developed as a treatment for patients with serious neurological disorders. The proposed initial indication for COYA 101 is treatment of amyotrophic lateral sclerosis (ALS). We have been granted orphan drug designation (“ODD”) for the active moiety or the principal molecular structural features in the United States for COYA 101 for the treatment of ALS.

Generally, if a drug with an ODD subsequently receives the first marketing approval for the indication for which it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes the EMA or the FDA from approving another marketing application for the same drug and indication for that time period, except in limited circumstances. The applicable period is seven years in the United States and ten years in Europe. The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for Orphan Drug Designation or if the drug is sufficiently profitable such that market exclusivity is no longer justified.

Overview of ALS

ALS is, a rare devastating and fatal neurodegenerative disease characterized by rapid and hard to stop progression, affecting approximately 20,000 patients in the United States. ALS, also known as Lou Gehrig’s disease, attacks nerve cells, called motor neurons, that control voluntary muscles. When these cells die, voluntary muscle control and movement are lost. This leads to progressive weakness and disability. People living with ALS eventually lose their strength, ability to move their arms, legs, and body, and the ability

to breathe on their own. In most cases, their minds remain sharp and alert. The average life expectancy for people with ALS is two to five years from diagnosis, although 50% of patients die within 2.5 years of symptoms onset. We believe ALS constitutes a clear unmet medical need, as currently available products only provide limited benefit to some patients.

Development Status

Phase 1 Clinical Data

Based upon an open-label Phase 1 clinical study in ALS patients, in which administration of repeated infusions were associated with stabilization of ALS progression over the course of the treatment period during the first and second infusion cycles over 6 and 12 weeks, respectively, we believe the results of the Phase 1 trial support that repeat intravenous administration of Treg infusions are well tolerated and able to achieve a therapeutic response.

This Phase 1 study was a first-in-human proof-of concept trial in 3 patients with ALS, conducted under an Investigator-Initiated IND Application. The primary endpoint of the study was to assess the safety and tolerability of COYA 101 in patients with ALS. Secondary endpoints were Treg supportive function and Treg numbers assessed in peripheral blood and preliminary clinical efficacy, as assessed with the Revised ALS Functional Rating Scale (“ALSFRS-R”) and the Appel ALS Scale (“AALS”). This initial Phase 1 study was conducted as a proof-of-concept trial and was not powered to assess statistical significance. Results of this Phase 1 study showed a slowing of disease progression over the course of each cycle of Treg intravenous infusions as measured by standard clinical ALS scales, which were also correlated with increased Treg suppressive function. All patients demonstrated an increase in Treg suppressive function, slowing of functional decline, and stable respiratory function over the course of two Tregs infusion cycles of 6 weeks (first cycle) and 12 weeks duration (second cycle). Treatment with COYA 101 was well tolerated in all patients. Results of this Phase 1 study were published in Neurology: Neuroimmunology & Neuroinflammation.

Thisincluded 3 ALS patients exhibiting a different rate of decline (as measured with the ALSFRS-R) prior to initiation of the Treg infusions. During the first infusion cycle (marked with red triangles in Figure 1) Tregs were administered every 2 weeks, and during the second infusion cycle (marked with green squares in Figure 1) a few months later, Tregs were administered every 4 weeks. Over the course of the infusion cycles and during the period between Tregs infusions, the subjects received concomitant low-dose IL-2 subcutaneously 3 times per week.

Regardless of their pre-study rate of decline using the ALSFRS-R scale, all 3 patients stopped or slowed the clinical progression of the disease at each Treg infusion cycle, as shown in the figure below.

COYA 101 Phase 1 Study. ALSFRS-R Scores Over Time by Patient (N=3).

Adapted from Thonhoff et al. (Neurol Neuroimmunol Neuroinflamm 2018;5:e465).

We believe that the ability to maintain a plateau representing no decline in physical function for up to 8 weeks during the first infusion cycle and again for up to 12 weeks during the second infusion cycle with COYA 101 treatment indicates that COYA 101 may have the ability to be a disease-modifying therapy by slowing or stopping ALS disease progression.

Further, treatment did not aggravate or speed up the decline in loss of physical function between or after COYA 101 treatment. The noted decline in physical function between and after treatment was attributed to expected disease progression.

More specifically, in the Phase 1 study the three participants represented a wide range of disease progression rates, the rates of decline were comparable between the lead-in phases and the post-infusion phases for each round of Treg infusions. The average slopes of the lead-in phases were calculated from the baseline clinical evaluation about 1 month before the initial Treg infusion to the clinical evaluation on the day of the initial Treg infusion for each round. The post-infusion phases were calculated from the clinical evaluations performed 2 weeks after the last Treg infusion for each round to the subsequent clinical evaluation. Average slopes provided below (of all 3 patients) are reported as Mean ± Std. Dev. in AALS points/week.

In addition, all three patients underwent prospective evaluation of blood biomarkers of inflammation and oxidative stress, in order to identify whether clinical responses to treatment correlated with changes in these markers. Over the course of the first administration cycle of COYA 101 infusions, low and stable levels of oxidized low-density lipoprotein (ox-LDL) were observed, which correlated with patient clinical stabilization. After the first infusion cycle, over a subsequent six-month washout period during which COYA 101 was not administered, patients exhibited clinical decline and increased levels of ox-LDL. Following the wash-out period, a second cycle of COYA 101 was administered and, as during the first cycle, low levels of ox-LDL were observed correlating with clinical stabilization.

At the end of the study and after cessation of treatment, ox-LDL were elevated consistent with concurrent patient decline.

As observed with ox-LDL, serum levels of acute phase proteins (“APPs”), such as soluble CD14, lipopolysaccharide binding protein (“LBP”), and C-reactive protein (“CRP”), were stabilized during COYA 101 administrations, but rose during the washout period and again after therapy was discontinued.

We believe this Phase 1 study provided initial evidence supporting that Treg cell therapy has the potential to suppress peripheral oxidative stress and the accompanying circulating pro-inflammatory APPs, which may serve as peripheral biomarkers for monitoring clinical efficacy of immunomodulating therapies. Results of the biomarker data from this Phase 1 study were published in Annals of Neurology (Beers et al, 2022).

Phase 2a Clinical Data

Following the results of the Phase 1 study, a double-blind placebo-controlled investigator-initiated Phase 2a trial in ALS patients was conducted over 24 weeks. This study was filed under the same academic IND. The double-blind study was followed by an open-label extension study over additional 24 weeks in which all patients received Tregs. The objectives of the Phase 2a study were to evaluate the biological activity, safety and tolerability, and preliminary clinical efficacy of COYA 101 administered intravenously every 4 weeks. Clinical efficacy was measured with a validated tool, the Revised ALS Functional Rating Scale (“ALSFRS-R”), and respiratory function was assessed with the Maximum Inspiratory Pressure (“MIP”) test. The study was conducted at 2 clinical sites in the United States (Massachusetts General Hospital in Boston, Massachusetts, and the Houston Methodist Hospital in Houston, Texas).

The planned enrollment of 12 patients was negatively impacted by the COVID-19 pandemic. A total of 6 ALS patients were included in the double-blind portion of the study (3 patients received COYA 101 and 3 patients received placebo). Patients receiving COYA 101 showed an adequate tolerability profile, comparable to patients receiving placebo. The very limited sample size of the double-blind portion of the study did not allow for a meaningful efficacy analysis.

However, all 6 patients who completed the 24-week double-blind study rolled over into the open-label extension for additional 24 weeks. In order to increase the sample size that was negatively impacted by the COVID-19 pandemic, two additional patients were included in the open-label portion of the study. Assessment of ALSFRS-R scores over the 24-week open-label showed that 75% (6 of 8) of patients stopped or slowed disease progression. Consistent with the observations from the Phase 1 study, evaluation of pro-inflammatory and oxidative stress serum biomarkers over the course of the study suggests that levels of certain biomarkers correlate with disease progression and may also serve to prospectively identify ALS patients that may experience greater therapeutic response with COYA 101 treatment. Results of this Phase 2a study have been published in a peer-reviewed journal.

Disease progression was documented in each participant by the ALSFRS-R over the duration of the 24-week open label extension ("OLE"). The timing of the Treg infusions was depicted by the vertical dotted lines with the corresponding Treg dosages. The baseline ALSFRS-R value for the OLE was taken at week 26 for the 6 participants who went through the DB and week 0 for the two participants who entered directly into the OLE. The total change in the ALSFRS-R was calculated after 24 weeks. Six of the eight

patients showed intermediate to no progression of the ALSFRS-R (average of -2.7 points). Two of the eight patients showed rapid progression (average of -10.5 points). The following figure illustrates the numerical difference in ALSFRS-R scores over the course of the OLE previously described for the two subgroups of patients. The limited and unbalanced number of patients in each group does not allow for a meaningful statistical comparison. Accordingly, no p-values are available.

ALS Disease Progression in COYA 101 OLE Study (N=8)

From Thonhoff et al, 2022.

Treg suppressive function was assessed in each patient at screening, 4 weeks after the second infusion of a 1x dose of Tregs (week 34), 4 weeks after the second infusion of a 2x dose (week 42), and 4 weeks after the second infusion of a 3x dose (week 50). (B) Treg numbers were assessed in each patient at screening, 4 weeks after the second infusion of a 1x dose of Tregs (week 34), 4 weeks after the second infusion of a 2x dose (week 42), and 4 weeks after the second infusion of the 3x dose (week 50). Data were depicted as visit-specific estimates ± standard error and were compared for progression of continuous endpoints using a shared-baseline, linear mixed model. A p value < 0.05 was considered statistically significant, as depicted by the asterisk in the below image.

Treg Suppressive Function and Numbers in COYA 101 OLE Study (N=8)

From Thonhoff et al, 2022.

Treatment with COYA 101 was well tolerated, consistent with the tolerability profile observed in the Phase 1 study. No subject receiving COYA 101 experienced a serious adverse event or discontinued the study.

The study results have been recently published in the peer-reviewed journal Neurology, Neuroimmunology & Neuroinflammation in an article titled “Combined Regulatory T-Lymphocyte and IL-2 Treatment Is Safe, Tolerable, and Biologically Active for 1 Year in Persons With Amyotrophic Lateral Sclerosis.”

To meet the needs of this Phase 2a study, we developed an optimized Tregs manufacturing process to produce at least 2 billion Treg cells from each study participant. Our proprietary Treg manufacturing process had to overcome numerous challenges associated with Treg instability to maintain robust Treg expansion despite long-term cryopreservation, while preserving phenotypic characteristics, stability, sterility and functionality. We believe the process optimization also allows for cryopreservation and thawing while retaining adequate cell numbers and suppressive function over a long period of time, resulting in the supply of sufficient Tregs from a single run to meet the dosing level and monthly infusion scheme over 12 months.

Manufacturing Activity

COYA 101 is an autologous cell therapy that requires individual manufacturing of each patient-specific batch. After undergoing leukapheresis, a laboratory procedure in which white blood cells are separated from a sample of blood, each patient-specific sample is processed for Treg cell isolation, conversion to functional Treg phenotype, expansion to therapeutic dose, and cryopreservation, to be re-thawed for infusion at a given outpatient facility.

COYA 101 manufacturing has undergone extensive process optimization since the Phase 2a academic trial, in order to lock down scaled-up CMC manufacturing capabilities to be able to successfully approach next steps in the development of COYA 101 and potential commercialization, if approved by FDA. We do not believe that manufacturing scalability or the costs thereof represent a material barrier to our ability advance COYA 101 through its prospective clinical studies.

Our management team is comprised of technical experts, with years of experience with FDA and industry, and understand how to navigate the CMC processes and regulatory landscape. This team will lead us through the process of scaling our Treg cell therapy GMP manufacturing processes, including automation steps, closed door systems and analytical capabilities, to optimize production and reduce cost of goods.

Development Status

After completion of the two investigator-initiated clinical studies, we had a pre-IND meeting with the FDA. We had a Type B meeting (pre-IND) with CBER/FDA, and the FDA provided written responses on November 5, 2021. The main objective of the pre-IND meeting was to gather all necessary FDA feedback as early as possible to be able to address the FDA’s requirements in the industry-sponsored IND submission. In its responses, the FDA provided clear guidance for the GMP manufacturing of COYA 101 for a well-controlled industry-sponsored study, and also provided insight for design of the clinical protocol for the next clinical study.

Our goal is to advance COYA 101 into a Phase 2b clinical trial. However, we currently believe that we are best served by utilizing our available cash to advance COYA 301, COYA 302, COYA 201 and COYA 206 candidates before beginning a Phase 2b clinical trial of COYA 101. The costs associated with such a Phase 2b trial would significantly impede our ability to advance COYA 301, COYA 302, COYA 201 and COYA 206 before we can reasonably judge which product candidates and which therapeutic modalities may have the most potential. However, based on our pre-clinical results to date, we maintain as a goal advancing COYA 101 into a Phase 2b trial via non-dilutive funding sources. We believe a grant or other non-dilutive funding in the amount of approximately $3 million would be sufficient for us to begin advancing COYA 101 into a Phase 2b trial. In the event we receive such grant funding, or we receive non-dilutive financing from some other source, we would expect to begin the Phase 2b of COYA 101 and would incur Phase 2b clinical trial expenses for Coya 101 not otherwise covered by the non-dilutive financing. We believe that the expenses required to advance Coya 101 net of any grant would be limited and that we can continue to make appropriate progress in advancing COYA 301, COYA 302, COYA 201 and COYA 206, albeit not at the same rate if we did not devote resources to COYA 101. If we are unable to receive such a grant or any other grant we may apply and qualify for in the future, or we are unable to find a suitable strategic partner with whom we can collaborate on terms that are favorable to us, or at all, we may delay or terminate the clinical development of COYA 101.

Manufacturing

Industrial CMC Process Using Bioreactors

We have developed a proprietary and efficient ex vivo manufacturing process that isolates millions of dysfunctional Tregs from a patient and converts and expands these cells into billions of highly functional Tregs that are neuroprotective and immunosuppressive.

This unique approach does not require genetic manipulation and has been automated into bioreactor modules which permit faster vein-to-vein times. The bioreactor produces up to 3 billion functional Treg cells from each patient-specific sample within 10-14 days from start of expansion. We believe the viable cells have potent Treg suppressive function and display a unique and reproducible phenotype, which confers the enhanced functional activity of the expanded and converted cells.

Cryopreservation Technology

We have developed proprietary technology to cryopreserve the expanded and converted functional Treg cells via the CTregTM modality. We believe this is the first cryopreservation modality in the Treg cell therapy field that has been clinically tested and validated, allowing for long-term monthly infusions while maintaining viability and suppressive function. We believe, in progressive neurodegenerative diseases, one-time infusions of Tregs will not suffice and a cryopreservation step permits long-term repeat dose treatment of patients. This cryopreservation process allows for one manufacturing run to produce enough cells for up to 12 months of treatment.

Expanded Tregs Unique Phenotype

We have also shown that the expanded Treg cells are characterized by a unique phenotype, compared to the baseline dysfunctional Tregs, which confers the enhanced functional Treg activity. Moreover, the novel phenotype is maintained upon cryopreservation and re-thawing. The phenotype has been well characterized by both proteomics and flow cytometry.

iscEXOTM

We have also developed the technology to isolate and expand highly neuroprotective and immunomodulatory Treg-derived exosomes through our proprietary iscEXOTM (immunosuppressive cell exosome) modality.

We believe our proprietary Treg cell manufacturing process generates exosome-rich batches that contain large amounts of Treg exosomes. Optimization of a cutting-edge, proprietary exosome isolation technology using tangential flow filtration provides for the scaled isolation, concentration, and buffer exchange of liters of exosome-rich product in a short period of time.

Our efficient GMP manufacturing process has demonstrated batch-to-batch reproducibility and comparable critical quality attributes, and in vitro and in vivo testing have shown Treg-conserved markers and function in the Treg-derived exosome product, including suppression and inhibition of proliferation of activated pro-inflammatory cells.

Following manufacturing and packaging, Treg exosomes can maintain their structural integrity during prolonged periods of storage under frozen conditions. Importantly, the suppressive function of the Treg exosomes can be maintained over the long-term stability testing under frozen conditions and after multiple freeze-thaw cycles.

Key Milestones

We will continue to conduct research and development activities for our various product candidates and indications over the course of 2023-2024. Our anticipated developmental milestones are provided below.

The dates reflected in the foregoing are estimates only, and there can be no assurances that the events included will be completed on the anticipated timeline presented, or at all. Further, there can be no assurance that we will be successful in the development of any of our current product candidates or any other product candidate we may develop in the future, or that any of our current product candidates, or any other product candidate we may develop in the future, will receive FDA approval for any indication.

Competition

We believe the ability of our product candidates to enhance Treg function ex vivo (Treg cell therapy and Treg exosomes) and in vivo (biologics), potentially resulting in amelioration of the chronic and progressive inflammatory environment that underlies certain serious diseases,represents a meaningful competitive advantage and may benefit us in our goal of successfully developing novel and highly effective treatments for neurodegenerative, autoimmune, and metabolic diseases. We believe our Treg exosomes are significantly more potent in suppressing inflammation than mesenchymal cell derived exosomes. Moreover, we are developing technology in conjunction with Carnegie Mellon University to target Treg exosomes to proteins of interest while loading with cargo of interest, requiring no genetic manipulation, while CAR Treg approaches require genetic manipulation. Moreover, Treg exosomes are end stage differentiated and cannot be converted in-vivo to a dysfunctional state, unlike cells. Our Treg cell therapy is a polyclonal product that requires no genetic manipulation. Moreover, we have developed bioreactors to shorten the time to obtain the final product (within 10-12 days). Finally, we have developed the ability to cryopreserve Treg cells and rethaw while maintaining full functional potency, allowing for chronic dosing from one patient manufacturing run. We believe our biologic is unique in that it enhances Treg function in-vivo without the need for ex-vivo manipulation, and the biologic is a simple to administer injection in a prefilled syringe that is intended for in home administration.

However, the pharmaceutical industry is intensely competitive and subject to rapid and significant technological change. We will continue to face competition from various global pharmaceutical, biotechnology, specialty pharmaceutical and generic drug companies that engage in drug development activities.

Many of our competitors have similar products that focus on the same diseases and conditions that our current and future pipeline product candidates address and may address in the future. Many of our competitors have greater financial flexibility to deploy capital in certain areas as well as more commercial and other resources, marketing and manufacturing organizations, and larger research

and development staff. As a result, these companies may be able to pursue strategies or approvals that we are not able to finance or otherwise pursue and may receive FDA, or other applicable regulatory approvals more efficiently or rapidly than us. Also, our competitors may have more experience in marketing and selling their products post-approval and gaining market acceptance more quickly.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Our product candidates could become less competitive if our competitors are able to license or acquire technology that is more effective or less costly and thereby offer an improved or a cheaper alternative to our product candidates.

Competitor companies developing Biologic approaches to enhancing Tregs, leveraging IL-2 formulations, include: Amgen (AMGN) (IL-2 mutein for GVHD and autoimmune diseases), Nektar (NKTR) (Pegylated IL-2 for autoimmune diseases), Merck (MRK) (IL-2 mutein for autoimmune diseases), Xencor (XNCR) (IL-2 Fc Fusion Protein for autoimmune diseases), Selecta Biosciences (SELB) (recombinant IL-2 + ImmTOR for autoimmune diseases), Cue Biopharma (CUE) (IL-2 bispecific for GVHD and autoimmune diseases), and Moderna (MRNA) (LNP encapsulated mRNA based therapeutic encoding IL-2 for autoimmune diseases).

Competitor companies developing Treg based cellular therapeutics include: Abata Therapeutics (CAR Treg for autoimmune diseases), Sonoma Therapeutics (CAR Treg for autoimmune diseases), Sangamo (SGMO) (CAR Treg for Renal Disease, IBD), TrexBio (Treg cell therapy for Immunology/Inflammation), Mozart Therapeutics (CD8 Treg cell modulators for Celiac Disease/IBD), Gentibio (Treg cell therapy generated from T-effector cells for T1 Diabetes), Kyverna (Autologous and Allogeneic Tregs for autoimmune diseases), Cellenkos (Allogeneic umbilical cord blood Tregs for multiple conditions), AZ Therapies (Allogeneic CAR Tregs for CNS Diseases), and Quell Therapeutics (Autologous CAR Tregs for liver transplantation, T1 Diabetes and ALS).

To our knowledge, there exists no other Treg-derived exosome competitor. However, there exists other cell derived exosome competitors including: Evox Therapeutics (Mesenchymal Derived Exosomes), Capricor Therapeutics (Cardiosphere Derived Exosomes), and Exopharm (Platelet Derived Exosomes), and Rion (Platelet Derived Exosomes).

We expect any product candidates that we develop and commercialize will compete on the basis of, among other things, efficacy, safety, convenience of administration and delivery, price and the availability of reimbursement from government and other third-party payors. We also expect to face competition in our efforts to identify appropriate collaborators or partners to help commercialize our product candidate portfolio in our target commercial markets.

Intellectual Property and Protection

As of March 28, 2023, our patent estate derived from our relationship with The Houston Methodist Hospital includes one U.S. non-provisional patent application, six foreign patent applications, and five pending Patent Cooperation Treaty (“PCT”) applications, each co-owned with or in-licensed from The Houston Methodist Hospital. These patent applications are directed to our Treg and exosome compositions and methods of use, methods of Treg and exosome manufacture, and methods of in vivo Treg expansion via combination therapies, among other things. If any patents issue from or claim priority to these patent applications, the patents are expected to expire in 2040 and 2042, without giving effect to any potential patent term extensions or patent term adjustments and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees. All of our Houston Methodist Hospital patents have composition and method claims, with the exception of a biomarker patent, which has only method claims.

In addition, our patent estate derived from our relationship with ARScience Biotherapeutics, Inc. (described below) includes one published patent application and one provision patent application. The patents are expected to expire in 2041 and 2043, respectively, without giving effect to any potential patent term extensions or patent term adjustments and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. The ARScience Biotherapeutics, Inc. patents have composition, method, and utility claims.

Finally, our patent estate derived from our relationship with Carnegie Mellon includes one pending patent application. The patent, if granted, would be expected to expire in 2043, without giving effect to any potential patent term extensions or patent term adjustments and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. The Carnegie Mellon patent has method claims.

Methodist License Agreement

In September 2022, we entered into an Amended and Restated Patent and Know How License Agreement, effective as of October 6, 2020 (the “Methodist License Agreement”), with The Methodist Hospital (“Methodist”), pursuant to which Methodist granted us an exclusive license, with the right to sublicense, under certain patent rights and know-how related to regulatory T-cell (“Treg”) technology to develop and commercialize products and/or services for the diagnosis, prevention or treatment of ALS, Alzheimer’s disease, or other human diseases or conditions (such products, “Licensed Products” and such services, “Licensed Services”). The

Licensed Products comprise all of our current product candidates. Methodist also granted us an exclusive right of reference with respect to the existing IND and all related data and documentation generated in connection with the Existing IND. The last to expire licensed patent under the Methodist License Agreement is scheduled to expire on September 14, 2042.

In consideration of the rights and licenses granted to us by Methodist under the Methodist License Agreement, we agreed to (i) reimburse Methodist for costs incurred in connection with filing and prosecution of existing patent applications (as of March 28, 2023, we have reimbursed Methodist for $30,532 in patent related expenses); (ii) pay Methodist an annual $5,000 license maintenance fee; and (iii) we issued 131,682 shares of our common stock to Methodist and the equivalent amount of shares to the inventors of the licensed patent rights in proportion to a ratio provided by Methodist. We are obligated to use commercially reasonable efforts to (a) continue to develop, seek to obtain and maintain regulatory approval, and if regulatory approval is achieved, to commercialize at least one Licensed Product or Licensed Service; and (b) achieve certain development milestones as set forth in the Methodist License Agreement. The Methodist License Agreement also contains termination provisions typical of agreements of this type including the ability of Methodist to terminate the license in the event that we or a subsequent sublicensee is not “Actively Attempting to Develop or Commercialize” (as defined in the Methodist License Agreement) for a continuous period of 6 months anytime beginning October 2, 2025.

Pursuant to the Methodist License Agreement, we agreed to make contingent milestone payments to Methodist on a Licensed Product-by-Licensed Product or Licensed Service-by-Licensed Service basis upon the achievement of certain development, approval and sales milestones (i) related to the treatment of ALS totaling up to $325,000 in the aggregate, and (ii) related to the treatment of each other indication (that is not ALS) totaling between $212,500 and up to $425,000 in the aggregate per indication. As of March 28, 2023 no milestone payments have been accrued or paid in connection with the Methodist License Agreement.

Pursuant to the Methodist License Agreement, we are also required to pay Methodist, on a licensed product-by-licensed product and country-by-country basis, royalties (subject to customary reductions) up to 10% of annual worldwide net sales of such licensed product during a defined royalty term. The applicable royalty percentage increases as Licensed Products are used to treat from only one to more than three indications and if a given Licensed Product utilizes only T-reg cell therapy or is a combination of both T-reg cell therapy and exosomes. Therefore, the lowest tier is paid when there is only a single indication being addressed with a single product. The lowest tier is paid on combination products where there are three or more indications being served. We are also required to pay a low single digit percentage for certain licensed services. We are required to pay mid-teens royalties on sublicense revenue. Commencing on January 1, 2025, the minimum amount which will be owed by us once commercialization occurs is $50,000 annually.

Our obligation to pay royalties (a) starts with the first commercial sale of the Licensed Product or provision of the Licensed Service after obtaining regulatory approval for the subject Licensed Product or Licensed Service and (b) ends either (1) immediately, if no valid claim within the licensed patent rights covers the subject Licensed Product or Licensed Service in the applicable country exists at such time, or (2) if at least one valid claim exists at such time, then when no remaining valid claim within the licensed patent rights covers the subject Licensed Product or Licensed Service in the applicable country. As of March 28, 2023 no royalty payments have been accrued or paid in connection with the Methodist License Agreement.

ARScience Biotherapeutics, Inc. License Agreement

On August 23, 2022 (the “Execution Date”), we entered into a License Agreement (the “ARS License Agreement”) with ARScience Biotherapeutics, Inc. (“ARS”) pursuant to which ARS granted us an option to, if we choose to exercise such option, an exclusive, royalty-bearing license for two patents regarding certain formulations of hrIL-2 (the product that serves as the basis for COYA 301), with the right to grant sublicenses through multiple tiers under these patents (the “ARS Option”). In consideration for the ARS Option, we paid ARS a one-time, non-refundable, non-creditable option fee of $100,000.

On December 1, 2022, we exercised the ARS Option by written notice to ARS (the “Option Exercise Notice”). Upon the delivery of the Option Exercise Notice (such date of delivery, the “Effective Date”), ARS automatically was deemed to have granted to us the licenses and all provisions of the ARS License Agreement and the ARS License Agreement became effective as of the Effective Date. Pursuant to the terms of the ARS License Agreement, we paid to ARS a mid-six-figure up-front fee.

In addition, we may also owe tiered payments to ARS based on our achievement of certain developmental milestones. Under the ARS License Agreement, we will pay an aggregate of $13.25 million in developmental milestone payments for the first Combination Product (as defined in the ARS License Agreement) in a new indication. We will then pay an aggregate of $11.6 million in developmental milestone payments for each Combination Product in each subsequent new indication. Further, for the first Mono Product (as defined In the ARS License Agreement) we will pay an aggregate of $11.75 million in developmental milestone payments. We will then pay an aggregate of $5.85 million in developmental milestone payments for each Mono Product in each subsequent new indication, we will owe an aggregate of $5.85 million if all developmental milestones are achieved for each new indication. We will also owe royalties on net sales of licensed products ranging from low to mid-single digit percentages. In the event we sublicense our rights under the ARS License Agreement, we will owe royalties on sublicense income within the range of 10% to 20%. To date, the $100,000 option fee and the mid-six-figure up-front fee (upon exercise of the ARS Option) are the only payments made to ARS under ARS License Agreement.

The ARS License Agreement contains customary termination provisions for cause, insolvency, convenience and cessation of development or commercialization. Termination for cause permits either party to terminate the ARS License Agreement upon written notice of a material breach that remains uncured after 90 days. If either party files for protection under bankruptcy or insolvency laws among other things, the other party may terminate the ARS License Agreement upon written notice. We are entitled to terminate the ARS License Agreement at our sole discretion at any time with 120 days’ prior written notice. Lastly, in the event that we do not conduct material development or commercialization activities (as set forth in the agreement) for any products over a continuous period of 24 months, then ARS may terminate the ARS License Agreement upon 60 days’ written notice to us.

This ARS License Agreement will continue, on a product-by-product and country-by-country basis, until (i) with respect to products we commercialize, the expiration of the royalty term applicable to such product and such country and (ii) with respect to products commercialized by a sublicensee, our receipt of all payments that may become due under the applicable sublicense, and will expire in its entirety upon the expiration of the last royalty term and payment under any such sublicense, as applicable.

The ARS License Agreement also provides that within 90 days of the Effective Date, we and ARS will enter into a supply agreement whereby ARS will provide us with GMP supply of those products described in the ARS License Agreement. We expect that this exclusive supply agreement will permit us to acquire GMP quality manufactured products at the lesser of (a) cost (to be defined in the definitive supply agreement) plus 10% and (b) a fixed per unit price for the duration of the agreement.

Carnegie Mellon Option Agreement

We are party to a Material Transfer Agreement and Option, as amended (the “CMU Option Agreement”) with Carnegie Mellon University (“CMU”), pursuant to which CMU granted us a nonexclusive license to use certain of CMU’s technology and materials relating to exosome modification (the “Materials”) and practice under certain CMU patent rights related to such Materials (the “Patent”), in each case for our research and evaluation purposes. We agreed to pay CMU a five-digit fee in consideration of the preparation and distribution costs associated with making the Materials. Pursuant to the CMU Option Agreement, CMU also granted us an option (the “CMU Option”) to negotiate an exclusive license to use and commercialize products and services based on the Materials and to practice under the Patent for exosome and cellular therapeutic applications. In consideration of the CMU Option, we agreed to pay CMU (i) a five-digit fee, and (ii) any out of pocket fees or expenses incurred by CMU for the filing, prosecution or maintenance of the Patent or any U.S. patents comprising the Materials during the fourteen-month CMU Option period. As of December 31, 2022, we have not exercised the CMU Option with respect to the Materials and Patent.

The CMU Option Agreement will continue in effect until the earliest of (i) fourteen months from the date of execution, (ii) our permanent cessation of use of CMU’s technology and materials, or (iii) 30 days after we have received from CMU written notice of our breach of the Option Agreement, if we fail to cure such breach within 30 days of such notice.

Pursuant to a Biologics Material Transfer Agreement (the “CMU Materials Agreement”), entered into simultaneously with the CMU Option Agreement, CMU has the right to develop and modify the Materials for non-commercial purposes. If CMU desires to develop the Materials for Commercial Purposes (as defined in the CMU Materials Agreement), CMU must negotiate a commercial license with us, but we have no obligation to grant a commercial license to our ownership in the Materials to CMU. CMU is free to file patent applications claiming inventions made by CMU through the use of the Materials but must notify us upon the filing of such patent(s). Further, no patent application can be filed by CMU that would inhibit our ability to use the Materials. If any patent is filed or granted, CMU has agreed to assign to us any and all patent rights that include rights to make, use or sell the Materials. The CMU Materials Agreement will terminate upon the earliest of: (i) when the Materials become generally available from third parties, (ii) on completion of CMU’s activities related to the Purpose (as defined in the Option Agreement), or (iii) by us on 30 days’ notice.

License Agreement with Dr. Reddy's

On March 16, 2023, we entered into an exclusive License and Supply Agreement (the “DRL License Agreement”) with Dr. Reddy’s Laboratories Limited (“DRL”). The DRL License Agreement will become effective on April 1, 2023. Pursuant to the terms of the DRL License Agreement, we will in-license DRL’s proposed Abatacept biosimilar to be used in the development and commercialization of COYA 302 in the United States, Canada, Mexico, South America, the European Union, the United Kingdom, and Japan. COYA 302 is our proprietary biologic combination product candidate being developed for the treatment of certain neurodegenerative diseases. COYA 302 is comprised of two components – COYA 301 and DRL’s proposed Abatacept biosimilar. COYA 301 is our low dose IL-2.

Pursuant to the DRL License Agreement, within 30 days of execution, we will pay a one-time, non-refundable upfront payment of $350,000. We will pay to DRL up to an aggregate of approximately $2.9 million of pre-approval regulatory milestone payments for the first indication in the Field (as defined in the DRL License Agreement) and an additional approximately $20.0 million if all other development, regulatory approval and sales milestones are incurred under the DRL License Agreement. We will also pay to DRL a low-six figure milestone payment per additional indication. Further, pursuant to the DRL License Agreement, we will pay to DRL single-digit royalties on Net Sales (as defined in the DRL License Agreement).

The DRL License Agreement also provides for the license of COYA 301 to DRL to permit the commercialization by DRL of COYA 302 in territories not otherwise granted to us pursuant to the DRL License Agreement. We will be eligible to receive single-digit royalties on Net Sales (as defined in the DRL License Agreement) of COYA 302 by DRL in such territories.

Pursuant to the DRL License Agreement, we maintain responsibility for the development of COYA 302, while DRL is responsible for the manufacture and supply of the proposed biosimilar Abatacept. The Company and DRL are each responsible for regulatory approval of COYA 302 in its respective territory (or territories, as applicable). We have also agreed with DRL that within 36 months before the anticipated date of the regulatory application for COYA 302, the parties will in good faith negotiate the terms and conditions for the supply of commercial quantities of DRL’s biosimilar Abatacept for use in COYA 302.

The initial term of the DRL License Agreement is 25 years, and automatically renews for successive 2 year terms unless a party provides notice of non-renewal. The DRL License Agreement contains termination provisions for cause, insolvency, and regulatory approval issues. The DRL License Agreement also contains customary representations, warranties and covenants, as well as customary provisions relating to exclusivity, indemnification, confidentiality and other matters.

Patent Rights

COYA 101 Intellectual Property Portfolio

IP Title: Regulatory T Cell Compositions and Methods for Treating Neurodegenerative Diseases

Anticipated Expiry: December 2040

Claims: Composition and Method

Type of Patent: Licensed

Entered National Phase: June 2022

Jurisdictions: Pending National Phase: Canada, Australia, Mexico, Japan, Europe, Hong Kong, United States

IP Title: Methods for Producing Regulatory T Cell Populations, Treg Compositions, and Methods for Treatment

Anticipated Expiry: June 2042

Claims: Composition and Method

Type of Patent: Co-owned with Methodist

Pending PCT: National Phase filing deadline: December 2023

Original Jurisdiction: United States

IP Title: Serum Immune Based Biomarkers for Use in ALS Therapy

Anticipated Expiry: September 2042

Claims: Method

Type of Patent: Co-owned with Methodist

Pending PCT: National Phase deadline: March 2024

Original Jurisdiction: United States

COYA 201 Intellectual Property Portfolio

IP Title: Regulatory T Cell Extracellular Vesicle Compositions and Methods

Anticipated Expiry: February 2042

Claims: Composition and Method

Type of Patent: Licensed

Pending PCT: National Phase filing deadline: August 2023

Original Jurisdiction: United States

IP Title: Methods for Producing Regulatory T Cell Populations, Treg Compositions, and Methods for Treatment.

Anticipated Expiry: June 2042

Claims: Composition and Method

Type of Patent: Co-owned with Methodist

Pending PCT: National Phase filing deadline: December 2023

Original Jurisdiction: United States

COYA 206 Intellectual Property Portfolio

IP Title: Extracellular Vesicle Functionalization Using Oligonucleotide Tethers

Anticipated Expiry: February 2040

Claims: Method

Type of Patent: Licensed

Patent awaiting examination

Jurisdictions Filed: United States

COYA 301 Intellectual Property Portfolio

IP Title: Therapeutically Active Aldesleukin Highly Stable in Liquid Pharmaceutical Compositions

Anticipated Expiry: February 2043

Claims: Composition and Method

Type of Patent: Licensed

Patent awaiting examination

Jurisdictions Filed: United States, Canada, Korea, Japan, European Union, China, Singapore, Israel

IP Title: Low Dose Interleukin-2 Formulations

Anticipated Expiry: February 2043-2045

Claims: Composition and Method

Type of Patent: Licensed

Jurisdiction: Provisional Pending: United States

Government Regulation

The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting of drugs. We, along with our vendors, contract research organizations and contract manufacturers, will be required to navigate the various preclinical, clinical, manufacturing and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval of our product candidates. The process of obtaining regulatory approvals of drugs and ensuring subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

In the U.S., the FDA regulates drug products under the Federal Food, Drug, and Cosmetic Act, or FD&C Act, as amended, its implementing regulations and other laws. If we fail to comply with applicable FDA or other requirements at any time with respect to product development, clinical testing, approval or any other legal requirements relating to product manufacture, processing, handling, storage, quality control, safety, marketing, advertising, promotion, packaging, labeling, export, import, distribution, or sale, we may become subject to administrative or judicial sanctions or other legal consequences. These sanctions or consequences could include, among other things, the FDA’s refusal to approve pending applications, issuance of clinical holds for ongoing studies, withdrawal of approvals, warning or untitled letters, product withdrawals or recalls, product seizures, relabeling or repackaging, total or partial suspensions of manufacturing or distribution, injunctions, fines, civil penalties or criminal prosecution.

The process required by the FDA before our product candidates are approved as drugs for therapeutic indications and may be marketed in the U.S. generally involves the following:

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completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice, or GLP, requirements;

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submission to the FDA of an IND application, which must become effective before clinical trials may begin;

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approval by an institutional review board, or IRB, or independent ethics committee at each clinical trial site before each trial may be initiated;

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performance of adequate and well-controlled clinical trials in accordance with applicable IND regulations, good clinical practice, or GCP, requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication;

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submission to the FDA of an New Drug Application (“NDA”) or biologics license application (“BLA”);

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a determination by the FDA within 60 days of its receipt of an NDA or BLA, to accept the filing for review;

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satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug will be produced to assess compliance with current good manufacturing practice (“cGMP”) requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

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potential FDA audit of the clinical trial sites that generated the data in support of the NDA or BLA;

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payment of user fees for FDA review of the NDA or BLA; and

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FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the U.S.

Preclinical Studies and Clinical Trials for Drugs

Before testing any drug in humans, the product candidate must undergo rigorous preclinical testing. Preclinical studies include laboratory evaluations of drug chemistry, formulation and stability, as well as in vitro and animal studies to assess safety and in some cases to establish the rationale for therapeutic use. The conduct of preclinical studies is subject to federal and state regulations and requirements, including GLP requirements for safety/toxicology studies. The results of the preclinical studies, together with manufacturing information and analytical data must be submitted to the FDA as part of an IND. An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before clinical trials may begin. Some long-term preclinical testing may continue after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial, including concerns that human research patients will be exposed to unreasonable health risks, and imposes a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Submission of an IND may result in the FDA not allowing clinical trials to commence or not allowing clinical trials to commence on the terms originally specified in the IND.

The clinical stage of development involves the administration of the product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCP requirements, which include the requirement that all research patients provide their informed consent for their participation in any clinical trial. 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 in monitoring safety and evaluating effectiveness. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND. Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trial are minimized and are reasonable related to the anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative, and must monitor the clinical trial until completed. The FDA, the IRB or the sponsor may suspend or discontinue a clinical trial at any time on various grounds, including a finding that the patients are being exposed to an unacceptable health risk. There also are requirements governing the reporting of ongoing clinical trials and completed clinical trials to public registries. Information about clinical trials, including clinical trials results, must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website.

A sponsor who wishes to conduct a clinical trial outside of the U.S. may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. If a foreign clinical trial is not conducted under an IND, the sponsor can submit data from the clinical trial to the FDA in support of a BLA. The FDA will accept a well-designed and well-conducted foreign clinical trial not conducted under an IND if the trial was conducted in accordance with GCP requirements, and the FDA is able to validate the data through an onsite inspection if deemed necessary.

Clinical trials to evaluate therapeutic indications to support BLAs for marketing approval are typically conducted in three sequential phases, which may overlap.

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Phase I-Phase I clinical trials involve initial introduction of the investigational product into healthy human volunteers or patients with the target disease or condition. These studies are typically designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, excretion, the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

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Phase II-Phase II clinical trials typically involve administration of the investigational product to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.

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Phase III-Phase III clinical trials typically involve administration of the investigational product to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval and physician labeling.

Post-approval trials, sometimes referred to as Phase IV clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the product in a clinical setting. In certain instances, the FDA may mandate the performance of Phase IV clinical trials as a condition of approval of a BLA.

Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA. Written IND safety reports must be submitted to the FDA and the investigators fifteen days after the trial sponsor determines the information qualifies for reporting for serious and unexpected suspected adverse events, findings from other studies or animal or in vitro testing that suggest a significant risk for human volunteers and any clinically important increase in the severity or rate of a serious suspected adverse reaction over that listed in the investigator brochure. The sponsor must also notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction as soon as possible but in no case later than seven calendar days after the sponsor’s initial receipt of the information.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the product candidate and finalize a process for manufacturing the drug product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and manufacturers must develop, among other things, methods for testing the identity, strength, quality and purity of the final drug product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

U.S. Marketing Approval for Drugs

Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications. A BLA must contain proof of the drug’s safety and efficacy. The marketing application may include both negative and ambiguous results of preclinical studies and clinical trials, as well as positive findings. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of the FDA. FDA approval of a BLA must be obtained before a drug may be marketed in the U.S.

The FDA reviews all submitted NDAs before it accepts them for filing and may request additional information rather than accepting the NDA for filing. The FDA must make a decision on accepting a BLA for filing within 60 days of receipt, and such decision could include a refusal to file by the FDA. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the NDA. The FDA reviews a BLA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity. Under the goals and polices agreed to by the FDA under the Prescription Drug User Fee Act, or PDUFA, the FDA targets ten months, from the filing date, in which to complete its initial review of a new molecular entity NDA and respond to the applicant, and six months from the filing date of a new molecular entity NDA for priority review. The FDA does not always meet its PDUFA goal dates for standard or priority NDAs, and the review process is often extended by FDA requests for additional information or clarification.

Further, under PDUFA, as amended, each NDA must be accompanied by a user fee. The FDA adjusts the PDUFA user fees on an annual basis. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The FDA also may require submission of a Risk Evaluation and Mitigation Strategy, or REMS, program to ensure that the benefits of the drug outweigh its risks. The REMS program could include medication guides, physician communication plans, assessment plans and/or elements to assure safe use, such as restricted distribution methods, patient registries or other risk-minimization tools.

The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, which reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving a BLA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP and other requirements and the integrity of the clinical data submitted to the FDA.

After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinical or preclinical testing in order for the FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Even if the FDA approves a product, depending on the specific risk(s) to be addressed it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase IV clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act of 1983, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the U.S., or if it affects more than 200,000 individuals in the U.S., there is no reasonable expectation that the cost of developing and making the product available in the U.S. for the disease or condition will be recovered from sales of the product. Orphan designation must be requested before submitting a BLA. Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, though companies developing orphan products are eligible for certain incentives, including tax credits for qualified clinical testing and waiver of application fees.

If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to a seven-year period of marketing exclusivity during which the FDA may not approve any other applications to market the same therapeutic agent for the same indication, except in limited circumstances, such as a subsequent product’s showing of clinical superiority over the product with orphan exclusivity or where the original applicant cannot produce sufficient quantities of product. Competitors, however, may receive approval of different therapeutic agents for the indication for which the orphan product has exclusivity or obtain approval for the same therapeutic agent for a different indication than that for which the orphan product has exclusivity. Orphan product exclusivity could block the approval of one of our products for seven years if a competitor obtains approval for the same therapeutic agent for the same indication before we do, unless we are able to demonstrate that our product is clinically superior. If an orphan designated product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan exclusivity. Further, orphan drug exclusive marketing rights in the U.S. may be lost if the FDA later determines that the request for designation was materially defective or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Expedited Development and Review Programs for Drugs

The FDA maintains several programs intended to facilitate and expedite development and review of new drugs to address unmet medical needs in the treatment of serious or life-threatening diseases or conditions. These programs include Fast Track designation, Breakthrough Therapy designation, Priority Review and Accelerated Approval, and the purpose of these programs is to either expedite the development or review of important new drugs to get them to patients earlier than under standard FDA development and review procedures.

A new drug is eligible for Fast Track designation if it is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address unmet medical needs for such disease or condition. Fast Track designation provides increased opportunities for sponsor interactions with the FDA during preclinical and clinical development, in addition to the potential for rolling review once a marketing application is filed, meaning that the agency may review portions of the marketing application before the sponsor submits the complete application, as well as Priority Review, discussed below.

In addition, a new drug may be eligible for Breakthrough Therapy designation if it is intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Breakthrough Therapy designation provides all the features of Fast Track designation in addition to intensive guidance on an efficient drug development program beginning as early as Phase I, and FDA organizational commitment to expedited development, including involvement of senior managers and experienced review staff in a cross-disciplinary review, where appropriate.

Any product submitted to the FDA for approval, including a product with Fast Track or Breakthrough Therapy designation, may also be eligible for additional FDA programs intended to expedite the review and approval process, including Priority Review designation and Accelerated Approval. A product is eligible for Priority Review if it has the potential to provide a significant improvement in safety or effectiveness in the treatment, diagnosis or prevention of a serious disease or condition. Under Priority Review, the FDA must review an application in six months compared to ten months for a standard review.

Additionally, products are eligible for Accelerated Approval if they can be shown to have an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or an effect on a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality which is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

Accelerated Approval is usually contingent on a sponsor’s agreement to conduct additional post-approval studies to verify and describe the product’s clinical benefit. The FDA may withdraw approval of a drug or indication approved under Accelerated Approval if, for example, the confirmatory trial fails to verify the predicted clinical benefit of the product. In addition, unless otherwise informed by the FDA, the FDA currently requires, as a condition for Accelerated Approval, that all advertising and promotional materials that are intended for dissemination or publication within 120 days following marketing approval be submitted to the agency for review during the pre-approval review period, and that after 120 days following marketing approval, all advertising and promotional materials must be submitted at least 30 days prior to the intended time of initial dissemination or publication.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or the time period for FDA review or approval may not be shortened. Furthermore, Fast Track designation, Breakthrough Therapy designation, Priority Review and Accelerated Approval do not change the scientific or medical standards for approval or the quality of evidence necessary to support approval but may expedite the development or review process.

U.S. Post-Approval Requirements for Drugs

Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, reporting of adverse experiences with the product, complying with promotion and advertising requirements, which include restrictions on promoting products for unapproved uses or patient populations (known as “off-label use”) and limitations on industry-sponsored scientific and educational activities. Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such uses. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including investigation by federal and state authorities. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use or first publication. Further, if there are any modifications to the drug, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA or BLA supplement, which may require the development of additional data or preclinical studies and clinical trials.

The FDA may impose a number of post-approval requirements as a condition of approval of an BLA. For example, the FDA may require post-market testing, including Phase IV clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.

In addition, drug manufacturers and their subcontractors involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMP, which impose certain procedural and documentation requirements upon us and our contract manufacturers. Failure to comply with statutory and regulatory requirements can subject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, product seizures, injunctions, civil penalties or criminal prosecution. There is also a continuing, annual prescription drug product program user fee.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, requirements for post-market studies or clinical trials to assess new safety risks, or imposition of distribution or other restrictions under a REMS. Other potential consequences include, among other things:

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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

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safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product;

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fines, warning letters or holds on post-approval clinical trials;

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refusal of the FDA to approve applications or supplements to approved applications, or withdrawal of product approvals;

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product seizure or detention, or refusal to permit the import or export of products;

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injunctions or the imposition of civil or criminal penalties; and

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consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; or mandated modification of promotional materials and labeling and issuance of corrective information.

Other Regulatory Matters

Manufacturing, sales, promotion and other activities of product candidates following product approval, where applicable, or commercialization are also subject to regulation by numerous regulatory authorities in the U.S. in addition to the FDA, which may include the Centers for Medicare & Medicaid Services, or CMS, other divisions of the Department of Health and Human Services, the Department of Justice, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments and governmental agencies.

Healthcare Reform

In March 2010, Congress passed the Affordable Care Act, or the ACA, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of health spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry, and impose additional policy reforms. The ACA, for example, contains provisions that subject products to potential competition by lower-cost products and may reduce the profitability of products through increased rebates for drugs reimbursed by Medicaid programs; address a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increase the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations; establish annual fees and taxes on manufacturers of certain branded prescription drugs; and create a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (increased to 70% pursuant to the Bipartisan Budget Act of 2018, or BBA, effective as of 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.

Since its enactment, there have been judicial, administrative, executive and Congressional legislative challenges to certain aspects of the ACA. The Supreme Court upheld the ACA in the main challenge to the constitutionality of the law in 2012. Specifically, in June 2021, the Supreme Court held that the individual mandate and corresponding penalty was constitutional because it would be considered a tax by the federal government. The Supreme Court also upheld federal subsidies for purchasers of insurance through federally facilitated exchanges in a decision released in June 2015.

Further, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which have resulted in several recent Congressional inquiries and proposed and enacted bills designed to, among other things,

bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. In addition, the U.S. government, state legislatures, and foreign governments have shown significant interest in implementing cost containment programs, including price-controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs to limit the growth of government paid healthcare costs. For example, the U.S. government has passed legislation requiring pharmaceutical manufacturers to provide rebates and discounts to certain entities and governmental payors to participate in federal healthcare programs. Congress has continually explored legislation intended to address the cost of prescription drugs. Notably, the major committees of jurisdiction in the Senate (Finance Committee, Health, Education, Labor and Pensions Committee, and Judiciary Committee), regularly evaluate and hold hearings on legislation intended to address various elements of the prescription drug supply chain and prescription drug pricing. Proposals include a significant overhaul of the Medicare Part D benefit design efforts to cap the increase in drug prices, create drug price transparency, curb anti-competitive behavior, and efforts to allow the Secretary of the Department of Health and Human Services to negotiate drug prices with prescription drug manufacturers. While we cannot predict what proposals may ultimately become law, the elements under consideration could significantly change the landscape in which the pharmaceutical market operates. The former Trump administration took several regulatory steps and proposed numerous prescription drug cost control measures. Similarly, the Biden administration has identified promoting competition and lowering drug prices as a priority.

These initiatives recently culminated in the enactment of the Inflation Reduction Act (“IRA”), in August 2022, which, among other things, will allow the U.S. Department of Health and Human Services (“HHS”) to negotiate the selling price of certain drugs and biologics that CMS reimburses under Medicare Part B and Part D, although this will only apply to high-expenditure single-source drugs that have been approved for at least 7 years (11 years for biologics). The negotiated prices, which will first become effective in 2026, will be capped at a statutory ceiling price representing a significant discount from average prices to wholesalers and direct purchasers. The law will also, beginning in October 2023, penalize drug manufacturers that increase prices of Medicare Part B and Part D drugs at a rate greater than the rate of inflation. In addition, the law eliminates the “donut hole” under Medicare Part D beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and requiring manufacturers to subsidize, through a newly established manufacturer discount program, 10% of Part D enrollees’ prescription costs for brand drugs below the out-of-pocket maximum, and 20% once the out-of-pocket maximum has been reached. Although these discounts represent a lower percentage of enrollees’ costs than the current discounts required below the out-of-pocket maximum (that is, in the “donut hole” phase of Part D coverage), the new manufacturer contribution required above the out-of-pocket maximum could be considerable for very high-cost patients and the total contributions by manufacturers to a Part D enrollee’s drug expenses may exceed those currently provided. Further, the law incentivizes the manufacture of biosimilars and vaccine uptake, and limits the Part B or Part D insulin copayment to $35 per month. The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. These provisions will take effect progressively starting in 2023, although they may be subject to legal challenges.

At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including restrictions or prohibitions on certain marketing practices, reporting of specified categories of remuneration provided to health care practitioners, and reporting and justification of price increases greater than a specified level. In some cases, states have designed programs to encourage importation from other countries and bulk purchasing, though the federal government has not yet approved any such plans. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for pharmaceuticals and other healthcare products and services, which could result in reduced demand for our product candidates.

Individual states in the U.S. have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Additionally, we may face competition in the United States for our development candidates and investigational medicines, if approved, from therapies sourced from foreign countries that have placed price controls on pharmaceutical products. In the United States, the Medicare Modernization Act, or MMA, contains provisions that call for the promulgation of regulations that expand pharmacists’ and wholesalers’ ability to import cheaper versions of an approved drug and competing products from Canada, where there are government price controls. Further, the MMA provides that these changes to U.S. importation laws will not take effect, unless and until the Secretary of the HHS certifies that the changes will pose no additional risk to the public’s health and safety and will result in a significant reduction in the cost of products to consumers. On September 23, 2020, the Secretary of the HHS made such certification to Congress, and on October 1, 2020, the FDA published a final rule that allows for the importation of certain prescription drugs from Canada. The final rule became effective November 30, 2020. Under the final rule, States and Indian Tribes, and in certain future circumstances pharmacists and wholesalers, may submit importation program proposals to the FDA for review and authorization. On September 25, 2020, CMS stated drugs imported by States under this rule will not be eligible for federal rebates under Section 1927 of the Social Security Act and manufacturers would not report these drugs for “best price” or Average Manufacturer Price purposes. Since these drugs are not considered covered outpatient drugs, CMS further stated it will not publish a National Average Drug Acquisition Cost for these drugs. Separately, the FDA also issued a final guidance document outlining a pathway for manufacturers to obtain an additional National Drug Code, or NDC, for an FDA-approved drug that was originally intended to be marketed in a foreign country and that was authorized for sale in that foreign country. The market implications of the final rule and guidance are unknown at

this time. Proponents of drug reimportation may attempt to pass legislation that would directly allow reimportation under certain circumstances. Legislation or regulations allowing the reimportation of drugs, if enacted, could decrease the price we receive for any products that we may develop and adversely affect our future revenues and prospects for profitability. Individual states in the U.S. have also been increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

From time to time, legislation is drafted, introduced, and passed in Congress that could significantly change the statutory provisions governing the sale, marketing, coverage, and reimbursement of products regulated by CMS or other government agencies. In addition to new legislation, CMS regulations and policies are often revised or interpreted by the agency in ways significantly affecting our business and our products.

Other Healthcare Laws and Regulations

If we obtain regulatory approval of our products, we may be subject to various federal and state laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things, our proposed sales and marketing strategies. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. These laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security, and physician sunshine laws and regulations.

The federal Anti-Kickback Statute prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or paying remuneration (a term interpreted broadly to include anything of value, including, for example, gifts, discounts and credits), directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, an item or reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. Violations of the federal Anti-Kickback Statute can result in significant civil monetary and criminal penalties, per kickback plus three times the amount of remuneration and a prison term per violation. Further, violation of the federal Anti-Kickback Statute can also form the basis for False Claims Act liability (discussed below). A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, many states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only government programs.

Additionally, the civil False Claims Act (the “FCA”) prohibits knowingly presenting or causing the presentation of a false, fictitious or fraudulent claim for payment to the U.S. government. Actions under the FCA may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government. Violations of the FCA can result in very significant monetary penalties, for each false claim and treble the amount of the government’s damages. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims. The federal government continues to use the FCA, and the accompanying threat of significant liability, in its investigations and prosecutions of pharmaceutical and biotechnology companies throughout the U.S. Such investigations and prosecutions frequently involve, for example, the alleged promotion of products for unapproved uses and other sales and marketing practices. The government has obtained multi-million and multi-billion dollar settlements under the FCA in addition to individual criminal convictions under applicable criminal statutes. Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ and manufacturers’ compliance with the FCA and other applicable fraud and abuse laws.

We may be subject to the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transferring of remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular supplier of Medicare or Medicaid payable items or services. Federal government price reporting laws require manufacturers to calculate and report complex pricing metrics to government programs.

The U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, includes a fraud and abuse provision referred to as the HIPAA All-Payor Fraud Law, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, including the final omnibus rule published on January 25, 2013, imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s

privacy and security standards directly applicable to “business associates,” defined as independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. Many states also have laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

We may also be subject to federal transparency laws, including the federal Physician Payment Sunshine Act, which was part of the ACA and requires manufacturers of certain drugs and biologics, among others, to track and disclose payments and other transfers of value they make to U.S. physicians and teaching hospitals, as well as physician ownership and investment interests in the manufacturer. Effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners. This information is subsequently made publicly available in a searchable format on a CMS website. Failure to disclose required information may result in civil monetary penalties for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission. Certain states also mandate implementation of compliance programs, impose restrictions on drug manufacturer marketing practices and/or require the tracking and reporting of gifts, compensation and other remuneration to physicians and/or other healthcare providers.

As noted above, analogous state laws and regulations, such as, state anti-kickback and false claims laws may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures. There are also state and local laws that require the registration of pharmaceutical sales representatives.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, imprisonment, exclusion of drugs from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our financial results. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource consuming and can divert a company’s attention from the business.

Government Regulation of Drugs Outside of the United States

To market any product outside of the U.S., we would need to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization or identification of an alternate regulatory pathway, manufacturing, commercial sales and distribution of our products. For instance, in the United Kingdom and the European Economic Area, or the EEA (comprised of the 27 EU Member States plus Iceland, Liechtenstein and Norway), medicinal products must be authorized for marketing by using either the centralized authorization procedure or national authorization procedures.

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Centralized procedure-If pursuing marketing authorization of a product candidate for a therapeutic indication under the centralized procedure, following the opinion of the European Medicines Agency’s Committee for Medicinal Products for Human Use, or, CHMP, the European Commission issues a single marketing authorization valid across the EEA. The centralized procedure is compulsory for human medicines derived from biotechnology processes or advanced therapy medicinal products (such as gene therapy, somatic cell therapy and tissue engineered products), products that contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune diseases and other immune dysfunctions, viral diseases, and officially designated orphan medicines. For medicines that do not fall within these categories, an applicant has the option of submitting an application for a centralized marketing authorization to the European Medicines Agency, or EMA, as long as the medicine concerned

contains a new active substance not yet authorized in the EEA, is a significant therapeutic, scientific or technical innovation, or if its authorization would be in the interest of public health in the EEA. Under the centralized procedure the maximum timeframe for the evaluation of an MAA by the EMA is 210 days, excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP. Accelerated assessment might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation. The timeframe for the evaluation of an MAA under the accelerated assessment procedure is 150 days, excluding clock stops.

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National authorization procedures-There are also two other possible routes to authorize products for therapeutic indications in several countries, which are available for products that fall outside the scope of the centralized procedure.

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Decentralized procedure-Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one EU country of medicinal products that have not yet been authorized in any EU country and that do not fall within the mandatory scope of the centralized procedure.

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Mutual recognition procedure-In the mutual recognition procedure, a medicine is first authorized in one EU Member State, in accordance with the national procedures of that country.

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Following authorization through either procedure, additional marketing authorizations can be sought from other EU countries in a procedure whereby the countries concerned recognize the validity of the original, national marketing authorization.

In the EEA, new products for therapeutic indications that are authorized for marketing (i.e., reference products) qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization. The data exclusivity period prevents generic or biosimilar applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar marketing authorization in the EU during a period of eight years from the date on which the reference product was first authorized in the EU. The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until ten years have elapsed from the initial authorization of the reference product in the EU. The ten-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

The criteria for designating an “orphan medicinal product” in the EEA are similar in principle to those in the U.S. In the EEA a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition. Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication. During this ten-year orphan market exclusivity period, no marketing authorization application shall be accepted, and no marketing authorization shall be granted for a similar medicinal product for the same indication. An orphan product can also obtain an additional two years of market exclusivity in the EU for pediatric studies. The ten-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if (i) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; (ii) the applicant consents to a second orphan medicinal product application; or (iii) the applicant cannot supply enough orphan medicinal product.

Similar to the United States, the various phases of non-clinical and clinical research in the European Union are subject to significant regulatory controls.

The Clinical Trials Directive 2001/20/EC, the Directive 2005/28/EC on GCP and the related national implementing provisions of the individual EU Member States govern the system for the approval of clinical trials in the European Union. Under this system, an applicant must obtain prior approval from the competent national authority of the EU Member State in which the clinical trial is to be conducted. Furthermore, the applicant may only start a clinical trial at a specific trial site after the competent ethics committee has issued a favorable opinion. The clinical trial application must be accompanied by, among other documents, an investigational medicinal product dossier (the “Common Technical Document”) with supporting information prescribed by Directive 2001/20/EC, Directive 2005/28/EC, where relevant the implementing national provisions of the individual EU Member States and further detailed in applicable guidance documents.

COYA US Equity

COYA · 10-K · period ended 2022-12-31

ITEM 1.BUSINESS

COYA US Equity☆

COYA · 10-K · period ended 2022-12-31

ITEM 1.BUSINESS

COYA US Equity