10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
For the Fiscal Year Ended December 31, 2024
For the transition period from __________________ to __________________
Commission file number: 001-38327
Cue Biopharma, Inc.
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
(617) 949-2680
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share CUE Nasdaq Capital Market
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See 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 Act): Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $59.9 million (based on the closing price of the registrant’s common stock on June 28, 2024 of $1.24 per share).
As of March 27, 2025, the registrant had 61,819,101 shares of Common Stock, $0.001 par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days after the end of the fiscal year ended December 31, 2024. Portions of such proxy statement are incorporated by reference into Part III of this Form 10-K.
CUE BIOPHARMA, INC.
TABLE OF CONTENTS
PART I
Item 1. Business 4
Item 1A. Risk Factors 47
Item 1B. Unresolved Staff Comments 89
Item 1C. Cybersecurity 89
Item 2. Properties 90
Item 3. Legal Proceedings 90
Item 4. Mine Safety Disclosures 90
PART II
Item 6. [Reserved] 91
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 105
Item 8. Financial Statements and Supplementary Data 105
Item 9A. Controls and Procedures 105
Item 9B. Other Information 106
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 106
PART III
Item 10. Directors, Executive Officers and Corporate Governance 107
Item 11. Executive Compensation 107
Item 14. Principal Accountant Fees and Services 107
PART IV
Item 15. Exhibits and Financial Statement Schedules 109
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “would,” “could,” “seek,” “intend,” “plan,” “goal,” “project,” “estimate,” “anticipate,” “strategy,” “future,” “likely” or other comparable terms. All statements, other than statements of historical fact, contained in this Annual Report on Form 10-K, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements.
The forward-looking statements in this Annual Report on Form 10-K include, among other things, statements about:
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the initiation, timing, progress and results of our ongoing and planned preclinical studies and any future clinical trials and our research and development programs;
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our estimates regarding expenses, future revenue, capital requirements and need for additional financing;
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our expectations regarding our ability to fund our projected operating requirements with our existing cash resources and the period in which we expect that such cash resources will enable us to fund such operating requirements;
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our plans to develop our drug product candidates, including our intention to prioritize our autoimmune programs, including CUE-401 and CUE-501;
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our plans to pursue third party support through partnerships and collaborations to further develop the CUE-100 series programs, including CUE-101 and CUE-102, as well as CUE-501;
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the timing of and our ability to submit applications for, and to obtain and maintain regulatory approvals for, our drug product candidates;
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the potential advantages of our drug product candidates;
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the rate and degree of market acceptance and clinical utility of our drug product candidates, if approved;
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our estimates regarding the potential market opportunity for our drug product candidates;
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our commercialization, marketing and manufacturing capabilities and strategy;
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our intellectual property position;
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our ability to identify additional products, drug product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;
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the impact of government laws and regulations;
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our competitive position;
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developments relating to our competitors and our industry;
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our ability to continue as a going concern; and
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our ability to maintain and establish collaborations or obtain additional funding.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include the factors discussed below under the heading “Risk Factor Summary,” and the risk factors detailed further in Item 1A., “Risk Factors” of Part I of this Annual Report on Form 10-K.
This report includes statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties as well as our own estimates. All of the market data used in this report
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involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our estimates of the potential market opportunities for our drug product candidates include several key assumptions based on our industry knowledge, industry publications, third-party research, and other surveys, which may be based on a small sample size and may fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions.
Any forward-looking statement made by us in this Annual Report on Form 10-K is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
RISK FACTOR SUMMARY
Investment in our securities involves risk. You should carefully consider the following summary of what we believe to be the principal risks facing our business, in addition to the risks described more fully in Item 1A, “Risk Factors” of Part I of this Annual Report on Form 10-K and other information included in this report. The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations.
If any of the following risks occurs, our business, financial condition and results of operations and future growth prospects could be materially and adversely affected, and the actual outcomes of matters as to which forward-looking statements are made in this report could be materially different from those anticipated in such forward-looking statements.
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Our recurring losses from operations raise substantial doubt regarding our ability to continue as a going concern.
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We are a clinical-stage biopharmaceutical company, have no history of generating commercial revenue, have a history of operating losses and may never achieve or maintain profitability.
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We currently do not have, and may never develop, any FDA-approved or commercialized products.
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We are substantially dependent on the success of our drug product candidates, only two of which are currently being tested in clinical trials, and significant additional research and development and clinical testing will be required before we can potentially seek regulatory approval for or commercialize any of our drug product candidates.
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We have limited experience in conducting clinical trials and no history of commercializing biologic products, which may make it difficult to evaluate the prospects for our future viability.
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Success in preclinical studies or early clinical trials may not be indicative of results obtained in later trials.
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We plan to continue to seek collaborations or strategic alliances. However, we may not be able to establish such relationships, and relationships we have established may not provide the expected benefits.
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We may not be successful in our efforts to identify additional drug product candidates. Due to our limited resources and access to capital, we must prioritize the development of certain drug product candidates; these decisions may prove to be wrong and may adversely affect our business.
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We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. Our competitors may be able to develop other compounds or drugs that are able to achieve similar or better results than our drug product candidates.
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We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to successfully complete development of, obtain
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regulatory approval for, or commercialize our drug product candidates and our business could be substantially harmed.
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We rely completely on third parties to manufacture our preclinical and clinical drug supplies for our drug product candidates.
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If we or our licensor(s) are unable to protect our or its intellectual property, then our financial condition, results of operations and the value of our technology and potential products could be adversely affected.
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Even if we, or any collaborators we may have, obtain marketing approvals for any of our drug product candidates, the terms of approvals and ongoing regulation of our products could require the substantial expenditure of resources and may limit how we, or they, manufacture and market our products, which could materially impair our ability to generate revenue.
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We will need substantial additional financing to support our growth and ongoing operations. Additional capital may be difficult to obtain, restrict our operations, require us to relinquish rights to our technologies or drug product candidates, encumber our assets and result in ongoing debt service cost, or result in additional dilution to our stockholders.
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We have a loan agreement that requires us to meet certain operating covenants and place restrictions on our operating and financial flexibility.
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PART I
Item 1. Business
Executive Summary
We are a clinical-stage biopharmaceutical company developing precision immunotherapies to treat cancer and autoimmune diseases. Unlike conventional approaches that broadly activate the immune system, our Immuno-STATTM platform is designed to selectively modulate disease-relevant T cells, enhancing efficacy while minimizing off-target effects. Our lead programs include drug product candidates designed to:
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CUE-400 series (Autoimmune Diseases): Enhance regulatory T cells (Tregs) with a novel and unique mechanism to not only proliferate but also generate Tregs, and restore immune balance (e.g., CUE-401 for autoimmune condition).
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CUE-500 series (Targeted Cell Depletion): Redirect antiviral T cells to target eliminate pathogenic cells (e.g., CUE-501 for autoimmune B cell depletion).
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CUE-100 series (Oncology): Selectively activate tumor-specific T cells (e.g., CUE-101 for HPV+ cancers, CUE-102 for WT-1 expressing cancers).
We aim to leverage our differentiated platform to establish new standards of care, forge strategic partnerships, and accelerate clinical development.
Overview
We are developing a novel class of injectable therapeutics engineered to selectively engage and modulate targeted, disease-relevant T cells. Through our approach, we aim to establish a new standard of care for diseases that cause human suffering and mortality, with an initial focus on cancer and autoimmune disease, by selectively modulating the immune system to restore function and re-establish immune balance. We believe our proprietary Immuno-STATTM (Selective Targeting and Alteration of T Cells) platform, as described below, will enable us to therapeutically enhance a patient’s own immune system to potentially restore health.
Cancer and autoimmune disease cause immeasurable pain and suffering, shortening the life expectancy of those afflicted and impacting large populations worldwide. There are approximately 20 million new cancer diagnoses worldwide each year with approximately 2 million new cases annually in the United States, or U.S., alone. Of these new cases, approximately 50% will progress to recurrent metastatic disease, ultimately resulting in death. In addition, approximately 4% of the world’s population is diagnosed with an autoimmune disease each year, resulting in approximately 24 million cases annually in the U.S.
A key factor in susceptibility to cancer is inadequate immunity against malignant cancer cells and inversely, autoimmune disease is caused by excessive immune activation against self-tissue. T cells are central to enhancing tumor-immunity as well as maintaining tolerance against self-tissue antigens and are regulated with a highly selective “command and control” instruction process through interactions with antigen-presenting cells, or APCs. We have designed and engineered our Immuno-STAT platform to mimic nature’s “command and control” system to restore immune balance.
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Immuno-STAT Platform for Restoration of Immune Balance
The immune system’s specificity of T cell engagement is achieved through the T cell receptor, or TCR, binding to a highly specific, targeted peptide segment, referred to as an “epitope”. The epitope is presented by a specialized protein scaffold, referred to as HLA molecules, present on the surface of APCs. TCR engagement along with “command” secondary signals, such as interleukin 2, or IL-2, transforming growth factor beta, or TGF-β, PD-1, determines the activation state and effector function of T cells. For example, IL-2 signals result in potent activation of CD8+ T cells into killer T cells in cancer, while other signals may differentiate T cells into regulatory T cells, or Tregs, to suppress autoimmunity. These “cues”, or signals, when engaged at the same time, as is the case with our Immuno-STATs, are able to “dial-in” selective activation of targeted tumor-specific T cells to attack cancer while avoiding potentially harmful broad immune activation of T cells. Conversely, in autoimmunity, our autoimmune drug product candidates are designed to deploy signals to generate Tregs to selectively inhibit, or dampen, autoreactive T cells while avoiding broad immune suppression that can increase susceptibility to other diseases. It is through the specificity of the TCR and the simultaneous delivery of “co-stimulatory” signals that we aim to “command and control” disease-relevant T cells with necessary precision for the treatment of cancer and autoimmune disease. We have generated supportive clinical data with our CUE-100 series, namely CUE-101 in HPV+ head and neck cancer and CUE-102 in Wilms’ tumor 1 protein, or WT1, expressing cancers, as well as preclinical data supporting the advancement of our CUE-400 and CUE-500 series for autoimmune disease. We believe our Immuno-STAT platform has the potential to develop drug product candidates with the potential of becoming new standards of care in the treatment of cancer and autoimmune disease. The graphic below summarizes the pipeline of assets that we have in development for restoration of immune balance.
Immuno-STAT Platform Pipeline of Assets for Restoration of Immune Balance
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The Immuno-STAT framework is engineered to be highly flexible and modular, potentially enabling us to deploy the same or similar core functional elements to restore immune balance across diverse therapeutic approaches. In the case of oncology, Immuno-STATs are designed to selectively engage and activate tumor-specific T cells while avoiding systemic immune activation. In contrast, for autoimmune diseases, CUE-401 has been designed to induce and proliferate Tregs to selectively down regulate autoreactive T cells, referred to as Teff cells, while avoiding broad immuno-suppression.
In oncology, we have observed in our Phase 1 clinical trials that our CUE-100 series selectively delivered a cancer protein-specific TCR that activated a signal along with an IL-2 variant cytokine to preferentially activate and proliferate tumor-specific T cells while sparing all other irrelevant T cells.
In autoimmune, we have developed novel approaches to restoring immune balance and health. CUE-401 is a novel bispecific composed of a masked, attenuated TGF-β with an IL-2 attenuated variant that together has demonstrated preclinically the ability to potently stimulate the generation and proliferation of Tregs. The masking of TGF-β enables the drug to have a biased, or “conditional” binding to immune cells having both the IL-2 receptor, as well as the TGF-β receptors, enabling concurrent, conditional signaling. In autoimmune disease, Tregs are the master regulators of maintaining immune homeostasis, or “balance” and health. Teff cells are reactive against “self” proteins and foster inflammation and induce chronic tissue damage. Tregs are important to maintaining “immune balance” in that they possess the ability to dampen and control the Teff cells. CUE-401 has been specifically engineered and designed to foster Treg control by proliferating existing natural regulatory T cells, or nTregs, that develop in the thymus as well as inducing new Tregs, or iTregs, and reducing the number of inflammatory Teff cells, thereby restoring the essential Treg/Teff balance. As such, we believe that CUE-401 represents a novel approach to selectively induce and expand Tregs with the potential to provide superior therapeutic effects for the treatment for chronic autoimmune diseases.
In addition to CUE-401, we have also developed the CUE-500 series to enable T cell-mediated depletion of pathogenic cell types. We believe these biologics have the potential to achieve immune balance in autoimmune patients and are significantly differentiated from other competing approaches such as antibody drug conjugates, or ADCs, pan-T cell engagers. IL-2 muteins, TNFR2 agonists, or CAR-T therapies. The CUE-500 series represents a novel approach to selectively target disease-causing cells and redirect existing anti-viral memory T cells to targeted disease-causing cells and deplete these cells. From this series, CUE-501 is being specifically developed to target and deplete autoimmune disease-causing B cells, an effective therapeutic objective which has been validated by others through the ablation of B cells with CAR-T and bispecific T cell engager therapies with pan-T cell activation. Targeted B cell depletion is widely recognized in the industry as a clinically validated and important approach for the treatment of B cell mediated autoimmune and inflammatory diseases, such as Lupus. We believe the preclinical data generated to date for the CUE-401 and the CUE-500 series demonstrates clear evidence of the intended mechanistic effect of these novel approaches for the potential treatment of autoimmune disease, and each represent potential breakthrough therapeutic opportunities for significant patient populations.
Immuno-STAT Platform for Oncology: CUE-100 Series-Combining TCR and IL-2 to Selectively Target Cancer
Historically, we have primarily focused our resources on the development of our CUE-100 series for oncology, namely the CUE-101 and CUE-102 drug product candidates, which are representative of our approach to selectively activate targeted CD8+ T cells against cancer. Although we are prioritizing CUE-401 and CUE-501, we are currently continuing to treat and monitor patients in a Phase 1b open-label expansion study investigating CUE-101 in the treatment of HPV+ recurrent metastatic, or R/M, head and neck squamous cell carcinoma, or HNSCC, in second line, or 2L, and beyond patients as a monotherapy. We are also conducting a Phase 1b clinical trial investigating CUE-101 in the treatment of HNSCC, as a first line, or 1L, therapy in combination with standard of care KEYTRUDA. We are also currently continuing to monitor patients in a Phase 1b clinical trial of CUE-102 as a monotherapy in late line R/M WT1+ colorectal, gastric, ovarian, and pancreatic cancer.
The figure below depicts our CUE-100 series Immuno-STAT platform for selectively expanding tumor-specific T cells by building upon nature’s “cues” for selective T cell engagement and activation.
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CUE-100 Series Potential Best-in-Class IL-2 Based T Cell Engager
The data from the CUE-101 and CUE-102 clinical trials has demonstrated clinical evidence of targeted activation and expansion of T cells with the specific TCR for the selected cancer-epitope, e.g., HPV E7 epitope for HPV+ R/M HNSCC, in the case of CUE-101, and WT1 epitope for cancers expressing WT1, such as ovarian, gastric, colorectal and pancreatic cancer, in the case of CUE-102. Activation and expansion of the targeted T cell populations have been demonstrated in patients from both the Phase 1b clinical trial for CUE-101 and the Phase 1b clinical trial for CUE-102, and a notable increase in median overall survival, or mOS, has been observed in the maturing clinical data with CUE-101. We have also observed an increased survival trend with the emerging CUE-102 Phase 1b clinical data.
CUE-100 Series Maturing Clinical Trial Data Shows Notable Increase in Survival
In our Phase 1 clinical trial for CUE-101 as a monotherapy, we have observed prolonged survival in patients with advanced R/M HNSCC. Notably, and as shown in the above figure, the median overall survival, or mOS, of 2L+ patients treated at monotherapy doses greater than 1mg/kg is 20.8 months, which compares favorably to the historical third-party mOS data of 8.4 months with KEYTRUDA and 7.5 months with OPDIVO in the 2L setting. As shown in the left graph above,
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patients treated with higher dose levels (> 2 mg/kg) of CUE-101 exhibited greater mOS compared to patients from the same clinical trial that were treated with lower dose levels (< 1 mg/kg) of CUE-101. We believe this survival data is due to the repeated stimulation and expansion of tumor-specific T cells given the mechanism of action of CUE-101 especially in the tumor microenvironment. Having demonstrated in clinical trials the selective activation and expansion of tumor-specific T cells by the Immuno-STAT platform in patients fighting cancer, we are now seeking strategic partnerships to continue clinical development and move these drug product candidates towards a potential registration path.
As shown in the figure below, the data from our CUE-101 Phase 1b clinical trial investigating CUE-101 in combination with standard of care pembrolizumab (Keytruda), continues to mature with a mOS of 21.8 months and a 12-month landmark survival of 87.5% as of February 17, 2025. We believe these results appear favorable compared with the historical pembrolizumab mOS of 12.3 months. Also of importance is the observation of a 46% objective response rate, or ORR, for the combination treatment of CUE-101 and pembrolizumab compared to a 19% ORR for pembrolizumab alone from historic data.
Median Overall Survival of CUE-101 (4mg/kg) and Pembrolizumab
In our Phase 1 clinical trial for CUE-102 as a monotherapy for treating WT-1 expressing tumors, including colorectal, gastric, pancreatic and ovarian, we have observed evidence of WT-1 specific T cell proliferation as shown in the figure below. Importantly, as the data continues to mature, we have observed what appears to be a trend of enhanced survival in colorectal cancer and pancreatic cancer patients, where the number of enrolled patients allows for a possible pattern to be observed. We have also observed reductions in tumor burden in patients with pancreatic, gastric, and ovarian cancer.
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Selective Expansion of WT1-Specific T Cells Demonstrated in Patients Treated with CUE-102
We continue to monitor and assess the maturing clinical data and believe it continues to strengthen and enhance the potential of establishing a third-party partnership to further develop this promising approach for addressing the pressing need for more effective and well tolerated cancer therapeutics.
As previously announced, we are strategically prioritizing CUE-401 and the CUE-500 series, including CUE-501. We believe these programs represent near-term value creation opportunities for our shareholders and have the potential to be innovations providing transformative therapies, with large, underserved market opportunities.
Immuno-STAT Platform for Autoimmune Disease: CUE-400 Series-Combining a Masked TGF-b and IL-2 to Potentially Transform the Treatment of Autoimmune Diseases
Recently we have observed significant focus within the pharmaceutical industry to identify approaches that target and foster Tregs for more effective therapeutic intervention and management of autoimmune disease. It is well established that TGF-β exerts direct suppressive effects on multiple immune cells, including inhibition of the cytotoxic activity of CD8+ T cells, CD4+ T cells, and NK cells, and enhances the functionality of Tregs, which are a critical immunosuppressive population essential for maintaining immune balance. We prioritized our autoimmune disease assets due to the pressing need for more effective therapies in autoimmune disease, coupled with our observations from the preclinical data generated with our CUE-401 program, which is specifically designed to foster the immunosuppressive features of TGF-β with the complimentary/ synergistic properties of Il-2.
We believe that CUE-401 is a novel approach to not only expand existing Tregs, but also to significantly induce and expand antigen specific Tregs for regulating disease causing autoreactive Teff cells. IL-2 and TGF- β are known to be important signals for promoting expansion and stabilization of existing Tregs in the body, as well as naïve CD4+ T cells undergoing activation resulting in the stable induction of the Foxp3 promoter, present in Tregs. CUE-401 was designed to incorporate the same attenuated IL-2 variant that has been derisked by our CUE-100 series candidates, CUE-101 and CUE-102, as well as a unique and novel, masked TGF-β variant, designed by structure-guided engineering for conditional activation.
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CUE-401 Novel and Unique Bi-specific
The mechanism of action of CUE-401, as illustrated below, is significantly differentiated from IL-2 muteins and TNFR2 agonists, providing a unique opportunity to harness the full potential of Treg differentiation and expansion with the qualitative advantages of iTregs.
CUE-401 Differentiated Mechanism of Action
T regs act directly on autoreactive T cells, to suppress their activation, proliferation and function, which includes secretion of cytokines known to play an important role in multiple autoimmune diseases. Unlike drugs that only target one predominant cytokine pathway, IL-17 for example, Tregs suppress Teff cell responses of diverse phenotypes, including Th1, Th2 and Th17 responses, which are distinct subsets of T helper cells that underlie autoimmune disease progression. In addition to direct effects on Teff cells, Tregs act on key additional immune compartments to inhibit and resolve self-reactivity and inflammation. Furthermore, Tregs regulate myeloid derived immune cell populations, including macrophages and dendritic cells, which drive inflammation through antigen presentation, cytokine production and T cell stimulation. Given these diverse effects, Tregs represent a promising therapeutics approach for the modulation of inflammation and autoimmune disease.
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The graphic below highlights the unique and differentiated mechanism of action of CUE-401 as compared to CD25-biased IL-2 muteins, selectively designed for expansion of existing Tregs. As shown below, CUE-401 has shown in preclinical studies that it expanded pre-existing nTregs, as well as converted naïve CD4+ T cells and Teff cells into new Tregs, thereby enhancing the quantitative and qualitative population of Tregs available to control the pathogenic cellular reactions in autoimmune patients and maintain a state of immune balance. The conversion of self-reactive CD4+ T cells into Foxp3-positive Tregs, a specialized subset of CD4+ T cells, decreases the number of pathogenic, autoreactive Teff cells and may also generate antigen-specific Tregs that have enhanced suppressive function.
CUE-401 Designed to be Mechanistically Differentiated from IL-2 Muteins
To date, we have made significant progress in the development of CUE-401, including the identification of a lead candidate and initiation of Investigational New Drug, or IND, enabling studies. Preclinical data generated in our labs, as well as in collaboration with Dr. Richard DiPaolo of St. Louis University, supports the premise that CUE-401 selectively expands and induces Tregs (both nTregs and iTregs) that are functionally suppressive and stable. The data shown in the left graph below demonstrated dose-dependent iTreg induction in primary human T cells in a mixed lymphocyte reaction, or MLR, in the presence of CUE-401 treatment. In contrast, treatment of the same T cell MLR with a CD25-biased IL-2 mutein did not result in the generation of iTregs, consistent with the known literature that both IL-2 and TGF-β signals are required for this effect. Further demonstration of this mechanism is shown in the right graph below, where treatment of human T cell MLRs with only the IL-2 or TGF-β domains of CUE-401 did not result in generation of a substantial population of iTregs. In contrast, treatment with the full CUE-401 molecule, containing both the IL-2 and TGF-β domains, demonstrated the generation of a robust population of FOXP3+ iTregs from these primary human T cells.
CUE-401 Preclinical Demonstration of Inducible Treg Expansion from Teff Cells
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In vivo experiments in mice further demonstrated that treatment with CUE-401 resulted in a significant increase in the frequency of Tregs, as did treatment with IL-2 complexes (a mimic of CD25-biased IL-2; see left graph below). Importantly, treatment with IL-2 complexes also resulted in increased proliferation of Teff cells, while CUE-401 treatment selectively increased Treg frequency without increasing Teff cell proliferation. Teff cells upregulate expression of CD25, the high affinity receptor of IL-2, thus CD25-biased forms of IL-2 can result in stimulation of activated Teff cells, which in the case of autoimmune disease may be the self-reactive Teff cells that are promoting disease. The selectivity of CUE-401 to avoid stimulation of Teff cells and possibly convert Teff cells to iTregs we believe is a competitive advantage of the CUE-401 molecular design.
The expanded Tregs resulting from CUE-401 treatment demonstrated to be functionally suppressive and maintained a stable phenotype, as evidenced by Foxp3+ demethylation, whereby CUE-401 treatment also suppressed the expansion of self-reactive Teff cells in a T cell transfer model of autoimmune gastritis. As shown in the vehicle treated control mice in the figures below, transfer of Treg-depleted T cells into immunocompromised mice in this model resulted in the development of autoimmune gastritis over approximately 9 weeks, where the gastric lining of these mice exhibited histopathological evidence of disease and self-reactive Teff cells were activated and expanded in the gastric lymph node and infiltrated the gastric lining of the stomach. In contrast, treatment of this model with two doses of CUE-401 (Days 1 and 14) resulted in prolonged and durable suppression of Teff self-reactive T cells and significantly reduced pathological evidence of disease in the stomachs of treated mice. The representative histopathology images below and the compiled gastritis pathology scores demonstrate significant, long-term protection from tissue destruction in mice treated with CUE-401.
CUE-401 Reduced Pathologic Autoimmune Teff Cells While Normalizing Histopathologic Gastritis Scores
We have conducted additional preclinical studies to characterize the pharmacokinetics, pharmacodynamics, and tolerability of CUE-401 across multiple animal species providing insights towards potential translation to human clinical studies. These preclinical results, along with advances in the manufacturing of CUE-401, have derisked the development of this asset and identified the lead candidate molecule. Scale-up manufacturing and other IND-enabling studies are ongoing.
Immuno-STAT Platform for Autoimmune Disease: CUE-500 Series- Exploiting the Natural Anti-viral T Cell Repertoire Against Targeted Tissue
In addition to CUE-401, we are also developing the CUE-500 series for the selective targeting and depletion of pathogenic immune cells with the potential to reset the immune system, which could have the potential to offer more durable and better tolerated therapeutic responses.
We are advancing our CUE-500 series of Immuno-STAT molecules for the depletion of disease-relevant pathogenic cell types. CUE-501 has been specifically designed for the treatment of autoimmune disease via anti-viral T cell-mediated depletion of B cells. We aim to establish a near-term third party development partnership to further pursue this lead program from our CUE-500 series of Immuno-STATs.
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The therapeutic concept of the CUE-500 series, as summarized below, builds upon the clinical de-risking accomplished with the CUE-100 series, where the shared constant is the presence of a bivalent peptide-HLA molecule that is designed to selectively engage TCRs of selected T cell populations. Whereas CUE-100 series Immuno-STATs are engineered to selectively engage tumor-specific T cells, in the case of the CUE-500 series, the peptide presented by the HLA is a well characterized virus epitope recognized by virus-specific memory T cells that are present in high frequencies due to our repeated exposures to common viral diseases. Examples of such common viral epitopes would include CMV, EBV, and SARS-CoV-2, each of which are well known to elicit long-lived memory cytotoxic T cells that continually survey our bodies to protect against future exposures to these viruses. In addition to these viral peptide-HLA complexes, each CUE-500 series molecule also contains antibody binding domains directed against unique target proteins expressed on the surface of disease-relevant pathogenic cells. This molecular configuration is designed to allow for CUE-500 molecules to bind target pathologic cells, or “paint” the surface of these cells, making these cells appear as virally infected cells by presenting the viral peptide-HLA complexes that are recognized by naturally occurring virus-specific killer T cells. These targeted pathologic cells can then be recognized and destroyed by our protective anti-viral memory T cell repertoire.
CUE-501 Opportunity for Redirected T Cell Killing
Recently published datasets from small third-party clinical trials have demonstrated evidence of clinical activity in autoimmune patients treated with CAR-T cells and bispecific T cell engagers directed against CD19 for T cell-mediated depletion of B cells, providing strong mechanistic evidence for the superiority of T cell-mediated B cell depletion versus prior approaches with antibody-dependent B cell depletion (such as anti-CD19, anti-CD20 monoclonal antibodies). In many cases, from these third-party clinical trials, long-term ongoing clinical remissions have been noted in patients with lupus and myositis with no concurrent immunosuppressive regimens, which could be early signals of functional cures. However, both of these therapeutic approaches have also exhibited significant safety and tolerability limitations as observed in oncology patients, including cytokine release syndrome, or CRS, and deployment of cellular therapies are in general constrained by a number of challenges associated with manufacturing, logistics, and patient preconditioning requirements.
We see potential for CUE-501, the first asset in our novel CUE-500 series, to enable virus-specific T cell mediated killing of B cells, akin to what CAR-T cellular therapies do, and potentially achieve equivalent B cell killing benefits as an off-the-shelf biologic with a more favorable tolerability profile. This novel mechanism of action is depicted below with an example of a CUE-501 molecule enabling cytomegalovirus-specific T cells, or CMV T cells, to kill primary human B cells. It is well known that CMV-specific T cells are a significant proportion of the protective anti-viral T cell repertoire and are present in a
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large portion of the population. This mechanism of natural target recognition via TCRs is of similar sensitivity, if not higher, compared to how a CAR-T cell recognizes its targets via the CAR domain.
In contrast to CAR-T and bispecific T cell engager approaches, CUE-501 was designed to selectively deplete B cells while reducing the risk of CRS by stimulating only a select population of naturally occurring anti-viral T cells. Preclinical evidence for this selective and unique mechanism of action is shown below. As shown in the upper figure above, CUE-501 demonstrated the capacity to deplete CD19 positive B cells from human PBMCs to a similar extent as a CD3-bispecific T cell engager, but in the case of CUE-501, the killing of B cells was specifically mediated by the engagement of only CMV-specific T cells. This specificity of T cell engagement is demonstrated by the lack of killing observed following exposure to a CUE-500 molecule that is identical to CUE-501 except for the presentation of an HIV peptide instead of a CMV peptide. Since HIV-specific T cells are not present in PBMCs of healthy donors, a CUE-500 molecule targeting HIV-specific T cells is not able to cause redirected killing of B cells. While CUE-501 resulted in comparable B cell killing to a CD3-based, pan-T cell engager, the lower panels of this figure show that the bispecific T cell engager also caused significant release of inflammatory cytokines involved in CRS (i.e. interferon gamma, or IFN-g, and tumor necrosis factor alpha, or TNF-a) while CUE-501 did not. This finding suggests that the risk of CRS in patients treated with CUE-501 may be reduced and may provide an advantage over other currently investigated T cell-mediated mechanisms of B cell depletion.
CUE-501 Designed to Direct Selective Memory T Cells to Deplete B Cells to Address Autoimmune and Inflammatory Disease
We believe that our CUE-500 series is capable of selectively redirecting prevalent and naturally occurring anti-viral killer T cells to mediate depletion of pathogenic cell types while avoiding the systemic indiscriminate engagement and activation of T cells. The CUE-500 series is designed with what we believe to be a superior differentiation of the mechanism of action as compared to other competing modalities for target cell depletion, including CAR-T cellular therapy and pan-T cell engagers, including CD3 bi-specifics.
CAR-T approaches face complex manufacturing and supply chains challenge for broad access, as well as patient conditioning regimens, in-patient administration and safety risks including CRS and neurotoxicity that continue to pose challenges. Pan T cell engagers that non-selectively activate T cells via anti-CD3 or CD28 crosslinking are also not favorable for autoimmune applications. These modalities activate all T cells indiscriminately, potentially resulting in CRS and other
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toxicities, and we believe therefore may be unsuitable for autoimmune patients. In addition, they pose the risk of further activating and propagating self-reactive T cells that may exacerbate the underlying autoimmune disease. In contrast to these modalities, the CUE-500 series is designed to offer a potential solution for selectively exploiting the long-lasting anti-viral memory T cells to drive pathogenic cell depletion. This off-the-shelf approach therefore offers the potential to achieve CAR-T-like efficacy while avoiding the challenges associated with cell therapy modalities.
Due to its modularity, we believe that the CUE-500 series has therapeutic potential across multiple therapeutic areas. The mode of redirecting a defined population of already existing anti-viral T cells may apply to many pathogenic cell types readily addressed by swapping different cell-targeting antibody domains into the CUE-500 series framework. Lead candidate selection studies are underway for CUE-501, for which we aim to establish a near-term third party partnership to further pursue this preclinical lead program.
As an innovative protein engineering company we aim to fully exploit the modular nature of the Immuno-STAT platform. Building off the design and development of the CUE-100 series associated with demonstrable clinical benefit in clinical trials, we have developed CUE-401 and the CUE-500 series. CUE-401, a potentially first-in-class, masked TGF-β and IL-2v bispecific, incorporates the same IL-2v from our CUE-100 series and offers an opportunity for conversion of antigen-specific Tregs, which have been shown to be more effective at controlling autoreactive T cells, a primary cause of autoimmune disease. The CUE-500 series takes advantage of the peptide-HLA-Fc components of the CUE-100 series to enable targeted cellular depletion in both oncology and immunology. The modularity of the CUE-500 series allows us to utilize the same core framework to target many cell types, including pathogenic immune cells in autoimmune disorders or cancer cells for oncology, thus providing significant efficiencies for the development of additional candidates from this series.
Immuno-STAT Platform a Series of Next Generation Targeted Therapeutic Candidates
Our Business Strategy
Our approach to developing precision immunotherapies has yielded a growing portfolio of novel proteins, addressing multiple unmet needs across autoimmune disease and cancer. We believe that our science is derisked with clinical tolerability and activity from our Phase 1 clinical trials of CUE-101 and CUE-102, with the potential for significant potential market opportunities. As a result of our insights and learnings from our growing body of supportive data, we believe our corresponding strategic plans have us well positioned for optimizing shareholder value. Our pipeline of drug product candidates and programs aims to address significant unmet medical needs for treating serious, life-threatening diseases. To achieve our objectives, we are focused on the following strategy:
Exploring strategic options for our CUE-100 series in oncology, as our clinical data continues to mature
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Continue to assess maturing clinical data to further the potential of establishing strategic development partnerships.
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Fully exploit the potential for the CUE-100 series, e.g. CUE-101 and CUE-102, to address the challenges confronting adoptive cellular therapy, e.g. CAR-T and TCR-T, by enabling durability and persistence.
Optimizing shareholder value by advancing our autoimmune portfolio
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Further position the CUE-401 program as a potentially disruptive, high value opportunity with the potential to address multiple major indications. We believe CUE-401 has the potential to become a new standard of care in the treatment of autoimmune disease.
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The preclinical candidates in our CUE-500 series are precision immune therapeutics, designed to redirect anti-viral killer T cells to eradicate pathogenic cells. By pairing a target cell with a virus-specific epitope, anti-viral killer T cells may be redirected to attack and destroy pathogenic cells. The potential applicability of the CUE-500 series across multiple cell types and indications in both autoimmune and oncology represents an opportunity for strategic collaborations to further advance and validate this novel approach to address multiple high value indications.
We are actively pursuing strategic options, including collaborations across our pipeline. We are seeking development and commercialization partners for our oncology assets, CUE-101 and CUE-102. We are preparing CUE-401 for an IND filing in the third quarter of 2026 with the prospects of early clinical data providing validation of its potential breakthrough mechanism of action. For CUE-501, we intend to establish a third-party partnership to advance the preclinical program, which leverages clinically validated mechanisms for B cell depletion, such as CAR-T or CD3 bispecifics, but with the potential for a more favorable safety profile compared to CAR-T or CD3 bispecifics.
Our License Agreement with Einstein
On January 14, 2015, or the Effective Date, we entered into a license agreement, as amended and restated on July 31, 2017 and as further amended on October 30, 2018 and January 13, 2024, or the Einstein License, with Albert Einstein College of Medicine, or Einstein, for certain patent rights, or the Patents, relating to our core technology platform for the engineering of biologics to control T cell activity, precision, immune-modulatory drug product candidates, and two supporting technologies that enable the discovery of costimulatory signaling molecules (ligands) and T cell targeting peptides. We hold an exclusive worldwide license, with the right to sublicense, import, make, have made, use, provide, offer to sell, and sell all products, processes and services that use the Patents, including certain technology received from Einstein related thereto, which we refer to as the Licensed Products.
The Einstein License is a royalty-bearing license obligating us to pay a percentage of proceeds received from sales of categories of Licensed Products at low single digit rates. We have also agreed to share a portion of our proceeds that we derive from other agreements, like sublicense agreements, that we may enter into relating to the Licensed Products. The percentage of such proceeds that we are required to pay Einstein ranges from the low to mid-teens, depending on how far we have developed a Licensed Product before we enter into an agreement relating to the Licensed Product. These percentages are reduced for sales of Licensed Products in countries where a competing product exists and for products or services involving the use or incorporation of technology received from Einstein relating to synapse for targeted T cell activation molecules, receptor ligand identification or platforms for T cell monitoring. In addition to our obligation to pay royalties based upon a percentage of proceeds from sales of Licensed Products, we have also agreed to pay Einstein annual maintenance fees. The maintenance payments are non-refundable, but are creditable against any royalty payments we pay under the Einstein License. For the year ended December 31, 2024, there were no payments related to Einstein license maintenance fees under the Einstein License, as they were creditable against actual payments owed to Einstein during the twelve-month period.
Under the Einstein License, we are also obligated to make milestone payments corresponding to: (i) approval of the first IND by the FDA or foreign equivalent for a Licensed Product; (ii) approval of any subsequent IND application or foreign equivalent for a “new indication” for a Licensed Product; (iii) initiation of Phase 2 clinical trials or foreign equivalent on a Licensed Product; (iv) initiation of Phase 2 clinical trials or foreign equivalent for a “new indication” for a Licensed Product; (v) initiation of Phase 3 clinical trials or foreign equivalent on a Licensed Product; (vi) initiation of Phase 3 clinical trials or foreign equivalent for a “new indication” for a Licensed Product; (vii) the first commercial sale of a Licensed Product; (viii) the first commercial sale of each “new indication” for one of our previously approved Licensed Products; and (ix) cumulative sales of certain Licensed Products reaching certain threshold amounts. The aggregate amount of milestone payments made under the Einstein License may equal up to $1.85 million for each Licensed Product and up to $1.85 million for each new indication of a Licensed Product. Additionally, the aggregate amount of one-time milestone payments based on cumulative sales of all Licensed Products may equal up to $5.75 million. At December 31, 2024, we have made payments totaling $1.2 million since inception with respect to achievement of these milestones.
In addition to our obligations to make the cash payments to Einstein described above, under the Einstein License we issued Einstein 671,572 shares of our Common Stock immediately prior to completion of the initial public offering of our common stock completed on December 27, 2017.
The Einstein License expires upon the expiration of our last obligation to make royalty payments to Einstein, which may be due with respect to certain Licensed Products, unless terminated earlier under the provisions thereof. Under the Einstein License, we will be obligated to make royalty payments to Einstein, with respect to certain Licensed Products, for the
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longer of 15 years from the first sale of such products in each country or for the duration of any market exclusivity period granted by a regulatory agency for such product and, with respect to certain Licensed Products sold by sublicensees, the longer of 10 years from the first sale of such products in each country or for so long as the sublicensee agrees to pay royalties on such products. We have the right to terminate the Einstein License at any time upon 60 days’ written notice to Einstein; provided, however, that we will lose intellectual property rights related to the Patents if we choose to terminate the Einstein License in this manner. Each party has the right to terminate the Einstein License if the other party is in default or breach of any condition of the Einstein License with a right to cure any such breach within 60 days from receipt of notice of such default or breach, unless the other party has disputed the alleged breach in good faith. Either party can also terminate the Einstein License if the other party voluntarily files for bankruptcy or other similar insolvency proceedings, makes a general assignment for the benefit of creditors, or is the subject of an involuntary bankruptcy petition that is not dismissed within 90 days. If we fail to pay any sum that is due and payable to Einstein within 30 days after receiving written notice of our default from Einstein, then Einstein has the option of terminating the Einstein License unless we pay within 45 days of such notice all delinquent sums with interest.
The Einstein License also obligates us to meet certain due diligence requirements, or the Diligence Milestones, as follows:
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update our research and development plan annually;
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initiate Phase 1 clinical trials on a Licensed Product within a number of years from the Effective Date;
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initiate Phase 2 clinical trials on a Licensed Product within a number of years from the Effective Date;
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initiate Phase 3 clinical trials on a Licensed Product or an FDA approved clinical trial designed to support a biologics license application, or BLA, within a number of years from the Effective Date;
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submit an application for FDA approval to market and sell a Licensed Product within a number of years from the Effective Date;
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have our first commercial sale of an FDA Licensed Product within a number of years from the Effective Date; and
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spend a minimum amount per year on product development until our first commercial sale of a Licensed Product.
If we fail to meet any of the Diligence Milestones, Einstein will have the right to terminate the Einstein License if such Diligence Milestone is not satisfied within thirty days from receiving a written notice of default from Einstein. Under certain circumstances and upon prior notice to Einstein, we may have the right to an additional extension of our Diligence Milestones if, despite our commercially reasonable efforts we are not able to satisfy the Phase 3 clinical trial Diligence Milestone or any subsequent Diligence Milestone. As of the date of this report, we have met all required Diligence Milestones.
Our Collaboration Agreement with LG Chem
On November 6, 2018, we entered into a Collaboration, License and Option Agreement, or the LG Chem Collaboration Agreement, with LG Chem Ltd., or LG Chem, pertaining to the development of CUE-101 and CUE-102 Immuno-STATs in Australia and in certain countries in Asia, or the LG Chem Territory.
In furtherance of pursuing strategic options pertaining to CUE-101, on March 11, 2025, we regained our rights to the CUE-101 program which had previously been licensed to LG Chem.
LG Chem continues to maintain its interest and rights in the CUE-102 program, targeting WT1 expressing cancers, pursuant to the LG Chem Collaboration Agreement. See discussion of the LG Chem Collaboration Agreement in Note 10 to our consolidated financial statements appearing elsewhere in this Form 10-K.
Our Collaboration and Option Agreement with Ono
Effective March 6, 2025, we regained worldwide development and commercialization rights for CUE-401, which had previously been licensed to Ono Pharmaceutical pursuant to a Collaboration and Option Agreement entered into in February 2023. We are excited to progress CUE-401 through preclinical development and into the clinic.
CUE-401 is currently in IND-enabling studies and we plan to file an IND in the third quarter of 2026. It is our hypothesis that early clinical evidence could demonstrate a mechanistic competitive advantage and may potentially position
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CUE-401 as a new standard of care. We intend to disclose CUE-401 preclinical data in the near future. See discussion of the Collaboration and Option Agreement in Note 10 to our consolidated financial statements appearing elsewhere in this Form 10-K.
Our Intellectual Property
We believe that our current patents and patent applications and any future patents and other proprietary rights that we own, or control through licensing, are and will be essential to our business. We believe that these intellectual property rights will affect our ability to compete effectively with others. We also rely and will rely on trade secrets, know-how, continuing technological innovations and licensing opportunities to develop, maintain and strengthen our competitive position. We seek to protect these, in part, through confidentiality agreements with certain employees, consultants, advisors and other parties. Our success will depend in part on our ability, and the ability of our licensors, to obtain, maintain (including making periodic filings and payments) and enforce patent protection for our/their intellectual property, including those patents and patent applications to which we have secured exclusive rights.
As of December 31, 2024, we owned or had licensed 145 issued patents (including 30 issued U.S. patents), 379 pending patent applications (including 79 in the U.S.), 9 pending U.S. provisional patent applications, 18 pending PCT (international) applications, and 282 pending foreign patent applications.
Our patent applications describe certain features of our technologies, including our Immuno-STAT platform, our Neo-STAT platform, CAR-T and ex-vivo applications of our Immuno-STAT platform, our RDI-STAT platform, our CUE-300 Series platform, including CUE-301, our CUE-400 Series platform, including CUE-401, as well as specific biologic molecules, drug product candidates and methods of treatment using our Immuno-STATs. In addition, we have pending applications that cover CUE-501 and the CUE-500 series and their use in oncology and autoimmune indications. We plan to spend considerable resources and focus in the future on obtaining U.S. and foreign patents. We have and will continue to actively protect our intellectual property. No assurances can be given that any of our patent applications will result in the issuance of a patent or that the examination process will not require us to narrow our claims. In addition, any issued patents may be contested, circumvented, found unenforceable or invalid, and we may not be able to successfully enforce our patent rights against third parties. No assurance can be given that others will not independently develop a similar or competing technology or design around any patents that may be issued to us. We intend to expand our international operations in the future and our patent portfolio, copyright, trademark and trade secret protections may not be available or may be limited in foreign countries.
Each of our patents, if and when granted, will generally have a term of 20 years from its respective U.S. or international non-provisional priority filing date, subject to available extensions. They are thus set to expire no earlier than dates ranging from 2033 to 2045, although patents that specifically cover our drug product candidates will expire no earlier than December 2037, subject to available extensions.
Competition
Our Immuno-STAT platform offers a differentiated approach by targeting disease-relevant T cells without inducing systemic toxicity seen in traditional immunotherapies. While we believe that our drug product candidates, technology, knowledge and experience provide us with significant competitive advantages, we face competition from established and emerging pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others, who may have drug product candidates in further stages of development than ours.
Autoimmune Competition
We compete with other companies working to develop cytokines to restore immune balance, as well as those developing other therapeutic modalities, including monoclonal antibodies, bi-specific antibodies, cell therapies, and vaccines with application in treating patients living with autoimmune disease. Potential competitors in the cytokine-based therapy space include Amgen, Bristol-Myers Squibb, Merck & Co., Nektar Therapeutics, Sanofi S.A., TRex Bio, and RegCell. In the regulatory T cell therapies space, potential competitors include Abata Therapeutics, Coya Therapeutics, Quell Therapeutics, Sangamo Therapeutics, and Sonoma Biotherapeutics.
We believe that our approach provides us with a superior competitive advantage and differentiation, with a potentially first-in-class, masked TGF-b and IL-2v designed to address the underlying mechanism of disease by rebalancing the Treg and effector cell ratio.
Oncology Competition
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We compete with other companies working to develop cytokines as cancer immunotherapies, as well as those developing other immunotherapeutic modalities, including monoclonal antibodies, bi-specific antibodies, antibody-drug conjugates, cell therapies, oncolytic viruses, and vaccines with application in treating patients living with cancer. Potential competitors in the cytokine-based therapy space include Asher Bio, Aulos Bio, BioNTech SE, Medicenna Therapeutics, Moderna, Inc., Mural Oncology, Roche Holding AG, Synthekine, Werewolf Therapeutics, and Xilio Therapeutics. In the cell therapy space, potential competitors include Adaptimmune Therapeutics, Bristol-Myers Squibb, Iovance Biotherapeutics, Gilead Sciences, Janssen Pharmaceuticals, and Novartis AG. In the checkpoint inhibitor, or CPI, space, potential competitors include AstraZeneca, Bristol-Myers Squibb, Merck & Co., and Roche Holding AG.
We believe that our approach provides us with a competitive advantage through selective delivery of immune activating signals, coupling engineered cytokines (i.e., IL-2) to a targeting moiety (i.e., peptide-MHC complex) for enhanced activation of cancer-specific CD8+ T cells.
Many of our competitors have greater financial, technical and human resources than we do. Additionally, many competitors have greater experience in product discovery and development, obtaining FDA and other regulatory approvals, and commercialization capabilities, which may provide them with a competitive advantage.
We expect any drug product candidate that we commercialize, either independently or with our strategic partners, will compete with existing, market-leading products and believe that our ability to compete will depend on our ability to execute on the following objectives:
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design, develop and commercialize products that are superior to other products in the market in terms of, among other things, safety, efficacy, convenience, or price;
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obtain patent and/or other proprietary protection for our processes and drug product candidates;
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obtain required regulatory approvals;
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obtain favorable reimbursement, formulary and guideline status; and
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collaborate with others in the design, development and commercialization of our products.
Established competitors may invest heavily to discover and develop novel compounds that could make our drug product candidates obsolete. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and/or safety in order to obtain approval, to overcome price competition and to be commercially successful. If we are not able to compete effectively, our business will not grow and our financial condition and operations will suffer.
Government Regulation and Licensure of Products
Government authorities in the United States, at the federal, state and local level, and in other countries and jurisdictions, including the European Union, or EU, extensively regulate, among other things, the research, development, testing, manufacture, pricing, reimbursement, sales, quality control, approval, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post‐approval monitoring and reporting, and import and export of pharmaceutical products, including biological products. The processes for obtaining marketing approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources and may have a significant impact on our business.
Licensure and Regulation of Biologics in the United States
In the United States, our drug product candidates are regulated as biological products, or biologics, under the Public Health Service Act, or the PHSA, and the Federal Food, Drug and Cosmetic Act, or the FDCA, and their implementing regulations and guidance. A company, institution, or organization which takes responsibility for the initiation and management of a clinical development program for such products, and for their regulatory approval, is typically referred to as a sponsor. The failure to comply with the applicable U.S. requirements at any time during the product development process, including non‐clinical testing, clinical testing, the approval process or post‐approval process, may subject a sponsor to delays in the conduct of the study, regulatory review and approval, and/or administrative or judicial sanctions. A sponsor seeking approval to market and distribute a new biologic in the United States generally must satisfactorily complete each of the following steps:
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preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the FDA’s
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Good Laboratory Practice, or GLP, regulations and standards and other applicable regulations;
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completion of the manufacture, under current Good Manufacturing Practices, or GMP, conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing;
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design of a clinical protocol and submission to the FDA of an investigational new drug application, or IND, application for human clinical testing, which must become effective before human clinical trials may begin;
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approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;
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performance of adequate and well‐controlled human clinical trials to establish the safety, potency, and purity of the product candidate for each proposed indication, in accordance with current Good Clinical Practices, or GCP;
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preparation and submission to the FDA of a BLA for a biologic product requesting marketing for one or more proposed indications, including submission of detailed information on the manufacture and composition of the product in clinical development and proposed labelling;
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review of the product by an FDA advisory committee, where appropriate or if applicable;
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satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with GMP requirements and to assure that the chemistry, methods, and controls, or CMC, for the product are adequate to preserve the product’s identity, strength, quality, and purity, and, if applicable, the FDA’s current good tissue practice for the use of human cellular and tissue products;
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satisfactory completion of any FDA audits of the non‐clinical and clinical trial sites to assure compliance with GCPs and the integrity of clinical data in support of the BLA;
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payment of substantial application and program fees pursuant to the Prescription Drug User Free Act, or PDUFA;
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securing FDA approval of the BLA and licensure of the new biologic product allowing marketing in the United States for particular indications and under certain conditions; and
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compliance with any post‐approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and any post‐approval studies required by the FDA.
Preclinical Studies
Before testing any biologic product candidate in humans, a product candidate must undergo preclinical testing. Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate the potential for efficacy and toxicity in animal studies. These studies are generally referred to as IND-enabling studies. The conduct of the preclinical tests and formulation of the compounds for testing must comply with federal regulations and requirements, including GLP regulations and standards and the United States Department of Agriculture’s Animal Welfare Act, if applicable. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application.
The IND Process
An IND is an exemption from the FDCA that allows an unapproved product candidate to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer such investigational product to humans. The IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about the product or conduct of the proposed clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In that case, the IND sponsor and the FDA must resolve any outstanding FDA concerns before the clinical trials can begin or recommence.
As a result, submission of the IND may result in the FDA not allowing the trials to commence or allowing the trial to commence on the terms originally specified by the sponsor in the IND. If the FDA raises concerns or questions either during this
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initial 30‐day period or following commencement of the clinical trial, it may choose to impose a partial or complete clinical hold. Clinical holds are imposed by the FDA whenever there is concern for patient safety and may be a result of new data, findings, or developments in clinical, nonclinical, and/or CMC. This order issued by the FDA would delay either a proposed clinical study or cause suspension of an ongoing study, until all outstanding concerns have been adequately addressed and the FDA has notified the company that investigations may proceed. This could cause significant delays or difficulties in completing planned clinical studies in a timely manner.
Expanded Access to an Investigational Drug for Treatment Use
Expanded access, sometimes called “compassionate use,” is the use of investigational products outside of clinical trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no comparable or satisfactory alternative treatment options. The rules and regulations related to expanded access are intended to improve access to investigational products for patients who may benefit from investigational therapies. FDA regulations allow access to investigational products under an IND by the company or the treating physician for treatment purposes on a case-by-case basis for: individual patients (single-patient IND applications for treatment in emergency settings and non-emergency settings); intermediate-size patient populations; and larger populations for use of the investigational product under a treatment protocol or treatment IND application.
When considering an IND application for expanded access to an investigational product with the purpose of treating a patient or a group of patients, the sponsor and treating physicians or investigators will determine suitability when all of the following criteria apply: patient(s) have a serious or immediately life-threatening disease or condition, and there is no comparable or satisfactory alternative therapy to diagnose, monitor, or treat the disease or condition; the potential patient benefit justifies the potential risks of the treatment and the potential risks are not unreasonable in the context or condition to be treated; and the expanded use of the investigational drug for the requested treatment will not interfere initiation, conduct, or completion of clinical investigations that could support marketing approval of the product or otherwise compromise the potential development of the product.
There is no obligation for a sponsor to make its drug products available for expanded access; however, as required by the 21st Century Cures Act, or the Cures Act, passed in 2016, if a sponsor has a policy regarding how it responds to expanded access requests, it must make that policy publicly available. Although these requirements were rolled out over time, they have now come into full effect. Sponsors are required to make such policies publicly available upon the earlier of initiation of a Phase 2 or Phase 3 study; or 15 days after the investigational drug or biologic receives designation as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.
In addition, on May 30, 2018, the Right to Try Act was signed into law. The law, among other things, provides a federal framework for certain patients to access certain investigational products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a manufacturer to make its investigational products available to eligible patients as a result of the Right to Try Act.
Human Clinical Trials in Support of a BLA
Clinical trials involve the administration of the investigational product candidate to healthy volunteers or patients with the disease to be treated under the supervision of a qualified principal investigator in accordance with GCP requirements. Clinical trials are conducted under study protocols detailing, among other things, the objectives of the study, inclusion and exclusion criteria, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.
Each clinical trial must be reviewed and approved by an IRB either centrally or individually at each institution at which the clinical trial will be conducted. The IRB will consider, among other things, clinical trial design, patient informed consent, ethical factors, the safety of human subjects, and the possible liability of the institution. An IRB must operate in compliance with FDA regulations. The IRB or the clinical trial sponsor may suspend or discontinue a clinical trial at any time for various reasons, including a finding that the clinical trial is not being conducted in accordance with FDA requirements or the subjects or patients are being exposed to an unacceptable health risk. Clinical testing also must satisfy extensive GCP rules and the requirements for informed consent.
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Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data monitoring committee, or DMC. This group may recommend continuation of the study as planned, changes in study conduct, or cessation of the study at designated check points based on certain available data from the study to which only the DMC has access. Finally, research activities involving infectious agents, hazardous chemicals, recombinant DNA, and genetically altered organisms and agents may be subject to review and approval of an Institutional Biosafety Committee in accordance with U.S. National Institutes of Health, or NIH, Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules.
Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Additional studies may be required after approval.
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Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion, and pharmacodynamics in healthy humans or, on occasion, in patients, such as cancer patients.
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Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose tolerance and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials.
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Phase 3 clinical trials proceed if the Phase 2 clinical trials demonstrate that a dose range of the product candidate is potentially effective and has an acceptable safety profile. Phase 3 clinical trials are undertaken within an expanded patient population to further evaluate dosage, provide substantial evidence of clinical efficacy, and further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites. A well‐controlled, statistically robust Phase 3 trial may be designed to deliver the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to appropriately label a biologic; such Phase 3 studies are referred to as “pivotal.”
In some cases, the FDA may approve a BLA for a product candidate but require the sponsor to conduct additional clinical trials to further assess the product candidate’s safety and effectiveness after approval. Such trials are typically referred to as post-approval clinical trials. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved under accelerated approval regulations. If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any post-approval clinical trial requirement or to request a change in the product labeling. Failure to exhibit due diligence with regard to conducting post-approval clinical trials could result in withdrawal of approval for products.
A clinical trial may combine the elements of more than one phase and the FDA often requires more than one Phase 3 trial to support marketing approval of a product candidate. A company’s designation of a clinical trial as being of a particular phase is not necessarily indicative that the study will be sufficient to satisfy the FDA requirements of that phase because this determination cannot be made until the protocol and data have been submitted to and reviewed by the FDA. Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need.
In March 2022, the FDA released final guidance entitled “Expansion Cohorts: Use in First-In-Human Clinical Trials to Expedite Development of Oncology Drugs and Biologics,” which outlines how developers can utilize an adaptive trial design commonly referred to as a seamless trial design in early stages of oncology biological product development (i.e., the first-in-human clinical trial) to compress the traditional three phases of trials into one continuous trial called an expansion cohort trial. Information to support the design of individual expansion cohorts are included in IND applications and assessed by the FDA. Expansion cohort trials can potentially bring efficiency to product development and reduce developmental costs and time.
In December 2022, with the passage of the Food and Drug Omnibus Reform Act, or FDORA, Congress required sponsors to develop and submit a diversity action plan, or DAP, for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. Specifically, DAPs must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them. In addition to these requirements, the legislation directed the FDA to issue new guidance on DAPs. In June 2024, the FDA issued draft guidance
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setting out its policies for the collection of race and ethnicity data in clinical trials. Unlike most guidance documents issued by the FDA, the DAP guidance when finalized will have the force of law because FDORA specifically dictates that the form and manner for submission of DAPs are specified in FDA guidance. On January 27, 2025, in response to an Executive Order issued by President Trump on January 21, 2025, on Diversity, Equity and Inclusion programs, the FDA removed this draft guidance from its website. The implications of this action are not yet known.
In June 2023, the FDA issued draft guidance with updated recommendations for GCPs aimed at modernizing the design and conduct of clinical trials. The updates are intended to help pave the way for more efficient clinical trials to facilitate the development of medical products. The draft guidance is adopted from the International Council for Harmonisation’s recently updated E6(R3) draft guideline that was developed to enable the incorporation of rapidly developing technological and methodological innovations into the clinical trial enterprise. In addition, the FDA issued draft guidance outlining recommendations for the implementation of decentralized clinical trials.
Finally, sponsors of clinical trials are required to register and disclose certain clinical trial information on a public registry (clinicaltrials.gov) maintained by the NIH. In particular, information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. Although the FDA has historically not enforced these reporting requirements due to the U.S. Department of Health and Human Services’, or HHS’s, long delay in issuing final implementing regulations, those regulations have now been issued. With those regulations now in place, the FDA has issued, as of December 19, 2024, six notices of non-compliance, thereby signaling the government’s willingness to begin enforcing these requirements against non-compliant clinical trial sponsors. While these notices of non-compliance did not result in civil monetary penalties, the failure to submit clinical trial information to clinicaltrials.gov is a prohibited act under the FDCA with violations subject to potential civil monetary penalties of up to $10,000 for each day the violation continues. Violations may also result in injunctions and/or criminal prosecution or disqualification from federal grants.
Clinical Studies Outside the United States in Support of FDA Approval
In connection with our clinical development program, we may conduct trials at sites outside the United States. When a foreign clinical study is conducted under an IND, all IND requirements must be met unless waived. When a foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements of the FDA in order to use the study as support for an IND or application for marketing approval. Specifically, the studies must be conducted in accordance with GCP, including undergoing review and receiving approval by an independent ethics committee, or IEC, and seeking and receiving informed consent from subjects. GCP requirements encompass both ethical and data integrity standards for clinical studies. The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical studies, as well as the quality and integrity of the resulting data. They further help ensure that non-IND foreign studies are conducted in a manner comparable to that required for IND studies.
The acceptance by the FDA of study data from clinical trials conducted outside the United States in support of US approval may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the U.S., the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations; and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept the data as support for an application for marketing approval unless the study is well-designed and well-conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Many foreign regulatory authorities have similar approval requirements. In addition, such foreign trials are subject to the applicable local laws of the foreign jurisdictions where the trials are conducted.
Interactions with FDA During the Clinical Development Program
Following the clearance of an IND and the commencement of clinical trials, the sponsor will continue to have interactions with the FDA. Progress reports detailing the results of clinical trials must be submitted annually within 60 days of the anniversary dates that the IND went into effect and more frequently if serious adverse events occur. These reports must include a development safety update report, or DSUR. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other trials or animal or in vitro testing that
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suggest a significant risk in humans exposed to the product; and any clinically important increase in the occurrence of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.
In addition, sponsors are given opportunities to meet with the FDA at certain points in the clinical development program. Meetings at other times may also be requested. There are five types of meetings that occur between sponsors and the FDA. Type A meetings are those that are necessary for an otherwise stalled product development program to proceed or to address an important safety issue. Type B meetings include pre-IND and pre-BLA meetings, as well as end of phase meetings such as EOP2 meetings. A Type C meeting is any meeting other than a Type A or Type B meeting regarding the development and review of a product, including for example meetings to facilitate early consultations on the use of a biomarker as a new surrogate endpoint that has never been previously used as the primary basis for product approval in the proposed context of use. A Type D meeting is focused on a narrow set of issues, which should be limited to no more than two focused topics and should not require input from more than three disciplines or divisions. Finally, INTERACT meetings are intended for novel products and development programs that present unique challenges in the early development of an investigational product.
At the conclusion of these meetings, the FDA will typically provide its responses to questions posed by the sponsor regarding the clinical development program. The FDA will not indicate whether a BLA will be approved, but it will provide guidance to the sponsor on various questions, including whether an application should be submitted in the first place on the basis of the studies and data proposed by the sponsor. The agency may also generally express support for the sponsor’s approach in the clinical development program but indicate that questions concerning whether the data support approval will be subject to review by the agency following its acceptance for filing of the BLA. The FDA has indicated that its responses, as conveyed in meeting minutes and advice letters, only constitute mere recommendations and/or advice made to a sponsor and, as such, sponsors are not bound by such recommendations and/or advice. Nonetheless, from a practical perspective, a sponsor’s failure to follow the FDA’s recommendations for design of a clinical program may put the program at significant risk of failure.
Pediatric Studies
Under the Pediatric Research Equity Act of 2003, or PREA, a BLA or supplement thereto must contain data that are adequate to assess the safety, potency and purity of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. Sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposed pediatric study or studies the sponsor plans to conduct, including study objectives and design, any deferral or waiver requests, and other information required by regulation. The sponsor, the FDA, and the FDA’s internal review committee must then review the information submitted, consult with each other, and agree upon a final plan. The FDA or the sponsor may request an amendment to the plan at any time. In May 2023, the FDA issued new draft guidance that further describes the pediatric study requirements under PREA.
For products intended to treat a serious or life-threatening disease or condition, the FDA must, upon the request of a sponsor, meet to discuss preparation of the initial pediatric study plan or to discuss deferral or waiver of pediatric assessments. In addition, FDA will meet early in the development process to discuss pediatric study plans with sponsors and FDA must meet with sponsors by no later than the end-of-phase 1 meeting for serious or life-threatening diseases and by no later than 90 days after FDA’s receipt of the study plan.
The FDA may, on its own initiative or at the request of the sponsor, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. A deferral may be granted for several reasons, including a finding that the product or therapeutic candidate is ready for approval for use in adults before pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric trials begin. The FDA is required to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although the FDA has taken steps to limit what it considers abuse of this statutory exemption in PREA. The FDA also maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population. In May 2023, the FDA issued new draft guidance that further describes the pediatric study requirements under PREA.
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Compliance with GMP Requirements
The FDA’s regulations require that pharmaceutical products be manufactured in specific approved facilities and in accordance with GMPs. The GMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products. Manufacturers and others involved in the manufacture and distribution of products must also register their establishments with the FDA and certain state agencies. Both domestic and foreign manufacturing establishments must register and provide additional information to the FDA upon their initial participation in the manufacturing process.
Any product manufactured by or imported from a facility that has not registered, whether foreign or domestic, is deemed misbranded under the FDCA. The PREVENT Pandemics Act, which was enacted in December 2022, clarifies that foreign drug manufacturing establishments are subject to registration and listing requirements even if a drug or biologic undergoes further manufacture, preparation, propagation, compounding, or processing at a separate establishment outside the United States prior to being imported or offered for import into the United States. Establishments may be subject to periodic unannounced inspections by government authorities to ensure compliance with GMPs and other laws. Inspections must follow a “risk‐based schedule” that may result in certain establishments being inspected more frequently. Manufacturers may also have to provide, on request, electronic or physical records regarding their establishments. Delaying, denying, limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated.
Changes to the manufacturing process, specifications or container closure system for an approved product are strictly regulated and often require prior FDA approval before being implemented. The FDA’s regulations also require, among other things, the investigation and correction of any deviations from GMP and the imposition of reporting and documentation requirements upon the sponsor and any third-party manufacturers involved in producing the approved product.
Submission and Filing for Review of a BLA
The results of product candidate development, preclinical testing, and clinical trials, including negative or ambiguous results as well as positive findings, are submitted to the FDA as part of a BLA requesting a license to market the product. The BLA must contain extensive manufacturing information and detailed information on the composition of the product and proposed labeling as well as payment of a user fee. Under federal law, the submission of most BLAs is subject to an application user fee, which for federal fiscal year 2025 is $4,310,002 for an application requiring clinical data. The sponsor of a licensed BLA is also subject to an annual program fee, which for federal fiscal year 2025 is $403,889. Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver for certain small businesses.
The FDA conducts a preliminary review of all applications within 60 days of receipt and must inform the sponsor at that time or before whether an application is sufficiently complete to permit substantive review. In the event that the FDA determines that an application does not satisfy this standard, it will issue a Refuse to File, or RTF, determination to the sponsor. The FDA may request additional information and studies, and the application must be resubmitted with the additional information. The resubmitted application is subject to review before the FDA accepts it for filing.
Once the submission has been accepted for filing, the FDA begins an in‐depth review of the application. Under the goals and policies agreed to by the FDA under the PDUFA, the FDA has ten months in which to complete its initial review of a standard application and respond to the sponsor, and six months for a priority review of the application. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs. The review process may often be significantly extended by FDA requests for additional information or clarification. The review process and the PDUFA goal date may be extended by three months if the FDA requests or if the sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.
The FDA seeks to meet these timelines for review of an application but its ability to do so may be affected by a variety of factors. While the costs associated with review of an application are typically covered by the PDUFA user fee program, other activities, including government budget and funding levels, the ability to hire and retain key personnel and statutory, regulatory and policy changes, may impact the FDA’s review and approval of marketing applications. Average review times at the agency have fluctuated in recent years, as a result. For example, during the past decade, the U.S. government has shut down several times and certain regulatory agencies, including the FDA, have had to furlough critical employees and stop critical activities. Further, there is substantial uncertainty as to how measures currently being implemented by the new Trump Administration across the government will impact the FDA and other federal agencies with jurisdiction over biologics.
In connection with its review of an application, the FDA will typically submit information requests to the applicant and set deadlines for responses thereto. The FDA will also inspect the facility or facilities where the product is or will be manufactured. These pre-approval inspections may cover all facilities associated with a submission, including component manufacturing, finished product manufacturing and control testing laboratories. The FDA will not approve an application
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unless it determines that the manufacturing processes and facilities are in compliance with current GMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an application, the FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the data submitted in support of the application. With passage of FDORA, Congress clarified FDA’s authority to conduct inspections by expressly permitting inspection of facilities involved in the preparation, conduct, or analysis of clinical and non-clinical studies submitted to FDA as well as other persons holding study records or involved in the study process.
Moreover, the FDA will review a sponsor’s financial relationship with the principal investigators who conducted the clinical trials in support of the BLA. That is because, under certain circumstances, principal investigators at a clinical trial site may also serve as scientific advisors or consultants to a sponsor and receive compensation in connection with such services. Depending on the level of that compensation and any other financial interest a principal investigator may have in a sponsor, the sponsor may be required to report these relationships to the FDA. The FDA will then evaluate that financial relationship and determine whether it creates a conflict of interest or otherwise affects the interpretation of the trial or the integrity of the data generated at the principal investigator’s clinical trial site. If so, the FDA may exclude data from the clinical trial site in connection with its determination of safety and efficacy of the investigational product.
The FDA may also refer the application to an advisory committee for review, evaluation, and recommendation as to whether the application should be approved. In particular, the FDA may refer applications for novel biologic products or biologic products that present difficult questions of safety or efficacy to an advisory committee. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates, and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Decisions on BLAs
After evaluating the application and all related information, including the advisory committee recommendations, if any, and inspection reports of manufacturing facilities and clinical trial sites, the FDA will issue either a Complete Response Letter, or CRL, or an approval letter. To reach this determination, the FDA must determine whether there is substantial evidence that the product is effective and that expected benefits of the proposed product outweigh its potential risks to patients. This assessment is informed by the severity of the underlying condition and how well patients’ medical needs are addressed by currently available therapies; uncertainty about how the premarket clinical trial evidence will extrapolate to real-world use of the product in the post-market setting; and whether risk management tools are necessary to manage specific risks.
If the application is not approved, the FDA will issue a CRL, which will contain the conditions that must be met in order to secure final approval of the application, and, when possible, will outline recommended actions the sponsor might take to obtain approval of the application. Sponsors that receive a CRL may submit to the FDA information that represents a complete response to the issues identified by the FDA. Such resubmissions are classified under PDUFA as either Class 1 or Class 2. The classification of a resubmission is based on the information submitted by a sponsor in response to an action letter. Under the goals and policies agreed to by the FDA under PDUFA, the FDA has two months to review a Class 1 resubmission and six months to review a Class 2 resubmission. The FDA will not approve an application until issues identified in the complete response letter have been addressed. For those seeking to challenge FDA’s CRL decision, the agency has indicated that sponsors may request a formal hearing on the CRL or they may file a request for reconsideration or a request for a formal dispute resolution.
An approval letter, on the other hand, authorizes commercial marketing of the product with specific prescribing information for specific indications.
The FDA may limit the approved indications for use of the product. It may also require that contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may call for post‐approval studies, including post-approval clinical trials, to further assess the product’s safety after approval. The agency may also require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms, including REMS, to help ensure that the benefits of the product outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patent registries.
The FDA may prevent or limit further marketing of a product based on the results of post‐approval studies or surveillance programs. After approval, many types of changes to the approved product, such as adding new indications,
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manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.
Expedited Review Programs
The FDA is authorized to expedite the review of applications in several ways. Under the Fast Track program, the sponsor of a product candidate may request the FDA to designate the product for a specific indication as a Fast Track product concurrent with or after the filing of the IND. Product candidates are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied. In addition to other benefits, such as the ability to have greater interactions with the FDA, the FDA may initiate review of sections of a Fast Track application before the application is complete, a process known as rolling review.
Any product candidate submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as breakthrough therapy designation, priority review and accelerated approval.
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Breakthrough therapy designation. To qualify for the breakthrough therapy program, product candidates must be intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence must indicate that such product candidates may demonstrate substantial improvement on one or more clinically significant endpoints over existing therapies. The FDA will seek to ensure the sponsor of a breakthrough therapy product candidate receives intensive guidance on an efficient development program, intensive involvement of senior managers and experienced staff on a proactive, collaborative and cross-disciplinary review and rolling review.
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Priority review. A product candidate is eligible for priority review if it treats a serious condition and, if approved, it would be a significant improvement in the safety or effectiveness of the treatment, diagnosis or prevention compared to marketed products. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting product reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new subpopulation. The FDA aims to complete its review of priority review applications within six months as opposed to 10 months for standard review.
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Accelerated approval. Biologic products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval. Accelerated approval means that a product candidate may be approved on the basis of adequate and well controlled clinical trials establishing that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity and prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a biologic product candidate receiving accelerated approval perform adequate and well controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials.
With passage of FDORA, in December 2022, Congress modified certain provisions governing accelerated approval of drug and biologic products. Specifically, the new legislation authorized the FDA to require a sponsor to have its confirmatory clinical trial underway before accelerated approval is awarded and to submit progress reports on its post-approval studies to FDA every six months until the study is completed. Moreover, FDORA established expedited procedures authorizing FDA to withdraw an accelerated approval if certain conditions are met, including where a required confirmatory study fails to verify and describe the predicted clinical benefit or where evidence demonstrates the product is not shown to be safe or effective under the conditions of use. The FDA may also use such procedures to withdraw an accelerated approval if a sponsor fails to conduct any required post-approval trial of the product with due diligence, including with respect to “conditions specified by the Secretary.” The new procedures include the provision of due notice and an explanation for a proposed withdrawal, and opportunities for a meeting with the Commissioner of Food and Drugs, or the Commissioner, or the Commissioner’s designee and a written appeal, among other things.
In March 2023, the FDA issued draft guidance that outlines its current thinking and approach to accelerated approval. The agency indicated that the accelerated approval pathway is commonly used for approval of oncology
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drugs due to the serious and life-threatening nature of cancer. Although single-arm trials have been commonly used to support accelerated approval, a randomized controlled trial is the preferred approach as it provides a more robust efficacy and safety assessment and allows for direct comparisons to an available therapy. To that end, the FDA outlined considerations for designing, conducting, and analyzing data for trials intended to support accelerated approvals of oncology therapeutics. Subsequently, in December 2024 and January 2025, the FDA issued additional draft guidances relating to accelerated approval. These guidances describe FDA’s views on what it means to conduct a confirmatory trial with due diligence and how the agency plans to interpret whether such a study needs to be underway at the time of approval. While these guidances are currently only in draft form and will ultimately not be legally binding even when finalized, sponsors typically observe the FDA’s guidance closely to ensure that their investigational products qualify for accelerated approval.
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Regenerative advanced therapy. With passage of the Cures Act in December 2016, Congress authorized the FDA to accelerate review and approval of products designated as regenerative advanced therapies. A product is eligible for this designation if it is a regenerative medicine therapy that is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product candidate has the potential to address unmet medical needs for such disease or condition. The benefits of a regenerative advanced therapy designation include early interactions with the FDA to expedite development and review, benefits available to breakthrough therapies, potential eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints.
None of these expedited programs changes the standards for approval but each may help expedite the development or approval process governing product candidates.
Project Optimus
Project Optimus is an initiative of the Oncology Center of Excellence, or OCE, at the FDA. This project focuses on dose optimization and dose selection in oncology drug development, and whether the current paradigm based on cytotoxic chemotherapeutics leads to doses and schedules of molecularly targeted therapies that provide more toxicity without additional efficacy, among other things. In Project Optimus, drug developers have the opportunity to meet with the FDA’s Oncology Review Divisions early in their development programs, well before conducting trials intended for registration, to discuss dose-finding and dose optimization. The program thus allows sponsors to develop strategies for dose finding and dose optimization that leverages nonclinical and clinical data in dose selection, including randomized evaluations of a range of doses in trials, with the objective of performing these studies as early as possible in the development program to bring promising new therapies to patients. In August 2024, the FDA issued final guidance concerning optimizing the dosage of biologics and drugs for the treatment of oncologic diseases.
Real-Time Oncology Review of Supplemental NDAs
Through its OCE, the FDA has established two pilot programs allowing for real-time review of supplemental applications for previously approved oncology products. This approach will allow FDA to evaluate clinical data as soon as the results of a clinical trial become available with the objective of reviewing and approving a new indication soon after a sponsor files the application. The first of these pilot programs, Real-Time Oncology Review, or RTOR, focuses on early submission of data that are the most relevant to assessing the product’s safety, potency and purity. RTOR allows the FDA to review much of the data earlier, after the clinical trial results become available and the database is locked, but before the information is formally submitted to the agency.
The FDA has established several criteria to determine whether a supplemental application may be selected for RTOR. Those criteria include whether: the investigational product is likely to demonstrate substantial improvements over available therapy; the study design is straight forward, as determined by the review division and the OCE; the endpoints can be easily interpreted. Applications with chemistry, manufacturing and control formulation changes and supplements with pharmacology/toxicology data are excluded from RTOR. In addition, submissions with greater complexity, including those with companion diagnostics, may also be excluded for the purposes of the pilot program. On the basis of these criteria, the appropriate FDA review division and OCE management will jointly decide whether the application can be selected for the RTOR pilot program.
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If the FDA determines that RTOR is an appropriate review pathway, the sponsor can send pre-submission data to the agency under the original application two to four weeks after all patient data have been entered and locked in the database, and the sponsor is ready to request FDA approval. The package should also include key raw and derived datasets, including safety/efficacy tables and figures, study protocol and amendments, and a draft of the package insert. The sponsor must also submit key results, analysis, and datasets for other disciplines, if applicable. The FDA will then evaluate these materials for sufficiency and integrity so that it can analyze the data to properly address key regulatory questions. By the time the sponsor submits the application to the FDA, the review team will have completed the analysis and be familiar with the data, and can conduct a more efficient, timely, and thorough review.
Post‐Approval Regulation
If regulatory approval for marketing of a product or new indication for an existing product is obtained, the sponsor will be required to comply with all regular post‐approval regulatory requirements as well as any post‐approval requirements that the FDA have imposed as part of the approval process. The sponsor will be required to report certain adverse reactions and production problems to the FDA, provide updated safety and efficacy information and comply with requirements concerning advertising and promotional labeling requirements. Manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including GMP regulations, which impose certain procedural and documentation requirements upon manufacturers. Accordingly, the sponsor and its third‐party manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain compliance with GMP regulations and other regulatory requirements.
A product may also be subject to official lot release, meaning that the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official lot release, the manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot, to the FDA. The FDA may in addition perform certain confirmatory tests on lots of some products before releasing the lots for distribution. Finally, the FDA will conduct laboratory research related to the safety, purity, potency, and effectiveness of pharmaceutical products.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post‐market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:
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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
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fines, warning letters or holds on post‐approval clinical trials;
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refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals;
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product seizure or detention, or refusal to permit the import or export of products; or
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injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Pharmaceutical products may be promoted only for the approved indications and in accordance with the provisions of the approved label. Promotional claims about a drug's safety or effectiveness are prohibited before the drug is approved. Although health care providers may prescribe products for off-label uses in their professional judgment, drug manufacturers are prohibited from soliciting, encouraging or promoting unapproved uses of a product. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off‐label uses, and a company that is found to have improperly promoted off‐label uses may be subject to significant liability. In September 2021, the FDA published final regulations which describe the types of evidence that the agency will consider in determining the intended use of a biologic.
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If a company is found to have promoted off-label uses, it may become subject to adverse public relations and administrative and judicial enforcement by the FDA, the U.S. Department of Justice, or the Office of the Inspector General of HHS, as well as state authorities. This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes drug products. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in nonpromotional, non-misleading communication regarding off-label information, such as distributing scientific or medical journal information. Moreover, with passage of the Pre-Approval Information Exchange Act in December 2022, sponsors of products that have not been approved may proactively communicate to payors certain information about products in development to help expedite patient access upon product approval. Previously, such communications were permitted under FDA guidance but the new legislation explicitly provides protection to sponsors who convey certain information about products in development to payors, including unapproved uses of approved products.
In addition, in January 2025, the FDA published final guidance outlining its policies governing the distribution of scientific information to healthcare providers about unapproved uses of approved products. The final guidance calls for such communications to be truthful, non-misleading and scientifically sound and to include all information necessary for healthcare providers to interpret the strengths and weaknesses and validity and utility of the information about the unapproved use of the approved product. If a company engages in such communications consistent with the guidance’s recommendations, the FDA indicated that it will not treat such communications as evidence of unlawful promotion of a new intended use for the approved product.
In addition, the distribution of prescription pharmaceutical products is subject to a variety of federal and state laws. The Prescription Drug Marketing Act, or PDMA, was the first federal law to set minimum standards for the registration and regulation of drug distributors by the states and to regulate the distribution of drug samples. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. In November 2013, the federal Drug Supply Chain Security Act, or DSCSA, became effective in the United States, mandating an industry-wide, electronic, interoperable system to trace prescription drugs through the pharmaceutical distribution supply chain with a ten-year phase-in process. Manufacturers were required by November 2023 to have such systems and processes in place. So as not to disrupt supply chains, the FDA has granted certain exemptions from enhanced drug distribution security requirements for eligible trading partners for particular periods of time.
Orphan Drug Designation and Exclusivity
Orphan drug designation in the United States is designed to encourage sponsors to develop products intended for rare diseases or conditions. In the United States, a rare disease or condition is statutorily defined as a condition that affects fewer than 200,000 individuals in the United States or that affects more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available the biologic for the disease or condition will be recovered from sales of the product in the United States.
Orphan drug designation qualifies a company for tax credits and market exclusivity for seven years following the date of the product’s marketing approval if granted by the FDA. An application for designation as an orphan product can be made any time prior to the filing of an application for approval to market the product. A product becomes an orphan when it receives orphan drug designation from the Office of Orphan Products Development at the FDA based on acceptable confidential requests made under the regulatory provisions. The product must then go through the review and approval process like any other product.
A sponsor may request orphan drug designation of a previously unapproved product or new orphan indication for an already marketed product. In addition, a sponsor of a product that is otherwise the same product as an already approved orphan drug may seek and obtain orphan drug designation for the subsequent product for the same rare disease or condition if it can present a plausible hypothesis that its product may be clinically superior to the first drug. More than one sponsor may receive orphan drug designation for the same product for the same rare disease or condition, but each sponsor seeking orphan drug designation must file a complete request for designation.
If a product with orphan designation receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product
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generally will receive orphan drug exclusivity. Orphan drug exclusivity means that the FDA may not approve another sponsor’s marketing application for the same product for the same indication for seven years, except in certain limited circumstances. If a product designated as an orphan drug ultimately receives marketing approval for an indication broader than what was designated in its orphan drug application, it may not be entitled to exclusivity.
The period of exclusivity begins on the date that the marketing application is approved by the FDA. Orphan drug exclusivity will not bar approval of another product under certain circumstances, including if the company with orphan drug exclusivity is not able to meet market demand or the subsequent product is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care. Under Omnibus legislation signed by the then President of the United States on December 27, 2020, the requirement for a product to show clinical superiority applies to drug products that received orphan drug designation before enactment of amendments to the FDCA in 2017 but have not yet been approved by FDA.
In September 2021, the Court of Appeals for the 11th Circuit, in Catalyst Pharms, Inc. v. Becerra, or Catalyst, held that, for the purpose of determining the scope of orphan drug exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law. On January 23, 2023, the FDA announced that, in matters beyond the scope of the Catalyst court order, the FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug is approved. More recently however, on February 14, 2025, a federal district court in Washington, D.C. fully embraced the reasoning of the Catalyst decision in another decision challenging the scope of orphan drug exclusivity. The implications of this decision, and its impact on the FDA’s implementation of the Orphan Drug Act, are unclear at this point.
Pediatric Exclusivity
Pediatric exclusivity is another type of non‐patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of regulatory exclusivity to the term of any existing regulatory exclusivity, including orphan exclusivity, for biologic products. This six‐month exclusivity may be granted if a BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.
Biosimilars and Regulatory Exclusivity
The 2010 Patient Protection and Affordable Care Act, which was signed into law in March 2010, included a subtitle called the Biologics Price Competition and Innovation Act of 2009, or the BPCIA. The BPCIA established a regulatory scheme authorizing the FDA to approve biosimilars and interchangeable biosimilars. A biosimilar is a biological product that is highly similar to an existing FDA-licensed “reference product.” To date, the FDA has licensed a number of biosimilar products and interchangeable biosimilar products.
Under the BPCIA, a manufacturer may submit an application for licensure of a biologic product that is “biosimilar to” or “interchangeable with” a previously approved biological product or “reference product.” In order for the FDA to approve a biosimilar product, it must find that there are no clinically meaningful differences between the reference product and proposed biosimilar product in terms of safety, purity, and potency. For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find that the biosimilar product can be expected to produce the same clinical results as the reference product, and (for products administered multiple times) that the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. In December 2022, Congress clarified through FDORA that FDA may approve multiple first interchangeable biosimilar biological products so long as the products are all approved on the first day on which such a product is approved as interchangeable with the reference product.
An application for a biosimilar product may not be submitted to the FDA until four years following the date of approval of the reference product. The FDA may not approve a biosimilar product until 12 years from the date on which the reference product was approved. Even if a product is considered to be a reference product eligible for exclusivity, another company could market a competing version of that product if the FDA approves a full BLA for such product containing the
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sponsor’s own preclinical data and data from adequate and well‐controlled clinical trials to demonstrate the safety, purity, and potency of their product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. There have been recent government proposals to reduce the 12-year reference product exclusivity period, but none has been enacted to date. At the same time, since passage of the BPCIA, many states have passed laws or amendments to laws, which address pharmacy practices involving biosimilar products.
Patent Term Restoration and Extension
A patent claiming a new biologic product, its method of use or its method of manufacture may be eligible for a limited patent term extension under the Hatch‐Waxman Act, which permits a patent restoration of up to five years for patent term lost during product development and FDA regulatory review. The restoration period granted on a patent covering a product is typically one‐half the time between the effective date of the IND clearing the clinical investigation involving human beings and the submission date of an application, plus the time between the submission date of an application and the ultimate approval date. Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals. The U.S. Patent and Trademark Office reviews and approves the application for any patent term extension or restoration in consultation with the FDA.
FDA Approval of Companion Diagnostics
In August 2014, the FDA issued final guidance clarifying the requirements that will apply to approval of therapeutic products and in vitro companion diagnostics. According to the guidance, for novel drugs, a companion diagnostic device and its corresponding therapeutic should be approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product’s labeling. Approval or clearance of the companion diagnostic device will ensure that the device has been adequately evaluated and has adequate performance characteristics in the intended population. In July 2016, the FDA issued a draft guidance intended to assist sponsors of the drug therapeutic and in vitro companion diagnostic device on issues related to co-development of the products.
The 2014 guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a biologic product candidate generally will be considered an investigational device, unless it is employed for an intended use for which the device is already approved or cleared. If used to make critical treatment decisions, such as patient selection, the diagnostic device generally will be considered a significant risk device under the FDA’s Investigational Device Exemption, or IDE, regulations. Thus, the sponsor of the diagnostic device will be required to comply with the IDE regulations. According to the guidance, if a diagnostic device and a product are to be studied together to support their respective approvals, both products can be studied in the same investigational study, if the study meets both the requirements of the IDE regulations and the IND regulations. The guidance provides that depending on the details of the study plan and subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE.
In April 2020, the FDA issued additional guidance which describes considerations for the development and labeling of companion diagnostic devices to support the indicated uses of multiple biological oncology products, when appropriate. The 2020 guidance expands on the policy statement in the 2014 guidance by recommending that companion diagnostic developers consider a number of factors when determining whether their test could be developed, or the labeling for approved companion diagnostics could be revised through a supplement, to support a broader labeling claim such as use with a specific group of oncology therapeutic products (rather than listing an individual therapeutic product(s)).
Under the FDCA, in vitro diagnostics, including companion diagnostics, are regulated as medical devices. In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post‐market surveillance. Unless an exemption applies, diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution.
The FDA previously has required in vitro companion diagnostics intended to select the patients who will respond to the product candidate to obtain pre-market approval, or PMA, simultaneously with approval of the therapeutic product candidate. The PMA process, including the gathering of clinical and preclinical data and the submission to and review by the FDA, can take several years or longer. It involves a rigorous premarket review during which the sponsor must prepare and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and its
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components regarding, among other things, device design, manufacturing and labeling. PMA applications are subject to an application fee. For federal fiscal year 2025, the standard fee is $540,783 and the small business fee is $135,196.
A clinical trial is typically required for a PMA application and, in a small percentage of cases, the FDA may require a clinical study in support of a 510(k) submission. A manufacturer that wishes to conduct a clinical study involving the device is subject to the FDA’s IDE regulation. The IDE regulation distinguishes between significant and non-significant risk device studies and the procedures for obtaining approval to begin the study differ accordingly. Also, some types of studies are exempt from the IDE regulations. A significant risk device presents a potential for serious risk to the health, safety, or welfare of a subject. Significant risk devices are devices that are substantially important in diagnosing, curing, mitigating, or treating disease or in preventing impairment to human health. Studies of devices that pose a significant risk require both FDA and an IRB approval prior to initiation of a clinical study. Non-significant risk devices are devices that do not pose a significant risk to the human subjects. A non-significant risk device study requires only IRB approval prior to initiation of a clinical study.
After a device is placed on the market, it remains subject to significant regulatory requirements. Medical devices may be marketed only for the uses and indications for which they are cleared or approved. Device manufacturers must also establish registration and device listings with the FDA. A medical device manufacturer’s manufacturing processes and those of its suppliers are required to comply with the applicable portions of the Quality System Regulation, which covers the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices. Domestic facility records and manufacturing processes are subject to periodic unscheduled inspections by the FDA. The FDA also may inspect foreign facilities that export products to the United States.
It is possible that an in vitro companion diagnostic device could be subject to FDA enforcement discretion from compliance with the FDCA if it meets the definition of a Laboratory Developed Test, or LDT. However, the FDA issued a final rule in April 2024 to end enforcement discretion for LDTs and actively regulate such products as medical devices. Under this final rule, LDTs are required to come into compliance with the FDA’s medical device regulatory requirements in a staged approach over the course of four years. The implementation of this LDT final rule could potentially be affected by the Executive Order, Regulatory Freeze Pending Review, issued by President Trump on January 20, 2025 and/or the anticipated change in leadership at the FDA under the new administration. Further, while the final regulation is set to take effect on May 6, 2025, a number of parties have challenged the legality of the LDT regulation in a federal district court. That court held a hearing on this matter on February 19, 2025, and is expected to issue a ruling soon.
Federal and State Data Privacy and Security Laws
Under the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, HHS has issued regulations to protect the privacy and security of protected health information used or disclosed by covered entities including certain healthcare providers, health plans, and healthcare clearinghouses. HIPAA also regulates standardization of data content, codes, and formats used in healthcare transactions and standardization of identifiers for health plans and providers. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their regulations, including the omnibus final rule published on January 25, 2013, also imposes certain obligations on the business associates of covered entities that obtain protected health information in providing services to or on behalf of covered entities. In addition to federal privacy regulations, there are a number of state laws governing confidentiality and security of health information that are applicable to our business. In addition to possible federal civil and criminal penalties for HIPAA violations, state attorneys general are authorized to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with pursuing federal civil actions. Accordingly, state attorneys general (along with private plaintiffs) have brought civil actions seeking injunctions and damages resulting from alleged violations of HIPAA’s privacy and security rules. New laws and regulations governing privacy and security may be adopted in the future as well.
In addition to potential enforcement by HHS, we are also potentially subject to privacy enforcement from the Federal Trade Commission, or FTC. The FTC has been particularly focused on the unpermitted processing of health and genetic data through its recent enforcement actions and is expanding the types of privacy violations that it interprets to be “unfair” under Section 5 of the Federal Trade Commission Act, as well as the types of activities it views to trigger the Health Breach Notification Rule (which the FTC also has the authority to enforce). The agency is also in the process of developing rules related to commercial surveillance and data security that may impact our business. We will need to account for the FTC’s evolving rules and guidance for proper privacy and data security practices in order to mitigate our risk for a potential enforcement action, which may be costly. If we are subject to a potential FTC enforcement action, we may be subject to a settlement order that requires us to adhere to very specific privacy and data security practices, which may impact our business. We may also be required to pay fines as part of a settlement (depending on the nature of the alleged violations). If we violate
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any consent order that we reach with the FTC, we may be subject to additional fines and compliance requirements. Finally, both the FTC and HHS’s enforcement priorities (as well as those of other federal regulators) may be impacted by the change in administration and new leadership. These shifts in enforcement priorities may also impact our business.
There are also increased restrictions at the federal level relating to transferring sensitive data outside of the United States to certain foreign countries. For example, in 2024, Congress passed H.B. 815, which included the Protecting Americans’ Data from Foreign Adversaries Act of 2024. This law creates certain restrictions for entities that disclose sensitive data (including potential health data) to countries such as China. Failure to comply with these rules can lead to a potential FTC enforcement action. Additionally, the U.S. Department of Justice recently finalized a rule implementing Executive Order 14117, which creates similar restrictions related to the transfer of sensitive U.S. data to countries such as China. These data transfer restrictions (and others that may pass in the future) may create operational challenges and legal risks for our business.
Additionally, California recently enacted legislation that has been dubbed the first “GDPR-like” (referring to the EU General Data Protection Regulation, or GDPR) law in the United States. Known as the California Consumer Privacy Act, or CCPA, it creates new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA went into effect on January 1, 2020 and requires covered companies to provide new disclosures to California consumers, provide such consumers new ways to opt-out of certain sales of personal information, and allow for a new cause of action for data breaches. The CCPA could impact our business activities depending on how it is interpreted and exemplifies the vulnerability of our business to not only cyber threats but also the evolving regulatory environment related to personal data and protected health information.
In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or the CPRA, which went into effect on January 1, 2023, and significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information. The CPRA also created a new enforcement agency – the California Privacy Protection Agency – whose sole responsibility is to enforce the CPRA, which will further increase compliance risk. The provisions in the CPRA may apply to some of our business activities.
In addition to California, a number of other states have passed comprehensive privacy laws similar to the CCPA and CPRA. These laws are either in effect or will go into effect sometime over the next several years. Like the CCPA and CPRA, these laws create obligations related to the processing of personal information, as well as special obligations for the processing of “sensitive” data, which includes health data in some cases. Some of the provisions of these laws may apply to our business activities. There are also states that are strongly considering or have already passed comprehensive privacy laws that will go into effect over the next several years. Other states will be considering similar laws in the future, and Congress has also been debating passing a federal privacy law. There are also states that are specifically regulating health information that may affect our business. For example, the State of Washington passed the My Health My Data Act in 2023 which specifically regulated health information that is not otherwise regulated by the HIPAA rules, and the law also has a private right of action, which further increases the relevant compliance risk. Connecticut and Nevada have also passed similar laws regulating consumer health data, and more states are considering such legislation. These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.
Plaintiffs’ lawyers are also increasingly using privacy-related statutes at both the state and federal level to bring lawsuits against companies for their data-related practices. In particular, there have been a significant number of cases filed against companies for their use of pixels and other web trackers. These cases often allege violations of the California Invasion of Privacy Act and other state laws regulating wiretapping, as well as the federal Video Privacy Protection Act. The rise in these types of lawsuits creates potential risk for our business.
Regulation and Procedures Governing Approval of Medicinal Products in the European Union
In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products. Whether or not it obtains FDA approval for a product, a sponsor will need to obtain the necessary approvals by the comparable foreign regulatory authorities before it can commence clinical trials or marketing of the product in those countries or jurisdictions. Specifically, the process governing approval of medicinal products in the EU generally follows the same lines as in the United States. It entails satisfactory completion of preclinical studies and adequate and well‐controlled clinical trials to establish the safety and efficacy
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