10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2022

Commission file number 001-40407

Vera Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (650) 770-0077

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

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

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

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

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

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

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

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☒

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

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

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

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

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

The aggregate market value of the Registrant’s Class A common stock held by non-affiliates of the Registrant as of June 30, 2022, the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately $163.2 million based on the closing price of the Registrant’s Class A common stock on the Nasdaq Global Select Market of $13.61 per share.

As of March 23, 2023, the registrant had 44,261,109 shares of Class A common stock, $0.001 par value per share, andno shares of Class B common stock, $0.001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement for its 2023 Annual Meeting of Stockholders, which the Registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the Registrant’s fiscal year ended December 31, 2022, are incorporated by reference into Part III of this Annual Report on Form 10-K.

Table of Contents

Page

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ii

SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS iii

PART I

Item 1. Business 1

Item 1A. Risk Factors 44

Item 1B. Unresolved Staff Comments 94

Item 2. Properties 94

Item 3. Legal Proceedings 94

Item 4. Mine Safety Disclosures 94

PART II

Item 6. Reserved 95

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 105

Item 8. Financial Statements and Supplementary Data 105

Item 9A. Controls and Procedures 130

Item 9B. Other Information 130

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 131

PART III

Item 10. Directors, Executive Officers and Corporate Governance 132

Item 11. Executive Compensation 132

Item 14. Principal Accountant Fees and Services 132

PART IV

Item 15. Exhibit and Financial Statement Schedules 133

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (the Annual Report) may contain “forward-looking statements” within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A, “Risk Factors” in this Annual Report. Except as required by law, we assume no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise. These statements, which represent our current expectations or beliefs concerning various future events, may contain words such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate” or other words indicating future results, though not all forward-looking statements necessarily contain these identifying words. Such statements may include, but are not limited to, statements concerning the following:

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our financial performance;

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the sufficiency of our existing cash to fund our future operating expenses and capital expenditure requirements;

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

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the scope, progress, results and costs of developing our product candidates and conducting nonclinical studies and clinical trials;

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the timing and costs involved in obtaining and maintaining regulatory approval of our product candidates and the timing or likelihood of regulatory filings and approvals, including our expectation to seek special designations for our product candidates for various diseases;

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our plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and our ability to grow a sales team;

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the ability to license additional intellectual property relating to any future product candidates and to comply with our existing license agreements;

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the impact of unfavorable geopolitical and macroeconomic conditions on our business and operations;

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the implementation of our strategic plans for our business and current product candidates or any other product candidates we may develop;

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the size of the market opportunity for our product candidates in each of the diseases we target;

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our reliance on third parties to conduct nonclinical research activities, and for the manufacture of our product candidates;

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

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our estimates of the number of patients in the United States who suffer from the diseases we target and the number of subjects that will enroll in our clinical trials;

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the progress and focus of our current and future clinical trials, and the reporting of data from those trials;

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our ability to advance product candidates into and successfully complete clinical trials;

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the ability of our clinical trials to demonstrate the safety and efficacy of our product candidates, and other positive results;

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

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

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our plans relating to the further development and manufacturing of our product candidates, including additional indications that we may pursue;

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existing regulations and regulatory developments in the United States and other jurisdictions;

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

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the rate and degree of market acceptance of our product candidates, as well as the pricing and reimbursement of our product candidates, if approved;

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our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates;

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our plans and ability to obtain and protect intellectual property rights;

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the scope of protection we are able to establish and maintain for intellectual property rights, including atacicept, MAU868 and any other product candidates we may develop;

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our ability to retain the continued service of our key personnel and to identify, hire, and then retain additional qualified personnel; and

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our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (JOBS Act) and as a smaller reporting company under the Securities Exchange Act of 1934, as amended (Exchange Act).

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. You should be aware that the occurrence of any of the events discussed under Part I, Item 1A, “Risk Factors” and elsewhere in this Annual Report could substantially harm our business, results of operations and financial condition and that if any of these events occurs, the trading price of our common stock could decline and you could lose all or a part of the value of your shares of our common stock.

The cautionary statements made in this Annual Report are intended to be applicable to all related forward-looking statements wherever they may appear in this Annual Report. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. Except as required by law, we assume no obligation to update our forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.

SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS

An investment in shares of our Class A common stock involves a high degree of risk. Below is a list of some of the material risks associated with our business. This summary does not address all of the risks that we face. Additional discussion of the risks listed in this summary, as well as other risks that we face, are set forth under Part I, Item 1A, “Risk Factors” in this Annual Report.

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We have not completed any clinical trials for our lead product candidate, atacicept, and have no products approved for commercial sale, which may make it difficult to evaluate our current business and predict our future success and viability.

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We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs of our product candidates or future commercialization efforts.

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We have incurred net losses since inception, and we expect to continue to incur net losses for the foreseeable future. In addition, we may be unable to continue as a going concern over the long-term.

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We are substantially dependent on the success of our product candidates, atacicept and MAU868, which are currently in the clinical development stage. If we are unable to complete development of, obtain regulatory approval for and commercialize our product candidates in one or more indications and in a timely manner, our business, financial condition, results of operations and prospects will be significantly harmed.

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Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control, including difficulties in identifying patients with immunoglobulin A nephropathy (IgAN), the availability of competitive products, and significant competition for recruiting patients in clinical trials.

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The incidence and prevalence for target patient populations of atacicept in specific indications are based on estimates and third-party sources. If the market opportunities for atacicept, or any future product candidate we may develop, if and when approved, are smaller than we estimate or if any approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability might be materially and adversely affected.

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Interim, initial, “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

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We face significant competition, which may result in others discovering, developing or commercializing products before or more successfully than us.

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Changes in methods of manufacturing or formulation of our product candidates may result in additional costs or delays.

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Our product candidates may cause significant adverse events, toxicities or other undesirable side effects when used alone or in combination with other approved products or investigational new drugs that may result in a safety profile that could inhibit regulatory approval, prevent market acceptance, limit their commercial potential or result in significant negative consequences.

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Even if any product candidate we develop receives regulatory approval, it could be subject to significant post-marketing regulatory requirements and will be subject to continued regulatory oversight.

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Biosimilars to our product candidates may provide competition sooner than anticipated.

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Unfavorable geopolitical and global economic conditions could adversely affect our business, financial condition and results of operations.

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Our success depends on our ability to protect our intellectual property and our proprietary technologies. If we or our potential licensors, licensees, or collaborators are unable to obtain or maintain patent protection with respect to our product candidates, proprietary technologies and their uses, our business, financial condition, results of operations and prospects could be significantly harmed.

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The terms of our loan agreement place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.

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Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees and key consultants.

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We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators.

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If we breach our license agreement (Ares Agreement) with Ares Trading S.A. (Ares), an affiliate of Merck KGaA, Darmstadt, Germany, related to atacicept, or the license agreement with Novartis International Pharmaceutical AG (Novartis) related to MAU868, we could lose the ability to continue the development and commercialization of atacicept or MAU868, respectively.

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We may be required to make significant payments under our license agreements related to atacicept and MAU868.

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If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected.

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Patent terms may be inadequate to protect our competitive position on atacicept, MAU868 or any future product candidates we may develop for an adequate amount of time.

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We rely, and expect to continue to rely, on third parties, including independent clinical investigators and contract research organizations (CROs), to conduct certain aspects of our nonclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize atacicept, MAU868 or future product candidates we may develop and our business, financial condition, results of operations and prospects could be significantly harmed.

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The manufacture of drugs is complex and our third-party manufacturers may encounter difficulties in production. If any of our third-party manufacturers encounter such difficulties, our ability to provide adequate supply of our product candidates for clinical trials or our product for patients, if approved, could be delayed or prevented.

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If we engage in future acquisitions or strategic partnerships, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks.

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The price of our Class A common stock may be volatile, and you could lose all or part of your investment.

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If we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

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Our principal stockholders and management own a significant percentage of our outstanding voting stock and will be able to exert significant control over matters subject to stockholder approval.

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Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

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We may be subject to securities litigation, which is expensive and could divert management attention.

PART I

Item 1. Business.

Overview

We are a late clinical-stage biotechnology company focused on developing and commercializing transformative treatments for patients with serious immunological diseases. Our lead product candidate, atacicept, is a self-administered fusion protein that blocks both B lymphocyte stimulator (BLyS) and a proliferation-inducing ligand (APRIL) with best-in-class potential for the treatment of IgA nephropathy (IgAN). The Phase 2b ORIGIN clinical trial evaluating the safety and efficacy of atacicept in patients with IgAN completed enrollment in mid-2022 and reported positive 24-week topline results in January 2023. Atacicept met its primary endpoint at 24 weeks, achieved statistical significance in the 150 mg dose group, and showed a trend towards deeper reductions in proteinuria with available data at 36 weeks, for which full results will read out in the second quarter of 2023. Additionally, atacicept’s safety profile was comparable to placebo. The trial will remain blinded through 36 weeks, after which all patients will roll onto the open label portion of the study and receive atacicept 150 mg through 96 weeks. We plan to advance atacicept 150 mg in a pivotal Phase 3 clinical trial in IgAN in the second quarter of 2023. We also are planning a Phase 3 clinical trial of atacicept in lupus nephritis (LN), a severe renal manifestation of systemic lupus erythematosus (SLE), based on feedback from the FDA’s review of clinical results in a Phase 2 clinical trial of atacicept in SLE patients with high disease activity (HDA). In December 2021, we obtained worldwide, exclusive development and commercial rights to MAU868, a potentially first-in-class monoclonal antibody to treat reactivated BK virus (BKV) infections. MAU868 is a clinical-stage neutralizing monoclonal antibody that is directed against BKV, a polyoma virus that can have devastating consequences in certain settings such as kidney transplant and hematopoietic stem cell transplant (HSCT). In final results from the Phase 2 clinical trial of MAU868 versus placebo in BK viremia among kidney transplant recipients, MAU868 was shown to be well tolerated and demonstrated a clinically meaningful BKV antiviral activity through 36 weeks. We believe that our current pipeline programs leverage the deep expertise of our team and have strong commercial synergies. We hold global developmental and commercial rights to all of our pipeline molecules.

In January 2023, we announced our plan to prioritize and focus our current resources on the advancement of atacicept in IgAN into a pivotal Phase 3 trial. As a result, we are delaying enrollment in the pivotal Phase 3 trial for LN and commitment of resources to the MAU868 program.

Atacicept in IgAN

IgAN is a serious and progressive autoimmune disease of the kidney that is driven by the production of immunogenic galactose-deficient IgA1 (Gd-IgA1), which is associated with increased risk of kidney-related morbidity and mortality. We estimate there are approximately 126,000 biopsy-confirmed IgAN patients in the United States, 136,000 in the European Union, and 130,000 in Japan. Up to 50% of patients diagnosed with IgAN develop end-stage renal disease (ESRD) within 20 years from initial diagnosis, requiring dialysis or kidney transplant. ESRD causes considerable morbidity and impact on patients’ lives and represents a significant health economic burden, which was estimated to be $49.2 billion in the United States in 2018. Despite this high level of morbidity, only two treatments have been approved for this indication: TARPEYOTM (developed by Calliditas Therapeutics AB under the name Nefecon), a recently approved reformulated steroid, and FILSPARITM (developed by Travere Therapeutics under the name sparsentan), a recently approved dual endothelin angiotensin receptor antagonist. The current standard of care continues to consist of off-label use of renin-angiotensin-aldosterone system (RAAS) inhibitors, including angiotensin-converting enzyme (ACE) inhibitors and angiotensin II receptor blockers (ARBs), and potentially steroids. We estimate the U.S. market opportunity for novel therapeutics in IgAN is approximately $4.0 billion to $8.0 billion annually, based on the disease prevalence and the segment of IgAN patients at high risk of progressing to ESRD. In Europe and Japan, we estimate the annual market opportunity for novel IgAN therapeutics to be $1.0 billion and $600 million, respectively.

Atacicept is a fusion protein self-administered as a subcutaneous injection once weekly that blocks both BLyS and APRIL, which stimulate B cells and plasma cells to produce autoantibodies contributing to certain autoimmune diseases. We believe that atacicept’s mechanism has the potential to drive clinical success by measures designed to assess efficacy in IgAN and other immunologic diseases. BLyS inhibition has been clinically and commercially validated through the approval of Benlysta (belimumab) in both SLE and LN. Preclinical and clinical evidence support that atacicept’s mechanism of dual inhibition of BLyS and APRIL may provide improved clinical outcomes, measured by endpoints designed to assess efficacy, compared to inhibiting either signal alone. Atacicept has the potential to be the first disease-modifying therapy for IgAN due to its ability to act on core pathophysiology processes. As reported in a Phase 2a clinical trial of 16 patients conducted by Merck KGaA, Darmstadt, Germany, atacicept is the first and only molecule in development to demonstrate a 60% reduction in serum Gd-IgA1, which is central to the pathogenesis of IgAN, in a randomized controlled study in IgAN patients.

We have worldwide, exclusive rights to atacicept from Ares, an affiliate of Merck KGaA, Darmstadt, Germany, pursuant to the Ares Agreement, which advanced atacicept in randomized, double-blind, placebo-controlled clinical trials for several autoimmune diseases in over 1,500 patients, in which it was well tolerated. In IgAN, Merck KGaA, Darmstadt, Germany, conducted a randomized, double-blind, placebo-controlled Phase 2a trial known as JANUS. Results from the JANUS trial showed a dose-dependent effect of

atacicept 25 mg and 75 mg weekly on serum Gd-IgA1, proteinuria, and key biomarkers, including serum Ig levels. As reported at the American Society of Nephrology (ASN) conference in 2022, atacicept is also the first known therapeutic in IgAN to show reduction in all first three hits of disease pathogenesis—serum Gd-IgA1, anti-Gd-IgA1, and immune complex levels.

We are conducting a multinational, randomized, double-blind, placebo-controlled Phase 2b clinical trial in IgAN, which we refer to as ORIGIN. The ORIGIN trial is evaluating three subcutaneous weekly doses of atacicept (25 mg, 75 mg and 150 mg) and their impact on the reduction of proteinuria as the primary endpoint. A significant reduction in proteinuria, as measured by urine protein: creatinine ratio (UPCR) in a 24-hour urine collection, is associated with improved renal outcomes in patients with IgAN. UPCR is a surrogate endpoint endorsed by the FDA for primary glomerular diseases associated with significant proteinuria, including IgAN. The ORIGIN trial is powered to demonstrate a statistically significant difference between atacicept and placebo in decrease of proteinuria. Given the FDA’s recent approval of TARPEYO, we believe this validates the use of proteinuria as a surrogate for accelerated approval. Secondary endpoints include the difference in kidney function between treated and placebo patients as measured by estimated glomerular filtration rate (eGFR) and reduction in Gd-IgA1. We completed enrollment of the Phase 2b ORIGIN trial in mid-2022, enrolling a total of 116 patients at multiple global sites. In January 2023, we announced that atacicept met the primary endpoint: the pooled 75 mg and 150 mg arms achieved a statistically significant reduction in proteinuria versus placebo at 24 weeks. In a prespecified per-protocol (PP) analysis, a blinded third-party CRO identified patients with protocol deviations that potentially confounded proteinuria measure. In the PP population excluding these patients, atacicept 150 mg achieved a 41% mean reduction in proteinuria versus baseline, resulting in a statistically significant 34% placebo-adjusted reduction. Available data show a trend towards deeper reductions in proteinuria at 36 weeks for patients on atacicept, for which full results will read out in the second quarter of 2023. Atacicept was well tolerated, and its safety profile in IgAN patients was also comparable to placebo. The ORIGIN trial will remain blinded through 36 weeks, after which all patients will roll onto the open label portion of the trial and receive atacicept 150 mg through 96 weeks, allowing for the evaluation of long-term safety and durability of response of atacicept in IgAN.

We plan to advance atacicept into a pivotal Phase 3 trial in the second quarter of 2023, using the same formulation of the 150 mg dose. Phase 2b learnings will inform the Phase 3 study design and management to ensure a de-risked trial that accurately assesses treatment efficacy. With the ongoing data from the Phase 2b trial through 2024 and Phase 3 topline results expected in the first half of 2025, if positive, we expect to submit a biologics license application (BLA) for atacicept in IgAN to the FDA in the second half of 2025.

Atacicept in LN

Based on feedback from the FDA’s review of clinical results in a Phase 2 clinical trial of atacicept in HDA SLE patients, we are planning a Phase 3 clinical trial of atacicept as a potential treatment for patients with LN, a severe renal manifestation of SLE. We estimate that there are approximately 120,000 LN patients in the United States, 70,000 in the European Union, and 21,000 in Japan. We estimate the market for novel LN therapeutics annually to be approximately $2.0 to $5.0 billion, $600 million and $200 million in United States, Europe and Japan, respectively. Significant unmet need for improved efficacy persists for these patients despite the recent approval of the first two LN-specific therapies. Fewer than half of patients treated for LN have a complete response to therapy, and among patients without a complete response, over half will have non-functioning kidneys within five years. Benlysta (belimumab), a BlyS-only inhibitor, is one of the two therapies approved for patients with LN. Both BLyS and APRIL levels are increased in patients with SLE, suggesting that dual inhibition by atacicept may be more potent than blocking BLyS alone and has the benefit of targeting plasma cells in addition to B cells. Merck KGaA, Darmstadt, Germany previously initiated a randomized, double-blind, placebo-controlled Phase 2/3 clinical trial of atacicept in LN, the APRIL-LN trial, evaluating the efficacy and safety of atacicept 150 mg twice weekly for four weeks—then weekly—in patients with active LN. However, this trial was terminated early due to three patients developing hypogammaglobulinemia with induction therapy (mycophenolate mofetil (MMF) and corticosteroids (CS)) which continued to worsen when initiating atacicept and subsequently two patients developed pneumonia. In prior Phase 2 clinical trials of atacicept in SLE also conducted by Merck KGaA, Darmstadt, Germany, despite missing its primary endpoint in the broader SLE study population, atacicept achieved positive clinical data on multiple measures within the pre-specified patient segment with HDA (defined as Systemic Lupus Erythematosus Disease Activity Index 2000 [SLEDAI-2K] ≥10 at screening), including reduction of renal flares, which we believe supports atacicept’s applicability in LN. Because both preclinical and clinical evidence suggest atacicept’s dual inhibition of BLyS and APRIL may provide improved clinical outcomes, measured by endpoints designed to assess efficacy, compared to inhibiting either signal alone, we believe there is a strong rationale to conduct a clinical trial of atacicept in LN.

Our Phase 3, randomized, parallel-group, double-blind, placebo-controlled, multicenter, multinational study will evaluate the efficacy and safety of atacicept vs placebo in patients with LN. The clinical trial consists of a 104-week double blind treatment period, followed by a 52-week open label treatment period and a 26-week safety follow-up period. The trial will assess once weekly subcutaneous injections of 150 mg atacicept versus placebo. The primary endpoint is complete renal response at 52 weeks.

MAU868 in BK viremia among kidney transplant recipients

fibrosis and tubular injury; BKVN is a leading cause of allograft loss. Currently, there are no approved treatment options for BK viremia or BKVN. We estimate that approximately 80,000 kidney transplants are conducted globally each year, with approximately 20,000 in the United States, 20,000 in Europe, 1,500 in Japan, and 10,000 in China. Approximately 15% of kidney transplant recipients develop BK viremia; 3–4% of kidney transplant recipients develop BKVN. We estimate the market for a novel agent to treat reactivated BK infection in kidney transplant recipients to be a large commercial opportunity worldwide. We believe that MAU868 has the potential to become standard of care for the treatment of reactivated BK infection in order to prevent devastating consequences following kidney transplantation such as BKVN and graft loss.

At ASN 2022, final results from the Phase 2 clinical trial of MAU868 versus placebo showed that MAU868 was well tolerated and demonstrated clinically meaningful reductions in BK antiviral activity through 36 weeks in kidney transplant patients with BK viremia.

MAU868 in BK cystitis among HSCT patients

We are exploring the development of MAU868 to treat BKV cystitis in HSCT patients. Patients undergoing HSCT are at risk for BKV reactivation due to immunodeficiency; in this setting, BK reactivation and subsequent viruria and viremia can lead to cystitis, including hemorrhagic cystitis. Cystitis is characterized by dysuria, urgency, and/or frequency, while hemorrhagic cystitis indicates the presence of microscopic or gross hematuria. Both BKV cystitis and hemorrhagic cystitis are associated with high patient morbidity and prolonged hospitalization, yet there are no approved treatment options. An estimated 50,000 allogeneic HSCTs are conducted globally each year, with approximately 10,000 in the United States, 16,000 in Europe, 3,500 in Japan, and 2,500 in China. An estimated 57,000 autologous HSCTs are conducted globally each year, with approximately 17,000 in the United States, 27,000 in Europe, 2,500 in Japan, and 1,800 in China. Approximately 15% of allogeneic recipients and 5% of autologous recipients develop BK cystitis, including hemorrhagic cystitis. We believe that MAU868 may represent an important future treatment option for these patients.

Our business principles and strategy

Our goal is to develop and commercialize transformative treatments for patients suffering from severe immunological diseases. We believe the successful translation of biomedical science into innovative therapeutic products for patients with immunological diseases will enable outsized growth over the next decade and beyond. Specifically, our strategy is based on the following business principles:

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Develop disease-modifying medicines to improve patients’ lives. Our team seeks to bring transformative medical products to patients with severe immunological diseases, who often receive steroids for treatment. The non-specific immunologic effect of steroids, with known acute and chronic side effects, presents an important opportunity for innovation. We aim to develop and commercialize disease-modifying drugs that target the source of disease, minimize side effects, and have high potential to meaningfully change standard medical care and improve patients’ lives.

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Establish clear line-of-sight to successful products. We apply our deep drug development experience, scientific rigor, and disciplined decision making to establish clear line-of-sight along the full spectrum of drug development. We pursue biologic targets, product candidates, and disease indications with a de-risked profile and capital-efficient development pathway, and optimize for high probability of clinical, regulatory, and commercial success.

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Build a leading biotech company that delivers innovative medicines to patients. We believe our team’s expertise and our business culture are fundamental to our success. Our Research and Development team is led by experienced drug development executives with proven track records in clinical and commercial development who have led or been involved in the approvals of more than 12 medicines from leading companies, including Gilead Sciences and Genentech. We leverage our team’s know-how with additional outsourced resources and enable focused clinical development of our product candidates with the goal of improving patients’ lives.

These principles have guided us to the successful in-licensing of atacicept from Ares and obtaining the rights to MAU868 from Amplyx, in each case with worldwide rights for development and commercialization in all indications. We take a gated-capital raise approach and scale product candidate investment and exposure in close step with key development milestones to ensure high return on development costs.

The near- and long-term objectives to achieve our goal include:

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Complete global development of atacicept in IgAN. We reported positive 24-week topline results from the ORIGIN Phase 2b clinical trial in January 2023, will report results from 36-week data in the second quarter of 2023, and plan to initiate a pivotal Phase 3 clinical trial in the second quarter of 2023.

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Complete global development of atacicept in LN. We are planning a Phase 3 clinical trial of atacicept as a potential treatmentfor patients with LN. LN is a frequent but devastating complication of SLE. The FDA approval of the anti-BLyS antibody, Benlysta (belimumab), provides clinical and regulatory precedent upon which to build our program. We believe

that atacicept could offer a significant efficacy advantage for LN patients with its dual anti-BLyS and anti-APRIL mechanism.

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Complete global development of MAU868 in BK viremia in kidney transplant recipients and explore treatment of BK cystitis in HSCT patients. We reported final results from our Phase 2 clinical trial inkidney transplant recipients in 2022. Pending alignment with regulatory authorities, we plan to initiate a Phase 2b or Phase 3 clinical trial.

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Build and scale organizational capabilities to support commercialization of atacicept and MAU868. Under the leadership of ourexperienced management team, we have begun building a specialized commercial organization with deep launch experience in nephrology, B-cell, autoimmune, and transplant therapeutics, to launch atacicept and MAU868 in the United States and other key markets, if approved.

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Explore additional disease areas where atacicept holds significant therapeutic promise. By targeting BLyS and APRIL,atacicept’s ability to reduce disease-causing autoantibodies may provide clinical benefit. We intend to explore additional immunologic diseases where BLyS and APRIL are abnormally elevated, or where autoantibodies play an important role.

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Expand our pipeline by acquiring or in-licensing product candidates for immunologic diseases with unmet needs. Webelieve our expertise and track record will enable us to identify and acquire or in-license additional product candidates that represent opportunities to expand the potential value of our pipeline. We will leverage our lean clinical development operation to bring to market additional product candidates to address immunologic diseases.

Management team

We were founded and are led by a team of experienced drug development professionals who have proven track records in clinical and commercial development and have led or been involved in the approvals of 10 medicines from Gilead Sciences, Inc. (Gilead) and Genentech, Inc. (Genentech), including numerous drugs within Gilead’s multi-billion-dollar blockbuster HIV and HCV franchises. Our President and Chief Executive Officer, Marshall Fordyce, M.D., brings more than 15 years of experience leading teams in clinical translation, development, and commercialization of new treatments. Earlier in his career, Dr. Fordyce served as Gilead’s Senior Director of Clinical Research where he contributed to seven new drug approvals and served as project lead for Gilead’s tenofovir alafenamide development program that led to five commercial products, including Genvoya and Descovy, which collectively generated over $12.0 billion in worldwide sales in 2019. Our senior management team also includes: Chief Financial Officer, Sean Grant, who was previously Vice President, Corporate Strategy and Business Development at CareDx, Inc. and Vice President in the Global Healthcare Investment Banking Division at Citigroup where he specialized in public and private capital raising as well as M&A, and executed a broad range of transactions for many of the world’s leading life sciences companies; Chief Medical Officer, Celia Lin, M.D., who joined from Genentech and was previously at Amgen Inc., where she led Phase 3 global trial execution in various therapeutic areas, as well as a regulatory filing in an orphan disease; Chief Development Officer, Joanne Curley, Ph.D., who was formerly head of Portfolio Management at Gilead; Chief Business Officer, Lauren Frenz, who held positions of increasing responsibility within Gilead’s commercial organization; Senior Vice President, Development Operations, Tom Doan, who was formerly Executive Director of Clinical Operations and Therapeutic Area Head of Inflammation and Respiratory at Gilead; Senior Vice President and Head of Product Development and Manufacturing, Neeraj Pakala, PhD, MBA, who served most recently as the VP of Product Development and Manufacturing at Aimmune Therapeutics (acquired by Nestlé), and prior to Aimmune, spent six years at Alexza Pharmaceuticals culminating as their Executive Director of Manufacturing and Engineering; and Senior Vice President, Finance and Chief Accounting Officer, Joseph Young, who was formerly Senior Vice President, Finance and Treasurer at Plexxikon Inc.

Intellectual property

As of December 31, 2022, our licensed patent portfolio related to atacicept contains approximately seven issued U.S. patents, one pending U.S. patent application, as well as foreign counterparts of a subset of these patents and pending U.S. patent application in several foreign countries, including countries within the European Patent Convention, the Eurasian Patent Organization, and Taiwan. Because atacicept is a biologic, marketing approval would also provide 12 years of market exclusivity from the approval date of a BLA in the United States. Additionally, we plan to seek orphan drug designation for atacicept in IgAN from the FDA and European Medicines Agency (EMA), which would allow us to obtain regulatory exclusivity protection from the approval date for seven years in the United States and ten years in the European Union. Our licensed patent portfolio covering MAU868 includes three issued U.S. patents, a pending U.S. patent application, as well as certain foreign counterparts of a subset of these patents and pending U.S. patent application, in Australia, China, Mexico, Japan, Europe and Canada. The pending U.S. application and foreign counterpart applications are co-owned by Novartis.

Atacicept in IgAN

We are developing atacicept as a potential treatment for patients with IgAN, a serious and progressive autoimmune disease of the kidney with a high unmet medical need and limited treatment options available. Up to 50% of confirmed IgAN patients progress to ESRD, requiring dialysis or kidney transplant. ESRD causes significant morbidity and impact on patients’ lives and represents a

significant health economic burden estimated to be over $40 billion annually in the United States. Despite this high level of morbidity, the current standard of care consists of off-label use of RAAS inhibitors, including ACE inhibitors and ARBs, and potentially steroids. IgAN is driven by the production of pathogenic Gd-IgA1, and patients with elevated Gd-IgA1 are at increased risk of kidney-related morbidity and mortality. As reported in the Phase 2a JANUS trial, atacicept is the first molecule in development to demonstrate a 60% or greater reduction in serum Gd-IgA1 in IgAN patients, suggesting atacicept targets the source of disease in these patients. Based on these encouraging results, we are conducting the randomized, double-blind, placebo-controlled Phase 2b ORIGIN trial to further evaluate the efficacy and safety of atacicept in patients with IgAN. We reported positive topline results in January 2023, and we plan to initiate a pivotal Phase 3 clinical trial in the second quarter of 2023. We believe that atacicept has the potential to be the best-in-class and the leading B cell-targeted therapy for IgAN.

Pathophysiology of IgAN

The IgA antibody plays a key role in the immune system by protecting the body from foreign substances such as bacteria and viruses. Patients with IgAN produce elevated levels of Gd-IgA1. This abnormal glycosylation pattern of IgA1 is of central importance to the disease etiology.

As shown in Figure 1 below, a multi-step process leads to the ultimate development of progressive renal injury.

Figure 1: IgAN pathophysiology—overview

(1)

B cells, which mature into plasma cells, are abnormally primed in the Peyer’s patch region of the ileum of the intestines, potentially due to a combination of genetic predisposition and environmental, bacterial or dietary factors. BLyS promotes B cell maturation and survival, increasing the number of disease-causing B cells.

(2)

APRIL, a factor important for plasma cell survival, becomes upregulated, resulting in increased numbers of disease-causing plasma cells.

(3)

APRIL increases the number of plasma cells and increases antibody class switching, a mechanism that changes cells’ production from one immunoglobulin to another, causing an increase in the production of immunogenic Gd-IgA1.

(4)

The Gd-IgA1 antibodies are immunogenic when found in the systemic circulation, which triggers autoantibodies, or antibodies created by the body in response to a constituent of its own tissue.

(5)

Autoantibodies against Gd-IgA1 lead to the formation of pathogenic immune complexes, or clusters of antibodies.

(6)

Pathogenic immune complexes are deposited, become trapped in the kidney’s glomeruli, and initiate an inflammatory response that damages the membranes, resulting in protein and blood leaking into the urine.

(7)

As the glomeruli are destroyed, the kidney’s ability to remove waste products from the blood is reduced, which can result in potentially life-threatening complications that lead to the need for dialysis or kidney transplant in many patients.

Gd-IgA1 is central to the pathogenesis of IgAN

Gd-IgA1 is a subclass of IgA antibodies that lack units of galactose, a type of sugar, at the O-linked glycans of their hinge region, as shown in Figure 2 below. The hinge region is a stretch of amino acids in the IgA antibody. Circulating immune complex-containing Gd-IgA1 proteins have been shown to be the target antigens for IgG antibodies with specificity for the hinge region.

Figure 2: Components of Gd-IgA1

A histopathological hallmark of IgAN is deposition of Gd-IgA1 in the glomerular mesangium, either alone or in combination with IgG and/or IgM. Sampling of the serum of patients with IgAN has confirmed the presence of elevated levels of circulating immune complex-containing Gd-IgA1.

Clinical trials of patients with IgAN have correlated higher serum levels of Gd-IgA1 with greater severity of IgAN disease, suggesting that reduction in serum Gd-IgA1 may slow disease progression. Compared with healthy subjects, patients with IgAN have an increased proportion of Gd-IgA1 O-glycoforms in the serum. As published in Kidney International, in a prospective study of 275 patients with IgAN, higher serum levels of aberrantly glycosylated IgA1 demonstrated correlation with a higher likelihood of developing progressive renal failure, as shown in Figure 3 below. A separate clinical trial of patients with IgAN of varying severity found that higher titers of autoantibodies specific for Gd-IgA1 corresponded to both absolute renal risk score and risk of ESRD or death.

Figure 3: Renal survival by serum Gd-IgA1 quartiles in IgAN patients

In addition, high serum APRIL levels correlate with increased expression of serum Gd-IgA1 in IgAN patients and high serum BLyS levels are associated with more severe clinical features, as well as more severe histopathological features. For these reasons, we believe a fusion protein that blocks both BLyS and APRIL, which has the potential to reduce serum Gd-IgA1, would address the upstream source of IgAN, and represent the first disease-modifying approach for IgAN.

Disease burden, diagnosis, and predictors of disease progression

IgAN is a rare disease in the United States and European Union and is also the predominant cause of primary glomerulonephritis.

Patients with IgAN are diagnosed throughout life, but most commonly in the second and third decades. There are three common ways in which patients present:

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40–50% present with one or more episodes of gross (visible) hematuria, often linked to an upper respiratory tract infection.

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30–40% present with microscopic hematuria and mild proteinuria, which is detected in a routine physical or during chronic kidney disease evaluation.

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Less than 10% present with either nephrotic syndrome or an acute, rapidly progressive glomerulonephritis with symptoms including edema, hypertension, renal insufficiency, and hematuria.

Once IgAN is suspected based on clinical history and laboratory data, kidney biopsy, which is the gold standard for IgAN diagnosis, is performed.

IgAN market opportunity

We estimate there are approximately 126,000 biopsy-confirmed IgAN patients in the United States, 136,000 in the European Union, and 130,000 in Japan, and that growth in the diagnosed prevalent population is due to overall population growth. Underlying genetic differences may contribute to the significantly higher rate in Japan. As therapies become commercially available, however, an increase in diagnosis rate or longer time to progression, due to better treatments, may increase the diagnosed population over time.

We estimate the U.S. market opportunity for novel therapeutics in IgAN is approximately $4.0 billion to $8.0 billion annually, based on the prevalence of the disease in the United States and the segment of IgAN patients at high risk of progressing to ESRD. In Europe and Japan, we estimate the annual market opportunity for novel IgAN therapeutics to be $1.0 billion and $600 million, respectively.

Current standard of care for IgAN patients

Despite the high unmet medical need in IgAN, there are limited treatment options available. The following two general approaches are typically employed for the treatment of patients with IgAN:

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Non-specific measures to slow progression, including blood pressure control, and in patients with proteinuria, RAAS inhibitors, including ACE inhibitors or ARBs.

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Steroids with or without other immunosuppressive agents to non-specifically reduce inflammation as a result of immune complex deposition in the glomeruli.

Treatment is selected based on perceived risk of progressive kidney disease, and clinical measures such as hematuria, proteinuria, and eGFR are used to monitor patients while on treatment. The current standard of care is seen as insufficient by physicians and patients; these treatment approaches have limited clinical efficacy and are not well tolerated. Approximately 50% of patients fail to achieve controlled UPCR on ACE inhibitors, ARBS, or steroids. The use of steroids may cause significant side effects, including serious infections, high blood pressure, weight gain, diabetes, and osteoporosis. As such, there is a high unmet medical need for targeted therapies that impact the underlying disease pathophysiology and more tolerable, steroid-sparing treatment options for IgAN patients.

Emerging therapies in development

There are two agents approved for the treatment of IgAN and there are several treatments in clinical development. The multistep IgAN pathogenesis hypothesis offers potential target points and approaches for therapeutic intervention. Most therapeutic candidates in clinical development have employed various approaches to target inflammation and the downstream effects. Atacicept is the first agent in development for IgAN that has demonstrated a 60% reduction of Gd-IgA1, the upstream source of IgAN pathogenesis.

These agents can be grouped mechanistically into the following categories: glucocorticoid receptor agonists, endothelin receptor antagonists (ERAs), complement inhibitors, B-cell modulators, and a variety of other approaches that are earlier in development.

Glucocorticoid receptor agonists. Glucocorticoid receptor agonists are a well-known class of molecules that have broad anti-inflammatory effects, and well-established acute and chronic side effects. Though reduction in the risk of eGFR decline was shown in clinical trials, there is no consensus on whether glucocorticoids may improve renal survival. The glucocorticoid, budesonide, has been reformulated to concentrate steroid effects locally on the gut mucosa, theoretically suppressing the abnormal B-cell activity and reducing systemic steroid toxicity. Currently in a Phase 3 clinical trial in IgAN, reformulated budesonide has demonstrated statistically meaningful reduction of proteinuria, though systemic steroid side effects have been observed in prior clinical trials and the ongoing Phase 3 clinical trial.

ERAs. Aberrant endothelin signaling is implicated in structural podocyte changes and increased mesangial proliferation in chronic kidney diseases, including IgAN. ERAs block endothelin-induced cell proliferation and hence may reduce renal perfusion pressure and proteinuria. Since this mechanism of action works downstream of disease-related immune activities, it is not expected to reduce Gd-IgA1 or the resulting immune complexes that cause the disease. Several ERAs, which have previously been approved for the treatment of pulmonary arterial hypertension and erectile dysfunction and make use of a vasodilatory effect, are currently in Phase 3 development and have been shown to reduce proteinuria in patients with IgAN. However, ERAs have been associated with edema, significant liver toxicity and increased risk of heart failure.

Complement inhibitors. Increased complement activation is commonly observed in patients with IgAN. It is hypothesized that immune-complex deposition in glomeruli may contribute to complement activation, though the exact mechanism is not well understood. Several agents that inhibit complement activation are in clinical development for IgAN. Modest reduction of proteinuria has been observed in early clinical trials. As complement inhibition works downstream of immune complex formation, these agents are not expected to impact the upstream cause of disease and reduce Gd-IgA1 or the resulting immune complexes that cause inflammation and complement activation in the kidney.

B-cell modulators. B-cell modulators, including atacicept, are an important category of emerging therapies for IgAN. The disease-causing Gd-IgA1 is predominantly produced by B cells and plasma cells. Therefore, control of B-cell activation may reduce production of Gd-IgA1 and the downstream formation of autoantibodies and immune complexes. Preclinical models have shown that dual inhibition of BLyS and APRIL offers improved suppression of B-cell activities than blocking BLyS or APRIL alone. Atacicept blocks both BLyS and APRIL and has shown substantial reduction (60%) in Gd-IgA1. We believe that dual inhibition may also confer a potential dosing advantage versus APRIL-only inhibition.

Our solution: Atacicept

Atacicept is a fusion protein that blocks both BLyS and APRIL, which play key roles in the upstream pathway that causes IgAN, and is dosed once weekly via a 1-mL subcutaneous injection. As a result, we believe atacicept has the potential to be the first disease-modifying therapy for IgAN. Through an integrated analysis of randomized, double-blind, placebo-controlled clinical trials in multiple autoimmune diseases with over 1,500 patients to date, atacicept has a well-characterized clinical safety profile. In a Phase 2a clinical trial in patients with IgAN, atacicept substantially reduced Gd-IgA1 and demonstrated a clinically meaningful reduction in proteinuria

and stable eGFR parameters at week 24. We completed enrollment of patients in the Phase 2b ORIGIN trial in 2022, and we reported positive topline results in January 2023.

Our approach to IgAN: Reducing Gd-IgA1, the source of autoantibodies

Atacicept is a fully humanized fusion protein that impacts the B-cell pathway, which has well characterized implications in immunologic diseases. Specifically, as shown in Figure 4 below, atacicept contains the soluble transmembrane activator and CAML interactor (TACI) receptor that binds to the cytokines BLyS and APRIL. These cytokines are members of the tumor necrosis factor family that promote B-cell survival and autoantibody production associated with IgAN and other immunologic diseases. Dual blockade of BLyS and APRIL by TACI has been shown to be more potent than blocking BLyS alone or APRIL alone and has the benefit of targeting long-lived plasma cells, in addition to B cells, thus reducing autoantibody production, including Gd-IgA1, IgA, IgG and IgM. Therefore, atacicept’s mechanism acts directly on the source of IgAN, which we believe will significantly mitigate the downstream effects of the disease.

Figure 4: Atacicept blocks both BLyS and APRIL

Atacicept: Potential to address the core processes underlying IgAN pathogenesis

Atacicept’s specific actions on IgAN disease pathogenesis are shown in Figure 5 below.

Figure 5: Atacicept impact on IgAN pathogenesis

(1)

Atacicept blocks BLyS, a factor important for B cell survival and maturation, resulting in reduced numbers of disease-causing B cells.

(2)

Atacicept blocks APRIL, a factor important for plasma cell survival, resulting in reduced numbers of disease-causing plasma cells.

(3)

Reductions in plasma cells and in antibody class switching to IgA reduce production of immunogenic Gd-IgA1.

(4)

Reductions in B cells, plasma cells, and Gd-IgA1 work together to reduce production of autoantibodies to Gd-IgA1.

(5)

Therefore, formation of pathogenic immune complexes is greatly reduced.

(6)

This in turn, reduces immune complex deposition in glomeruli and reduces complement activation.

(7)

Ultimately, progressive renal injury is reduced, which we believe will significantly lower the morbidity and mortality associated with IgAN.

Atacicept’s disease-modifying mechanism addresses the upstream processes that cause IgAN, while most other molecules in development act downstream. Therefore, we believe that the clinical outcomes of atacicept, measured by endpoints designed to assess efficacy and durability, will be favorable over competitors, with a demonstrated tolerability profile. Once weekly 1 mL subcutaneous dosing also provides an attractive target product profile for patients.

Atacicept in IgAN: clinical development

Atacicept was the subject of a collaboration agreement between Ares and ZymoGenetics, Inc. in 2001, and was licensed on an exclusive basis to Ares in 2008. It was advanced by Merck KGaA, Darmstadt, Germany, in clinical trials for several autoimmune diseases, including rheumatoid arthritis (RA), multiple sclerosis, SLE, and IgAN, and in totality studied in double-blind placebo-controlled clinical trials in over 1,500 patients to date. Safety, tolerability, pharmacokinetics, pharmacodynamics, and clinical efficacy of the weekly 25 mg, 75 mg and 150 mg doses administered subcutaneously have been studied.

Atacicept is being studied in the Phase 2b ORIGIN clinical trial, a multinational, 36-week randomized, placebo-controlled, double-blind trial, with a 60-week open label extension.

On January 3, 2023, and January 30, 2023, Vera reported positive week 24 primary results and shared the following results:

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Atacicept met its primary endpoint with a statistically significant reduction in proteinuria in the pooled 75/150 mg arms versus placebo

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In a prespecified per-protocol (PP) analysis, a blinded third-party CRO identified patients with protocol deviations that potentially confounded proteinuria measure. In the PP population excluding these patients, atacicept 150 mg achieved a 41%

mean reduction in proteinuria versus baseline, resulting in a statistically significant 34% placebo-adjusted reduction (p=0.025) at an early week 24 timepoint

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There was a trend towards deepening reductions in proteinuria at week 36 with available data in patients on atacicept.

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eGFR was stable through week 24 for all patients on atacicept

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Atacicept was well tolerated, and its safety profile in IgAN patients was comparable to placebo

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There was a 60% reduction in Gd-IgA1 at week 24 with atacicept 150 mg

Based on these Phase 2b ORIGIN trial results, the atacicept 150 mg dose was selected for a forthcoming Phase 3 clinical trial, which we expect to initiate in the second quarter of 2023. We will use the same formulation as the Phase 2b trial, while incorporating learnings from Phase 2b subgroup analyses to design a de-risked Phase 3 trial that accurately assesses treatment efficacy while minimizing potential confounders for proteinuria measure.

Atacicept safety and tolerability profile: Integrated analysis

Though there was a limited number of patients in the JANUS trial, in an integrated safety analysis of clinical trials in multiple indications with over 1,500 patients in a number of indications, atacicept was well tolerated, shown in Figure 6 below. Serious treatment-emergent adverse events (TEAEs) reported in the highest proportions were those in infections and infestations (placebo 3.9% versus atacicept 4.4%), musculoskeletal and connective tissue disorders (placebo 1.9% versus atacicept 1.3%), and nervous system disorders (placebo 2.1% versus atacicept 1.2%). The most frequently reported TEAE was pneumonia (placebo 1.2% versus atacicept 1.3%). We believe that this large and established data set is a competitive advantage for atacicept versus other approved and emerging therapies in development, many of which lack extensive safety data.

Figure 6. Integrated safety analysis: Summary of treatment-emergent adverse events > 5% in any arm, by dose

The safety profile of atacicept 25 mg, 75 mg and 150 mg has been characterized in healthy subjects and patients with RA, multiple sclerosis, optic neuritis, SLE, and B-cell malignancies, and is considered acceptable in IgAN. Over 1,940 individuals have been enrolled in 22 clinical trials, of which over 1,425 individuals have received at least one dose of atacicept. In the three Phase 2/3 clinical trials, 590 patients with SLE and 11 patients with IgAN have received at least one dose of atacicept.

We believe the benefit-risk balance of atacicept to be favorable for further development in IgAN and certain additional autoimmune diseases, and we intend to explore additional immunologic diseases where BLyS and APRIL are abnormally elevated, or where autoantibodies play an important role.

Ongoing phase 2b ORIGIN clinical trial design

ORIGIN, our ongoing Phase 2b randomized, double-blind, placebo-controlled, dose-ranging trial, will evaluate the efficacy and safety of atacicept in patients with IgAN. The clinical trial consists of a 36-week double-blind treatment period, followed by a 60-week open-label treatment period and a 26-week safety follow-up period. The trial assesses multiple doses (25 mg, 75 mg and 150 mg) of once weekly 1-mL subcutaneous injections of atacicept versus placebo on impact of renal function as measured by proteinuria. The primary endpoint is change from baseline in UPCR at 24 weeks based on 24-hour urine collection, with a secondary endpoint of UPCR at 36 weeks. Other endpoints include change from baseline in UPCR at 12, 48, and 96 weeks, change from baseline in eGFR at 12, 24, 36, 48, and 96 weeks, change from baseline in IgA, IgG, IgM, C3, C4, and Gd-IgA1 levels at 12, 24, 36, 48, and 96 weeks, number of

participants with adverse events during the double-blind treatment period through 36 weeks, and the serum concentration of atacicept through study completion.

Figure 7. Phase 2b ORIGIN trial design

UPCR is an accepted surrogate primary endpoint for clinical trials in IgAN, which allows for a faster path to commercialization than rate of change/slope in eGFR, which is measured after two years. The recommendation for usage of this surrogate endpoint was put forward by the ASN, partnering with the FDA under the auspices of the Kidney Health Initiative, and the EMA, and has now been implemented in five Phase 3 clinical trials in IgAN and in the two FDA approvals granted. Accelerated and/or conditional approval may be granted on the UPCR endpoint, with full approval to be granted upon longer-term data demonstrating stabilization of eGFR with treatment.

In mid-2022 we completed enrollment of the Phase 2b ORIGIN trial, enrolling a total of 116 patients at multiple global sites. In January 2023, we announced positive topline 24-week results. Atacicept met the primary endpoint: the pooled 75 mg and 150 mg arms achieved a statistically significant reduction in proteinuria versus placebo at 24 weeks. In a prespecified PP analysis, a blinded third-party CRO identified patients with protocol deviations that potentially confounded proteinuria measure. In the PP population excluding these patients, atacicept 150 mg achieved a 41% mean reduction in proteinuria versus baseline, resulting in a statistically significant 34% placebo-adjusted reduction (p=0.025) at an early week 24 timepoint. Available data show a trend towards deeper reductions in proteinuria with atacicept at 36 weeks, for which full results will read out in the second quarter of 2023. eGFR was stable through week 24 for all patients on atacicept. The 150 mg dose achieved a 60% reduction in Gd-IgA1 at week 24. Atacicept was well tolerated, and its safety profile in IgAN patients was also comparable to placebo. Treatment will remain blinded through 36 weeks, after which all patients will roll onto the open label portion of the study and receive atacicept 150 mg through 96 weeks, providing the opportunity to assess long-term safety of atacicept in patients with IgAN.

We plan to advance atacicept 150 mg into a pivotal Phase 3 trial in the second quarter of 2023, using the same formulation from the Phase 2b trial and learnings from the Phase 2b subgroup analyses to design a de-risked Phase 3 trial that accurately assesses treatment efficacy while minimizing potential confounders for proteinuria measure. With the ongoing data from the Phase 2b trial through 2024 and Phase 3 topline results expected in the first half of 2025, if positive, we expect to submit a BLA for atacicept in IgAN to the FDA in the second half of 2025.

Atacicept in LN: A severe renal manifestation of SLE

Based on discussions with the FDA following the review of Phase 2 data in SLE, we are planning a Phase 3 clinical trial of atacicept as a potential treatment for patients with LN, a severe renal manifestation of SLE. We estimate that there are approximately 120,000 LN patients in the United States, 70,000 in the European Union, and 21,000 in Japan. Significant unmet need for improved efficacy persists for these patients despite the recent approval of the first two LN-specific therapies. Fewer than half of patients treated for LN have a complete response to therapy, and among patients without a complete response, over half will have non-functioning kidneys within five years. Benlysta (belimumab), a BLyS-only inhibitor, is one of the two therapies approved for patients with LN. Both BLyS and APRIL levels are increased in patients with SLE, suggesting that dual inhibition by atacicept may be more potent than blocking BLyS alone and has the benefit of targeting plasma cells in addition to B cells. Merck KGaA, Darmstadt, Germany previously initiated a randomized, double-blind, placebo-controlled Phase 2/3 clinical trial of atacicept in LN, the APRIL-LN trial, aimed to evaluate the efficacy and safety of atacicept at 150 mg twice weekly for four weeks—then weekly—in patients with active LN. However, this trial was terminated early due to three patients developing hypogammaglobulinemia with induction therapy (MMF and CS) which continued to worsen when initiating atacicept and subsequently two patients developed pneumonia. In prior Phase 2 clinical

trials of atacicept in SLE also conducted by Merck KGaA, Darmstadt, Germany, despite missing its primary endpoint of improved SLE responder index 4 (SRI-4) at week 24, in the broader SLE study population, atacicept achieved positive clinical data on multiple measures within the prespecified HDA patient segment, including reduction of renal flares, which we believe supports atacicept’s applicability in LN. Because both preclinical and clinical evidence suggests atacicept’s dual inhibition of BLyS and APRIL may provide improved clinical outcomes, measured by endpoints designed to assess efficacy, compared to inhibiting either signal alone, we believe there is a strong rationale to conduct a clinical trial of atacicept in LN.

Pathophysiology of LN

LN is a severe renal manifestation of SLE (also referred to as lupus). SLE is a chronic and disabling autoimmune disease in which the body’s own immune system attacks itself. SLE predominantly affects women and is more prevalent in women of color. When LN is diagnosed in a patient, mortality risk dramatically increases.

LN pathogenesis involves a variety of disease-causing mechanisms, including the formation of immune deposits within the kidneys that are primarily due to anti-double stranded DNA (anti-dsDNA) antibodies, which atacicept has been shown to reduce in a dose-dependent manner. However, there are also instances in which induction of LN by anti-dsDNA may not require immune complex formation— autoreactive plasma cells in the kidney may be another cause of nephritis. Certain genes and genetic factors may also predispose patients.

LN disease burden and diagnosis

LN has a strong influence on morbidity and mortality within SLE, with up to 26% of patients progressing to ESRD within 15 to 20 years from initial diagnosis. LN is characterized by abnormal proteinuria, hematuria, and impaired kidney function.

Diagnosed SLE patients are routinely monitored by rheumatologists, who will refer to nephrologists upon suspicion of renal manifestations. In the United States and European Union, LN patients without a prior SLE diagnosis will typically first present to a primary care physician (U.S.) or internist (EU) with hematuria or proteinuria before ultimate referral to a nephrologist. For confirmatory diagnosis, nephrologists perform renal biopsy—of which the results are analyzed to determine histologic class and relevant treatment course.

LN patients are segmented in Classes I–VI based on histopathology and degree of renal impairment, and this classification drives treatment decisions. Class I, or Minimal mesangial LN, is rarely diagnosed as these patients have normal urinalysis and therefore biopsy is not typically performed. Class II, Mesangial proliferative LN, refers to microscopic hematuria and/or proteinuria. Patients with Class III, or Focal LN, tend to have both hematuria and proteinuria, and may have hypertension, decreased eGFR, and nephrotic syndrome. Class IV, or Diffuse LN, is the most commonly diagnosed and severe form of LN, with patients exhibiting hematuria, proteinuria, nephrotic syndrome, hypertension, and decreased eGFR. Patients with Class V, or lupus membranous nephropathy, tend to have nephrotic syndrome, and may have microscopic hematuria and hypertension, but normal UPCR. Class VI, or advanced sclerosing LN, refers to a slow progression of kidney dysfunction correlated with proteinuria.

As shown in Figure 8 below, LN typically develops early in the disease course, though the rate of SLE patients who develop LN increases over time.

Figure 8: LN progression

LN market opportunity

According to the Centers for Disease Control and Prevention, there are approximately 322,000 people living with SLE in the United States.

Approximately half of individuals living with SLE develop LN within 15 years of their initial diagnosis, as shown in Figure 8 above.

We estimate that there are approximately 120,000 LN patients in the United States, 70,000 in the European Union, and 21,000 in Japan at present. In the United States, higher prevalence rates occur in the heterogeneous population, as both SLE and LN occur more frequently among non-White patients—with the highest frequency of LN occurring in Black and Hispanic populations after adjustment for socioeconomic factors. In all three geographies, women account for the majority of LN cases.

Based on primary market research with physicians and payors and extensive secondary research, we estimate the market for novel LN therapeutics annually to be approximately $2.0 to $5.0 billion, $600 million and $200 million in United States, Europe and Japan, respectively.

Current standard of care for LN patients

Current LN treatment is largely cyclical, with induction versus maintenance therapy dictated by the severity of disease and frequency of flares. Treatment is driven by histologic class and can be influenced by the treatments that the patient has been on since SLE diagnosis. Class I and II LN do not generally need LN-specific treatment. Within Class III–V, patients tend to receive induction therapy for approximately one year to achieve complete or partial remission. Induction therapy for Class III–IV patients include several immunosuppressive agents, such as MMF ± CS or cylophosphamide (CYC) ± CS in the first line of treatment, switching to either CYC or MMF in the second line, whichever was not administered first line. Third line induction therapy has generally consisted of rituximab for Class III–V patients. For induction therapy of Class V LN patients, patients typically receive MMF ± steroids in the first line, a calcineurin inhibitor in the second line, and rituximab for third line. Maintenance therapy, which typically consists of MMF, azathioprine (AZA), or hydroxychloroquine (HCQ), is typically prescribed to well controlled patients after any line of induction to reduce flares. Immunosuppressive therapy is unlikely to be beneficial for Class VI, or advanced sclerosing LN.

Patients on maintenance still experience flares approximately every year, resulting in cycling back to induction therapy. Many of the therapies used in the treatment paradigm today have limited efficacy and poor tolerability profiles—and therefore there is significant unmet need for safe and specific therapies that have a direct impact on LN disease activity without a high risk of infection.

Recently approved and emerging therapies in development

Until recently, there were no approved therapies for the treatment of LN. In December 2020, the FDA approved Benlysta (belimumab), an anti-BLyS antibody, for treatment of adult patients with active LN who are receiving standard therapy. In January 2021, the FDA approved Lupkynis (voclosporin), a calcineurin inhibitor, to be used in combination with a background immunosuppressive therapy regimen for adult patients with active LN. Clinical guidelines on how these two medicines may be incorporated into standard of care remain to be updated. In addition to Benlysta (belimumab) and Lupkynis (voclosporin), there are several other cytokine inhibitors and complement inhibitors in development for LN.

B-cell Modulators. Benlysta (belimumab) is an anti-BLyS antibody, belonging to the class of B-cell modulators. Within the B-cell modulator class, there is a desire for different mechanisms to target the complex pathophysiology of LN. The results shared to date for these agents reveal statistically significant efficacy, but complete response rates are only achieved in fewer than 50% of the patients studied.

Calcineurin Inhibition. Lupkynis (voclosporin) is a calcineurin inhibitor, a mechanism which has been commonly used in generic form as induction therapy for Class V patients. Calcineurin inhibition has been shown to reduce cytokine activation of T-cells and protect against proteinuria, however it may pose serious infection risks and nephrotoxicity is a known class effect.

Cytokine Inhibitors. The other cytokine inhibitors under investigation offer blockade of key pro-inflammatory cytokines (IL17A, IL23, Type 1 IFNs) involved in the pathogenesis of LN, however, they are early in their development.

Complement Pathway Inhibitors. Complement pathway inhibitors are also early in their development, but unlikely to be disease-modifying, since complement activation is one result of the inflammation caused by immune-complex deposition in the kidneys, downstream of key steps in disease pathophysiology.

Our solution: Atacicept

Targeting both BLyS and APRIL is key to reduce autoantibodies produced by B cells and plasma cells in LN. Autoantibodiesplay a large role in the pathogenesis of LN. Autoantibodies target tissue or form immune complexes, leading to tissue and organ damage. Both short-lived and long-lived plasma cells are responsible for generating high levels of autoantibodies in LN.

Short-lived plasma blasts are the main B cell effector subset dependent on activation of various B cell receptors such as TACI, B cell maturation agent (BCMA) and BLyS. Therefore, B cell blocking agents such as Rituxan (rituximab; anti-CD20) and Benlysta (belimumab; anti-BLyS) can reduce short-lived plasma cells and the resulting autoantibody production.

Long-lived plasma cells are in bone marrow and inflammatory tissue niches, and form antibodies in the absence of B-cell activation. Inflammatory tissue has high levels of BLyS and APRIL, which serve to maintain long-lived plasma cells. Inhibiting APRIL blocks long-lived nonproliferating plasma cell activities to further reduce autoantibody formations in LN.

Atacicept contains the soluble TACI receptor that binds to the cytokines BLyS and APRIL and prevents their interaction with TACI, BCMA and BLyS receptors (BLyS-R is also known as B cell activating factor receptor or BAFF-R). Atacicept thus inhibits survival of immature and mature B cells and antibody-producing plasma cells and prevents immunoglobulin class switching. In contrast to a range of available biologics directed at B cells only, we believe atacicept has a prompt and marked effect on antibody production by inhibiting both short-lived and long-lived plasma cells.

Preclinical evidence indicates that dual inhibition of BLyS and APRIL is superior to either BLyS or APRIL alone. Animal modelsof kidney disease have confirmed that atacicept reduces plasma cell numbers and reduces autoantibodies more effectively than BLyS and APRIL antibodies given individually. In a mouse model of collagen-induced arthritis, soluble atacicept inhibited development of collagen-specific antibodies and reduced the incidence of the disease better than BLyS (also known as BAFF) agents alone. In a mouse model of SLE, soluble atacicept decreased the number of B cells, increased survival time and reduced severity of disease symptoms. Furthermore, in a mouse model of SLE, atacicept administered after onset of autoimmunity decreased the number of bone marrow plasma cells and slowed down further formation of autoantibodies. Atacicept prevented renal damage during a 12-week treatment period regardless of autoantibody levels, while the BLyS-only inhibitor did not. Atacicept also decreased established plasma cells in an immunization model better than single inhibitors of BLyS or APRIL.

In patients with active SLE, targeting BLyS and APRIL with atacicept appears to have improved clinical outcomes, measured by endpoints designed to assess efficacy, compared to BLyS alone (Benlysta [belimumab]). While atacicept and Benlysta (belimumab) have not been studied head-to-head in clinical trials, each has been studied in similar populations of patients with SLE, and results of a Phase 2 clinical trial of 150 mg of atacicept compared favorably to published reports on changes in SLE responder index (SRI-4) of belimumab. In a Phase 2 clinical trial of atacicept, the magnitude of efficacy as measured by the difference between treatment and placebo in SRI-4 at 24 weeks was approximately 39% (25% placebo, 64% atacicept 75 mg, 65% atacicept 150 mg, both p=0.005). For Benlysta (belimumab), in a Phase 3 clinical trial of SLE patients, a published analysis of patients with HDA and serologically active disease, clinical efficacy for Benlysta (belimumab) 10 mg/kg showed a difference between treatment and placebo in SRI-4 at 24 weeks of approximately 12%.

Figure 9: Evidence for atacicept performance in SLE

Atacicept consistently demonstrated improved clinical outcomes, measured by endpoints designed to assess efficacy, versus placebo in SLE patients with HDA (SLEDAI-2K ≥10) across additional clinical measures, and consistently across all SRI cut-offs, as well as using the separate clinical assessment, British Isles Lupus Assessment Group (BILAG)-based Combined Lupus Assessment (BICLA). In the HDA population in ADDRESS II, the BICLA delta at week 24 was 20% (atacicept 150 mg 49%, placebo 29.2%, p=0.035), which compares very favorably to BICLA data from other late-stage SLE clinical trials, such as anifrolumab (week 24 BICLA in 16%). We believe that based on these results, an improved clinical benefit may be observed in patients with LN.

Prior clinical development of atacicept in LN

Merck KGaA, Darmstadt, Germany conducted a randomized, double-blind, placebo-controlled Phase 2/3 clinical trial of atacicept in LN, the APRIL-LN trial, aimed to evaluate the efficacy and safety of atacicept in patients with active LN. As per trial protocol, patients initiated high-dose CS (the lesser of 0.8 mg/kg/day or 60 mg/day prednisone) and MMF (1 g daily, increased by 1 g/day each week to 3 g daily) at the time of screening (day -14). From day 1, atacicept (150 mg, subcutaneously, twice weekly for four weeks, then weekly) was initiated with MMF along with a tapered dose of CS.

Four of the six enrolled LN patients developed decreases in serum IgG levels following the initiation of MMF and CS in the setting of significant proteinuria, which are contributing factors of hypogammaglobulinemia. After initiation of atacicept, serum IgG levels further declined; two patients developed severe hypogammaglobulinemia, defined as IgG <3 g/L, and pneumonia. These two patients recovered after treatment discontinuation and received antibiotics therapy. This trial was terminated. Based on the detailed assessment of results from this trial, plans to develop atacicept for the treatment of LN will explore alternatives to the induction regimen studied previously, including not dosing atacicept 150 mg twice weekly; clearly defining the dosing regimen for CS and MMF; and closely monitoring immunoglobulin levels during induction therapy.

Evaluation of safety and efficacy profile of atacicept in SLE

Atacicept 75 mg and 150 mg, dosed once per week with subcutaneous auto-injection, have demonstrated improved clinical outcomes, measured by endpoints designed to assess efficacy, in patients with SLE in the Phase 2 APRIL-SLE and ADDRESS II trials. In these trials, autoantibody titers were significantly reduced, and prespecified and post hoc analyses revealed prevention of flare and reduction of active disease with atacicept treatment, despite the fact that the primary endpoints in these trials were not met.

In ADDRESS II, SLE patients with HDA (SLEDAI-2K ≥10) had an increase in SRI-6 response, attainment of low disease activity (LDA), or SLEDAI-2K ≤2, and a reduction of the risk of a first new severe flare (defined by SLEDAI Flare Index [SFI] or by BILAG A) when treated with atacicept 150 mg. Furthermore, the 024 long-term extension (LTE) trial showed durability of these effects through a median duration of treatment of 96 weeks.

Following the release of the HDA data, Merck KGaA, Darmstadt, Germany pursued the planning and initiation of a global Phase 3 registrational program for atacicept 150 mg once per week in SLE. This program, including two large Phase 3 randomized placebo-controlled trials of atacicept 150 mg compared to placebo, were reviewed by FDA via end-of-phase-2 communication and scientific advice communication with EMA, prior to Merck KGaA, Darmstadt, Germany terminating the SLE program and the IgAN program for business strategy reasons.

Phase 2 clinical trial in patients with SLE for 24 weeks

ADDRESS II, a Phase 2b SLE trial of 306 patients, evaluated the efficacy and safety of atacicept at two subcutaneous doses (150 mg and 75 mg) versus placebo over the course of 24 weeks, with an LTE arm continuing an additional 96 weeks.

Atacicept demonstrated consistent reductions in IgG, IgA, and IgM serum levels, and reductions in anti-dsDNA antibodies, as well as improvements in serum C3 and C4 levels, as shown in Figure 10 below.

Figure 10: Atacicept impact on key biomarkers in the phase 2 ADDRESS II trial

Though atacicept missed its primary endpoint of SRI-6 reduction versus placebo in all comers, in a prespecified analysis of HDA patients, which comprised approximately half of those enrolled, atacicept 150 mg showed improved clinical outcomes, measured by multiple endpoints designed to assess efficacy, including a 26% improvement (p=0.005) in SRI-6 versus placebo, flare risk reduction, and serologic marker normalization. SRI-6 response is defined as ≥6-point reduction in the SELENA-SLEDAI score, no new BILAG A organ domain score or two new BILAG B organ domain scores, and no worsening (<0.30-point increase) in Physician’s Global Assessment score.

Figure 11: SRI-6 response among HDA patients in the phase 2 ADDRESS II trial

Also, among this HDA patient segment, significantly more patients on the atacicept 150 mg arm reached LDA, as measured by SLEDAI-2K ≤2, as shown in Figure 12 below.

Figure 12: HDA patients reaching LDA in the phase 2 ADDRESS II trial

Furthermore, Figure 13 below demonstrates the durable clinical outcomes observed in the HDA segment: more patients reached LDA by multiple measures at both week 24 and week 48. Significantly more patients treated with atacicept 150 mg once weekly versus placebo demonstrated clinical improvement (as shown by SRI-6), achieved LDA, and remission.

Figure 13: Durable clinical outcomes observed in HDA patients in the phase 2 ADDRESS II trial

We believe that the clinical outcomes, measured by multiple endpoints designed to assess efficacy within the HDA segment of the SLE population in the ADDRESS II trial—and a favorable tolerability profile observed in ADDRESS II, as well as the integrated safety analysis in over 1,500 patients—provide the foundation of our rationale for developing atacicept further in LN, a severe renal manifestation of SLE.

Planned phase 3 clinical trial design

Our Phase 3, randomized, parallel-group, double-blind, placebo-controlled, multicenter, multinational study will evaluate the efficacy and safety of atacicept vs placebo in patients with LN. The clinical trial consists of a 104-week double blind treatment period, followed by a 52-week open label treatment period and a 26-week safety follow-up period. The trial, as shown in Figure 14 below, will assess atacicept 150 mg once weekly subcutaneous injections versus placebo. The primary endpoint is complete renal response at 52 weeks.

Figure 14: Planned phase 3 clinical trial design

MAU868 in reactivated BK infection among kidney transplant recipients

We are developing MAU868 as a potential treatment for reactivated BK infection in kidney transplant recipients. While up to 90% of healthy adults have been infected with BKV at some point in their lives, it remains latent in everyone except severely immunocompromised populations such as kidney transplant recipients. There are approximately 80,000 kidney transplants annually worldwide, with approximately 20,000 in the United States. Approximately 225,000 kidney allograft recipients are living in the United States. Waitlists to receive kidneys are long: approximately 3–5 years and 75,000 people long in the United States. Up to 12% of transplants per year are re-transplants, which further limits organ availability for new patients. BKV is a polyoma virus that is tropic to the kidney and bladder tissue and can reactivate with the immunosuppression required for kidney transplant. This reactivation can cause BKVN, a condition in which BK infection, typically first identified as BK viremia, triggers inflammation, which then progresses to renal fibrosis and tubular injury; as shown in Figure 15, BKVN is a leading cause of allograft loss, a devastating outcome for kidney transplant recipients.

Figure 15: Graft survival (%) in kidney transplant patients is worse with BKVN

Currently, there are no approved treatment options for BK viremia or BKVN. We shared full Cohort 1 and Cohort 2 results in 2022 from the Phase 2 trial conducted by Amplyx, and plan to initiate a Phase 2b or Phase 3 clinical trial, pending alignment with regulatory authorities. We believe that MAU868 has the potential to become standard of care for the treatment of BK viremia in order to prevent devastating consequences such as BKVN.

Pathophysiology of BK virus in kidney transplant

BKV has a worldwide seroprevalence of up to 90%. Primary BK infection is typically acquired during childhood, after which the virus establishes lifelong infection in the kidney and bladder tissue. Most people do not experience any known adverse effects from either primary or persistent infection. Control of infection is dependent on CD4+ and CD8+ T cell immunity, which immunosuppressants can displace. In the setting of kidney transplant and related immunosuppression, latent virus can be reactivated or new virus can be transmitted via the donor kidney. BKV reactivation is marked first by viruria—or detection of virus in the urine, and then viremia—detection of viral DNA in the blood, and most commonly occurs within the first year of transplant.

Viremia typically occurs in 15% of kidney transplant recipients, after which BKVN may occur. Approximately 3-4% of kidney transplant recipients develop BKVN.

BKVN disease burden and diagnosis

BKVN may lead to allograft injury and in some cases, allograft loss. Up to 24–60% of all graft losses are due to BKV-associated disease. The average cost of a kidney transplant in the United States is over $440,000. Pre-transplant, recipients are typically on dialysis, for which the cost is approximately $90,000 per year; there is an approximate 450% increase in annual medical cost to treat transplant recipients who experience graft loss.

Most institutions monitor for BK in both the urine, through PCR and urinalysis, and plasma, via PCR. It is common practice to screen kidney transplant recipients for BK viremia via PCR test monthly in the first six months post-transplant and then every three months until two years post-transplant, after which patients are typically screened annually. Also, at any sign of allograft dysfunction, physicians will test for BK viremia. Viral load levels >1000 copies/mL are considered positive for BK viremia, and levels >10,000 copies/mL are considered presumptive BKVN. Kidney allograft biopsy is considered the gold standard for diagnosing BKVN. Late diagnosis of BKV can lead to irreversible renal function decline and poor treatment outcomes.

Kidney transplant market opportunity

An estimated 80,000 kidney transplants are conducted globally each year, with approximately 20,000 in the United States, 20,000 in Europe, 1,500 in Japan, and 10,000 in China. Approximately 225,000 kidney allograft recipients are living in the United States. Waitlists to receive kidneys are long: 3–5 years and 75,000 people deep in the United States. Up to 12% of transplants per year are re-transplants, which further limits organ availability for new patients. Approximately 15% of kidney transplant recipients develop BK viremia. Patients can be risk stratified for BK viremia based on the degree of immunosuppression employed, which is related to the degree of human leukocyte antigen (HLA) match between the graft and recipient; the greater the mismatch, the more intense immunosuppression required, which increases the risk of BKV reactivation.

We estimate the market for a novel agent to treat reactivated BK infection in kidney transplant recipients to be a large commercial opportunity. We believe that MAU868 has the potential to become standard of care for the treatment of reactivated BK infection in order to prevent devastating consequences following kidney transplantation such as BKVN and graft loss.

Current standard of care for kidney transplant patients with BK viremia

Currently, there is no approved treatment specific to BKV. Upon detection of BK viremia, physicians’ first line of defense is to reduce immunosuppression with the goal of restoring CD4+ and CD8+ T cell immunity without causing acute rejection. Initial modification will typically consist of lowering MMF by 50% followed by a reduction in tacrolimus by 50%. If no improvement is observed, use of MMF and tacrolimus will be stopped and dose of prednisone will be increased. Other agents such as intravenous immunoglobulin (IVIG), leflunomide, and cidofovir, are occasionally used—but all have limited data and both leflunomide and cidofovir have serious safety concerns. After development of BKVN, patients have limited options and may continue to receive antivirals or IVIG. Physicians are not satisfied with current treatment options for BKV and highlight that there is a significant unmet need for a viable therapy.

Emerging therapies in development

Despite the high level of unmet need in treating BK viremia and preventing devastating consequences, there is limited development in the space. There is only one alternate industry-sponsored program in clinical development: Allovir’s posoleucel (formerly known as ALVR-105 and Viralym-M), a multi-virus specific T-cell therapy, which is currently being evaluated in a Phase 2 clinical trial. While this approach may have the potential to treat BKV and other opportunistic infections, logistics and distribution are likely to render this approach less feasible than a monoclonal antibody, for instance. Therefore, posoleucel may be reserved for second line of therapy and/or treatment of presumptive BKVN rather than BK viremia.

Our solution: MAU868 / scientific rationale

MAU868 is a human monoclonal antibody (IgG1/l isotype subclass) directed against the major viral capsid protein of BKV, VP1, which is essential for binding to and infection of new cells, as shown in Figure 16. MAU868 neutralizes all four serotypes of BKV at sub-nanomolar concentrations and has a high barrier to resistance in vitro (resistant isolates of BKV were not selected in vitro at any of the concentrations of MAU868 investigated). MAU868 is being developed for the treatment of BKV disease in kidney transplant recipients (BKV nephropathy) and being considered for HSCT recipients (BKV-associated hemorrhagic cystitis). MAU868 also has neutralizing activity in vitro against the closely related JC virus, the cause of progressive multifocal leukoencephalopathy.

Figure 16: MAU868 blocks BK virion binding

Clinical development of MAU868

Phase 1

A first-in-human, randomized, blinded, placebo-controlled, single ascending dose study to assess the safety, tolerability, and pharmacokinetics of MAU868 following IV or SC administration to healthy adult subjects was performed. Administration of up to 100 mg/kg MAU868 IV and 3 mg/kg MAU868 SC were safe and well tolerated. No deaths or serious adverse events were reported, and there were no adverse events that led to the discontinuation of the drug or the study.

Ongoing phase 2

A Phase 2 randomized, double-blind, placebo-controlled clinical trial designed to assess the safety, tolerability, and efficacy of MAU868 for the treatment of allograft-threatening BKV infection in kidney (or kidney-pancreas) transplant recipients is ongoing. Up to 36 patients with BK viremia will participate in 1 of 3 sequential cohorts. As shown in Figure 17, each cohort was designed to randomize approximately 12 patients (8 to MAU868 and 4 to placebo), for which Cohort 1 (1350 mg IV approximately every 28 days for a total of 4 doses) and Cohort 2 (6750 mg IV on Day 1, 1350 mg IV every 28 days for 3 additional doses) have completed dosing.

The primary objective of the clinical trial is to assess the safety and tolerability of MAU868, with secondary objectives to assess the impact of MAU868 on BKV related outcomes. MAU868 has been shown in an interim analysis of week 12 data from Cohorts 1 and 2 to be well-tolerated and showed a greater proportion of patients with decrease in BK plasma viral load versus placebo.

Figure 17: MAU868 phase 2 clinical trial design

Future clinical trials

We plan to initiate a Phase 2b or Phase 3 clinical trial.

MAU868 in BKV cystitis among HSCT recipients

We are exploring development of MAU868 to treat BKV cystitis in HSCT patients. Patients undergoing HSCT are at risk for BKV reactivation due to immunodeficiency; in this setting, BK reactivation and subsequent viruria and viremia can lead to cystitis, including hemorrhagic cystitis. Cystitis is characterized by dysuria, urgency, and/or frequency, while hemorrhagic cystitis indicates the presence of microscopic or gross hematuria. Both BKV cystitis and hemorrhagic cystitis are associated with high patient morbidity and prolonged hospitalization, yet there are no approved treatment options. We believe that MAU868 may represent an important future treatment option for these patients.

Pathophysiology of BK virus reactivation in HSCT

HSCT patients, particularly those who have received allogeneic transplants, are at high risk of various infectious diseases due to immunodeficiency. During the early post-engraftment period, BKV is a common cause of hemorrhagic cystitis. Patients are at highest risk for BKV cystitis three to six weeks following HSCT. Myeloablative conditioning regimen in the setting of human leukocyte antigen (HLA) mismatch is a particular risk factor for BK reactivation. Viruria occurs in approximately half of allogeneic and less than 10% of autologous HSCT recipients. BK viremia > 10,000 copies/mL has been shown to be predictive of renal and urologic outcomes in HSCT patients.

BKV cystitis disease burden and diagnosis

Moderate to severe BKV cystitis may occur prior to discharge and prolong hospital stay and/or result in readmission to the hospital if already discharged. Currently HSCT patients are not routinely monitored for BKV reactivation given the lack of treatments available. BKV testing and monitoring is initiated only in patients who become symptomatic and present with cystitis symptoms, which may emerge several weeks or months following engraftment. Patients who are symptomatic would then be monitored for BKV via urine and/or blood testing monthly for six months, and then at longer intervals. BK viruria alone is not concerning unless the viral load is rapidly accelerating; BKV viremia is more concerning and may trigger physicians to actively treat the cystitis symptoms. In our market research, physicians estimate that 15% of allogeneic HSCT patients and approximately 5% of autologous HSCT patients develop BKV cystitis, including hemorrhagic cystitis.

HSCT market opportunity

The primary addressable patient segment initially is for the treatment of symptomatic BKV cystitis, including hemorrhagic cystitis. Other potential segments may include prophylaxis in high-risk patients and treatment of BK viremia. BK viremia is not currently screened for until symptoms of cystitis occur, but this is likely to change once physicians have an effective treatment available.

An estimated 50,000 allogeneic HSCTs are conducted globally each year, with approximately 10,000 in the United States, 16,000 in Europe, 3,500 in Japan, and 2,500 in China. An estimated 57,000 autologous HSCTs are conducted globally each year, with approximately 17,000 in the United States, 27,000 in Europe, 2,500 in Japan, and 1,800 in China. Approximately 15% of allogeneic recipients and 5% of autologous recipients develop BK cystitis, including hemorrhagic cystitis.

Current standard of care for BKV cystitis in HSCT patients

Upon diagnosis of BKV-associated cystitis, physicians consider reducing immunosuppression—with initial modification typically consisting of lowering MMF by 50% or modifying the tacrolimus dose. This reduction of immunosuppression must be balanced with

consideration for increased risk of acute Graft versus Host Disease (GvHD). Antivirals such as low-dose cidofovir and leflunomide as well as IVIG are used in patients whose BKV does not resolve after a reduction of immunosuppression, or in patients where reduction in immunosuppression is viewed as too high risk (i.e., instances of HLA mismatch or prior history of GvHD). However, there is not robust clinical trial evidence supporting use of these agents in this setting. Symptomatic treatments for severe bleeding due to hematuria include red blood cell transfusions, bladder embolization or cystectomy. For HSCT patients, physicians’ primary concerns are acute GvHD and cytomegalovirus (CMV) reactivation moreso than BKV, though they continue to view BKV cystitis as an area of high unmet need.

Emerging therapies in development

There is limited clinical development of new agents targeting BKV in the HSCT setting. Allovir’s posoleucel (formerly known as ALVR-105 and Viralym-M), a multi-virus specific T-cell therapy, is currently in a Phase 3 clinical trial for the treatment of virus-associated hemorrhagic cystitis. This therapy has the potential to treat six viral pathogens: BKV, CMV, adenovirus, Epstein-Barr virus, human herpesvirus 6 and JC virus, and therefore may have utility when physicians are concerned about multiple viral reactivations. Posoleucel is also in two Phase 2 clinical trials: one in kidney transplant recipients with BK viremia and another in multi-virus prevention following allogeneic HSCT.

We believe that MAU868 may represent an important future treatment option for HSCT patients with BKV cystitis and that its relative ease of distribution and administration may provide a competitive advantage over other emerging therapies.

Exclusive license agreement with Ares Trading S.A.

On October 29, 2020, we entered into the Ares Agreement with Ares, an affiliate of Merck KGaA, Darmstadt, Germany, pursuant to which Ares granted us an exclusive worldwide license to certain patents and related know-how to research, develop, manufacture, use and commercialize therapeutic products containing atacicept or any other compound that is covered by a claim of such licensed patents. Pursuant to the Ares Agreement, Ares also transferred inventory of licensed product to us for use in our clinical development of atacicept.

Per the Ares Agreement, we have obligations to use commercially reasonable efforts to develop at least one licensed product, to launch at least one licensed product in a major market country within a specified time frame after receiving marketing approval for such product and to maintain sufficient resources to manufacture and supply licensed products to meet the market demand in each country for which a licensed product has received marketing approval.

In consideration for the rights granted under the Ares Agreement, we issued 22,171,553 shares of our Series C redeemable convertible preferred stock to Ares at the time of the initial closing of our Series C redeemable convertible preferred stock financing in October 2020, representing ownership of approximately 10% on a fully diluted basis. As additional consideration under the Ares Agreement, we paid Ares $25.0 million upon delivery and initiation of the transfer of specified information and supply of drug product and drug substance and we are required to pay Ares aggregate milestone payments of up to $ 176.5 million upon the achievement of specified BLA filing or regulatory approvals in the United States, Europe and Japan (the first of which consists of a $15.0 million payment upon filing of the BLA), and aggregate milestone payments of up to $515.0 million upon the achievement of specified commercial milestones. Commencing on the first commercial sale of licensed products, we are obligated to pay tiered royalties of low double-digit to mid-teen percentages on annual net sales of the products covered by the license. Our obligation to pay royalties will expire on a licensed product-by-licensed product and country-by-country basis until the latest of (i) 15 years after the first commercial sale of such licensed product in such country; (ii) the expiration of the last valid claim of a licensed patent that covers such licensed product in, or its use, importation or manufacture with respect to, such country; and (iii) expiration of all applicable regulatory exclusivity periods in such country with respect to such licensed product. In the event we sublicense our rights under the Ares Agreement, we are obligated to pay Ares a percentage ranging from the mid single-digit to the low double-digits of specified sublicensing income received.

The term of the Ares Agreement will expire on a licensed product-by-licensed product and country-by-country basis upon the expiration of our obligation to pay royalties to Ares with respect to such licensed product in such country. We have the right to terminate the Ares Agreement at will upon a specified notice period, provided that such termination is not within two years of the effective date of the Ares Agreement. Ares has the right to terminate the Ares Agreement in the event we challenge the validity of the licensed patents. Additionally, either party can terminate the Ares Agreement for the other party’s uncured material breach or bankruptcy.

Asset purchase agreement with Amplyx and exclusive license with Novartis

On December 16, 2021, we entered into an asset purchase agreement (the Amplyx Agreement) with Amplyx, a wholly-owned subsidiary of Pfizer.

Pursuant to the terms of the Amplyx Agreement, we acquired all of Amplyx’s right, title and interest in and to certain assets of Amplyx related to MAU868, a monoclonal antibody that was under development by Amplyx for the treatment of BKV infections (the Purchased Assets). The Purchased Assets include an investigational new drug application filed with the U.S. Food and Drug

Administration, patents, contracts, including the Novartis License, chemical and biological materials, and development and regulatory files, documentation, data, results and other electronic records related to MAU868. We also assumed certain liabilities of Amplyx arising out of the Purchased Assets. We and Amplyx have made customary representations and warranties and agreed to customary covenants in the Amplyx Agreement. Subject to certain limitations, each of we and Amplyx has also agreed to indemnify the other for breaches of representations and warranties and other specified matters.

In partial consideration for the Asset Acquisition, we made an upfront initial payment of $5.0 million to Amplyx. In addition, we are also obligated to make certain milestone payments to Amplyx in an aggregate amount of up to $7.0 million based on certain regulatory milestones. Further, we are required to pay Amplyx low single digit percentage royalties based on net sales on a country-by-country and product-by-product basis.

MAU868 is subject to the Novartis License, which was assigned to us by Amplyx. Pursuant to the terms of the Novartis License, we obtained a worldwide, exclusive license from Novartis to develop, manufacture and commercialize MAU868, subject to certain retained rights for research and development by Novartis, provided that Novartis may not develop or sell products incorporating monoclonal antibody targeting BKV and treating BKV disease within a certain period. We will be solely responsible for all research, development, regulatory, manufacturing and commercialization activities of MAU868. Pursuant to the Novartis License, we are obligated to make certain milestone payments to Novartis in an aggregate amount of up to $69.0 million based on certain clinical development, regulatory and sales milestones. Further, we are required to pay Novartis mid- to high-single digit percentage royalties based on net sales on a country-by-country and product-by-product basis. Unless terminated earlier, the Novartis License will remain in effect with respect to each MAU868 product until the expiration of the royalty term for such product. We may terminate the Novartis License for convenience with 60 days’ prior written notice. We or Novartis may terminate the Novartis License for the other party’s uncured material breach. Novartis may terminate the Novartis License for our insolvency. Upon termination, any license granted by Novartis to us will terminate.

Intellectual property

Our success depends in part upon our ability to protect our core technology and intellectual property. To protect our intellectual property rights, we rely on patents, trademarks, copyrights and trade secret laws, confidentiality procedures, and employee disclosure and invention assignment agreements. Our intellectual property is critical to our business and we strive to protect it through a variety of approaches, including by obtaining and maintaining patent protection in the United States and internationally for our product candidate, and other inventions that are important to our business. For our product candidates, we generally intend to pursue patent protection covering compositions of matter, including new formulations, methods of making and methods of use. As we continue the development of our product candidates, we intend to identify additional means of obtaining patent protection that would potentially enhance commercial success, including through claims covering additional methods of use.

As of December 31, 2022, we have licensed, including pursuant to sublicenses, from Ares, an affiliate of Merck KGaA, Darmstadt, Germany, a patent portfolio related to atacicept that contains approximately seven issued U.S. patents, as well as certain foreign counterparts of a subset of these patents in foreign countries, including Australia, Brazil, Canada, China, Hong Kong, Israel, India, Japan, Mexico, Singapore, South Korea, South Africa, and countries within the European Patent Convention and the Eurasian Patent Organization. The issued patents include claims covering methods of purifying atacicept, formulations and various methods of treatment, and are expected to expire between 2027 and 2029, without considering any patent term extension.

There is also a pending U.S. application as well as certain foreign counterparts directed to treatment of IgAN and proteinuria. Patents that issue in this family are expected to expire in 2041.

Because atacicept is a biologic, marketing approval would also provide 12 years of market exclusivity from the approval date of a BLA in the United States. We are currently seeking orphan drug designation for atacicept in IgAN from the FDA and EMA, which, if secured, would provide seven and ten years, in the United States and European Union, respectively, of regulatory exclusivity protection from the approval date.

As of December 31, 2022, our patent portfolio licensed from Novartis and covering MAU868 includes three issued U.S. patents with claims covering the composition of matter of MAU868, and methods of neutralizing BKV or JC virus as well as methods of treating or reducing the likelihood of BKV or JC virus associated disorders. The U.S. patents are expected to expire in 2036. Corresponding foreign counterparts are granted in Australia, China, Japan, Mexico, Macau and Taiwan, and pending in other jurisdictions such as Canada, Mexico, Europe, Israel and Japan. The foreign patents are expected to expire in 2036.

In addition, an application co-owned with and licensed from Novartis that is directed to dosing regimens for MAU868 is pending as a U.S. application as well as certain foreign counterparts. Patents that issue in this family are expected to expire in 2041.

In addition to patents, we may rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. However, trade secrets and know-how can be difficult to protect. We seek to protect our proprietary information, in part, by executing confidentiality agreements with our collaborators and scientific advisors, and non-solicitation, confidentiality, and invention assignment agreements with our employees and consultants. We have also executed agreements requiring assignment of inventions with selected scientific advisors and collaborators. The confidentiality agreements we

enter into are designed to protect our proprietary information and the agreements or clauses requiring assignment of inventions to us are designed to grant us ownership of technologies that are developed through our relationship with the respective counterparty. We cannot guarantee, however, that we have executed such agreements with all applicable counterparties, such agreements will not be breached, or that these agreements will afford us adequate protection of our intellectual property and proprietary rights. For more information, see “Risk factors—Risks related to our intellectual property.”

Furthermore, we seek trademark protection in the United States and internationally where available and when we deem appropriate.

Manufacturing and supply

We manage a number of external CMOs to develop and manufacture our product candidates.

Atacicept is a fully humanized fusion protein that impacts the B-cell pathway, which has well characterized implications in immunologic diseases. The human IgG1-Fc was modified to reduce the Fc binding to the C1q component of complement and the interaction with Fc receptors.

Atacicept is manufactured following cGMPs using a process that is similar to that used routinely for production of monoclonal antibodies.

The atacicept drug product is available as a ready-to-use injection solution in a prefilled syringe (PFS) at strengths of 25 mg/mL, 75 mg/mL, or 150 mg/mL of trial drug. Each atacicept PFS is designed to deliver a 1 mL solution of drug product. All formulation components are pharmacopeia grade. An atacicept prefilled syringe/autoinjector combination is in late-stage development and will be introduced into future clinical trials when appropriate.

The Ares Agreement includes the transfer of all existing inventory of atacicept drug substance and drug product, for our use in planned and future clinical trials.

We acquired approximately 35,000 PFS of atacicept, representing all three strengths, 25 mg, 75 mg and 150 mg, of atacicept and approximately 25,000 PFS of placebo, as part of the Ares Agreement. This drug product was used to initiate the Phase 2b ORIGIN trial. Additionally, we acquired 6 kg of atacicept drug substance which has subsequently been converted into drug product to supply both the ongoing Phase 2b ORIGIN trial and to support our future clinical trials through the first quarter of 2026.

MAU868 is an IgG1 monoclonal antibody that binds to BKV protein VP1. It is manufactured according to cGMP using a high expression CHO cell and a standard antibody manufacturing process that is completely free from animal or human derived raw materials. The MAU868 manufacturing supply chain is fully established using contract manufacturing organizations with contracts that are assignable to Vera Therapeutics

The fully formulated MAU868 drug product is provided as a 3 mL fill in a 6 mL vial which can be combined with multiple vials to prepare infusions at different dosage strengths for use in clinical trials. The drug product formulation is composed of MAU868 as the active substance, a buffering agent, and both a sugar and a surfactant as stabilizing agents.

The Amplyx Agreement includes the transfer of all existing inventory and work-in-process of MAU868 drug product for use in clinical trials. This includes 2,777 unlabeled vials and work-in-process expected to yield approximately 5,300 vials with release targeted for March 2022. These materials will support both the completion of the ongoing Phase 2 clinical trial and initiation of a future clinical trial.

Commercialization plans

Atacicept

We estimate the market opportunity for novel therapeutics in IgAN across the United States, Europe and Japan to be approximately $5.6 billion to $9.6 billion annually, based on our assumptions, secondary research, and primary market research with physicians and payors. In order to capitalize on this opportunity, we plan to build a specialty commercial infrastructure focused on IgAN, engaging treating physicians, including nephrologists, educating and engaging patients, and ensuring market access for patients.

For novel therapeutics in LN, we estimate the market opportunity across the United States, Europe and Japan to be $2.8 billion to $5.8 billion annually, based on a similar methodology. If we receive regulatory approval for atacicept in both IgAN and LN, we plan to assess call point overlap for the two indications and selectively build out our future commercial infrastructure to address any gaps to optimize our coverage of LN treating physicians. We also plan to build out LN-specific patient and market access programs, leveraging synergies where possible.

Through the Ares Agreement, we were granted worldwide rights to the development and commercialization of atacicept in all indications. We intend to commercialize atacicept ourselves in the United States and other key markets, if approved. Within certain ex-U.S. markets, we may consider strategic collaborations to facilitate commercialization.

MAU868

We plan to develop MAU868 for the treatment of BK viremia in kidney transplant as an initial indication, which has strong commercial synergies with our plans for atacicept. We believe that the prescribing physicians for MAU868 in renal transplant, if approved, will be a subset of the IgAN treating physicians, and plan to conduct an assessment of call point overlap. The launch of this indication, if prior to the atacicept launch, would require a smaller specialty commercial infrastructure build focused on educating and engaging treating physicians, including transplant nephrologists, partnering with kidney transplant organizations, and ensuring market access for patients. If prior to the atacicept launch, we would plan to leverage this infrastructure for eventual atacicept sales and marketing activities.

Through the Amplyx Agreement, we obtained worldwide rights to the development and commercialization of MAU868 in all indications.

Similar to our plans with atacicept, we intend to commercialize MAU868 ourselves in the United States and other key markets, if approved.

We also may consider strategic collaborations to facilitate commercialization in certain ex-U.S. markets.

Competition

The biotechnology and pharmaceutical industries are characterized by rapidly changing technologies, significant competition and a strong emphasis on intellectual property. This is also true for the development and commercialization of treatments for immunologic diseases. Though we believe that our focus, experienced team, scientific knowledge, and intellectual property provide us with competitive advantages, we face competition from a number of sources, including large and small biopharmaceutical companies, universities, and other research institutions.

Many of our competitors have significantly greater financial, technical, human and other resources than we do and may be better equipped to develop, manufacture and market technologically superior products. In addition, many of these competitors have significantly greater experience than we have in undertaking nonclinical studies and human clinical trials of new pharmaceutical products and in obtaining regulatory approvals of human therapeutic products. Accordingly, our competitors may succeed in obtaining FDA approval for superior products. Many of our competitors have established distribution channels for the commercialization of their products, whereas we have no such channel or capabilities. In addition, many competitors have greater name recognition and more extensive collaborative relationships. Mergers and acquisitions in the pharmaceutical and biotechnology 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.

Our competitors may obtain regulatory approval of their products more rapidly than we do or may obtain patent protection or other intellectual property rights that limit our ability to develop or commercialize our product candidates or any future product candidates. Our competitors may also develop drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than our products and these competitors may also be more successful than we are in manufacturing and marketing their products. If we are unable to compete effectively against these companies, then we may not be able to commercialize our product candidates or any future product candidates or achieve a competitive position in the market. This would adversely affect our ability to generate revenue. Our competitors also compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Atacicept in IgAN

Despite a high level of morbidity for IgAN, the current standard of care consists of off-label use of RAAS inhibitors, including ACE inhibitors and ARBs, and potentially steroids. Atacicept, if and when approved and successfully commercialized, may compete with these existing approaches and with any new therapies that may become available in the future. Sodium-glucose cotransporter-2 (SGLT2) inhibitors, including AstraZeneca plc’s (AstraZeneca) Farxiga, which is approved for chronic kidney disease, is becoming the standard-of-care in some geographies including the United States. Among emerging therapies, we consider our most direct competitors with respect to atacicept in IgAN to be approved products: the reformulated steroid from Calliditas Therapeutics AB, and endothelin and angiotensin II receptor antagonist from Travere Therapeutics, Inc.; programs in Phase 3 clinical development: Visterra Inc., Otsuka Pharmaceutical Co., Ltd., Novartis, Omeros Corporation, Alnylam Pharmaceuticals Inc., and Chinook Therapeutics Inc.; and the following companies with programs in Phase 2 of clinical development: Chinook Therapeutics Inc., Reata Pharmaceuticals, Inc., RemeGen Co., Ltd., Ionis Pharmaceuticals, Inc., AstraZeneca, and DiaMedica Therapeutics, Inc.

Atacicept in LN

In LN, prior to December 2020, there had been no approved therapies, and the standard-of-care has consisted of a number of non-specific therapies, including MMF, steroids, CYC, rituximab, calcineurin inhibitors, AZA, and HCQ, dependent on class of disease and whether a patient was cycling through the induction or maintenance phase of therapy. Paradigms are evolving with the FDA approvals of GlaxoSmithKline plc’s Benlysta (belimumab) and Aurinia Pharmaceuticals Inc.’s Lupkynis (voclosporin), both of which we consider to be direct competitors. Our competitors include: Roche Holding AG and Novartis Pharmaceuticals Corporation, each of which have programs in Phase 3 clinical development; and BeiGene Ltd., Janssen Pharmaceuticals, Inc., AstraZeneca, Alexion Pharmaceuticals Inc. (Alexion), Omeros Corporation, Kezar Life Science Inc., Bristol Myers Squibb, Boehringer, and Novartis Pharmaceuticals Corporation, each of which have programs in Phase 2 clinical development.

MAU868

There are currently no anti-BKV therapies approved, either in the kidney transplant or HSCT setting. The standard of care in both settings is to reduce immunosuppression as a first line, and potentially to offer IVIG in kidney transplant recipients or antivirals with limited clinical evidence, including leflunomide and cidofovir, in either setting. There are few industry-sponsored programs in development for these indications; we consider our most direct competitor to be Allovir’s multi-virus specific T-cell therapy, posoleucel, which is in a Phase 2 clinical trial for BK viremia in kidney transplant recipients, a Phase 3 clinical trial for treatment of virus-associated cystitis, and a Phase 2 clinical trial in multi-virus prevention following allogeneic HSCT.

Government regulation

Government authorities in the United States at the federal, state and local level and in other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, such as our investigational medicines and any future investigational medicines. Generally, before a new drug or biologic can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

Regulatory approval in the United States

In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug and Cosmetic Act (FDCA), and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post- approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Biological products used for the prevention, treatment or cure of a disease or condition of a human being are subject to regulation under the FDCA, except the section of the FDCA that governs the approval of a new drug application (NDA). Biological products are approved, or licensed, for marketing under provisions of the Public Health Service Act (PHSA) via a BLA. The application process and requirements for approval of BLAs for originator biological products are similar to those for NDAs for new chemical entities, and biologics are associated with similar approval risks and costs as drugs. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending NDAs or BLAs, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.

Our investigational medicines and any future investigational medicines must be approved by the FDA pursuant to a BLA before they may be legally marketed in the United States. The process generally involves the following:

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completion of extensive preclinical laboratory and animal studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practices (GLP) requirements;

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submission to the FDA of an Investigational New Drug Application (IND), which must become effective before human clinical trials may begin;

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approval of the protocol and related documents by an IRB or independent ethics committee at each clinical trial site before each clinical trial may be commenced;

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

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preparation of and submission to the FDA of a BLA for marketing approval that includes sufficient evidence of establishing the safety, purity, and potency of the proposed biological product for its intended indication, including from results of nonclinical testing and clinical trials;

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payment of any user fees for FDA review of the BLA;

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

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

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satisfactory completion of any potential FDA audits of the clinical trial sites that generated the data in support of the BLA to assure compliance with GCPs and integrity of the clinical data;

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potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA;

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FDA review and approval of the BLA, including consideration of the views of any FDA advisory committee; and

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compliance with any post-approval requirements, including a REMS, where applicable, and post- approval studies required by the FDA as a condition of approval.

The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product candidates will be granted on a timely basis, or at all.

Preclinical studies

Before testing any biological product candidates in humans, the product candidate must undergo rigorous preclinical testing. Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use. The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies.

Prior to beginning the first clinical trial with a product candidate in the United States, an IND must be submitted to the FDA and the FDA must allow the IND to proceed. An IND is an exemption from the FDCA that allows an unapproved product candidate to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA allowance that such investigational product may be administered to humans in connection with such trial. Such authorization must be secured prior to interstate shipment and administration. In support of a request for an IND, applicants must submit a protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. An IND sponsor must also submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among other things, to the FDA as part of an IND. Some long-term preclinical testing may continue after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the trial on clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.

Clinical trials

The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control. Clinical trials must be conducted: (i) in compliance with federal regulations; (ii) in compliance with GCPs, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors; as well as (iii) under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated in the trial. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.

Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. An IRB must operate in compliance with FDA regulations. An IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.

Some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee (DSMB). This group provides authorization as to whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the study.

There also are requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries. Information about certain clinical trials, including clinical trial results, must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website. Information related to the product, patient population, phase of investigation, clinical

trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration. Disclosure of the results of these clinical trials can be delayed in certain circumstances for up to two years after the date of completion of the trial.

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

Clinical trials are generally conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3:

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Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate. The primary purpose of these clinical trials is to assess the metabolism, pharmacokinetics, pharmacologic action, side effect tolerability, safety of the product candidate, and, if possible, early evidence of effectiveness.

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Phase 2 clinical trials generally involve studies in disease-affected patients to evaluate proof of concept and/or determine the dosing regimen(s) for subsequent investigations. At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted.

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Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product labeling. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the biologic.

These Phases may overlap or be combined. For example, a Phase 1/2 clinical trial may contain both a dose-escalation stage and a dose-expansion stage, the latter of which may confirm tolerability at the recommended dose for expansion in future clinical trials.

A single Phase 3 or Phase 2 trial with other confirmatory evidence may be sufficient in rare instances to provide substantial evidence of effectiveness (generally subject to the requirement of additional post-approval studies).

In some cases, FDA may require, or firms may voluntary pursue, post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, after initial marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.

During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.

Phase 1, Phase 2, Phase 3 and other types of clinical trials may not be completed successfully within any specified period, if at all. The FDA, the IRB, or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including non-compliance with regulatory requirements or a finding that the patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug or biologic has been associated with unexpected serious harm to patients.

Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry and physical characteristics of the drug or biologic as well as 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 and, among other things, companies must develop methods for testing the identity, strength, quality, potency and purity of the final product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the investigational medicines do not undergo unacceptable deterioration over their shelf life.

FDA review processes

Following completion of the clinical trials, the results of preclinical studies and clinical trials are submitted to the FDA as part of a BLA, along with proposed labeling, chemistry and manufacturing information to ensure product quality and other relevant data. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of the FDA. FDA approval of a BLA must be obtained before a biologic or drug may be marketed in the United States.

The cost of preparing and submitting a BLA is substantial. Under the Prescription Drug User Fee Act (PDUFA), each BLA must be accompanied by a substantial user fee. The FDA adjusts the PDUFA user fees on an annual basis. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication. The applicant under an approved BLA is also subject to an annual program fee.

Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the FDA 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. The resubmitted application also is subject to review to determine if it is substantially complete before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, pure and potent, for its intended use, and whether the product is being manufactured in accordance with cGMP to ensure its continued safety, purity and potency.

Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10 months, from the filing date, in which to complete its initial review of an original BLA for a new molecular entity and respond to the applicant, and six months from the filing date of an original BLA designated for priority review. The review process for both standard and priority review may be extended by the FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs, and the review process can be extended by FDA requests for additional information or clarification.

Before approving a BLA, the FDA will conduct a pre -approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements. The FDA will not approve the product 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.

The FDA also may audit data from clinical trials to ensure compliance with GCP requirements and the integrity of the data supporting safety and efficacy. Additionally, the FDA may refer applications for novel products or products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions, if any. The FDA is not bound by recommendations of an advisory committee, but it generally follows such recommendations when making decisions on approval. The FDA likely will reanalyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process.

After the FDA evaluates a BLA, it will issue either an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the biologic with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application will not be approved in its present form. A Complete Response Letter generally outlines the deficiencies in the BLA and may require additional clinical data, additional pivotal clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing in order for FDA to reconsider the application. If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application or request an opportunity for a hearing. The FDA has committed to reviewing such resubmissions in two or six months, depending on the type of information included. Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, including to subpopulations of patients, which could restrict the commercial value of the product. Furthermore, as a condition of BLA approval, the FDA may require a REMS to help ensure that the benefits of the biologic outweigh the potential risks to patients. A REMS can include medication guides, communication plans for healthcare professionals and elements to assure a product’s safe use (ETASU). An ETASU can include, but is not limited to, special training or certification for prescribing or dispensing the product, dispensing the product only under certain circumstances, special monitoring and the use of patient-specific registries. The requirement for a REMS can materially affect the potential market and profitability of the product. Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the product’s safety or efficacy.

Orphan drug designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is generally 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 but for which there is no reasonable expectation that the cost of developing and making the product for this type of disease or condition will be recovered from sales of the product in the United States.

Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation on its own does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same product for the same indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity by means of greater effectiveness, greater safety, or providing a major contribution to patient care, or in instances of drug supply issues. 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. Orphan drug exclusivity may be lost if the FDA later determines that the request for designation was materially defective. Further, competitors may receive approval of either a different product for the same indication or the same product for a different indication. In the latter case, because healthcare professionals are free to prescribe products for off-label uses, the competitor’s product could be used for the orphan indication despite another product’s orphan exclusivity.

Expedited development and review programs

The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition.

VERA US Equity

VERA · 10-K · period ended 2022-12-31

Item 1. Business.

VERA US Equity☆

VERA · 10-K · period ended 2022-12-31

Item 1. Business.

VERA US Equity