10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31,2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-38692

EQUILLIUM, INC.

(Exact name of registrant as specified in its Charter)

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (858) 240-1200

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

Title of each class TradingSymbol Name of each exchange on which registered

Common Stock, par value $0.0001 per share EQ The Nasdaq Capital Market

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

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

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

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

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

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

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☐

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

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

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2024 (the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $15.4 million based on the closing price of the registrant’s common stock on June 28, 2024 of $0.69 per share, as reported by the Nasdaq Capital Market. Shares of the registrant's common stock held by executive officers, directors and registrant's affiliates have been excluded from this calculation. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of March 20, 2025, there were 35,609,907 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Annual Report on Form 10-K incorporates by reference certain information from the registrant’s definitive Proxy Statement for its 2025 annual meeting of stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year end of December 31, 2024. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part of this Form 10-K.

Table of Contents

Page

PART I 6

Item 1. Business 6

Item 1A. Risk Factors 32

Item 1B. Unresolved Staff Comments 84

Item 1C. Cybersecurity 84

Item 2. Properties 86

Item 3. Legal Proceedings 86

Item 4. Mine Safety Disclosures 86

Item 6. [Reserved] 87

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 99

Item 8. Financial Statements and Supplementary Data 100

Item 9A. Controls and Procedures 100

Item 9B. Other Information 100

Item 10. Directors, Executive Officers and Corporate Governance 102

Item 11. Executive Compensation 102

Item 14. Principal Accountant Fees and Services 102

Item 15. Exhibits and Financial Statement Schedules 103

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•

our ability to obtain funding for our operations, including funding necessary to commence and complete the preclinical and clinical studies of our product candidates;

•

our plans to research, develop and commercialize our product candidates and any future product candidates;

•

our ability to obtain and maintain regulatory approval for our product candidates in any of the indications for which we plan to develop them;

•

our estimated timeline for announcing data from our clinical studies, for interacting with regulatory authorities, and for initiating preclinical and clinical studies;

•

the success, cost, and timing of our product development activities, including our ongoing and planned preclinical and clinical studies;

•

the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates;

•

the size of the markets for our product candidates, and our ability to serve those markets;

•

the rate and degree of market acceptance of any of our product candidates;

•

our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators;

•

existing regulations and regulatory developments in the United States and in other territories where we may conduct business, including the clinical development and potential commercialization of our product candidates;

•

the performance of our contract service providers, including Biocon Limited and other suppliers and manufacturers;

•

the safety, efficacy and market success of competing therapies that are or become available;

•

our ability to attract and retain key scientific or management personnel;

•

our ability to attract and retain collaborators with development, regulatory and commercialization expertise;

•

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

•

our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and our ability to operate our business without infringing on the intellectual property rights of others.

In some cases, you can identify these statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes. These forward-looking statements reflect our management’s beliefs, opinions and views with respect to future events and are based on estimates, assumptions and information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and are subject to risks and uncertainties. We discuss many of these risks in greater detail under the heading “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ

materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

You should carefully read this Annual Report on Form 10-K and the documents that we reference herein and have filed as exhibits to the Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Annual Report on Form 10-K by these cautionary statements.

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.

RISK FACTORS SUMMARY

We face many risks and uncertainties, as more fully described in this section under the heading “Risk Factors.” Some of these risks and uncertainties are summarized below. The summary below does not contain all of the information that may be important to you, and you should read this summary together with the more detailed discussion of these risks and uncertainties contained in “Risk Factors.”

•

We have incurred significant losses since our inception, expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability;

•

Our need for additional capital raises substantial doubt about our ability to continue as a going concern. We will require substantial additional funding to complete the development and any commercialization of itolizumab (EQ001) and EQ302, if we resume development activities, and any future product candidates. If we are unable to raise this capital when needed, we may be forced to delay, reduce or eliminate our research and development programs or other operations;

•

Our corporate cash saving initiatives and the associated headcount reductions we recently implemented, and potential additional headcount reductions in the future, could disrupt our business, and may not achieve our intended objectives;

•

Should we need to pursue strategic alternatives or a dissolution of the company, the value to stockholders in such an event may depend on the extent to which we will be able to successfully satisfy our existing contractual obligations to third parties and regulatory commitments on favorable terms, which may include the outcome of our negotiations to reduce or terminate such commitments;

•

We are highly dependent on the successful development of our current product candidates, including itolizumab (EQ001) and to a lesser extent EQ302 if we resume development activities, and we may not be able to obtain regulatory or marketing approval for, or successfully commercialize, these product candidates in any of the indications for which we plan to develop them;

•

We have licensed the rights to itolizumab in the United States, Canada, Australia, and New Zealand. Any adverse developments that occur during any research, clinical, or commercial use of itolizumab by Biocon or third parties in other jurisdictions may affect our ability to secure a partnership or financing to advance the further clinical development of itolizumab (EQ001), obtain regulatory approval of or successfully commercialize itolizumab (EQ001) or otherwise adversely impact our business;

•

We have licensed itolizumab from Biocon pursuant to an exclusive license agreement, which license is conditioned upon us meeting certain diligence obligations with respect to the development, regulatory approval and commercialization of itolizumab, and making significant milestone payments in connection with regulatory approval and commercial milestones as well as royalty payments;

•

Any delays in the commencement or completion, or termination or suspension, of our ongoing, planned or future clinical studies could result in increased costs to us, delay or limit our ability to raise capital or generate revenue and adversely affect our commercial prospects;

•

Interim, topline or preliminary data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data;

•

We currently have no marketing and sales organization and have no experience as a company in commercializing products, and we may have to invest significant resources to develop these capabilities. If we are unable to establish marketing and sales capabilities or enter into agreements with contracted third parties to market and sell any of our products, if approved, we may not be able to generate product revenue;

•

The manufacture of pharmaceutical products, especially biologics, is complex and we may encounter difficulties in production, distribution and delivery of our product candidates. If CMOs, including Biocon, our exclusive CMO for itolizumab (EQ001), encounter such difficulties, our ability to provide supply of our product candidates for clinical studies, our ability to obtain marketing approval, or our ability to obtain commercial supply of our products, if approved, could be delayed or stopped;

•

We rely, and intend to continue to rely, on CROs to conduct our clinical studies and perform some of our research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties, fail to comply with applicable regulatory requirements or meet expected deadlines, our development programs may be delayed or subject to increased costs or we may be unable to obtain regulatory approval, each of which may have an adverse effect on our business, financial condition, results of operations and prospects;

•

If we are unable to obtain or protect intellectual property rights covering our product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and we may not be able to compete effectively in our market;

•

Even if our product candidates receive marketing approval in any indication, they may fail to achieve the degree of market acceptance by physicians, patients, hospitals, healthcare payors and others in the medical community necessary for commercial success;

•

If we are unable to regain compliance with the listing requirements of the Nasdaq Capital Market, with an initial deadline of June 11, 2025, followed by a potential 180-day extension, our common stock may be delisted from the Nasdaq Capital Market which could have a material adverse effect on our financial condition and could make it difficult for you to sell your shares; and

•

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

PART I

Item 1. Business.

Overview

We are a clinical-stage biotechnology company leveraging a deep understanding of immunobiology to develop novel therapeutics to treat severe autoimmune and inflammatory, or immuno-inflammatory, disorders with high unmet medical need. Our strategy is focused on advancing the preclinical and clinical development of our product candidates, including potentially pursuing additional indications and acquiring new product candidates and platforms to expand our pipeline. We intend to commercialize our product candidates either independently or through partnerships or otherwise monetize our pipeline through strategic transactions.

Itolizumab (EQ001), our most advanced clinical-stage product candidate, is a first-in-class anti-CD6 immune-modifying monoclonal antibody, or mAb, that selectively targets the CD6-ALCAM signaling pathway to downregulate pathogenic T effector cells while preserving T regulatory cells critical for maintaining a balanced immune response. This pathway plays a central role in modulating the activity and trafficking of T cells that drive a number of immuno-inflammatory diseases. In March 2025, we announced topline results from our Phase 3 EQUATOR study of itolizumab (EQ001) in patients with acute graft-versus-host disease, or aGVHD, where itolizumab (EQ001) did not meet the Day 29 outcomes of complete response, or CR, a primary outcome, and overall response rate, or ORR, a key secondary outcome, but there was a clinically meaningful improvement in durable CR from Day 29 to 99, a key secondary outcome, and statistically significant evidence of clinical benefit was observed on pre-specified secondary endpoints of duration of CR and failure free survival. Patients treated with itolizumab (EQ001) exhibited a median duration of CR of 336 days and a median failure free survival of 154 days, compared to 72 days and 70 days, respectively, for placebo. A comprehensive summary of the efficacy results from the Phase 3 EQUATOR study is presented in Table 1, included later in this document.

EQ302 is a preclinical-stage, first-in-class, selective, bi-specific inhibitor of IL-15 and IL-21 formulated for oral delivery. Inhibiting IL-15 and IL-21 is believed to be an effective treatment approach for certain gastrointestinal indications, including celiac disease. We have paused development of EQ302 pending additional funding or partnering.

EQ101 is a clinical-stage, first-in-class, selective, tri-specific inhibitor of IL-2, IL-9 and IL-15, which are key disease-driving, clinically validated cytokine targets, aimed at addressing unmet needs across a range of immuno-inflammatory indications. The clinical activity of EQ101 has been demonstrated in multiple clinical studies. We have paused development of EQ101 pending additional funding or partnering.

Our novel and differentiated pipeline of therapeutic candidates has the potential to address unmet medical needs in numerous areas, including gastroenterology, dermatology, hematology, transplant science, rheumatology, pulmonology and oncology.

Strategy

Our goal is to become a leading, fully-integrated biotechnology company focused on therapies for severe immuno-inflammatory disorders. To achieve our goal, we intend to:

•

Pending positive regulatory feedback related to our submission of Phase 3 study data and our request for Breakthrough Therapy Designation, or BTD, and pending additional funding, submit a Biologics License

Application, or BLA, for itolizumab (EQ001) for aGVHD. Itolizumab (EQ001) has demonstrated clinical activity across multiple indications in several of our clinical studies. Although itolizumab (EQ001) did not achieve an improvement in complete response at Day 29 in a Phase 3 study in aGVHD, it did demonstrate clinically meaningful and statistically significant improvements in complete response at Day 99 as well as duration of complete response and failure free survival compared to placebo. The observed improvements in those longer-term outcomes are clinically important and encouraging in aGVHD where high rates of mortality and disease recurrence persist with current treatments. Therefore, we believe that itolizumab (EQ001) can play a critical role in therapeutic regimens in the treatment of aGVHD. In March 2025, we submitted data from the Phase 3 study and a request for BTD to the U.S. Food and Drug Administration, or FDA, and requested a meeting with the FDA to discuss the sufficiency of the data for supporting a BLA. We expect feedback from the FDA during May 2025, and pending positive feedback and securing additional funding, we intend to prepare a BLA and would expect to submit in the first half of 2026 for potential approval.

•

Resume the preclinical development of EQ302 with additional funding. Published research has demonstrated the synergistic effect of inhibiting both IL-15 and IL-21 as a therapeutic approach for celiac disease and potentially other autoimmune disorders. Preclinical and translational data has shown that EQ302 is a potent inhibitor of those two cytokines and is stable and permeable in the gut. We have paused development activities related to EQ302 pending securing additional financing. With additional funding, we would consider resuming preclinical development to optimize the product candidate and enable the initiation of a first-in-human clinical study. We would also consider partnering opportunities to advance the development of EQ302. Based on the unique mechanism of action of EQ302 and its product profile, including the advantage of oral delivery, we believe that EQ302 has the potential to be an attractive therapeutic option for gastrointestinal diseases, such as inflammatory bowel disease and celiac disease.

•

Seek a partner to fund further clinical development of EQ101.We completed a Phase 2 proof-of-concept clinical study of EQ101 in subjects with alopecia areata, or AA, and in June 2024, we announced positive topline data from that study. Based on those positive results and feedback from key opinion leaders in the treatment of AA, we believe further development of EQ101 in AA is warranted. EQ101 has also demonstrated proof-of-concept clinical activity in patients with cutaneous T cell lymphoma, or CTCL. Those data provide support for opportunistic expansion into other dermatological conditions where IL-2, IL-9 and IL-15 inhibition is important such as vitiligo and atopic dermatitis. However, due to limited financial resources, we have deprioritized further development activities of EQ101 and are exploring partnership opportunities to advance the clinical development of that asset.

•

Opportunistically expand our pipeline. We willcontinue to conduct preclinical and translational studies and assimilate learnings from clinical studies to help inform the selection of additional indications for future development of our product candidates. We will also leverage the collective talent within our organization to opportunistically discover, acquire or in-license other high-value therapeutic programs that may complement our core strategy or have the potential for synergistic therapeutic benefit in combination with our pipeline assets.

•

Build a commercial infrastructure. If any of our product candidates are approved, we may commercialize them ourselves in indications that can be effectively targeted using a specialty sales force. For other indications that require a larger sales force, we may commercialize approved products through collaborations with other parties.

Acquisitions

Acquisitions of innovative technologies and products have played an important role in the growth of our company. For example, we acquired the exclusive worldwide rights to EQ101 and a proprietary platform for discovering additional, novel multi-cytokine targeting product candidates such as EQ302 through the acquisition of Bioniz Therapeutics, Inc., or Bioniz, in February 2022. Pursuant to the merger agreement with Bioniz, we are obligated to potentially pay up to $57.5 million in regulatory approval milestones, of which $37.5 million relates to EQ101, $15 million relates to EQ102, and $5 million relates to EQ302, and up to $250 million in commercial milestones all related to EQ101.We also acquired Ariagen, Inc., or Ariagen, in October 2024 to obtain a preclinical stage therapeutic drug product. Ariagen was more than 92% owned by affiliates of Decheng Capital Management III (Cayman) LLC, who is the largest stockholder of Equillium. Pursuant to the stock purchase agreement with Ariagen, its stockholders and securityholder representative, we are obligated to potentially pay up to a maximum of $55.0 million in aggregate across the first three regulatory approvals. We have no affirmative diligence obligations with respect to the further development of the Ariagen assets.

Partnerships

Collaboration and License Agreement with Biocon

We may enter into strategic partnerships to grow and fund our business. For example, in May 2017 we acquired the rights to itolizumab (EQ001) pursuant to a collaboration and license agreement with Biocon SA (subsequently assigned to Biocon Limited, or together, Biocon). Pursuant to that agreement and subsequent amendments, or Biocon License, Biocon granted us an exclusive license to develop, make, have made, use, sell, have sold, offer for sale, import and otherwise exploit itolizumab (EQ001) and any pharmaceutical composition or preparation containing or comprising itolizumab (EQ001) that uses Biocon technology or Biocon know-how, or collectively, a Biocon Product, in the United States, Canada, Australia and New Zealand, or the Equillium Territory. Our collaboration with Biocon includes an exclusive supply agreement for clinical and commercial drug product of itolizumab (EQ001), or the Clinical Supply Agreement. Biocon currently manufactures itolizumab (EQ001) at commercial scale in a facility in India regulated by the FDA. In addition, we collaborated on and co-funded a Phase 2 clinical study of itolizumab in subjects with ulcerative colitis conducted by Biocon in India.

In consideration for the rights granted to us by Biocon, we issued to Biocon 2,316,134 shares of common stock. In addition, we are obligated to pay Biocon up to an aggregate of $30 million in regulatory milestone payments upon the achievement of certain regulatory approvals and up to an aggregate of $565 million in sales milestone payments upon the achievement of first commercial sale of product and specified levels of product sales. We are also required to pay royalties on tiers of aggregate annual net sales of Biocon Products by us, our affiliates and our sublicensees in the United States and Canada at percentages from the mid-single digits to sub-teen double digits and on tiers of aggregate annual net sales of Biocon Products by us and our affiliates (but not our sublicensees) in Australia and New Zealand, in each case, subject to adjustments in certain circumstances. Biocon is also required to pay us royalties at comparable percentages for sales of itolizumab outside of the Equillium Territory if the approvals in such geographies included or referenced our data, including data from certain of our clinical studies, subject to adjustments in certain circumstances. See Note 8 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further details of the Biocon License and Clinical Supply Agreement.

Option Agreement with Ono

In December 2022, we entered into an asset purchase agreement, or Asset Purchase Agreement, with Ono Pharmaceutical Co., Ltd., or Ono, pursuant to which we granted Ono an exclusive option to acquire our rights to itolizumab (EQ001), or the Option. In exchange for the Option, Ono paid us a one-time, upfront payment of $26.4 million and funded all of our itolizumab (EQ001) research and development expenses from July 1, 2022 through October 30, 2024, the end of the option period totaling $67.1 million. Ono’s option period expired and the Asset Purchase Agreement automatically terminated on October 30, 2024 pursuant to its terms. See Note 8 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further details of the Ono Asset Purchase Agreement.

Understanding the Basis of Our Approach: CD6-ALCAM Pathway Inhibition

The Role of CD6 in Autoimmunity

The role of the immune system is to defend the body against foreign organisms and cells, including cancerous cells, and in doing so must distinguish accurately between self- and non-self entities, a process called tolerance. Autoimmunity is an immune response directed against the body’s own healthy cells and tissues, and is the underlying process in many inflammatory diseases. Autoimmunity results from a loss of tolerance caused in part by an imbalance in the relationship between T effector cells, or Teff cells, and regulatory T cells, or Treg cells.

Immune checkpoints are critical regulators of immune activation pathways, can be either co-stimulatory (activating) or co-inhibitory (inhibiting), and are crucial for maintaining immune balance and preventing autoimmunity. We believe co-stimulatory checkpoints are attractive drug targets for the treatment of immuno-inflammatory diseases, and more recently they have become a focus of development in immuno-inflammation.

CD6 is a co-stimulatory receptor that plays an integral role in modulating T cell activation, proliferation, differentiation and trafficking. CD6 serves as a key checkpoint in regulating Teff cells that are central to autoimmune responses. Non-clinical and clinical studies have shown that blockade of CD6 co-stimulation leads to selective inhibition of pathogenic Teff cell activity and trafficking, while preserving the important regulatory function of Treg cells. Such studies and new insights into the underlying biology highlight CD6 as a resurgent target for the treatment of multiple immuno-inflammatory diseases.

Activated leukocyte cell adhesion molecule, or ALCAM, is a ligand of CD6 that is expressed on hematopoietic tissues such as antigen-presenting cells, where it is important for immune synapse formation and optimal co-stimulation. Binding of ALCAM to domain-3 of CD6 leads to the downstream activation of several mitogen activated protein kinase pathways related to T cell activation, proliferation, differentiation and survival.

ALCAM is also expressed on non-hematopoietic tissues such as the vascular endothelium, blood-brain barrier, skin, lung, kidney and gut, where it selectively facilitates the trafficking of T cells expressing CD6.

Modulation of Teff Cell Activity with Itolizumab (EQ001)

Itolizumab (EQ001) is a humanized antibody that selectively binds to human CD6 and inhibits the interaction of CD6 with its ligand ALCAM, preventing co-stimulation, and thereby reducing Teff cell activity and trafficking. Non-clinical studies of itolizumab (EQ001) have shown that blockade of CD6 leads to a reduction in Teff cell proliferation and downregulation of several important pathways that contribute to Teff cell development such as Th1, Th2 and Th17 cells. Critically, CD6 blockade leads to the downregulation of important cellular pathways that control inflammation, including STAT3 and RORγt. The downregulation of these pathways is accompanied by decreased secretion of the pro-inflammatory Teff cytokines IFN-γ, TNF-α, IL-6 and IL-17.

Additionally, by inhibiting the binding of ALCAM to CD6, itolizumab modulates lymphocyte trafficking and results in reduced Teff cell infiltration into inflamed tissues. Based on its broad multi-modal mechanism, we believe itolizumab (EQ001) has the potential to treat multiple immuno-inflammatory diseases, including those that are resistant or refractory to existing therapies.

Itolizumab (EQ001) Product Development by Biocon

Itolizumab has shown clinical activity and a well-tolerated profile in completed clinical studies conducted by Biocon in patients with rheumatoid arthritis, psoriasis, and acute respiratory distress syndrome, or ARDS, related to COVID-19. Itolizumab has been approved for the treatment of moderate to severe plaque psoriasis in India where it was originally launched by Biocon under the brand name ALZUMAb. ALZUMAb was produced in an NS0 cell line and formerly available only in an IV formulation. Itolizumab (EQ001) contains the identical monoclonal antibody sequence produced in a Chinese hamster ovary, or CHO, cell line and may be administered intravenously, or IV, or subcutaneously, or SC. CHO cell lines are the industry-standard antibody therapeutic production system. In September 2020, the Drugs Controller General of India granted approval to Biocon of itolizumab produced in a CHO cell line, marketed by Biocon in India under the brand name ALZUMAb-L, or ALZUMAb Lyophilized, for the treatment of plaque psoriasis, as well as emergency use authorization of ALZUMAb-L for the treatment of cytokine release syndrome in COVID-19 patients with moderate to severe ARDS. ALZUMAb is no longer being manufactured by Biocon and is no longer commercially available. Biocon has transitioned their marketing and commercialization efforts from ALZUMAb to ALZUMAb-L. Itolizumab (EQ001) and ALZUMAb-L are different drug product names for the same formulation. Itolizumab (EQ001) is manufactured by Biocon at commercial scale in an FDA regulated manufacturing facility in India.

Biocon also conducted a Phase 2 clinical study of itolizumab in India in subjects with UC, which Equillium co-funded. The randomized, double-blinded, placebo- and active-controlled Phase 2 clinical study evaluated the safety and efficacy of itolizumab in biologic-naïve patients with moderate to severe active UC. A total of 90 patients were randomized 1:1:1 to receive itolizumab (fixed dose of 140 mg), placebo, or adalimumab (a global standard of care biologic treatment used as an active control) every two weeks for an initial 12-week treatment period. The primary endpoint of the study was clinical remission as defined by Total Mayo Score, and secondary endpoints included the proportion of participants who achieved clinical response and endoscopic remission (evaluated by central endoscopy). The design and conduct of the study were a collaborative effort, with input from the gastroenterology community and leading global clinical and scientific experts in the field of IBD. The primary endpoint of the study was clinical remission, defined as Total Mayo Score of ≤ 2 with no individual sub-score greater than 1 at Week 12. Secondary endpoints included the proportion of participants who achieved clinical response (per Total Mayo Score) and endoscopic remission (evaluated by central endoscopy) at Week 12 and Week 24.

In February 2025, we announced positive topline data from the study where itolizumab demonstrated a clinical remission rate of 23.3% compared to 20.0% for adalimumab and 10.0% for placebo after 12 weeks of treatment. Further, itolizumab achieved a key secondary endpoint of endoscopic remission of 16.7% compared to 16.7% for adalimumab and 6.7% for placebo. Itolizumab was generally well-tolerated consistent with prior clinical experience and no safety signal was observed.

Graft-Versus-Host Disease Market Overview

Graft-versus-host disease, or GVHD, is a multisystem disorder that is a common complication of allogeneic hematopoietic stem cell transplants, or allo-HSCT, caused by the transplanted immune system, more specifically Teff cells, recognizing and attacking the recipient’s body. GVHD is the leading cause of non-relapse mortality in patients receiving an allo-HSCT. The

risk of GVHD limits the number and type of patients receiving allo-HSCT and we believe that a therapy that can attenuate GVHD risk could significantly expand the patient population eligible for allo-HSCT.

According to the Center for International Blood & Marrow Transplant Research and other published reports, there were approximately 8,300 allo-HSCT’s performed in the United States in 2021, and the number of procedures grew at an average annual growth rate of approximately 1% over the 5-year period from 2016 through 2021. In 2019, prior to the COVID-19 pandemic, there were approximately 8,600 allo-HCSTs performed. Approximately 30-70% of allo-HSCT recipients develop aGVHD. Mortality in patients with aGVHD remains high, with overall survival at 1-year as low as 40%. We estimate that approximately 5,000 patients develop aGVHD annually in the United States.

Rationale for Itolizumab (EQ001) for the Treatment of GVHD

Itolizumab (EQ001) Selectively Targets GVHD Pathogenesis

There is a high unmet medical need for a safe, effective and targeted treatment of GVHD. We believe itolizumab (EQ001) has the potential to be a best-in-class treatment for aGVHD based on its ability to target the underlying biology of GVHD in a highly selective way. Further, this approach is also promising as we consider future development in the prevention of GVHD and the treatment of chronic GVHD, or cGVHD.

It is well established that Th17 cells, driven by pSTAT3 signaling, play a role in the pathogenesis of aGVHD, and studies have shown that pSTAT3 was significantly increased in T cells of GVHD patients. In aGVHD, additional studies have reported that Th17 cells and IL-17 serum levels were significantly elevated in patients at onset compared with HSCT patients without aGVHD. As the disease progresses, Th17 cells traffic from the peripheral blood into GVHD target tissues where they trigger damage. Furthermore, the expansion of Th17 cells in the early phase of aGVHD plays a role in the transition to cGVHD. In GVHD patients, studies have shown a high Th17:Treg ratio suggesting a loss of tolerance. Notably the increased number of circulating Th17 cells was accompanied by a decrease in Treg cells, suggesting a loss of Teff cell regulation. Such regulatory mechanisms are crucial for eliminating alloreactive T cell activity, thus preventing sustained autoimmune responses and tissue destruction in GVHD.

We believe itolizumab (EQ001) can selectively target elements of the underlying pathogenesis of aGVHD by: a) inhibiting Teff cells proliferation; b) downregulating the STAT3 pathway associated with development of pathogenic Th17 cells driving GVHD pathogenesis; c) inhibiting trafficking of Teff cells into GVHD target tissues preventing further inflammation and organ damage; and d) reducing the Th17:Treg ratio associated with the development of GVHD and thereby promoting tolerance.

Third-party Clinical Experience with Targeting CD6 in GVHD

Clinical evidence to support the rationale of treating GVHD with itolizumab (EQ001) comes from previously-reported third-party clinical experience with CD6-expressing T cell depletion in patients receiving bone marrow transplants for hematologic malignancies where it has been demonstrated that using an anti-CD6 monoclonal antibody to deplete T cells from donor bone marrow or lymphocyte infusions has the potential to prevent aGVHD. In a study evaluating the clinical effects of selective in vitro CD6-expressing T cell depletion of donor allogeneic bone marrow using a monoclonal antibody to CD6 and rabbit complement, Soiffer et al. reported that in vitro T cell depletion with an anti-CD6 monoclonal antibody effectively reduced the incidence of both acute and chronic GVHD after allogeneic bone marrow transplant without compromising engraftment.

Subsequent studies further confirmed the feasibility of CD6-expressing T cell depletion in patients undergoing allogeneic bone marrow transplantation from human leukocyte antigen identical related and unrelated donors. In these studies, CD6- expressing depletion of the donor stem cell product was the sole method for GVHD prophylaxis. The low incidence of aGVHD reported in patients receiving allogeneic bone marrow treated with anti-CD6 monoclonal antibodies was attributed to the early appearance of a population of peripheral CD3 expressing T lymphocytes with a CD6-negative phenotype, which showed diminished reactivity to allogeneic stimulation in mixed lymphocyte reaction assays. Although the above described approach is one of ex vivo CD6-expressing T cell depletion, we believe that it further supports the role of CD6-expressing T cells in aGVHD pathogenesis and validates CD6 as a potentially important target for modulation for the treatment of GVHD.

Itolizumab (EQ001) Development Plan in aGVHD

Our IND with the FDA for aGVHD was accepted in July 2018. The FDA granted itolizumab (EQ001) Fast Track designation for the treatment of aGVHD in December 2018 and Orphan Drug designations for both the prevention and treatment of aGVHD in February 2019.

In March 2019, we initiated EQUATE, an open-label Phase 1b clinical study of itolizumab (EQ001) as a first-line therapy concomitant with steroids for the treatment of aGVHD. In the EQUATE clinical study, we assessed safety, PK, PD, and a number of clinical outcomes including complete response, or CR, rate, overall response rate, or ORR, survival and steroid taper.

In February 2023, we presented final safety and efficacy results from the EQUATE clinical study at the Tandem Meetings of the American Society of Transplantation and Cellular Therapy and the Center for International Blood & Marrow Transplant Research. Data was presented from a total of 30 subjects treated with itolizumab (EQ001) at doses of 0.4, 0.8, or 1.6 mg/kg. Itolizumab (EQ001) treatment in combination with systemic corticosteroids was associated with rapid and durable high rates of overall clinical response, where response at Day 29 was associated with improved progression-free survival through 1 year. Further, responders were able to taper steroids by 70% at Day 29 and 99% at Day 169. Itolizumab (EQ001) was well-tolerated in severe aGVHD patients. Based on these findings and feedback from both the FDA and leading physicians in the field of hematopoietic stem cell transplantation, in March 2022 we initiated EQUATOR, a Phase 3 pivotal clinical study in first-line aGVHD.

EQUATOR is a randomized, double-blind clinical study assessing the efficacy and safety of itolizumab (EQ001) versus placebo as a first-line therapy for aGVHD in combination with corticosteroids. The primary objective of the study is to achieve early disease response, with key secondary objectives to evaluate durability of response, corticosteroid use, survival outcomes, and cGVHD incidence. The primary endpoint assessment is CR rate at Day 29, with key secondary endpoints of overall response rate, or ORR, at Day 29 and durability of CR rate from Day 29 through Day 99.

The EQUATOR study is comparing the efficacy and safety of IV administered itolizumab (EQ001) versus placebo (randomized 1:1) as a first-line therapy in adult and adolescent patients with Grade III-IV aGVHD or Grade II aGVHD with lower GI involvement, in combination with high doses of corticosteroids, the current standard of care. The study protocol specified a total enrollment of 200 patients; however, due to financial constraints, recruitment was stopped with 158 patients enrolled, and study data was unblinded after all enrolled subjects had completed Day 29 assessments or discontinued the study. With 158 patients enrolled, the EQUATOR study represents the second largest clinical study ever conducted in the first-line treatment of aGVHD.

Per the study protocol, patients received itolizumab (EQ001) within 3 days of the first administration of high-dose corticosteroids with a treatment period from Days 1-99 and a follow-up period from Days 100-365. Eligible subjects who receive 2 mg/kg methylprednisolone or equivalent on Day 1 were randomized in a 1:1 ratio to the following two treatment groups: Group A: itolizumab (EQ001), 1.6 mg/kg initial dose followed by 6 doses of 0.8 mg/kg once every two weeks (Q2W), plus systemic corticosteroids (79 subjects), or Group B: placebo, 7 doses Q2W, plus systemic corticosteroids (79 subjects). An independent data monitoring committee is regularly reviewing safety data, and an interim analysis was conducted in July 2024 after approximately 100 subjects had completed Day 29 assessments to evaluate the safety and efficacy of treatment. An overview of the design of the EQUATOR study is depicted in Figure 1.

Figure 1: Overview of the EQUATOR clinical study design

In March 2025, we announced topline unblinded data from the EQUATOR study, the efficacy results of which are summarized in Table 1 below. While the EQUATOR study did not meet the Day 29 outcomes of CR, a primary outcome, and ORR, a key secondary outcome, there was a clinically meaningful improvement in durable CR from Day 29 to 99, a key secondary outcome, and statistically significant evidence of clinical benefit was observed on pre-specified secondary endpoints of duration of CR and failure free survival. Patients treated with itolizumab (EQ001) exhibited a median duration of CR of 336 days and a median failure free survival of 154 days, compared to 72 days and 70 days, respectively, for placebo. Additionally, overall survival showed positive trends in favor of itolizumab (EQ001). Specifically, the estimated 1-year survival for patients treated with itolizumab (EQ001) was 66.7% compared to 49.6% for placebo. Post-hoc analyses of CR at Day 99 and durable CR evaluating Day 29 complete responders also showed statistically significant benefit favoring itolizumab (EQ001). Steroid tapering and rates of primary disease relapse and chronic GVHD were similar for both treatment arms. These long-term durability responses are further supported by data from the open-label Phase 1b EQUATE study in which at the 0.8 and 1.6 mg/kg dose levels, CR, once achieved, persisted through the last visit assessment in most subjects. Most subjects had responses that were durable for over 100 days.

Table 1: Summary of EQUATOR efficacy results

In the EQUATOR study, itolizumab (EQ001) was observed to be generally well-tolerated with an adverse event profile consistent with prior clinical experience and consistent with this severe aGVHD patient population. In particular, increased risk of infection or sepsis, primary drivers of the high mortality associated with aGVHD, was not observed in patients treated with itolizumab (EQ001) compared to placebo. A summary of the treatment-emergent adverse events, or TEAEs, observed in the EQUATOR study is included in Table 2 below.

Table 2: Summary of EQUATOR Treatment-Emergent Adverse Events

In totality, we believe these outcomes, particularly longer-term maintenance of achieved response, may offer a profound and clinically meaningful benefit for patients having aGVHD, where high rates of mortality and disease recurrence persist with current treatments. As a result, in March 2025, we submitted data from the EQUATOR study and a request for BTD to the FDA and requested a meeting to discuss the sufficiency of the data for supporting a BLA. We expect feedback from the FDA during May 2025, and pending positive feedback and securing additional funding, we plan to prepare a BLA and would expect to submit in the first half of 2026 for potential approval.

Understanding the Basis of Our Approach: Multi-Cytokine Inhibition

Targeted Inhibition of Disease-Associated γC Cytokines with Novel Compounds Generated from a Proprietary Discovery Platform

Our proprietary multi-cytokine platform generates rationally designed composite peptides that selectively block key cytokines at the shared receptor level targeting pathogenic cytokine redundancies and synergies while preserving non-pathogenic signaling.

This approach provides multi-cytokine inhibition at the receptor level and is expected to avoid the broad immuno-suppression and off-target safety liabilities of Janus kinase, or JAK, inhibitors. Many immune-mediated diseases are driven by the same combination of dysregulated cytokines, and we believe identifying the key cytokines for these diseases will allow us to target and develop customized treatment strategies for multiple autoimmune diseases.

Many monoclonal antibody, or mAb, therapies are targeted to a single cytokine or cytokine receptor and may not completely address the disease pathology if more than one cytokine is implicated in the disease process. Another therapeutic approach, inhibition of the Janus kinase/signal transducer and activator of transcription, or JAK/STAT, signaling pathway, lacks specificity as it inhibits a signaling pathway that is utilized by many cytokines regardless of their involvement in the disease. As a result, this class of compounds is often associated with serious side effects. Further, JAK inhibitors only inhibit the JAK/STAT signaling pathway, whereas our peptides are designed to inhibit additional pathways including PI3K and ERK. Therefore, our peptides may provide more selective yet complete inhibition of key downstream signaling pathways, which we believe has the potential to translate into a more compelling therapeutic profile. Our proprietary peptides selectively block multiple disease driving cytokines while maintaining the healthy immune balance through the normal function of other family members. See Figure 2.

Figure 2: Rationally designed, selective inhibition of multiple cytokines is believed to represent an optimized therapeutic modality compared to mAb and JAK inhibitors.

Equillium's Multi-Cytokine Inhibitors Selectively Block Activity of Certain Cytokines by Binding Pockets in the yC Common Receptor

EQ302 is a first-in-class, orally delivered, selective inhibitor of IL-15 and IL-21. Translational and preclinical data support its potential use as a treatment for various gastrointestinal diseases including celiac disease, an immune disorder related to gluten exposure. The high degree of selectivity for IL-15 and IL-21 inhibition aligns well with the demonstrated key involvement of these two cytokines that work synergistically in driving the pathology in celiac disease and other inflammatory gut and hepatic disorders.

EQ101 is a first-in-class, tri-specific inhibitor of IL-2, IL-9 and IL-15, three inflammatory cytokines implicated in multiple diseases. It selectively blocks those three key pathogenic cytokines while preserving non-pathogenic signaling related to the other gCcytokine family members, IL-4, IL-7 and IL-21. EQ101 has demonstrated clinical proof-of-concept as a novel tri-specific cytokine inhibitor through a completed Phase 1/2 clinical study in cutaneous T cell lymphoma, or CTCL, a dermato-oncology indication. The study achieved its primary objective of safety and tolerability and showed clinically meaningful improvements in the modified severity-weighted assessment tool, or SWAT, scores. In that study, the compound was shown to be well tolerated with a favorable safety profile with no drug-related serious adverse events, or SAEs, no dose-limiting toxicities, and no clinically significant laboratory abnormalities. EQ101 has also generated positive clinical data in a Phase 2 clinical study in moderate to severe alopecia areata patients. Results of that study demonstrated a favorable safety and tolerability profile with no SAEs and improvements in Severity of Alopecia Tool, or SALT, scores above the published historically low placebo response rates.

EQ302 & EQ101 Product Development

EQ302

EQ302 is a stapled peptide that uses validated hydrocarbon staple technology to stabilize the peptide while retaining its specificity and enabling an attractive drug product profile. It can be orally delivered and is both stable and permeable in the gut.

EQ101

EQ101 is a synthetic peptide covalently conjugated to a polyethylene glycol, or PEG, molecule in a site-specific manner. The drug substance is currently manufactured under good manufacturing practices, or GMP, by a contract manufacturing organization, or CMO, located in the United States. EQ101 drug product is currently formulated as a lyophilized powder for

IV injection following reconstitution with Sterile Water for Injection, or SWFI. Prior to pausing development of EQ101, we were developing a subcutaneous, or SC, formulation of EQ101 for use in subsequent clinical studies.

We evaluated EQ101 in a Phase 2 clinical study in patients with moderate to very severe alopecia areata. That study was comprised of 36 adult subjects with at least 35% scalp hair loss due to AA. Subjects were dosed IV once weekly for 24 weeks with EQ101 at a dose level of 2 mg/kg, and subsequently followed for an additional four weeks. The primary objective of the study was to evaluate the safety profile and tolerability of EQ101 over a 24-week treatment period. Secondary objectives included an evaluation of drug efficacy, pharmacokinetic/pharmacodynamic, or PK/PD, properties, and changes in patient biomarkers. We announced positive topline data from the Phase 2 clinical study in June 2024, where we reported that 20% of all subjects that completed the 24-week treatment period achieved a SALT score less than or equal to 20 by week 24 and 29% of completed subjects with moderate to severe disease (baseline SALT score of 35 to less than 95) achieved a SALT score less than or equal to 20. Data also indicated reductions of cell surface CD132 on both CD8 and NK cells in peripheral blood consistent with EQ101 target engagement and pharmacodynamic response. Twenty-five subjects completed the study; eleven subjects discontinued the study early, of which only five were attributed to adverse events. EQ101 was generally well-tolerated with no SAEs, and no notable changes in safety laboratory parameters, electrocardiogram, vital signs, or physical exam findings were reported. The majority of adverse events were Grade 1 or 2, with the most common being upper respiratory tract infection, headache and fatigue. The two Grade 3 events in two subjects considered related to study treatment were transient lymphocytopenia and fatigue.

EQ101 has also been evaluated by Bioniz in three completed human clinical studies. One was a single ascending dose, or SAD, clinical study in healthy volunteers and another was a multiple ascending dose, or MAD, clinical study in healthy volunteers. In the SAD study, subjects received EQ101 administered IV, at a single dose of 0.2, 0.4, 0.8, 1.6, 3.2, or 6.4 mg/kg. In the MAD study, subjects received four weekly IV doses of EQ101 at 0.5, 1, or 1.5 mg/kg or three doses every other week at 2 or 3 mg/kg. A total of 43 healthy subjects received at least 1 dose of EQ101 in each of the two studies. EQ101 was considered well-tolerated with no deaths, serious or severe treatment-emergent adverse events, infusion reactions or dose-limiting toxicities, or DLTs.

The third completed human study of EQ101 conducted by Bioniz was an open-label Phase 1/2 dose-ranging clinical study of patients with large granular lymphocyte leukemia, or LGLL, or refractory cutaneous T cell lymphoma, or rCTCL, to characterize the safety, tolerability, clinical efficacy, and PK/PD of EQ101. The study enrolled 50 subjects, 30 with rCTCL and 20 with LGLL. Four escalating dose levels of 0.5 mg/kg, 1.0 mg/kg, 2.0 mg/kg and 4.0 mg/kg were administered weekly by IV infusion for up to 74 weeks. The study found that EQ101 was well-tolerated, with no DLTs, no infusion reactions, and no deaths, and only one subject discontinued participation due to an adverse event. Subjects treated with EQ101 exhibited a reduction in IL-2 and IL-15 dependent cells and inflammation, with improvements in skin lesions and a favorable overall response rate observed. Both the FDA and the European Medicines Agency, or EMA, granted EQ101 Orphan Drug designations for the treatment of CTCL in July 2019 and April 2021, respectively.

Celiac Disease Market Overview

Celiac disease is a chronic inflammatory intestinal disorder caused by inappropriate cellular and humoral immune responses to the dietary intake of gluten in the genetically susceptible individual. Celiac disease is one of the most common autoimmune disorders, with a reported prevalence of 0.5% to 1% of the global population and affecting approximately 2.3 million people in the United States. The prevalence of celiac disease has increased over the past 50 years and the rate of diagnosis has risen over the past two decades. Although celiac disease can occur at any age, onset most commonly occurs either in the first two years of life or in the second or third decades of life. Celiac disease occurs selectively in individuals expressing the gene human leukocyte antigen (HLA)-DQ2 or HLA-DQ8. In celiac disease, a mucosal inflammatory response in the intestinal epithelia leads to villous atrophy, and crypt cell hyperplasia. The loss of mucosal integrity in celiac disease is associated with a high burden of illness resulting from a plethora of intestinal and extraintestinal disease manifestations. Currently, there are no approved products to treat celiac disease, and strict adherence to a gluten-free diet is currently the only approach for celiac disease patients to manage the disease. A full recovery is often observed in pediatric celiac disease patients, but over 40% of adult celiac disease patients maintain histological abnormalities – such as villous structural damage – following complete removal of dietary gluten. Further complicating the gluten-free treatment strategy, 5% of adult patients can develop a refractory form of celiac disease, characterized by severe villous atrophy and the presence of abnormal intraepithelial lymphocytes, or IELs, which is considered the early stages of enteropathy associated T cell lymphoma, a potentially lethal condition not confined to intestinal epithelia.

Rationale for EQ302 for the Treatment of Celiac Disease

IL-15 has been identified as a key driver of celiac disease pathogenesis. IL-15 is chronically upregulated in the lamina propria and epithelium of the intestine and directly correlates with the severity of mucosal damage. This proinflammatory cytokine acts on distinct cell types resulting in malfunction of multiple immune mechanisms. Elevated IL-15 in the intestinal lamina propria has been shown to promote phenotypic changes to tolerogenic dendritic cells leading to a block in the generation of regulatory T cells, or Tregs, a lymphocyte subset critical for maintaining tolerance to self-antigens and promoting tolerance to innocuous dietary antigens. The reduction of inducible Tregs to dietary antigens elevates the potential for an intestinal inflammatory immune response to gluten intake. IL‐15 expression is also correlated with the upregulation of the activating NKG2D receptor on cytotoxic lymphocytes and its associated cytotoxic pathway, and with the complementary major histocompatibility complex class I chain-related (MIC) ligands (i.e., MICA and MICB) at the epithelial cell surface that triggers their subsequent killing by cytotoxic lymphocytes.

Another γc cytokine that has been implicated in celiac disease is IL-21. IL-21 has a robust genetic association with celiac disease. IL-21 is produced by the gluten-specific CD4 T cells in celiac disease and has the capacity to promote cytolysis in intestinal intraepithelial cytotoxic T lymphocytes (IE‐CTL). IL-21 is only over-expressed in active celiac disease (patients who have gut tissue destruction) and not in potential celiac disease (those who only have antibody response and no gut tissue damage). This suggests that IL‐21 may be a co-factor along with IL-15 in causing tissue damage in active celiac disease. Furthermore, IL-21 is known to be a key cytokine in the development of B cell differentiation and plasma cell generation, and therefore antibody response. A key characteristic of celiac disease is the presence of autoantibodies to transglutaminase 2 (TG2) that are produced by TG2-specific B cells. In addition to the infiltration of IE-CTLs in the lamina propria of the small bowel, there is evidence of plasmacytosis in the lamina propria which may highlight the potential pathogenic effect of autoantibody production in celiac disease. Recent studies highlighted the importance of crosstalk between CD4 T cells and B cells in activating the cytotoxic immune attack against gut tissue in celiac disease. IL‐21, as a major B-cell cytokine, may play a key role in orchestrating both antibody and cytotoxic responses in celiac disease. IL-21 inhibition may control the production of autoantibodies in these patients.

Further support that these two γc cytokines work in concert is bolstered by evidence that IL-15 drives IL‐21 secretion in IELs derived from patients with active celiac disease. EQ302 specifically inhibits the activity of IL-15 and IL-21, but not the remaining γc cytokines in the family (IL-2, -4, -7, or -9), thus targeting the key pathogenic cytokines in celiac disease while preserving the functional immune system through other uninterrupted γc cytokines. We believe EQ302 is uniquely positioned to provide a specific two-pronged approach to downregulate the cytotoxic activity of IELs in celiac disease by inhibiting the synergistic effect of IL-15 and IL-21. We believe EQ302 may control the gliadin mediated inflammatory effect in celiac disease by acting on both B and T cell arms in a highly selective manner.

EQ302 Development Plan in Celiac Disease

We have conducted preclinical development of EQ302, including in vivo pharmacology studies and formulation development, to further characterize and optimize the product candidate. Pending additional funding, we expect to resume the preclinical development of EQ302 including GMP-manufacturing and toxicology studies capable of supporting a potential IND filing and advancement toward a first-in-human clinical study.

Intellectual Property

Our intellectual property is critical to our business and we strive to protect it, including by obtaining and maintaining patent protection in the United States and internationally for our product candidates, discovery platforms, novel biological discoveries, epitopes, new therapeutic approaches and potential indications, and other inventions that are important to our business. For our product candidates, generally we intend to initially pursue patent protection covering compositions of matter and methods of use. Throughout the development of our product candidates, we intend to identify additional means of obtaining patent protection that would potentially enhance commercial success, including claims targeting newly identified compositional improvements, methods of design, methods of treating and additional therapeutic targets.

Our patent portfolio related to itolizumab included issued patents and pending patent applications exclusively licensed from Biocon in the United States, Australia, Canada, and New Zealand, and pending international and national stage patent applications filed under the Patent Cooperation Treaty, or PCT, that we own. The terms of the Biocon License are discussed above in “Business—Partnerships—Collaboration and License Agreement with Biocon”. Should itolizumab (EQ001) be approved in the United States, we expect to obtain regulatory exclusivity that the FDA currently affords novel biologic therapies of 12 years following first approval, which is expected to extend beyond the life of itolizumab patents currently issued and in prosecution. Because of that assumption and as a means of conserving our cash, we recently decided to pause efforts related to the prosecution and maintenance of the itolizumab patents, and we intend to let lapse all itolizumab-related patent families in the Equillium Territory.

As of March 15, 2025, through our acquisition of Bioniz, we wholly own a patent portfolio directed to composite peptide antagonists. This wing of our portfolio includes six additional patent application families, including those related to the IL-2, IL-9, IL-15 peptide antagonist EQ101, the IL-15 and IL-21 peptide antagonist EQ302, other peptide sequences, and other related technologies for peptide modulation of multi-cytokine signaling largely in the γc-cytokine family space.

Of these six composite peptide patent application families, the first family includes claims currently directed to composite peptides covering EQ101, methods of designing such peptides, and methods of using such peptides to treat various T cell mediated diseases and disorders (including but not limited to RA, immune-mediated hair loss, and myositis). This family currently includes nine issued U.S patents, three issued Australian patents, one issued Canadian patent, one issued Brazilian patent, one issued Chinese patent, one issued Hong Kong patent, 53 patents in European states, and two issued Japanese patents. Also pending are applications in the United States, China, and Japan. If granted, any patents in this patent family are expected to expire in 2032, absent any patent term adjustments or extensions.

The second patent application family in our composite peptide portfolio includes claims currently directed to other multi-cytokine family peptide antagonists, as well as their methods of production. This family includes three issued U.S. patents and a pending U.S. application. If granted, any patents in this patent family are expected to expire in 2034, absent any patent term adjustments or extensions.

The third patent application family includes claims currently directed to composite peptides covering IL-15 and IL-21 peptide antagonists and methods of use to treat various T cell mediated diseases and disorders (including but not limited to celiac disease and inflammatory bowel disease). This family includes three issued U.S. patents, three issued Australian patents, 24 patents in European states, one issued Hong Kong patent, two issued Japanese patents, one issued Indian patent, and two issued Korean patents. Also pending are applications in the United States, Australia, Canada, China, Europe, Hong Kong, India, and Korea. If granted, any patents in this patent family are expected to expire in 2036, absent any patent term adjustments or extensions.

The fourth patent application family includes claims currently directed to composite peptides covering EQ302 and methods of use to treat various T cell mediated diseases and disorders (including but not limited to celiac disease and inflammatory bowel disease). This family includes two issued Australian patents, with pending applications in the United States, Australia, Canada, China, Europe, Hong Kong, India, Japan, and Korea. If granted, any patents in this patent family are expected to expire in 2038, absent any patent term adjustments or extensions.

The fifth and sixth patent application families include claims currently directed to EQ101 for use in methods of treating various therapeutic targets including, but not limited to, alopecia areata, cytokine release syndrome, and related disorders to each. Collectively, these families include one issued U.S. patent and pending applications in the United States, Australia, Brazil, Canada, China, Europe, Hong Kong, India, Japan, and Korea. If granted, any patents in this patent family are expected to expire in either 2040 or 2041, absent any patent term adjustments or extensions.

We file U.S. provisional patent applications as well as U.S. non-provisional applications and PCT applications that claim the benefit of the priority date of earlier filed provisional applications, when applicable. Provisional applications for patents were designed to provide a lower-cost first patent filing in the United States. Corresponding non-provisional patent applications must be filed not later than 12 months after the provisional application filing date. The corresponding non-provisional application benefits in that the priority date(s) of the patent application is/are the earlier provisional application filing date(s), and the patent term of the finally issued patent is calculated from the later non-provisional application filing date. This system allows us to obtain an early priority date, add material to the patent application(s) during the priority year, obtain a later start to the patent term and to delay prosecution costs, which may be useful in the event that we decide not to pursue examination in an application. The PCT system allows a single application to be filed within 12 months of the original priority date of the patent application, and to designate all of the 153 PCT member states in which national patent applications can later be pursued based on the international patent application filed under the PCT. The PCT searching authority performs a patentability search and issues a non-binding patentability opinion which can be used to evaluate the chances of success for the national applications in foreign countries prior to having to incur the filing fees. Although a PCT application does not issue as a patent, it allows the applicant to seek protection in any of the member states through national-phase applications. At the end of the period of 21⁄2 years from the first priority date of the patent application, separate patent applications can be pursued in any of the PCT member states either by direct national filing or, in some cases by filing through a regional patent organization, such as the European Patent Organization. The PCT system delays expenses, allows a limited evaluation of the chances of success for national/regional patent applications and enables substantial savings where applications are abandoned within the first 21⁄2 years of filing.

Except with respect to our itolizumab patents as described above, we intend to prosecute the pending applications that we own and in-license and to pursue patent issuance and protection in key commercial markets where we expect significant product

sales may occur. We will evaluate on an ongoing basis the patents and applications that came to Equillium with the acquisition of Bioniz and seek to realize cost savings as appropriate.

With the enactment of the Biologics Price Competition and Innovation Act of 2009, or BPCIA, an abbreviated pathway for the approval of biosimilar and interchangeable biological products was created. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as interchangeable based on its similarity to an existing reference product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product is approved under a Biologics License Application, or BLA.

The patent positions of biotechnology companies like ours are generally uncertain and involve complex legal, scientific and factual questions. We recognize that the ability to obtain patent protection and the degree of such protection depends on a number of factors, including the extent of the prior art, the novelty and non-obviousness of the invention, and the ability to satisfy the enablement requirement of the patent laws. In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Consequently, we may not obtain or maintain adequate patent protection for any of our product candidates. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient proprietary protection from competitors. Any patents that we hold may be challenged, circumvented or invalidated by third parties.

Our commercial success will also depend in part on not infringing the proprietary rights of third parties. In addition, we have licensed rights under proprietary technologies of third parties to develop, manufacture and commercialize specific aspects of our products and services. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, alter our processes, obtain licenses or cease certain activities. The expiration of patents or patent applications licensed from third parties or our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future technology may have a material adverse impact on us. If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the United States Patent and Trademark Office, or USPTO, to determine priority of invention. For a more comprehensive discussion of the risks related to our intellectual property, please see “Risk Factors-Risks Related to Intellectual Property.”

The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application related to the patent. A U.S. patent also may be afforded a patent term adjustment, or PTA, under certain circumstances to compensate for delays in obtaining the patent from the USPTO. In some instances, such a PTA may result in a U.S. patent term extending beyond 20 years from the earliest date of filing a non-provisional patent application related to the U.S. patent. In addition, in the United States, the term of a U.S. patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process. The Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug. In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering those products. We plan to seek patent term extensions to any of our issued patents in any jurisdiction where these are available, however there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and if granted, the length of such extensions.

We also rely on trade secrets relating to product candidates and seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets, including through breaches of such agreements with our employees and consultants. Thus, we may not be able to meaningfully protect our trade secrets. It is our policy to require our employees, consultants, outside scientific partners, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances.

Our agreements with employees also provide that all inventions conceived by the employee in the course of employment with us or from the employee’s use of our confidential information are our exclusive property.

Competition

The biotechnology and pharmaceutical industries are characterized by continuing technological advancement and significant competition. While we believe that our product candidates, technology, knowledge, experience and scientific resources provide us with competitive advantages, we face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future. Key product features that would affect our ability to effectively compete with other therapeutics include the efficacy, safety and convenience of our products. The level of generic competition and the availability of reimbursement from government and other third-party payors will also significantly affect the pricing and competitiveness of our products. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

Many of the companies against which we may compete have significantly greater financial resources and expertise in research and development, manufacturing, non-clinical testing, conducting clinical studies, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical study sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs.

Moreover, there are several companies marketing or developing treatments that may be approved for the same indications and/or diseases as our product candidates.

aGVHD

Corticosteroids, or steroids, remain the standard of care for the first-line treatment of aGVHD. There are currently no FDA-approved therapies indicated as a first-line treatment of aGVHD. Second-line therapy consists of off-label immunosuppressives for which the therapeutic benefit has not been established, Incyte Corporation’s Jakafi which was approved for the treatment of steroid refractory aGVHD in 2019, and Mesoblast’s Ryoncil which was approved for pediatric patients with steroid refractory aGVHD in December 2024.

In addition, we are aware of a number of companies with clinical development programs in first-line and steroid refractory aGVHD, including AltruBio, Inc., ASC Therapeutics, CSL Behring LLC, Cynata Therapeutics Limited, ElsaLys Biotech (acquired by Mediolanum Pharmaceutici), Evive Biotech (subsidiary of Yifan Pharmaceutical Co., Ltd.), Maat Pharma SA, Medac GmbH, Shenzhen Xbiome Biotech, Co., Ltd., TR1X Bio, ViGenCell Inc., and Zelgen Biopharmaceuticals Co., Ltd.

Celiac Disease

The only available treatment for celiac disease is lifelong adherence to a strict gluten-free diet. Most patients have difficulty maintaining such a diet and many patients do not fully respond, with symptoms persisting despite avoidance of gluten. There are currently no FDA-approved therapies for treatment of celiac disease. We are aware of a number of companies with clinical development programs targeting the condition including Amgen Inc. (former asset of Provention Bio), Anokion SA, Barinthus Biotherapeutics Ltd., Calypso Biotech BV (acquired by Novartis AG), Chugai Pharmaceutical Co., Ltd., Immunic, Inc., ImmunogenX, Inc. (acquired by Entero Therapeutics, Inc.), Mozart Therapeuitcs, Pfizer Inc., Protagonist Therapeutics, Inc., Sanofi SA, Takeda Pharmaceuticals, Teva Pharmaceuticals, Topas Therapeutics GmbH, and Zedira GmbH.

Sales and Marketing

Given our stage of development, we have not yet established a commercial organization or distribution capabilities. We expect to manage sales, marketing, patient access and distribution either through internal resources or through third-party relationships. While we may commit significant financial and management resources to commercial activities, we will also consider collaborating with one or more pharmaceutical companies to enhance our commercial capabilities. Should we receive positive feedback from the FDA, secure additional capital and decide to proceed with preparing a BLA, we would expect to ramp up our investments related to commercial planning for a potential launch of itolizumab (EQ001), if approved.

Manufacturing

We do not own or operate manufacturing facilities for the production of our product candidates, nor do we have plans to develop our own manufacturing operations in the foreseeable future. We rely on Biocon, our contract manufacturer, pursuant to the Biocon License and Biocon Supply Agreement, for all our required raw materials, drug substance and drug product needs for non-clinical research, clinical studies and commercial supply of itolizumab (EQ001). Biocon manufactures itolizumab (EQ001) at commercial scale at its FDA-regulated facility in Bangalore, India. If we resume development activities for EQ302, we will rely on CMOs to manufacture EQ302.

With respect to any future product candidates, we expect to rely on contract manufacturers for all our required raw materials, drug substance and drug product needs for non-clinical research, clinical studies and commercial supply.

Government Regulation and Product Approval

The FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of biologics such as those we are developing. We, along with third-party contractors, will be required to navigate the various non-clinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.

In the United States, the FDA regulates biologics under both the Federal Food, Drug and Cosmetic Act, or FDCA, and the Public Health Services Act, or PHSA, and their implementing regulations. The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following:

▪

completion of non-clinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices, or GLP, regulations;

▪

submission to the FDA of an IND, which must become effective before clinical studies may begin and must be updated annually or when significant changes are made;

▪

approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the study is commenced;

▪

performance of adequate and well-controlled human clinical studies to establish the safety, purity and potency of the proposed biologic product candidate for its intended purpose;

▪

preparation of and submission to the FDA of a biologics license application, or BLA, for product candidates that are manufactured in biological systems like itolizumab (EQ001), or a New Drug Application, or NDA, for product candidates like EQ302 that are manufactured through chemical synthesis, after completion of all pivotal clinical studies that includes substantial evidence of safety, purity and potency from results of non-clinical testing and clinical studies;

▪

a determination by the FDA within 60 days of its receipt of a BLA or NDA to file the application for review;

▪

satisfactory completion of an FDA Advisory Committee review, if applicable;

▪

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with current good manufacturing practice, or cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP; and

▪

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

Preclinical and Clinical Development

Prior to beginning the first clinical study with a product candidate in the United States, we must submit an IND to the FDA. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies. The IND also includes results of animal and in vitro studies assessing the toxicology, PK, pharmacology, and PD characteristics of the product candidate; chemistry, manufacturing, and controls information; and any available human data or literature to support the use of the investigational product. An IND must become effective before human clinical studies may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical study. In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical study can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical study.

Clinical studies involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study. Clinical studies are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A separate submission to the existing IND must be made for each successive clinical study conducted during product development and for any subsequent protocol amendments. Furthermore, an independent IRB for each site proposing to conduct the clinical study must review and approve the plan for any clinical study and its informed consent form before the clinical study begins at that site, and must monitor the study until completed. Regulatory authorities, the IRB or the sponsor may suspend a clinical study at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the study is unlikely to meet its stated objectives. Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical study if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy. There are also requirements governing the reporting of ongoing clinical study results to public registries.

For purposes of BLA or NDA approval, human clinical studies are typically conducted in three sequential phases that may overlap.

▪

Phase 1—The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition. These studies are designed to test the safety, dosage tolerance, absorption, metabolism, distribution and elimination of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

▪

Phase 2—The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical studies may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical studies.

▪

Phase 3—The investigational product is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical study sites. These clinical studies are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical studies after a product is approved to gain more information about the product. These so-called Phase 4 clinical study may be made a condition to approval of the BLA or NDA. Concurrent with clinical studies, companies may complete additional animal studies and develop additional information about the biological characteristics of the product candidate, and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, must develop methods for testing the identity, strength, quality and purity of the final product, or for biologics, the safety, purity and potency. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Submission, Review and Approval of a BLA or NDA

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, non-clinical studies and clinical studies are submitted to the FDA as part of a BLA or NDA

requesting approval to market the product for one or more indications. The BLA or NDA must include all relevant data available from pertinent non-clinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things. The submission of a BLA or NDA requires payment of a substantial application user fee to FDA, unless a waiver or exemption applies.

Once a BLA or NDA has been submitted, the FDA’s goal is to review standard applications within ten months after it accepts the application for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing. In both standard and priority reviews, the review process is often significantly extended by FDA requests for additional information or clarification. The FDA reviews a BLA or NDA to determine, among other things, whether a product is safe, pure and potent and the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued safety, purity and potency. The FDA may convene an advisory committee to provide clinical insight on application review questions. Before approving a BLA or an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA or an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

After the FDA evaluates a BLA or an NDA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

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

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. For example, the FDA may approve the BLA or NDA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The FDA may require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies.

Expedited Development and Review Programs

Any marketing application for a new therapeutic product submitted to the FDA for approval may be eligible for FDA programs intended to expedite the FDA review and approval process, such as priority review, fast track designation, breakthrough therapy and accelerated approval.

A product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or to provide a significant improvement in the treatment, diagnosis or prevention of a serious disease or condition compared to marketed products. For products containing new molecular entities, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (compared with ten months under standard review).

To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need by providing a therapy where none exists or a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. Fast track designation provides opportunities for frequent interactions with the FDA review team to expedite development and review of the product. The FDA may also review sections of the BLA or NDA for a fast track product on a rolling basis before the complete application is submitted, if the sponsor and FDA agree on a schedule for the submission of the application sections, and the sponsor pays any required user fees upon submission of the first section of the BLA or NDA.

In addition, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Drugs or biologics designated as breakthrough therapies are also eligible for accelerated approval. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.

Additionally, products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review and approval will not be shortened. Furthermore, priority review, fast track designation, breakthrough therapy designation, and accelerated approval do not change the standards for approval but may expedite the development or approval process.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States for which there is no reasonable expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug or biologic. Orphan designation must be requested before submitting a BLA or NDA. After the FDA grants orphan designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

If a product that has orphan designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan exclusivity, which means that the FDA may not approve any other applications, including a full BLA or NDA, to market the same product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan exclusivity does not prevent FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA or NDA application fee.

A designated orphan product may not receive orphan exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Post-Approval Requirements

Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to quality control and quality assurance, record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and

promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing user fee requirements, under which FDA assesses an annual program fee for each product identified in an approved BLA or NDA. Biologic manufacturers and 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 cGMP, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

The FDA may withdraw 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 AEs 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 studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:

▪

restrictions on the marketing or manufacturing of a product, mandated modification of promotional materials or issuance of corrective information, issuance by FDA or other regulatory authorities of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product, or complete withdrawal of the product from the market or product recalls;

▪

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

▪

refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals;

▪

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

▪

injunctions, consent decrees or the imposition of civil or criminal penalties.

The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. However, companies may share truthful and not misleading information that is otherwise consistent with the product’s FDA approved labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Biosimilars and Reference Product Exclusivity

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the Affordable Care Act, signed into law in 2010, includes the BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-approved reference biological product. To date, a number of biosimilars have been licensed under the BPCIA, and numerous biosimilars have been approved in Europe. The FDA has issued several guidance documents outlining its approach to the review and approval of biosimilars.

Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and clinical studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own non-clinical data and data from adequate and well-controlled clinical studies to demonstrate the safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

The BPCIA is complex and continues to be interpreted and implemented by the FDA. In addition, recent government proposals have sought to reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate impact, implementation, and impact of the BPCIA is subject to significant uncertainty.

Other U.S. Healthcare Laws and Compliance Requirements

In the United States, our current and future operations are subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to, the Centers for Medicare & Medicaid Services, or CMS, other divisions of the U.S. Department of Health and Human Services, or HHS (such as the Office of Inspector General, Office for Civil Rights and the Health Resources and Service Administration), the U.S. Department of Justice, or DOJ, and individual U.S. Attorney offices within the DOJ, and state and local governments. For example, our clinical research, sales, marketing and scientific/educational grant programs may have to comply with the anti-fraud and abuse provisions of the Social Security Act, the false claims laws, the privacy and security provisions of the Health Insurance Portability and Accountability Act, or HIPAA, and similar state laws, each as amended, as applicable.

The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs. The term remuneration has been interpreted broadly to include anything of value. The federal Anti-Kickback Statute has been interpreted to apply to arrangements between therapeutic product manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution. The exceptions and safe harbors are drawn narrowly and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.

Additionally, the intent standard under the federal Anti-Kickback Statute was amended by the Affordable Care Act, to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act, or FCA (discussed below).

The federal false claims, including the FCA, and civil monetary penalty laws, which can be enforced by private citizens, on behalf of the government, through civil qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal government, including federal healthcare programs, such as Medicare and Medicaid, knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government. A claim includes “any request or demand” for money or property presented to the U.S. government. For instance, historically, pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, off-label, and thus generally non-reimbursable, uses.

HIPAA created additional federal civil and criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit

program, including private third-party payors, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Like the federal Anti-Kickback Statute, the Affordable Care Act amended the intent standard for certain healthcare fraud statutes under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Also, many states have similar, and typically more prohibitive, fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

We may be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose requirements on covered entities, business associates and their covered subcontractors relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to business associates, independent contractors, or agents of covered entities, which include certain healthcare providers, health plans and healthcare clearinghouses, that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, many state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways, are often not pre-empted by HIPAA, and may have a more prohibitive effect than HIPAA, thus complicating compliance efforts.

We may develop products that, once approved, may be administered by a physician. Under currently applicable U.S. law, certain products not usually self-administered (including injectable drugs) may be eligible for coverage under Medicare through Medicare Part B. Medicare Part B is part of original Medicare, the federal health care program that provides health care benefits to the aged and disabled, and covers outpatient services and supplies, including certain biopharmaceutical products, that are medically necessary to treat a beneficiary’s health condition. As a condition of receiving Medicare Part B reimbursement for a manufacturer’s eligible drugs, the manufacturer is required to participate in other government healthcare programs, including the Medicaid Drug Rebate Program and the 340B Drug Pricing Program. The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of HHS as a condition for states to receive federal matching funds for the manufacturer’s outpatient drugs furnished to Medicaid patients. Under the 340B Drug Pricing Program, the manufacturer must extend discounts to entities that participate in the program.

In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price, or ASP, and best price. Penalties may apply in some cases when such metrics are not submitted accurately and timely. Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.

Additionally, the federal Physician Payments Sunshine Act, or the Sunshine Act, within the Affordable Care Act, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians, as defined by such law, other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members. Failure to report timely and accurately could result in penalties. In addition, many states also govern the reporting of payments or other transfers of value, many of which differ from each other in significant ways, are often not pre-empted, and may have a more prohibitive effect than the Sunshine Act, thus further complicating compliance efforts.

In order to distribute products commercially, we will need to comply with state laws that require the registration of manufacturers and wholesale distributors of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the

state, make periodic public disclosures on sales, marketing, pricing, clinical studies and other activities, and/or register their sales and medical representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws.

Ensuring business arrangements with third parties comply with applicable healthcare laws and regulations is a costly endeavor. If our operations are found to be in violation of any of the federal and state healthcare laws described above or any other current or future governmental regulations that apply to us, we may be subject to significant penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Coverage, Pricing and Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we may obtain regulatory approval. In the United States and in foreign markets, sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on the extent to which third-party payors provide coverage and establish adequate reimbursement levels for such products. In the United States, third-party payors include federal and state healthcare programs, private managed care providers, health insurers and other organizations. Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare & Medicaid in the United States, and commercial payors are critical to new product acceptance.

Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which therapeutics they will pay for and establish reimbursement levels. Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a therapeutic is:

▪

a covered benefit under its health plan;

▪

safe, effective and medically necessary;

▪

appropriate for the specific patient;

▪

cost-effective; and

▪

neither experimental nor investigational.

We cannot be sure that coverage will be available for any product that we commercialize and, if coverage is available, what the level of reimbursement will be. Coverage may also be more limited than the purposes for which the product is approved by the FDA or comparable foreign regulatory authorities. Reimbursement may impact the demand for, or the price of, any product for which we obtain regulatory approval.

Third-party payors are increasingly challenging the price, examining the medical necessity, and reviewing the cost-effectiveness of medical products, therapies and services, in addition to questioning their safety and efficacy. Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with branded drugs and drugs administered under the supervision of a physician. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain FDA approvals. Our product candidates may not be considered medically necessary or cost-effective. Obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our product on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained. A third-party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further, one third-party payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product. Adequate third-party reimbursement may not be available to enable us to maintain

price levels sufficient to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any product candidate that we successfully develop. Additionally, we or our collaborators may develop companion diagnostic tests for use with our product candidates. Companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products. Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical products, will apply to companion diagnostics.

Different pricing and reimbursement schemes exist in other countries. In the European Union, governments influence the price of biopharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical studies that compare the cost effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to fix their own prices for medicines but monitor and control company profits. The downward pressure on health care costs has become intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country.

The marketability of any product candidates for which we receive regulatory approval for commercial sale may suffer if government and third-party payors fail to provide coverage and adequate reimbursement. In addition, emphasis on managed care, the increasing influence of health maintenance organizations, and additional legislative changes in the United States has increased, and we expect will continue to increase, the pressure on healthcare pricing. The Inflation Reduction Act of 2022, or IRA, which was passed into law in August 2022, included drug pricing reforms that have the potential to adversely impact our ability to successfully commercialize our product candidates and could lessen the real or perceived value of our product candidates, which would negatively impact our business. The downward pressure on the rise in healthcare costs in general, particularly prescription medicines, medical devices and surgical procedures and other treatments, has become very intense. Coverage policies and third-party payor reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Healthcare Reform

In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect the ability to profitably sell product candidates for which marketing approval is obtained. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.

The Affordable Care Act has substantially changed healthcare financing and delivery by both governmental and private insurers. There have been amendments and legal and political challenges to certain aspects of the Affordable Care Act. For example, on August 16, 2022, the IRA was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. It is possible that the Affordable Care Act will be subject to judicial or Congressional challenges in the future. It is unclear how such challenges and the healthcare reform measures of the second Trump administration will impact the Affordable Care Act and our business.

We anticipate that the Affordable Care Act, will continue to result in additional downward pressure on coverage and the price that we receive for any approved product, and could seriously harm our business. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products. Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates.

Further legislation or regulation could be passed that could harm our business, financial condition and results of operations. Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, on August 2, 2011, the Budget Control Act of 2011, among other things, included aggregate reductions to Medicare payments to providers of two percent per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the

statute, will remain in effect until 2032, unless additional Congressional action is taken. Additionally, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and federal legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. At the federal level, the IRA, among other things, (1) directs HHS to negotiate the price of certain high-expenditure, single-source drugs that have been on the market for at least seven years and biologics that have been on the market for at least eleven years covered under Medicare, or the Medicare Drug Price Negotiation Program, and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions began to take effect progressively in fiscal year 2023. On August 15, 2024, HHS announced the agreed-upon prices of the first ten drugs that were subject to price negotiations, which take effect in January 2026. On January 17, 2025, HHS selected fifteen additional products covered under Part D for price negotiation in 2025, although the Medicare Drug Price Negotiation Program is currently subject to legal challenges. Each year thereafter, more Part B and Part D products will become subject to the Medicare Drug Price Negotiation Program. On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.

The current Trump administration is pursuing policies to reduce regulations and expenditures across government including at HHS, the FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business. These actions may, for example, include directives to reduce agency workforce, rescinding a Biden administration executive order tasking the Center for Medicare and Medicaid Innovation, or CMMI, to consider new payment and healthcare models to limit drug spending and eliminating the Biden administration’s executive order that directed HHS to establishing an AI task force and developing a strategic plan. Additionally, in its June 2024 decision in Loper Bright Enterprises v. Raimondo (“Loper Bright”), the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper Bright decision could result in additional legal challenges to current regulations and guidance issued by federal agencies applicable to our operations, including those issued by the FDA. Congress may introduce and ultimately pass health care related legislation that could impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program created under the IRA.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control biopharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Additionally, in the United States and some foreign jurisdictions there have been, and continue to be, several legislative and regulatory changes and proposed reforms of the healthcare system in an effort to contain costs, improve quality, and expand access to care, particularly in light of the recent U.S. Presidential and Congressional elections. These reform initiatives may, among other things, result in modifications to the aforementioned laws and/or the implementation of new laws affecting the healthcare industry.

The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Additional Regulation

In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business. These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations. If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines. We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these laws may affect our future operations.

Government Regulations Related to Economic Sanctions

Pursuant to various laws, regulations, and executive orders, the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, administers and enforces economic and trade sanctions that prohibit or restrict certain activities with embargoed countries, sanctioned entities, and sanctioned individuals for particular foreign policy and national security reasons. The scope of the sanctions varies significantly, but may include comprehensive restrictions on imports, exports, investment, and facilitation of foreign transactions involving a sanctioned jurisdiction, entity or person, as well as non-sanctioned persons and entities acting on behalf of sanctioned jurisdictions, entities or people.

One such set of regulations is the Cuban Assets Control Regulations, or CACR. The CACR prohibits U.S. persons from engaging in virtually all transactions involving property of the government of Cuba or Cuban nationals, or property in which the government of Cuba or any Cuban national has at any time on or since July 8, 1963 had any interest of any nature whatsoever, direct or indirect. Where activity is prohibited by the CACR, engagement in such activity must be authorized by a general or specific license granted by OFAC. The antibody sequence for both itolizumab (EQ001) and ALZUMAb was developed exclusively by Cuban nationals. We currently rely on a general license in the CACR, relating to Cuban-origin pharmaceuticals, to import and conduct clinical studies relating to itolizumab (EQ001).

In November 2019, OFAC notified us that after careful consideration, which included consultation with the FDA, OFAC determined that itolizumab falls within the definition of “Cuban-origin pharmaceutical” and, as such, the general licenses at section 515.547(b) and (c) of the CACR authorize the conduct of clinical studies for itolizumab for the purpose of seeking approval for the drug from the FDA. Thus, no further authorization is required from OFAC at this time for our ongoing and planned clinical studies of itolizumab.

Other Regulations

We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with such laws and regulations now or in the future.

Employees

As of December 31, 2024, we employed 35 employees, all of whom were full-time and engaged in research and development activities, operations, finance, business development or administration. We also engage temporary employees and consultants as needed.

Corporate Information

We were originally incorporated as Attenuate Biopharmaceuticals, Inc. in Delaware in March 2017 and subsequently changed our name to Equillium, Inc. in May 2017. Our principal executive offices are located at 2223 Avenida de la Playa, Suite 105, La Jolla, CA 92037. We have three wholly-owned subsidiaries, Bioniz Therapeutics, Inc., a Delaware corporation, Ariagen, Inc., a Delaware corporation, and Equillium Australia Pty LTD, an Australian proprietary limited corporation. Our telephone number is (858) 240-1200. Our website address is www.equilliumbio.com. Our website and the information contained on, or that can be accessed through, the website will not be deemed to be incorporated by reference in, and are not considered part of, this Annual Report on Form 10-K. Our Annual Reports on Form 10‐K, Quarterly Reports on Form 10‐Q, Current Reports on Form 8‐K and amendments to such reports filed or furnished pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available free of charge on our website as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.

We are also a “smaller reporting company” as defined in the Exchange Act and have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies.

All brand names or trademarks appearing in this Annual Report on Form 10-K are the property of their respective holders. Use or display by us of other parties’ trademarks, trade dress, or products in this Annual Report on Form 10-K is not intended to, and does not, imply a relationship with, or endorsements or sponsorship of, us by the trademark or trade dress owners.

Item 1A. Risk Factors.

RISK FACTORS

You should carefully consider the following risk factors, as well as the other information in this report, before deciding whether to purchase, hold or sell shares of our common stock. The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. You should consider all of the factors described as well as the other information in our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” when evaluating our business. If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock would likely decline and you may lose all or part of your investments. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant losses since our inception, expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability.

We are a clinical-stage biotechnology company incorporated in March 2017 and our operations, to date, have consisted primarily of organizing and staffing our company, business planning, raising capital, in-licensing rights to itolizumab (EQ001), conducting preclinical development of EQ302, filing three INDs, conducting clinical development of itolizumab (EQ001), EQ101, and EQ102, conducting CMC and formulation development activities, conducting business development activities including the acquisitions of Bioniz, Inc. and Ariagen, Inc., effecting a stock repurchase program, and the general and administrative activities associated with being a public company. We have never completed the development of any product candidate through to marketing approval, and we have never generated any revenue from sales of an approved product. Consequently, we have no meaningful operations upon which to evaluate our business, and predictions about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing biopharmaceutical products.

Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable. We have never generated any revenues from sales of an approved product, and we cannot estimate with precision the extent of our future losses. For the years ended December 31, 2024 and 2023, our net losses were $8.1 million and $13.3 million, respectively. As of December 31, 2024, we had an accumulated deficit of $193.8 million. We expect to incur operating losses for the foreseeable future as we execute our plan to perform research and development activities, conduct preclinical studies on our product candidates, potentially perform discovery research, conduct formulation development of our product candidates, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new products and/or product candidates, seek regulatory approvals of and potentially commercialize any approved products, hire and retain additional personnel, maintain compliance with regulatory requirements, protect our intellectual property, and manage the administrative aspects of our business. Furthermore, strategic transactions have and may in the future accelerate the rate at which our operating losses increase, including as a result of preclinical, clinical and regulatory expenses incurred to advance our potential product candidates. In addition, if we obtain regulatory approval of any of our product candidates, we expect to incur increased sales and marketing expenses, with certain of such investments potentially being made in advance of an approval. As a result, we expect to continue to incur significant operating losses and negative cash flows for the foreseeable future. These losses have had and will continue to have an adverse effect on our financial position and working capital.

To become and remain profitable, we must develop or acquire and eventually commercialize a product with significant market potential. This will require us to be successful in a range of challenging activities, including completing non-clinical studies and clinical studies of our product candidates, obtaining marketing approvals of our product candidates, manufacturing, marketing and selling our product candidates if we obtain marketing approval, and satisfying post-marketing requirements, if any. We may never succeed in these activities and, even if we succeed in obtaining approval of and commercializing our product candidates, we may never generate revenues that are significant enough to achieve profitability. In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges. Furthermore, because of the numerous risks and uncertainties associated with biopharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis and we may continue to incur substantial research and development and other expenditures to develop and market additional product candidates. Our

failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

Our need for additional capital raises substantial doubt about our ability to continue as a going concern. We will require substantial additional funding to complete the development and any commercialization of itolizumab (EQ001) and EQ302 if we resume development activities, and any future product candidates. If we are unable to raise this capital when needed, we may be forced to delay, reduce or eliminate our research and development programs or other operations.

EQ US Equity

EQ · 10-K · period ended 2024-12-31

Item 1. Business.

Item 1A. Risk Factors.

EQ US Equity☆

EQ · 10-K · period ended 2024-12-31

Item 1. Business.

Item 1A. Risk Factors.

EQ US Equity