LGVN US Equity☆

Item 1A. Risk Factors 33

Item 1B. Unresolved Staff Comments 71

Item 2. Properties 71

Item 3. Legal Proceedings 71

Item 4. Mine Safety Disclosures 71

PART II

Item 6. RESERVED 72

Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 83

Item 8. Financial Statements and Supplementary Data 83

Item 9A. Controls and Procedures 84

Item 9B. Other Information 84

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 84

PART III

Item 10. Directors, Executive Officers and Corporate Governance 85

Item 11. Executive Compensation 92

Item 14. Principal Accountant Fees and Services 102

PART IV

Item 15. Exhibits and Financial Statement Schedules 103

i

CAUTIONARY

NOTE REGARDING FORWARD-LOOKING STATEMENTS

In

this document, the terms “Longeveron,” “Company,” “we,” “us,” and “our” refer

to Longeveron Inc. We have no subsidiaries.

This

Annual Report on Form 10-K (this “10-K”) contains forward-looking statements, within the meaning of the Private Securities

Litigation Reform Act of 1995, that reflect our current expectations about our future results, performance, prospects and opportunities. This

10-K contains forward-looking statements that can involve substantial risks and uncertainties. All statements other than statements of

historical facts contained in this report, including statements regarding our future results of operations and financial position, business

strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success,

plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives

of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors

that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements

expressed or implied by the forward-looking statements.

In

some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,”

“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”

“potential,” “predict,” “project,” “should,” “target,” “will,”

or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain

these words. Forward-looking statements contained in this report include, but are not limited to, statements about:

● the success of competing therapies that are or may become available;

● our financial performance; and

We

have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which

we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and

these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only

as of the date of this report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk

Factors” and elsewhere in this report. Because forward-looking statements are inherently subject to risks and uncertainties, some

of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ

materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update

or revise any forward-looking statements contained herein after we distribute this report, whether as a result of any new information,

future events or otherwise.

In

addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These

statements are based upon information available to us as of the date of this report, 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 you are cautioned not to unduly rely upon these statements.

ii

PART

I

Item

1. Business

Overview

We

are a clinical stage biotechnology company developing cellular therapies for specific aging-related and life-threatening conditions.

Our lead investigational product is the LOMECEL-BTM cell-based therapy product (“Lomecel-B”), which is derived from

culture-expanded medicinal signaling cells (MSCs) that are sourced from bone marrow of young healthy adult donors. We believe that by

using the same cells that promote tissue repair, organ maintenance, and immune system function, we can develop safe and effective therapies

for some of the most difficult disorders associated with the aging process and other conditions.

We

are currently sponsoring or have sponsored Phase 1 and 2 clinical trials in the following indications: Aging Frailty, Alzheimer’s

disease (AD), the Metabolic Syndrome, Acute Respiratory Distress Syndrome (ARDS), and hypoplastic left heart syndrome (HLHS). Our mission

is to advance Lomecel-B and other cell-based product candidates into pivotal Phase 3 trials, with the goal of achieving regulatory approvals,

subsequent commercialization and broad use by the healthcare community.

Our

philosophy is that healthy aging can be improved through regenerative medicine approaches. Life expectancy has substantially increased

over the past century as a result of medical and public health advancements. However, this increase in longevity has not been paralleled

by the number of years a person is expected to live in relatively good health, with limited chronic disease and disabilities of aging

– a period known as healthspan. As we age, we experience: a decline in our own stem cells; a decrease in immune system function,

known as immunosenescence; diminished blood vessel functioning; chronic inflammation, known as “inflammaging”; and other

aging-related declines. Our preliminary clinical data suggest that Lomecel-B can potentially address these problems through multiple

mechanisms of action, or MOAs, that simultaneously target key aging-related processes.

Improving

healthspan is an imperative for governmental health agencies. The National Institute on Aging (NIA), an institute of the National Institutes

of Health (NIH), has promoted the concept of geroscience – the idea that aging itself is the biggest risk factor for aging-related

human diseases and that aging can be approached as a treatable disease to improve healthspan. The geroscience hypothesis provides a strong

rationale for the approach of treating underlying biological processes contributing to aging as a way to reduce disease burden and advance

global human health. Our investments into developing and testing product candidates are aimed at reducing aging-related disease burden

and improving healthspan.

Our

Strategy

Our

core business strategy is to become a world leading regenerative medicine company through the development and commercialization of novel

cell therapy products for unmet medical needs, with emphasis on aging-related indications. Key elements of our business strategy are

as follows.

1

Clinical

Development Pipeline

Since

our founding in 2014, we have initiated six clinical studies under five U.S. Food and Drug Administration (FDA) Investigational New Drug

applications (INDs) for the purpose of evaluating the safety and efficacy of Lomecel-B (See Figure 1).

Figure

1: Lomecel-B clinical development pipeline

2

3

Lomecel-B

for Aging-Related Indications: a Geroscience Approach

While

the exact mechanisms of action of Lomecel-B, and MSCs in general, are still active areas of research, based on current evidence, we believe

Lomecel-B may treat multiple facets of aging-related disorders simultaneously through multiple mechanisms of actions that may include

the following.

Biochemical

Properties of Lomecel-B

The

proposed mechanisms of action of Lomecel-B derive from intrinsic cellular features (See Figure 2). The cells in Lomecel-B cells

secrete numerous proteins that include cytokines and growth factors, which are believed to be responsible for decreasing inflammation

and promoting repair.

The

cells in Lomecel-B also secretes exosomes, which are biochemically active membrane spheres (called vesicles) that carry cargo composed

of proteins, ribonucleic acid (RNA), and other molecules. These secreted products can potentially have beneficial effects on numerous

targets, even over large distances, in treated subjects. Using exosomes as a therapeutic is an emerging therapeutic approach that we

are pursuing through our research and development.

Lomecel-B

cells can also potentially regulate endogenous cells through actions that include direct cell-cell interactions that can allow for exchange

of RNAs, proteins, and other cellular content between the cells through linkages called connexin-mediated gap-junctions. MSCs can also

form tunneling nanotubes (TNTs) that allow for exchange of larger cytoplasmic content, including mitochondria (the energy-generating

portions of cells). Such exchanges have been documented to occur between MSCs and neuronal stem cells, cardiomyocytes, corneal epithelial

cells, lung epithelial cells, retinal ganglion cells, renal epithelial cells, and macrophages.

In

the context of treating aging-related disorders, such exchange of mitochondria, proteins, RNA, and other cargo from Lomecel-B sourced

from young donors may suggest cellular regenerative mechanisms for older cells of the recipient which have depleted of mitochondria,

have reduced metabolic functioning, etc. In fact, mitochondria released from damaged cells appears to be a signal to induce regenerative

mechanisms in MSCs, which can promote a desired shift in energy metabolism in the recipient cells.

4

Figure

2. Potential mechanisms of action of Lomecel-B. (1) Lomecel-B cells release growth factors and other proteins, such as anti-inflammatory

cytokines. These have the potential to reduce inflammation, and stimulate nearby stem cells and other cells (called paracrine activity)

to promote regenerative and repair responses. There is also potential for these factors to be released into the blood and work at a distance,

called endocrine activity. (2) Lomecel-B cells also have the potential to engage in direct cell-cell interactions to induce positive

pathways in contacted cells. (3) Lomecel-B cells release exosomes, which have cargo consisting of RNA, proteins, and other molecules

that can be taken up by other cells to provide beneficial effects. (4) Lomecel-B cells also have the potential to form nanotube bridges

or TNTs, which can allow the exchange of mitochondria and other cellular contents between cells.

Our

Aging Frailty Research Program

Aging

Frailty is a clinically-defined and extreme form of unsuccessful aging. It is readily recognized by the hallmark signs of weakness, slowness,

fatigue, unintentional weight loss, and low activity. Those with Aging Frailty are disproportionately compromised in their ability to

cope with every day and acute stressors, are at increased vulnerability to disease and injury, have lowered tolerance to medications,

and are at risk for poor outcomes, including disability and death. Even normally “minor” insults (e.g., minor infection)

can have significant consequences, and lead to a spiral of decline to debility in these patients.

The

necessity for identifying patients with Aging Frailty is well-acknowledged in the geriatric community, and the treatment of Aging Frailty

and promotion of healthful aging are recognized priorities of the National Academy of Medicine and NIA/NIH. Despite the pressing need

for interventions, there are no FDA-approved therapies that can slow down, reverse, or prevent Aging Frailty.

5

Biological

Underpinnings of Aging Frailty

Aging

Frailty is a multifaceted biologically-driven process that is distinct from normal aging. While all of the biological mechanisms underlying

frailty are still being elucidated, it is thought to involve a low-level chronic pro-inflammatory state referred to as inflammaging.

This loss of control over inflammation can be attributed to an imbalance between levels of inflammatory promoters and anti-inflammatory

mediators, as well as diminished capacity to restore equilibrium once an inflammatory stimulus has subsided. The ultimate result is measurable

elevated serum levels of pro-inflammatory signaling molecules, such as tumor necrosis factor-α (TNF-α), and diminished levels

of anti-inflammatory mediators, such as interleukin-10 (IL-10).

Inflammation

can contribute to the physical decline in Aging Frailty through multiple mechanisms, including detrimental effects on muscles, bone tissue,

the immune system, cardiovascular function, and cognition. In muscle cells, pro-inflammatory mediators such as TNF-α stimulate

catabolic biochemical pathways that break down muscle tissue, which can explain the clinically observed atrophy, decreased strength and

endurance, and increased exhaustion seen in Aging Frailty. Inflammation can also severely diminish immune system function, and accelerate

the aging-related decline in the immune system, known as immunosenescence. This ultimately leads to an immune system that is hyporesponsive,

making these patients highly vulnerable to disease and cancer.

Aging

Frailty (and aging in general) is also characterized by reductions in the number and function of circulating MSCs. Therefore, treatments

that can positively affect and/or replenish these endogenous stem cell functions could be of therapeutic value for Aging Frailty.

The

culmination of these organ system declines can explain the common clinical manifestations of Aging Frailty, such as sarcopenia and cachexia,

and forms the basis for the resulting heightened vulnerability to injury, disease, adverse health outcomes, and mortality.

Lomecel-B

for the Potential Treatment of Aging Frailty

We

are evaluating Lomecel-B as a therapy for Aging Frailty because the potential mechanisms of action may suitably address many of the features

and underpinnings of this condition. Lomecel-B has the potential to reduce inflammation associated with Aging Frailty, and to promote

an anti-inflammatory state by releasing anti-inflammatory molecules, which can promote physiological restoration to a more normal state.

We believe current clinical data suggests Lomecel-B may be able to improve aspects of physical functioning, specifically exercise tolerance

and endurance in mobility-impaired older, frail individuals. Furthermore, we believe our current clinical and biomarker data suggest

that Lomecel-B may improve functioning of the vasculature, which in itself may result in certain systemic benefits to patients.

Market

Potential

U.S.

leading geriatricians and epidemiologists from Johns Hopkins University estimate approximately 15% of community-dwelling individuals

65 years and older in the U.S. have Aging Frailty, per the Cardiovascular Health Study (CHS) frailty phenotype definition. Another 45%

are considered at risk for becoming frail, or “pre-frail”. These equate to 8.1 million and 24.3 million people, respectively.

By 2035, the number of individuals with Aging Frailty is projected to reach over 11.4 million. Those with Aging Frailty are disproportionately

high consumers of healthcare resources whose cost of care may have significant economic consequences. Developing effective interventions

to prevent or reverse frailty is a priority for many countries with single-payor healthcare systems.

Japan

is considered to be a “super-aged” society, with approximately 28% of the population aged 65 or older in 2021, representing

some 35.9 million individuals. The pooled prevalence of frailty amongst this demographic per CHS frailty phenotype or modified version

definition, is estimated to be 7.4%.

For

the US and Japanese markets, and any other territory, the market size ultimately will be dependent on many factors, but the precise definition

used to define the condition/patient population for regulatory approval purposes in the U.S. and in Japan will likely result in a refined

market size that may be a subset of the frail population.

Aging

Frailty Clinical Trials and Regulatory Trial in the Bahamas

We

have completed two multicenter trials in the U.S. for Aging Frailty, and have received Japanese PMDA approval to conduct a Phase 2 Aging

Frailty clinical trial in Japan which is expected to initiate in the first half of 2022. We have government approval to administer Lomecel-B

for Aging Frailty participants in a Registry Trial that is actively enrolling in The Bahamas.

6

U.S.

Phase 2b Multicenter, Randomized, Double-Blinded, Placebo-Controlled Trial

The

Phase 2b Trial is our most advanced clinical trial in our Aging Frailty program (ClinicalTrials.gov #NCT03169231). The trial design was

guided by input from FDA’s Center for Biologics Evaluation and Research (CBER), and Longeveron’s scientific and clinical

advisors. Longeveron designated this as a “Phase 2b” trial because its objectives included a preliminary assessment of Lomecel-B

effectiveness for an Aging Frailty indication. Longeveron did not conduct a “Phase 2a” trial.

The

specific objectives of this trial were to evaluate the effectiveness of Lomecel-B in multiple domain measures of Aging Frailty: physical

functioning biomarkers; patient-reported outcomes (PROs); quality-of-life measures (QOLs); frailty status; and clinical outcomes and

other endpoints applicable to Aging Frailty. In addition, this trial assessed a dose-range of Lomecel-B to further our understanding

of evidence of a dose-response relationship that could support the product’s pharmacological bioactivity. The target population

was comprised of: individuals aged 70–85 years who were considered mild to moderately frail per the CSHA Clinical Frailty Scale

(CFS), could walk between 200 and 400 meters at baseline; and had systemic inflammation evidenced by elevated tumor necrosis factor-α

(TNF-α).

The

primary efficacy endpoint in this clinical trial was the change from baseline in the six-minute walk test (6MWT) at six months for investigational

treatment compared to placebo treatment. The primary endpoint included a primary analysis (comparing mean change from baseline for investigational

arms compared to placebo arm), and a secondary analysis (evaluating whether a dose-response relationship exists). The 6MWT is a functional

assessment that engages several organ systems, including the cardiopulmonary, musculoskeletal, and neurologic systems, is a reliable

indicator of frailty status, and may correlate with an individual’s ability to perform basic activities of daily living (ADLs).

This validated and easily-administered test measures how many meters a person can walk in six minutes, and is a general evaluation of

mobility and exercise tolerance or endurance. We intend to evaluate the full spectrum of results from both US Aging Frailty trials, and

depending on the data and input from our advisors, we may choose to engage FDA to discuss whether a regulatory pathway to pivotal clinical

trial(s) can be identified. These discussions would need to include evaluation of an acceptable and appropriate primary efficacy endpoint(s),

in an approvable indication with a mutually agreeably-defined patient population.

Phase

2b Aging Frailty Trial Results

One

hundred and forty-eight (148) subjects were randomized and received a single peripheral intravenous infusion of Lomecel-B (25 million

cells, 50 million cells, 100 million cells or 200 million cells), or placebo, followed by a 52-week observation period to evaluate safety

and efficacy. The Phase 2b trial was conducted at eight hospitals and clinics, primarily in South Florida, including the Miami Veterans

Administration (VA) Healthcare System, and was funded by a Small Business Innovation Research (SBIR) grant from the NIH’s NIA.

The trial was completed in the first quarter of 2021 and the topline results were announced on August 13, 2021.

The

study’s key secondary endpoints were 6 month change in the patient reported outcome questionnaire PROMIS—Physical Function—Short

Form 20a (SF-20a) total score and 6 month change in serum levels of TNF-α, a pro-inflammatory cytokine. Lomecel-B cohorts did not

show a statistically significant difference compared to the placebo cohort in the SF-20a score or the TNF-α results. The remainder

of the efficacy endpoints, which included assessments of physical function, sexual function, fear and risk of falling, depression, cognition,

frailty status, pulmonary function, and clinical outcomes, were considered exploratory and Lomecel-B-treated groups did not show statistically

significant differences versus placebo at most of the time points.

We

are continuing to further evaluate the clinical and biomarker data, and perform subgroup analysis, in conjunction with working with our

Frailty Steering Committee and other advisors to determine next steps in the clinical development plan for this indication.

7

U.S.

Phase 1/2 HERA Trial: Lomecel-B as a Potential Vaccine Adjuvant

The

aging-related diminution of the immune system (immunosenescence) makes Aging Frailty patients vulnerable to infection and disease. Immunosenescence

is the basis for a generally muted response to any type of immune challenge in these patients, including disproportionately low response

to vaccines, such as the influenza vaccine.

Many

efforts are made to try to boost vaccine effectiveness by manipulation of the vaccines themselves, such as increasing vaccine dosage

in the case of the High-Dose Flu Vaccine given to older recipients. However, this approach often falls short of providing the sought-after

immune protection because of the patients’ diminished intrinsic ability to mount an effective immune response and furthermore,

may be associated with increased incidence of adverse events. To date, there are no approved therapeutics shown to improve the intrinsic

competence of the immune system (immunocompetence).

In

this clinical program, Lomecel-B is being explored as a candidate for improving immunocompetence in older frail individuals receiving

influenza vaccine. The HERA Trial was designed to evaluate safety, to explore whether Lomecel-B infusion may have a positive effect on

the aging immune system in response to influenza vaccine, and to evaluate Lomecel-B’s possible effects on Aging Frailty status

and endpoints (ClinicalTrials.gov #NCT02982915).

Trial

Status. The trial is complete and data from the randomized, placebo-controlled phase is pending. The Phase 1 component of the trial

was a 22-patient multicenter, open-label, randomized trial. Phase 2 was a multicenter, randomized, double-blinded, placebo-controlled

trial. The Phase 2 portion of the trial had a target enrollment of up to 60 subjects, and enrolled a total of 39 subjects before it was

closed for enrollment at the conclusion of the 2020 flu season at the onset of the COVID-19 pandemic in the U.S. Clinical data from the

randomized, placebo-controlled Phase 2 trial is pending.

Aging

Frailty Phase 1 Results

HERA

Immune-Response Data. Phase 1 of the HERA Trial was an open-label study conducted during the 2017 – 2018 flu season. The primary

goal was to evaluate the safety of Lomecel-B as a vaccine adjuvant, and evaluate how a short (1 week) or longer (4 week) interval between

Lomecel-B infusion and vaccination might impacted the immune response to the vaccine. Subjects enrolled had mild to moderate Aging Frailty

per the CSHA CFS, and received the Fluzone High-Dose Vaccine (Sanofi Pasteur Inc.).

Interim

results from the Phase 1 portion of the trial showed that both groups (1 week and 4 week interval between infusion and vaccination) showed

statistically significant positive antibody responses as determined by the blood levels of IgM and IgG antibodies raised against influenza

A and B strains. IgM antibodies appear early in a normal immune response, and are normally followed by IgG antibodies which appear later.

Antibody levels ≥ 1.1 index value (IV) indicate positive antibody response. Average IgM levels prior to receiving vaccine were <

1.1 IV at the Infusion Visit and Vaccination Visit, where blood samples were taken prior to Lomecel-B administration and vaccination,

respectively. Post-vaccination, these increased to > 1.1 IV, with every subject showing an increase from baseline for all four antibodies

(IgG and IgM for influenza A and B viruses). These increases did not significantly differ between the two study arms (1-week and 4-week

interval between Lomecel-B infusion and vaccination).

We

also examined potential to neutralize the specific influenza virus strains that the vaccine was directed against (Michigan, Hong Kong,

and Brisbane viruses). This used a test called the hemagglutinin inhibition (HAI) assay. Overall, the 1-week interval group showed significantly

higher HAI results (meaning better performance) compared to the 4-week interval group. Based on these preliminary findings, we elected

to use a 1-week interval between infusion with Lomecel-B and vaccination in Phase 2 of HERA.

We

view these results as encouraging, in light of the reported suboptimal efficacy of the 2017 – 2018 Fluzone High-Dose Vaccine.

The Centers for Disease Control & Prevention (CDC) found an overall adjusted vaccine effectiveness (VE) of just 18% against

flu-associated medically-attended acute respiratory illness in those ≥ 65 years of age (CI = -25–47%). At the

approximate mid-point of Phase 2 of the HERA Trial, we performed a planned interim analysis in order to re-assess study powering. We

evaluated the 6MWT and other physical function measures of Aging Frailty as part of this analysis.

The

HERA Phase 2 interim analysis showed that the 6MWT increased in the Lomecel-B arm by 45.20 ± 81.03 meters (n=14) at six

months post-administration, versus a decrease of 21.40 ± 81.87 meters (n=15) in the placebo arm (mean ± standard

deviation; six-month difference from placebo: 66.60 meters. 95%CI: -4.70 – 137.89. p = 0.0656). A similar trend was seen

in the open-label HERA Phase 1 (59.59 ± 140.57 meters. 95%CI: -12.68 – 131.86. n=19. p=0.0996). We performed

an analysis using the pooled data from patients in the Phase 1 arm combined with those from the Phase 2 interim analysis Lomecel-B arms.

At six months post-infusion, there was a statistically significant improvement in the combined Phase 1 & 2 Lomecel-B arms from Baseline

relative to placebo (six-month difference from placebo: 75.65 meters. 95%CI: 0.71 – 150.60. p=0.0480). By 12 months post-infusion,

the improvements had waned in the Lomecel-B groups (Phase 1, Phase 2 interim analysis, and combined), and were no longer significantly

different from placebo (12-month difference from placebo: 35.31 meters. 95%CI: -16.99 – 87.61. p=0.1796).

8

Japanese

Phase 2 Aging Frailty Trial

The

PMDA has approved an investigator-initiated CTN application for a multicenter Phase 2 clinical study of Lomecel-B infusion in older Japanese

subjects with mild to moderate Aging Frailty. The trial is similar in design to our U.S. Phase 2b Trial, and is expected to initiate

in first half of 2022. The CTN applicant is the NCGG, and we are engaged in trial planning with the NCGG and Juntendo University Hospital,

as the other clinical trial site.

Under

the 2014 law passed by the Japanese government, two new Acts were added that regulate regenerative medicine development and offer two

pathways to market for regenerative medicine product candidates: The Act on the Safety of Regenerative Medicine (ASRM) and the Pharmaceutical

and Medical Devices Act (PMD Act). A summary of the primary differences and benefits of the two Acts is described in “Japanese

Laws and Regulations” within the Business section of this report.

The

Bahamas Registry Trial

In

2017, we were granted approval by the Bahamian government to sponsor a Registry Trial in Nassau, The Bahamas. Eligible subjects with

Aging Frailty who meet Registry eligibility requirements may receive Lomecel-B at their own expense at one of two medical centers with

which we are partnered. The medical providers are responsible for the administration of Lomecel-B to these individuals as well as their

care and Registry Trial-specific follow-up. The program is regulated by the Stem Cell Research and Therapy Act of 2013, and the Stem

Cell Research and Therapy Regulations passed in 2014. Under the terms of the approval, participants in the Registry pay a fee directly

to us, and we in turn pay a fee to the medical providers who administer Lomecel-B to the participant. Data collected from the Registry

Trial contribute to our overall understanding of the safety profile of Lomecel-B, and for gathering real-world evidence on possible efficacy.

Lomecel-B is not licensed for commercial sale in the Bahamas and is considered an investigational therapeutic.

In

2019, we received approval to expand the Registry for the following indications: mild cognitive impairment; AD and related dementias;

frailty due to reasons other than aging, including overuse and injury; and osteoarthritis. The Registry Trial has specified baseline

assessments and a prescribed follow up schedule over a 12-month post-administration time period. Participants are expected to follow

up with their local physician at the specified time points so that we may collect safety data and gain additional efficacy information,

specifically with respect to physical function, the individual’s global impressions of change, biomarkers, and other indication-specific

measures.

Participation

in the Registry Trial has been adversely impacted by the COVID-19 pandemic due to travel restrictions. Starting on July 22, 2020, the

Bahamian government halted travel from the U.S. into The Bahamas, which resulted in the temporary cessation of participation in The Bahamas

Registry Trial. While this travel restriction has now been lifted, participation in the Bahamas Registry Trial remains lower than anticipated,

due in part to pandemic-related effects on international travel.

Lomecel-B

for Alzheimer’s Disease

AD

is the leading form of dementia. This disease affects millions of Americans, leads to early mortality, and creates a tremendous burden

on families and society that costs the U.S. hundreds of billions of dollars annually in direct costs and lost productivity.

Patients

afflicted with AD have characteristic brain changes that include abnormal protein deposits in the brain, called β-amyloid deposits.

Another feature that occurs within the neurons themselves is called neurofibrillary tangles, which interferes with the structure and

function of the neurons, and leads to neuron death. Inflammation in the brain – a process called neuroinflammation – is also

a key feature of AD. This pro-inflammatory state appears essential for the clinical manifestation of dementia resulting from AD. In addition,

the functioning of the blood vessels in the brain are often compromised in AD, the consequences of which include impaired exchange across

the barrier between the blood and the brain, called the blood-brain barrier (BBB). Ultimately, these pathological processes lead to the

structural changes in the brain and resulting dementia.

We

are testing Lomecel-B as a potential treatment for AD based on the hypothesis that its multiple MOAs can simultaneously address multiple

features of AD. Preclinical studies show that MSCs can potentially reduce AD-associated brain inflammation, improve the function of blood

vessels in the brain, and reduce brain damage due to AD progression, and promote regenerative responses. We have completed a multicenter,

randomized, double-blinded, placebo-controlled Phase 1 safety study of subjects with mild AD. The trial met its primary safety endpoint,

and also provided preliminary evidence suggestive of efficacy. Based on the results, we are preparing a larger Phase 2 study. If successful

in clinical studies and approved by FDA, we hope that Lomecel-B may prove to be a disease-modifying therapy for AD.

9

Prevalence

of AD and Market Potential

The

Alzheimer’s Association estimates that 6.2 million Americans have AD, and as many as 12.7 million Americans will be afflicted by

2050 barring significant medical breakthroughs. An estimated 35.6 million people are affected with AD worldwide, and that number is expected

to quadruple by 2050. Among individuals age 85 and older, over a third have AD. AD is currently the sixth leading cause of death in the

U.S., taking more lives annually than breast cancer and prostate cancer combined, underscoring the critical importance for developing

a therapeutic intervention that can delay or reverse the progression of the disease. Arguably, AD represents the only leading cause of

death that cannot be prevented, cured, or slowed using existing approved therapies with the possible exception of Aduhelm in certain

patients. This disease has a tremendous impact on the quality of lives of the patients and their caregivers, costing American society

an estimated $355 billion for health-care, long-term care, and hospice services in 2021, and over $256.7 billion in unpaid dementia caregiving

(usually borne by family members) based on 2020 estimates.

Analysts

have suggested that any disease-modifying AD drug that makes it all the way to market could rapidly achieve over $10 billion in sales.

Without a major market competitor, analysts have predicted that that figure could balloon to over $20 billion by 2030.

Phase

1 Alzheimer’s Disease Clinical Trial

We

have conducted a double-blind, randomized, placebo-controlled Phase 1 trial to evaluate the safety and explore whether there was any

preliminary evidence of efficacy of Lomecel-B in subjects with mild AD (ClinicalTrials.gov #NCT02600130). Each subject received a single

infusion of low-dose of Lomecel-B (20 million cells), high-dose of Lomecel-B (100 million cells), or placebo. The observation period

was 12 months post-infusion. Our results support the safety and tolerability of using Lomecel-B in individuals with AD, in which the

primary safety endpoint was met, and no product-associated SAEs were observed.

Results

from the AD Phase 1 Trial

While

this Phase 1 study was powered for safety as the primary endpoint, it was also designed to evaluate the potential effects of Lomecel-B

in multiple efficacy domains that include cognition, ADLs, QOL, and biomarkers.

The

Mini Mental State Exam (MMSE) is a validated and commonly used assessment of cognitive function. A decreased score on the MMSE indicates

worsening, and a 6-month change of ~1.4 points has been calculated to be a minimally clinically important difference (MCID). Statistically

significant differences on the MMSE were found between the low-dose Lomecel-B and placebo groups. The placebo group showed a fairly steady

decline on the MMSE over the course of a year (p < 0.05 at Weeks 13, 39, and 52 post-treatment versus baseline). However, the

low-dose Lomecel-B group showed no significant change from baseline until Week 52 (1 year) post-infusion. At Week 39, average MMSE scores

were 19.78 ± 3.347 in low-dose Lomecel-B arm (Δ from baseline= -1.22 ± 2.728, n = 11) versus 15.43 ± 4.117

in the placebo group (Δ from baseline= -5.09 ± 3.854, n = 7). The difference in change from baseline between the low-dose

Lomecel-B arm and placebo was 3.87 points (p = 0.0236; 95%CI: 0.59 – 7.14 points). The high-dose Lomecel-B arm showed no

significant changes from baseline or versus placebo. Other cognitive assessments (such as the “Alzheimer’s Disease Assessment

Scale – Cognitive”) showed no significant differences between the Lomecel-B and placebo groups.

Phase

2a Alzheimer’s Disease Trial

In

the last quarter of 2021, we initiated this 48-patient, Phase 2a, randomized, placebo-controlled multicenter study enrolling mild to

moderate AD patients. The study is currently actively screening patients for enrollment. This study is designed to measure brain changes

using MRI, and include detailed biomarker assessments of the inflammatory and vascular systems thought to contribute to the worsening

of AD, in addition to cognitive function, ADLs, safety, and other endpoints.

10

Lomecel-B

for the Metabolic Syndrome

We

conducted a clinical sub-study to our Aging Frailty studies to explore whether Lomecel-B may improve the Metabolic Syndrome, and if the

Metabolic Syndrome presents confounding issues for this treatment approach in Aging Frailty patients. This sub-study primarily focuses

upon blood-based biomarker changes, and non-invasive evaluation of vascular (blood vessel) functioning.

For

the purpose of analysis, we are evaluating the Metabolic Syndrome in subjects enrolled in our Phase 2b Trial and HERA Aging Frailty trials,

and dividing them into two groups: those with and without the Metabolic Syndrome. We will look at the effect of Lomecel-B relative to

placebo on the two groups with respect to effect changes relevant to the Metabolic Syndrome. Approximately 40% of Aging Frailty patients

have been reported to have the Metabolic Syndrome, which we have empirically confirmed from our Phase 2b Trial and HERA clinical trial,

in which we have identified approximately 45% and 33% of enrolled subjects, respectively, who meet the criteria for the Metabolic Syndrome.

The Metabolic Syndrome is also becoming a well-recognized contributor to AD and related dementias.

The

Metabolic Syndrome is a clinically-defined condition (ICD-10: code 277.7) that increases the chances of developing CVD and T2DM. It is

also known as X syndrome, insulin resistance syndrome, cardiometabolic syndrome, and Reaven’s syndrome. The Metabolic Syndrome

lacks consensus definition regarding the specific variables amongst clinicians and researchers. The Metabolic Syndrome is defined as

a cluster of risk factors for which at least three of the following five criteria must be met.

● Elevated serum triglycerides.

● Reduced high-density lipoprotein (good cholesterol).

● Elevated blood pressure.

● Elevated fasting glucose.

● Increased waist circumference (central or apple-shaped obesity).

The

Metabolic Syndrome is associated with vascular dysfunction and damage, and a proinflammatory state marked by elevated serum levels

of C-reactive protein (CRP), interleukin-6 (IL-6), and D-dimer. Obesity also directly contributes to this proinflammatory state and

the Metabolic Syndrome. Compared to unaffected individuals, patients with the Metabolic Syndrome are twice as likely to

develop CVD in 5 – 10 years, five-times as likely for developing T2DM, over twice as likely to have a stroke, over three-times

as likely to have a heart attack, and have double the risk of dying from such events. The incidence of the Metabolic Syndrome has

reached epidemic proportions and continues to increase, as the overall prevalence in the U.S. is approximately 35% of the total

population, or over 80 million individuals.

Lomecel-B

may be a potential candidate for the Metabolic Syndrome through multiple potential MOAs that include the potential to reduce associated

inflammation and improve vascular function. Preclinical studies support the clinical benefits of allogeneic MSC therapy for treating

the Metabolic Syndrome, which resulted in improvements in vascular function, atherosclerosis, and glucose homeostasis.

11

Lomecel-B

for Acute Respiratory Distress Syndrome (ARDS)

We

are conducting a multicenter, double-blinded, randomized, placebo-controlled trial for ARDS due to COVID-19 or influenza virus

infection. ARDS can be rapidly induced by a variety of insults, such as coronavirus and influenza virus infection.

Approximately 200,000 people suffer from ARDS in the U.S. annually, with a mortality rate of about 40%. These numbers may increase

as a result of COVID-19, which could become a seasonal epidemic. Older persons, those with Aging Frailty, and those with the

Metabolic Syndrome, are at significantly increased risk for severely poor outcomes from ARDS due to viral infection, including

prolonged hospitalization and death.

Viral

infection leading to ARDS can result in severe inflammation called a “cytokine storm”, most pronounced by severely elevated

serum levels of CRP and IL-6. This in turn leads to disruption of the lung cell layers (the endothelial and epithelial barriers), and

consequently, to severe inhibition of pulmonary exchange. ARDS can result in long-term adverse effects on patients, such as lung scarring

(fibrosis). As now widely appreciated due to COVID-19, there is a dearth of treatment options available for ARDS, and first-line defense

measures often have sub-optimal palliative effects.

Lomecel-B

has the potential to be a treatment for ARDS due to the previously described MOAs. These include the potential to treat the cytokine

storm induced in ARDS without leading to toxic immunosuppression, reduce fibrotic damage, promote reparative mechanisms, and improve

immune functioning.

Status

of Clinical Trial. This trial is currently enrolling and we expect enrollment to continue through 2022.

Grant

Funding Award. This study is being supported in part by a grant award from the MSCRF, part of Maryland TEDCO.

Emergency

Use Expanded Access. In addition to our clinical trial, four patients with ARDS have been treated with Lomecel-B under FDA emergency-use

expanded-access through individual physician-filed applications.

Lomecel-B

for Hypoplastic Left Heart Syndrome (HLHS)

We

are testing Lomecel-B as a potential combinatorial therapy candidate to surgical intervention for HLHS. The scientific goal underlying

this study builds on surgical advances of the past thirty years, and is intended to address remaining obstacles to improving long-term

cardiac function in HLHS patients.

HLHS

is a severe congenital birth defect in which the left ventricle of the heart is either severely underdeveloped or missing. As a consequence,

babies born with this condition have severely diminished systemic blood flow, which previously led to a 100% mortality rate shortly after

birth. Babies born with HLHS now undergo a complex three stage heart reconstruction over the course of years, in which the single remaining

right ventricle is used to support systemic circulation (the right ventricle is normally used for lung circulation, which is a much lower

load). While these children can now live into adulthood, early mortality is still extremely high in this population due to right ventricle

failure, which is not meant for the increased load demanded for systemic circulation. Furthermore, HLHS patients after undergoing heart

reconstructive surgery are often not ideal candidates for a heart transplant. As such, there is an important unmet medical need to improve

right ventricular function in these patients to improve both short-term and long-term outcomes.

We

believe that Lomecel-B has potential as a combinatorial therapy with HLHS surgery to improve both short- and long-term clinical outcomes.

We are evaluating whether a direct injection in the heart can improve right ventricle function by promoting regenerative and repair responses.

In animal studies, this combinatorial approach resulted in a 10 – 15% improvement in right ventricle function.

Prevalence of HLHS. HLHS is a rare indication,

occurring at approximately 2 – 3 cases per 10,000 live births, or roughly 1,000 children annually in the U.S. FDA has granted both

RPD Designation and ODD for the treatment of HLHS.

12

Results

from Phase 1 HLHS Clinical Trial

We

have completed a multicenter, open-label, uncontrolled Phase 1 clinical trial in HLHS (ELPIS I, NCT02587572). This study was designed

to assess safety of intramyocardial injection of Lomecel-B administered to 10 infants with HLHS during Stage 2 bidirectional cavopulmonary

anastomosis (BDCPA, or “Glenn procedure”) surgeries. Children with HLHS undergoing Stage 2 surgery (Glenn procedure) were

treated via intramyocardial (direct heart) injection of Lomecel-B. This study met the primary safety endpoint: no major adverse cardiac

events (MACE), nor any treatment-related infections during the first month post-treatment.

Phase

2 Hypoplastic Left Heart Syndrome Clinical Trial

A

randomized, double-blind and controlled Phase 2 clinical trial designed to evaluate the efficacy of Lomecel-B in conjunction with reconstructive

surgery compared to surgery alone, is currently actively enrolling (ELPIS II, NCT04925024). With a target enrollment of 38 infants, we

expect ELPIS II to enroll in approximately 7 children’s hospitals in major metropolitan centers located throughout the U.S.

Phase

2 supported by Grant Funding Award. A grant from the NIH’s NHLBI (Grant number 1UG3HL148318), was awarded to the Principal

Investigator. We are a subawardee and provide clinical trial material (Lomecel-B) and other support. We may provide additional financial

and organizational support for this trial in the future.

Expanded

Access. In addition to the clinical trial, one HLHS baby has received Lomecel-B under FDA expanded access, or “compassionate

use” approval through an individual physician request.

Other

Investigational Products in Development

We

have conducted preclinical research and development work for additional cellular therapy product candidates, including exosomes and CD271+

cells. While similar to Lomecel-B, CD271+ cells may have characteristics that could lead to a next generation product and may have additional

uses. We conduct research and development for other cellular-based experimental products called exosomes, which are small membrane-bound

products secreted by cells, including MSCs, which contain bioactive cargo.

Manufacturing

The

manufacture and delivery of cell therapy products to patients involves complex, integrated processes. Commercial success in this area

requires manufacturing processes that are reliable, scalable, and economical. We currently operate a manufacturing facility in Miami,

FL, which supplies Lomecel-B for our clinical trials and also serves as our corporate headquarters. We have and will continue to devote

significant resources to optimization of process development and manufacturing to reduce per-unit manufacturing costs and to enable quick

scale-up of production upon approval of any of our candidates in a particular country. We also intend to expand the manufacturing capacities

in the U.S. and potentially Japan or other regions in Asia.

We also intend to expand

the manufacturing capacities in the U.S. and potentially Japan or other regions in Asia for commercialization at both a regional and

global scale upon regulatory approvals.

Our

GMP facility went online in early 2017, and consists of 4,150 ft2 (385.5 m2) with approximately 3,000 ft2

(279 m2) of GMP space comprised of ISO 7 cleanrooms, and ISO 8 ancillary areas and 1,150 ft2 (107 m2)

of warehouse, research and development and Quality Control space. The GMP cleanrooms are used exclusively for the manufacture of human

cellular therapy products for use in clinical trials. The facility is in compliance with FDA regulations in 21 CFR Parts 210 and 211.

Our

lead product, Lomecel-B, consists of human allogeneic bone-marrow derived MSCs as the active ingredient. These cells undergo culture-expansion

using proprietary processes, and are then formulated, packaged and stored frozen (cryopreserved) until shortly before use. Fresh

bone marrow is procured from established, licensed U.S.-based third-party tissue suppliers, which harvest the tissue from young, healthy

consenting donors. Lomecel-B is produced using processes that FDA has reviewed and authorized as part of our INDs. We currently have

bone marrow supply contracts in place with two suppliers: the Oklahoma Blood Institute and Vista Health Research. These suppliers provide

adequate bone marrow for our current and anticipated needs; however, if one or both suppliers were to no longer provide bone marrow,

alternate suppliers would be needed or our ability to produce Lomecel-B in the future could be impacted.

13

Technology

Capabilities

From

the commencement of operations in 2014, we recognized the potential for a cellular therapy product to be a novel therapeutic candidate

in our chosen indications. We have assembled a team of experts and proprietary technologies that we believe enables us to take a systematic

approach to rapidly develop improved cell therapies. We believe having established manufacturing capabilities and operations within the

U.S. early in the development of our product candidates is a competitive advantage. Over time, we expect to expand regional manufacturing

capacity and potentially add external supply nodes to meet projected product requirements for commercialization. We believe that anticipated

future clinical and commercial demand for Lomecel-B and new pipeline programs can be met, as our process has been designed to meet these

demands as milestones are achieved. We believe our scalable robust manufacturing process, along with our proprietary technologies and

our industry experienced team, would be challenging and costly for potential competitors to replicate.

Contract

Development and Manufacturing Services

We

produce all of our product candidates in the ISO 7 cleanrooms of our GMP facility to satisfy our ongoing clinical studies, and The Bahamas

Registry Trial. As a revenue-generating opportunity, occasionally we utilize excess capacity, when available, to provide contract manufacturing

and development services to third parties; however, our business development activity is limited in this area.

Commercialization

We

currently have no established sales, marketing or product distribution infrastructure. In order to commercialize any of our product

candidates if approved for commercial sale, we will need a sales and marketing organization with technical expertise and supporting

distribution capabilities or collaborate with third parties that have sales and marketing experience. As we move our product

candidates through development toward regulatory approval, we will evaluate several options for each product candidate’s

commercialization strategy. These options include further building an internal sales force, entering into a joint marketing

collaboration with another pharmaceutical or biotechnology company, or out-licensing any future approved product to another

pharmaceutical or biotechnology company.

Competition

The

field of regenerative medicine, which includes gene therapies, cell therapies (such as Lomecel-B), and tissue-engineered products, is

broadly defined as “products intended to repair, replace or regenerate organs, tissues, cells, genes, and metabolic processes in

the body,” per the Alliance for Regenerative Medicine (ARM), an international advocacy organization. Regenerative medicine companies

number over 1,000 worldwide as of the first half of 2021.

In

some of our indications, we face competition from both cellular therapy companies, and pharmaceutical/biotechnology companies. The following

table is a general, non-comprehensive list of cellular therapy companies that we believe could be considered our primary competition

on the basis that these companies are developers of living cell-based therapies, albeit for different indications in most cases.

Name Corporate Headquarters Clinical stage pipeline indication(s)

Athersys, Inc. U.S. Ischemic stroke; ARDS; GvHD; Acute Myocardial Infarction

BioCardia, Inc. U.S. Heart failure; Acute myocardial infarction

BrainStorm Cell Therapeutics U.S. ALS; MS

Caladrius Biosciences U.S. CLI; refractory disabling angina; CMD