美国
证券交易委员会
华盛顿特区，邮编：20549
形式
(标记一)
根据1934年《证券交易法》第13或15(D)条规定的季度报告 |
截至本季度末
或
根据1934年证券交易法第13或15（d）条提交的过渡报告 |
对于从__
委员会文件号：
(注册人的确切姓名载于其章程)
(述明或其他司法管辖权 |
(税务局雇主 |
公司或组织) |
识别号码) |
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（主要行政办公室地址） |
(邮政编码) |
注册人的电话号码，包括区号：(
根据该法第12(B)条登记的证券：
每个班级的标题 |
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交易 符号 |
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注册的每个交易所的名称 |
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用复选标记表示注册人(1)是否在过去12个月内(或注册人被要求提交此类报告的较短时间内)提交了1934年《证券交易法》第13条或15(D)节要求提交的所有报告，以及(2)在过去90天内是否符合此类提交要求。
用复选标记表示注册人是否在过去12个月内(或在注册人被要求提交此类文件的较短时间内)以电子方式提交了根据S-T规则第405条(本章232.405节)要求提交的每个交互数据文件。
用复选标记表示注册人是大型加速申报公司、加速申报公司、非加速申报公司、较小的报告公司或新兴成长型公司。请参阅《交易法》第12b-2条规则中“大型加速申报公司”、“加速申报公司”、“较小申报公司”和“新兴成长型公司”的定义。
大型加速文件服务器 |
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加速文件管理器 |
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规模较小的报告公司 |
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新兴成长型公司 |
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如果是一家新兴的成长型公司，用复选标记表示注册人是否已选择不使用延长的过渡期来遵守根据《交易所法》第13(A)节提供的任何新的或修订的财务会计准则。
用复选标记表示注册人是否是空壳公司(如《交易法》第12b-2条所定义)。是☐ 没有
截至2024年11月8日，登记人已
目录
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页面 |
第一部分： |
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项目2. |
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项目3. |
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项目4. |
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第二部分。 |
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项目1. |
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第1A项。 |
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项目2. |
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项目3. |
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项目4. |
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第五项。 |
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第六项。 |
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i
与我们的业务相关的重大风险和其他风险摘要
1
关于前瞻性陈述的特别说明
本季度10-Q表格报告，包括题为“风险因素”和“管理层对财务状况和经营结果的讨论和分析”的部分，包含基于我们管理层的信念和假设以及我们管理层当前可用的信息的明确或暗示的前瞻性陈述。尽管我们相信这些前瞻性陈述中反映的预期是合理的，但这些陈述与未来事件或我们未来的运营或财务业绩有关，并涉及已知和未知的风险、不确定性和其他因素，可能导致我们的实际结果、绩效或成就与这些前瞻性陈述所表达或暗示的任何未来结果、绩效或成就存在重大差异。本10-Q表格季度报告中的前瞻性陈述包括但不限于有关以下方面的陈述：
2
这些因素不应被解释为详尽无遗，而应与本10-Q表格季度报告中包含的其他警告性声明一起阅读。本10-Q表格季度报告中包含的前瞻性陈述于本10-Q表格季度报告之日做出，我们不承担公开更新或审查任何前瞻性陈述的义务，无论是由于新信息、未来发展还是其他原因。因此，您不应依赖这些前瞻性陈述来代表我们在本季度报告（表格10-Q）日期之后任何日期的观点。
3
第一部分--融资AL信息
项目1.融资所有报表。
CABALETTA比奥，Inc.
简明综合资产负债 床单
(单位为千，不包括每股和每股金额)
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9月30日， |
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12月31日， |
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资产 |
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（未经审计） |
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流动资产： |
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现金及现金等价物 |
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$ |
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短期投资 |
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预付费用和其他流动资产 |
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流动资产总额 |
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财产和设备，净额 |
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经营性租赁使用权资产 |
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其他资产 |
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总资产 |
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$ |
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$ |
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负债和股东权益 |
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流动负债： |
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应付账款 |
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$ |
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$ |
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应计负债和其他流动负债 |
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经营租赁负债，本期部分 |
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流动负债总额 |
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经营租赁负债，扣除当期部分 |
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总负债 |
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和意外情况（见注5和6） |
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股东权益： |
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优先股，美元 |
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有投票权和无投票权普通股，美元 |
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额外实收资本 |
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累计其他综合收益 |
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累计赤字 |
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股东权益总额 |
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总负债和股东权益 |
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$ |
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$ |
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附注是这些未经审计的简明综合财务报表的组成部分。
4
CABALETTA比奥，Inc.
的简明综合报表 运营与综合损失
(单位为千，不包括每股和每股金额)
（未经审计）
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止三个月 |
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止九个月 |
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2024 |
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2023 |
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2024 |
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2023 |
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运营费用： |
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研发 |
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$ |
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$ |
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一般及行政 |
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总运营支出 |
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运营亏损 |
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其他收入： |
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利息收入 |
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净亏损 |
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其他全面收入： |
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可供出售投资的未实现净收益（损失），扣除税款 |
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( |
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( |
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净综合亏损 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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基本股和稀释股有投票权和无投票权普通股每股净亏损 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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附注是这些未经审计的简明综合财务报表的组成部分。
5
卡巴莱塔BIO，Inc.
简明综合损益表 股东权益
(单位为千，不包括份额)
（未经审计）
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普通股 |
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股份 |
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额外 |
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累计其他综合收益 |
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累计赤字 |
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总 |
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余额-2022年12月31日 |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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股票补偿 |
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— |
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— |
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— |
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可供出售证券的未实现净收益 |
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— |
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— |
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— |
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— |
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与行使股票期权相关的普通股发行 |
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— |
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— |
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— |
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行使预融资认购权后发行普通股 |
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— |
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— |
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— |
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— |
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— |
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净亏损 |
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— |
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— |
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— |
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— |
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( |
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( |
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平衡-2023年3月31日 |
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$ |
— |
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$ |
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$ |
— |
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$ |
( |
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$ |
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股票补偿 |
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— |
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— |
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— |
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— |
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普通股发行，扣除发行成本美元 |
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— |
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— |
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— |
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与行使股票期权相关的普通股发行 |
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— |
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— |
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— |
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员工购股计划下普通股的发行 |
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可供出售证券的未实现净损失 |
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— |
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净亏损 |
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— |
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— |
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— |
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— |
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( |
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( |
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余额—2023年6月30日 |
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$ |
— |
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$ |
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$ |
( |
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( |
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股票补偿 |
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— |
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— |
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— |
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— |
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可供出售证券的未实现净损失 |
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— |
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— |
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— |
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( |
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— |
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( |
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与行使股票期权相关的普通股发行 |
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— |
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— |
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— |
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行使预融资认购权后发行普通股 |
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— |
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— |
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— |
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— |
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净亏损 |
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— |
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— |
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— |
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— |
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( |
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( |
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余额-2023年9月30日 |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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附注是这些未经审计的简明综合财务报表的组成部分。
6
CABALETTA比奥，Inc.
股东权益简明合并报表
(单位为千，不包括份额)
（未经审计）
|
普通股 |
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股份 |
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量 |
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额外 |
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累计其他综合损失 |
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累计赤字 |
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总 |
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余额-2023年12月31日 |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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普通股发行，扣除发行成本美元 |
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— |
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— |
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股票补偿 |
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— |
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— |
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— |
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可供出售证券的未实现净损失 |
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— |
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— |
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— |
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( |
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与行使股票期权相关的普通股发行 |
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— |
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— |
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— |
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净亏损 |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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平衡-2024年3月31日 |
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$ |
— |
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$ |
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$ |
( |
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( |
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股票补偿 |
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— |
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— |
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与行使股票期权相关的普通股发行 |
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员工购股计划下普通股的发行 |
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可供出售证券的未实现净收益 |
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— |
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净亏损 |
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— |
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— |
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— |
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— |
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( |
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( |
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余额-2024年6月30日 |
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$ |
— |
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$ |
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$ |
( |
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$ |
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股票补偿 |
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— |
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— |
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与行使股票期权相关的普通股发行 |
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行使预融资认购权后发行普通股 |
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— |
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可供出售证券的未实现净收益 |
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— |
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净亏损 |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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余额-2024年9月30日 |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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||||
附注是这些未经审计的简明综合财务报表的组成部分。
7
CABALETTA比奥，Inc.
的简明综合报表 现金流量
(in数千）
（未经审计）
|
|
止九个月 |
|
|||||
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|
2024 |
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2023 |
|
||
经营活动的现金流： |
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净亏损 |
|
$ |
( |
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$ |
( |
) |
对净亏损与经营活动中使用的现金净额进行的调整： |
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股票补偿 |
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折旧 |
|
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非现金租赁费用 |
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租赁负债的确认 |
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|
||
投资折扣摊销 |
|
|
( |
) |
|
|
( |
) |
经营资产和负债变化： |
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预付费用和其他流动资产 |
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其他资产 |
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( |
) |
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( |
) |
应付账款 |
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( |
) |
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应计负债和其他流动负债 |
|
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( |
) |
|
租赁负债 |
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( |
) |
|
|
( |
) |
用于经营活动的现金净额 |
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( |
) |
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( |
) |
投资活动产生的现金流： |
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||
购置财产和设备 |
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|
( |
) |
|
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( |
) |
购买投资 |
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( |
) |
|
投资到期所得收益 |
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||
投资活动提供(用于)的现金净额 |
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( |
) |
|
融资活动的现金流： |
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|
||
普通股发行收益，扣除发行成本 |
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与行使相关的普通股发行收益 |
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员工股票购买计划下发行普通股的收益 |
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|
||
融资活动提供的现金净额 |
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|
||
现金及现金等价物净(减)增 |
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|
( |
) |
|
|
|
|
现金和现金等价物--期初 |
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|
|
|
|
|
||
现金和现金等价物--期末 |
|
$ |
|
|
$ |
|
||
非现金投资和融资活动的补充披露： |
|
|
|
|
|
|
||
应付账款和应计费用中包括的财产和设备购置 |
|
$ |
|
|
$ |
|
||
以租赁义务换取的使用权资产 |
|
$ |
|
|
$ |
|
||
附注是这些未经审计的简明综合财务报表的组成部分。
8
CABALETTA比奥，Inc.
未经审计浓缩合并财务报表注释社会报表
(单位为千，不包括每股和每股金额)
1.陈述依据
Cabaletta Bio，Inc.(本公司或Cabaletta)于2017年4月在特拉华州注册为Tycho Treateutics，Inc.，并于2018年8月更名为Cabaletta Bio，Inc.。该公司总部位于宾夕法尼亚州费城。Cabaletta是一家临床阶段的生物技术公司，专注于发现和开发针对自身免疫性疾病的工程化t细胞疗法。主要业务于2018年4月开始。
风险和不确定性
除非公司完成临床前和临床开发，并获得一个或多个候选产品的监管批准，否则公司预计不会从针对自身免疫性疾病的工程t细胞疗法的销售中获得收入或任何其他收入。如果该公司寻求获得监管机构对其任何候选产品的批准，该公司预计将产生巨额商业化费用。
该公司面临生物技术行业公司常见的风险，包括但不限于新技术创新、对专有技术的保护、对关键人员的依赖、遵守政府规定以及获得额外融资的需要。因此，公司无法预测增加开支的时间或数额，也无法预测公司何时或是否能够实现或保持盈利。此外，公司依赖第三方进行某些研究和开发活动，包括制造服务(附注5和附注6)。目前正在开发的候选产品在商业化之前将需要大量额外的研究和开发努力，包括广泛的临床前和临床测试和监管批准。即使该公司能够从销售其候选产品中获得收入，如果获得批准，它也可能无法盈利。如果该公司未能实现盈利或无法持续盈利，则它可能无法继续按计划运营，并被迫减少运营。
流动性
该公司自成立以来一直遭受年度运营亏损，预计在可预见的未来将继续产生运营亏损。公司的最终成功取决于其研究和开发活动的结果。该公司拥有现金、现金等价物和以下投资$
该公司打算通过股票发行、债务融资、政府融资安排、战略联盟或其他来源来筹集此类额外资本。然而，如果此类融资不能在适当的水平上及时获得，或此类协议不能以优惠的条款获得，或者根本不能在需要时获得，公司将需要重新评估其运营计划，并可能被要求推迟或停止开发其一个或多个候选产品或运营计划。该公司预计，自公司向美国证券交易委员会(美国证券交易委员会)提交10-Q表格季度报告之日起，其截至2024年9月30日的现金、现金等价物和投资将足以为其计划的运营提供至少12个月的资金。
2.主要会计政策摘要
未经审计的中期财务信息
随附的未经审计简明合并财务报表是按照公认会计原则（GAAP）以及美国证券交易委员会有关中期财务报告的适用规则和法规编制的。这些注释中对适用指南的任何提及均指财务会计准则委员会（FASB）的会计准则编纂和会计准则更新（ASO）中的GAAP。根据这些规则的允许，GAAP通常要求的某些脚注和其他财务信息已被压缩或省略。未经审计的简明综合财务报表包括公司及其全资子公司的账目。所有公司间余额和交易均已在合并中消除。
9
管理层认为，随附的未经审计简明综合财务报表包括所有正常和经常性调整(主要由影响财务报表的应计项目和估计组成)，以公平地反映公司截至2024年9月30日的财务状况以及截至2024年9月30日和2023年9月30日的三个月和九个月的经营结果和现金流量。截至2024年9月30日的三个月和九个月的业绩不一定表明截至2024年12月31日的一年、任何其他过渡时期或任何未来一年或任何时期的预期结果。本文所包括的截至2023年12月31日的资产负债表是从截至该日的经审计的财务报表中得出的。本文提出的未经审计简明综合财务报表不包含GAAP对年度财务报表所要求的披露。这些未经审计的简明合并财务报表应与公司已审计的财务报表结合阅读，已审计的财务报表包含在公司于2024年3月21日提交给美国证券交易委员会的10-k表格2023年年报(2023年年报)中。
预算的使用
根据美国公认会计原则编制简明综合财务报表，要求管理层作出估计和假设，以影响截至财务报表日期的资产和负债额以及或有资产和负债的披露，以及报告期内报告的费用金额。所附财务报表中作出的重大估计和假设包括但不限于与公司研发费用相关的预付款和应计项目。本公司根据历史经验和其他因素持续评估其估计和假设，并在事实和情况需要时调整这些估计和假设。实际结果可能与这些估计不同。
表外风险与信用风险集中度
金融工具可能使公司面临严重的信用风险，包括投资于美国国库货币市场基金的现金和现金等价物，以及投资于美国国库证券的可供出售债务证券。该公司的部分现金由两家联邦保险的金融机构持有，账户余额有时可能超过联邦保险的限额。本公司并无在该等账户出现任何亏损，管理层相信本公司并无重大信贷风险。本公司没有表外风险，例如外汇合约、期权合约或其他海外对冲安排。
本公司将自购买之日起三个月或以下的原始到期日购买的所有高流动性投资视为现金等价物。现金等价物主要包括投资于货币市场账户的金额。
重大会计政策
在截至2024年9月30日的9个月内，与公司2023年年报中经审计的财务报表附注2所述的重大会计政策相比，公司的会计政策没有重大变化。
公允价值计量
在资产负债表中按公允价值经常性记录的资产和负债根据与用于计量其公允价值的投入相关的判断水平进行分类。公允价值被定义为一项资产将收到的交换价格或将支付的退出价格，以在计量日在市场参与者之间有序交易中转移该资产或负债的本金或最有利市场的负债。用于计量公允价值的估值技术必须最大限度地利用可观察到的投入，最大限度地减少使用不可观察到的投入。《关于公允价值计量的权威指引》为公允价值计量的披露确立了三级公允价值等级，具体如下：
第1级-可观察到的投入，例如在计量日期相同资产或负债在活跃市场的未调整报价。
第2级-资产或负债可直接或间接观察到的投入(第1级中包括的报价除外)。这些报价包括活跃市场中类似资产或负债的报价，以及非活跃市场中相同或类似资产或负债的报价。
第三级-市场活动很少或没有市场活动支持的不可观察的投入，并且对资产或负债的公允价值具有重大意义。
10
新兴成长型公司的地位
本公司是一家新兴的成长型公司，根据2012年的JumpStart Our Business Startups Act(JOBS Act)的定义。根据《就业法案》，新兴成长型公司可以推迟采用在《就业法案》颁布后发布的新的或修订后的会计准则，直到这些准则适用于私营公司。本公司已选择使用此延长过渡期以符合新的或经修订的会计准则，该等准则对上市公司及私人公司具有不同的生效日期，直至(I)不再是新兴成长型公司或(Ii)明确及不可撤销地选择退出《就业法案》所规定的延长过渡期，两者以较早者为准。因此，这些财务报表可能无法与截至上市公司生效日期遵守新的或修订的会计声明的公司进行比较。公司作为新兴成长型公司的地位将于2024年12月31日结束，这将是公司首次公开募股五周年后结束的财政年度的最后一天。
近期发布的会计公告
2023年11月，FASB发布了会计准则更新，或ASU，2023-07，分部报告(主题280)--对可报告分部披露的改进。本ASU要求公共实体在中期和年度的基础上提供额外的分部披露。本ASU中的修订应追溯适用于财务报表中列报的所有先前期间，除非不切实际。在过渡时，前几期披露的分部费用类别和金额应以采用期间确定和披露的重大分部费用类别为基础。ASU在2023年12月15日之后的财政年度和2024年12月15日之后的财政年度内的过渡期内有效。允许及早领养。公司目前计划在有效时采用这一指导方针，并正在评估采用这一指导方针对公司合并财务报表和附注的影响。
2023年12月，FASB发布了ASU 2023-09，所得税披露的改进。ASU 2023-09通过改进所得税披露，提高了所得税信息的透明度，这些信息主要与税率对账和已支付所得税信息有关。该指导意见自2024年12月15日起适用于公共企业实体的年度期间。允许及早领养。公司目前计划在有效时采用这一指导方针，并正在评估采用这一指导方针对公司合并财务报表和附注的影响。
3.公允价值计量
金融工具的公允价值
于2024年9月30日和2023年12月31日，公司的金融工具包括现金及现金等值物、可供出售债务证券、应付账款和应计费用。由于这些工具的短期性质，公司合并财务报表中报告的这些工具的现金和现金等值物、应付账款和应计费用的公允价值接近其各自的公允价值。
下表列出了有关公司经常性按公允价值计量的金融资产的信息，并指出了用于确定此类公允价值的公允价值层级的级别：
|
|
2024年9月30日 |
|
|||||||||||||
|
|
总 |
|
|
引用 |
|
|
显著 |
|
|
显著 |
|
||||
金融资产 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
现金等价物： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
货币市场基金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
短期投资： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美国国债 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
总 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
11
|
|
2023年12月31日 |
|
|||||||||||||
|
|
总 |
|
|
引用 |
|
|
显著 |
|
|
显著 |
|
||||
金融资产 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
现金等价物： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
货币市场基金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
美国国债-原到期日少于三个月 |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
短期投资： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美国国债 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
总 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
货币市场基金采用报价按经常性的公允价值计量，并被分类为第一级投入。投资根据源自可观察市场数据的报价以外的输入数据按公允价值计量，并被分类为第二级输入数据。
对于分类为可供出售投资的债务证券，公司将计量日期之间公允价值变化产生的未实现损益记录为其他全面收益的组成部分。
|
|
2024年9月30日 |
|
|||||||||||||
|
|
摊销成本 |
|
|
未实现收益总额 |
|
|
未实现总损失 |
|
|
公平值 |
|
||||
金融资产 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
现金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
货币市场基金 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
包括在现金和现金等价物中 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美国国债-一年或以下到期 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
包含在短期投资中 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
总 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
2023年12月31日 |
|
|||||||||||||
|
|
摊销成本 |
|
|
未实现收益总额 |
|
|
未实现总损失 |
|
|
公平值 |
|
||||
金融资产 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
现金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
货币市场基金 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美国国债-原到期日少于三个月 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
包括在现金和现金等价物中 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美国国债-一年或以下到期 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
包含在短期投资中 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
总 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
12
4.应计及其他流动负债
应计负债和其他流动负债包括以下各项：
|
|
9月30日， |
|
|
12月31日， |
|
||
研究和开发服务 |
|
$ |
|
|
$ |
|
||
总务和行政服务 |
|
|
|
|
|
|
||
补偿费用 |
|
|
|
|
|
|
||
其他 |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
5.合作、许可协议和其他协议
修改并重新签署了与宾夕法尼亚大学和费城儿童医院受托人的许可协议
于2018年8月，本公司与宾夕法尼亚大学订立许可协议(经2019年7月修订及重述)，包括费城儿童医院(CHOP)为一方，并于2020年5月及2021年10月修订(许可协议)，根据该许可协议，本公司获得(A)对宾夕法尼亚大学某些知识产权的非独家、不可再授权的全球许可，以进行研究、产品开发、临床试验、细胞制造及其他活动，及(B)独家的、全球范围的、具有版税负担的权利及许可，并有权按目标再许可，根据宾夕法尼亚大学的某些知识产权，制造、使用、销售、出售、进口和以其他方式商业化治疗自身免疫和同种免疫疾病的产品。除非提前终止，否则许可协议在公司许可的宾夕法尼亚大学知识产权中的最后一个有效索赔到期或放弃或以其他方式终止时失效。为方便起见，本公司可在60天内发出书面通知，随时终止许可协议。如果发生未治愈的重大违约，宾夕法尼亚州立大学可在60天内发出书面通知，终止许可协议。根据许可协议的条款，该公司有义务支付#美元
该公司被要求在达到特定的临床和商业里程碑时支付某些里程碑付款。对于达到里程碑的第二个产品，里程碑付款减少一定的百分比，对于达到里程碑的第三个产品，减少额外的百分比，依此类推，对于达到里程碑的每个后续产品。如果公司能够根据许可协议成功开发和推出多个产品，则里程碑付款总额可能约为$
主要翻译研究服务协议
2018年10月和2023年2月，公司与宾夕法尼亚大学签订了服务协议(CAARt和CATA服务协议)，为宾夕法尼亚大学的各个实验室提供研究、开发和制造服务。这些活动在单独执行的宾夕法尼亚州立大学具体组织增编中有详细说明。2020年5月，该公司修改了与先进视网膜和眼科治疗中心(CAROT)的附录，以扩大载体制造的机会。
与所附业务报表中确认的与宾夕法尼亚大学签订的主要翻译研究服务协议项下执行的增编有关的研究和开发费用为#美元。
13
与IASO BioTreateutics达成独家许可协议
2022年10月7日，本公司与南京IASO生物治疗有限公司(IASO)签订独家许可协议(IASO协议)。根据IASO协议，该公司根据IASO的某些知识产权获得了全球独家许可证，可以使用一种新型的临床阶段抗CD19结合剂来开发、制造、商业化和以其他方式开发针对CD19的T细胞产品，用于诊断、预防或治疗人类的任何自身免疫或同种免疫迹象。作为独家许可证的部分对价，IASO收到了#美元的预付款。
如果本公司希望授予第三方在大中国地区开发、制造、商业化或以其他方式开发特许产品的独家许可，IASO有权进行优先谈判。根据国际会计准则组织协议，国际会计准则组织和本公司各自同意，除某些例外情况外，不参与与某些项目有关的某些竞争性活动。本公司也可在任何时候通过多个级别再许可IASO根据IASO协议授予它的权利，但是，它必须向IASO支付从再许可或期权获得的任何收入的低两位数百分比，但受某些惯例排除的限制。除非提前终止，否则《国际会计准则》协定将继续以国家为单位、逐个特许产品为基础，直至《国际会计准则》所确定的特许权使用费期限届满。公司和国际会计准则组织中的任何一方均可因另一方重大的、未治愈的违约或资不抵债而终止协议。公司也可在事先书面通知后随意终止协议，如果IASO因破产相关事项拒绝协议的话。如果公司未能及时实现某些特定的尽职调查里程碑，和/或如果公司就与许可序列相关的专利和专利申请发起任何专利挑战，则IASO也可以终止协议，在每种情况下，都需要事先发出书面通知。
工匠协作和许可协议
2020年7月和2023年1月修订后，公司与Artisan Bio，Inc.(Artisan)签订了合作和许可协议，其中公司和Artisan同意合作，利用Artisan的基因编辑和工程技术针对特定目标潜在地增强公司的某些流水线产品。如果Artisan技术应用于本公司的任何产品，本公司将负责任何此类产品的开发、制造和商业化。根据协议条款，该公司必须向Artisan支付象征性的预付费用以及与研究和开发活动相关的费用。Artisan有资格获得未来的开发和监管里程碑，还有资格获得采用Artisan技术的产品的净销售额的销售里程碑和分级版税。本公司可在事先书面通知后随意终止本协议，不收取任何费用。2024年1月，本公司接到通知，该协议将与Artisan的一般转让有关，以使债权人受益。该协议仍然有效。
与牛津生物医疗公司签订的许可和供应协议
2021年12月，该公司与牛津生物医学(英国)有限公司(牛津)签订了一项许可和供应协议，其中，许可和供应协议向公司授予牛津生物医学(英国)有限公司(牛津)非独家许可，用于该平台在公司的DSG3-CAARt计划中的应用，并签订了一份多年的媒介供应协议。根据协议条款，该公司需要向牛津大学支付预付费用以及与初始媒介制造活动相关的费用，总成本最高可达约#美元。
14
与Autolus签订的选项和许可协议
2023年1月，公司与Autolus Holdings(UK)Limited(Autolus)签订了期权和许可协议(Autolus协议)，其中Autolus协议授予公司在其CD19-CAR T细胞治疗计划中使用Autolus的RQR8技术的非独家许可，并受额外象征性期权行使费用的限制，最多可增加四个目标。根据Autolus协议的条款，本公司须向Autolus预付许可费$
6.承付款和或有事项
制造协议
2021年1月，公司与无锡先进疗法有限公司(无锡)签订了开发和制造服务协议(无锡协议)，作为Musk-CAARt第一阶段临床试验(MusCAARTes)的额外细胞加工制造合作伙伴TM审判。无锡协议计划在无锡完成与马斯克-CAART和CABA-201相关的服务后到期。2023年8月，并于2024年8月延期，该公司与无锡签订了一项协议，作为该公司的制造合作伙伴之一，在多个适应症的CABA-201的全球临床开发，包括潜在的后期临床试验和CABA-201的商业准备活动。
其他采购承诺
在正常业务过程中，本公司与第三方合同制造商签订各种采购承诺，以制造和加工其候选产品和相关原材料，与合同研究机构签订临床试验合同，并与供应商签订其他服务和运营产品协议。这些协议一般规定终止或取消，但不包括已经发生的费用。
赔偿
本公司签订了某些类型的合同，这些合同临时要求本公司就第三方的索赔向各方进行赔偿。这些合同主要涉及(I)公司经修订和重新修订的附例(附例)，根据该附例，公司必须赔偿董事和高管以及其他高级管理人员和员工因其关系而产生的责任，(Ii)公司必须赔偿董事、某些高级管理人员和顾问因其关系而产生的责任的合同，(Iii)公司可能被要求赔偿合伙人某些索赔的合同，包括第三方提出的侵犯其知识产权的索赔，以及(Iv)采购、咨询、或许可协议，根据这些协议，公司可能被要求赔偿供应商、顾问或许可人的某些索赔，包括可能因公司在所提供的产品、技术或服务方面的行为或不作为而对他们提出的索赔。在正常业务过程中，公司可能会不时收到根据这些合同提出的赔偿要求。此外，根据这些合同，公司可能不得不修改被指控的侵犯知识产权和/或退还收到的金额。
15
如果其中一项或多项事项导致对公司提出索赔，不利结果（包括判决或和解）可能会对公司未来的业务、经营业绩或财务状况产生重大不利影响。由于先前赔偿索赔的历史有限以及每个特定协议中涉及的独特事实和情况，无法确定这些合同下的最高潜在金额。
诉讼
公司可能会不时卷入诉讼或法律诉讼。虽然无法确定地预测任何此类诉讼的结果，但截至2024年9月30日，公司没有参与任何预计会对其财务状况、经营业绩或现金流产生重大不利影响的重大诉讼或法律诉讼。
7.租契
本公司根据安排开始时存在的独特事实和情况来确定安排是否为或包含租约。公司根据加权平均剩余期限为1年的经营租约租赁无锡的办公、实验室空间和专用制造套件。
如附注6所述，于2023年8月，本公司根据无锡协议订立新工单，让无锡作为本公司全球临床开发CABA-201的细胞加工制造合作伙伴之一。无锡将公司的非专用套件转换为用于公司CABA-201和马斯克-CAARt项目的GMP制造专用套件，初始期限为18个月。
该公司租赁办公和实验室空间，包括租金上涨和额外的可变费用，包括公共区域维护、财产税和财产保险。鉴于此类成本的可变性质，它们被确认为已发生的费用。此外，本公司的部分租约须缴交若干固定费用，而本公司已确定该等费用为非租赁部分。本公司已选择实际权宜之计，将租赁和非租赁组成部分作为单一租赁组成部分进行核算，并在计算经营租赁负债时计入与非租赁组成部分相关的固定付款。2024年第三季度，该公司延长了实验室和办公室运营租约的期限。对租赁进行了重新计量，导致净资产和租赁负债增加#美元。
本公司营运租赁的加权平均贴现率为
截至2024年9月30日，不可撤销经营租赁项下的未来租赁付款如下：
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2024年10月1日-2024年12月31日 |
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$ |
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2025 |
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2026 |
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未贴现租赁付款总额 |
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扣除计入的利息 |
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租赁负债总额 |
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8.普通股
普通股
根据公司于2019年10月提交的第三份修订和重述的公司证书，公司被授权签发
16
2023年5月融资
2023年5月，本公司发布
2022年12月融资
2022年12月，本公司发布
预先出资认股权证被分类为额外实收资本内永久股东权益的一部分，并于发行日期按相对公允价值分配法入账。预融资认股权证被归类为权益类，因为它们(I)是独立的金融工具，可在法律上与权益工具分开行使，(Ii)可立即行使，(Iii)不体现本公司回购其股份的义务，(Iv)允许持有人在行使时获得固定数量的普通股，(V)与本公司普通股挂钩，以及(Vi)符合股权分类标准。此外，这类预先出资的认股权证不提供任何价值或回报保证。
在市场上提供产品
2024年3月21日，本公司提交了一份自动搁置登记声明(S-3 ASR)，涉及登记普通股、优先股、债务证券、权证和/或其任何组合的单位，目的是不时以一次或多次发售的方式出售本公司的普通股、债务证券或其他股权证券。这一S-三号ASR立即生效。
该公司与Cowen and Company，LLC(Cowen)签订了一项销售协议，规定发售、发行和出售总金额高达$
该公司此前与考恩公司签订了一项销售协议，规定发售、发行和出售总金额高达$
2018年股票期权和授予计划
2018年9月，公司通过了《2018年股票期权与授予计划》(《2018年计划》)，规定公司可向公司员工、董事会成员和顾问出售或发行普通股或其他基于股票的奖励。该公司一般只授予带有服务条件的股票奖励(基于服务的奖励)，尽管有一次授予带有业绩条件的奖励。确实有
2019年股票期权和激励计划
《2019年股票期权激励计划(2019计划)》于2019年10月14日经公司董事会批准，自2019年10月23日起施行。2019年计划规定向公司高管、员工、董事和顾问授予激励性股票期权、不合格股票期权、股票增值权、限制性股票单位、限制性股票奖励、非限制性股票奖励、现金奖励和股息等值权利。根据2019年计划初步预留供发行的股份数目为
17
的公司、公司股东批准了2019年计划第1号修正案，将2019年计划下保留发行的普通股股数增加了
股票期权活动摘要如下：
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数量 |
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加权 |
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加权 |
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骨料 |
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截至2024年1月1日未完成 |
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授予 |
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已锻炼 |
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被没收/取消 |
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截至2024年9月30日未完成 |
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可于2024年9月30日取消的期权 |
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期权的总内在价值计算为期权的行使价与公司普通股公允价值之间的差额。截至2024年9月30日和2023年9月30日止九个月期间授予的股票期权的加权平均授予日公允价值为美元
各项奖励的公允价值是根据以下假设使用Black-Scholes估计的：
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截至9月30日的9个月， |
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无风险利率 |
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预期波幅 |
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预期股息收益率 |
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Black-Scholes要求使用主观假设来确定基于股票的奖励的公允价值。这些假设包括：
预期期限-预期期限代表基于股票的奖励预计将突出的期限。期权授予的预期期限是使用简化方法确定的，该方法是期权的归属期限和合同期限之间的中间点。
预期波幅-作为本公司2019年10月首次公开募股之前的一家私人持股公司，本公司普通股的交易历史有限，因此，预期波动率是根据本公司股价和可比上市生物技术公司在与基于股票的奖励的预期期限相同的期间内的加权平均波动率估计的。可比较的公司是根据它们相似的规模、生命周期或专业领域的阶段来选择的。该公司将继续应用这一过程，直到有足够数量的关于其股票价格波动的历史信息可用。
无风险利率-无风险利率基于授予时有效的美国财政部零息债券，期限与基于股票的奖励的预期期限相对应。
预期股息-该公司从未对其普通股支付过股息，也没有计划对其普通股支付股息。因此，该公司使用的预期股息收益率为零。
18
基于股票的薪酬
公司在随附的经营报表中记录了基于股票的补偿如下：
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止三个月 |
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止九个月 |
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2024 |
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2023 |
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2024 |
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2023 |
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研发 |
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一般及行政 |
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总 |
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截至2024年9月30日，有美元
2019年员工购股计划
2019年员工购股计划(2019 ESPP)于2019年10月14日经公司董事会批准，并于2019年10月23日生效。总计
员工缴款通过工资扣除高达
9.所得税
《公司》做到了
10.每股净亏损
本公司按照参与证券所需的两级法计算每股基本净亏损和摊薄净亏损。在截至2024年9月30日和2023年9月30日的三个月和九个月期间，该公司发行了有投票权和无投票权的普通股。2024年5月，
稀释每股净亏损是使用IF-转换法计算的，该方法假定所有无投票权普通股转换为有投票权普通股。
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截至三个月 |
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九个月结束 |
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投票普通股 |
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无投票权普通股 |
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投票普通股 |
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无投票权普通股 |
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每股基本净亏损： |
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分子 |
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未分配损失的分配 |
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稀释每股净亏损： |
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加：无投票权普通股转换为有投票权普通股 |
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基本每股计算中使用的加权平均股数 |
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每股净亏损，基本 |
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稀释每股净亏损： |
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分配未分配损失用于基本计算 |
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因转换而重新分配未分配损失 |
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未分配损失的分配 |
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分母 |
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基本每股计算中使用的加权平均股数 |
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加：无投票权普通股转换为有投票权普通股 |
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稀释每股计算中使用的加权平均股数 |
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稀释后每股净亏损 |
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20
以下已发行的潜在稀释股份已被排除在每股稀释净亏损的计算之外，因为其影响具有反稀释性：
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截至9月30日， |
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2024 |
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2023 |
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购买普通股的股票期权 |
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21
项目2.管理层的讨论和分析财务状况和经营业绩。
您应阅读以下对我们财务状况和经营结果的讨论和分析，以及我们提交给美国证券交易委员会的10-K表格年度报告中的“风险因素”一节和我们未经审计的中期简明综合财务报表和相关注释，以及我们提交给美国证券交易委员会的10-K表格年度报告中包含的截至2023年12月31日的经审计财务报表和相关注释。本讨论和分析中包含的或本季度报告中其他部分阐述的信息，包括有关我们业务和相关融资的计划和战略的信息，包括涉及风险和不确定因素的前瞻性陈述。由于许多因素的影响，包括“风险因素”一节中阐述的那些因素，我们的实际结果可能与以下讨论和分析中包含的前瞻性陈述中描述或暗示的结果大不相同。您应该仔细阅读题为“风险因素”的部分，以了解可能导致实际结果与我们的前瞻性陈述大不相同的重要因素。
我们是一家临床阶段的生物技术公司，专注于发现和开发创新的工程t细胞疗法，这些疗法有可能通过一次性给药为自身免疫性疾病患者提供深入而持久的甚至是治愈性的反应。我们专有的CABA®，或Cabaletta B细胞消融方法，平台包含两种策略。我们的CARTA（用于自身免疫的嵌入性抗原受体t细胞）方法旨在潜在地重置免疫系统。我们传统的CAARt（即Chimeric Auto抗体受体t细胞）方法旨在工程化t细胞，以选择性地接合和仅消除致病的b细胞。我们相信我们的CABA® 该平台有潜力安全地为广泛的自身免疫性疾病提供完整和持久的反应，并且它具有潜在的适用性，适用于我们已经确定、评估和优先考虑的数十种自身免疫性疾病。
CARTA策略旨在通过使用经工程改造以表达抗体片段的t细胞在单次治疗后实现所有b细胞的短暂和完全耗尽，该抗体片段识别所有b细胞表面上表达的b细胞受体。该构建物的设计目的是允许完全消除所有b细胞，包括所有导致疾病的b细胞，随后由健康的幼稚b细胞进行重新繁殖。这种方法有可能重置免疫系统，为停止免疫抑制治疗的患者提供有意义的持久和完整的临床反应。
CABA-201是我们的主要候选产品，也是我们CARTA平台的第一个候选产品，是一种4-1BB共刺激结构域，包含全人CD19-CAR t结构，旨在治疗广泛的自身免疫性疾病患者。Caba-201是为用于自身免疫患者而设计的，以紧密复制CD19-car t结构的设计，该结构在学术报告中发表在包括自然医学，柳叶刀风湿学，而美国医学会杂志。这些研究采用了CD19-CAR T细胞疗法，在用氟达拉滨和环磷酰胺去除标准淋巴组织后，加入了4-1BB共刺激结构域。根据迄今的报道，在系统性红斑狼疮、特发性炎症性肌病和系统性硬化症患者中，含有CD19-car T细胞的4-1BB疗法在治疗后6个月内通过快速和深度耗尽表达CD19的b细胞，然后在治疗后7个月内恢复健康b细胞，从而导致临床疾病活动性的强劲改善。追踪正在进行中，截至2024年2月，系统性红斑狼疮(SLE)的临床反应维持了长达2.5年的免疫抑制治疗(Müller F等人)。自身免疫性疾病中的CD19Car T细胞治疗--带随访的病例系列。《新英格兰医学杂志》(2024)：687-700)。据公开报道，这项学术研究中的一名特发性炎症性肌病(IIM，或肌炎)受试者在接受CD19-CART治疗约12个月后肌肉疾病复发。
CABA-201中的全人CD19粘合剂由南京IASO生物治疗有限公司(IASO)独家授权，旨在与上述学术临床报告中使用的小鼠FMC63 CD19粘合剂等价物。与使用学术研究中使用的小鼠FMC63 CD19结合表达4-1BB-CAR的T细胞相比，在体外和体内表达含4-1BB-CAR的T细胞已被证明具有相似的生物学活性(戴振宇等)。用于T细胞治疗的新型全人抗CD19嵌合抗原受体的开发和功能表征。《细胞生理学杂志》236.8(2021年)：5832-5847)。这种全人粘合剂已经在中国的一项由研究人员发起的临床试验中进行了临床评估，该试验针对b细胞白血病和淋巴瘤正在开发中的双CD19xCD22卡介苗，在大约20名患者中，IASO报告了一种耐受性特征，我们认为这有利于自身免疫性疾病的发展。
In March 2023, the United States Food and Drug Administration, or the FDA, granted clearance of our CABA-201 Investigational New Drug, or IND, application for treatment of SLE in patients with active lupus nephritis, or LN, or active SLE without renal involvement. SLE is a chronic, potentially severe, autoimmune disease, most commonly impacting young women between the ages of 15 and 40 with higher frequency and more severity in people of color, where the immune system attacks healthy tissue throughout the body. SLE affects an estimated 160,000-320,000 patients in the U.S, with LN as the most common end-organ manifestation, affecting approximately 40% of SLE patients. In May 2023, we announced the FDA granted Fast Track Designation for CABA-201, designed to deplete CD19-positive B cells and improve disease activity in patients with SLE and LN. The RESET-SLETM Phase 1/2 clinical trial of CABA-201 is designed to treat six SLE patients with active LN, and in a separate parallel cohort, six patients with active SLE without
22
renal involvement, with an initial dose, 1.0 x 106 cells/kg, that is equivalent to the dose used in the academic reports of a 4-1BB containing CD19-CAR T construct evaluated in patients with SLE. The trial is open for enrollment across multiple sites in the United States. In March 2024, Health Canada issued a No Objection Letter in response to a Clinical Trial Application, or CTA, for the RESET-SLETM trial submitted by Cabaletta, enabling us to begin the process to activate clinical trial sites and pursue patient enrollment for the RESET-SLETM trial in Canada. In October 2024, the European Medicines Agency allowed a CTA submitted by Cabaletta for the RESET-SLE trial to proceed, enabling us to begin the process of activating clinical trial sites and pursuing patient enrollment for the RESET-SLE trial.
In May 2023, the FDA granted clearance of our CABA-201 IND application for treatment of IIM, or myositis. Myositis refers to a group of autoimmune diseases characterized by inflammation and muscle weakness. The three myositis subtypes being evaluated in the RESET-MyositisTM Phase 1/2 trial of CABA-201 affect approximately 66,000 patients in the U.S. and typically affect middle-aged individuals, particularly women. The RESET-MyositisTM clinical trial, which is actively enrolling patients, is designed to treat six patients with dermatomyositis, six patients with anti-synthetase syndrome, and six patients with immune-mediated necrotizing myopathy, all in separate parallel cohorts. The initial dose for the trial is equivalent to the dose administered to patients with myositis in the academic reports referenced above. We announced the FDA granted Fast Track Designation for CABA-201 for the treatment of patients with dermatomyositis to improve disease activity and Orphan Drug Designation for CABA-201 for the treatment of idiopathic inflammatory myopathies (IIM, or myositis) in January and February 2024, respectively. In March 2024, we announced the FDA granted Rare Pediatric Disease designation for CABA-201 for juvenile dermatomyositis. The trial is open for enrollment across multiple sites in the United States.
In October 2023, we announced that the FDA granted clearance of our CABA-201 IND application for treatment of systemic sclerosis, or SSc. SSc is a rare and potentially fatal chronic autoimmune disease characterized by progressive skin and internal organ fibrosis that can be life-threatening, including interstitial lung disease, pulmonary hypertension, and scleroderma renal crisis. SSc affects approximately 88,000 patients in the U.S., typically middle-aged individuals, particularly women. The RESET-SScTM Phase 1/2 clinical trial of CABA-201 is designed to treat six patients with severe skin manifestations and six patients with severe organ involvement associated with SSc. The initial dose for the trial is equivalent to the dose administered to patients with severe, diffuse SSc in the academic studies referenced above involving a 4-1BB containing CD19-CAR T construct. We announced the FDA granted Fast Track Designation for CABA-201 for the treatment of patients with SSc to improve associated organ dysfunction and Orphan Drug Designation for CABA-201 for the treatment of systemic sclerosis in January and March 2024, respectively. The trial is open for enrollment across multiple sites in the United States.
In November 2023, the FDA granted clearance of our CABA-201 IND application for treatment of generalized myasthenia gravis, or gMG, a subset of patients with myasthenia gravis, or MG. MG is a rare autoimmune disease characterized by autoantibodies that interfere with signaling at the neuromuscular junction, or NMJ, leading to potentially life-threatening muscle weakness. The majority of patients with MG have autoantibodies known to be pathogenic based on their interference with proteins in the NMJ, of which the majority target AChR. gMG affects approximately 85% of the between 50,000 and 80,000 estimated MG patients in the U.S. Symptoms of gMG include profound muscle weakness throughout the body, disabling fatigue, and potential shortness of breath due to respiratory muscle weakness, with risk for episodes of respiratory failure. Standard of care therapies include cholinesterase inhibitors, steroids, immunomodulators, and biologics, which typically require chronic administration, increasing the risk of serious long-term side effects. The RESET-MGTM Phase 1/2 clinical trial of CABA-201 is designed to treat six patients with AChR-positive gMG and six patients with AChR-negative gMG, each in separate parallel cohorts. The initial dose for the trial is identical to that will be employed in our RESETTM Phase 1/2 trials in SLE, myositis and SSc. The trial is open for enrollment across multiple sites in the United States.
In May 2024, we announced that we are working with active clinical sites to incorporate the RESET-PVTM trial as a sub-study within the Phase 1 DesCAARTesTM trial following the submission of a protocol amendment. The RESET-PVTM trial will evaluate CABA-201 as a monotherapy without preconditioning in patients with mucosal pemphigus vulgaris, or mPV, and mucocutaneous pemphigus vulgaris, or mcPV. The trial is open for enrollment across multiple sites in the United States.
In June 2024, we announced the initial clinical data for the first patient dosed in the RESET-SLETM and RESET-MyositisTM trials. In both of these patients, no cytokine release syndrome (CRS), immune effector cell-associated neurotoxicity syndrome (ICANS), infections or serious adverse events were observed through data cut-off of May 28, 2024. CABA-201 exhibited the anticipated profile of CAR T cell expansion and contraction with complete B cell depletion observed in both patients by day 15 post-infusion. Improvements in both patients’ specific disease measures were observed, consistent with academic experience of a similar 4-1BB CD19-CAR T.
In late June 2024, a lupus nephritis patient with very active, refractory disease was dosed and experienced Grade 1 CRS and a protocol-defined dose-limiting toxicity of Grade 4 ICANS. The ICANS resolved rapidly following standard management. The study’s Independent Data Monitoring Committee reviewed data from the patient, and recommended that the study proceed as designed, without delay, at the current dose. We recommended protocol modifications designed to improve patient safety, including enhanced monitoring for fever and neurologic symptoms along with seizure prophylaxis for all patients, in line with the practice at many academic sites
23
including at Erlangen University, the site of the CD19-CAR T studies led by Dr. Georg Schett. In July 2024, we provided standard notice to the FDA and communicated details of the event and proposed protocol changes to all active clinical sites within the RESETTM clinical trial program.
As of November 12, 2024, 16 patients have been enrolled with 10 patients dosed across the lupus, myositis and systemic sclerosis clinical trials, with 40 U.S. clinical sites actively recruiting patients. One additional patient initially enrolled in the RESET-MyositisTM trial withdrew from the study prior to apheresis due to a cardiac event. Clinical data from the first eight patients in the RESET-SLETM and RESET-MyositisTM trials, along with initial clinical data from the RESET-SSCTM trial, will be presented in oral and poster presentations at the American College of Rheumatology Convergence 2024 conference starting November 14, 2024. Data permitting, we anticipate meeting with the FDA in 2025 regarding potential registrational program designs for CABA-201.
The legacy CAART strategy is designed to selectively engage and eliminate only the pathogenic B cells responsible for driving disease by using T cells engineered to express disease specific targeting domains which are designed to mimic the antigen that is the subject of attack in an autoimmune disease. Our CAARs differ from chimeric antigen receptors, or CARs, in the use of the autoantigen rather than an antibody fragment, which may enable the CAAR T cells to serve as a “decoy” for specific autoreactive B cell receptors expressed on the surface of B cells, engaging them and resulting in their elimination. Within the legacy CAART strategy, our DSG3-CAART product candidate is designed to treat mPV, a chronic, autoimmune blistering skin disease that affects the mucous membranes and is caused by autoantibodies against the cell adhesion protein desmoglein 3, or DSG3. The DesCAARTesTM trial is no longer dosing patients for treatment with DSG3-CAART after evaluation of clinical and translational data from the combination cohort, where patients were pre-treated with IVIg, cyclophosphamide and fludarabine prior to DSG3-CAART infusion. In October 2024, we presented data in an oral presentation at the European Society of Gene and Cell Therapy, or ESGCT, 31st Annual Congress showing that the use of preconditioning with DSG3-CAART did not provide serologic or clinical improvement and did not deeply deplete B-cell levels in patients with mPV.
Our MuSK-CAART product candidate is designed to treat a subset of patients with MG, targeting autoreactive B cells that differentiate into antibody secreting cells that produce autoantibodies against a transmembrane protein, muscle-specific kinase, or MuSK, or MuSK-associated myasthenia gravis, or MuSK MG. The MusCAARTesTM trial is not currently dosing patients as we evaluate clinical and translational data from the A1 and A2 cohorts, where patients were treated with MuSK-CAART without preconditioning. In October 2024, we presented data in a poster presentation at ESGCT that indicated MuSK-CAART cells demonstrated evidence of biologic and clinical activity in treated patients, suggesting it may be possible to achieve clinical activity with CAR T cells in patients with autoimmune disease without preconditioning. The MusCAARTes™ trial is not currently dosing patients as we evaluate clinical and translational data from the first two cohorts.
Our manufacturing strategy is comprised of two stages, designed to initially leverage the extensive early-stage manufacturing expertise of our academic partners for rapid early development, and in parallel partner with commercially compliant contract development and manufacturing organizations, or CDMOs, capable of supporting late-stage clinical studies and commercial production. Our aim is to achieve full manufacturing readiness through expanded CDMO relationships, establishment of our own manufacturing facilities, and/or through strategic partnership(s).
The early-stage leverages the expertise in cell and vector manufacturing of our partners at the Children’s Hospital of Philadelphia, or CHOP, and the University of Pennsylvania, or Penn. For supply of lentiviral vector for the late-stage clinical and commercial manufacturing of CABA-201, we are working with Oxford Biomedica (UK) Limited, or Oxford. We have also collaborated with WuXi Advanced Therapies, Inc., or WuXi, to serve as an additional and commercially compliant cell manufacturing partner for our MusCAARTesTM and RESETTM clinical trials to meet planned capacity and international supply requirements. In July 2024, we entered into a new technology transfer agreement with Lonza, another commercially compliant CDMO, to execute a technology transfer of our expected commercial manufacturing process for CABA-201. This improved process is nearly fully closed, semi-automated, and more easily scaled than the current process. Transfer of this updated process will be performed from Cabaletta to Lonza in anticipation of being able to supply CABA-201 drug product for any of Cabaletta’s ongoing and planned RESETTM clinical trials.
In November 2023, we partnered with Cellares Corp., or Cellares, to evaluate their automated manufacturing platform, the Cell ShuttleTM, through the Cellares Technology Adoption Partnership, or TAP, program. As part of the collaboration, the companies have agreed on a proof-of-concept technology transfer process for the automated manufacture and release testing of CABA-201. In August 2024, we expanded our partnership with Cellares to facilitate the potential to incorporate the Cellares manufacturing platform to support the RESETTM clinical program.
We plan to secure commercial, scalable manufacturing capabilities through multiple potential strategies, including expanding existing or establishing new CDMO relationships, leasing, building, qualifying and operating our own manufacturing facility, and/or establishing a strategic partnership to rapidly and reliably scale manufacturing by leveraging the partner’s manufacturing expertise. We believe this later stage will enable control of product development and commercial supply for products arising from our CABA™
24
platform, enabling us to achieve continuous improvement of our product candidates. Multiple members of our team have previously built and led organizations that have constructed and commissioned cell therapy facilities, which we believe will enable us to build our own manufacturing organizations and facilities, if desirable.
We were incorporated in April 2017 and started principal operations in August 2018. Our operations to date have been financed primarily by proceeds from the sale of convertible notes and convertible preferred stock prior to our initial public offering, or IPO, and proceeds from the sale of our common stock in public equity offerings, including our IPO, “at-the-market” offerings and follow-on offerings of shares of our common stock and pre-funded warrants As of September 30, 2024, we had $183.0 million in cash, cash equivalents and investments.
Key Agreements
IASO Agreement
On October 7, 2022, we entered into an Exclusive License Agreement, or the IASO Agreement, with IASO. Pursuant to the IASO Agreement, we received an exclusive, worldwide license under certain IASO intellectual property to use a novel clinical-stage anti-CD19 binder to develop, manufacture, commercialize and otherwise exploit T cell products directed to CD19 for the purpose of diagnosis, prevention or treatment of any autoimmune or alloimmune indications in humans. IASO has the right of first negotiation if we desire to grant a third party an exclusive license to develop, manufacture, commercialize or otherwise exploit the licensed products in the Greater China region. Pursuant to the IASO Agreement, we and IASO have agreed, subject to certain exceptions, to refrain from engaging in certain competitive activities with respect to certain programs. As partial consideration for the exclusive license, IASO received an upfront payment of $2.5 million. IASO is also eligible to receive up to mid double digit millions in milestone payments based upon the achievement of specified pre-clinical, development and regulatory milestones, and up to an additional low triple digit millions in milestone payments based upon achievement of specified sales milestones, for a total consideration, inclusive of the upfront payment, of up to $162 million, along with tiered mid-single digit royalties on future net sales for licensed products that may result from the IASO Agreement. We also may sublicense through multiple tiers the rights granted to it by IASO under the IASO Agreement at any time, however, we must pay IASO a low double-digit percentage of any revenue obtained from sublicenses or options to third parties, subject to certain customary exclusions. The IASO Agreement will continue on a country-by-country, licensed product-by-licensed product basis until the expiration of the royalty term as identified in the IASO Agreement, unless earlier terminated. We and IASO may terminate the IASO Agreement for a material, uncured breach or insolvency of the other party. We may also terminate the IASO Agreement at will upon advance written notice and in the event IASO rejects the IASO Agreement due to bankruptcy-related matters. IASO may also terminate the IASO Agreement if we fail to achieve certain specified diligence milestones in a timely manner and/or if we commence any patent challenges with respect to the patents and patent applications relating to the licensed sequence, in each case upon advance written notice. A milestone payment of $1.5 million was paid to IASO in the first quarter of 2024 after the first patient in a CABA-201 trial was dosed.
Oxford Biomedica
In December 2021, we entered into a Licence and Supply agreement, or LSA, with Oxford wherein the LSA grants us a non-exclusive license to Oxford’s LentiVector® platform for its application in our DSG3-CAART program and puts in place a multi-year vector supply agreement. Under the terms of the agreement, we were required to pay Oxford an upfront fee, as well as costs associated with initial vector manufacturing activities for a total cost of up to approximately $4.0 million. Oxford, is eligible to receive regulatory and sales milestones in the low tens of millions and royalties in the low single digits on net sales of products that incorporate the Oxford technology. We can terminate the agreement at will upon advance written notice and subject to certain manufacturing slot cancellation fees. In May 2023, we amended the LSA with Oxford to expand the license to include our CABA-201 program for an upfront fee of $0.5 million and in August 2023, we entered into a vector supply agreement with Oxford, and a related second amendment to the LSA, for CABA-201 with a total cost of up to approximately $5.0 million under the vector supply agreement. In February 2024, we and Oxford entered into a third amendment of the LSA to update the patent schedule. In June 2024, we and Oxford entered into a fourth amendment of the LSA eliminating royalties on net sales of products that incorporate the Oxford technology if Oxford manufactures the vector.
WuXi Manufacturing Agreement
In January 2021, we entered into a Development and Manufacturing Services Agreement, or the WuXi Agreement, with WuXi to serve as an additional cell processing manufacturing partner for the MuSK-CAART Phase 1 clinical trial, or MusCAARTesTM trial. The WuXi Agreement is scheduled to expire upon completion of WuXi’s services related to MuSK-CAART and CABA-201. In August 2023, as amended in August 2024, we entered into an agreement with WuXi to serve as one of our manufacturing partners for the global clinical development of CABA-201 in multiple indications, including potential late-stage clinical trials and commercial readiness
25
activities for CABA-201. Under the August 2023 work orders, WuXi converted our non-dedicated suite to a dedicated suite for GMP manufacturing for our CABA-201 and MuSK-CAART programs, or the Dedicated Suite, for an initial term of 18 months with two 18 month extensions at our sole option on six months' notice prior to the end of the term. In August 2024, we notified WuXi that we would extend the initial term by 18 months through August 2026. In addition, we agreed to certain monthly minimum runs. In August 2024, the 2023 work order related to GMP manufacturing was amended to reduce the minimum monthly runs through the end of 2024. In lieu of the original $1.5 million termination fee under the terms of the WuXi Agreement, we would incur a $1.08 million termination fee if we terminate both the CABA-201 and MuSK-CAART work orders for any reason. We may terminate for convenience the WuXi Agreement or any work order with six months' prior written notice, however, we may not terminate the Dedicated Suite without terminating both the MuSK-CAART and CABA-201 GMP run work orders. WuXi may terminate the WuXi Agreement or any work order for convenience on 18 months' prior written notice, but such notice may not be effective prior to February 2028.
Amended and Restated License Agreement with the Trustees of the University of Pennsylvania and the Children’s Hospital of Philadelphia
In August 2018, we entered into a license agreement with Penn, which was amended and restated in July 2019 to include CHOP, collectively, the Institutions, and collectively with such amendment, as amended in May 2020 and October 2021, the License Agreement, pursuant to which we obtained (a) a non-exclusive, non-sublicensable, worldwide research license to make, have made and use products in two subfields of use, (b) effective as of October 2018, an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under certain of the Institutions’ intellectual property to make, use, sell, offer for sale and import products in the same two subfields of use, and (c) effective as of October 2018, a non-exclusive, worldwide, royalty-bearing license, with limited rights to sublicense, under certain of Penn’s know-how to make, have made, use, sell, offer for sale, import and have imported products in the same two subfields of use. Our rights are subject to the rights of the U.S. government and certain rights retained by the Institutions.
Unless earlier terminated, the License Agreement expires on the expiration or abandonment or other termination of the last valid claim in Penn’s intellectual property licensed by us. We may terminate the License Agreement at any time for convenience upon 60 days written notice. In the event of an uncured, material breach, Penn may terminate the License Agreement upon 60 days written notice.
Master Translational Research Services Agreement
In October 2018, we entered into a Master Translational Services Agreement with Penn, or the Services Agreement, pursuant to which Penn agreed to perform certain services related to the research and development of the technology licensed to us under the License Agreement, as well as certain clinical, regulatory and manufacturing services. The Services Agreement will expire on the later of (i) October 19, 2021 or (ii) completion of the services for which we have engaged Penn under the Services Agreement. Either party may terminate this agreement with or without cause upon a certain number of days’ prior written notice. The services encompassed by the Services Agreement are performed by different organizations at Penn pursuant to certain addenda to the Services Agreement, including the Center for Advanced Retinal and Ocular Therapeutics, or CAROT, Addendum, as amended in May 2020, and the CVPF Addendum.
In February 2023, we entered into a second Master Translational Services Agreement with Penn, or the CARTA Services Agreement, pursuant to which Penn agreed to perform certain research, development and manufacturing activities. The CARTA Services Agreement will expire on the later of (i) February 9, 2026 or (ii) completion of the services for which we have engaged Penn under the CARTA Services Agreement. Either party may terminate this agreement with or without cause upon a certain number of days’ prior written notice. The services encompassed by the CARTA Services Agreement are performed by different organizations at Penn pursuant to certain addenda to the CARTA Services Agreement.
Components of Operating Results
Revenue
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sales of products for several years, if at all. If our development efforts for our current or future product candidates are successful and result in marketing approval, we may generate revenue in the future from product sales. We cannot predict if, when or to what extent we will generate revenue from the commercialization and sale of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.
We may also in the future enter into license or collaboration agreements for our product candidates or intellectual property, and we may generate revenue in the future from payments as a result of such license or collaboration agreements.
26
运营费用
研究与开发
我们的研发费用包括：
自成立以来，我们没有报告项目成本，因为从历史上看，我们没有逐个项目跟踪或记录我们的研究和开发费用。我们在整个研发活动中使用人员和基础设施资源，旨在识别和开发候选产品。
我们在所有研发成本发生期间承担费用。某些研发活动的成本是根据使用我们的供应商和第三方服务提供商向我们提供的信息和数据对特定任务完成进度的评估来确认的。
随着我们项目的推进和临床试验的进行，我们预计我们的研发费用将在可预见的未来大幅增加，因为我们将继续投资于与开发候选产品相关的研发活动，包括对制造业的投资。进行必要的临床研究以获得监管机构批准的过程成本高昂且耗时，而且我们候选产品的成功开发也高度不确定。因此，我们无法确定研发项目的持续时间和完成成本，也无法确定何时以及在多大程度上我们将从任何候选产品的商业化和销售中产生收入。
由于与产品开发相关的众多风险和不确定性，我们无法确定当前或未来临床前研究和临床试验的持续时间和完成成本，或者我们是否、何时或在多大程度上将从商业化和销售中产生收入候选产品。我们可能永远无法成功地获得候选产品的监管批准。临床前研究、临床试验和候选产品开发的持续时间、成本和时间将取决于多种因素，包括：
27
我们可能永远不会成功地让我们的任何候选产品获得监管部门的批准。我们可能会从我们的临床前研究和临床试验中获得意想不到的结果。我们可能会选择停止、推迟或修改一些候选产品的临床试验，或者专注于其他产品。这些因素的任何一个结果的变化都可能意味着与我们当前和未来的临床前和临床候选产品的开发相关的成本和时间的重大变化。例如，如果FDA或其他监管机构要求我们进行超出我们目前预期的完成临床开发所需的临床试验，或者如果我们在执行或登记我们的任何临床前研究或临床试验方面遇到重大延误，我们可能需要花费大量额外的财政资源和时间来完成临床前和临床开发。我们预计，在可预见的未来，随着我们继续开发候选产品，我们的研发费用将会增加。
一般和行政费用
我们的一般和行政费用主要包括人事费用、与知识产权维护和备案有关的费用、折旧费用和外部专业服务的其他费用，包括法律、人力资源、信息技术、审计和会计服务。人员成本包括工资、福利和基于股票的薪酬费用。我们预计未来几年我们的一般和行政费用将增加，以支持我们持续的研发活动、制造活动、上市公司运营成本的增加以及我们候选产品的潜在商业化。我们预计，在招聘更多人员、开发商业基础设施、外部顾问、律师和会计师的费用以及与上市公司相关的成本增加(如与保持遵守纳斯达克上市规则和美国证券交易委员会要求相关的服务费用)、保险和投资者关系成本方面，我们的一般和行政成本将会增加。
其他收入
其他收入包括现金、现金等值物和投资赚取的利息以及债券折扣或溢价的摊销。
截至2024年和2023年9月30日的三个月经营业绩
以下列出了截至2024年9月30日和2023年9月30日止三个月的经营业绩：
|
|
截至9月30日的三个月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
变化 |
|
|||
|
|
(in数千） |
|
|
|
|
||||||
运营报表数据： |
|
|
|
|
|
|
|
|
|
|||
运营费用： |
|
|
|
|
|
|
|
|
|
|||
研发 |
|
$ |
26,290 |
|
|
$ |
13,787 |
|
|
$ |
12,503 |
|
一般及行政 |
|
|
6,756 |
|
|
|
4,881 |
|
|
|
1,875 |
|
总运营支出 |
|
|
33,046 |
|
|
|
18,668 |
|
|
|
14,378 |
|
运营亏损 |
|
|
(33,046 |
) |
|
|
(18,668 |
) |
|
|
(14,378 |
) |
其他收入： |
|
|
|
|
|
|
|
|
|
|||
利息收入 |
|
|
2,417 |
|
|
|
2,220 |
|
|
|
197 |
|
净亏损 |
|
$ |
(30,629 |
) |
|
$ |
(16,448 |
) |
|
$ |
(14,181 |
) |
28
研究与开发
截至2024年9月30日的三个月，研发费用为2630万美元，而截至2023年9月30日的三个月为1380万美元。下表总结了我们的研发费用：
|
|
截至9月30日的三个月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
变化 |
|
|||
|
|
(in数千） |
|
|
|
|
||||||
知识产权许可 |
|
$ |
4 |
|
|
$ |
54 |
|
|
$ |
(50 |
) |
临床前和临床用品的制造 |
|
|
4,835 |
|
|
|
1,956 |
|
|
|
2,879 |
|
临床试验 |
|
|
6,228 |
|
|
|
2,236 |
|
|
|
3,992 |
|
人员 |
|
|
10,289 |
|
|
|
5,686 |
|
|
|
4,603 |
|
开发服务 |
|
|
4,495 |
|
|
|
3,552 |
|
|
|
943 |
|
其他 |
|
|
439 |
|
|
|
303 |
|
|
|
136 |
|
|
|
$ |
26,290 |
|
|
$ |
13,787 |
|
|
$ |
12,503 |
|
我们的研发费用逐年的具体变化包括：
一般和行政
截至2024年9月30日的三个月，一般和行政费用为680万美元，而截至2023年9月30日的三个月为490万美元。一般和行政费用增加190万美元包括：
其他收入
与截至2023年9月30日的三个月相比，截至2024年9月30日的三个月的利息收入增加了20万美元，主要是由于赚取了更高的现金利息，2023年5月融资和2023年第四季度根据2023年ATM计划出售普通股的收益产生的现金等值物和投资余额，以及2024年第一季度。
29
截至2024年和2023年9月30日的九个月经营业绩
以下列出了截至2024年9月30日和2023年9月30日止九个月的经营业绩：
|
|
截至9月30日的9个月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
变化 |
|
|||
|
|
(in数千） |
|
|
|
|
||||||
运营报表数据： |
|
|
|
|
|
|
|
|
|
|||
运营费用： |
|
|
|
|
|
|
|
|
|
|||
研发 |
|
$ |
71,671 |
|
|
$ |
38,019 |
|
|
$ |
33,652 |
|
一般及行政 |
|
|
19,685 |
|
|
|
13,495 |
|
|
|
6,190 |
|
总运营支出 |
|
|
91,356 |
|
|
|
51,514 |
|
|
|
39,842 |
|
运营亏损 |
|
|
(91,356 |
) |
|
|
(51,514 |
) |
|
|
(39,842 |
) |
其他收入： |
|
|
|
|
|
|
|
|
|
|||
利息收入 |
|
|
8,078 |
|
|
|
4,725 |
|
|
|
3,353 |
|
净亏损 |
|
$ |
(83,278 |
) |
|
$ |
(46,789 |
) |
|
$ |
(36,489 |
) |
研究与开发
截至2024年9月30日的九个月，研发费用为7170万美元，而截至2023年9月30日的九个月为3800万美元。下表总结了我们的研发费用：
|
|
截至9月30日的9个月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
变化 |
|
|||
|
|
(in数千） |
|
|
|
|
||||||
知识产权许可 |
|
$ |
1,519 |
|
|
$ |
2,378 |
|
|
$ |
(859 |
) |
临床前和临床用品的制造 |
|
|
12,176 |
|
|
|
5,067 |
|
|
|
7,109 |
|
临床试验 |
|
|
15,963 |
|
|
|
4,939 |
|
|
|
11,024 |
|
人员 |
|
|
27,453 |
|
|
|
15,365 |
|
|
|
12,088 |
|
开发服务 |
|
|
12,954 |
|
|
|
9,348 |
|
|
|
3,606 |
|
其他 |
|
|
1,606 |
|
|
|
922 |
|
|
|
684 |
|
|
|
$ |
71,671 |
|
|
$ |
38,019 |
|
|
$ |
33,652 |
|
我们的研发费用逐年的具体变化包括：
30
一般和行政
截至2024年9月30日的九个月，一般和行政费用为1，970万美元，而截至2023年9月30日的九个月为1，350万美元。一般和行政费用增加620万美元包括：
其他收入
与截至2023年9月30日的九个月相比，截至2024年9月30日的九个月的利息收入增加了340万美元，主要是由于现金利率上升，2022年12月和2023年5月融资产生的现金等值物和投资余额以及根据2023年ATM计划出售普通股的收益2023年第四季度和2024年第一季度。
流动性与资本资源
从2017年4月成立到首次公开募股（IPO），我们的运营资金来自出售可转换票据和可转换优先股的8640万美元收益以及出售普通股的7100万美元收益。自首次公开募股以来，我们通过公开发行普通股和预先融资的认购权来购买我们的普通股产生了现金，净收益总额约为28000万美元。截至2024年9月30日，我们拥有18300万美元的现金、现金等值物和投资。超过当前需求的现金根据我们的投资政策进行投资，主要是为了流动性和资本保全。
自成立以来，我们一直出现亏损，截至2024年9月30日，我们的累计亏损为31650万美元。我们的现金主要用途是为运营费用提供资金，其中主要包括研究和开发支出，以及较小程度的一般和行政支出。用于资助运营费用的现金受到我们支付这些费用时间的影响，这反映在我们未偿还预付费用和其他流动资产、应付账款和应计费用的变化中。
我们可能开发的任何候选产品都可能永远不会实现商业化，我们预计在可预见的未来我们将继续蒙受损失。我们预计我们的研发费用、一般和行政费用以及资本支出将继续增加。因此，在我们能够产生可观的产品收入之前，我们预计将通过股票发行、债务融资或其他资本来源的组合来满足我们的现金需求，包括潜在的合作、许可和其他类似安排。我们资本的主要用途是，我们预计将继续用于补偿和相关费用、第三方临床研究、制造和开发服务、与扩建我们的总部、实验室和制造设施相关的成本、可能产生的许可证付款或里程碑义务、实验室和相关用品、临床成本、制造成本、法律和其他监管费用以及一般管理费用。
根据我们目前的运营计划，我们相信，截至2024年9月30日的现有现金、现金等价物和投资将使我们能够为2026年上半年的运营费用和资本支出需求提供资金。我们基于可能被证明是错误的假设做出了这一估计，我们可以比目前预期的更快地利用我们可用的资本资源。我们将继续需要额外的资金，以推动我们目前的候选产品通过临床开发，开发、收购或许可其他潜在的候选产品，并为可预见的未来的运营提供资金。我们将继续通过股票发行、债务融资或其他资本来源寻求资金，包括潜在的合作、许可证和其他类似安排。然而，我们可能无法在需要时以优惠条件或根本无法筹集额外资金或达成此类其他安排。如果我们确实通过公开或私募股权发行筹集更多资本，我们现有股东的所有权权益将被稀释，这些证券的条款可能包括清算或其他对我们股东权利产生不利影响的优惠。如果我们通过债务融资筹集额外资本，我们可能会受到公约的限制或限制我们采取具体行动的能力，例如承担额外债务、进行资本支出或宣布股息。任何未能在需要时筹集资金的情况都可能对我们的财务状况以及我们执行业务计划和战略的能力产生负面影响。如果我们无法筹集资金，我们将需要推迟、减少或终止计划中的活动，以降低成本。
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市场销售协议
2024年3月21日，我们提交了一份自动货架登记声明（文件编号：333-278126）或S-3 ASC，涉及普通股、优先股、债务证券、认购证和/或其任何组合的登记，目的是不时出售我们的普通股、债务证券或一项或多项发行中的其他股权证券。这款S-3 ASO立即生效。
我们与Cowen and Company，LLC或Cowen签订了销售协议，规定根据S-3 ASB并遵守其限制，不时以“市场”发行或ATM计划的方式发行、发行和销售总额高达20，000万美元的普通股。尚未根据2024年ATM计划进行销售。
我们之前与Cowen签订了销售协议，根据我们在S-3表格（文件号333-270599）上的货架登记声明（该声明于2023年4月26日宣布生效），不时以“市场上”发行、发行和销售总额高达10000万美元的普通股。截至2023年12月31日止年度，我们根据2023年ATM计划出售了4，760，899股股票，扣除佣金240万美元后，净收益为9170万美元。2024年第一季度，我们额外出售了258，070股股票，完成了2023年ATM计划，扣除10万美元佣金后，净收益为570万美元。
2022年12月融资
2022年12月，我们以每股5.52美元的价格发行了126，815股普通股，并向某些投资者以每股5.51999美元的价格购买了6，213，776股普通股，以取代普通股的预融资证。每份预先融资的认购价代表普通股的每股发行价减去该预先融资的认购价每股0.00001美元。扣除承销折扣和佣金以及发行费用240万美元后，净收益总额为3260万美元。截至2024年9月30日，已有5，589，202份预融资认购权已被行使，624，574份尚未行使。其余未行使的认购权已于2024年9月30日之后行使。没有尚未执行的逮捕令。
2023年5月融资
2023年5月，我们以承销公开发行的方式发行了8，337，500股普通股，其中包括承销商全额行使其选择权以每股12.00美元的公开发行价格购买额外1，087，500股。扣除承销折扣和佣金以及发行费用630万美元后，净收益总额为9380万美元。
由于与药品的研究、开发和商业化相关的众多风险和不确定性，我们无法估计运营资本需求的确切金额。我们未来的资金需求将取决于许多因素，包括但不限于：
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此外，我们的运营计划可能会发生变化，我们可能需要额外的资金来满足临床试验和其他研发活动的运营需求和资本要求。我们目前没有信贷安排或承诺的资本来源。由于与我们候选产品的开发和商业化相关的众多风险和不确定性，我们无法估计与我们当前和预期的产品开发计划相关的资本支出和运营支出的增加金额。
现金流
下表汇总了所示期间的现金流：
|
|
截至9月30日的9个月， |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in数千） |
|
|||||
提供的现金净额(用于)： |
|
|
|
|
|
|
||
经营活动 |
|
$ |
(65,100 |
) |
|
$ |
(37,101 |
) |
投资活动 |
|
|
35,165 |
|
|
|
(23,587 |
) |
融资活动 |
|
|
7,305 |
|
|
|
94,582 |
|
现金及现金等价物净(减)增 |
|
$ |
(22,630 |
) |
|
$ |
33,894 |
|
经营活动
截至2024年9月30日的九个月内，经营活动使用的现金为6510万美元，归因于我们净经营资产和负债的净亏损8330万美元以及净变化130万美元，部分被主要来自股票补偿、非现金租赁费用以及租赁负债和折旧的增加的1950万美元的非现金费用所抵消。
截至2023年9月30日的九个月内，经营活动使用的现金为3710万美元，原因是净亏损4680万美元以及净运营资产和负债减少50万美元，部分被非现金费用净变化1020万美元所抵消，主要来自股票补偿、非现金租赁费用、租赁负债和折旧的增加。
投资活动
截至2024年9月30日的九个月内，投资活动提供的现金为3520万美元，来自短期投资到期的3700万美元，部分被购买的180万美元财产和设备抵消。
截至2023年9月30日的九个月内，投资活动使用的现金为2360万美元，用于购买4810万美元的短期投资以及50万美元的财产和设备，部分被短期投资到期收益2500万美元所抵消。
融资活动
截至2024年9月30日的九个月内，融资活动提供的现金为730万美元，来自普通股销售的570万美元（扣除已支付的发行成本），以及根据2019年员工股票购买计划（即2019年ESPP）行使员工股票期权和购买股份的160万美元。
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截至2023年9月30日的九个月内，融资活动提供的现金为9460万美元，主要来自我们承销公开募股的净收益9350万美元以及行使员工股票期权和购买2019年ESPP下的股份的110万美元。
合同义务和承诺
有关影响我们的合同义务和其他承诺的讨论，请参阅我们截至2023年12月31日的年度10-k表格年度报告中包含的“财务状况和运营结果的管理层讨论和分析-合同义务和其他承诺”标题下的讨论，该年度报告于2024年3月21日向SEC提交。
自2023年12月31日以来，公司的合同义务和其他承诺没有发生重大变化。
关键会计政策与重大判断和估计
我们于2024年3月21日向SEC提交的截至2023年12月31日的年度10-k表格年度报告中包含的关键会计政策以及重大判断和估计没有重大变化。
新兴成长型公司的地位
我们是一家新兴的成长型公司，正如2012年的JumpStart Our Business Startup Act或JOBS Act所定义的那样。根据《就业法案》，新兴成长型公司可以推迟采用在《就业法案》颁布后发布的新的或修订后的会计准则，直到这些准则适用于私营公司。《就业法案》第107条规定，新兴成长型公司可利用1933年《证券法》第7(A)(2)(B)节规定的延长过渡期，以遵守《就业法案》颁布后发布的新会计准则或修订后的会计准则，直至这些准则适用于私营公司。《就业法案》第107条规定，我们可以在任何时候选择退出延长的过渡期，这一选择是不可撤销的。我们选择使用这一延长的过渡期来遵守新的或修订的会计准则，这些准则对上市公司和私人公司具有不同的生效日期，直到我们(I)不再是一家新兴成长型公司或(Ii)明确且不可撤销地选择退出《就业法案》规定的延长过渡期。因此，我们的合并财务报表可能无法与截至上市公司生效日期遵守新的或修订的会计声明的公司进行比较。
作为一家新兴的成长型公司，我们可能会利用特定的减少披露和其他适用于上市公司的其他要求。这些规定包括：(I)除了任何规定的未经审计的简明合并财务报表外，只允许提交两年的经审计财务报表，并相应减少“管理层对财务状况和经营结果的讨论和分析”的披露；(Ii)减少关于我们高管薪酬安排的披露；(Iii)不需要就高管薪酬举行咨询投票，也不需要获得股东对任何先前未获批准的金降落伞安排的批准；(Iv)根据2002年萨班斯-奥克斯利法案，在评估我们对财务报告的内部控制时，豁免审计师的认证要求；以及(V)豁免遵守上市公司会计监督委员会关于在审计师关于财务报表的报告中传达关键审计事项的要求。我们将一直是一家新兴的成长型公司，直到(1)财政年度的最后一天，即我们首次公开募股完成五周年之后的最后一天，也就是2024年12月31日，(B)我们的年总收入至少为12.35亿美元亿或(C)我们被视为大型加速申报公司，这要求截至前一个6月30日，非关联公司持有的我们普通股的市值超过70000美元万，和(2)我们在前三年期间发行了超过10美元亿的不可转换债券的日期.
近期发布的会计公告
2023年11月，财务会计准则委员会（FASb）发布了会计准则更新（ASO，2023-07） 分部报告（主题280）-可报告分部披露的改进.该ASO要求公共实体按中期和年度提供额外的分部披露。除非不切实际，否则本ASO中的修订应追溯应用于财务报表中呈列的所有前期。过渡后，前期披露的分部费用类别和金额应基于采用期间识别和披露的重要分部费用类别。亚利桑那州立大学在2023年12月15日之后开始的财年和开始的财年内的过渡期有效
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2024年12月15日之后。允许提前收养。我们目前计划在生效时采用该指南，并正在评估采用该指南对我们的综合财务报表和随附脚注的影响。
2023年12月，FASB发布了ASU 2023-09， 改进所得税披露. ASO 2023-09通过改进主要与税率调节和已缴所得税信息相关的所得税披露，提高了所得税信息的透明度。该指南自2024年12月15日之后开始的年度期间对公共商业实体有效。允许提前收养。我们目前计划在生效时采用该指南，并正在评估采用该指南对我们的综合财务报表和随附脚注的影响。
项目3.数量和质量关于市场风险的披露。
我们在正常业务过程中面临市场风险。这些风险主要包括利率敏感性。截至2024年9月30日，我们持有现金、现金等值物和投资18300万美元。我们通常将现金持有在附息货币市场国债账户中，我们的投资是可供出售债务证券，投资于美国国债。我们面临的主要市场风险是利率敏感性，它受到美国总体利率水平变化的影响。由于我们的现金等值物的期限较短，利率立即发生100个基点的变化不会对我们的现金等值物的公平市场价值产生重大影响。然而，利率下降将减少未来的投资收入。
我们没有任何外币或衍生金融工具。通货膨胀通常通过增加劳动力成本和项目成本来影响我们。尽管我们不认为通货膨胀对我们迄今为止的财务状况或运营业绩产生了重大影响，但由于对进行临床试验的成本、我们为吸引和留住合格人员而产生的劳动力成本以及其他运营成本的影响，我们可能会在不久的将来经历一些影响（特别是如果通货膨胀率继续上升）。通货膨胀成本可能会对我们的业务、财务状况和运营业绩产生不利影响。
项目4.控制 和程序
信息披露控制和程序的评估
我们的管理层在首席执行官和首席财务官的参与下，评估了截至本报告所述期间结束时，我们的披露控制和程序(如修订后的1934年证券交易法第13a-15(E)和15d-15(E)条或交易法所界定的)的有效性。基于这一评估，我们的首席执行官和首席财务官得出结论，截至本报告涵盖的期间结束时，我们的披露控制和程序在合理的保证水平下有效，以确保我们根据交易所法案提交或提交的报告中要求披露的信息：(I)在美国证券交易委员会规则和表格中指定的时间段内被记录、处理、汇总和报告；(Ii)积累并传达给管理层，包括首席执行官和首席财务官，以便及时讨论所需披露的内容。我们认为，无论控制系统的设计和运作如何良好，都不能绝对保证控制系统的目标得以实现，而任何控制措施的评估都不能绝对保证公司内部的所有控制问题和舞弊事件(如果有)都已被发现。
财务报告内部控制的变化
截至2024年9月30日的财政季度，我们对财务报告的内部控制（定义见《交易法》第13 a-15（f）条和第15 d-15（f）条）没有发生对我们对财务报告的内部控制产生重大影响或合理可能产生重大影响的变化。
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P第二条-其他信息
I主题1。法律诉讼。
我们公司可能会不时卷入诉讼或法律诉讼。虽然无法确定任何此类诉讼的结果，但截至2024年9月30日，我们没有参与任何预计会对我们的财务状况、经营业绩或现金流产生重大不利影响的重大诉讼或法律诉讼。
I项目1A。危险因素
我们的业务涉及重大风险和其他风险，下面将对其中一些风险进行总结和说明。你应该仔细考虑以下描述的风险和不确定因素，以及这份10-Q表格季度报告中包含的所有其他信息，包括“管理层对财务状况和经营结果的讨论和分析”，以及精简的综合财务报表和相关附注。如果实际发生以下任何风险，可能会损害我们的业务、前景、经营业绩和财务状况以及未来前景。在这种情况下，我们普通股的市场价格可能会下跌，您可能会损失全部或部分投资。我们目前不知道或我们目前认为无关紧要的其他风险和不确定性也可能损害我们的业务运营。这份Form 10-Q季度报告还包含涉及风险和不确定因素的前瞻性陈述。由于本季度报告下面和其他地方描述的因素，我们的实际结果可能与前瞻性陈述中预期的结果大不相同。
标有“*”（如果有的话）的风险因素是我们截至2023年12月31日年度的10-k表格年度报告中新添加的或已进行重大更新。
与我们的业务、技术和行业相关的风险
临床开发相关风险
我们的开发工作还处于早期阶段。如果我们无法通过临床开发推进我们的候选产品、获得监管机构批准并最终将我们的候选产品商业化，或者在这样做时遇到重大延误，我们的业务将受到重大损害。
我们的开发工作还处于早期阶段，尚未完成任何临床试验。我们创造产品收入的能力（如果有的话）将在很大程度上取决于我们的一个或多个候选产品的成功开发和最终商业化。即使我们能够开发和商业化可销售的产品，我们也可能面临从产品销售中产生收入的挑战。我们候选产品的成功将取决于几个因素，包括以下因素：
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如果我们没有及时或根本没有实现其中一个或多个因素，我们可能会遇到重大延误或无法成功将我们的候选产品商业化，这将对我们的业务造成重大损害。如果我们没有获得候选产品的监管批准，我们可能无法继续运营。
细胞疗法，包括我们工程化的嵌入抗原受体t细胞（CAR t）、嵌入自身抗体受体t细胞（CAAR t）候选产品，代表了治疗自身免疫性疾病的新方法，这给我们带来了重大挑战。对我们开发的任何候选产品的负面看法或加强监管审查可能会对我们开展业务或为此类候选产品获得监管批准的能力产生不利影响。
细胞疗法是一种新的方法，对我们开发的任何候选产品的负面看法或加强的监管审查可能会对我们开展业务或获得此类候选产品的监管批准的能力产生不利影响。总的来说，细胞疗法仍然是新的，到目前为止，美国或欧盟还没有获得许可的细胞免疫疗法来治疗自身免疫性疾病或同种异体免疫反应。针对自身免疫性或同种异体免疫性疾病的CART或CAAR T细胞疗法可能不会被公众或医学界接受。例如，CART和其他细胞疗法在某些情况下造成了严重的副作用，包括死亡，因此它们的更广泛使用可能会受到限制。未来，如果其他CART疗法(包括使用CD19粘合剂的疗法)出现如此严重的副作用，可能会增加人们对我们候选产品的负面看法和监管审查。例如，2023年11月，fda宣布将对使用bcma或cd19指导的自体car t细胞免疫疗法治疗后的t细胞恶性肿瘤的报告进行调查。FDA还表示，接受此类批准产品治疗的患者和临床试验参与者应该对新的恶性肿瘤进行终身监测。2024年1月，美国食品和药物管理局决定，所有bcma和cd19基因修饰的自体t细胞免疫疗法的标签中都应该包括与t细胞恶性肿瘤相关的新的安全信息，并使用方框警告语言对这些恶性肿瘤进行标记。公众的认知可能会受到这样的说法的影响，即基因治疗，包括植入转基因，是不安全的，而含有基因治疗的产品可能无法获得公众或医学界的接受。我们的候选产品所针对的患者群体通常也不会面临近期死亡的风险，即使他们可能会出现危及生命的症状，因此患者需要认为细胞治疗的好处值得冒未知潜在不良副作用的风险。我们的成功将取决于专门治疗我们候选产品所针对的自身免疫性疾病的医生，他们开出的治疗方案涉及使用我们的候选产品来替代或补充他们更熟悉的、可能有更多临床数据的现有治疗方法。我们候选产品的临床试验、其他开发类似产品的临床试验或批准后环境中的不良事件以及由此产生的宣传，以及细胞疗法领域的任何其他不良事件，都可能导致对我们可能开发的任何产品的需求减少。
我们正在开发CAR t和CAAR t候选产品管道，旨在用于治疗患有自身免疫性疾病的个体。推进这些新颖候选产品给我们带来了重大挑战，包括：
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此外，临床前小鼠和其他动物模型可能不存在或不足以治疗某些或所有自身免疫性疾病，在这些疾病中，b细胞可能在启动或维持我们在计划中选择的疾病方面发挥作用，而且由于我们处于临床开发过程的早期，我们无法预测我们开发的任何候选产品治疗可能会产生短期或长期影响。在开发我们的候选产品时，我们并没有穷尽地探索制造CART或CAAR T电池的方法的不同选择。我们可能会发现，随着未来设计或工艺的改变，我们现有的制造工艺可能会得到实质性的改进，这将需要进一步的临床测试，推迟我们首批产品的商业发布，并导致我们产生额外的费用。例如，虽然我们在制造过程中使用了慢病毒载体，但未来我们可能会发现另一种病毒载体或基于非病毒载体的过程提供了优势。从一种慢病毒载体切换到另一种慢病毒载体或从慢病毒载体切换到另一种递送系统需要额外的过程开发和临床测试，这可能会推迟现有候选产品的开发。
此外，我们不知道关键试验中需要评估的剂量，或者（如果获得许可）商业化的剂量。寻找合适的剂量可能会推迟我们预期的临床开发时间表，我们可能会选择暂停临床试验以寻找合适的剂量或在继续试验之前进行评估。随着我们开发候选产品并了解这些关键因素，我们对可扩展性和制造成本的期望可能会有很大差异。我们在开发可持续、可重复和可扩展的制造工艺或将该工艺转移给商业合作伙伴时可能会遇到延误，这可能会阻止我们及时或有利可图地完成临床研究或将候选产品商业化（如果有的话）。
此外，我们的候选产品可能无法在临床试验中成功表现，或者可能与不良事件相关，使其与之前已获得许可的CAR t疗法区分开来。例如，我们CAAR t临床试验中的受试者将输注我们提出的疗法，并且可能具有强激活的可溶性抗体，而肿瘤患者中不存在这种抗体，当它们与我们输注的候选产品相互作用时，可能会导致潜在的不良副作用，例如CRS或ICANS。此外，即使是我们的CAR t或CAAR t候选产品之一引起的不良副作用也可能会对我们基于CABA开发未来候选产品的能力产生负面影响® 平台我们的任何候选产品的意外副作用或临床结果都会对我们的业务产生重大影响。
此外，FDA、欧洲药品管理局(EMA)和其他监管机构的临床研究要求以及他们用来确定候选产品的安全性、有效性和纯度的标准，是根据潜在产品的类型、复杂性、新颖性和预期用途和市场来确定的。像我们这样的新产品候选产品的监管审批过程不那么明确，可能会更复杂，因此与其他更知名或经过广泛研究的药品或其他产品候选产品相比，具有更高的开发风险、更昂贵的成本和更长的时间。FDA批准用于治疗b细胞介导性疾病的现有细胞疗法，如Kymriah(诺华制药公司)和Yescarta®(吉利德科学公司)在肿瘤学适应症中，可能不表明FDA可能要求批准我们的自身免疫适应症的治疗。任何监管机构的批准可能不表明任何其他监管机构可能需要批准什么，或者这些监管机构可能需要批准与新产品候选有关的什么。当我们推出我们的候选产品时，我们将被要求与这些监管机构协商，并遵守适用的要求和指导方针。如果我们未能做到这一点，我们可能被要求推迟或停止此类候选产品的开发。这些额外的流程可能会导致审查和批准过程比我们预期的要长。更具限制性的法律制度、政府法规或负面舆论将对我们的业务、财务状况、运营结果和前景产生不利影响，并可能延迟或损害我们候选产品的开发和商业化，或对我们可能开发的任何产品的需求。
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此外，联邦和州一级的机构对公众的负面看法或道德关切的反应可能会导致新的立法或法规，可能会限制我们开发或商业化任何候选产品、获得或维持监管批准或以其他方式实现盈利的能力。FDA已表示有兴趣进一步监管生物技术产品，如细胞疗法。美国联邦和州一级的机构以及美国国会委员会和其他政府实体或管理机构也表示有兴趣进一步监管生物技术行业。这样的行动可能会推迟或阻止我们的部分或全部候选产品的商业化。其他人进行的细胞疗法产品临床试验或批准后环境中的不利发展可能会导致FDA或其他监督机构改变对我们任何候选产品的批准要求。这些监管审查机构和委员会及其颁布的新要求或指南可能会延长监管审查过程，要求我们进行额外的研究或试验，增加我们的开发成本，导致监管立场和解释的变化，推迟或阻止我们候选产品的批准和商业化，或者导致重大的批准后限制或限制。
接受基于t细胞的免疫疗法（例如我们的候选产品）的患者过去和未来可能会经历严重的不良事件，包括ICANS、CRS以及杀死表达自身抗体的预期b细胞以外的细胞。如果我们的候选产品被发现具有高度且不可接受的严重程度和/或普遍存在的副作用或意外特征，其临床开发、监管批准和商业潜力将受到负面影响，这将严重损害我们的业务、财务状况和前景。
我们的候选产品是CART或CAAR T细胞免疫疗法。在我们用于治疗癌症的临床试验和其他类似设计的细胞免疫疗法中，出现了与ICAN和CRS相关的危及生命的事件，需要进行激烈的医疗干预，如插管或用药物维持血压，在几个案例中，还会导致死亡。在我们正在进行的CABA-201中，我们观察到了CRS和ICAN的事件，恢复了自我容忍或重置TM，审判。ICANS是一种目前临床上定义为脑水肿、神志不清、嗜睡、言语障碍、震颤、癫痫或其他中枢神经系统副作用的疾病，当这些副作用严重到足以导致重症监护时。CRS是一种目前临床上由与细胞因子释放有关的某些症状来定义的疾病，这些症状可能包括发热、寒战和低血压，当这些副作用严重到足以导致使用机械通气或重要的药物来维持血压的重症监护时。我们的候选产品可能会有类似的危及生命的严重不良副作用，如ICAN和CRS。
我们的候选产品可能会由于与CAR或CAAR的意外蛋白质相互作用而以体内细胞为靶点，从而产生严重和潜在的致命后果。尽管我们已经完成了多项临床前研究，旨在筛选DSG3 CAAR、麝香CAAR和CABA-201的细胞结合结构域意外靶向识别所造成的毒性，并打算筛选未来尚未通过临床前研究在患者中测试的CAR和CAAR候选蛋白，但我们的候选产品仍可能识别一个或多个与预期表面免疫球蛋白目标蛋白无关的蛋白质并与其发生反应。如果正常组织发生意外结合，我们的候选产品可能会针对并杀死患者的正常组织，导致严重和潜在的致命不良事件、不良副作用、毒性或意外特征。检测到任何意想不到的目标可能会停止或推迟我们候选产品的任何正在进行的临床试验，并阻止或推迟监管部门的批准。虽然我们已经开发了一个临床前筛选过程来确定我们的候选产品的交叉反应，但我们不能确定这个过程是否会识别我们的候选产品可能针对的所有潜在组织。例如，带有DSG3-CAARt的膜蛋白阵列针对一种旨在与糖蛋白结合的蛋白产生一个微弱的信号，该蛋白在测试和控制条件下都被检测到。在确证细胞分析中对该蛋白的进一步分析反复证明DSG3-CAARt不识别或激活该蛋白。我们对麝香CAAR和CABA-201进行了类似的临床前研究，没有观察到任何已证实的穆斯克-CAARt或CABA-201的非靶标活性。然而，这种进一步的分析可能被证明是不准确的。任何影响患者安全的意想不到的目标都可能对我们的候选产品进入临床试验或进入市场批准和商业化的能力产生实质性影响。此外，如果受试者再次接受治疗，他们的反应可能与给予相同剂量的其他受试者不同，并且可能无法耐受该剂量或出现安全问题。
我们的研究结果可能揭示出副作用或意想不到的特征的高度和不可接受的严重性和普遍性。我们的候选产品引起的不良副作用可能会导致我们或监管机构中断、推迟或停止临床试验，并可能导致更严格的标签或FDA或其他监管机构推迟或拒绝监管批准。2023年11月28日，fda发布了一份声明，称正在调查bcma或cd19指导的自体car细胞免疫疗法在癌症环境下发生t细胞恶性肿瘤的严重风险，并要求对接受这些疗法的患者进行终身监测。我们CART和CAART研究中的患者也可能患上某些危及生命的癌症或恶性肿瘤。我们对CABA-201的临床试验代表了对该候选产品在患者中的首次评估，CABA-201针对所有表达CD19的b细胞；因此，存在延长b细胞再生障碍性疾病和/或低丙种球蛋白血症的风险，这可能使患者容易受到感染。考虑到我们正在寻求治疗的自身免疫和同种异体免疫疾病在某些情况下没有使用其他免疫治疗产品治疗的晚期癌症那么严重，我们相信fda和其他监管机构可能会应用不同的益处-风险评估阈值，这样即使我们的候选产品显示出与当前car t疗法相似的安全性，fda最终可能会确定有害的副作用大于益处，并要求我们停止治疗。
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临床试验或拒绝批准我们的候选产品。我们相信，我们的CAAR t和CAR t细胞疗法在自身免疫和同种免疫适应症中追求的患者群体对不良事件的耐受性将低于肿瘤学，因此，这些毒性产生负面影响的风险对我们来说可能高于肿瘤学中的CAR t计划。
此外，与治疗相关的副作用也可能影响患者招募或纳入患者完成研究的能力或导致潜在的产品责任索赔。此外，这些副作用可能没有得到治疗医务人员的适当认识或处理，因为基于T细胞的免疫疗法引起的毒性通常不会在常规医疗中遇到。医务人员可能需要对基于T细胞的免疫疗法候选产品进行额外的培训，以了解其副作用。在认识或未能有效管理基于T细胞的免疫疗法候选产品的潜在副作用方面培训不足，可能导致患者死亡。任何这些情况都可能对我们的业务、财务状况和前景造成重大损害。除了我们的候选产品造成的副作用外，任何我们作为流程改进和优化努力的一部分而不时评估的任何预调节、管理流程或相关程序，也可能会导致不利的副作用。例如，已注意到长期或持续的细胞减少症和ICAN与某些淋巴清除方案和CART疗法的使用有关。
目前在我们的几项临床试验中实施的预处理方案可能会增加不良副作用的风险，并影响我们准确评估候选产品功效的能力。
在接受CART细胞治疗的肿瘤患者中，通常在CART细胞输注之前使用淋巴清除预适应方案，以提高肿瘤的免疫原性并促进输注的CART细胞的扩增。总而言之，这些效应已被证明可以增强肿瘤患者CART细胞的临床活性。这些方案通常包括环磷酰胺和氟达拉滨，通常在CART细胞输注前一周内给药。我们在DesCAARTes实施了一种预适应方案TM某些受试者在注射DSG3-CAARt之前接受静脉注射免疫球蛋白和环磷酰胺预治疗，其他患者在注射DSG3-CAARt之前接受静脉注射免疫球蛋白、环磷酰胺和氟达拉滨预治疗的试验，已在MusCAARTes中纳入计划剂量队列TM试验中，受试者在输注Musk-CAARt之前接受氟达拉滨和环磷酰胺的预治疗，我们在重置中加入了氟达拉滨和环磷酰胺的淋巴耗竭预适应方案TM临床试验。我们正在评估无预适应的CABA-201在MPV和MCPV患者中的RESET-PV试验。在一些患者输注CART细胞后观察到了严重的不良反应，包括感染、细胞因子释放综合征和ICAN。淋巴去除和免疫调节预适应方案可能导致这些不良事件的发生和严重程度，其作用是诱导血液中的白细胞减少或低水平的白细胞，包括血液中的淋巴细胞减少或低水平的淋巴细胞，并调节其他免疫细胞和抗体的激活和效应功能，以及增强CAT细胞的活性。
此外，淋巴清除疗法可以消除我们的CAAR-T细胞候选产品所针对的致病b细胞。因此，我们使用的任何淋巴去除预适应方案都可能延迟或以其他方式不利地影响我们使用DSG3或Musk自身抗体效价(一种标准的临床检测方法)分别评估DSG3-CAARt和Musk-CAARt活性的能力。不能使用DSG3或穆斯克自身抗体水平来显示我们的CAAR T细胞候选产品的特定活性，可能需要我们依赖于DesCAARTes中患者水泡形成的主观测量TM马斯卡蒂的肌肉无力或肌肉无力TM试验，这可能是一种不那么灵敏和准确的CAAR T细胞活性测量方法。因此，这可能会延迟CAAR潜在生物学活性的信号，因此可能会减缓临床发展。我们将继续评估来自MusCAARTes的新兴数据TM正在进行的试验以及自身免疫性疾病的其他相关临床试验，并可能酌情进行额外的修改。
除了淋巴消耗预处理外，还可以考虑具有免疫调节作用的其他预处理方案，为身体准备CAR t或CAAR t输注。例如，如果发现自身抗体会降低或抑制体内CAAR t的功能，则可以考虑对患者进行抗体降低疗法（例如FcRN抑制剂、IVIG、血浆置换术）或利妥昔单抗治疗后患者的预处理。其中一些类型的预处理是该自身免疫人群的标准护理，因此已被认为在该患者人群中具有有益的风险特征。这些其他预处理方案可能会导致严重的不良事件，包括低血压、血栓栓和机会性感染。
我们收件箱中的主题TM 除我们的RESEt-PV试验外，其他试验将在CABA-201输注之前采用由氟达拉滨和环磷胺组成的标准预处理方案进行治疗。此外，淋巴细胞清除方案可能会消除CABA-201靶向的一些病原性b细胞。因此，淋巴细胞清除方案可能会导致CABA-201后可能观察到的初始临床反应，这可能会导致早期疗效的解释难以评估，并且还可能延迟我们独立于氟达拉滨和环磷胺的影响来描述CABA-201活性的能力。我们打算通过与非淋巴细胞耗尽组的比较，在CAAR和CABA-201研究中评估预处理的潜在影响。
我们的临床患者可能会经历与预处理方案具体相关的增加或更严重的不良反应，例如严重的过敏反应、呼吸困难、严重头痛、发烧和寒战、严重感染、低血细胞计数、结肠炎症伴出血、膀胱刺激、血栓、某些癌症的发展、心脏、肺或肾脏损伤，甚至死亡。这些不良副作用，无论是与单独的预处理方案有关还是组合有关
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使用我们的CAR t细胞候选产品或CAAR t细胞候选产品，可能会导致我们临床试验的患者入组延迟，可能会导致我们或监管机构中断、延迟或停止临床试验，并可能导致我们的临床试验设计发生变化、更具限制性的标签或延迟或拒绝FDA的监管批准。上述任何情况都可能会增加我们候选产品的临床开发持续时间和费用，或限制此类候选产品的市场接受度（如果获得批准），其中任何情况都可能对我们的业务和财务状况产生重大不利影响。
我们的业务高度依赖于针对自身免疫性疾病的初始候选产品的成功，其中b细胞可能在引发或维持疾病方面发挥作用。我们所有候选产品都需要进行大量额外的临床前和/或临床开发，然后才能寻求监管机构批准并将产品投入商业市场。
我们的业务和未来的成功取决于我们获得监管机构批准、然后成功推出和商业化针对自身免疫性疾病的初始候选产品的能力，其中b细胞可能在疾病的引发或维持中发挥作用。无法保证我们能够通过临床开发推进我们的候选产品或获得我们的任何候选产品的营销批准。任何候选产品获得营销批准的过程都是非常漫长且有风险的，为了按计划获得营销批准（如果有的话），我们将面临重大挑战。
我们观察到的初步临床结果可能无法预测本临床试验中后续队列或任何未来临床试验的结果。由于CABA-201、DSG 3-CAARt和MuSk-CAARt是我们在临床上测试的前三种候选产品，因此我们可能会遇到有关试验设计、方案制定和执行、建立试验方案、患者招募和入组、临床剂量的质量和供应或安全问题的初步并发症。
此外，我们的DSG 3-CAARt、MuSk-CAARt或CABA-201 RST临床试验失败TM 试验可能会影响医生和监管机构对CABA可行性的看法® 更广泛的平台，特别是如果观察到治疗相关的副作用。任何这些风险的发生都可能严重损害我们的发展计划和业务前景。如果使用DSG 3-CAARt、MuSk-CAARt或CABA-201观察到治疗相关的副作用，或者如果它们被认为比其他疗法更不安全、有效或纯度，那么我们开发其他CAAR t或CAR t细胞疗法的能力可能会受到显着损害。
我们从未成功完成任何临床试验，而且我们可能无法为我们开发的任何候选产品做到这一点。
我们尚未证明我们有能力成功完成任何临床试验，包括大规模的关键临床试验、获得监管批准、制造商业规模的产品、或安排第三方代表我们这样做，或进行成功商业化所需的销售和营销活动。虽然我们的关键员工在领导临床开发计划方面拥有丰富的经验，但我们使用我们的候选产品进行临床试验的经验有限。我们可能无法在预期的时间线上提交任何其他候选产品的IND或CTA(如果有的话)。例如，我们不能确定为我们未来的候选产品进行的IND或CTA研究是否会及时完成或成功，或者制造过程是否会及时得到验证。即使我们为未来的候选产品提交IND或CTA，FDA、EMA或其他外国监管机构也可能无法批准IND或CTA，并允许我们及时或根本不能开始临床试验。提交未来候选产品的时间将取决于临床前和制造方面的进一步成功。此外，我们不能确定提交IND或CTA会导致FDA或其他外国监管机构允许开始进一步的临床试验，或者一旦开始，就不会出现要求我们暂停或终止临床试验的问题。根据与FDA和其他外国监管机构的讨论，启动这些临床试验中的每一项都需要最终确定试验设计。我们从FDA或其他外国监管机构收到的任何指导意见都可能发生变化。这些监管机构可能会改变他们的立场，包括我们试验设计的可接受性或所选的临床终点，这可能要求我们完成更多的临床试验或施加比我们目前预期更严格的批准条件。
如果我们被要求对我们的候选产品进行超出我们目前预期的额外临床试验或其他测试，如果我们无法成功完成我们候选产品的临床试验或其他测试，如果这些试验或测试的结果不呈阳性或仅为轻微阳性，或者如果存在安全问题，我们可能会：
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如果对我们提起产品责任诉讼，我们可能会承担大量责任，并可能被要求限制我们候选产品的商业化。
由于对候选产品进行临床测试，我们面临着固有的产品责任风险，如果我们将任何产品商业化，我们将面临更大的风险。例如，如果我们的候选产品在临床测试、制造、营销或销售期间造成或被认为造成伤害，或者被发现在其他方面不适合，我们可能会被起诉。任何此类产品责任索赔可能包括对制造缺陷、设计缺陷、未能警告产品固有危险、疏忽、严格责任或违反保证的指控。也可以根据州消费者保护法提出索赔。如果我们无法成功保护自己免受产品责任索赔的影响，我们可能会承担重大责任或被要求限制我们候选产品的商业化。即使成功的防御也需要大量的财务和管理资源。无论优点或最终结果如何，责任索赔可能会导致：
由于我们还没有开始销售任何产品，我们还没有为我们的候选产品商业化投保产品责任保险。我们无法以可接受的成本获得足够的产品责任保险，以防范潜在的产品责任索赔，这可能会阻止或阻碍我们单独或与公司合作伙伴开发的产品的商业化。我们的保险单也可能有各种例外，我们可能会受到产品责任索赔的影响，而我们没有承保范围。假设我们为我们的临床试验获得了临床试验保险，我们可能不得不支付法院裁决的或在和解协议中谈判达成的超出我们承保范围限制或不在我们保险覆盖范围内的金额，而我们可能没有或能够获得足够的资本来支付这些金额。即使我们与任何未来的公司合作伙伴达成的协议使我们有权获得损失赔偿，如果出现任何索赔，这种赔偿可能是不可用的或足够的。
行业相关风险
我们的候选产品可能会导致不良副作用或具有其他特性，可能会阻止其临床开发、阻止其监管批准、限制其商业潜力或导致严重的负面后果。
我们的候选产品造成的不良或不可接受的副作用可能会导致我们或监管机构中断、推迟或停止临床试验，并可能导致标签更具限制性，或者FDA或其他外国监管机构延迟或拒绝监管批准。此外，临床试验本质上利用了潜在患者人群的样本。由于受试者数量有限，暴露持续时间有限，我们候选产品的罕见和严重副作用只有在接触该药物的患者数量明显增加的情况下才可能被发现。不良副作用还可能导致我们临床试验规模扩大，增加我们临床试验的预期成本和时间轴。此外，我们的临床试验的结果可能揭示了副作用或意外特征的严重程度和普遍程度很高且不可接受。
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获得许可的CAR t细胞疗法和正在开发的疗法显示出CRS和ICANS的频繁发生，不良事件已导致患者死亡。在使用我们当前或未来的CAR t或CAAR t细胞候选产品治疗期间也发生过类似的不良事件，并且可能发生。例如，患者自身抗体或同种抗体激活CAAR t细胞可以刺激CRS。当输注CAAR t细胞并且CAAR与治疗患者血液或组织中的可溶性抗体结合时，这些可溶性抗体可能会导致CAAR t细胞繁殖，导致免疫系统激活过高，导致CRS。此外，由于对CAAR内抗原预先存在的免疫力，患者可能会表现出对CAAR t细胞的急性排斥反应。这可能会使我们的候选产品无效。
如果我们的候选产品开发过程中出现不可接受的毒性或健康风险，包括其他无关免疫疗法试验的推断风险，我们可以暂停或终止我们的试验，或FDA、我们试验的安全监测委员会(例如数据安全监测委员会或独立数据安全监测委员会，IDMC)，或当地监管机构，如机构审查委员会，IRBs，或独立道德承诺，或IECS，可视情况建议或命令我们停止临床试验。监管机构，如FDA，也可以拒绝批准我们的任何或所有目标适应症的候选产品。与治疗相关的副作用也可能影响患者招募或受试者完成试验的能力或导致潜在的产品责任索赔。此外，治疗医务人员可能没有适当地认识到或处理这些副作用，因为T细胞疗法引起的毒性通常不会出现在普通患者群体和医务人员身上。我们预计必须培训使用CART或CAAR T细胞候选产品的医务人员，以了解我们的临床前研究和临床试验的候选产品的副作用概况，以及我们的任何候选产品的任何商业化(如果获得许可)。在识别或管理我们的候选产品的潜在副作用方面培训不足可能会导致患者死亡。任何这些情况都可能对我们的业务、财务状况和前景造成重大损害。
* 我们的临床前研究和临床试验可能无法证明我们任何候选产品的安全性、效力和纯度，这将阻止或推迟监管批准和商业化。
在我们的任何候选产品的商业销售获得监管部门的批准之前，我们必须通过漫长、复杂和昂贵的临床前测试和临床试验来证明我们的候选产品是安全、有效和纯粹的，可以用于每个目标适应症。临床试验费用昂贵，可能需要数年时间才能完成，而且其结果本身也不确定。在临床试验过程中，任何时候都可能发生失败。我们候选产品的临床前研究和早期临床试验的结果可能不能预测后期临床试验的结果，包括我们候选产品的任何批准后研究。此外，任何临床试验的初步成功可能并不代表这些试验完成后所取得的结果。通常，由于候选产品在临床试验中失败而导致的自然流失率极高。尽管在临床前研究和初步临床试验中取得了进展，但临床试验后期阶段的候选产品可能无法显示出所需的安全性、有效性和纯度。同样，虽然我们认为CABA-201的总体设计与用于患者的结构相似自然医学， 《柳叶刀》、《风湿病与风湿学年鉴》但是，由于这些研究并未公开发表，这些研究涉及少量患者和不同的候选产品，而这些研究中观察到的初步临床结果可能不能预测使用CABA-201或我们的任何其他候选产品的临床试验结果，此外，由于这些研究不是我们自己的，我们可能无法获得准确的后续信息或同行评议的结果。
尽管早期试验取得了令人鼓舞的结果，但由于缺乏效力或功效、效力或功效的持久性不足或不可接受的安全问题，生物制药行业的许多公司在先进的临床试验中遭遇了重大挫折，我们无法确定我们不会面临类似的挫折。这些挫折是由临床试验进行时发现的临床前和其他非临床发现，或者临床前研究和临床试验中发现的安全性或有效性观察造成的，包括之前未报告的不良事件。此外，临床前和临床数据往往容易受到不同的解释和分析，许多认为其候选产品在临床前研究和临床试验中表现令人满意的公司，但未能获得FDA或EMA的批准。大多数开始临床试验的候选产品从未被批准为产品。
我们可能进行的任何临床前研究或临床试验可能无法证明获得监管部门批准将我们的候选产品推向市场所需的安全性、有效性和纯度。如果我们正在进行的或未来的临床前研究和临床试验的结果在评估我们的候选产品的有效性、安全性、效力和纯度方面没有确定的结果，如果我们没有达到具有统计和临床意义的临床终点，或者如果我们的候选产品存在安全问题，我们可能会阻止或推迟获得此类候选产品的上市批准。在某些情况下，由于许多因素，同一候选产品的不同临床前研究和临床试验之间的疗效、安全性、效力或纯度结果的评估可能存在显著差异，包括方案中规定的试验程序的变化、患者群体的大小和类型的差异、临床试验方案的变化和遵守以及临床试验参与者的退学率。例如，由于我们的CAAR T细胞候选产品仅针对患者体内约0.01%至1%的b细胞，因此它们可能不足以达到消除所有致病b细胞所需的充分植入。临床试验中安全性或有效性不足可能会推迟产品开发，以便有时间为下一代方法修改候选产品或进行制造更改，或者可能导致我们停止开发候选产品。
此外，我们正在进行的临床试验利用了“开放标签”试验设计，而且我们计划的试验可能利用了“开放标签”试验设计。“开放标签”临床试验是指患者和研究者都知道患者是否正在接受候选研究产品、活性药物或安慰剂的试验。最典型的是，开放标签临床试验仅测试候选研究产品，有时可能会以不同的剂量水平进行测试。开放标签临床试验受到各种限制，这些限制可能会夸大任何治疗效果，因为开放标签临床试验中的患者在接受治疗时知道。开放标签临床试验可能会受到“患者”的影响
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“偏见”，即患者认为自己的症状仅仅是因为他们意识到接受实验性治疗而有所改善。此外，开放标签临床试验可能会受到“研究者偏见”的影响，即那些评估和审查临床试验生理结果的人知道哪些患者已经接受了治疗，并且可能会更有利地解释治疗组的信息。开放标签试验的结果可能无法预测我们的任何候选产品的未来临床试验结果，当在使用安慰剂或活性对照的受控环境中进行研究时，我们纳入了开放标签临床试验。
此外，我们不能保证FDA或其他外国监管机构会像我们一样解释我们任何正在进行或计划进行的临床试验的结果，在我们提交候选产品批准之前，可能需要进行更多试验。如果试验结果不令FDA或其他外国监管机构满意，无法支持上市申请，我们候选产品的批准可能会严重延迟，或者我们可能需要花费我们可能无法使用的大量额外资源来进行额外试验，以支持我们候选产品的潜在批准。
为了在美国境外营销任何产品，公司还必须遵守其他国家和司法管辖区在质量、安全性和有效性以及对产品的临床试验、营销授权、商业销售和分销等方面的众多不同的监管要求。无论是否获得FDA对产品的批准，申请人都需要获得类似外国监管机构的必要批准，才能在这些国家或司法管辖区开始该产品的临床试验或营销。例如，欧盟对医药产品的审批流程与美国大体相同，但也可能存在显著差异。它需要令人满意的完成临床前研究和充分和良好控制的临床试验，以确定产品的安全性和有效性的每一个建议的适应症。它还要求向有关主管当局提交销售授权申请，并由这些主管部门给予销售授权，然后产品才能在欧洲联盟销售和销售。
随着更多数据的可用，我们进行的任何临床前研究或临床试验的中期、总体或初步数据可能会发生变化，并且需要接受审计和验证程序，这可能会导致最终数据发生重大变化。
我们的DesCAARTesTM 审判，MusCAARTesTM 审判和起诉TM 在系统性红斑狼疮、脊髓炎、SSc和gMG和RESEt中的试验- 光伏TM 子研究设计为开放标签试验。我们可能会不时公开披露临床前研究和临床试验的中期、初步或总体数据，包括安全性数据和疗效评估，这些数据将基于对当时可用数据的初步分析，在我们收到额外数据或对与特定研究相关的数据进行更全面的审查后，结果以及相关发现和结论可能会发生变化，或审判作为数据分析的一部分，我们还做出假设、估计、计算和结论，我们可能尚未收到或没有机会全面、仔细地评估所有数据。
因此，我们报告的背线结果可能与相同研究的未来结果不同，或者一旦收到更多数据并进行充分评估，不同的结论或考虑因素可能会使这些结果合格。背线数据仍需接受审计和核实程序，这可能会导致最终数据与我们之前公布的初步数据大不相同。因此，在最终数据可用之前，应谨慎查看背线数据。有时，我们也可能在我们的临床试验中披露计划中的中期分析的中期数据。我们可能完成的临床试验的中期数据面临这样的风险，即随着患者登记的继续和更多患者数据的获得，一个或多个临床结果可能会发生实质性变化。初步或中期数据与最终数据之间的不利差异可能会严重损害我们的业务前景。此外，由于试验的开放标签设计，如果我们或我们的竞争对手，或者知道患者正在接受研究产品的患者或护理人员披露临时数据，可能会导致我们普通股的价格波动。
监管机构，包括FDA或其他外国监管机构，可能不接受或同意我们的假设、估计、计算、结论或分析，或者可能以不同的方式解释或权衡数据的重要性，这可能会影响特定计划的价值、特定候选产品或产品的可批准性或商业化以及我们的整个公司。
如果我们报告的中期、总体或初步数据与实际结果不同，或者如果包括监管机构在内的其他人不同意得出的结论，我们获得候选产品批准和商业化的能力可能会受到损害，这可能会损害我们的业务、经营结果、前景或财务状况。
社交媒体平台的使用越来越多，带来了新的风险和挑战。
社交媒体越来越多地被用来沟通我们的临床开发计划以及我们开发候选产品要治疗的疾病。我们打算利用适当的社交媒体来沟通我们的开发计划。生物制药行业的社交媒体实践不断发展，与此类使用相关的法规并不总是明确。这种演变带来了不确定性和不遵守适用于我们业务的法规的风险。例如，患者可能会使用社交媒体渠道报告临床试验期间涉嫌不良事件。当发生此类披露时，我们可能无法监控和遵守适用的不良事件报告义务，或者我们可能无法辩护
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由于我们对研究产品的言论受到限制，因此面临社交媒体产生的政治和市场压力，我们的业务或公众的合法利益。还存在在任何社交网站上不当披露敏感信息或关于我们的负面或不准确帖子或评论的风险，或者我们的任何员工在社交网站上发布的帖子可能被解释为不当促销的风险。如果发生其中任何事件或我们未能遵守适用法规，我们可能会承担责任、面临监管行动或对我们的业务造成其他损害。
我们的临床试验可能会遇到重大延误，或者可能无法按照我们预期的时间表或根本无法进行试验。
临床测试昂贵、耗时且具有不确定性。我们无法保证任何临床试验将按计划进行或按计划完成（如果有的话）。即使这些试验按计划开始，也可能会出现暂停或终止此类临床试验的问题。一项或多项临床试验的失败可能发生在测试的任何阶段，并且我们正在进行的和未来的临床试验可能不会成功。可能阻碍临床开发成功或及时完成的事件包括：
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Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue. If we make manufacturing or formulation changes to our product candidates, we may be required to, or we may elect to, conduct additional trials to bridge our modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which our product candidates and products, if licensed, have patent protection and may allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.
We could also encounter delays if a clinical trial is suspended or terminated by us, the FDA or other regulatory authority, or if the IRBs of the institutions in which such trials are being conducted suspend or terminate the participation of their clinical investigators and sites subject to their review. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Delays in the initiation, conduct or completion of any clinical trial of our product candidates will increase our costs, slow down our product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. In the event we identify any additional product candidates to pursue, we cannot be sure that submission of an IND or comparable foreign regulatory submission will result in the FDA or other foreign regulatory authorities allowing clinical trials to begin in a timely manner, if at all.
In addition, from time to time, we may publicly announce the expected timing of various scientific, clinical, regulatory, manufacturing and other product development milestones. These milestones may include the commencement, completion or development of data from our preclinical studies and clinical trials or the submission of regulatory filings, such as an IND or a CTA. All of these milestones are, and will be, based on a variety of assumptions. If any of the foregoing events impact our ability to meet the publicly announced timing of our milestones, we may experience adverse effects on our business, financial condition and prospects and the price of our common stock could decline.
Monitoring safety of patients receiving our product candidates will be challenging, which could adversely affect our ability to obtain regulatory approval and commercialize our product candidates.
For our RESETTM, DSG3-CAART, MuSK-CAART and other planned clinical trials, we expect to continue to contract with academic medical centers and hospitals experienced in the assessment and management of toxicities arising during clinical trials. In the future, we may also contract with non-academic medical centers and hospitals with similar capabilities. Nonetheless, these centers and hospitals may have difficulty observing patients, including due to failure by patients to comply with post-clinical trial follow-up programs, and treating toxicities, which may be more challenging due to personnel changes, inexperience, inadequate institutional safety procedures, shift changes, house staff coverage or related issues. This could lead to more severe or prolonged toxicities or even patient
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deaths, which could result in us or the FDA delaying, suspending or terminating one or more of our clinical trials, and which could jeopardize regulatory approval. We also expect the centers using CABA-201, DSG3-CAART, MuSK-CAART and our other product candidates, if licensed, on a commercial basis could have similar difficulty in managing adverse events. Medicines used at centers to help manage adverse side effects of CABA-201, DSG3-CAART, MuSK-CAART and our other product candidates may not adequately control the side effects and/or may have a detrimental impact on the efficacy of the treatment.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. The enrollment of patients depends on many factors, including:
In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Since the number of qualified clinical investigators is limited, some of our clinical trial sites may also be used by some of our competitors, which may reduce the number of patients who are available for our clinical trials in that clinical trial site.
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Moreover, because our product candidates represent a departure from more commonly used methods for autoimmune diseases where B cells may play a role in initiating or maintaining disease treatment, potential patients and their doctors may be inclined to use conventional therapies, such as corticosteroids or systemic immunosuppressive medications, rather than enroll patients in our clinical trial. Delays in patient enrollment may result in increased costs or may affect the timing or outcome of our ongoing and planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates.
Our DesCAARTesTM trial, our MusCAARTesTM trial, our RESETTM trials in SLE, myositis, SSc, and gMG, our RESET-PVTM sub-study and any additional expected clinical trials for each of our product candidates will enroll a limited number of patients. The activity and toxicity data from these clinical trials of our product candidates may differ from future results of subsequent clinical trials that enroll a larger number of patients. Since the number of patients that we plan to dose in our MusCAARTesTM trial, our RESETTM trials in SLE, myositis, SSc, gMG and RESET-PVTM trial is small, and the number of patients in clinical trials for any future product candidates may be small, the results from such clinical trials, once completed, may be less reliable than results achieved in larger clinical trials, which may hinder our efforts to obtain regulatory approval for our product candidates. In both our RESET-PVTM trial and our MusCAARTesTM trial, we plan to evaluate the toxicity profile of our product candidates and establish the recommended dose for the next clinical trial. The preliminary results of clinical trials with smaller sample sizes, such as our DesCAARTesTM trial, our MusCAARTesTM trial and our RESETTM trials, as well as any clinical trials for future product candidates, can be disproportionately influenced by various biases associated with the conduct of small clinical trials, such as the potential failure of the smaller sample size to accurately depict the features of the broader patient population, which limits the ability to generalize the results across a broader community, thus making the clinical trial results less reliable than clinical trials with a larger number of patients. As a result, there may be less certainty that such product candidates would achieve a statistically significant effect in any future clinical trials. If we conduct any future clinical trials of DSG3-CAART, MuSK-CAART, or CABA-201, we may not achieve a statistically significant result or the same level of statistical significance, if any, that we might have anticipated based on the results observed in our DesCAARTesTM trial, our MusCAARTesTM trial, and RESETTM trials, respectively.
Risks Related to Sales, Marketing and Competition
The market opportunities for our product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small.
Our projections of both the number of people who have autoimmune diseases where B cells may play a role in initiating or maintaining disease we are targeting, as well as the subset of people with these diseases in a position to receive second or later lines of therapy and who have the potential to benefit from treatment with our product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations, or market research and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these autoimmune diseases where B cells may play a role in initiating or maintaining disease. The number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates.
We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.
The biopharmaceutical and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong focus on intellectual property. We face competition from many different players, including large and specialty pharmaceutical and biotechnology companies, academic research organizations and governmental agencies. Any therapeutic candidates we successfully develop and commercialize will compete with the existing standard of care as well as novel therapies that may gain regulatory approval in the future. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations and well-established sales forces. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. We are the first and only company developing CAAR T drug candidates and one of several developing CAR T drug candidates for the treatment autoimmune diseases where B cells may play a role in initiating or maintaining disease. Additionally, despite the significant differences in discovery, development and target populations between oncology and autoimmune targets, we recognize that companies with an investment and expertise in CAR T cell development for oncology indications could also attempt to leverage their expertise into autoimmune diseases where B cells may play a role in initiating or maintaining disease affected populations. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors, either alone or with collaborative partners, may succeed in developing, acquiring or licensing on an exclusive basis drug or biologic products that are more effective,
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safer, more easily commercialized or less costly than our product candidates or may develop proprietary technologies or secure patent protection that we may need for the development of our technologies and products.
Specifically, while rituximab is the first drug for the treatment of PV, the target indication for DSG3-CAART, to have received regulatory approval in the United States in over 60 years, we are aware that multiple biopharmaceutical companies have therapies in clinical development. We are also aware of other biopharmaceutical companies developing therapies for muscle-specific kinase myasthenia gravis, or MuSK MG, SLE, myositis, SSc and gMG. While we do not expect these product candidates to be directly competitive to our product candidates, even if we obtain regulatory approval of our product candidates, the availability and price of these other products could limit the demand and the price we are able to charge for our product candidates. We may not be able to implement our business plan if the acceptance of our product candidates is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to our product candidates, or if physicians switch to other new drug or biologic products or choose to reserve our product candidates for use in limited circumstances.
Even if we obtain regulatory approval of our product candidates, the products may not gain the market acceptance among physicians, patients, hospitals, treatment centers and others in the medical community necessary for commercial success.
The use of engineered T cells as a potential treatment for B cell-mediated autoimmune diseases is a recent development and may not become broadly accepted by physicians, patients, hospitals, treatment centers and others in the medical community. We expect physicians to be particularly influential and we may not be able to convince them to use our product candidates for many reasons. Additional factors will influence whether our product candidates are accepted in the market, including:
The product candidates we plan to develop and commercialize are premised on offering a potential cure for autoimmune diseases where B cells may play a role in initiating or maintaining disease, which may result in a high degree of uncertainty related to pricing and long-term demand for our product. Our target patient populations are relatively small. Because of this pricing and demand for our product candidates, if licensed, may not be adequate to support an extended period of commercial viability, which could adversely affect our continued ability to successfully produce and market our product or any follow-on products.
In addition, if our product candidates are licensed but fail to achieve market acceptance among physicians, patients, hospitals, treatment centers or others in the medical community, we will not be able to generate significant revenue. Even if our products achieve market acceptance, we may not be able to maintain that market acceptance over time if new products or technologies are introduced that are more favorably received than our products, are more cost effective or render our products obsolete.
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Risks Related to Business Development
We may not be successful in our efforts to identify additional product candidates. Due to our limited resources and access to capital, we must prioritize development of certain product candidates, which may prove to be wrong and may adversely affect our business.
Although we intend to explore other therapeutic opportunities, in addition to the product candidates that we are currently developing, we may fail to identify viable new product candidates for clinical development for a number of reasons. If we fail to identify additional potential product candidates, our business could be materially harmed.
Research programs to pursue the development of our existing and planned product candidates for additional indications and to identify new product candidates and disease targets require substantial technical, financial and human resources whether or not they are ultimately successful. Our research programs may initially show promise in identifying potential indications and/or product candidates, yet fail to yield results for clinical development for a number of reasons, including:
Because we have limited financial and human resources, we intend to initially focus on research programs and product candidates for a limited set of indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.
Accordingly, there can be no assurance that we will ever be able to identify additional therapeutic opportunities for our product candidates or to develop suitable potential product candidates through internal research programs, which could materially adversely affect our future growth and prospects. We may focus our efforts and resources on potential product candidates or other potential programs that ultimately prove to be unsuccessful.
If we fail to develop additional product candidates, our commercial opportunity will be limited.
One of our core strategies is to pursue clinical development of additional product candidates beyond CABA-201, DSG3-CAART and MuSK-CAART. Developing, obtaining regulatory approval and commercializing additional product candidates will require substantial additional funding and is prone to the risks of failure inherent in medical product development. We cannot provide you any assurance that we will be able to successfully advance any of these additional product candidates through the development process.
Even if we receive FDA or other foreign regulatory authority approval to market additional product candidates for the treatment of autoimmune diseases where B cells may play a role in initiating or maintaining disease, we cannot assure you that any such product candidates will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If we are unable to successfully develop and commercialize additional product candidates, our commercial opportunity will be limited. Moreover, a failure in obtaining regulatory approval of additional product candidates may have a negative effect on the approval process of any other, or result in losing approval of any approved, product candidate.
We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel. We are highly dependent on our management, scientific, and medical personnel, including our Chief Executive Officer and President, our Scientific Advisory Board members, our President, Science and Technology, our Chief Medical Officer, and our Chief Financial Officer. The loss of the services of any of our executive officers, other key employees, and other scientific and medical advisors, and our inability to find suitable replacements could result in delays in product development and harm our business.
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Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all. To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided stock options that vest over time. The value to employees of stock options that vest over time may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies. Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice. Although we have employment agreements with our key employees, these employment agreements provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without notice. We do not maintain “key person” insurance policies on the lives of these individuals or the lives of any of our other employees. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel.
*We expect to grow the size of our organization, and we may experience difficulties in managing this growth.
As of September 30, 2024, we had 154 full-time employees and one part-time employee. As our development and commercialization plans and strategies develop, and as we continue to broaden our operational capabilities, we expect to expand our employee base and continue to add managerial, operational, sales, research and development, marketing, financial and other personnel. Current and future growth imposes significant added responsibilities on members of management, including:
Our future financial performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage our growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including certain research and development as well as general and administrative support, pursuant to agreements which expire after a certain period of time. There can be no assurance that the services of independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of our product candidates or otherwise advance our business. There can be no assurance that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, or if we are not able to raise sufficient funds in the future to support our hiring efforts beyond our research and development personnel, we may not be able to successfully implement the tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.
Business disruptions, including due to natural disasters, global conflicts or political unrest, could seriously impact our operations, research and trials and harm our future revenue and financial condition.
Our operations, Penn’s operations, WuXi’s operations and those of any CMOs, CROs and other contractors and consultants that we may engage could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured. Further, global conflicts or political unrest, such as the ongoing military conflict between Russia and Ukraine, the Israel-Hamas war, and the conflict in the Middle East may disrupt our global clinical trials and increase the likelihood of supply interruptions. Additionally, the effect of global financial and economic conditions and geopolitical events, including presidential elections in the United States, events related thereto such as changes to candidates or political unrest or otherwise, or similar events, may have an impact on our business. The occurrence of any of these business disruptions could seriously harm our research, clinical trials, operations and financial condition and increase our costs and expenses. Our ability to obtain clinical supplies of our
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product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption.
There are also current geopolitical tensions with China. Recently, the Biden administration signed multiple executive orders regarding China. One particular executive order titled Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy signed on September 12, 2022 will likely impact the pharmaceutical industry to encourage U.S. domestic manufacturing of pharmaceutical products. Moreover, there have been Congressional legislative proposals, such as the bill titled the BIOSECURE Act, which would, among other things, prohibit U.S. federal funding in connection with biotechnology equipment or services produced or provided by certain named Chinese “biotechnology companies of concern” (which, under the version of legislation passed by the U.S. House of Representatives on September 9, 2024, are WuXi AppTec, WuXi Biologics, MGI, BGI, and Complete Genomics) and loans and grants to, and federal contracts with any entity that uses biotechnology equipment or services from one of these entities in performance of the government contract, grant, or loan. The legislation also gives the federal government the authority to name additional “biotechnology companies of concern” that are engaged in research activities with the Chinese government and that pose a risk of U.S. national security. Previously, on May 15, 2024, the House Committee on Oversight and Accountability approved an updated version of the BIOSECURE Act which would delay the application of the BIOSECURE Act’s provisions (1) until January 1, 2032, with respect to biotechnology equipment and services provided or produced by a named biotechnology company of concern under a contract or agreement entered before the effective date of the legislation and (2) for a period of 5 years after the identification of new biotechnology companies of concern, with respect to biotechnology equipment and services provided or produced by an entity that the government identifies in the future as a biotechnology company of concern. Any additional executive action, legislative action or potential sanctions with China could materially impact one of our current manufacturing partners, WuXi, and our agreement with them. For example, in February 2024, the former chair and ranking member of the House Select Committee on the Chinese Communist Party, former Representative Mike Gallagher and Representative Raja Krishnamoorthi, respectively, along with Senators Gary Peters and Bill Haggerty sent a letter to the Biden administration requesting that both WuXi AppTec Co., Ltd., WuXi’s parent company, and the affiliated WuXi Biologics be added to the Department of Defense’s Chinese Military Companies List (1260H list), the Department of Commerce’s Bureau of Industry and Security Entity List, and the Department of Treasury’s Non-SDN Chinese Military-Industrial Complex Companies List. While the Biden administration has yet to take action on this letter, adding either or both previously mentioned WuXi entities on any or all of the aforementioned lists could materially impact the WuXi Agreement. Additionally, on February 28, 2024, President Biden signed Executive Order 14117 (“Preventing Access to Americans' Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern”) which implements a new framework to protect the privacy of personal data shared between the U.S. and Europe, which may, in effect, impact privacy laws with “countries of concern” such as China or Russia.
In addition, due to our adoption of a more flexible work model following the COVID-19 pandemic, our increased prevalence of personnel working from home may negatively impact productivity, or disrupt, delay, or otherwise adversely impact our business operations. Further, this could increase our cyber security risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could adversely impact our business operations or delay necessary interactions with local and federal regulators, ethics committees, manufacturing sites, research or clinical trial sites and other important agencies and contractors.
Risks Related to Our Financial Condition and Capital Requirements
Risks Related to Past Financial Condition
*We have incurred net losses in every period since our inception and anticipate that we will incur substantial net losses over the next several years, and may never achieve or maintain profitability.
Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. We have no products licensed for commercial sale, and we will continue to incur significant research and development and other expenses related to our ongoing operations. Our net losses may fluctuate significantly from quarter to quarter and year to year. We have to date financed our operations primarily through private placements of our preferred stock, the sale of common stock in our initial and secondary public offerings and sales of our common stock from time to time in “at-the-market” offerings.
As a result, we are not profitable and have incurred net losses in each period since our inception. For the nine months ended September 30, 2024 and 2023, we recorded net losses of $83.3 million and $46.8 million, respectively. As of September 30, 2024, we
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had an accumulated deficit of $316.5 million. We expect to incur significant losses for the foreseeable future, and we expect these losses to increase substantially if, and as, we:
To become and remain profitable, we must succeed in developing, and eventually commercializing, a product or products that generate significant revenue. The ability to achieve this success will require us to be effective in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates, discovering additional product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval. We are only in the preliminary stages of most of these activities and have not yet demonstrated our ability to successfully develop any product candidate, obtain regulatory approvals, manufacture a commercial scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. We may never be able to develop, manufacture or commercialize a marketable product.
Even if we are able to succeed in these activities, we may never generate revenues that are significant enough to achieve profitability. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Our expenses will increase if, among other things:
Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses we will incur or when, if ever, we will be able to achieve profitability. Even if we succeed in commercializing one or more of our product candidates, we will continue to incur substantial research and development and other expenditures to develop, seek regulatory approval for and market additional product candidates. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
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We have a limited operating history, which may make it difficult to evaluate the success of our business to date and to assess our future viability, and we may face significant challenges and expense as we test our product candidates and build our capabilities.
We were incorporated in 2017 and initially acquired rights to license certain patent rights from Penn in August 2018, and acquired rights to license certain patent rights from Nanjing IASO Biotherapeutics Co., Ltd., or IASO, in October 2022. All of our product candidates are still in the preclinical development or clinical stage. We have not yet demonstrated our ability to successfully complete any clinical trials, including large-scale, pivotal clinical trials, obtain marketing approvals, manufacture clinical and commercial scale therapeutics, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization. Our ability to generate product revenue or profits, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates, which may never occur. We may never be able to develop or commercialize a marketable product.
Our limited operating history, particularly in light of the rapidly evolving cell therapy field, may make it difficult to evaluate our current business and predict our future performance. Our relatively short history as an operating company makes any assessment of our future success or viability subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by clinical-stage companies in rapidly evolving fields. If we do not address these risks successfully, our business will suffer. Similarly, we expect that our financial condition and operating results will continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. As a result, our shareholders should not rely upon the results of any quarterly or annual period as an indicator of future operating performance.
We currently do not have in-house resources sufficient to enable the development of our product candidates, including our CAR T and CAAR T cell platforms. We are reliant on several manufacturing and support services from Penn through two Master Translational Research Service Agreements, or the CAART Services Agreement and CARTA Services Agreement, respectively, and collectively, the Services Agreements. We also rely on Penn for current manufacturing of CABA-201. Our ability to rely on services from Penn is limited to a specified period of time, to specific capabilities, and is subject to Penn’s right to terminate these services with or without cause. We are reliant on WuXi manufacturing services for MuSK-CAART and CABA-201 in multiple indications through a Development, Manufacturing and Testing Services Agreement, or the WuXi Agreement. Our ability to rely on services from WuXi is limited to a specified period of time, to specific capabilities, and is subject to WuXi’s right to terminate these services with or without cause. If we are unable to establish necessary relationships with third party partners and/or build our own capabilities, our operating and financial results could differ materially from our expectations, and our business could suffer. As we build our own capabilities, and enter into agreements with third parties, we expect to encounter risks and uncertainties frequently experienced by growing companies in new and rapidly evolving fields, including the risks and uncertainties described herein.
All of our programs require additional preclinical research and development, clinical development, regulatory approval in multiple jurisdictions, obtaining manufacturing supply, capacity and expertise, building of a commercial organization, substantial investment and significant marketing efforts before we generate any revenue from product sales. Other programs of ours require additional discovery research and then preclinical and clinical development. In addition, our product candidates must be licensed for marketing by the FDA or other foreign regulatory authorities before we may commercialize any product.
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We have not generated any revenue from our product candidates and our ability to generate revenue from product sales and become profitable depends significantly on our success in a number of areas.
To become and remain profitable, we or any potential future collaborator must develop and eventually commercialize products with significant market potential at an adequate profit margin after cost of goods sold and other expenses. All of our product candidates are in the early stages of development and we will require additional preclinical studies, clinical development, regulatory review and approval, substantial investment, access to sufficient commercial manufacturing capacity and significant marketing efforts before we can generate any revenue from product sales. We initiated our DesCAARTesTM trial of DSG3-CAART, targeting pathogenic B cells in patients with mucosal pemphigus vulgaris, or mPV, in June 2020. The DesCAARTesTM trial is no longer dosing patients for treatment with DSG3-CAART after evaluation of clinical and translational data from the combination cohort, where patients were pre-treated with IVIg, cyclophosphamide and fludarabine prior to DSG3-CAART infusion. Our IND for MuSK-CAART, targeting pathogenic B cells in a subset of patients with myasthenia gravis, or MG, became effective in January 2022. The MusCAARTes™ trial is not currently dosing patients as we evaluate clinical and translational data from the A1 and A2 cohorts, where patients were treated with MuSK-CAART without preconditioning. Our INDs for CABA-201, which are designed to treat patients with active LN or active SLE without renal involvement, patients with myositis, patients with SSc, and patients with gMG became effective in March 2023, May 2023, September 2023 and November 2023, respectively. Our ability to generate revenue depends on a number of factors, including, but not limited to:
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Many of the factors listed above are beyond our control and could cause us to experience significant delays or prevent us from obtaining regulatory approvals or commercialize our product candidates. Even if we are able to commercialize our product candidates, we may not achieve profitability soon after generating product sales, if ever. If we are unable to generate sufficient revenue through the sale of our product candidates or any future product candidates, we may be unable to continue operations without continued funding.
If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Additionally, even if we succeed in commercializing one or more of our product candidates, we will continue to incur substantial research and development and other expenditures to research, develop and market additional product candidates. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.
We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
Risks Related to Future Financial Condition
*We will require substantial additional financing to develop and commercialize our product candidates and implement our operating plans. If we fail to obtain additional financing or cannot obtain financing at the levels we require, we may be delayed in our plans or unable to complete the development and commercialization of our product candidates.
Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to continue the preclinical and clinical development of our product candidates, including our DesCAARTesTM trial, our MusCAARTesTM trial, our RESETTM trials, and our research and development, preclinical studies and clinical trials for any future product candidates, to seek regulatory approvals for our product candidates, to enable commercial production of our products, if licensed, and to initiate and complete registration trials for multiple products. As of September 30, 2024, we had $183.0 million of cash, cash equivalents and investments. Since our initial public offering, we have generated cash from public offerings of our common stock and pre-funded warrants to purchase our common stock resulting in aggregate net proceeds of approximately $280 million. While we currently expect our existing cash, cash equivalents and short-term investments to be sufficient to fund our operations into the first half of 2026, which includes initial clinical data on efficacy endpoints and tolerability from the initial CABA-201 treated patients in the RESETTM clinical trials, we expect to require significant additional financing to complete these clinical trials and any future clinical trials of these and our other product candidates. Further, if marketing approval is received, we will require significant additional amounts of cash to launch and commercialize our product candidates. However, we have based this estimate on assumptions that may prove to be wrong. Additionally, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. We may require substantial additional capital for the further development and commercialization of our product candidates, including funding our internal manufacturing capabilities, and may need to raise additional funds sooner if we choose to expand more rapidly than we presently anticipate. Because the length of time and activities associated with development of our product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing and commercialization activities. Our future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to:
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We cannot be certain that additional funding will be available on acceptable terms, or at all. As widely reported, global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflation, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Until we are able to generate sufficient revenue to finance our cash requirements, we will need to finance our future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue our research and development initiatives and clinical development plans. We could be required to seek collaborators for our product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.
Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.
We expect that significant additional capital may be needed in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, expanded research and development activities and costs associated with operating a public company. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.
Pursuant to our equity incentive plans, our management is authorized to grant stock options to our employees, directors and consultants. Additionally, the number of shares of our common stock reserved for issuance under the 2019 Stock Option and Incentive Plan, or the 2019 Plan, automatically increased on January 1, 2024 and will automatically increase each January 1 thereafter through and including January 1, 2029, by 4% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors. Unless our board of directors elects not to increase the number of shares available for future grant each year, our stockholders may experience additional dilution, which could cause our stock price to fall. In addition, on April 7, 2023, our board of directors adopted, and at our 2023 annual meeting our stockholders approved, an amendment to the 2019 Plan, or the Plan Amendment, to increase the aggregate number of shares authorized for issuance under the 2019 Plan by 3,000,000 shares, subject to adjustment. Our compensation committee determined the size of the increase to the reserved pool under the Plan Amendment based on projected equity awards to anticipated new hires, projected annual equity awards to existing employees and an assessment of the magnitude of increase that our institutional investors and the firms that advise them would likely find acceptable. We anticipate that the increased share reserve under our 2019 Plan, as amended by the Plan Amendment, will be sufficient to provide equity incentives to attract, retain, and motivate employees for a period of two years following the effective date of the Plan Amendment.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.
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Risks Related to Our Intellectual Property
We rely heavily on certain in-licensed patent and other intellectual property rights in connection with our development of our product candidates and, if we fail to comply with our obligations under our existing and any future intellectual property licenses with third parties, we could lose license rights that are important to our business.
Our ability to develop and commercialize our product candidates is heavily dependent on in-licenses to patent rights and other intellectual property granted to us by third parties. For example, we depend heavily on our License Agreement with Penn and CHOP, which was entered into in 2018, amended and restated in July 2019, and further amended in May 2020 and October 2021, pursuant to which we obtained (a) a non-exclusive, non-sublicensable, worldwide research license to intellectual property controlled by Penn and CHOP to make, have made and use products in two subfields of use, (b) effective as of October 2018, an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under certain of such intellectual property to make, use, sell, offer for sale and import products in the same two subfields of use, and (c) effective as of October 2018, a non-exclusive, worldwide, royalty-bearing license, with limited rights to sublicense, under certain of Penn’s know-how, which know-how satisfies certain criteria and is listed on a mutually agreed to schedule, to make, have made, use, sell, offer for sale, import and have imported products in the same two subfields of use. We also depend on our Exclusive License Agreement with IASO, which was entered into in October 2022, pursuant to which we obtained a worldwide, exclusive license under certain intellectual property to develop, manufacture, commercialize and otherwise exploit T cell products directed to CD19 for the purpose of diagnosis, prevention or treatment of an autoimmune or alloimmune indication in humans, or the IASO Agreement. We may enter into additional license agreements in the future. Our license agreements with Penn, CHOP and IASO impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty, insurance and other obligations on us. If we fail to comply with our obligations under these licenses, our licensors, including Penn, CHOP and IASO may have the right to terminate these license agreements, in which event we might not be able to market our product candidates. Termination of any of our license agreements or reduction or elimination of our licensed rights may also result in our having to negotiate new or reinstated licenses with less favorable terms.
We may need to obtain additional licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could harm our business significantly. We cannot provide any assurances that third-party patents do not exist which might be enforced against our current product candidates or future products, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.
Furthermore, in many cases, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we in-license from third parties. For example, pursuant to our IASO Agreement, IASO controls such activities for the patent rights licensed to us under such agreement. Pursuant to our License Agreement with Penn and CHOP, Penn controls such activities for the patent rights licensed to us under such agreement. Therefore, although we provide input to IASO, Penn and CHOP on these activities, we cannot be certain that these patents will be prosecuted, maintained and enforced in a manner consistent with the best interests of our business. If our current or future licensors or collaboration partners fail to obtain, maintain or protect any patents or patent applications licensed to us, our rights to such patents and patent applications may be reduced or eliminated and our right to develop and commercialize any of our product candidates that are the subject of such licensed rights could be adversely affected.
Disputes may arise between us and our current and future licensors regarding intellectual property subject to a license agreement, including those related to:
Furthermore, disputes may arise between us and our current or future licensors regarding the ownership of intellectual property developed by us, such that we may be required to assign or otherwise transfer such intellectual property to such licensor. In the event
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that the assigned or transferred intellectual property is covered by an existing license agreement with such licensor we may be required to make additional royalty or milestone payments, or both, to such licensor. If the assigned or transferred intellectual property is not covered by an existing license agreement, then we may be required to enter into an additional license agreement to advance our research or allow commercialization of our product candidates, which may not be available on commercially reasonable terms or at all.
If disputes over intellectual property that we have licensed, or license in the future, prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.
If our efforts to protect the proprietary nature of the intellectual property related to our current and any future product candidates are not adequate, we may not be able to compete effectively in our market.
Our success depends in large part on our ability to obtain and maintain intellectual property protection in the United States and other countries with respect to our product candidates. If we do not adequately protect or enforce our intellectual property rights, competitors may be able to erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability. To protect our proprietary position, we have in-licensed patent rights in the United States and abroad relating to the product candidates that are important to our business. The patent application and approval process is expensive, complex and time-consuming. Our licensors may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain. No consistent policy regarding the breadth of claims allowed in biotechnology and pharmaceutical patents has emerged to date in the United States or in many foreign jurisdictions. In addition, the determination of patent rights with respect to biological and pharmaceutical products commonly involves complex legal and factual questions, which has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Pending patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications. Assuming the other requirements for patentability are met, currently, the first to file a patent application is generally entitled to the patent. However, prior to March 16, 2013, in the United States, the first to invent was entitled to the patent. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that our licensors were the first to make the inventions claimed in the patents or pending patent applications we in-license, or that our licensors were the first to file for patent protection of such inventions.
Moreover, because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, the patents or pending patent applications we in-license may be challenged in the courts or patent offices in the United States and abroad. For example, we may be subject to a third party preissuance submission of prior art to the U.S. Patent and Trademark Office, or USPTO, or become involved in post-grant review procedures, derivation proceedings, reexaminations, or inter partes review in the United States, or oppositions and other comparable proceedings in foreign jurisdictions, challenging our patent rights or the patent rights of others. An adverse determination in any such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates. In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of the patents we in-license or narrow the scope of our patent protection. In addition, the laws of foreign countries may not protect our rights to the same extent or in the same manner as the laws of the United States. For example, European patent law is more restrictive than U.S. patent law in connection with the patentability of methods of treatment of the human body and Chinese bankruptcy law may not provide a licensee the same protections as U.S. bankruptcy law. This could impact our in-license under the IASO Agreement with IASO, a China-based company, if IASO declared bankruptcy, and could have a material adverse effect on the development of CABA-201.
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A European Unified Patent Court, or the UPC, came into force during 2023. The UPC is a common patent court to hear patent infringement and revocation proceedings effective for member states of the European Union. This could enable third parties to seek revocation of our European patents in a single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which the European patent is validated. Any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products. Moreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect our ability to enforce or defend the validity of our European patents. Although we have decided, and may continue to decide, to opt out certain of our European patents and patent applications from the UPC, if certain formalities and requirements are not met, then our European patents and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC. Thus, we cannot be certain that our European patents and patent applications will avoid falling under the jurisdiction of the UPC.
We cannot predict whether the patent applications we in-license currently being pursued will issue as patents, whether the claims of any patent that has or may issue will provide us with a competitive advantage or prevent competitors from designing around the claims to develop competing technologies in a non-infringing manner, or whether we or our licensors will be able to successfully pursue patent applications in the future relating to our current product candidates or future products and product candidates. Moreover, the patent application and approval process is expensive and time-consuming. We or our licensors may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Furthermore, we, or any future partners, collaborators, or licensees, may fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. Therefore, we may miss potential opportunities to seek additional patent protection.
It is possible that defects of form in the preparation or filing of patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, claim scope, or requests for patent term adjustments. If we fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated. If there are material defects in the form, preparation, prosecution or enforcement of the patents or patent applications we in-license, such patents may be invalid and/or unenforceable, and such applications may never result in valid, enforceable patents. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
Even if the patent applications we in-license issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our patent rights by developing similar or alternative technologies or products in a non-infringing manner. Our competitors may also seek approval to market their own products similar to or otherwise competitive with our product candidates. Alternatively, our competitors may seek to market generic versions of any approved products by submitting abbreviated BLAs to the FDA during which process they may claim that patents licensed by us are invalid, unenforceable or not infringed. In these circumstances, we may need to defend or assert our intellectual property rights, or both, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find the patents we in-license invalid or unenforceable, or that our competitors are competing in a non-infringing manner. Thus, even if we have in-licensed valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.
In the future, we likely will need to expand our patent portfolio to pursue patent coverage for new product candidates that we wish to develop. The patent prosecution process is competitive, and other companies, some which may have greater resources than we do in this area, may also be pursuing intellectual property rights that we may consider necessary or attractive in order to develop and commercialize future product candidates.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting, maintaining, defending and enforcing patents on our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States. Although our License Agreement and IASO Agreement grant us worldwide rights, there can be no assurance that we will obtain or maintain patent rights in or outside the United States under any future license agreements. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States even in jurisdictions where we and our licensors pursue patent protection. Consequently, we and our licensors may not be able to prevent third parties from practicing our inventions in all countries outside the United States, even in jurisdictions where we and our licensors pursue patent protection, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we and our licensors have not pursued and obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we and our licensors have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidates and the patents we in-license or other intellectual property rights may not be effective or sufficient to prevent them from competing.
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Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of the patents we in-license or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights, even if obtained, in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put the patents we in-license at risk of being invalidated or interpreted narrowly and the patent applications we in-license at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
We or our licensors may be subject to claims challenging the inventorship or ownership of the patents and other intellectual property that we own or license.
We or our licensors may be subject to claims that former employees, collaborators or other third parties have an ownership interest in the patents and intellectual property that we in-license or that we may own or in-license in the future. While it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own or such assignments may not be self-executing or may be breached. Our licensors may face similar obstacles. We or our licensors could be subject to ownership disputes arising, for example, from conflicting obligations of employees, consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against any claims challenging inventorship or ownership. If we or our licensors fail in defending any such claims, we may have to pay monetary damages and may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property, which could adversely impact our business, results of operations and financial condition.
Some intellectual property which we have in-licensed was discovered through government funded programs and thus is subject to federal regulations such as “march-in” rights, certain reporting requirements, and a preference for U.S. industry. Compliance with such regulations may limit our exclusive rights and limit our ability to contract with non-U.S. manufacturers.
Certain of the intellectual property rights we have licensed, including rights licensed to us by Penn relating to our DSG3-CAART and DSG3/1-CAART product candidates, was generated through the use of U.S. government funding and may therefore be subject to certain federal laws and regulations. As a result, the U.S. government has certain rights to intellectual property embodied in our DSG3-CAART and DSG3/1-CAART product candidates and may have rights in future product candidates pursuant to the Bayh-Dole Act of 1980. These U.S. government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations, also referred to as “march-in rights”. The U.S. government also has the right to take title to these inventions if we, or the applicable licensor, such as Penn, fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us or the applicable licensor to expend substantial resources. In addition, the U.S. government requires that products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. manufacturers may limit our ability to contract with non-U.S. product manufacturers for product candidates covered by such intellectual property.
We may become involved in lawsuits to protect or enforce our patent rights or other intellectual property rights, which could be expensive, time consuming and unsuccessful.
Competitors may infringe, misappropriate or otherwise violate patents, trademarks, copyrights or other intellectual property that we own or in-license. To counter infringement, misappropriation or other unauthorized use, we may be required to file claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against perceived violators could provoke these parties to assert counterclaims against us alleging that we infringe, misappropriate or otherwise violate their intellectual property, in addition to counterclaims asserting that the patents we in-license are invalid or unenforceable, or both. In any patent infringement proceeding, there is a risk that a court will decide that a patent we in-license is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. In the U.S., grounds for a validity challenge in a court proceeding could be an alleged failure to meet one or more statutory requirements for
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patentability, including, for example, lack of novelty, obviousness, lack of written description or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Additionally, third parties are able to challenge the validity of issued patents through administrative proceedings in the patent offices of certain countries, including the USPTO and the European Patent Office.
Even if the validity of a patent is upheld during a court proceeding, there is a risk that the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that the patent claims do not cover the invention. An adverse outcome in a litigation or proceeding involving the patents we in-license could limit our ability to assert the patent we in-license against those parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition.
Even if we establish infringement, misappropriation or another violation of our intellectual property rights, the court may decide not to grant an injunction against the offender and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our shares. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. Any of the foregoing may have a material adverse effect on our business, financial condition, results of operations and prospects.
Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
Changes in either the patent laws or the interpretation of the patent laws in the United States or other jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. When implemented, the Leahy-Smith Act included several significant changes to U.S. patent law that impacted how patent rights could be prosecuted, enforced and defended. In particular, the Leahy-Smith Act also included provisions that switched the United States from a “first-to-invent” system to a “first-to-file” system, allowed third-party submission of prior art to the USPTO during patent prosecution and set forth additional procedures to attack the validity of a patent by the USPTO administered post grant proceedings. Under a first-to-file system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The USPTO developed new regulations and procedures governing the administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, became effective on March 16, 2013. It remains unclear what impact, if any, the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of the patent applications we in-license and the enforcement or defense of the issued patents we in-license, all of which could have a material adverse effect on our business.
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The patent positions of companies engaged in the development and commercialization of biologics are particularly uncertain. For example, the Supreme Court of the United States issued its decision in Association for Molecular Pathology v. Myriad Genetics, Inc., or Myriad, a case involving patent claims held by Myriad Genetics, Inc. relating to the breast cancer susceptibility genes BRCA1 and BRCA2. Myriad held that an isolated segment of naturally occurring DNA, such as the DNA constituting the BRCA1 and BRCA2 genes, is not patent-eligible subject matter, but that complementary DNA, which is an artificial construct that may be created from RNA transcripts of genes, may be patent-eligible. Thereafter, the USPTO issued a guidance memorandum instructing USPTO examiners on the ramifications of the Prometheus and Myriad rulings and apply the Myriad ruling to natural products and principles including all naturally occurring nucleic acids. Certain claims of our in-licensed patent applications contain, and any future patents we may obtain may contain, claims that relate to specific recombinant DNA sequences that are naturally occurring at least in part and, therefore, could be the subject of future challenges made by third parties.
We cannot assure you that our efforts to seek patent protection for one or more of our product candidates will not be negatively impacted by this Supreme Court decision, rulings in other cases or changes in guidance or procedures issued by the USPTO. We cannot fully predict what impact the Supreme Court’s decisions in Myriad may have on the ability of life science companies to obtain or enforce patents relating to their products in the future. These decisions, the guidance issued by the USPTO and rulings in other cases or changes in USPTO guidance or procedures could have a material adverse effect on our existing patent rights and our ability to protect and enforce our intellectual property in the future.
If we are unable to protect the confidentiality of trade secrets, our business and competitive position would be harmed.
In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect certain proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce, and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect and some courts inside and outside the United States are less willing or unwilling to protect trade secrets. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary technology and processes. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Competitors and other third parties could infringe, misappropriate or otherwise violate our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If our trade secrets are not adequately protected or sufficient to provide an advantage over our competitors, our competitive position could be adversely affected, as could our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating our trade secrets.
Patent term may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. In the United States, the Drug Price Competition and Patent Term Restoration Act of 1984 permits a patent term extension of up to five years beyond the normal expiration of the patent, which is limited to the approved indication (or any additional indications approved during the period of extension). However, a patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of the product’s approval by the FDA, only one patent applicable to an approved drug is eligible for the extension, and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. In the future, if and when our product candidates receive FDA approval, we plan to apply for patent term extensions on patents covering those product candidates in any jurisdiction where these are available. However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to the patents we in-license, or may grant more limited extensions than we request. Moreover, we may not receive an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.
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We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.
Certain of our employees, consultants or advisors are currently, or were previously, employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. Our licensors may face similar risks, which could have an adverse impact on intellectual property that is licensed to us.
We may become subject to claims that we are infringing certain third-party patents or other third-party intellectual property rights, any of which may prevent or delay our development and commercialization efforts and have a material adverse effect on our business.
Our commercial success depends in part on avoiding infringing, misappropriating and otherwise violating the patents and other intellectual property and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, and administrative proceedings such as interferences, inter partes review and post grant review proceedings before the USPTO and opposition proceedings before foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned or controlled by third parties, including our competitors, exist in the fields in which we are pursuing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.
Third parties may assert that we or our licensors are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, methods of manufacture or methods for treatment relating to our product candidates and, because patent applications can take many years to issue, there may be currently pending third party patent applications which may later result in issued patents, in each case that our product candidates, their manufacture or use may infringe or be alleged to infringe. We may fail to identify potentially relevant patents or patent applications, incorrectly conclude that a patent is invalid or does not cover our activities, or incorrectly conclude that a patent application is unlikely to issue in a form of relevance to our activities.
Parties making patent infringement claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, including demonstrating non-infringement, invalidity or unenforceability of the respective patent rights in question, regardless of their merit, is time-consuming, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. For example, in order to successfully challenge the validity of any U.S. patent in federal court, we would need to overcome a presumption of validity. This is a high burden requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, and we can provide no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. We may not have sufficient resources to bring these actions to a successful conclusion. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our shares.
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In the event that a holder of any such patents seeks to enforce its patent rights against us with respect to one or more of our product candidates, and our defenses against the infringement of such patent rights are unsuccessful, we may be precluded from commercializing our product candidates, even if approved, without first obtaining a license to some or all of these patents, which may not be available on commercially reasonable terms or at all. Moreover, we may be required to pay significant fees and royalties to secure a license to the applicable patents. Such a license may only be non-exclusive, in which case our ability to stop others from using or commercializing technology and products similar or identical to ours may be limited. Furthermore, we could be liable for damages to the holder of these patents, which may be significant and could include treble damages if we are found to have willfully infringed such patents. In the event that a challenge to these patents were to be unsuccessful or we were to become subject to litigation or unable to obtain a license on commercially reasonable terms with respect to these patents, it could harm our business, financial condition, results of operations and prospects.
We are aware of third-party issued U.S. patents relating to the lentiviral vectors which may be used in the manufacture or use of our product candidates. We are also aware of a European patent directed to a composition of matter comprising genetically engineered T cells for use in treating autoimmune diseases, which may be relevant to our CABA-201 product candidate. If these patent rights were enforced against us, we believe that we have defenses against any such action, including that these patents would not be infringed by our product candidates and/or that these patents are not valid. However, if these patents were enforced against us and defenses to such enforcement were unsuccessful, unless we obtain a license to these patents, which may not be available on commercially reasonable terms, or at all, we could be liable for damages and precluded from commercializing any product candidates that were ultimately held to infringe these patents, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Furthermore, even if our arguments are successful, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could significantly harm our business and operating results.
Even in the absence of a finding of infringement, we may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our product candidates. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, or at all. In that event, we would be unable to further develop and commercialize our product candidates. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business. Any of the foregoing could materially adversely affect our business, results of operations and financial condition.
Intellectual property rights do not necessarily address all potential threats.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:
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Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.
Risks Related to Our Reliance on Third Parties
We currently, and will likely continue to, rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval of or commercialize our product candidates.
We depend and will continue to depend upon third parties, including independent investigators and collaborators, such as universities, medical institutions, CROs and strategic partners, to conduct our preclinical studies and clinical trials under agreements with us. Specifically, we depend on clinical trial sites to enroll patients and conduct the DesCAARTesTM trial, MusCAARTesTM trial and RESETTM trials in a timely and appropriate manner. If our clinical trial sites do not conduct the trials on the timeline we expect or otherwise fail to support the trials, our clinical trial results could be significantly delayed, thereby adversely impacting our leadership position in the autoimmune cell therapy space and our ability to progress additional product candidates. As we open additional clinical trial sites, we expect to have to negotiate budgets and contracts with CROs and study sites, which may result in delays to our development timelines and increased costs.
We will rely heavily on these third parties, including Penn and WuXi, to conduct our manufacturing, and as a result, will have limited control over pace at which these activities are carried out. Nevertheless, we are responsible for ensuring that each of our trials is conducted in accordance with applicable protocol, legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities. We and these third parties are required to comply with FDA’s GCPs which are regulations and guidelines enforced by the FDA for product candidates in clinical development. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of these third parties fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications. We cannot provide assurance that, upon inspection, such regulatory authorities will not determine that some or all of our clinical trials do not fully comply with the GCP requirements. For any violations of laws and regulations during the conduct of our clinical trials, we could be subject to untitled and warning letters or enforcement action that may include civil penalties up to and including criminal prosecution. In addition, our clinical trials must be conducted with biologic product produced under cGMPs and will require a large number of test patients. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
As widely reported, global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. In the event that one or more of our current or future service providers, manufacturers and other partners do not successfully carry out their contractual duties, meet expected deadlines, or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, due to the economic downturn, the enactment of legislative proposals or for any other reasons, then we may not be able to obtain, or may be delayed in obtaining, marketing approvals for any product candidates we may develop and will not be able to, or may be delayed in our efforts to, successfully commercialize our medicines. Our failure or the failure of these third parties to comply with applicable regulatory requirements or our stated protocols could also subject us to enforcement action. Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.
We currently rely on certain foreign or foreign-owned third-party vendors, including WuXi, to manufacture certain clinical materials or to provide services in connection with certain clinical trials. Such foreign and foreign-owned vendors may be subject to U.S. legislation or investigations, including the proposed BIOSECURE Act, sanctions, trade restrictions and other foreign regulatory requirements, which could increase the cost or reduce the supply of material available to us, delay the procurement or supply of such material, delay or impact clinical trials, have an adverse effect on our ability to secure significant commitments from governments to purchase our potential therapies and could adversely affect our financial condition and business prospects.
Any third parties conducting our clinical trials will not be our employees and, except for remedies available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our ongoing preclinical and clinical programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical studies or other drug development activities, which could affect their performance on our behalf. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be
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able to complete development of, obtain regulatory approval of or successfully commercialize our product candidates. As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.
If any of our relationships with trial sites, or any CRO that we may use in the future, terminates, we may not be able to enter into arrangements with alternative trial sites or CROs or do so on commercially reasonable terms. Switching or adding third parties to conduct our clinical trials involves substantial cost and requires extensive management time and focus. In addition, there is often a natural transition period when a new third party commences work. As a result, delays may occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.
We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of any product candidates we may develop or commercialization of our medicines, producing additional losses and depriving us of potential product revenue.
We intend to rely on third parties to manufacture our clinical product supplies, and we may have to rely on third parties to produce and process our product candidates, if licensed.
Although we may eventually secure our own clinical manufacturing facility for any late phase clinical development that we undertake, we currently rely on third parties, including Penn and WuXi, to manufacture our product candidates, and we intend in the future to continue to rely on CMOs. In the case of any manufacturing performed for us by third parties, the services performed for us risk being delayed because of the competing priorities that such parties have for utilization of their manufacturing resources and any capacity issues that thereby arise.
We do not yet have sufficient information to reliably estimate the cost of the manufacturing and processing of our product candidates in clinical quantity or commercial quantity, and the actual cost to manufacture and process our product candidates could ultimately materially and adversely affect the commercial viability of our product candidates. As a result, we may never be able to develop a commercially viable product.
In addition, our anticipated reliance on a limited number of third-party manufacturers exposes us to the following risks:
Furthermore, all of our contract manufacturers are engaged with other companies to supply and/or manufacture materials or products for such companies, which exposes our manufacturers to regulatory risks related to the production of such materials and products. As a result, failure to meet the regulatory requirements for the production of those materials and products may affect the regulatory clearance of our contract manufacturers’ facilities generally. If the FDA does not approve these facilities for the manufacture of our product candidates or if any agency withdraws its approval in the future, we may need to find alternative manufacturing facilities, which would negatively impact our ability to develop, obtain regulatory approval for or market our product candidates, if licensed.
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Our contract manufacturers would also be subject to the same risks we face in developing our own manufacturing capabilities, as described above. Each of these risks could delay our clinical trials, the approval, if any of our product candidates by the FDA or the commercialization of our product candidates or result in higher costs or deprive us of potential product revenue. In addition, we will rely on third parties to perform release tests on our product candidates prior to delivery to patients. If these tests are not appropriately done and test data are not reliable, patients could be put at risk of serious harm.
For more information, see “Risk Factors—Risks Related to Manufacturing and Supply”.
We may form or seek strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such alliances or licensing arrangements.
We may form or seek strategic alliances, create joint ventures or collaborations or enter into additional licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to our product candidates and any future product candidates that we may develop. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety, potency and purity. Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, which would harm our business prospects, financial condition and results of operations.
If we license products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture. We cannot be certain that, following a strategic transaction or license, we will achieve the results, revenue or specific net income that justifies such transaction.
We may not realize the benefits of acquired assets or other strategic transactions, including any transactions whereby we acquire or license manufacturing and other advanced technologies.
In August 2018, we entered into a License Agreement with Penn and CHOP which was amended and restated in July 2019, and further amended in May 2020 and October 2021, or the License Agreement, pursuant to which we were granted licenses to certain patent rights for the research and development of products, as well as an exclusive license under those same patent rights to make, use, sell and import such products, in the autoimmune disease and alloimmune response subfields, in each case, for the treatment of humans. In January 2021 and as amended in August 2022, we entered into an agreement with WuXi to serve as an additional cell processing manufacturing partner for our MusCAARTesTM trial, and have since completed enabling engineering and patient production runs. In August 2023, as amended in August 2024, we entered into an agreement with WuXi to serve as one of our manufacturing partners for the global clinical development of CABA-201 in multiple indications, including potential late-stage clinical trials and commercial readiness activities for CABA-201. In October 2022, we entered into the IASO Agreement, pursuant to which we were granted worldwide license under certain intellectual property to develop, manufacture, commercialize and otherwise exploit T cell products directed to CD19 for the purpose of diagnosis, prevention or treatment of an autoimmune or alloimmune indication in humans.
We actively evaluate various strategic transactions on an ongoing basis. We may acquire other businesses, products or technologies as well as pursue joint ventures or investments in complementary businesses. The success of our strategic transactions, including the License Agreement, and any future strategic transactions depends on the risks and uncertainties involved including:
If any of these risks or uncertainties occur, we may not realize the anticipated benefit of any acquisition or strategic transaction. Additionally, foreign acquisitions and joint ventures are subject to additional risks, including those related to integration of operations
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across different cultures and languages, currency risks, potentially adverse tax consequences of overseas operations and the particular economic, political, legal and regulatory risks associated with specific countries. For example, IASO is based in China and we may not receive the same protections under Chinese law, including with respect to applicable bankruptcy, insolvency, liquidation, arrangement, moratorium or similar laws relating to or affecting our rights.
Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition.
Risks Related to Manufacturing and Supply
*We are reliant on Penn and WuXi for our current manufacturing activities and Penn and/or WuXi’s failure to perform or termination would disrupt normal business operations, and we intend to continue to rely on other third parties for our future manufacturing needs prior to establishing our own manufacturing facility.
We are reliant on Penn and WuXi for our current manufacturing activities for our preclinical and clinical research. If Penn and its affiliated entities were to fail to perform their obligations in accordance with the terms of the Services Agreements or terminate the Services Agreements, or if WuXi were to fail to perform their obligations in accordance with the terms of the WuXi Agreement or terminate the WuXi Agreement, we may have difficulty continuing our normal business operations and our business prospects, financial condition and results of operations could be harmed.
There are also current geopolitical tensions with China. These tensions and the related risks are described in the Risk Factor in this Report titled, “Risks Related to Business Development – Business disruptions, including due to natural disasters, global conflicts or political unrest, could seriously impact our operations, research and trials and harm our future revenue and financial condition.”
In addition, the CAART Services Agreement is scheduled to expire on the later of October 19, 2021 or completion of all research and development projects, and unless the CAART Services Agreement is amended, Penn will not be obligated to provide any further services under the CAART Services Agreement after that time. We currently anticipate that research and development projects under the CAART Services Agreement will continue through at least 2024. In addition, Penn has the right to terminate the CAART Services Agreement in whole at any time with 90 days’ notice and to terminate any research and development project being performed under the CAART Services Agreement if the Penn service provider appointed to lead such project is unavailable and Penn is unavailable to find a replacement within 60 days for such service provider. Penn also has the right to terminate certain manufacturing services being performed under the CAART Services Agreement with 180 days’ written notice. From time to time, we may enter into further addenda to the CAART Services Agreement that provide Penn with the right to terminate such addenda with limited notice periods. If we do not have adequate personnel and capabilities at the time that we assume responsibilities for such services, we may not be successful in effectively or efficiently transitioning these services from Penn, which could disrupt our business and have a material adverse effect on our financial condition and results of operations. Even if we are able to successfully transition these services, they may be more expensive or less efficient than the services we are receiving from Penn during the transition period.
The CARTA Services Agreement is scheduled to expire on the later of February 9, 2026 or completion of all research and development projects, and unless the CARTA Services Agreement is amended, Penn will not be obligated to provide any further services under the CARTA Services Agreement after that time. In addition, Penn has the right to terminate the CARTA Services Agreement in whole at any time with 180 days’ notice. From time to time, we may enter into further addenda to the CARTA Services Agreement that provide Penn with the right to terminate such addenda with limited notice periods. If we do not have adequate personnel and capabilities at the time that we assume responsibilities for such services, we may not be successful in effectively or efficiently transitioning these services from Penn, which could disrupt our business and have a material adverse effect on our financial condition and results of operations. Even if we are able to successfully transition these services, they may be more expensive or less efficient than the services we are receiving from Penn during the transition period.
The WuXi Agreement is scheduled to expire upon completion of WuXi’s services related to MuSK-CAART and CABA-201. In August 2023, as amended in August 2024, we entered into new work orders under the WuXi Agreement for WuXi to serve as one of our cell processing manufacturing partners for the planned global clinical development of CABA-201 in multiple indications, including potential late-stage clinical trials and commercial readiness activities for CABA-201. Under the August 2023 work orders, WuXi will convert our non-dedicated suite to a dedicated suite for GMP manufacturing for our CABA-201 and MuSK-CAART programs, or the Dedicated Suite, for an initial term of 18 months with two 18 month extensions at our sole option on six months notice prior to the end of the term. In August 2024, we notified WuXi that we would extend the initial term by 18 months through August 2026. We may terminate for convenience with six months prior written notice, however, we may not terminate the Dedicated Suite without terminating both the MuSK-CAART and CABA-201 GMP run work orders. In lieu of the existing 18 month termination right for convenience under the WuXi Agreement, WuXi may not terminate prior to February 2028. If WuXi were to fail to perform their obligations in accordance
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with the terms of the WuXi Agreement or terminate the WuXi Agreement, our clinical trials and commercial readiness may be adversely impacted which could in turn materially and adversely affect our business, results of operations and prospects.
Further, we may not be able to achieve clinical manufacturing and cell processing through our CMOs or on our own on a timely basis. While our current manufacturing process is similar to the well-established process developed at Penn for CD19 CAR-T, or CART19, which was later commercialized, we have limited experience as an organization in managing the CAR-T or CAAR T engineering process at commercial scale. Finally, because clinical manufacturing and cell processing is highly complex and patient donor material is inherently variable, we cannot yet be sure that our manufacturing process, will consistently result in product that meets specifications for release. Success in manufacturing in smaller early phase clinical trials may not predict the frequency of success at larger late phase clinical trials, or success at the commercial phase production until process qualification and validation is completed and submitted for BLA filing.
Our product candidates are uniquely manufactured. If we or any of our third-party manufacturers encounter difficulties in manufacturing our product candidates, our ability to provide supply of our product candidates for clinical trials or, if licensed, for commercial sale, could be delayed or stopped, or we may be unable to maintain a commercially viable cost structure.
The manufacturing process used to produce our product candidates is complex and novel, and it has not yet been validated for commercial production. The manufacture of our product candidates includes harvesting white blood cells from each patient, stimulating certain T cells from the white blood cells and thereby causing them to activate and proliferate, combining patient T cells with lentiviral delivery vector through a process known as transduction, expanding the transduced T cells to obtain the desired dose, formulating and freezing the cell product, and ultimately infusing the modified T cells back into the patient’s body. Because of the bespoke nature of this product for patients, the cost to manufacture our product candidates is higher than traditional small molecule chemical compounds and monoclonal antibodies. Furthermore, our manufacturing process development and scale-up is at an early stage, and evaluation of cost at large scale has not yet been finalized. The actual cost to manufacture and process our product candidates could be greater than we expect and could materially and adversely affect the commercial viability of our product candidates.
Our manufacturing process may be susceptible to technical and logistics delays or failures due to the fact that each patient is an independent manufacturing lot, and also due to unique supply chain requirements. These include the collection of white blood cells from patients’ blood, variability in the quality of white blood cells collected from patients’ blood, cryopreservation of the white blood cells collected, packaging and shipment of frozen white blood cells to the manufacturing site in order to enable multi-site studies, procurement of lentiviral vectors that meet potency and purity requirements and shipment to the product candidate manufacturing site, shipment of the final product to clinical centers, manufacturing issues associated with interruptions in the manufacturing process, scheduling constraints for cell manufacturing slots, process contamination, equipment or reagent failure or supply shortage(s)/interruption(s), improper installation or operation of equipment, vendor or operator error, and inconsistency in cell growth. Even minor deviations from normal manufacturing processes could result in reduced production yields, lot failures, product defects, product recalls, product liability claims and other supply disruptions. If microbial, viral, or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, production at such manufacturing facilities may be interrupted for an extended period of time to investigate and remedy the contamination. Further, as product candidates are developed through preclinical studies to late-stage clinical trials toward approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are altered along the way in an effort to optimize processes and results. Such changes may result in the need to enroll additional patients or to conduct additional clinical studies to evaluate the impact of changes on product safety and efficacy. Penn has informed us that it will be unable provide clinical supply for any late-phase or non-U.S. clinical trials of our product candidates that we may conduct. Therefore, we will need maintain and/or add new agreements with additional CMOs to produce clinical supply of our product candidates for late-phase clinical trials and at the necessary scale. We cannot guarantee that we will be able to enter into such agreements on commercially acceptable terms, if at all. Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause our product candidates to perform differently and affect the results of ongoing and planned clinical trials or other future clinical trials.
Although we continue to optimize our manufacturing process for our product candidates, doing so is a difficult and uncertain task, and there are risks associated with scaling to the level required for advanced clinical trials or commercialization, including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, lot consistency and timely availability of reagents and/or raw materials. If we are unable to adequately scale-up the manufacturing process for our product candidates with WuXi, we may need to transfer to another manufacturer and/or our own facility, which can be lengthy. If we are able to adequately establish and scale-up the manufacturing process for our product candidates with an alternative manufacturer, we will still need to negotiate with such manufacturer an agreement for commercial supply and it is not certain we will be able to come to agreement on terms acceptable to us. This may impact our cost of goods and thus commercial viability and/or competitiveness.
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In addition, many of the components which are required to support our cell manufacturing process, such as equipment, media, growth factors and disposables, are highly specialized and it is possible that the supply chain for these materials may be interrupted. If we are unable to promptly remedy such interruption, then there may be delays to our clinical development efforts.
The manufacturing process for any products that we may develop is subject to the FDA approval process, and we will need to contract with manufacturers who can meet all applicable FDA requirements on an ongoing basis.
The manufacturing process for any products that we may develop is subject to the FDA approval process, and we will need to contract with manufacturers who can meet all applicable FDA requirements on an ongoing basis. If we or our CMOs are unable to reliably produce products to specifications acceptable to the FDA, we may not obtain or maintain the approvals we need to commercialize such products. Even if we obtain regulatory approval for any of our product candidates, there is no assurance that either we or our CMOs will be able to manufacture the approved product in accordance with requirements from the FDA, to produce it in sufficient quantities to meet the requirements for the potential launch of the product, or to meet potential future demand. Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, suspension of production or recalls of the product candidates or marketed biologics, operating restriction and criminal prosecutions, delay approval of our product candidates, impair commercialization efforts, increase our cost of goods, and have an adverse effect on our business, financial condition, results of operations and growth prospects. Our future success depends on our ability to manufacture our products, if licensed, on a timely basis with acceptable manufacturing costs, while at the same time maintaining good quality control and complying with applicable regulatory requirements, and an inability to do so could have a material adverse effect on our business, financial condition, and results of operations. In addition, we could incur higher manufacturing costs if manufacturing processes or standards change, and we could need to replace, modify, design, or build and install equipment, all of which would require additional capital expenditures. Specifically, because our product candidates may have a higher cost of goods than conventional therapies, the risk that coverage and reimbursement rates may be inadequate for us to achieve profitability may be greater.
The manufacture of viral vectors is complex and variable, and there are a limited number of manufacturers able to supply us with viral vectors.
Our MuSK-CAART and CABA-201 product candidates utilize a lentiviral delivery vector and some or all of our other product candidates may require a lentiviral delivery vector, a key drug substance that delivers the CAR or CAAR to the target T cells. We do not have the capability to manufacture lentiviral vector and plan to obtain the vector we require from third parties. The manufacturing process for lentiviral vector is variable and still evolving. It is not uncommon for manufacturing runs to fail, whether due to contamination, supplier error, or equipment failure, or to be delayed. To the extent our product candidates use a lentiviral delivery vector, a lack of vector supply will cause us to be unable to manufacture our CAR T or CAAR T cells as well as a delay in patient enrollment, which may have a negative impact on our ability to successfully develop our product candidates.
Further, there are a limited number of manufacturers capable of producing lentiviral vectors. It can be challenging to secure a relationship with any of these manufacturers, and the manufacturing and release process can take a significant amount of time. We have secured a supply of lentiviral vector from CAROT sufficient for a portion of the patients we plan to enroll in our MusCAARTesTM trial and our RESETTM clinical trials in SLE, myositis, SSc and gMG. We have also reserved additional vector manufacturing capacity at Penn and CHOP and in December 2021 and in May 2023, we secured a license and supply agreement with Oxford to establish a process and supply lentiviral vector for the clinical and commercial development of our DSG3-CAART and CABA-201 candidates. There is no assurance that we will be able to continue to secure adequate and timely supply of lentiviral vector. Moreover, we cannot be certain that our CAR T or CAAR T cell product candidates produced with lentiviral vector from different manufacturers will be comparable or that results of clinical trials will be consistent if conducted with lentiviral vector from different manufacturers.
Vector production also requires the production of high-quality DNA plasmids, for which there is also a limited number of suppliers. Although we have established relationships with suppliers for lentiviral vector and plasmids, we do not yet have our own clinical-scale manufacturing facility established, and are therefore highly dependent on the ability of these suppliers to manufacture necessary materials and to deliver these materials to us on a timely and reliable basis.
If we are to operate our own manufacturing facility, significant resources will be required and we may fail to successfully operate our facility, which could adversely affect our clinical trials and the commercial viability of our product candidates.
If we establish our own manufacturing facility, our operations will be subject to review and oversight by the FDA and the FDA could object to our use of our manufacturing facility. We must first receive approval from the FDA prior to licensure to manufacture our product candidates, which we may never obtain. Even if licensed, we would be subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMPs and other government regulations. Our license to
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manufacture product candidates will be subject to continued regulatory review. Our cost of goods development is at an early stage. The actual cost to manufacture and process our product candidates at a manufacturing facility of our own could be greater than we expect and could materially and adversely affect the commercial viability of our product candidates.
The manufacture of biopharmaceutical products is complex and requires significant expertise, and can be impacted by resource constraints, labor disputes and workforce limitations.
The manufacture of biopharmaceutical products is complex and requires significant expertise, including the development of advanced manufacturing techniques and process controls. Manufacturers of cell therapy products often encounter difficulties in production, particularly in scaling out and validating initial production and ensuring the absence of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Furthermore, if contaminants are discovered in our supply of product candidates or in the manufacturing facilities upon which we currently or will rely, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. We cannot assure you that any stability or other issues relating to the manufacture of our product candidates, whether by Penn, WuXi, or other third-party CMOs, or at any manufacturing facility that we may establish, will not occur in the future.
Penn, WuXi or other third-party CMOs that we engage, or we may fail to manage the logistics of storing and shipping our product candidates. Storage failures and shipment delays and problems caused by us, our vendors or other factors not in our control, such as weather, could result in loss of usable product or prevent or delay the delivery of product candidates to patients.
Penn, WuXi, or other third-party CMOs that we engage, or we may also experience manufacturing difficulties due to resource constraints, labor disputes or workforce limitations arising from the expanding need for manufacturing in the cell therapy field and the limited number of training programs for technical staff. If we were to encounter any of these difficulties, our ability to provide our product candidates to patients would be jeopardized.
We are dependent upon the availability of specialty raw materials and the production capabilities of small manufacturers to source the components of our product candidates.
Our product candidates require many specialty raw materials, some of which are manufactured by small companies with limited resources and experience to support a commercial product, and the suppliers may not be able to deliver raw materials to our specifications. In addition, those suppliers generally do not have the capacity to support commercial products manufactured under cGMP by biopharmaceutical firms. The suppliers may be ill-equipped to support our needs, especially in non-routine circumstances like an FDA inspection or medical crisis, such as widespread contamination. We also do not have contracts with many of these suppliers, and we may not be able to contract with them on acceptable terms or at all. Accordingly, we may experience delays in receiving key raw materials to support clinical or commercial manufacturing.
In addition, some raw materials are currently available from a single supplier, or a small number of suppliers. We cannot be sure that these suppliers will remain in business or that they will not be purchased by one of our competitors or another company that is not interested in continuing to produce these materials for our intended purpose. In addition, the lead time needed to establish a relationship with a new supplier can be lengthy, and we may experience delays in meeting demand in the event we must switch to a new supplier. The time and effort to qualify a new supplier could result in additional costs, diversion of resources or reduced manufacturing yields, any of which would negatively impact our operating results. Further, we may be unable to enter into agreements with a new supplier on commercially reasonable terms, which could have a material adverse impact on our business. We are also unable to predict how changing global economic conditions or global health concerns will affect our third-party suppliers and manufacturers. Any negative impact of such matters on our third-party suppliers and manufacturers may also have an adverse impact on our results of operations or financial condition.
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We may encounter difficulties in production, particularly with respect to process development or scaling up of our manufacturing capabilities. If we encounter such difficulties, our ability to provide supply of our CAR T or CAAR T cells for clinical trials or for commercial purposes could be delayed or stopped.
Establishing clinical and commercial manufacturing and supply is a difficult and uncertain task, and there are risks associated with scaling to the level required for advanced clinical trials or commercialization, including, among others, increased costs, potential problems with process scale-out, process reproducibility, stability issues, lot consistency, and timely availability of reagents or raw materials. For example, we may find it difficult to establish a manufacturing process that is consistent. If this occurs, we may need to complete more than one manufacturing run for each treated patient, which would impact the availability of adequate coverage and reimbursement from third-party payors. Competitors that have developed CAR T cell therapies have had difficulty reliably producing engineered T cell therapies in the commercial setting. If we experience similar challenges manufacturing product candidates to approved specifications, this may limit our product candidates’ utilization and our ability to receive payment for these product candidates once licensed. Alternatively, these challenges may require changes to our manufacturing processes, which could require us to perform additional clinical studies, incurring significant expense. We may ultimately be unable to reduce the expenses associated with our product candidates to levels that will allow us to achieve a profitable return on investment.
If we or our third-party suppliers use hazardous, non-hazardous, biological or other materials in a manner that causes injury or violates applicable law, we may be liable for damages.
Our research and development activities involve the controlled use of potentially hazardous substances, including chemical and biological materials. We and our suppliers are subject to federal, state and local laws and regulations in the United States governing the use, manufacture, storage, handling and disposal of medical and hazardous materials. Although we believe that we and our suppliers’ procedures for using, handling, storing and disposing of these materials comply with legally prescribed standards, we and our suppliers cannot completely eliminate the risk of contamination or injury resulting from medical or hazardous materials. As a result of any such contamination or injury, we may incur liability or local, city, state or federal authorities may curtail the use of these materials and interrupt our business operations. In the event of an accident, we could be held liable for damages or penalized with fines, and the liability could exceed our resources. We do not have any insurance for liabilities arising from medical or hazardous materials. Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations may impair our research, development and production efforts, which could harm our business, prospects, financial condition or results of operations.
Changes in product candidate manufacturing or formulation may result in additional costs or delay, which could adversely affect our business, results of operations and financial condition.
As product candidates are developed through preclinical studies to later-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods or formulation, are altered along the way in an effort to optimize processes and results. Any of these changes could cause our product candidates to perform differently and affect the results of ongoing and planned clinical trials or other future clinical trials conducted with the altered materials or with materials made with the altered methods. Such changes may also require additional testing, or notification to, or approval by the FDA or other regulatory authorities. This could delay completion of clinical trials, require the conduct of bridging clinical trials or studies, require the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates and/or jeopardize our ability to commence product sales and generate revenue.
Risks Related to Government Regulation
The regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of our product candidates.
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products, including biologics, are subject to extensive regulation by the FDA and other regulatory authorities in the United States and comparable authorities in other jurisdictions, such as the EMA in Europe. We are not permitted to market any biological drug product in the United States until we receive approval of a Biologics License Application, or BLA, from the FDA. We have not previously submitted a BLA to the FDA, or similar licensure filings to comparable foreign authorities. A BLA must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety, potency and purity for each desired indication. The BLA must also include significant information regarding the chemistry, manufacturing and controls for the product, including with respect to chain of identity and chain of custody of the product.
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We expect the novel nature of our product candidates to create further challenges in obtaining regulatory approval. For example, to our knowledge, the FDA has not previously reviewed regulatory applications for marketing authorization of CAR T cells for treatment of autoimmune disease or CAAR T cells for treatment of pemphigus, and there is no cell therapy currently approved by the FDA for the treatment of mPV, MuSK myasthenia gravis, SLE, myositis, SSc or gMG. Because of this, we have little guidance as to which endpoints will be accepted, how many clinical trials we may expect to conduct, and whether open-label clinical trials will be deemed acceptable, among other things. We may also request regulatory approval of future CAR T or CAAR T cell-based product candidates by target, regardless of disease type or origin, which the FDA may have difficulty accepting if our clinical trials only involved diseases of certain origins. The FDA may also require a panel of experts, referred to as an Advisory Committee, to deliberate on the adequacy of the safety, potency and purity data to support licensure. The opinion of the Advisory Committee, although not binding, may have a significant impact on our ability to obtain licensure of the product candidates based on the completed clinical trials, as the FDA often adheres to the Advisory Committee’s recommendations. Further, given the rapidly evolving landscape of cell therapy, we could encounter a significant change in the regulatory environment for our product candidates once we have already begun one or more lengthy and expensive clinical trials for our product candidates. For example, the U.S. Supreme Court’s July 2024 decision to overturn prior established case law giving deference to regulatory agencies’ interpretations of ambiguous statutory language has introduced uncertainty regarding the extent to which FDA’s regulations, policies, and decisions may become subject to increasing legal challenges, delays, and/or changes. Accordingly, the regulatory approval pathway for our product candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained.
We may also experience delays in completing ongoing and planned clinical trials for a variety of reasons, including delays related to:
We could also encounter delays if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. If we experience delays in the completion of, any future clinical trial of our product candidates, the commercial prospects for our product candidates will be harmed, and our ability to generate product revenue will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product sales and generate revenue. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may ultimately lead to the denial of regulatory approval of our product candidates.
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We expect the product candidates we develop will be regulated as biological products, or biologics, and therefore they may be subject to competition.
The Biologics Price Competition and Innovation Act of 2009, or BPCIA, was enacted as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to a licensed biologic. Under the BPCIA, an application for a biosimilar product cannot be licensed by the FDA until 12 years after the reference product was licensed under a BLA. The law is complex and is still being interpreted and implemented by the FDA.
We believe that any of the product candidates we develop that is licensed in the United States as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider the subject product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar, once licensed, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
The regulatory landscape that will govern our product candidates is uncertain; regulations relating to more established cell therapies and other therapies for autoimmune diseases where B cells may play a role in initiating or maintaining disease are still developing, and changes in regulatory requirements could result in delays or discontinuation of development of our product candidates or unexpected costs in obtaining regulatory approval.
Because we are developing novel CAR T and CAAR T cell product candidates that are unique biological entities, the regulatory requirements that we will be subject to are not entirely clear. Even with respect to more established products that fit into the categories of gene therapies or cell therapies, the regulatory landscape is still developing. For example, regulatory requirements governing gene therapy products and cell therapy products have changed frequently and may continue to change in the future. Moreover, there is substantial, and sometimes uncoordinated, overlap in those responsible for regulation of existing gene therapy products and cell therapy products. For example, in the United States, the FDA established the Office of Tissues and Advanced Therapies, or OTAT, in 2016, within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review of gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. In September 2022, the FDA announced retitling of OTAT to the Office of Therapeutic Products, or OTP, and elevation of OTP to a “Super Office” to meet its growing cell and gene therapy workload. In addition, under guidelines issued by the National Institutes of Health, or NIH, gene therapy clinical trials are also subject to review and oversight by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. Before a clinical trial can begin at any institution, that institution’s institutional review board, or IRB, and its IBC assesses the safety of the research and identifies any potential risk to public health or the environment. While the NIH guidelines are not mandatory unless the research in question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them. Although the FDA decides whether individual gene therapy protocols may proceed, review process and determinations of other reviewing bodies can impede or delay the initiation of a clinical study, even if the FDA has reviewed the study and approved its initiation. Conversely, the FDA can place an IND application on clinical hold even if such other entities have provided a favorable review. Furthermore, each clinical trial must be reviewed and approved by an independent IRB at or servicing each institution at which a clinical trial will be conducted. In addition, adverse developments in clinical trials of gene therapy products conducted by others or in the post-approval context may cause the FDA or other regulatory bodies to change the requirements for approval of any of our product candidates. For example, after the FDA’s November 2023 announcement of its investigation into reports of T cell malignancies for BCMA- and CD19-directed CAR T cell immunotherapies, the FDA informed us that, based on those reports, patients receiving CABA-201 in our clinical trials will require life-long monitoring for new malignancies.
Complex regulatory environments exist in other jurisdictions in which we might consider seeking regulatory approvals for our product candidates, further complicating the regulatory landscape. For example, in the European Union, a special committee called the Committee for Advanced Therapies was established within the EMA in accordance with Regulation (EC) No 1394/2007 on advanced-therapy medicinal products, or ATMPs, to assess the quality, safety and efficacy of ATMPs, and to follow scientific developments in the field. ATMPs include gene therapy products as well as somatic cell therapy products and tissue engineered products. These various regulatory review committees and advisory groups and new or revised guidelines that they promulgate from time to time may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval limitations or restrictions. Because the regulatory landscape for our CAR T and CAAR T cell product candidates is new, we may face even more cumbersome and complex regulations than those emerging for gene therapy products and cell therapy products.
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Furthermore, even if our product candidates obtain required regulatory approvals, such approvals may later be withdrawn because of changes in regulations or the interpretation of regulations by applicable regulatory agencies. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue to maintain our business.
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.
Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, import and export are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States. Before we can commercialize any of our product candidates, we must obtain marketing approval. We have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction and it is possible that none of our product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval. We, as a company, have no experience in filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third-party CROs and/or regulatory consultants to assist us in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the drug candidate’s safety, potency and purity.
Securing regulatory approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.
The process of obtaining regulatory approvals is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted IND, BLA or comparable application types in other countries, may cause delays in the approval or rejection of an application. The FDA and foreign regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. Our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including the following:
Of the large number of drugs in development, only a small percentage successfully complete the FDA approval process and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, results of operations and prospects.
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We expect the novel nature of our product candidates to create further challenges in obtaining regulatory approval. As a result, our ability to develop product candidates and obtain regulatory approval may be significantly impacted. For example, the general approach for FDA approval of a new biologic or drug is for sponsors to seek licensure or approval based on dispositive data from well-controlled, Phase 3 clinical trials of the relevant product candidate in the relevant patient population. Phase 3 clinical trials typically involve hundreds of patients, have significant costs and take years to complete. We believe that we may be able to utilize the FDA’s Regenerative Medicine Advanced Therapy designation for our product candidates given the limited alternatives for treatments for certain rare diseases and autoimmune diseases where B cells may play a role in initiating or maintaining disease, but the FDA may not agree with our plans.
Moreover, approval of genetic or biomarker diagnostic tests may be necessary to advance some of our product candidates to clinical trials or potential commercialization. In the future, regulatory agencies may require the development and approval of such tests. Accordingly, the regulatory approval pathway for such product candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained.
In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, if licensed, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.
On November 28, 2023, the FDA issued a statement that it is investigating serious risk of T-cell malignancy following BCMA-directed or CD19-directed autologous CAR T cell immunotherapies. While the FDA noted that it currently believes that the overall benefits of the approved products continue to outweigh their potential risks for their approved uses, the FDA stated that it is investigating the identified risk of T-cell malignancy with serious outcomes, including hospitalization and death, and is evaluating the need for regulatory action. However, because all currently approved CAR T-cell immunotherapies are in oncology indications, there can be no assurance that FDA will reach the same risk-benefit analysis in other indications, such as autoimmune. Given that the autoimmune diseases we are seeking to treat with CABA-201, a CD19-directed CAR T immunotherapy, are different indications from the approved oncology indications, the FDA and other regulatory authorities may apply a different benefit-risk assessment threshold such that even if our product candidate demonstrated a similar safety profile as current CAR T therapies, the FDA could ultimately determine that the harmful side effects outweigh the benefits and require us to cease clinical trials or deny approval of our product candidates. The FDA’s investigation may impact the FDA’s review of product candidates that we are developing, or that we may seek to develop in the future, which may, among other things, result in additional regulatory scrutiny of our product candidates, delay the timing for receiving any regulatory approvals or impose additional post-approval requirements on any of our product candidates that receive regulatory approval.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.
Even though we may apply for orphan drug designation for our product candidates, we may not be able to obtain orphan drug marketing exclusivity.
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the United States, or a patient population of 200,000 or more in the United States when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic. In order to obtain orphan drug designation, the request must be made before submitting a BLA. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
If a product that has orphan drug designation subsequently receives the first FDA approval of that particular product for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same biologic (meaning, a product with the same principal molecular structural features) for the same indication for seven years, except in limited circumstances such as a showing of clinical superiority to the product with orphan drug exclusivity or if FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. As a result, even if one of our product candidates receives orphan exclusivity, the FDA can still approve other biologics that do not have the same principal molecular structural features for use in treating the same indication or disease or the same biologic for a different indication or disease during the exclusivity period. Furthermore, the FDA can waive orphan exclusivity if we are unable to manufacture sufficient supply of our product or if a subsequent applicant demonstrates clinical superiority over our product.
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We have obtained from the FDA orphan drug designation for DSG3-CAART for the treatment of pemphigus vulgaris, for MuSK-CAART for the treatment of MuSK MG and for CABA-201 for the treatment of idiopathic inflammatory myopathies (IIM, or myositis) and systemic sclerosis. We may seek orphan drug designation for certain other of our product candidates, but may be unable to obtain orphan drug designation for some or all of our product candidates in specific orphan indications in which we believe there is a medically plausible basis for the use of these products. Even if we obtain orphan drug designation, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition, or if a subsequent applicant demonstrates clinical superiority over our products, if licensed. Although we may seek orphan drug designation for other product candidates, we may never receive such designations. In addition, the FDA may further reevaluate the Orphan Drug Act and its regulations and policies. We do not know if, when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business. Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.
The FDA has granted rare pediatric disease designation to CABA-201 for the treatment of juvenile dermatomyositis. However, a marketing application for CABA-201 or any other product candidate, if approved, may not meet the eligibility criteria for a priority review voucher.
The FDA has granted rare pediatric disease designation to CABA-201 for the treatment of juvenile dermatomyositis. Designation of a drug as a drug for a rare pediatric disease does not guarantee that an NDA or BLA for such drug will meet the eligibility criteria for a rare pediatric disease priority review voucher at the time the application is approved. Under the FDCA, we will need to request a rare pediatric disease priority review voucher in our original BLA for CABA-201. The FDA may determine that a BLA for CABA-201, if approved, does not meet the eligibility criteria for a priority review voucher, including for the following reasons:
The authority for the FDA to award rare pediatric disease priority review vouchers for drugs and biologics is currently limited to drugs and biologics that receive Rare Pediatric Disease designation on or prior to December 20, 2024, and the FDA may only award rare pediatric disease priority review vouchers for drugs and biologics that are approved by September 30, 2026. However, it is possible the FDA’s authority to award rare pediatric disease priority review vouchers will be further extended by Congress. Absent any such extension, if a BLA for CABA-201 is not approved prior to September 30, 2026 for any reason, regardless of whether it meets the criteria for a rare pediatric disease priority review voucher, it will not be eligible for a priority review voucher.
A fast track designation by the FDA, even if granted, may not lead to a faster development or regulatory review or approval process, and does not increase the likelihood that our current product candidate and any future product candidates will receive marketing approval.
If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the drug sponsor may apply for FDA fast track designation for a particular indication. Fast track is a process designed to facilitate the development, and expedite the review of drugs to treat serious or life-threatening conditions and address an unmet medical need. We have received fast track designation for DSG3-CAART for improving healing of mucosal blisters in patients with mPV, for MuSK-CAART for improving activities of daily living and muscle strength in patients with MuSK antibody-positive myasthenia gravis and for CABA-201, designed to deplete CD19-positive B cells and improve disease activity in patients with SLE, LN and the myositis subtype of dermatomyositis and for the treatment of patients with systemic sclerosis to improve associated organ dysfunction. We may also apply for fast track designation for certain of our other product candidates, but there is no assurance that the FDA will grant this status to any of our other current or future product candidates. Marketing applications filed by sponsors of products in fast track development may qualify for priority review under the policies and procedures offered by the FDA, but the fast track designation does not assure any such qualification or ultimate marketing approval by the FDA. The FDA has broad discretion whether or not to grant fast track designation, so even if we believe a particular product candidate is eligible for this designation, there can be no assurance that the FDA would decide to grant it. Even though we have received fast track designation for certain of our product candidates, we may not experience a faster development process, regulatory review or approval for these product candidates as compared to conventional FDA procedures, and receiving a fast track designation does not provide assurance of ultimate FDA approval. In
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addition, the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program. In addition, the FDA may withdraw any fast track designation at any time.
Although we may pursue expedited regulatory approval pathways for a product candidate, it may not qualify for expedited development or, if it does qualify for expedited development, it may not actually lead to a faster development or regulatory review or approval process.
Although we believe there may be an opportunity to accelerate the development of certain of our product candidates through one or more of the FDA’s expedited programs, such as fast track, breakthrough therapy, Regenerative Medicine Advanced Therapy, accelerated approval or priority review, we cannot be assured that any of our product candidates will qualify for such programs.
For example, we may seek a Regenerative Medicine Advanced Therapy, or RMAT, designation for some of our product candidates. An RMAT is defined as cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products. Gene therapies, including genetically modified cells that lead to a durable modification of cells or tissues may meet the definition of a Regenerative Medicine Therapy. The RMAT program is intended to facilitate efficient development and expedite review of RMATs, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition. A new drug application or a BLA for an RMAT may be eligible for priority review or accelerated approval through (1) surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit or (2) reliance upon data obtained from a meaningful number of sites. Benefits of such designation also include early interactions with FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval. A Regenerative Medicine Therapy that is granted accelerated approval and is subject to post-approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence, such as electronic health records; the collection of larger confirmatory data sets; or post-approval monitoring of all patients treated with such therapy prior to its approval. Although RMAT designation or access to any other expedited program may expedite the development or approval process, it does not change the standards for approval. If we apply for RMAT designation or any other expedited program for our product candidates, the FDA may determine that our proposed target indication or other aspects of our clinical development plans do not qualify for such expedited program. Even if we are successful in obtaining a RMAT designation or access to any other expedited program, we may not experience faster development timelines or achieve faster review or approval compared to conventional FDA procedures. Access to an expedited program may also be withdrawn by the FDA if it believes that the designation is no longer supported by data from our clinical development program. Additionally, qualification for any expedited review procedure does not ensure that we will ultimately obtain regulatory approval for such product candidate.
Disruptions at the FDA, the SEC and other government agencies, including from government shutdowns, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or biologics to be reviewed, which would adversely affect our business. For example, over the past decade, the U.S. government has shut down several times, and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue to fund our operations.
Risks Related to Ongoing Regulatory Obligations
Even if we receive regulatory approval of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.
Any regulatory approvals that we receive for our product candidates will require surveillance to monitor the safety, potency and purity of the product candidate. We believe it is likely that the FDA will require a Risk Evaluation and Mitigation Strategy, or REMS,
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in order to approve our product candidates, which could entail requirements for a medication guide, physician communication plans or additional elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA approves our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and GCPs for any clinical trials that we conduct post-approval. As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any BLA, other marketing application and previous responses to inspectional observations. Additionally, manufacturers and manufacturers’ facilities are required to comply with extensive FDA, and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations and applicable product tracking and tracing requirements. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. In addition, the FDA could require us to conduct another study to obtain additional safety or biomarker information. Additionally, under the Food and Drug Omnibus Reform Act of 2022, or FDORA, sponsors of approved drugs and biologics must provide six months’ notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing the product on a list of discontinued products, which would revoke the product’s ability to be marketed.
Further, we will be required to comply with FDA promotion and advertising rules, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known as “off-label use”), limitations on industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet and social media. Later discovery of previously unknown problems with our product candidates through follow-up programs with our clinical trial patients, including adverse events of unanticipated severity or frequency, or with our third-party suppliers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks, or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:
The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action. If these executive actions impose restrictions on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our research and development activities involve the use of biological and hazardous materials and produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials, which could cause an interruption of our commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. Breach of certain environmental, health and safety laws and regulations could also in certain circumstances constitute a breach of our License Agreement with Penn. In addition, we may incur substantial costs in
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order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
Although we maintain workers’ compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. We do not carry specific biological waste or hazardous waste insurance coverage, workers compensation or property and casualty and general liability insurance policies that include coverage for damages and fines arising from biological or hazardous waste exposure or contamination.
Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk of employee fraud or other illegal activity by our employees, independent contractors, consultants, commercial partners and vendors. Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to comply with the laws of the FDA, provide true, complete and accurate information to the FDA, comply with manufacturing standards we have established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws, or report financial information or data accurately or to disclose unauthorized activities to us. If we obtain FDA approval of any of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with principal investigators and research patients, as well as proposed and future sales, marketing and education programs.
Risks Related to Healthcare
Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, which could make it difficult for us to sell our product candidates, if licensed, profitably.
Successful commercialization of our product candidates, if licensed, will depend in part on the extent to which reimbursement for those drug products will be available from government health administration authorities, private health insurers, and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drug products they will pay for and establish reimbursement levels. The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford a drug product. Sales of drug products depend substantially, both domestically and abroad, on the extent to which the costs of drugs products are paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval. Any product candidate for which we seek regulatory approval and reimbursement will need to meet or surpass our target product profile, or TPP, to be deemed a viable alternative to currently approved therapies. In addition, because our product candidates represent new approaches to the treatment of autoimmune diseases where B cells may play a role in initiating or maintaining disease, we cannot accurately estimate the potential revenue from our product candidates. For more information, see “Business - Government Regulation - Pricing and Reimbursement, United States” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Obtaining coverage and reimbursement of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide the payor with supporting scientific, clinical and cost-effectiveness data for the use of our products, if licensed. In the United States, the principal decisions about reimbursement for new drug products are typically made by the Centers for Medicare and Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, or HHS. CMS decides whether and to what extent a new drug product will be covered and reimbursed under Medicare, and private payors tend to follow CMS to a substantial degree. However, no uniform policy of coverage and reimbursement for drug products exists among third-party payors and coverage and reimbursement levels for drug products can differ significantly from payor to payor. Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.
Even if we obtain coverage for a given product, if the resulting reimbursement rates are insufficient, hospitals may not approve our product for use in their facility or third-party payors may require co-payments that patients find unacceptably high. Patients are unlikely to use our product candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our product candidates. Separate reimbursement for the product itself may or may not be available. Instead, the hospital or administering physician may be reimbursed only for providing the treatment or procedure in which our product is used. Further, from time to time, CMS revises the reimbursement systems used to reimburse health care providers, including the Medicare Physician Fee Schedule and Outpatient Prospective Payment System, which may result in reduced Medicare payments. In some cases, private third-party payors rely on all or portions of Medicare payment systems to determine payment rates. Changes to government healthcare
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programs that reduce payments under these programs may negatively impact payments from private third-party payors, and reduce the willingness of physicians to use our product candidates.
The marketability of any product candidates for which we receive regulatory approval for commercial sale may suffer if government and other third-party payors fail to provide coverage and adequate reimbursement. We expect downward pressure on pharmaceutical pricing to continue. Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations.
In the United States, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay regulatory approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain regulatory approval. We expect that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price that we, or any collaborators, may receive for any approved products. For more information, see “Business - Government Regulation - Current and Future Legislation, United States” in our Annual Report on Form 10-K for the year ended December 31, 2023.
We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability.
We expect that the healthcare reform measures that have been adopted and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product and could seriously harm our future revenues. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.
Our relationships with customers, healthcare providers, physicians, and third-party payors will be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations. If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we could face substantial penalties.
These laws may impact, among other things, our clinical research program, as well as our proposed and future sales, marketing and education programs. In particular, the promotion, sales and marketing of healthcare items and services is subject to extensive laws and regulations designed to prevent fraud, kickbacks, self-dealing and other abusive practices, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, which may constrain the business or financial arrangements and relationships through which such companies sell, market and distribute pharmaceutical products. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive and other business arrangements. We may also be subject to federal, state and foreign laws governing the privacy and security of individual identifiable health information and other personally identifiable information. For more information, see “Business - Government Regulation - Other Healthcare Laws and Compliance Requirements, United States” in our Annual Report on Form 10-K for the year ended December 31, 2023.
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The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from the business.
The failure to comply with any of these laws or regulatory requirements subjects entities to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Any action for violation of these laws, even if successfully defended, could cause a pharmaceutical manufacturer to incur significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.
Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of our business activities, or our arrangements with physicians, some of whom receive stock options as compensation, could be subject to challenge under one or more of such laws. If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we may be subject to investigations, enforcement actions and/or significant penalties. We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter employee misconduct or business noncompliance, and the precautions we take to detect and prevent inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Risks Related to Data and Privacy
Data collection is governed by restrictive regulations governing the use, processing, and cross-border transfer of personal information.
We are subject to stringent privacy and data protection requirements and these requirements may become more complex as we grow our business and begin to operate in other jurisdictions. For example, the collection, use, storage, disclosure, transfer, or other processing of personal data regarding individuals in the European Economic Area, or the EEA, including personal health data, is subject to the EU General Data Protection Regulation, or the EU GDPR, and similarly, processing of personal data regarding individuals in the UK is subject to the UK General Data Protection Regulation and the UK Data Protection Act 2018, or the UK GDPR, and together with the EU GDPR, or the GDPR. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to having a legal basis for processing personal data, stricter requirements relating to the processing of sensitive data (such as health data), where required by the GDPR obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, requiring data protection impact assessments for high risk processing and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA/UK, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million (£17.5 million under UK GDPR) or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. In addition, the GDPR includes restrictions on cross-border data transfers of personal data to countries outside the EEA/UK that are not considered by the European Commission and UK government as providing “adequate” protection to personal data, or third countries, including the United States. The GDPR may increase our responsibility and liability in relation to personal data that we process where such processing is subject to the GDPR, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries. Compliance with the GDPR is rigorous and
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time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with our European activities.
To enable the transfer of personal data outside of the EEA or the UK, adequate safeguards (for example, the European Commission approved Standard Contractual Clauses, or SCCs) must be implemented in compliance with European and UK data protection laws. In addition, transfers made pursuant to the SCCs (and other similar appropriate transfer safeguards) need to be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular regarding applicable surveillance laws and relevant rights of individuals with respect to the transferred personal data, to ensure an “essentially equivalent” level of protection to that guaranteed in the EEA in the jurisdiction where the data importer is based, or the Transfer Impact Assessment. On June 4, 2021, the EC issued new forms of standard contractual clauses for data transfers from controllers or processors in the EU/EEA (or otherwise subject to the GDPR) to controllers or processors established outside the EU/EEA. The UK is not subject to the EC’s new standard contractual clauses but has published its own transfer mechanism, the International Data Transfer Agreement and International Data Transfer Addendum, or the IDTA, which enable transfers from the UK, and has also implemented a similar Transfer Impact Assessment requirement. Further, the EU and United States have adopted its adequacy decision for the EU-U.S. Data Privacy Framework, or the Framework, which entered into force on July 11, 2023. This Framework provides that the protection of personal data transferred between the EU and the United States is comparable to that offered in the EU. This provides a further avenue to ensuring transfers to the United States are carried out in line with GDPR. There has been an extension to the Framework to cover UK transfers to the United States. The Framework could be challenged like its predecessor frameworks. We will be required to implement these safeguards and carry out Transfer Impact Assessments when conducting restricted data transfers under the GDPR and doing so will require significant effort and cost, and may result in us needing to make strategic considerations around where EEA or UK personal data is stored and transferred, and which service providers we can utilize for the processing of EEA/UK personal data.
Although the UK is regarded as a third country under the EU GDPR, the European Commission has issued a decision recognizing the UK as providing adequate protection under the EU GDPR, or the Adequacy Decision, and, therefore, transfers of personal data originating in the EEA to the UK remain unrestricted. The UK government has confirmed that personal data transfers from the UK to the EEA remain free flowing. The UK Government has also now introduced a Data Protection and Digital Information Bill, or the UK Bill, into the UK legislative process. The aim of the UK Bill is to reform the UK’s data protection regime. If passed, the final version of the UK Bill may have the effect of further altering the similarities between the UK and EEA data protection regime. This may lead to additional compliance costs and could increase our overall risk. The respective provisions and enforcement of the EU GDPR and UK GDPR may further diverge in the future and create additional regulatory challenges and uncertainties.
In the United States, there has been a flurry of activity at the state level. In California, the California Consumer Privacy Act, or CCPA, went into effect on January 1, 2020, and became subject to enforcement by the California Attorney General’s office on July 1, 2020. The CCPA broadly defines personal information, and creates comprehensive individual privacy rights and protections for California consumers (as defined in the law), places increased privacy and security obligations on entities handling personal data of consumers or households, and provides for civil penalties for violations and a private right of action for data breaches. The CCPA requires covered companies to provide certain disclosures to consumers about their data collection, use and sharing practices, and to provide affected California residents with ways to opt-out of certain sales or transfers of personal information.
Additionally, a California ballot initiative, the California Privacy Rights Act, or CPRA, was passed in November 2020 and as of January 1, 2023 has imposed additional obligations on companies covered by the legislation. The CPRA significantly modified the CCPA, including by expanding consumers' rights with respect to certain sensitive personal information. The CPRA also created a new state agency that is vested with authority to implement and enforce the CCPA and the CPRA. While there is an exception for protected health information that is subject to HIPAA and clinical trial regulations, the effects of the CCPA, as amended by the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and decrease our potential exposure to regulatory enforcement and/or litigation.
Similar laws have been passed in numerous other states and other states have proposed similar new privacy laws. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The existence of comprehensive privacy laws in different states in the country would make our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance. There are also states that are specifically regulating health information. For example, Washington state recently passed a health privacy law that will regulate the collection and sharing of health information, and the law also has a private right of action, which further increases the relevant compliance risk. Connecticut and Nevada have also passed similar laws regulating consumer health data. In addition, other states have proposed and/or passed legislation that regulates the privacy and/or security of certain specific types of information. For example, a small number of states have passed laws that regulate biometric data specifically. These various privacy and security laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.
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State laws are changing rapidly and there is discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we may likely become subject, if enacted.
All of these evolving compliance and operational requirements impose significant costs, such as costs related to organizational changes, implementing additional protection technologies, training employees and engaging consultants and legal advisors, which are likely to increase over time. Further, various other jurisdictions around the world continue to propose new and/or amended laws that regulate the privacy and/or security of certain types of personal data. Complying with these laws, if enacted, would require significant resources and leave us vulnerable to possible fines and penalties if we are unable to comply. The regulatory framework governing the collection, processing, storage, use and sharing of certain information is rapidly evolving and is likely to continue to be subject to uncertainty and varying interpretations. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our services and platform capabilities. Compliance with the above and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules, modify our data processing practices and policies, utilize management’s time and/or divert resources from other initiatives and projects. Any failure or perceived failure by us, or any third parties with which we do business, to comply with our posted privacy policies, evolving laws, rules and regulations, industry standards, or contractual obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or other liabilities. In addition, any such action, particularly to the extent we were found to be guilty of violations or otherwise liable for damages, would damage our reputation and adversely affect our business, financial condition and results of operations.
If our security measures or those of our contractors, consultants or other service providers are breached or unauthorized access to confidential and/or proprietary information or other sensitive information, including individually identifiable health information or other personally identifiable information, is otherwise obtained, our reputation may be harmed, and we may incur significant liabilities.
Unauthorized access to, or security compromises or breaches of, our systems and databases could result in unauthorized access to data and information and loss, compromise, misuse, or corruption of such data and information. The systems of any CMOs that we may engage now or in the future, and present and future CROs, contractors, consultants and other service providers also could experience breaches or compromises of security leading to the exposure of confidential and sensitive information. Cyber incidents have been increasing in sophistication and frequency and can include third parties gaining access to employee or customer data using stolen or inferred credentials, wrongful conduct by employees, vendors, or other third parties, hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud or cyber-attacks, computer malware, viruses, spamming, phishing attacks and social engineering, business email compromise, ransomware, card skimming code, and other deliberate attacks and attempts to gain unauthorized access to or disrupt or compromise our information technology systems. Because the techniques used by computer programmers who may attempt to penetrate and sabotage our information technology systems and infrastructure, network security or our website change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques or to adequately prevent or address them.
It is also possible that unauthorized access to our confidential and/or proprietary information or other sensitive information, including customer or employee information, may be obtained through inadequate use of security controls by customers, suppliers or other vendors. We rely on such third parties to implement effective security measures and identify and correct for any failures, deficiencies, compromises or breaches.
In the event of a security compromise or breach, our company could suffer loss of business, severe reputational damage adversely affecting investor confidence, regulatory inquiries, investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties and fines for violation of applicable laws or regulations, significant costs for remediation and other liabilities. For example, the loss of preclinical study or clinical trial data from completed or future preclinical studies or clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security compromise or breach were to result in a loss or misappropriation of, or damage to, our data, systems, or applications, or inappropriate disclosure of confidential or proprietary information or other sensitive information, we could incur liability and the further development and commercialization of our product candidates could be delayed.
We have incurred and expect to incur significant expenses to prevent security compromises or breaches, including costs related to deploying additional personnel and protection technologies, training employees, and engaging third-party solution providers and consultants. Although we expend significant resources to create security protections that are designed to shield our confidential and/or proprietary information or other sensitive information, including customer data, against potential theft and security compromises or breaches, such measures cannot provide absolute security. Moreover, as we outsource more of our information systems to vendors and
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rely more on cloud-based information systems, the related security risks will increase, and we will need to expend additional resources to protect our technology and information systems.
We have in the past experienced security incidents, and we may in the future experience other data security incidents, compromises or breaches affecting personally identifiable information or other confidential business information. We remain at risk for future compromises or breaches, including, without limitation, compromises or breaches that may occur as a result of third-party action, or employee, vendor or contractor error or malfeasance and other causes. If, in the future, we experience a data breach or security incident, we would be likely to experience harm to our reputation, financial performance, and customer and vendor relationships, and the possibility of litigation or regulatory investigations or actions by state and federal governmental authorities and non-U.S. authorities, including fines, penalties, and other legal and financial exposure and liabilities. Additionally, actual, potential or anticipated attacks or compromises may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees, conduct security incident investigation or remediation and engage third-party experts and consultants. Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.
Interruptions in the availability of server systems or communications with internet or cloud-based services, or failure to maintain the security, confidentiality, accessibility or integrity of data stored on such systems, could harm our business.
We rely upon a variety of internet service providers, third-party web hosting facilities and cloud computing platform providers to support our business. Failure to maintain the security, confidentiality, accessibility or integrity of data stored on or processed by such systems could result in interruptions in our operations, damage our reputation in the market, increase our service costs, cause us to incur substantial costs, subject us to liability for damages and/or fines, and divert our resources from other tasks, any one of which could materially adversely affect our business, financial condition, results of operations and prospects. If our security measures or those of our third-party data center hosting facilities, cloud computing platform providers, or third-party service partners, are breached, and unauthorized access is obtained to or there is misuse of our data or our information technology systems, we may incur significant legal and financial exposure and liabilities.
We also do not have control over the operations of the facilities of our cloud service providers and our third-party web hosting providers, and they also may be vulnerable to damage, security compromise or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct. In addition, any changes in these providers’ service levels may adversely affect our ability to meet our requirements and operate our business.
Risks Related to Ownership of Our Common Stock
Risks Related to Ownership Generally
*Our principal stockholders and management own a significant percentage of our stock and could be able to exert significant control over matters subject to stockholder approval.
As of September 30, 2024, our executive officers, directors, and 5% stockholders beneficially owned, in the aggregate, approximately 51% of our common stock. Such calculations assume all shares of non-voting common stock, if any outstanding, are converted into voting common stock in accordance with the terms of our Third Amended and Restated Certificate of Incorporation, or the amended and restated certificate of incorporation. Accordingly, these stockholders could have the ability to influence us through this ownership position and significantly affect the outcome of all matters requiring stockholder approval. For example, these stockholders may be able to significantly affect the outcome of elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.
If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls. The Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and, beginning with our second annual report following our initial public offering, provide a management report on internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Our internal control
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over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. We have begun the process of documenting, reviewing, and improving our internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act. We have begun recruiting additional finance and accounting personnel with certain skill sets that we need as a public company.
Implementing any appropriate changes to our internal controls may distract our officers and employees, entail substantial costs to modify our existing processes, and take significant time to complete. These changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business. In addition, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm our stock price and make it more difficult for us to effectively market and sell our service to new and existing customers.
The dual class structure of our common stock may limit your ability to influence corporate matters and may limit your visibility with respect to certain transactions.
The dual class structure of our common stock may limit your ability to influence corporate matters. Holders of our common stock are entitled to one vote per share, while holders of our non-voting common stock are not entitled to any votes. Nonetheless, each share of our non-voting common stock may be converted at any time into one share of our common stock at the option of its holder by providing written notice to us, subject to the limitations provided for in our amended and restated certificate of incorporation. Additionally, stockholders who hold, in the aggregate, more than 10% of our common stock and non-voting common stock, but 10% or less of our common stock, and are not otherwise a company insider, may not be required to report changes in their ownership due to transactions in our non-voting common stock pursuant to Section 16(a) of the Exchange Act, and may not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act. In May 2024, 1,444,295 shares of non-voting common stock were converted to voting common stock and no shares of non-voting common stock remain outstanding.
Sales of a substantial number of shares of our common stock by our existing stockholders in the public market could cause our stock price to fall.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Certain holders of our common stock have rights, subject to conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by affiliates, as defined in Rule 144 under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.
On March 21, 2024, we filed a registration statement on Form S-3ASR (File No. 333-278126) with the SEC, or the 2024 Shelf Registration Statement, in relation to the registration of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof for the purposes of selling, from time to time, our common stock, debt securities or other equity securities in one or more offerings. We also simultaneously entered into a Sales Agreement, or the 2024 Sales Agreement, with Cowen and Company, LLC, or the Sales Agent, to provide for the offering, issuance and sale of up to an aggregate amount of $200.0 million of our common stock from time to time in “at-the-market”, offerings under the 2024 Shelf Registration Statement and subject to the limitations thereof. The 2024 Shelf Registration Statement and 2024 Sales Agreement replaced our former registration statement and sales agreement, pursuant to which we had a $100 million at-the-market offering program, all of which we sold. We will pay to the Sales Agent cash commissions of up to 3.0 percent of the aggregate gross proceeds of sales of common stock under the 2024 Sales Agreement. Sales of common stock, debt securities or other equity securities by us may represent a significant percentage of our common stock currently outstanding. If we sell, or the market perceives that we intend to sell, substantial amounts of our common stock under the 2024 Shelf Registration Statement or otherwise, the market price of our common stock could decline significantly. No shares of common stock have been sold pursuant to the 2024 Sales Agreement.
We have also filed registration statements on Form S-8 to register shares issued or reserved for issuance under our equity compensation plans and will file additional registration statements on Form S-8 to register additional shares pursuant to the “evergreen” provisions under our equity compensation plans, the Plan Amendment and any subsequent amendments to our equity compensation plans. Shares registered under these registration statements on Form S-8 can be freely sold in the public market upon issuance and once vested, subject to volume limitations applicable to affiliates and the lock-up agreements described above. If any of these additional shares are sold, or if it is perceived that they will be sold, in the public market, the market price of our common stock could decline.
In addition, certain of our employees, executive officers, and directors may enter into Rule 10b5-1 trading plans providing for sales of shares of our common stock from time to time. Under a Rule 10b5-1 trading plan, a broker executes trades pursuant to parameters
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established by the employee, director, or officer when entering into the plan, without further direction from the employee, officer, or director. A Rule 10b5-1 trading plan may be amended or terminated in some circumstances. Our employees, executive officers, and directors also may buy or sell additional shares outside of a Rule 10b5-1 trading plan when they are not in possession of material, nonpublic information.
Risks Related to our Charter and Bylaws
Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management.
Our amended and restated certificate of incorporation and amended and restated bylaws, as amended, or the amended and restated bylaws, contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our stockholders might consider favorable. Some of these provisions include:
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These anti-takeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline.
Our amended and restated bylaws designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Pursuant to our amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for state law claims for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders; (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws (including the interpretation, application or validity thereof); or (iv) any action asserting a claim governed by the internal affairs doctrine (the Delaware Forum Provision). The Delaware Forum Provision will not apply to any causes of action arising under the Securities Act of 1933, as amended (the Securities Act) or the Securities Exchange Act of 1934. Our amended and restated bylaws further provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America are the sole and exclusive
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forum for resolving any complaint asserting a cause of action arising under the Securities Act, or the rules and regulations promulgated thereunder, or the Federal Forum Provision. In addition, our amended and restated bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing Delaware Forum Provision and Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed to have waived our compliance with the U.S. federal securities laws and the rules and regulations thereunder.
The Delaware Forum Provision and the Federal Forum Provision may impose additional litigation costs on stockholders in pursuing any such claims. Additionally, these forum selection clauses may limit our stockholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers or employees, which may discourage the filing of lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit our stockholders. While the Delaware Supreme Court and other states have upheld the validity of federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court, there is uncertainty as to whether other courts will enforce our Federal Forum Provision. If the Federal Forum Provision is found to be unenforceable, we may incur additional costs with resolving such matters. The Federal Forum Provision may also impose additional litigation costs on us and/or our stockholders who assert that the provision is invalid or unenforceable. The Court of Chancery of the State of Delaware or the federal district courts of the United States of America may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.
Risks Related to Tax
Changes in tax laws could adversely affect our business and financial condition.
The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations. Prospective investors in our common stock should consult with their legal and tax advisors with respect to potential changes in tax laws and the tax consequences of investing in or holding our common stock.
Our ability to utilize our net operating losses and certain other tax attributes to offset future taxable income may be subject to certain limitations.
As of December 31, 2023, we had U.S. federal, state and local net operating loss carryforwards of $121.6 million, $131.9 million and $83.0 million, respectively. $0.3 million of the federal amounts expire in 2037. The state net operating losses begin to expire in 2037 and the local net operating losses began to expire in 2024. Approximately $121.3 million of the federal net operating losses can be carried forward indefinitely. Certain net operating loss carryforwards could expire unused and be unavailable to offset future taxable income. In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating loss carryforwards or tax credits, or NOLs or credits, to offset future taxable income or taxes. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Our existing NOLs or credits may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change, our ability to utilize NOLs or credits could be further limited by Sections 382 and 383 of the Code. In addition, future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs or credits may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of our NOLs or credits. Furthermore, our ability to utilize our NOLs or credits is conditioned upon our attaining profitability and generating U.S. federal and state taxable income. As described above under “—Risks Related to Our Financial Condition and Capital Requirements”, we have incurred significant net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future; and therefore, we do not know whether or when we will generate the U.S. federal or state taxable income necessary to utilize our NOLs or credits. Under current law, U.S. federal net operating loss carryforwards generated in taxable years beginning after December 31, 2017 will not be subject to expiration. However, any such net operating loss carryforwards may only offset 80% of our annual taxable income in taxable years beginning after December 31, 2020.
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General Risk Factors
Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
Adverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation as receiver. Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that us, the financial institutions with which we have credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.
Public health crises, such as a pandemic, epidemic or outbreak of other highly infectious or contagious diseases, could seriously harm our research, development and potential future commercialization efforts, increase our costs and expenses and have a material adverse effect on our business, financial condition and results of operations.
Public health crises, such as a pandemic, epidemic or outbreak of other highly infectious or contagious diseases, could adversely impact our business, the business operations of third parties on whom we rely and our ongoing or planned research and development activities. Additionally, timely enrollment in our ongoing and planned clinical trials is dependent upon clinical trial sites which may be adversely affected by global health concerns. Public health crises could result in increased adverse events and deaths in our clinical trials. Some factors from public health crises that could delay or otherwise adversely affect enrollment in the clinical trials of our product candidates, as well as our business generally, include:
Any of these factors, and other factors related to any such disruptions that are unforeseen, could have a material adverse effect on our business and our results of operations and financial condition. Further, uncertainty around these and related issues could lead to
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adverse effects on the economy of the United States and other economies, which could impact our ability to raise the necessary capital needed to develop and commercialize our product candidates.
The price of our stock may be volatile, and you could lose all or part of your investment.
The trading price of our common stock has been, and is likely to be in the future, highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume. In addition to the factors discussed in this “Risk Factors” section, these factors include:
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In addition, the stock market in general, and The Nasdaq Global Select Market and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations in recent years that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. Securities class action litigation has often been instituted against companies, particularly in the biopharmaceutical and life sciences industries, following periods of volatility in the market price of a company’s securities. We have been subject to such a securities class action lawsuit filed in February 2022 and voluntarily dismissed by the plaintiff in October 2022, against certain of our officers and certain of our current and former directors, and may become subject to additional securities class action lawsuits in the future. This type of litigation could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results or financial condition.
Our business is affected by macroeconomic conditions, including rising inflation, interest rates and supply chain constraints.
Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates, the risk of economic slowdown or recession in the United States, instability in the banking system, and overall economic conditions and uncertainties such as those resulting from the current and future conditions in the global financial markets, including the presidential elections in the United States. Recent supply chain constraints have led to higher inflation, which if sustained could have a negative impact on our product development and operations. If inflation or other factors were to significantly increase our business costs, our ability to develop our current pipeline and new therapeutic products may be negatively affected. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and our ability to raise capital on favorable terms, or at all, in order to fund our operations. Similarly, these macroeconomic factors could affect the ability of our third-party suppliers and manufacturers to manufacture clinical trial materials for our product candidates.
We do not intend to pay dividends on our common stock, so any returns will be limited to the value of our stock.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.
We are an emerging growth company and a “smaller reporting company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act, or JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the date of completion of our initial public offering, although circumstances could cause us to lose that status earlier. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our common stock that is held by non-affiliates to exceed $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.
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Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, we are not subject to the same new or revised accounting standards as other public companies that are not emerging growth companies and our financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates.
Assuming we do not surpass one of the other thresholds, our status as an emerging growth company will end on December 31, 2024, which will be the last day of the fiscal year ending after the fifth anniversary of our initial public offering. As such, we will be subject to the disclosure requirements applicable to other public companies that were not applicable to us as an emerging growth company. These requirements include:
When our independent registered public accounting firm is required to undertake an assessment of our internal control over financial reporting, the cost of our compliance with Section 404 of Sarbanes-Oxley Act will correspondingly increase. Moreover, if we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act applicable to us in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Additionally, we expect that our loss of emerging growth company and smaller reporting company status will require additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others.
We are also a “smaller reporting company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. We would cease to be a smaller reporting company if we have a public float in excess of $250 million, or have annual revenues in excess of $100 million and a public float in excess of $700 million, determined on an annual basis. Consequently, even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us.
We could be subject to significant legal proceedings which may adversely affect our results of operations or financial condition.
We are subject to the risk of litigation, derivative claims, securities class actions, regulatory and governmental investigations and other proceedings, including proceedings arising from investor dissatisfaction with us or our performance or claims brought by employees, government agencies or supplies. In the past, securities class action litigation has often been brought against a company
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following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and pharmaceutical companies have experienced significant stock price volatility in recent years. In addition, if any individuals acting on our behalf fails to satisfy his or her relevant legal or contractual duties, we could have liability to third parties, including the government or investors. If any claims were brought against us and resulted in a finding of substantial legal liability, the finding could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us, which could seriously adversely impact our business. Allegations of improper conduct by private litigants or regulators, regardless of veracity, also may harm our reputation and adversely impact our ability to grow our business. Even if the allegations against us in future legal matters are unfounded or we ultimately are not held liable, the costs to defend ourselves may be significant and the litigation may subject us to substantial settlements, fines, penalties or judgments against us and may consume management’s bandwidth and attention, some or all of which may negatively impact our financial condition and results of operations. Litigation also may generate negative publicity, regardless of whether the allegations are valid, or we ultimately are liable, which could damage our reputation, and adversely impact our sales and our relationship with our employees, customers, and partners. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. In the event that one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the fiscal quarter ended on September 30, 2024, none of our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act)
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Item 6. Exhibits.
The exhibits listed on the Exhibit Index immediately preceding such exhibits, which is incorporated herein by reference, are filed or furnished as part of this Quarterly Report on Form 10-Q.
Exhibit Number |
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Description |
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3.1 |
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3.2 |
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3.3 |
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10.1† * |
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10.2† * |
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10.3† * |
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10.4† * |
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31.1* |
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31.2* |
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32.1** |
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32.2** |
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101.INS* |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document |
104* |
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Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101*) |
* Filed herewith.
† Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.
** This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Cabaletta Bio, Inc. |
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Date: November 14, 2024 |
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By: |
/s/ Steven Nichtberger |
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Steven Nichtberger |
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Chief Executive Officer and President (Principal Executive Officer) |
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Date: November 14, 2024 |
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By: |
/s/ Anup Marda |
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Anup Marda |
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Chief Financial Officer (Principal Financial and Accounting Officer) |
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