sttk-20231231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2023

For the transition period from to

Commission File Number: 001-39593

Shattuck Labs, Inc.

(Exact name of registrant as specified in its charter)

500 W. 5th Street, Suite 1200

Austin, TX78701

(512) 900-4690

(Address of principal executive offices including zip code)

Former name, former address and former fiscal year, if changed since last report: N/A

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

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock, par value $0.0001 per share STTK The Nasdaq Global Select Market

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

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

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

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 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 §241.10D-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 30, 2023, was approximately $85,554,422 based on the closing price on The Nasdaq Global Select Market reported for such date. Shares of common stock held by each officer and director and by each person who is known to own 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 12, 2024, the registrant had 47,474,783 shares of common stock, $0.0001 par value per share, outstanding.

Documents Incorporated by Reference

The information required by Part III of this Report, to the extent not set forth herein, is incorporated by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Stockholders to be held in 2024, which shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

Auditor Firm ID: 185 Auditor Name: KPMG LLP Auditor Location: Austin, TX, USA

SHATTUCK LABS, INC.

TABLE OF CONTENTS

Page

Part I. 1

Item 1. Business 1

Item 1A. Risk Factors 34

Item 1B. Unresolved Staff Comments 52

Item 1C. Cybersecurity 52

Item 2. Properties 53

Item 3. Legal Proceedings 53

Item 4. Mine Safety Disclosures 53

Part II. 54

Item 6. Reserved 54

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 63

Item 8. Audited Financial Statements 64

Item 9A. Controls and Procedures 85

Item 9B. Other Information 85

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 85

Part III. 85

Item 10. Directors, Executive Officers and Corporate Governance 85

Item 11. Executive Compensation 86

Item 14. Principal Accountant Fees and Services 86

Part IV. 87

Item 15. Exhibits and Financial Statement Schedules 87

SIGNATURES 90

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties and are based on estimates and assumptions. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, plans or intentions relating to products and markets, and business trends and other information referred to under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan,” “develop”, or the negative of these terms, and similar expressions intended to identify forward-looking statements. Forward-looking statements are not historical facts, and reflect our current views with respect to future events. Given the significant uncertainties, you should not place undue reliance on these forward-looking statements.

There are a number of risks, uncertainties and other factors that could cause our actual results to differ materially from the forward-looking statements expressed or implied in this Annual Report on Form 10-K. Such risks, uncertainties and other factors include, among others, the following:

•the timing of the initiation, progress, and expected results of our nonclinical studies, our clinical trials, and our research and development programs;

•our ability to enroll patients in our clinical trials;

•the costs related to our nonclinical studies, our clinical trials and our research and development programs, and the impact of inflationary pressures on such costs;

•our ability to retain the continued service of our key executives and to identify, hire, and retain additional qualified professionals;

•our ability to advance product candidates into, and successfully complete, nonclinical studies and clinical trials;

•the timing or likelihood of regulatory filings and approvals;

•the commercialization of our product candidates, if approved;

•our ability and the potential to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved;

•the pricing, coverage, and reimbursement of our product candidates, if approved;

•the implementation of our business model, strategic plans for our business, and product candidates;

•the scope of protection we are able to establish and maintain for intellectual property rights covering our technology platforms, including our ARC® product candidate and other product candidates, and the defense of such intellectual property rights;

•our potential need to obtain additional licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms, and which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated;

•our ability to enter into strategic arrangements and/or collaborations and to realize the potential benefits of such arrangements;

•our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•our estimates regarding the market opportunity for our product candidates, if approved;

•our estimates regarding expenses, capital requirements, and needs for additional financing and our ability to obtain additional capital;

•our financial performance; and

•developments relating to our competitors and our industry, including competing product candidates and therapies

There may be other factors that may cause our actual results to differ materially from the forward-looking statements expressed or implied in this Annual Report on Form 10-K, including factors disclosed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should evaluate all forward-looking statements made in this Annual Report on Form 10-K in the context of these risks and uncertainties.

We caution you that the risks, uncertainties, and other factors referred to above and elsewhere in this Annual Report on Form 10-K may not contain all of the risks, uncertainties and other factors that may affect our future results and operations. Moreover, new risks will emerge from time to time. It is not possible for our management to predict all risks. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected.

Any forward-looking statements contained in this Annual Report on Form 10-K speak only as of the date hereof and not of any future date, and we expressly disclaim any intent to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Part I.

In this Annual Report on Form 10-K, unless the context requires otherwise, references to “we,” “us,” “our,” “Shattuck Labs,” “Shattuck,” or the “company” refer to Shattuck Labs, Inc. Additionally, references to our “Board” refer to the board of directors of Shattuck Labs, Inc.

Item 1. Business

Overview

We are an innovative clinical-stage biotechnology company pioneering the development of dual-sided fusion proteins as an entirely new class of biologic medicine. We have created a novel approach to immune modulation by designing biologics with structural characteristics that may not be achievable by existing therapeutic modalities, including monoclonal or bispecific antibodies. Our ARC® platform was designed to simultaneously inhibit checkpoint molecules and activate costimulatory molecules with a single therapeutic as a potential treatment for cancer. We also have at varying stages of preclinical development, dual-sided fusion proteins, distinct from our Agonist Redirected Checkpoint (“ARC”) platform, that have therapeutic potential in autoimmune and inflammatory diseases, among other therapeutic areas.

Our lead product candidate, SL-172154, is designed to simultaneously inhibit the CD47/SIRPα macrophage checkpoint interaction and activate the CD40 costimulatory receptor to induce an antitumor immune response. Coupling CD40 activation with CD47 inhibition differentiates SL-172154 from all other clinical-stage CD47/SIRPα inhibitors in development, and in our published preclinical studies, SL-172154 resulted in superior antitumor immunity as compared to certain CD47/SIRPα inhibitors. We are pursuing a broad clinical development strategy in both solid and hematologic tumors, with multiple ongoing clinical trials. SL-172154 is in an ongoing Phase 1B clinical trial for the treatment of patients with ovarian cancer. We are also evaluating SL-172154 in an ongoing Phase 1B clinical trial for the treatment of patients with certain hematologic malignancies, including acute myeloid leukemia (“AML”), and higher-risk myelodysplastic syndromes (“HR-MDS”). We believe our clinical development plan may provide both first-in-class and best-in-class development opportunities for SL-172154.

We believe that data shared to date in human cancer patients demonstrate that the unique protein engineering and physical properties of the ARC platform have led to a differentiated profile in terms of safety and on-target immune activation, demonstrated by unique pharmacodynamic findings, as compared to monoclonal or bispecific antibodies. Further, clinical data generated with our ARC platform has guided our preclinical research efforts to further expand our pipeline, and we are advancing certain potential product candidates through preclinical development. We expect to nominate one or more additional product candidates to our clinical pipeline in the future, potentially for indications outside of oncology, by selecting product candidates where there is an expectation of monotherapy efficacy and where our scientific and protein engineering expertise has led to a product candidate with advantages over current treatment modalities.

In February 2024, we announced a strategic collaboration and license agreement (the “Ono Agreement”) with Ono Pharmaceutical Co., Ltd. (“Ono”) in which we will lead research and preclinical development of certain compounds selected by Ono from our pipeline of bifunctional fusion proteins to a pair of prespecified targets for potential treatment of autoimmune and inflammatory diseases.

Our Pipeline

We are conducting a Phase 1A/B clinical trial in patients with AML and HR-MDS. We completed the Phase 1A dose-escalation portion of this clinical trial in 2023 and are currently enrolling patients in the Phase 1B expansion cohorts evaluating SL-172154 in combination with azacitidine in frontline HR-MDS or frontline TP53 mutant (“TP53m”) AML. In AML patients without TP53 mutations (“TP53 wild type”, or “TP53wt”), we intend to study SL-172154 in combination with azacitidine and venetoclax. In December 2023, we shared initial data from both the HR-MDS and TP53m AML Phase 1B combination cohorts. In the frontline HR-MDS cohort, as of the data cutoff date of December 1, 2023, out of 14 evaluable patients, five patients achieved a complete response (“CR”) and four patients achieved a marrow complete response (“mCR”). In the frontline TP53m AML cohort, as of the data cutoff date of December 1, 2023, out of 11 evaluable patients, two patients achieved a CR, and another patient achieved a complete response with incomplete hematologic recovery(“CRi”) and was taken to allogeneic hematopoietic stem cell transplantation (“allo-HSCT”). As of the cutoff date of December 1, 2023, SL-172154 had an acceptable safety and tolerability profile at 3 mg/kg in combination with azacitidine. After completing enrollment in the initial Phase 1B combination expansion cohorts in HR-MDS or TP53m AML patients in 2023, and on the basis of the encouraging

initial data, we are further expanding both cohorts to generate additional data and to inform our subsequent clinical trial plans. We expect to announce additional data from the HR-MDS and TP53m AML Phase 1B combination cohorts mid-year 2024.

We are also conducting a Phase 1B clinical trial evaluating SL-172154 in patients with platinum-resistant ovarian cancer (“PROC”). This Phase 1B clinical trial contains two combination expansion cohorts combining SL-172154 with either pegylated liposomal doxorubicin (“PLD”), or mirvetuximab soravtansine (“mirvetuximab” or, “Elahere”).

In November 2023, we announced initial data from our ongoing Phase 1B clinical trial expansion cohort evaluating SL-172154 in combination with PLD. As of the data cutoff date of October 31, 2023, we had 11 patients evaluable for response, and we observed one confirmed partial response (“PR”) and two unconfirmed PRs. As of the data cutoff of October 31, 2023, SL-172154 had an acceptable safety and tolerability profile at 3 mg/kg in combination with PLD.

We expect to announce additional data from the Phase 1B cohort in combination with PLD mid-year 2024 and initial data from the Phase 1B cohort in combination with mirvetuximab mid-year 2024.

The following table highlights our clinical-stage pipeline:

In addition to our clinical-stage ARC product candidate, we possess a deep pipeline of preclinical immuno-oncology compounds. As an example, SL-9258 is designed to inhibit the interaction between TIGIT and its known ligands, including PVR, PVRL2, PVRL3, and NECTIN-4, while simultaneously activating HVEM and LTβ receptors with two preformed LIGHT trimers. With the addition of HVEM and LTβ receptor activation, we believe this compound is a highly differentiated TIGIT inhibitor. Utilizing a proprietary animal model of PD-1 acquired resistance, SL-9258 demonstrated differentiation from antibody-mediated TIGIT blockade in its ability to overcome checkpoint inhibitor acquired resistance.

Our ARC Platform

Our proprietary ARC platform has the potential to create therapeutics that can dramatically change the way we treat cancer and other diseases. We developed the ARC platform to address the need for a single therapeutic that consolidates multiple immune functions. Compounds developed from our ARC platform simultaneously block immune checkpoint receptors and activate costimulatory molecules in the tumor necrosis factor (“TNF”) superfamily.

The functional domains of ARC compounds are derived from native human proteins, rather than antibody binding domains. This enables the rapid generation of new constructs, given that the starting template for distinct ARC compounds is the human genome. Therefore, an ARC compound can be taken from the conception stage to a manufactured purified protein in approximately six weeks, whereas it can take approximately six months to reach the same stage for an antibody therapeutic candidate. This rapid reduction in discovery processing time has allowed us to generate more than 400 unique, dual-sided fusion proteins.

Structure of an ARC Compound

Our proprietary ARC platform is designed to overcome the limitations of existing bivalent antibodies. ARC compounds consolidate checkpoint blockade and immune costimulation within a single therapeutic. Additionally, ARC compounds possess a structure that matches the native structure of the target receptors and colocalizes both mechanisms of activity within the immune synapse to promote a coordinated immune response. We designed the ARC platform as a modular scaffold wherein three principal components are fused together, comprising a human Type 1 extracellular domain protein, an optimized, proprietary Fc domain, and a human Type 2 extracellular domain protein. As shown in Figure 1 below, one end of the ARC

compound consists of a checkpoint receptor domain and the opposite end consists of a TNF ligand domain, connected by an optimized, proprietary scaffold such as an Fc domain. We designed ARC compounds to self-assemble into a hexameric structure, as shown in Figure 1 below, comprising six distinct checkpoint receptor domains and six distinct TNF ligand domains, which importantly form two trimerized costimulatory ligand domains.

Figure 1—Structural Properties of ARC Compounds

The unique dual-sided structure of our ARC compounds allows us to simultaneously and effectively target a wide array of pathways for the creation of a deep and differentiated product pipeline. We utilize our understanding of disease pathology and immune dysfunction to identify pairings of optimal domains. Initially, our efforts are concentrated on three broad target families: immune checkpoints, TNF superfamily costimulatory receptors, and cytokines.

We believe that the following features represent the key advantages offered by compounds developed with the ARC platform:

•Matching native structure of TNF receptors

•Target specificity, high affinity, and high avidity

•Replacing tumor immune evasion with potent immune stimulation

•Versatility

•Speed from concept to compound to clinic

•Accelerated lead selection process

We believe these collective advantages create the potential for the capital-efficient identification and pursuit of differentiated product candidates.

While many TNF receptor agonist antibodies have been developed and tested in human clinical trials, most have been discontinued prior to pivotal studies due to toxicity. As shown in Panel A of Figure 2 below, activation of TNF receptors, such as CD40, and downstream signaling requires the assembly of three receptor molecules (“trimerization”). As shown in Panel B of Figure 2 below, there is a structural mismatch between bivalent antibody therapeutics and trimeric TNF receptors. Traditional bivalent antibodies can only bind to two TNF receptors and are thus unable to individually trimerize a TNF receptor, leading to weak signaling of TNF pathways. For TNF receptor agonist antibodies to trimerize a TNF receptor, multiple antibodies must be cross-linked through Fc receptors located on accessory cells. This mechanism becomes less effective at increasing antibody doses due to saturation of TNF receptors and Fc receptors independently of each other. Consequently, there is no free Fc receptor available to cross-link the TNF receptor bound antibody. This effect manifests in clinical trials as an atypical dose-response relationship, known as a “bell-shaped” dose-response curve, wherein any signs of immune activation initially increase with dose but then subsequently decrease at higher doses. As shown in Panel C of Figure 2, ARCs are designed to self-assemble into two sets of TNF trimers, which induces trimerization of TNF receptor targets and drives a costimulatory signal.

We believe that the totality of our clinical data generated to date, from multiple ARC-derived product candidates and across multiple indications, provide strong evidence that our ARC compounds can uniquely activate members of the TNF

superfamily by addressing certain structural properties of these receptors. For example, our clinical data demonstrate that high levels of receptor occupancy of CD40 are achievable with an ARC, and that the “bell shaped” dose-response curve observed with antibodies was not seen in humans treated with SL-172154. Instead, we believe that the pharmacodynamic data indicate that SL-172154 may more effectively activate CD40-dependent pharmacodynamic effects in human cancer patients, in a manner that allows this pathway to be appropriately drugged and may provide benefit in the treatment of cancer patients.

Figure 2—Antibody Therapies Lead to Inefficient TNF Pathway Activation

Versatility of the Platform

The modularity of our dual-sided fusion protein platforms, including our ARC platform, facilitates a vast repertoire of potential dual-sided fusion proteins that can be synthesized and developed. In the human genome, there are more than 1,400 Type 1 membrane proteins, which are characterized by an extracellular amino terminal domain, and more than 450 Type 2 membrane proteins, which are characterized by an extracellular carboxy terminal domain. ARC compounds are assembled from any combination of Type 1 and Type 2 membrane proteins and, therefore, have significant diversity, with more than 630,000 possible combinations. Within this vast set of possible combinations, we have chosen to focus initially on three classes of targets that have already shown significant clinical relevance for the treatment of cancer comprising immune checkpoints, the TNF superfamily, and cytokines. We utilize our understanding of disease pathology and immune dysfunction to identify pairings of optimal targets within a single therapeutic.

Our Strategy

Our goal is to become the world leader in the discovery, development, and commercialization of dual-sided, bi-functional fusion proteins for the treatment of cancer and autoimmune diseases. We plan to achieve this by utilizing our proprietary ARC platform and protein engineering expertise to create novel therapeutics to treat patients who lack effective treatment options. Key elements of our strategy include:

•Rapidly advancing our clinical-stage ARC product candidate, SL-172154, through clinical development and marketing approval

•Leveraging our ARC platform to rapidly advance additional product candidates into clinical development

•Applying our clinical learnings from our ARC platform in oncology to identify, develop, and advance novel fusion protein compounds in autoimmune and inflammatory diseases, among other therapeutic areas

•Continuing to augment our fusion protein manufacturing capabilities

•Collaborating with leading biopharmaceutical companies

•Building on our culture of R&D excellence and continuing to out-innovate ourselves

•Deepening our intellectual property portfolio to continue to protect our platform technologies and product candidates

Our ARC Product Candidate

SL-172154: A Dual CD47/SIRPα Blocking and CD40-Activating ARC Compound

Overview

Our lead product candidate, SL-172154, is designed to simultaneously inhibit the CD47/SIRPα macrophage checkpoint interaction and activate the CD40 costimulatory receptor to induce an antitumor immune response. We believe that SL-172154 is a highly differentiated CD47 inhibitor with potential for both best-in-class and first-in-class development opportunities.

We are conducting Phase 1 clinical trials evaluating the administration of SL-172154 in both solid tumors and hematologic malignancies. As a class, CD47 inhibitors are being developed in combination with other agents that potentiate phagocytosis and initiate an immune response, such as chemotherapy, antibody-dependent cellular phagocytosis (“ADCP”)-competent antibodies, antibody drug conjugates, and others.

We see an opportunity for SL-172154 to continue to differentiate from other compounds in the field due to the combined effects of CD47 blockade and CD40 costimulation. We believe that our preclinical and initial clinical data from both our Phase 1A and Phase 1B clinical trials in PROC and Phase 1A/B clinical trial in HR-MDS and AML indicate that SL-172154 may differentiate from other CD47/SIRPα inhibitors in one or more of the following ways:

•Improved overall response rate due to CD40-mediated activation of both innate and adaptive immunity

•Improved response durability due to enhanced CD40-mediated activation of adaptive immunity

•Differentiated safety profile due to the absence of dose-limiting toxicities due to anemia or thrombocytopenia

Acute Myeloid Leukemia and Higher-Risk Myelodysplastic Syndromes

Clinical Data to Date

In December 2023, we announced initial data from the Phase 1B portion of our ongoing Phase 1A/B clinical trial evaluating SL-172154 in combination with azacitidine in frontline HR-MDS and TP53m AML. As of the data cutoff date of December 1, 2023, we had enrolled 22 patients with previously untreated HR-MDS. 14 of these patients were evaluable for response (13 of whom had TP53m or deletion), of which five patients achieved a CR, four patients achieved a mCR (three with hematologic improvement in at least one lineage), and two patients achieved stable disease (“SD”) (both with hematologic improvement in at least one lineage). Figure 3 below depicts both the interim maximum percent reductions in bone marrow blasts from baseline and the interim best response in individual patients with HR-MDS as of December 1, 2023.

Figure 3 — Interim Response Assessment & Percent Reductions in Bone Marrow Blasts in HR-MDS Patients

As of the data cutoff date of December 1, 2023, we had enrolled 14 patients with previously untreated TP53m AML. 11 of these patients were evaluable for response, and two patients had achieved a CR and another patient achieved a CRi and was taken to allo-HSCT. Seven additional patients with stable disease had blast reductions, five of which had recovery of platelets or neutrophils and remain on study and their response may improve. Blast count reductions were observed in 100% of these patients. One patient died during the first cycle. The left panel of Figure 4 below, depicts the kinetics of bone marrow blast reductions from baseline in individual patients with TP53m AML as of December 1, 2023. The right panel of Figure 4 below depicts both the interim maximum percent reductions in bone marrow blasts from baseline and the interim best response in individual patients with TP53m AML as of December 1, 2023.

Figure 4 — Kinetics of Bone Marrow Blast Reduction and Interim Response Assessment in TP53 Mutant AML Patients

As of the data cutoff date of December 1, 2023, SL-172154 had an acceptable safety and tolerability profile. Infusion-related reactions (“IRRs”) were the most common SL-172154 related treatment-emergent adverse events (“TEAEs”). In the HR-MDS and TP53m AML cohorts, IRRs were reported in seven patients (32%) and seven patients (50%) respectively. Grade 3 or 4 adverse events (“AEs”) related to SL-172154 were reported in four patients (18%) in HR-MDS and two patients (14%) in TP53m AML, including; IRR (2), aspartate aminotransferase (“AST”) increased (1), alanine aminotransferase (“ALT”) increased (1), fatigue (1), hypoxia (1), pneumonia (1), chondrocalcinosis (1), and febrile neutropenia (1). There were no reports of destructive anemia. In the TP53m AML expansion cohort, there was one Grade 5 AE of cardiac arrest reported in one patient with history of coronary artery disease, recent arrhythmia, and hypokalemia in the setting of amiodarone use. In the HR-MDS cohort, there were no Grade 5 AEs related to SL-172154 reported.

Additionally, in December 2023, in a poster at the American Society for Hematology annual meeting, we announced data from the Phase 1A parallel staggered dose escalation trial of SL-172154 as monotherapy and in combination with azacitidine in primarily relapsed/refractory (“R/R”) AML and HR-MDS patients. As of the data cut-off date of September 15, 2023, 32 adult patients with R/R AML or HR-MDS received SL-172154 as monotherapy or in combination with azacitidine in the parallel staggered dose-escalation portion of a Phase 1A/B clinical trial. Patients had a median of two prior lines of therapy. An additional five subjects with frontline TP53m HR-MDS received SL-172154 with azacitidine. We observed a monotherapy response in a heavily pre-treated R/R AML patient. This patient achieved a morphologic leukemia-free state and subsequently proceeded to allo-HSCT. Anti-tumor activity was also observed in combination with azacitidine in previously untreated TP53m HR-MDS patients. Out of four evaluable previously untreated TP53m HR-MDS patients, there was one CR and one mCR. Two patients, one with mCR and one with SD, proceeded to allo-HSCT. Additionally, we observed SL-172154 bound to both healthy immune cells and myeloid blast cells in bone marrow biopsies collected after intravenous infusion of SL-172154, as shown in Figure 5 below.

Figure 5 — SL-172154 Binding to Leukemic Blasts, T Cells and Monocytes in Patient Bone Marrow Biopsies

Clinical Development Strategy and Upcoming Milestones

We are conducting a Phase 1A/B clinical trial for SL-172154 in patients with AML and HR-MDS. This ongoing Phase 1 clinical trial will evaluate the safety, tolerability, pharmacokinetics, antitumor activity, and pharmacodynamic effects of SL-172154, as both monotherapy and in combination with azacitidine. We completed the Phase 1A dose-escalation portion of this trial and subsequently completed enrollment in the initial Phase 1B expansion cohorts in combination with azacitidine in TP53m AML and HR-MDS patients during 2023. The Phase 1A dose-escalation portion of our clinical trial was primarily conducted in patients with R/R AML or HR-MDS, included both monotherapy SL-172154 cohorts and SL-172154 plus azacitidine combination cohorts, and supported selection of 3 mg/kg as the appropriate dose to explore in the Phase 1B expansion cohorts. The initial Phase 1B expansion cohorts were conducted in patients with previously untreated TP53m AML or HR-MDS, using the 3 mg/kg dose of SL-172154 in combination with azacitidine. Based on the initial safety and efficacy profile, we amended the protocol for both the TP53m AML and HR-MDS cohorts to add additional patients to strengthen our confidence in the safety and efficacy profile and to further inform our future clinical trial plans.

In TP53wt AML, we plan to evaluate SL-172154 in combination with both azacitidine and venetoclax. Azacitidine plus venetoclax is the standard of care for frontline TP53wt AML patients. We believe there may be an opportunity for the addition of SL-172154 to azacitidine plus venetoclax to differentiate from the current standard of care.

We expect to announce additional data from the Phase 1B expansion cohorts in previously untreated TP53m AML and HR-MDS, including safety, objective response rates and initial response durability mid-year in 2024.

Platinum-Resistant Ovarian Cancer

Clinical Data to Date

In November 2023, we announced initial data from our ongoing Phase 1B combination clinical trial evaluating SL-172154 in combination with PLD in PROC. As of the data cutoff date of October 31, 2023, we had enrolled 16 patients with PROC. 11 of these patients were evaluable for efficacy, and we observed one confirmed PR and two unconfirmed PRs. Patients had a median of 1.5 prior lines of systemic therapy, 88% were resistant to treatment with frontline platinum, 47% had bulky disease measuring >5 cm, and 56% were pre-treated with bevacizumab. As of the cutoff date, the patient population treated was similar to the population enrolled in the Pfizer-sponsored JAVELIN Ovarian 200 clinical trial (results published in 2021), wherein PLD monotherapy provided an overall response rate of 4%. Another clinical trial, the Roche-sponsored Aurelia trial (subgroup analysis published in 2014), provided for a 7.8% overall response rate for PLD monotherapy. Figure 6 below depicts the interim best percent change in the size of the target lesion, as well as interim best response, in individual patients with PROC, as of October 31, 2023.

Figure 6— Interim Response Assessment and Percent Change in Tumor Diameter in PROC Patients Treated with SL-172154 in Combination with PLD

As of the cutoff date of October 31, 2023, SL-172154 in combination with PLD had an acceptable safety profile and is consistent with the safety profile of the individual agents. Among the 16 treated patients, the most common SL-172154-related AEs were IRRs, nausea, fatigue, headache and neutropenia, mostly in Grades 1 or 2. SL-172154-related AEs in Grades 3 or 4 were observed in six patients: anemia (n=2), AST increased (n=2), neutropenia (n=2), ALT increased (n=1), embolism (n=1) and thrombocytopenia (n=1). SL-172154-related IRRs occurred in four patients but were manageable and did not prevent the completion of dosing or lead to discontinuation. There were no Grade 5 adverse events.

In June 2023, in a poster presented at the American Society of Clinical Oncology annual meeting, we announced data from our Phase 1A monotherapy dose escalation clinical trial in PROC As of the data cutoff of January 3, 2023, 27 patients with PROC had been enrolled, with ovarian (70%), fallopian tube (15%) or primary peritoneal (15%) cancer. These patients had a median of four prior systemic therapies (range two to nine). As of a data cutoff date of January 3, 2023, 10 mg/kg was defined as the maximum administered dose, and a maximum tolerated dose was not reached.

As of the data cutoff of January 3, 2023, SL-172154 as monotherapy had an acceptable safety and tolerability profile. We observed a single dose-limiting toxicity of elevated liver enzymes in a single patient at the 10mg/kg dose level. We also frequently observed infusion-related reactions, which were manageable by slowing the rate of infusion and/or by the administration of certain premedication(s). Grade 3/4 treatment-related AEs in greater than one patient were AST increased (G3) and lymphopenia (G4), each in 2 patients (7%); all were fully resolved with no dose modifications. There were no fatal AEs, no AEs that led to drug discontinuation and no events of cytokine release syndrome. The frequency of IRR events increased with increasing dose, and slowing the rate of infusion was utilized for mitigation. Importantly, however, we have not observed dose-limiting toxicities due to hemolytic anemia, thrombocytopenia or other cytopenias (toxicities which have limited the development of some CD47 inhibitors). We believe that SL-172154 may have a differentiated safety profile, which may be due to the lack of an Fc gamma receptor binding Fc domain.

Clinical Development Strategy and Upcoming Milestones

Ovarian cancer expresses the highest levels of CD47 of any solid tumor and is a tumor type with a significant infiltration of macrophages, which express CD40. We believe this makes ovarian cancer particularly well-suited to the investigation of SL-172154. We are conducting a Phase 1 clinical trial of SL-172154 administered intravenously in patients with advanced ovarian, fallopian tube, and primary peritoneal cancers, collectively referred to as ovarian cancer. Patients that are eligible for this trial have relapsed after standard-of-care therapies and are ineligible for further platinum-based therapies. The primary objective of this trial is to assess the safety and tolerability of SL-172154. The secondary objectives include evaluation of the pharmacokinetic and pharmacodynamic profiles and the antitumor activity of SL-172154.

We completed the Phase 1A monotherapy dose-escalation clinical trial in patients with PROC in 2023. In this clinical trial, we reached a maximum administered dose of 10 mg/kg. We did not reach a maximum tolerated dose. Also in 2023, we completed initial enrollment to the Phase 1B dose-expansion portion of our clinical trial in PROC evaluating SL-172154 in combination with PLD. We have selected a starting dose of 3 mg/kg of SL-172154 in this trial. Our protocol allows for further dose escalation in the combination, if warranted. PLD is a standard-of-care chemotherapy for this patient population. According to the literature, PLD upregulates calreticulin, an endogenous “eat me” signal, on the surface of tumor cells. Consequently, we believe that PLD is an attractive combination partner due to upregulation of calreticulin and induction of immunogenic cell death. In in vivo preclinical studies, we observed improved anti-tumor activity with the combination of PLD and SL-172154 compared to PLD alone or SL-172154 alone. Furthermore, because the overall response rate of this patient population to PLD is approximately 4-8%, there is significant opportunity for improved response rates in combination with SL-172154, wherein we believe the contribution of SL-172154 will be discernible.

In addition to our combination strategy of SL-172154 in combination with PLD, we are evaluating SL-172154 in a Phase 1B combination dose-escalation and dose-expansion clinical trial in PROC in combination with mirvetuximab soravtansine, marketed by AbbVie, Inc (“AbbVie”) as Elahere. Mirvetuximab soravtansine is an antibody-drug conjugate (“ADC”) targeting folate receptor alpha (“FRα”) which provides for both direct tumor cell killing as well as enhanced macrophage phagocytosis through binding with Fc gamma receptors, and has received accelerated approval for PROC patients whose tumors are shown to be FRα positive, defined as ≥75%, as determined by the VENTANA FOLR1 (FOLR1-2.1) Assay, using the PS2+ scoring method. Pre-clinical studies have shown that both of these mechanisms may be complementary to the mechanism of SL-172154 by enhancing the activity of macrophages to phagocytose FRα- expressing ovarian cancer cells, and that SL-172154 may broaden the activity of mirvetuximab soravtansine, particularly for patients with tumors that express lower levels of FRα.

We intend to enroll patients with broader FRα expression, including those with “high” (greater than ≥75% of tumor cells staining with 2+ intensity), “medium” (≥50% to <75% of tumor cells staining with 2+ intensity), and “low” (≥25% to <50% of tumor cells staining with 2+ intensity) expression of FRα, as determined by the VENTANA FOLR1 (FOLR1-2.1) Assay, using the PS2+ scoring method. Based on our preclinical data, we believe that the addition of SL-172154 to mirvetuximab soravtansine will increase responses rates in the “medium” and “low” expressors of FRα and/or potentially provide a more durable response across the entire spectrum of FRα expressors.

We expect to announce data for both the PLD and mirvetuximab soravtansine combination trials in 2024. We expect to announce data, including topline overall response rate and an initial look at duration of response, from the Phase 1B combination clinical trial with PLD mid-year 2024. We also expect to announce initial data from the Phase 1B combination clinical trial with mirvetuximab soravtansine mid-year 2024.

SL-172154 Preclinical Experience

Our lead product candidate, SL-172154, simultaneously inhibits CD47 and activates the CD40 receptor. The pairing of a CD40 agonist domain to a CD47 inhibitory domain was selected based on prior publications which demonstrated that tumor rejection in the setting of CD47 inhibition was dependent upon a T cell mediated adaptive immune response. Agents which only block the interaction between CD47 and SIRPα do not directly activate T cell mediated adaptive immunity, but instead function to enable macrophage mediated phagocytosis of tumor cells. Antigen presenting cells, including macrophages, express CD40. Stimulation of CD40 on antigen presenting cells is known to improve the efficiency of antigen presentation and activation of T cell mediated adaptive immunity, including antitumor immunity.

To date, we have conducted extensive preclinical studies of SL-172154 that have demonstrated the following:

•Specific binding to CD47 and CD40 with high picomolar affinity

•A significant increase in macrophage-mediated phagocytosis of tumor cells

•Durable receptor occupancy to CD47 expressing cells

•Dose-dependent CD40-mediated pharmacodynamic activity

•The activation of antigen presenting cells by a CD40-induced type I interferon response

•Dose-dependent increases in multiple anti-cancer cytokines in both non-human primates and by human lymphocytes

•Dose-dependent activation of a CD8 positive T cell response, which was responsible for tumor cell killing

•Superior tumor rejection as compared to CD47 inhibitory antibodies, CD40 agonist antibodies, or the combination thereof, in mouse tumor models

Taken together, we believe these data demonstrate the potential ability of SL-172154 to activate and bridge the adaptive and innate immune responses.

We performed standard in vitro tumor cell phagocytosis assays to demonstrate whether SL-172154 enhanced macrophage-mediated phagocytosis of various tumor cell lines, both alone and in combination with tumor-targeted ADCP-competent antibodies. As shown in Figure 7 below, consistent with the mechanism of action of CD47 blocking agents, SL-172154 significantly enhanced the ability of macrophages to phagocytose tumor cells in the presence of tumor-targeted ADCP-competent antibodies. Additionally, SL-172154 potentiated macrophage-mediated phagocytosis of tumor cells that expressed calreticulin, a well-established “eat me” signal expressed on the surface of cells marked for phagocytosis.

Figure 7 — Tumor Phagocytosis Activity of SIRPα-Fc-CD40L with or without ADCP-competent Antibodies

Human monocyte derived macrophages were co-cultured with HCC1954, A431, HCC827, or Caov-3 cells in the presence of an IgG negative control, SL-172154, an ADCP-competent tumor-targeted antibody, including Trastuzumab or Cetuximab, or the combination of SL-172154 and the ADCP-competent tumor-targeted antibody. After two hours, the proportion of tumor cells phagocytosed by human macrophages was determined and reported as the phagocytosis index.

We also performed standard in vitro tumor cell phagocytosis assays to demonstrate whether SL-172154 enhanced macrophage-mediated phagocytosis across a range of tumor cells expressing varying levels of FRα expression, both alone and

in combination with mirvetuximab soravtansine, an ADC composed of a FRα-binding antibody, cleavable linker, and the maytansinoid payload DM4, a potent tubulin-targeting agent, designed to kill the targeted cancer cells. As shown in Figure 8 below, consistent with the mechanism of action of CD47 blocking agents, SL-172154 significantly enhanced the ability of macrophages to phagocytose tumor cells in the presence of mirvetuximab soravtansine.

Figure 8 — In Vitro Tumor Phagocytosis Activity of SIRPα-Fc-CD40L with or without Mirvetuximab Soravtansine

Ovarian cancer cells KB, IGROV1, or MES-OV, that express varying levels of cell surface FRα were cultured with human monocyte derived macrophages in the presence of a vehicle control, SL-172154, mirvetuximab soravtansine, or the combination of SL-172154 and mirvetuximab soravtansine. After treatment, the proportion of tumor cells phagocytosed by human macrophages was determined and reported as the phagocytosis index.

Preclinical Research and Development

Our facility in Durham, North Carolina, houses our research laboratory as well as our technical operations group. This includes both expertise and infrastructure to advance novel biologics from discovery to cell line development, analytical and process development, and into production in our manufacturing pilot plant facility. These internal capabilities have enabled development of additional potential product candidates from our ARC platform in oncology indications. Further, these capabilities have led to collaborations with outside institutions, such as our studies to understand mechanisms of acquired resistance to checkpoint inhibitors with Memorial Sloan Kettering Cancer Center, Cancer Research UK, and Astra Zeneca, which were published in Cancer Cell in January 2024. In addition, we have produced and studied multiple dual-sided fusion proteins for non-oncology indications, including dual-sided TNFR2-Fc, CTLA4-Fc and GLP1-Fc fusion proteins. Another collaboration with Moderna was published in Cancer Research in February 2024, wherein the feasibility of delivering certain dual-sided fusion proteins as lipid-encapsulated mRNA was studied. This work has informed our internal plans for advancing certain dual-sided fusion proteins in non-oncology indications, wherein mRNA/LNP based delivery methods may provide pharmacokinetic, pharmacodynamic and pharmacoeconomic advantages in comparison to traditional, intravenous delivery of recombinant proteins for chronic, non-lethal diseases. Finally, the ARC platform was generated based on the goal of linking an immune checkpoint inhibitor to a TNF superfamily ligand. This expertise in TNF ligand and receptor biology has provided a basis to develop other potential product candidates to inhibit certain TNF receptors, including TNFRSF25.

Collaboration and License Agreements

Strategic Collaboration and Option Agreement with Ono Pharmaceutical Co., Ltd.

On February 9, 2024, we entered into the Ono Agreement, effective February 13, 2024, pursuant to which we and Ono will collaborate in the research and preclinical development of certain prespecified compounds directed toward a pair of targets selected by Ono from our pipeline of bifunctional fusion proteins (the “Development Compounds”). We are primarily responsible for carrying out the research activities in accordance with a mutually agreed upon research plan (the “Research Plan”), subject to the oversight of a joint research committee consisting of representatives from both parties. Pursuant to the Ono Agreement, we granted to Ono an exclusive option (the “Option”) to obtain an exclusive, sublicensable license to research, develop, manufacture and commercialize multiple products resulting from the Development Compounds in any therapeutic area worldwide. The option period will extend from the effective date of the Ono Agreement until 90 days after we deliver our final report pursuant to the Research Plan, and following any exercise of the Option, Ono will be responsible for further development and commercialization of the Development Compounds.

In connection with entering into the Ono Agreement and conducting the Research Plan, we are entitled to receive up to $9 million consisting of an initial upfront payment and additional amounts payable upon the achievement of certain milestones specified in the Research Plan. Additionally, Ono has agreed to pay for all of our costs and expenses incurred in conducting the Research Plan.

In the event Ono exercises the Option for the Development Compounds, we are entitled to receive licensing, clinical and regulatory, and commercial milestone payments of up to $217.5 million upon the exercise of the Option, the achievement of certain specified clinical and regulatory milestones and commercial milestones and, in addition, a tiered percentage royalty on global net sales ranging from mid-single digits to low double digits. Royalties are payable by Ono on a licensed product-by-licensed product and country-by-country basis for a maximum of ten years after the first commercial sale of such licensed product in such country.

The Ono Agreement may be terminated by mutual agreement of both parties or by either us or Ono upon an uncured material breach of the Ono Agreement or the insolvency of the other party. Ono may terminate the Ono Agreement at any time upon 90 days’ written notice to us. If Ono exercises such termination right, Ono will pay all of our costs up through the date of termination. In addition, after the conditions to exercise the Option have been met, we may terminate the Ono Agreement if Ono discontinues its development or commercialization efforts and other conditions are met.

The foregoing description of the Ono Agreement does not purport to be complete and is qualified in its entirety by reference to the Ono Agreement. We intend to file the Ono Agreement as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

Clinical Trial Collaboration and Supply Agreement with ImmunoGen

On February 4, 2022, we entered into a Clinical Trial Collaboration and Supply Agreement (“the Clinical Trial Collaboration Agreement”), with ImmunoGen, Inc. (“ImmunoGen”). Pursuant to the Clinical Trial Collaboration Agreement, ImmunoGen will supply us with a sufficient quantity of mirvetuximab soravtansine for use in our Phase 1B combination cohort evaluating SL-172154 in combination with mirvetuximab soravtansine in patients with PROC,(the “Study”). We will bear all other costs associated with the conduct of the Study, except that ImmunoGen will reimburse us for $2.0 million of the costs we incur. We have sole authority over the design, conduct, and control of the Study. We will provide ImmunoGen with a final study report (the “Final Study Report”), relating to the Study promptly following completion thereof.

Unless sooner terminated, the term of the Clinical Trial Collaboration Agreement continues until the delivery of the Final Study Report. We may terminate earlier upon 60 days’ written notice for any reason; provided, that if the Study is underway at the time of such notice, such termination will only be effective 60 days following the parties’ mutual agreement on a written plan for the winddown or termination of the Study. ImmunoGen may terminate earlier if it believes, in good faith, that mirvetuximab soravtansine is being used in the Study in an unsafe manner or that the Study may unreasonably affect patient safety. In addition, either party may terminate the agreement due to a material breach by the other party (subject to a cure period), if either party determines in good faith, based on a review of the clinical data or other information, that the Study poses imminent danger to patients, if a regulatory authority takes any action that causes it to be unreasonable for, or otherwise prevents, the terminating party from supplying its compound for the Study, or if a party withdraws any applicable regulatory approval for its compound or discontinues development of its compound for any reason.

In February 2024, ImmunoGen was acquired by AbbVie.

Kopfkino License Agreement

We are party to an Exclusive License Agreement (as amended, “the Kopfkino License Agreement”), with Kopfkino IP, LLC (“Kopfkino”). Pursuant to the Kopfkino License Agreement, we have (1) a worldwide, sublicensable exclusive license to research, develop, manufacture, and commercialize products under three provisional patent applications, including all patents issuing from such applications (the “Fusion Protein Patent Rights”) and (2) a worldwide, sublicensable nonexclusive license to research, develop, manufacture, and commercialize certain know-how related to the Fusion Protein Patent Rights. We originally entered into the Kopfkino License Agreement in June 2016 with Scorpius Holdings, Inc. (“Scorpius”) (f/k/a Nighthawk Biosciences, Inc. f/k/a Heat Biologics Inc.). The Kopfkino License Agreement was subsequently amended in November 2016, December 2016, and March 2017. In January 2024, Scorpius assigned its right, title and interest in and under the Kopfkino License Agreement, along with the underlying patents and patent applications, to Kopfkino.

Under the Kopfkino License Agreement, Scorpius was required to conduct certain research and development services under a mutually-agreed upon research and development plan and Scorpius was eligible to receive financial support from us for these efforts. Effective March 2017, Scorpius completed all research and development services under the Kopfkino License Agreement and assigned to us three patent applications and all data derived from the research and development activities, referred to collectively as the Research Services Inventions. Pursuant to the terms of the Kopfkino License Agreement, we are obligated to use commercially reasonable efforts to diligently research and develop at least one product covered by the Fusion

Protein Patent Rights, including the obligation to file an Investigational New Drug (“IND”) application for such product. Our development efforts to date, including the development of SL-279252 and certain other ARC compounds, satisfy these obligations. In addition, we are to provide annual reports to Kopfkino on or before the anniversary of the effective date of the Kopfkino License Agreement to inform Kopfkino of our progress.

Unless sooner terminated or extended, the term of the Kopfkino License Agreement continues until the later of (1) 20 years following the effective date, and (2) the expiration of the last-to-expire royalty term. Either party may terminate the agreement due to a material breach by the other party (subject to a 90-day cure period) or if the other party files for bankruptcy. In the event we terminate the Kopfkino License Agreement due to a material breach by Kopfkino, Kopfkino must assign to us all right, title, and interest in the patent rights licensed under the Kopfkino License Agreement.

In addition to an upfront payment of $50,000, which we made in 2016, and a payment of $100,000 upon the successful completion of the first Phase 1 clinical trial, which we made in 2023, the Kopfkino License Agreement requires us to make further payments to Kopfkino in the future of up to $20.5 million in the aggregate for the achievement of specified development, regulatory, and commercial sale milestones for certain licensed products. We are also required to pay Kopfkino a percentage of certain upfront fees or other non-royalty payments that are not tied to milestone events which we receive in connection with certain sublicenses of the Fusion Protein Patent Rights. We are also required to pay Kopfkino a royalty on all worldwide net sales by us, our affiliates, and sublicenses of certain licensed products in the low single digits. Royalties are payable, on a product-by-product and country-by-country basis, commencing on the first commercial sale of such product and continuing until the last-to-expire valid patent claim to the licensed patent rights that cover such product in that country.

Manufacturing and Supply

By working with third-party vendors to conduct activities in compliance with current Good Manufacturing Practices (“cGMP”) we have invested significant resources to identify and scale up a suitable manufacturing process for our product candidates and ARC compounds, including SL-172154. Currently, ARC compounds are produced by mammalian cell lines commonly used in the manufacture of monoclonal antibodies, including Chinese hamster ovary (“CHO”) cells. SL-172154 has achieved cell culture titer greater than four grams per liter, and another ARC compound has achieved titers exceeding seven grams per liter. Purification of ARC compounds initially utilizes affinity chromatography directed to the Fc domain for capture, and subsequent chromatography steps are designed to remove process-related impurities including CHO derived DNA and proteins.

To date, we have manufactured bulk drug substance (“BDS”) for our product candidates utilizing the services of a limited number of third-party contract manufacturers, with whom we maintain master service agreements, pursuant to which we may manufacture BDS on a per project basis. We may terminate the master services agreements at any time for convenience in accordance with the terms of the agreement. These contract manufacturers, or we, may also terminate the master services agreements with respect to an uncured breach by the other party in accordance with the terms of the agreement. These agreements include confidentiality and intellectual property provisions to protect our proprietary rights related to our product candidates.

Given the complexity of manufacturing our dual-sided, bi-functional fusion proteins and our increased need for manufacturing driven by multiple clinical trial programs, we work to ensure that we have arrangements with multiple contract manufacturers to reduce the risk of single-source procurement of BDS. Additionally, in 2022, we completed the build out of an in-house facility to support our cell line development, manufacturing process development, analytical assay development, and non-GMP manufacturing activities.

We expect to continue to devote significant resources to process development and optimization of the manufacture of our product candidates. We believe that we have developed a manufacturing process for SL-172154 suitable for Phase 3 clinical trials and for supply of commercial drug product. A cGMP batch has not yet been initiated or completed using this improved process, however we expect that tech transfer of the manufacturing process and validation of a series of analytical methods required for release of drug substance and drug product to support Phase 3 clinical trials will be completed over the course of 2024 and into 2025. To our knowledge, no other company has successfully scaled up commercial manufacturing of dual-sided, bi-functional fusion proteins. Due to the novelty of our product candidates, we may face challenges in developing large-scale manufacturing processes. Moreover, the nature of biologic medicines could create challenges for the stability of the drug substance. While these and other challenges may result in timeline delays and higher costs, we believe that we will have sufficient BDS to support our current clinical trial programs.

All of our product candidates are manufactured from a master cell bank of that protein’s production cell line. We have or intend to have one master cell bank for each product candidate that was or will be produced and tested in accordance with cGMP and applicable regulations. Each master cell bank is or will be stored in two independent locations, and we intend to produce working cell banks for each product candidate later in product development. It is possible that we could lose multiple

cell banks from multiple locations and have our manufacturing severely impacted by the need to replace the cell banks. However, we believe we have adequate backup should any particular cell bank be lost in a catastrophic event.

Competition

The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While we believe that our technology, development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including large pharmaceutical and biotechnology companies, academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for the research, development, manufacturing, and commercialization of cancer therapies. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

We compete in the segments of the pharmaceutical, biotechnology, and other related markets that develop cancer therapies. There are many other companies that have commercialized or are developing cancer therapies, including large pharmaceutical and biotechnology companies, such as AstraZeneca/MedImmune, Bristol Myers Squibb, Merck, Novartis, Pfizer, Roche/Genentech and Gilead.

We face significant competition from pharmaceutical and biotechnology companies that target specific tumor-associated antigens using immune cells or other cytotoxic modalities. These generally include immune cell redirecting therapeutics (e.g., T cell engagers), adoptive cellular therapies (e.g., CAR-Ts), antibody drug conjugates, targeted radiopharmaceuticals, targeted immunotoxin, and targeted cancer vaccines.

With respect to our lead product candidate, SL-172154, we are aware of other competing clinical-stage therapeutics that target the CD47 pathway or the CD40 pathway, which include, but are not limited to magrolimab, evorpacept, lemzoparlimab TTI-621, TTI-622, DSP107, and APX005M. It is possible that the competitive landscape for CD47 inhibitors may change over the course of 2024 as the sponsors of these compounds are no longer providing guidance to potential approvals, including magrolimab, TTI-621 and TTI-622.

Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do. Mergers and acquisitions in the pharmaceutical, biotechnology, and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and manufacturing capacity and enrolling subjects for our clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

We could see a reduction or elimination of our commercial opportunity if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we or our collaborators may develop. Our competitors also may obtain U.S. Federal Food and Drug Administration (“FDA”) or foreign 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 or our collaborators are able to enter the market. The key competitive factors affecting the success of all our product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the effectiveness of companion diagnostics, if required, the level of biosimilar or generic competition, and the availability of reimbursement from government and other third-party payors.

Intellectual Property

We strive to protect and enhance our proprietary technology, inventions, and improvements that we consider commercially important to the development of our business, including by seeking, maintaining, and defending U.S. and foreign patent rights, including patents covering our platform technologies, product candidates, and methods of using the same, whether developed internally or licensed from third parties. We also rely on trade secrets, know-how, and continuing technological innovation to develop, strengthen and maintain our proprietary position in our field. Additionally, we intend to rely on regulatory protection afforded through data exclusivity and market exclusivity, among others, as well as patent term extensions, where available.

Our future commercial success depends, in part, on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions, and know-how related to our business, including our platform technologies and product candidates, defend and enforce our intellectual property rights, in particular our patents rights, preserve the confidentiality of our trade secrets, and operate without infringing, misappropriating, or violating the valid and enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering

to sell, or importing our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.

The patent positions of biotechnology companies like ours are generally uncertain and can involve complex legal, scientific, and factual issues. We cannot predict whether the patent applications we are currently pursuing, or those we will file or license from others, will grant us patents in any particular jurisdiction or whether the claims of any granted patents will provide sufficient proprietary protection from competitors.

In addition, the coverage claimed in a patent application may be significantly reduced before a patent is granted, and its scope can be reinterpreted and even challenged after issuance. As a result, we cannot guarantee that any of our products will be protected or remain protectable by enforceable patents. Moreover, any patents that we hold may be challenged, circumvented, or invalidated by third parties. In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that, before any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby limiting the protection such patent would afford the respective product and any competitive advantage such patent may provide. See “Risk Factors—Risks Related to Intellectual Property and Information Technology” for a more comprehensive description of risks related to our intellectual property.

For any individual patent, the term depends on the applicable law in the country in which the patent is granted. In most countries where we have filed patent applications or in-licensed patents and patent applications, patents have a term of 20 years from the application filing date or earliest claimed nonprovisional priority date. In the United States, the patent term is 20 years from the application filing date or earliest claimed nonprovisional priority date, but may be shortened if a patent is terminally disclaimed over another patent that expires earlier. The term of a U.S. patent may also be lengthened by a Patent Term Adjustment in order to address administrative delays by the U.S. Patent and Trademark Office (“U.S. PTO”) in granting a patent.

In the United States, the term of a patent that covers an FDA-approved drug or biologic may be eligible for Patent Term Extension in order to restore the period of a patent term lost during the premarket FDA regulatory review process. The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) permits a Patent Term Extension of up to five years beyond the natural expiration of the patent (but the total patent term, including the extension period, must not exceed 14 years following FDA approval). The term extension period granted on a patent covering a product is typically one-half the time between the effective date of a clinical investigation involving human beings is begun and the submission date of an application, plus the time between the submission date of an application and the ultimate approval date. Only one patent applicable to an approved product is eligible for the extension, and only those claims covering the approved product, a method for using it, or a method for manufacturing it may be extended. The application for the extension must be submitted prior to the expiration of the patent. The U.S. PTO reviews and approves the application for any Patent Term Extension in consultation with the FDA. In the future, we may decide to apply for restoration of patent term for one of our currently owned or licensed patents to extend its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant biologics license application.

Intellectual property related to our most advanced programs is summarized below. We generally file patent applications directed to our key technologies and programs in an effort to secure our intellectual property positions. As of February 1, 2024, we own or exclusively license (i) more than 25 patents and more than 20 pending non-provisional patent applications in the United States and (ii) 20 patents and more than 150 pending patent applications in jurisdictions outside of the United States. We also own additional pending provisional patent applications in the United States and pending international patent applications filed under the Patent Cooperation Treaty (“PCT”). Patent prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the U.S. PTO and other patent offices may be significantly revised before issuance, if granted at all.

SL-172154 Product Candidate

As of February 1, 2024, we own or exclusively license (i) 6 patents and 6 pending non-provisional patent applications in the United States and (ii) 11 patents and more than 25 pending patent applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan) that relate to SL-172154.

These patents and applications originate from several different patent families. Patents granted in a family generally directed to compositions and methods of treating cancer are expected to expire in the United States in 2036, without taking potential patent term extension or patent term adjustment into account. Patents granted in other families, generally directed to methods of treating cancer with various combination agents, are expected to expire in the United States in 2038, 2039, and 2042, depending on the family and without taking potential term extension or patent term adjustment into account. The terms of individual patents granted in jurisdictions outside of the United States depends on the legal term for patents in those jurisdictions.

ARC Platform

As of February 1, 2024, we own or exclusively license (i) more than 20 patents and 15 pending non-provisional patent applications in the United States and (ii) 11 patents and more than 125 pending patent applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan) that relate to the ARC platform. These include patents and/or patent applications related to SL‐172154 and other ARC compounds combining TIM3, PD‐1, SIRPα, TIGIT, CSF1R, VSIG8, or FLT3L with OX40, CD40L, 4-1BBL, or LIGHT.

These patents and applications originate from several different patent families. Patents granted in families generally directed to compositions and methods of treating cancer are expected to expire in the United States in 2036, 2038, 2039, 2040, and 2042, depending on the family and without taking potential patent term extension or patent term adjustment into account. Patents granted in other families, generally directed to methods of treating cancer with various combination agents, are expected to expire in the United States in 2038, 2039, and 2040, depending on the family and without taking potential patent term extension or patent term adjustment into account. The terms of individual patents granted in jurisdictions outside of the United States depends on the legal term for patents in those jurisdictions.

Trademark Protection

As of February 1, 2024, we own a registered trademark for “ARC” with the U.S. PTO. We plan to register trademarks in connection with our biological products.

Licensed Intellectual Property from Kopfkino IP, LLC

We are party to the Kopfkino License Agreement, with Kopfkino. Under the Kopfkino License Agreement, we have an exclusive (as to the patent rights), non-transferable, sublicensable, worldwide, royalty-bearing, non-field restricted license to certain patent rights and know-how, including rights related to the ARC platform. We are obligated to pay Kopfkino fees upon receipt of certain sublicensing income, achievement of certain milestones, and royalties upon sales of commercial products. The Kopfkino license provides us rights in the patent family including PCT/US16/54598. As of February 1, 2024, that family includes (i) 11 patents and 1 pending non-provisional patent applications in the United States, and (ii) 11 patents and more than 25 pending applications in jurisdictions outside of the United States (including, among others, Australia, Canada, China, Europe, and Japan). We control prosecution, maintenance, and enforcement of this family of patents and patent applications. We originally entered into the Kopfkino License Agreement in June 2016 with Scorpius. The agreement was subsequently amended in November 2016, December 2016, and March 2017. In January 2024, Scorpius assigned its right, title, and interest in and under the Kopfkino License Agreement, along with the underlying patents and patent applications, to Kopfkino.

Government Regulation

The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting of biologics such as those we are developing. We, along with third-party contractors, will be required to navigate the various preclinical, 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.

U.S. Biologics Regulation

In the United States, biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”) and other federal, state, local, and foreign statutes and regulations. The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following:

•completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices (“GLP”) regulation;

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

•approval by an independent institutional review board (“IRB”) or ethics committee at each clinical site before the trial is commenced;

•manufacture of the proposed biologic candidate in accordance with cGMPs;

•performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements 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 (“BLA”) after completion of all pivotal clinical trials;

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

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

•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 cGMPs, 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 GCPs; and

•FDA review and approval of a BLA 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 trial with a product candidate, 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 or protocols for preclinical studies and clinical trials. The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology and pharmacodynamic characteristics of the product, 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 trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises safety concerns or questions about the proposed clinical trial. In such a case, the IND may be placed on a partial or full clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

In addition to the IND submission process, supervision of human gene transfer trials includes evaluation and assessment by an institutional biosafety committee (“IBC”) a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment and such review may result in some delay before initiation of a clinical trial.

Clinical trials 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 trials 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 trial conducted during product development and for any subsequent protocol amendments. Furthermore, an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins at that site, and must monitor the study until completed. Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial 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 trial 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 preclinical studies and clinical trials and clinical study results to public registries.

For purposes of BLA approval, human clinical trials 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 and distribution 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 trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

•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 trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product. These so-called Phase 4 studies may be made a condition to approval of the BLA. Concurrent with clinical trials, 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.

BLA Submission and Review

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications. The BLA must include all relevant data available from pertinent preclinical studies and clinical trials, 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. Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of the product, or from a number of alternative sources, including studies initiated and sponsored by investigators. The submission of a BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.

In addition, under the Pediatric Research Equity Act (“PREA”), a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The Food and Drug Administration Safety and Innovation Act requires that a sponsor who is planning to submit a marketing application for a biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial pediatric study plan within sixty days after an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA. Unless otherwise required by regulation, PREA does not apply to any biological product for an indication for which orphan designation has been granted.

Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. Once a BLA has been accepted for filing, the FDA’s goal is to review standard applications within ten months after the filing date, 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 may also be extended by FDA requests for additional information or clarification. The FDA reviews a BLA 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. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving a BLA, the FDA 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, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs. 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 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, 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 in condition for approval, including requests for additional information or clarification. The FDA may delay or refuse

approval of a BLA 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 with a Risk Evaluation and Mitigation Strategy (“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

The FDA offers a number of expedited development and review programs for qualifying product candidates. The fast track program is intended to expedite or facilitate the process for reviewing new products that meet certain criteria. Specifically, new products are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and data demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a fast track product has opportunities for more frequent interactions with the review team during product development and, once a BLA is submitted, the product may be eligible for priority review. A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.

A product intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review. A product can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product, including involvement of senior managers.

Any marketing application for a biologic submitted to the FDA for approval, including a product with a fast track designation and/or breakthrough therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval. A product is eligible for priority review if it has the potential to provide a significant improvement in safety or effectiveness of the treatment, diagnosis or prevention of a serious disease or condition. For original BLAs, 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 (as compared to ten months under standard review).

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. Under the Food and Drug Omnibus Reform Act of 2022, the FDA may require, as appropriate, that such studies be underway prior to approval or within a specific time period after the date of approval for a product granted accelerated approval. Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted 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.

In 2017, the FDA established a new regenerative medicine advanced therapy (“RMAT”) designation as part of its implementation of the 21st Century Cures Act. The RMAT designation program is intended to fulfill the 21st Century Cures Act requirement that the FDA facilitate an efficient development program for, and expedite review of, any drug that meets the following criteria: (i) the drug qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; (ii) the

drug is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (iii) preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition. RMAT designation provides all the benefits of breakthrough therapy designation, including more frequent meetings with the FDA to discuss the development plan for the product candidate and eligibility for rolling review and priority review. Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites. Once approved, when appropriate, the FDA can permit fulfillment of post-approval requirements under accelerated approval through: the submission of clinical evidence, preclinical studies, clinical trials, patient registries or other sources of real world evidence such as electronic health records; the collection of larger confirmatory datasets; or post-approval monitoring of all patients treated with the therapy prior to approval.

Fast track designation, breakthrough therapy designation, priority review and RMAT designation do not change the standards for approval but may expedite the development or approval process. 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 or approval will not be shortened. In May 2018, the Right to Try Act established a new regulatory pathway to increase access to unapproved, investigational treatments for patients diagnosed with life-threatening diseases or conditions who have exhausted approved treatment options and who are unable to participate in a clinical trial.

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 drug designation must be requested before submitting a BLA. After the FDA grants orphan drug 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 drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusive approval (or exclusivity), which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic 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 or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. Orphan drug exclusivity does not prevent the 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 application fee.

A designated orphan drug may not receive orphan drug 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.

There is some uncertainty with respect to the FDA’s interpretation of the scope of orphan drug exclusivity. Historically, exclusivity was specific to the orphan indication for which the drug was approved. As a result, the scope of exclusivity was interpreted as preventing approval of a competing product. However, in 2021, the federal court in Catalyst Pharmaceuticals, Inc. v. Becerra suggested that orphan drug exclusivity covers the full scope of the orphan-designated “disease or condition” regardless of whether a drug obtained approval for a narrower use.

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 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 the FDA assesses an annual program fee for each product identified in an approved BLA. 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 cGMPs, 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 cGMPs 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 cGMPs 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, complete withdrawal of the product from the market or product recalls;

•fines, warning 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;

•consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs;

•mandated modification of promotional materials and labeling and the issuance of corrective information;

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

•injunctions 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. 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.

Regulation of Diagnostic Tests

Our drug candidates may require use of a diagnostic to identify appropriate patient populations for our product candidates. These diagnostics, often referred to as companion diagnostics, are medical devices, often in vitro devices, which provide information that is essential for the safe and effective use of a corresponding drug. In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance. Unless an exemption applies, diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution. The two primary types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and premarket approval (“PMA approval”). We expect that any companion diagnostic developed for our drug candidates will utilize the PMA pathway.

PMA applications must be supported by valid scientific evidence, which typically requires extensive data, including technical, preclinical, clinical and manufacturing data, to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device. For diagnostic tests, a PMA application typically includes data regarding analytical and clinical validation studies. As part of its review of the PMA, the FDA will conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the Quality System Regulation, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures. FDA review of an initial PMA may require several years to complete. If the FDA evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter or an approvable letter, which usually contains a number of conditions that must be met in order to secure the final approval of the PMA. If the FDA’s evaluation of the PMA or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. A not approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA approvable. The FDA may also determine that additional clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are

conducted and then the data submitted in an amendment to the PMA. Once granted, PMA approval may be withdrawn by the FDA if compliance with post approval requirements, conditions of approval or other regulatory standards is not maintained or problems are identified following initial marketing.

On August 6, 2014, the FDA issued a final guidance document addressing the development and approval process for “In Vitro Companion Diagnostic Devices.” According to the guidance, for novel drugs such as our drug candidates, a companion diagnostic device and its corresponding drug should be approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product labeling. The guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a drug generally will be considered an investigational device, unless it is employed for an intended use for which the device is already approved or cleared. If used to make critical treatment decisions, such as patient selection, the diagnostic device generally will be considered a significant risk device under the FDA’s Investigational Device Exemption (“IDE”) regulations. Thus, the sponsor of the diagnostic device will be required to comply with the IDE regulations. According to the guidance, if a diagnostic device and a drug are to be studied together to support their respective approvals, both products can be studied in the same investigational study, if the study meets both the requirements of the IDE regulations and the IND regulations. The guidance provides that depending on the details of the study plan and subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE.

Biosimilars and Reference Product Exclusivity

The Affordable Care Act (“ACA”) includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are highly similar, or “biosimilar,” to or interchangeable with an FDA-approved reference biological product. The FDA has issued several guidance documents outlining an approach to 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, is generally shown through analytical studies, animal studies, and a clinical study or 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. A product shown to be biosimilar or interchangeable with an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product. 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. In September 2021, the FDA issued two guidance documents intended to inform prospective applicants and facilitate the development of proposed biosimilars and interchangeable biosimilars, as well as to describe the FDA’s interpretation of certain statutory requirements added by the BPCIA.

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 preclinical data and data from adequate and well-controlled clinical trials 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 first biologic product submitted under the abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against other biologics submitted under the abbreviated approval pathway for the lesser of (i) one year after the first commercial marketing, (ii) eighteen months after approval if there is no legal challenge, (iii) eighteen months after the resolution in the applicant’s favor of a lawsuit challenging the biologics’ patents if an application has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-month period.

A biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.

The BPCIA is complex and continues to be interpreted and implemented by the FDA. In July 2018, the FDA announced an action plan to encourage the development and efficient review of biosimilars, including the establishment of a new office within the agency that will focus on therapeutic biologics and biosimilars. On December 20, 2020, Congress amended the

PHSA as part of the COVID-19 relief bill to further simplify the biosimilar review process by making it optional to show that conditions of use proposed in labeling have been previously approved for the reference product, which used to be a requirement of the application. In addition, government proposals have sought to reduce the 12-year reference product exclusivity period. As of March 2020, certain products previously approved as drugs under the FDCA, such as insulin and human growth hormone, are now deemed to be biologics under the PHSA, which means they may face competition through the biosimilars pathway and are not be eligible for the twelve-year period of exclusivity granted to new BLAs. 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.

As discussed below, the Inflation Reduction Act of 2022 (“IRA”) is a significant new law that intends to foster generic and biosimilar competition and to lower drug and biologic costs.

Other Healthcare Laws and Compliance Requirements

Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business. Such laws include, without limitation: the federal Anti-Kickback Statute (“AKS”); the federal False Claims Act (“FCA”); the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and similar foreign, federal and state fraud, abuse and transparency laws.

The AKS prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program. The term remuneration has been interpreted broadly to include anything of value. The AKS has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand, and prescribers and purchasers on the other. The government often takes the position that to violate the AKS, only one purpose of the remuneration need be to induce referrals, even if there are other legitimate purposes for the remuneration. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from AKS prosecution, but they are drawn narrowly and practices that involve remuneration, such as consulting agreements, 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. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory 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 AKS. 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.

Civil and criminal false claims laws, including the FCA, and civil monetary penalty laws, which can be enforced through civil whistleblower or qui tam actions, prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment of federal government funds, including in federal healthcare programs, that are false or fraudulent. Pharmaceutical and other healthcare companies have been prosecuted under these laws for engaging in a variety of different types of conduct that caused the submission of false claims to federal healthcare programs. Under the AKS, for example, a claim resulting from a violation of the AKS is deemed to be a false or fraudulent claim for purposes of the FCA. The FCA imposes mandatory treble damages and per-violation civil penalties up to approximately $27,000.

HIPAA created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program, including private third-party payors, and making false statements relating to healthcare matters. A person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate the statute in order to have committed a violation.

The FDCA addresses, among other things, the design, production, labeling, promotion, manufacturing, and testing of drugs, biologics and medical devices, and prohibits such acts as the introduction into interstate commerce of adulterated or misbranded drugs or devices. The PHSA also prohibits the introduction into interstate commerce of unlicensed or mislabeled biological products.

The U.S. federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information related to payments or other transfers of value made to various healthcare professionals including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Beginning on January 1, 2023, California Assembly Bill 1278 requires California physicians and surgeons to notify patients of Open Payments.

We are also subject to additional similar U.S. state and foreign law equivalents of each of the above federal laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating compliance efforts. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply, we

may be subject to penalties, including, without limitation, civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.

Data Privacy and Security

Numerous state, federal, and foreign laws govern the collection, dissemination, use, access to, confidentiality, and security of personal information, including health-related information. In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations, govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners. For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations imposes privacy, security, and breach notification obligations on certain health care providers, health plans, and health care clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve using, disclosing, creating, receiving, maintaining, or transmitting individually identifiable health information for or on behalf of such covered entities. The requirements imposed by HIPAA and HITECH on covered entities and business associates include entering into agreements that require business associates protect PHI provided by the covered entity against improper use or disclosure, among other things; following certain standards for the privacy of PHI, which limit the disclosure of a patient’s past, present or future physical or mental health or condition or information about a patient’s receipt of health care if the information identifies, or could reasonably be used to identify, the individual; ensuring the confidentiality, integrity and availability of all PHI created, received, maintained or transmitted in electronic form, to identify and protect against reasonably anticipated threats or impermissible uses or disclosures to the security and integrity of such PHI; and reporting of such breaches of PHI to individuals and regulators.

Significant civil and criminal fines and other penalties may be imposed for violating HIPAA. A covered entity or business associate is also liable for civil money penalties for a violation that is based on an act or omission of any of its agents, which may include a downstream business associate, as determined according to the federal common law of agency. HITECH also increased the civil and criminal penalties applicable to covered entities and 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. To the extent that we submit electronic healthcare claims and payment transactions that do not comply with the electronic data transmission standards established under HIPAA and HITECH, payments to us may be delayed or denied.

Even when HIPAA does not apply, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

In addition, state laws govern the privacy and security of personal information, including health-related information, in certain circumstances. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. For example, the California Consumer Privacy Act of 2018 (“CCPA”), as amended by the California Privacy Rights Act of 2020 (“CPRA”), which went into effect on January 1, 2020, creates new data privacy obligations for covered companies and provides new privacy rights to California residents. The CCPA/CPRA applies to personal data of consumers, business representatives, and employees, and imposes obligations on certain businesses that do business in California, including to provide specific disclosures in privacy notices, rights to California residents in relation to their personal information. Health information falls under the CCPA/CPRA’s definition of personal information where it identifies, relates to, describes, or is reasonably capable of being associated with or could reasonably be linked with a particular consumer or household—unless it is subject to HIPAA—and is included under a new category of personal information, “sensitive personal information,” which is offered greater protection.

Coverage and Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any pharmaceutical or biological product for which we obtain regulatory approval. Sales of any product, if approved, depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement, if any, for such product by third-party payors. Decisions regarding whether to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations. As a result, the coverage determination process is

often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

Third-party payors are increasingly challenging the prices charged for medical products and services, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical or biological products, medical devices and medical services, in addition to questioning safety and efficacy. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product that receives approval. Decreases in third-party reimbursement for any product or a decision by a third-party not to cover a product could reduce physician usage and patient demand for the product.

For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. In addition, 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 or biological products, will apply to companion diagnostics.

In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products. The IRA provides CMS with significant new authorities intended to curb drug costs and to encourage market competition. For the first time, CMS will be able to directly negotiate prescription drug prices and to cap out-of-pocket costs. Each year, CMS will select and negotiate a preset number of high-spend drugs and biologics that are covered under Medicare Part B and Part D that do not have generic or biosimilar competition. These price negotiations will begin in 2023. The IRA also provides a new “inflation rebate” covering Medicare patients that will take effect in 2023 and is intended to counter certain price increases in prescriptions drugs. The inflation rebate provision will require drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Part B and Part D increases faster than the rate of inflation. To support biosimilar competition, beginning in October 2022, qualifying biosimilars may receive a Medicare Part B payment increase for a period of five years. Separately, if a biologic drug for which no biosimilar exists delays a biosimilar’s market entry beyond two years, CMS will be authorized to subject the biologics manufacturer to price negotiations intended to ensure fair competition. Notwithstanding these provisions, the IRA’s impact on commercialization and competition remains largely uncertain.

Healthcare Reform

The United States and some foreign jurisdictions are considering or have enacted a number of reform proposals to change the healthcare system. There is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded health care programs, and increased governmental control of drug pricing.

The ACA, which was enacted in March 2010, substantially changed the way healthcare is financed by both governmental and private insurers in the United States, and significantly affected the pharmaceutical industry. The ACA contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.

Other legislative changes have been proposed and adopted since the ACA was enacted, including automatic aggregate reductions of Medicare payments to providers of 2% per fiscal year as part of the federal budget sequestration under the Budget Control Act of 2011. These reductions went into effect in April 2013 and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional action is taken by Congress. In addition, the Bipartisan Budget Act of 2018, among other things, amended the Medicare Act (as amended by the ACA) to increase the point-of-sale discounts that manufacturers must agree to offer under the Medicare Part D coverage discount program from 50% to 70% off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs being covered under Medicare Part D.

Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state

measures designed to, among other things, reduce the cost of prescription drugs, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. For example, in May 2019, CMS adopted a final rule allowing Medicare Advantage Plans the option to use step therapy for Part B drugs, permitting Medicare Part D plans to apply certain utilization controls to new starts of five of the six protected class drugs, and requiring the Explanation of Benefits for Part D beneficiaries to disclose drug price increases and lower cost therapeutic alternatives, which went into effect on January 1, 2021.

Notwithstanding the IRA, continued legislative and enforcement interest exists in the United States with respect to specialty drug pricing practices. Specifically, we expect regulators to continue pushing for transparency to drug pricing, reducing the cost of prescription drugs under Medicare, reviewing the relationship between pricing and manufacturer patient programs, and reforming government program reimbursement methodologies for drugs.

Other Government Regulation Outside of the United States

In addition to regulations in the United States, we are subject to a variety of regulations in other jurisdictions governing, among other things, research and development, clinical trials, testing, manufacturing, safety, efficacy, quality control, labeling, packaging, storage, record keeping, distribution, reporting, export and import, advertising, marketing and other promotional practices involving biological products as well as authorization, approval as well as post-approval monitoring and reporting of our products. Because biologically sourced raw materials are subject to unique contamination risks, their use may be restricted in some countries.

Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

The requirements and process governing the conduct of clinical trials, including requirements to conduct additional clinical trials, product licensing, safety reporting, post-authorization requirements, marketing and promotion, interactions with healthcare professionals, pricing and reimbursement may vary widely from country to country. No action can be taken to market any product in a country until an appropriate approval application has been approved by the regulatory authorities in that country. The current approval process varies from country to country, and the time spent in gaining approval varies from that required for FDA approval. In certain countries, the sales price of a product must also be approved. The pricing review period often begins after market approval is granted. Even if a product is approved by a regulatory authority, satisfactory prices may not be approved for such product, which would make launch of such products commercially unfeasible in such countries.

Regulation in the European Union

European Data Laws

The collection and use of personal health data and other personal data in the EU is governed by the provisions of the European General Data Protection Regulation (EU) 2016/679 (“GDPR”), which came into force in May 2018, and related data protection laws in individual EU Member States. The GDPR imposes a number of strict obligations and restrictions on the ability to process, including collecting, analyzing and transferring, personal data of individuals, in particular with respect to health data from clinical trials and adverse event reporting. The GDPR includes requirements relating to the legal basis of the processing (such as consent of the individuals to whom the personal data relates), the information provided to the individuals prior to processing their personal data, the notification obligations to the national data protection authorities, and the security and confidentiality of the personal data. EU Member States may also impose additional requirements in relation to health, genetic and biometric data through their national legislation.

In addition, the GDPR imposes specific restrictions on the transfer of personal data to countries outside of the European Economic Area (“EEA”) that are not considered by the European Commission (“EC”) to provide an adequate level of data protection. Appropriate safeguards are required to enable such transfers. Among the appropriate safeguards that can be used, the data exporter may use the standard contractual clauses (“SCCs”). With regard to the transfer of data from the EEA to the US, on July 10, 2023, the European Commission adopted its adequacy decision for the EU-US Data Privacy Framework. On the bases of the new adequacy decision, personal data can flow from the EEA to US companies participating in the framework.

Failure to comply with the requirements of the GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater, other administrative penalties and a number of criminal offenses (punishable by uncapped fines) for organizations and, in certain cases, their directors and officers, as well as civil liability claims from individuals whose personal data was processed. Data protection authorities from the different EU Member States may still implement certain variations, enforce the GDPR and national data protection laws differently, and introduce additional national regulations and guidelines, which adds to the complexity of processing personal data in the EU. Guidance developed at both the

EU level and at the national level in individual EU Member States concerning implementation and compliance practices are often updated or otherwise revised.

Furthermore, there is a growing trend towards the required public disclosure of clinical trial data in the EU, which adds to the complexity of obligations relating to processing health data from clinical trials. Such public disclosure obligations are provided in the new EU Clinical Trials Regulation (EU) No. 536/2014 (“CTR”), European Medicines Agency (“EMA”) disclosure initiatives and voluntary commitments by industry. Failure to comply with these obligations could lead to government enforcement actions and significant penalties against us, harm to our reputation, and adversely impact our business and operating results. The uncertainty regarding the interplay between different regulatory frameworks, such as the CTR and the GDPR, further adds to the complexity that we face with regard to data protection regulation.

With regard to the transfer of personal data from the EEA to the United Kingdom (“UK”), personal data may now freely flow from the EU to the UK since the UK is deemed to have an adequate data protection level. However, the adequacy decisions include a ‘sunset clause’ which entails that the decisions will automatically expire four years after their entry into force, unless renewed. Additionally, following the UK’s withdrawal from the EU and the EEA, companies also have to comply with the UK’s data protection laws (including the UK GDPR, as defined in section 3(10) (as supplemented by section 205(4)) of the Data Protection Act 2018 (the “DPA 2018”) (“UK GDPR”), the DPA 2018, and related data protection laws in the UK). Separately to the fines that can be imposed by the GDPR, the UK regime has the ability to impose fines up to the greater of £17.5 million or 4% of global turnover.

Following the UK’s withdrawal from the EU and the EEA, companies are subject to specific transfer rules under the UK regime; personal data may flow freely from the UK to the EEA, since the EEA is deemed to have an adequate data protection level for purposes of the UK regime. These UK international transfer rules broadly mirror the GDPR rules. On February 2, 2022, the UK Secretary of State laid before the UK Parliament the international data transfer agreement (“IDTA”) and the international data transfer addendum to the European Commission’s standard contractual clauses for international data transfers (“Addendum”) and a document setting out transitional provisions. The IDTA and Addendum came into force on March 21, 2022 and replaced the old SCCs for the purposes of the UK regime. However, the transitional provisions, adopted with the IDTA and the Addendum, provide that contracts concluded on or before September 21, 2022 on the basis of any old SCCs continue to provide appropriate safeguards for the purpose of the UK regime until March 21, 2024, provided that the processing operations that are the subject matter of the contract remain unchanged and reliance on those clauses ensures that the transfer of personal data is subject to appropriate safeguards.

With regard to the transfer of personal data from the UK to the United States, the UK government has adopted an adequacy decision for the United States (the “UK-US Data Bridge”), which came into force on October 12, 2023. The UK-US Data Bridge recognizes the United States as offering an adequate level of data protection where the transfer is to a U.S. company participating in the EU-US Data Privacy Framework and the UK Extension to the EU-US Data Privacy Framework.

Drug and Biologic Development Process

Regardless of where they are conducted, all clinical trials included in applications for marketing authorization for human medicines in the European EU/EEA must have been carried out in accordance with EU regulations. This means that clinical trials conducted in the EU/EEA have to comply with EU clinical trial legislation but also that clinical trials conducted outside the EU/EEA have to comply with ethical principles equivalent to those set out in the EEA, including adhering to international good clinical practice and the Declaration of Helsinki. The conduct of clinical trials in the EU is governed by the CTR, which entered into force on January 31, 2022. The CTR replaced the Clinical Trials Directive 2001/20/EC (“Clinical Trials Directive”) and introduced a complete overhaul of the existing regulation of clinical trials for medicinal products in the EU.

Under the former regime, which will expire after a transition period of one or three years, respectively, as outlined below in more detail, before a clinical trial can be initiated it must be approved in each EU member state where there is a site at which the clinical trial is to be conducted. The approval must be obtained from two separate entities: the National Competent Authority (“NCA”) and one or more Ethics Committees. The NCA of the EU Member States in which the clinical trial will be conducted must authorize the conduct of the trial, and the independent Ethics Committee must grant a positive opinion in relation to the conduct of the clinical trial in the relevant EU member state before the commencement of the trial. Any substantial changes to the trial protocol or other information submitted with the clinical trial applications must be submitted to or approved by the relevant NCA and Ethics Committees. Under the current regime all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial must be reported to the NCA and to the Ethics Committees of the EU member state where they occur.

A more unified procedure will apply under the new CTR. A sponsor will be able to submit a single application for approval of a clinical trial through a centralized EU clinical trials portal. One national regulatory authority (the reporting EU member state proposed by the applicant) will take the lead in validating and evaluating the application consult and coordinate with the other concerned EU Member States. If an application is rejected, it may be amended and resubmitted through the EU

clinical trials portal. If an approval is issued, the sponsor may start the clinical trial in all concerned EU Member States. However, a concerned EU member state may in limited circumstances declare an “opt-out” from an approval and prevent the clinical trial from being conducted in such member state. The CTR also aims to streamline and simplify the rules on safety reporting, and introduces enhanced transparency requirements such as mandatory submission of a summary of the clinical trial results to the EU Database (“CTIS”). The CTR foresees a three-year transition period. EU Member States will work in CTIS immediately after the system has gone live. On January 31, 2023, submission of initial clinical trial applications via CTIS became mandatory, and by January 31, 2025, all ongoing trials approved under the former Clinical Trials Directive will need to comply with the CTR and have to be transitioned to CTIS.

Under both the former regime and the new CTR, national laws, regulations, and the applicable GCP and GLP standards must also be respected during the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use guidelines on GCP and the ethical principles that have their origin in the Declaration of Helsinki.

During the development of a medicinal product, the EMA and national regulators within the EU provide the opportunity for dialogue and guidance on the development program. At the EMA level, this is usually done in the form of scientific advice, which is given by the Committee for Medicinal Products for Human Use (“CHMP”) on the recommendation of the Scientific Advice Working Party. A fee is incurred with each scientific advice procedure, but is significantly reduced for designated orphan medicines. Advice from the EMA is typically provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical testing and clinical studies, and pharmacovigilance plans and risk-management programs. Advice is not legally binding with regard to any future Marketing Authorization Application (“MAA”) of the product concerned.

Drug Marketing Authorization

In the European Union, medicinal products, including advanced therapy medicinal products (“ATMPs”), are subject to extensive pre- and post-market regulation by regulatory authorities at both the European Union and national levels. ATMPs comprise gene therapy products, somatic cell therapy products and tissue engineered products, which are genes, cells or tissues that have undergone substantial manipulation and that are administered to human beings in order to cure, diagnose or prevent diseases or regenerate, repair or replace a human tissue. Pursuant to the ATMP Regulation, the Committee on Advanced Therapies (“CAT”) is responsible in conjunction with the CHMP for the evaluation of ATMPs. The CHMP and CAT are also responsible for providing guidelines on ATMPs. These guidelines provide additional guidance on the factors that the EMA will consider in relation to the development and evaluation of ATMPs and include, among other things, the preclinical studies required to characterize ATMPs manufacturing and control information that should be submitted in a In the EU and in Iceland, Norway and Liechtenstein (together the EEA) after completion of all required clinical testing, pharmaceutical products may only be placed on the market after obtaining a Marketing Authorization (“MA”). To obtain an MA of a drug under European Union regulatory systems, an applicant can submit an MAA through, amongst others, a centralized or decentralized procedure.

Centralized Authorization Procedure

STTK US Equity

STTK · 10-K · period ended 2023-12-31

Item 1. Business

STTK US Equity☆

STTK · 10-K · period ended 2023-12-31

Item 1. Business

STTK US Equity