美國
證券交易委員會
華盛頓特區，郵編：20549
形式
(標記一)
根據1934年《證券交易法》第13或15(D)條規定的季度報告 |
截至本季度末
或
根據1934年證券交易法第13或15（d）條提交的過渡報告 |
對於從__
委員會文件號：
(註冊人的確切姓名載於其章程)
(述明或其他司法管轄權 |
(稅務局僱主 |
公司或組織) |
識別號碼) |
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（主要行政辦公室地址） |
(郵政編碼) |
註冊人的電話號碼，包括區號：(
根據該法第12(B)條登記的證券：
每個班級的標題 |
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交易 符號 |
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註冊的每個交易所的名稱 |
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用複選標記表示註冊人(1)是否在過去12個月內(或註冊人被要求提交此類報告的較短時間內)提交了1934年《證券交易法》第13條或15(D)節要求提交的所有報告，以及(2)在過去90天內是否符合此類提交要求。
用複選標記表示註冊人是否在過去12個月內(或在註冊人被要求提交此類文件的較短時間內)以電子方式提交了根據S-T規則第405條(本章232.405節)要求提交的每個交互數據文件。
用複選標記表示註冊人是大型加速申報公司、加速申報公司、非加速申報公司、較小的報告公司或新興成長型公司。請參閱《交易法》第12b-2條規則中「大型加速申報公司」、「加速申報公司」、「較小申報公司」和「新興成長型公司」的定義。
大型加速文件服務器 |
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加速文件管理器 |
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規模較小的報告公司 |
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新興成長型公司 |
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如果是一家新興的成長型公司，用複選標記表示註冊人是否已選擇不使用延長的過渡期來遵守根據《交易所法》第13(A)節提供的任何新的或修訂的財務會計準則。
用複選標記表示註冊人是否是空殼公司(如《交易法》第12b-2條所定義)。是☐ 沒有
截至2024年11月8日，登記人已
目錄
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頁面 |
第一部分： |
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項目1. |
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項目2. |
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項目3. |
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項目4. |
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第二部分。 |
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項目1. |
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第1A項。 |
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項目2. |
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項目3. |
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項目4. |
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第五項。 |
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第六項。 |
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i
與我們的業務相關的重大風險和其他風險摘要
1
關於前瞻性陳述的特別說明
本季度10-Q表格報告，包括題爲「風險因素」和「管理層對財務狀況和經營結果的討論和分析」的部分，包含基於我們管理層的信念和假設以及我們管理層當前可用的信息的明確或暗示的前瞻性陳述。儘管我們相信這些前瞻性陳述中反映的預期是合理的，但這些陳述與未來事件或我們未來的運營或財務業績有關，並涉及已知和未知的風險、不確定性和其他因素，可能導致我們的實際結果、績效或成就與這些前瞻性陳述所表達或暗示的任何未來結果、績效或成就存在重大差異。本10-Q表格季度報告中的前瞻性陳述包括但不限於有關以下方面的陳述：
2
這些因素不應被解釋爲詳盡無遺，而應與本10-Q表格季度報告中包含的其他警告性聲明一起閱讀。本10-Q表格季度報告中包含的前瞻性陳述於本10-Q表格季度報告之日做出，我們不承擔公開更新或審查任何前瞻性陳述的義務，無論是由於新信息、未來發展還是其他原因。因此，您不應依賴這些前瞻性陳述來代表我們在本季度報告（表格10-Q）日期之後任何日期的觀點。
3
第一部分--融資AL信息
項目1.融資所有報表。
CABALETTA比奧，Inc.
簡明綜合資產負債 牀單
(單位爲千，不包括每股和每股金額)
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9月30日， |
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12月31日， |
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資產 |
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流動資產： |
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現金及現金等價物 |
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$ |
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短期投資 |
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預付費用和其他流動資產 |
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流動資產總額 |
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財產和設備，淨額 |
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經營性租賃使用權資產 |
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其他資產 |
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總資產 |
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$ |
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$ |
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負債和股東權益 |
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流動負債： |
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應付賬款 |
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$ |
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$ |
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應計負債和其他流動負債 |
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經營租賃負債，本期部分 |
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流動負債總額 |
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經營租賃負債，扣除當期部分 |
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總負債 |
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和意外情況（見注5和6） |
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股東權益： |
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優先股，美元 |
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有投票權和無投票權普通股，美元 |
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額外實收資本 |
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累計其他綜合收益 |
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累計赤字 |
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( |
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股東權益總額 |
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總負債和股東權益 |
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$ |
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$ |
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附註是這些未經審計的簡明綜合財務報表的組成部分。
4
CABALETTA比奧，Inc.
的簡明綜合報表 運營與綜合損失
(單位爲千，不包括每股和每股金額)
（未經審計）
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止三個月 |
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止九個月 |
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2024 |
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2023 |
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2024 |
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2023 |
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運營費用： |
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研發 |
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$ |
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$ |
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$ |
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一般及行政 |
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總運營支出 |
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運營虧損 |
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其他收入： |
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利息收入 |
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淨虧損 |
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$ |
( |
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$ |
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其他全面收入： |
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可供出售投資的未實現淨收益（損失），扣除稅款 |
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( |
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( |
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淨綜合虧損 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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基本股和稀釋股有投票權和無投票權普通股每股淨虧損 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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附註是這些未經審計的簡明綜合財務報表的組成部分。
5
卡巴萊塔BIO，Inc.
簡明綜合損益表 股東權益
(單位爲千，不包括份額)
（未經審計）
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普通股 |
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股份 |
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量 |
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額外 |
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累計其他綜合收益 |
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累計赤字 |
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總 |
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餘額-2022年12月31日 |
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$ |
— |
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$ |
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( |
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股票補償 |
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— |
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— |
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可供出售證券的未實現淨收益 |
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— |
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— |
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與行使股票期權相關的普通股發行 |
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— |
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— |
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行使預融資認購權後發行普通股 |
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— |
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— |
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— |
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— |
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淨虧損 |
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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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股票補償 |
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— |
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— |
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— |
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— |
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普通股發行，扣除發行成本美元 |
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與行使股票期權相關的普通股發行 |
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員工購股計劃下普通股的發行 |
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可供出售證券的未實現淨損失 |
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( |
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淨虧損 |
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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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餘額—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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$ |
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股票補償 |
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— |
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— |
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— |
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— |
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可供出售證券的未實現淨損失 |
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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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與行使股票期權相關的普通股發行 |
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— |
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— |
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— |
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行使預融資認購權後發行普通股 |
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— |
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— |
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— |
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淨虧損 |
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— |
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— |
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— |
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( |
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( |
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餘額-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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附註是這些未經審計的簡明綜合財務報表的組成部分。
6
CABALETTA比奧，Inc.
股東權益簡明合併報表
(單位爲千，不包括份額)
（未經審計）
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普通股 |
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股份 |
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量 |
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額外 |
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累計其他綜合損失 |
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累計赤字 |
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總 |
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餘額-2023年12月31日 |
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$ |
— |
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$ |
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( |
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普通股發行，扣除發行成本美元 |
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— |
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股票補償 |
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— |
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可供出售證券的未實現淨損失 |
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— |
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— |
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— |
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( |
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與行使股票期權相關的普通股發行 |
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— |
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淨虧損 |
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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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股票補償 |
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— |
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— |
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與行使股票期權相關的普通股發行 |
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— |
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員工購股計劃下普通股的發行 |
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— |
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可供出售證券的未實現淨收益 |
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淨虧損 |
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— |
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— |
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— |
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( |
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( |
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餘額-2024年6月30日 |
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$ |
— |
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$ |
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$ |
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股票補償 |
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與行使股票期權相關的普通股發行 |
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— |
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行使預融資認購權後發行普通股 |
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— |
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可供出售證券的未實現淨收益 |
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淨虧損 |
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— |
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( |
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( |
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餘額-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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||||
附註是這些未經審計的簡明綜合財務報表的組成部分。
7
CABALETTA比奧，Inc.
的簡明綜合報表 現金流量
(in數千）
（未經審計）
|
|
止九個月 |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
經營活動的現金流： |
|
|
|
|
|
|
||
淨虧損 |
|
$ |
( |
) |
|
$ |
( |
) |
對淨虧損與經營活動中使用的現金淨額進行的調整： |
|
|
|
|
|
|
||
股票補償 |
|
|
|
|
|
|
||
折舊 |
|
|
|
|
|
|
||
非現金租賃費用 |
|
|
|
|
|
|
||
租賃負債的確認 |
|
|
|
|
|
|
||
投資折扣攤銷 |
|
|
( |
) |
|
|
( |
) |
經營資產和負債變化： |
|
|
|
|
|
|
||
預付費用和其他流動資產 |
|
|
|
|
|
|
||
其他資產 |
|
|
( |
) |
|
|
( |
) |
應付賬款 |
|
|
( |
) |
|
|
|
|
應計負債和其他流動負債 |
|
|
|
|
|
( |
) |
|
租賃負債 |
|
|
( |
) |
|
|
( |
) |
用於經營活動的現金淨額 |
|
|
( |
) |
|
|
( |
) |
投資活動產生的現金流： |
|
|
|
|
|
|
||
購置財產和設備 |
|
|
( |
) |
|
|
( |
) |
購買投資 |
|
|
|
|
|
( |
) |
|
投資到期所得收益 |
|
|
|
|
|
|
||
投資活動提供(用於)的現金淨額 |
|
|
|
|
|
( |
) |
|
融資活動的現金流： |
|
|
|
|
|
|
||
普通股發行收益，扣除發行成本 |
|
|
|
|
|
|
||
與行使相關的普通股發行收益 |
|
|
|
|
|
|
||
員工股票購買計劃下發行普通股的收益 |
|
|
|
|
|
|
||
融資活動提供的現金淨額 |
|
|
|
|
|
|
||
現金及現金等價物淨(減)增 |
|
|
( |
) |
|
|
|
|
現金和現金等價物--期初 |
|
|
|
|
|
|
||
現金和現金等價物--期末 |
|
$ |
|
|
$ |
|
||
非現金投資和融資活動的補充披露： |
|
|
|
|
|
|
||
應付賬款和應計費用中包括的財產和設備購置 |
|
$ |
|
|
$ |
|
||
以租賃義務換取的使用權資產 |
|
$ |
|
|
$ |
|
||
附註是這些未經審計的簡明綜合財務報表的組成部分。
8
CABALETTA比奧，Inc.
未經審計濃縮合並財務報表註釋社會報表
(單位爲千，不包括每股和每股金額)
1.陳述依據
Cabaletta Bio，Inc.(本公司或Cabaletta)於2017年4月在特拉華州註冊爲Tycho Treateutics，Inc.，並於2018年8月更名爲Cabaletta Bio，Inc.。該公司總部位於賓夕法尼亞州費城。Cabaletta是一家臨床階段的生物技術公司，專注於發現和開發針對自身免疫性疾病的工程化t細胞療法。主要業務於2018年4月開始。
風險和不確定性
除非公司完成臨床前和臨床開發，並獲得一個或多個候選產品的監管批准，否則公司預計不會從針對自身免疫性疾病的工程t細胞療法的銷售中獲得收入或任何其他收入。如果該公司尋求獲得監管機構對其任何候選產品的批准，該公司預計將產生巨額商業化費用。
該公司面臨生物技術行業公司常見的風險，包括但不限於新技術創新、對專有技術的保護、對關鍵人員的依賴、遵守政府規定以及獲得額外融資的需要。因此，公司無法預測增加開支的時間或數額，也無法預測公司何時或是否能夠實現或保持盈利。此外，公司依賴第三方進行某些研究和開發活動，包括製造服務(附註5和附註6)。目前正在開發的候選產品在商業化之前將需要大量額外的研究和開發努力，包括廣泛的臨床前和臨床測試和監管批准。即使該公司能夠從銷售其候選產品中獲得收入，如果獲得批准，它也可能無法盈利。如果該公司未能實現盈利或無法持續盈利，則它可能無法繼續按計劃運營，並被迫減少運營。
流動性
該公司自成立以來一直遭受年度運營虧損，預計在可預見的未來將繼續產生運營虧損。公司的最終成功取決於其研究和開發活動的結果。該公司擁有現金、現金等價物和以下投資$
該公司打算通過股票發行、債務融資、政府融資安排、戰略聯盟或其他來源來籌集此類額外資本。然而，如果此類融資不能在適當的水平上及時獲得，或此類協議不能以優惠的條款獲得，或者根本不能在需要時獲得，公司將需要重新評估其運營計劃，並可能被要求推遲或停止開發其一個或多個候選產品或運營計劃。該公司預計，自公司向美國證券交易委員會(美國證券交易委員會)提交10-Q表格季度報告之日起，其截至2024年9月30日的現金、現金等價物和投資將足以爲其計劃的運營提供至少12個月的資金。
2.主要會計政策摘要
未經審計的中期財務信息
隨附的未經審計簡明合併財務報表是按照公認會計原則（GAAP）以及美國證券交易委員會有關中期財務報告的適用規則和法規編制的。這些註釋中對適用指南的任何提及均指財務會計準則委員會（FASB）的會計準則編纂和會計準則更新（ASO）中的GAAP。根據這些規則的允許，GAAP通常要求的某些腳註和其他財務信息已被壓縮或省略。未經審計的簡明綜合財務報表包括公司及其全資子公司的賬目。所有公司間餘額和交易均已在合併中消除。
9
管理層認爲，隨附的未經審計簡明綜合財務報表包括所有正常和經常性調整(主要由影響財務報表的應計項目和估計組成)，以公平地反映公司截至2024年9月30日的財務狀況以及截至2024年9月30日和2023年9月30日的三個月和九個月的經營結果和現金流量。截至2024年9月30日的三個月和九個月的業績不一定表明截至2024年12月31日的一年、任何其他過渡時期或任何未來一年或任何時期的預期結果。本文所包括的截至2023年12月31日的資產負債表是從截至該日的經審計的財務報表中得出的。本文提出的未經審計簡明綜合財務報表不包含GAAP對年度財務報表所要求的披露。這些未經審計的簡明合併財務報表應與公司已審計的財務報表結合閱讀，已審計的財務報表包含在公司於2024年3月21日提交給美國證券交易委員會的10-k表格2023年年報(2023年年報)中。
預算的使用
根據美國公認會計原則編制簡明綜合財務報表，要求管理層作出估計和假設，以影響截至財務報表日期的資產和負債額以及或有資產和負債的披露，以及報告期內報告的費用金額。所附財務報表中作出的重大估計和假設包括但不限於與公司研發費用相關的預付款和應計項目。本公司根據歷史經驗和其他因素持續評估其估計和假設，並在事實和情況需要時調整這些估計和假設。實際結果可能與這些估計不同。
表外風險與信用風險集中度
金融工具可能使公司面臨嚴重的信用風險，包括投資於美國國庫貨幣市場基金的現金和現金等價物，以及投資於美國國庫證券的可供出售債務證券。該公司的部分現金由兩家聯邦保險的金融機構持有，帳戶餘額有時可能超過聯邦保險的限額。本公司並無在該等帳戶出現任何虧損，管理層相信本公司並無重大信貸風險。本公司沒有表外風險，例如外匯合約、期權合約或其他海外對沖安排。
本公司將自購買之日起三個月或以下的原始到期日購買的所有高流動性投資視爲現金等價物。現金等價物主要包括投資於貨幣市場帳戶的金額。
重大會計政策
在截至2024年9月30日的9個月內，與公司2023年年報中經審計的財務報表附註2所述的重大會計政策相比，公司的會計政策沒有重大變化。
公允價值計量
在資產負債表中按公允價值經常性記錄的資產和負債根據與用於計量其公允價值的投入相關的判斷水平進行分類。公允價值被定義爲一項資產將收到的交換價格或將支付的退出價格，以在計量日在市場參與者之間有序交易中轉移該資產或負債的本金或最有利市場的負債。用於計量公允價值的估值技術必須最大限度地利用可觀察到的投入，最大限度地減少使用不可觀察到的投入。《關於公允價值計量的權威指引》爲公允價值計量的披露確立了三級公允價值等級，具體如下：
第1級-可觀察到的投入，例如在計量日期相同資產或負債在活躍市場的未調整報價。
第2級-資產或負債可直接或間接觀察到的投入(第1級中包括的報價除外)。這些報價包括活躍市場中類似資產或負債的報價，以及非活躍市場中相同或類似資產或負債的報價。
第三級-市場活動很少或沒有市場活動支持的不可觀察的投入，並且對資產或負債的公允價值具有重大意義。
10
新興成長型公司的地位
本公司是一家新興的成長型公司，根據2012年的JumpStart Our Business Startups Act(JOBS Act)的定義。根據《就業法案》，新興成長型公司可以推遲採用在《就業法案》頒佈後發佈的新的或修訂後的會計準則，直到這些準則適用於私營公司。本公司已選擇使用此延長過渡期以符合新的或經修訂的會計準則，該等準則對上市公司及私人公司具有不同的生效日期，直至(I)不再是新興成長型公司或(Ii)明確及不可撤銷地選擇退出《就業法案》所規定的延長過渡期，兩者以較早者爲準。因此，這些財務報表可能無法與截至上市公司生效日期遵守新的或修訂的會計聲明的公司進行比較。公司作爲新興成長型公司的地位將於2024年12月31日結束，這將是公司首次公開募股五週年後結束的財政年度的最後一天。
近期發佈的會計公告
2023年11月，FASB發佈了會計準則更新，或ASU，2023-07，分部報告(主題280)--對可報告分部披露的改進。本ASU要求公共實體在中期和年度的基礎上提供額外的分部披露。本ASU中的修訂應追溯適用於財務報表中列報的所有先前期間，除非不切實際。在過渡時，前幾期披露的分部費用類別和金額應以採用期間確定和披露的重大分部費用類別爲基礎。ASU在2023年12月15日之後的財政年度和2024年12月15日之後的財政年度內的過渡期內有效。允許及早領養。公司目前計劃在有效時採用這一指導方針，並正在評估採用這一指導方針對公司合併財務報表和附註的影響。
2023年12月，FASB發佈了ASU 2023-09，所得稅披露的改進。ASU 2023-09通過改進所得稅披露，提高了所得稅信息的透明度，這些信息主要與稅率對賬和已支付所得稅信息有關。該指導意見自2024年12月15日起適用於公共企業實體的年度期間。允許及早領養。公司目前計劃在有效時採用這一指導方針，並正在評估採用這一指導方針對公司合併財務報表和附註的影響。
3.公允價值計量
金融工具的公允價值
於2024年9月30日和2023年12月31日，公司的金融工具包括現金及現金等值物、可供出售債務證券、應付賬款和應計費用。由於這些工具的短期性質，公司合併財務報表中報告的這些工具的現金和現金等值物、應付賬款和應計費用的公允價值接近其各自的公允價值。
下表列出了有關公司經常性按公允價值計量的金融資產的信息，並指出了用於確定此類公允價值的公允價值層級的級別：
|
|
2024年9月30日 |
|
|||||||||||||
|
|
總 |
|
|
引用 |
|
|
顯著 |
|
|
顯著 |
|
||||
金融資產 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
現金等價物： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
貨幣市場基金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
短期投資： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美國國債 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
總 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
11
|
|
2023年12月31日 |
|
|||||||||||||
|
|
總 |
|
|
引用 |
|
|
顯著 |
|
|
顯著 |
|
||||
金融資產 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
現金等價物： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
貨幣市場基金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
美國國債-原到期日少於三個月 |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
短期投資： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美國國債 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
總 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
貨幣市場基金採用報價按經常性的公允價值計量，並被分類爲第一級投入。投資根據源自可觀察市場數據的報價以外的輸入數據按公允價值計量，並被分類爲第二級輸入數據。
對於分類爲可供出售投資的債務證券，公司將計量日期之間公允價值變化產生的未實現損益記錄爲其他全面收益的組成部分。
|
|
2024年9月30日 |
|
|||||||||||||
|
|
攤銷成本 |
|
|
未實現收益總額 |
|
|
未實現總損失 |
|
|
公平值 |
|
||||
金融資產 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
現金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
貨幣市場基金 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
包括在現金和現金等價物中 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美國國債-一年或以下到期 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
包含在短期投資中 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
總 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
2023年12月31日 |
|
|||||||||||||
|
|
攤銷成本 |
|
|
未實現收益總額 |
|
|
未實現總損失 |
|
|
公平值 |
|
||||
金融資產 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
現金 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
貨幣市場基金 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美國國債-原到期日少於三個月 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
包括在現金和現金等價物中 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美國國債-一年或以下到期 |
|
|
|
|
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包含在短期投資中 |
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總 |
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$ |
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$ |
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4.應計及其他流動負債
應計負債和其他流動負債包括以下各項：
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9月30日， |
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12月31日， |
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研究和開發服務 |
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$ |
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$ |
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總務和行政服務 |
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補償費用 |
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其他 |
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5.合作、許可協議和其他協議
修改並重新簽署了與賓夕法尼亞大學和費城兒童醫院受託人的許可協議
於2018年8月，本公司與賓夕法尼亞大學訂立許可協議(經2019年7月修訂及重述)，包括費城兒童醫院(CHOP)爲一方，並於2020年5月及2021年10月修訂(許可協議)，根據該許可協議，本公司獲得(A)對賓夕法尼亞大學某些知識產權的非獨家、不可再授權的全球許可，以進行研究、產品開發、臨床試驗、細胞製造及其他活動，及(B)獨家的、全球範圍的、具有版稅負擔的權利及許可，並有權按目標再許可，根據賓夕法尼亞大學的某些知識產權，製造、使用、銷售、出售、進口和以其他方式商業化治療自身免疫和同種免疫疾病的產品。除非提前終止，否則許可協議在公司許可的賓夕法尼亞大學知識產權中的最後一個有效索賠到期或放棄或以其他方式終止時失效。爲方便起見，本公司可在60天內發出書面通知，隨時終止許可協議。如果發生未治癒的重大違約，賓夕法尼亞州立大學可在60天內發出書面通知，終止許可協議。根據許可協議的條款，該公司有義務支付#美元
該公司被要求在達到特定的臨床和商業里程碑時支付某些里程碑付款。對於達到里程碑的第二個產品，里程碑付款減少一定的百分比，對於達到里程碑的第三個產品，減少額外的百分比，依此類推，對於達到里程碑的每個後續產品。如果公司能夠根據許可協議成功開發和推出多個產品，則里程碑付款總額可能約爲$
主要翻譯研究服務協議
2018年10月和2023年2月，公司與賓夕法尼亞大學簽訂了服務協議(CAARt和CATA服務協議)，爲賓夕法尼亞大學的各個實驗室提供研究、開發和製造服務。這些活動在單獨執行的賓夕法尼亞州立大學具體組織增編中有詳細說明。2020年5月，該公司修改了與先進視網膜和眼科治療中心(CAROT)的附錄，以擴大載體制造的機會。
與所附業務報表中確認的與賓夕法尼亞大學簽訂的主要翻譯研究服務協議項下執行的增編有關的研究和開發費用爲#美元。
13
與IASO BioTreateutics達成獨家許可協議
2022年10月7日，本公司與南京IASO生物治療有限公司(IASO)簽訂獨家許可協議(IASO協議)。根據IASO協議，該公司根據IASO的某些知識產權獲得了全球獨家許可證，可以使用一種新型的臨床階段抗CD19結合劑來開發、製造、商業化和以其他方式開發針對CD19的T細胞產品，用於診斷、預防或治療人類的任何自身免疫或同種免疫跡象。作爲獨家許可證的部分對價，IASO收到了#美元的預付款。
如果本公司希望授予第三方在大中國地區開發、製造、商業化或以其他方式開發特許產品的獨家許可，IASO有權進行優先談判。根據國際會計準則組織協議，國際會計準則組織和本公司各自同意，除某些例外情況外，不參與與某些項目有關的某些競爭性活動。本公司也可在任何時候通過多個級別再許可IASO根據IASO協議授予它的權利，但是，它必須向IASO支付從再許可或期權獲得的任何收入的低兩位數百分比，但受某些慣例排除的限制。除非提前終止，否則《國際會計準則》協定將繼續以國家爲單位、逐個特許產品爲基礎，直至《國際會計準則》所確定的特許權使用費期限屆滿。公司和國際會計準則組織中的任何一方均可因另一方重大的、未治癒的違約或資不抵債而終止協議。公司也可在事先書面通知後隨意終止協議，如果IASO因破產相關事項拒絕協議的話。如果公司未能及時實現某些特定的盡職調查里程碑，和/或如果公司就與許可序列相關的專利和專利申請發起任何專利挑戰，則IASO也可以終止協議，在每種情況下，都需要事先發出書面通知。
工匠協作和許可協議
2020年7月和2023年1月修訂後，公司與Artisan Bio，Inc.(Artisan)簽訂了合作和許可協議，其中公司和Artisan同意合作，利用Artisan的基因編輯和工程技術針對特定目標潛在地增強公司的某些流水線產品。如果Artisan技術應用於本公司的任何產品，本公司將負責任何此類產品的開發、製造和商業化。根據協議條款，該公司必須向Artisan支付象徵性的預付費用以及與研究和開發活動相關的費用。Artisan有資格獲得未來的開發和監管里程碑，還有資格獲得採用Artisan技術的產品的淨銷售額的銷售里程碑和分級版稅。本公司可在事先書面通知後隨意終止本協議，不收取任何費用。2024年1月，本公司接到通知，該協議將與Artisan的一般轉讓有關，以使債權人受益。該協議仍然有效。
與牛津生物醫療公司簽訂的許可和供應協議
2021年12月，該公司與牛津生物醫學(英國)有限公司(牛津)簽訂了一項許可和供應協議，其中，許可和供應協議向公司授予牛津生物醫學(英國)有限公司(牛津)非獨家許可，用於該平台在公司的DSG3-CAARt計劃中的應用，並簽訂了一份多年的媒介供應協議。根據協議條款，該公司需要向牛津大學支付預付費用以及與初始媒介製造活動相關的費用，總成本最高可達約#美元。
14
與Autolus簽訂的選項和許可協議
2023年1月，公司與Autolus Holdings(UK)Limited(Autolus)簽訂了期權和許可協議(Autolus協議)，其中Autolus協議授予公司在其CD19-CAR T細胞治療計劃中使用Autolus的RQR8技術的非獨家許可，並受額外象徵性期權行使費用的限制，最多可增加四個目標。根據Autolus協議的條款，本公司須向Autolus預付許可費$
6.承付款和或有事項
製造協議
2021年1月，公司與無錫先進療法有限公司(無錫)簽訂了開發和製造服務協議(無錫協議)，作爲Musk-CAARt第一階段臨床試驗(MusCAARTes)的額外細胞加工製造合作伙伴TM審判。無錫協議計劃在無錫完成與馬斯克-CAART和CABA-201相關的服務後到期。2023年8月，並於2024年8月延期，該公司與無錫簽訂了一項協議，作爲該公司的製造合作伙伴之一，在多個適應症的CABA-201的全球臨床開發，包括潛在的後期臨床試驗和CABA-201的商業準備活動。
其他採購承諾
在正常業務過程中，本公司與第三方合同製造商簽訂各種採購承諾，以製造和加工其候選產品和相關原材料，與合同研究機構簽訂臨床試驗合同，並與供應商簽訂其他服務和運營產品協議。這些協議一般規定終止或取消，但不包括已經發生的費用。
賠償
本公司簽訂了某些類型的合同，這些合同臨時要求本公司就第三方的索賠向各方進行賠償。這些合同主要涉及(I)公司經修訂和重新修訂的附例(附例)，根據該附例，公司必須賠償董事和高管以及其他高級管理人員和員工因其關係而產生的責任，(Ii)公司必須賠償董事、某些高級管理人員和顧問因其關係而產生的責任的合同，(Iii)公司可能被要求賠償合夥人某些索賠的合同，包括第三方提出的侵犯其知識產權的索賠，以及(Iv)採購、諮詢、或許可協議，根據這些協議，公司可能被要求賠償供應商、顧問或許可人的某些索賠，包括可能因公司在所提供的產品、技術或服務方面的行爲或不作爲而對他們提出的索賠。在正常業務過程中，公司可能會不時收到根據這些合同提出的賠償要求。此外，根據這些合同，公司可能不得不修改被指控的侵犯知識產權和/或退還收到的金額。
15
如果其中一項或多項事項導致對公司提出索賠，不利結果（包括判決或和解）可能會對公司未來的業務、經營業績或財務狀況產生重大不利影響。由於先前賠償索賠的歷史有限以及每個特定協議中涉及的獨特事實和情況，無法確定這些合同下的最高潛在金額。
訴訟
公司可能會不時捲入訴訟或法律訴訟。雖然無法確定地預測任何此類訴訟的結果，但截至2024年9月30日，公司沒有參與任何預計會對其財務狀況、經營業績或現金流產生重大不利影響的重大訴訟或法律訴訟。
7.租契
本公司根據安排開始時存在的獨特事實和情況來確定安排是否爲或包含租約。公司根據加權平均剩餘期限爲1年的經營租約租賃無錫的辦公、實驗室空間和專用製造套件。
如附註6所述，於2023年8月，本公司根據無錫協議訂立新工單，讓無錫作爲本公司全球臨床開發CABA-201的細胞加工製造合作伙伴之一。無錫將公司的非專用套件轉換爲用於公司CABA-201和馬斯克-CAARt項目的GMP製造專用套件，初始期限爲18個月。
該公司租賃辦公和實驗室空間，包括租金上漲和額外的可變費用，包括公共區域維護、財產稅和財產保險。鑑於此類成本的可變性質，它們被確認爲已發生的費用。此外，本公司的部分租約須繳交若干固定費用，而本公司已確定該等費用爲非租賃部分。本公司已選擇實際權宜之計，將租賃和非租賃組成部分作爲單一租賃組成部分進行覈算，並在計算經營租賃負債時計入與非租賃組成部分相關的固定付款。2024年第三季度，該公司延長了實驗室和辦公室運營租約的期限。對租賃進行了重新計量，導致淨資產和租賃負債增加#美元。
本公司營運租賃的加權平均貼現率爲
截至2024年9月30日，不可撤銷經營租賃項下的未來租賃付款如下：
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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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未貼現租賃付款總額 |
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扣除計入的利息 |
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租賃負債總額 |
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$ |
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8.普通股
普通股
根據公司於2019年10月提交的第三份修訂和重述的公司證書，公司被授權簽發
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2023年5月融資
2023年5月，本公司發佈
2022年12月融資
2022年12月，本公司發佈
預先出資認股權證被分類爲額外實收資本內永久股東權益的一部分，並於發行日期按相對公允價值分配法入賬。預融資認股權證被歸類爲權益類，因爲它們(I)是獨立的金融工具，可在法律上與權益工具分開行使，(Ii)可立即行使，(Iii)不體現本公司回購其股份的義務，(Iv)允許持有人在行使時獲得固定數量的普通股，(V)與本公司普通股掛鉤，以及(Vi)符合股權分類標準。此外，這類預先出資的認股權證不提供任何價值或回報保證。
在市場上提供產品
2024年3月21日，本公司提交了一份自動擱置登記聲明(S-3 ASR)，涉及登記普通股、優先股、債務證券、權證和/或其任何組合的單位，目的是不時以一次或多次發售的方式出售本公司的普通股、債務證券或其他股權證券。這一S-三號ASR立即生效。
該公司與Cowen and Company，LLC(Cowen)簽訂了一項銷售協議，規定發售、發行和出售總金額高達$
該公司此前與考恩公司簽訂了一項銷售協議，規定發售、發行和出售總金額高達$
2018年股票期權和授予計劃
2018年9月，公司通過了《2018年股票期權與授予計劃》(《2018年計劃》)，規定公司可向公司員工、董事會成員和顧問出售或發行普通股或其他基於股票的獎勵。該公司一般只授予帶有服務條件的股票獎勵(基於服務的獎勵)，儘管有一次授予帶有業績條件的獎勵。確實有
2019年股票期權和激勵計劃
《2019年股票期權激勵計劃(2019計劃)》於2019年10月14日經公司董事會批准，自2019年10月23日起施行。2019年計劃規定向公司高管、員工、董事和顧問授予激勵性股票期權、不合格股票期權、股票增值權、限制性股票單位、限制性股票獎勵、非限制性股票獎勵、現金獎勵和股息等值權利。根據2019年計劃初步預留供發行的股份數目爲
17
的公司、公司股東批准了2019年計劃第1號修正案，將2019年計劃下保留髮行的普通股股數增加了
股票期權活動摘要如下：
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數量 |
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加權 |
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加權 |
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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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$ |
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授予 |
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已鍛鍊 |
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被沒收/取消 |
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截至2024年9月30日未完成 |
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$ |
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$ |
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可於2024年9月30日取消的期權 |
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$ |
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$ |
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期權的總內在價值計算爲期權的行使價與公司普通股公允價值之間的差額。截至2024年9月30日和2023年9月30日止九個月期間授予的股票期權的加權平均授予日公允價值爲美元
各項獎勵的公允價值是根據以下假設使用Black-Scholes估計的：
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截至9月30日的9個月， |
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2024 |
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2023 |
無風險利率 |
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預期期限 |
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預期波幅 |
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預期股息收益率 |
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Black-Scholes要求使用主觀假設來確定基於股票的獎勵的公允價值。這些假設包括：
預期期限-預期期限代表基於股票的獎勵預計將突出的期限。期權授予的預期期限是使用簡化方法確定的，該方法是期權的歸屬期限和合同期限之間的中間點。
預期波幅-作爲本公司2019年10月首次公開募股之前的一傢俬人持股公司，本公司普通股的交易歷史有限，因此，預期波動率是根據本公司股價和可比上市生物技術公司在與基於股票的獎勵的預期期限相同的期間內的加權平均波動率估計的。可比較的公司是根據它們相似的規模、生命週期或專業領域的階段來選擇的。該公司將繼續應用這一過程，直到有足夠數量的關於其股票價格波動的歷史信息可用。
無風險利率-無風險利率基於授予時有效的美國財政部零息債券，期限與基於股票的獎勵的預期期限相對應。
預期股息-該公司從未對其普通股支付過股息，也沒有計劃對其普通股支付股息。因此，該公司使用的預期股息收益率爲零。
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基於股票的薪酬
公司在隨附的經營報表中記錄了基於股票的補償如下：
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止三個月 |
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止九個月 |
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研發 |
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一般及行政 |
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截至2024年9月30日，有美元
2019年員工購股計劃
2019年員工購股計劃(2019 ESPP)於2019年10月14日經公司董事會批准，並於2019年10月23日生效。總計
員工繳款通過工資扣除高達
9.所得稅
《公司》做到了
10.每股淨虧損
本公司按照參與證券所需的兩級法計算每股基本淨虧損和攤薄淨虧損。在截至2024年9月30日和2023年9月30日的三個月和九個月期間，該公司發行了有投票權和無投票權的普通股。2024年5月，
稀釋每股淨虧損是使用IF-轉換法計算的，該方法假定所有無投票權普通股轉換爲有投票權普通股。
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投票普通股 |
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投票普通股 |
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每股基本淨虧損： |
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基本每股計算中使用的加權平均股數 |
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每股淨虧損，基本 |
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稀釋每股淨虧損： |
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分配未分配損失用於基本計算 |
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未分配損失的分配 |
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基本每股計算中使用的加權平均股數 |
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加：無投票權普通股轉換爲有投票權普通股 |
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稀釋每股計算中使用的加權平均股數 |
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稀釋後每股淨虧損 |
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截至三個月 |
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九個月結束 |
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投票普通股 |
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無投票權普通股 |
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投票普通股 |
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無投票權普通股 |
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每股基本淨虧損： |
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分母 |
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基本每股計算中使用的加權平均股數 |
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每股淨虧損，基本 |
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稀釋每股淨虧損： |
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分配未分配損失用於基本計算 |
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基本每股計算中使用的加權平均股數 |
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加：無投票權普通股轉換爲有投票權普通股 |
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稀釋每股計算中使用的加權平均股數 |
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稀釋後每股淨虧損 |
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以下已發行的潛在稀釋股份已被排除在每股稀釋淨虧損的計算之外，因爲其影響具有反稀釋性：
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截至9月30日， |
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2023 |
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購買普通股的股票期權 |
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項目2.管理層的討論和分析財務狀況和經營業績。
您應閱讀以下對我們財務狀況和經營結果的討論和分析，以及我們提交給美國證券交易委員會的10-K表格年度報告中的「風險因素」一節和我們未經審計的中期簡明綜合財務報表和相關注釋，以及我們提交給美國證券交易委員會的10-K表格年度報告中包含的截至2023年12月31日的經審計財務報表和相關注釋。本討論和分析中包含的或本季度報告中其他部分闡述的信息，包括有關我們業務和相關融資的計劃和戰略的信息，包括涉及風險和不確定因素的前瞻性陳述。由於許多因素的影響，包括「風險因素」一節中闡述的那些因素，我們的實際結果可能與以下討論和分析中包含的前瞻性陳述中描述或暗示的結果大不相同。您應該仔細閱讀題爲「風險因素」的部分，以了解可能導致實際結果與我們的前瞻性陳述大不相同的重要因素。
我們是一家臨床階段的生物技術公司，專注於發現和開發創新的工程t細胞療法，這些療法有可能通過一次性給藥爲自身免疫性疾病患者提供深入而持久的甚至是治癒性的反應。我們專有的CABA®，或Cabaletta B細胞消融方法，平台包含兩種策略。我們的CARTA（用於自身免疫的嵌入性抗原受體t細胞）方法旨在潛在地重置免疫系統。我們傳統的CAARt（即Chimeric Auto抗體受體t細胞）方法旨在工程化t細胞，以選擇性地接合和僅消除致病的b細胞。我們相信我們的CABA® 該平台有潛力安全地爲廣泛的自身免疫性疾病提供完整和持久的反應，並且它具有潛在的適用性，適用於我們已經確定、評估和優先考慮的數十種自身免疫性疾病。
CARTA策略旨在通過使用經工程改造以表達抗體片段的t細胞在單次治療後實現所有b細胞的短暫和完全耗盡，該抗體片段識別所有b細胞表面上表達的b細胞受體。該構建物的設計目的是允許完全消除所有b細胞，包括所有導致疾病的b細胞，隨後由健康的幼稚b細胞進行重新繁殖。這種方法有可能重置免疫系統，爲停止免疫抑制治療的患者提供有意義的持久和完整的臨床反應。
CABA-201是我們的主要候選產品，也是我們CARTA平台的第一個候選產品，是一種4-1BB共刺激結構域，包含全人CD19-CAR t結構，旨在治療廣泛的自身免疫性疾病患者。Caba-201是爲用於自身免疫患者而設計的，以緊密複製CD19-car t結構的設計，該結構在學術報告中發表在包括自然醫學，柳葉刀風溼學，而美國醫學會雜誌。這些研究採用了CD19-CAR T細胞療法，在用氟達拉濱和環磷酰胺去除標準淋巴組織後，加入了4-1BB共刺激結構域。根據迄今的報道，在系統性紅斑狼瘡、特發性炎症性肌病和系統性硬化症患者中，含有CD19-car T細胞的4-1BB療法在治療後6個月內通過快速和深度耗盡表達CD19的b細胞，然後在治療後7個月內恢復健康b細胞，從而導致臨床疾病活動性的強勁改善。追蹤正在進行中，截至2024年2月，系統性紅斑狼瘡(SLE)的臨床反應維持了長達2.5年的免疫抑制治療(Müller F等人)。自身免疫性疾病中的CD19Car T細胞治療--帶隨訪的病例系列。《新英格蘭醫學雜誌》(2024)：687-700)。據公開報道，這項學術研究中的一名特發性炎症性肌病(IIM，或肌炎)受試者在接受CD19-CART治療約12個月後肌肉疾病復發。
CABA-201中的全人CD19粘合劑由南京IASO生物治療有限公司(IASO)獨家授權，旨在與上述學術臨床報告中使用的小鼠FMC63 CD19粘合劑等價物。與使用學術研究中使用的小鼠FMC63 CD19結合表達4-1BB-CAR的T細胞相比，在體外和體內表達含4-1BB-CAR的T細胞已被證明具有相似的生物學活性(戴振宇等)。用於T細胞治療的新型全人抗CD19嵌合抗原受體的開發和功能表徵。《細胞生理學雜誌》236.8(2021年)：5832-5847)。這種全人粘合劑已經在中國的一項由研究人員發起的臨床試驗中進行了臨床評估，該試驗針對b細胞白血病和淋巴瘤正在開發中的雙CD19xCD22卡介苗，在大約20名患者中，IASO報告了一種耐受性特徵，我們認爲這有利於自身免疫性疾病的發展。
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
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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
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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
運營費用
研究與開發
我們的研發費用包括：
自成立以來，我們沒有報告項目成本，因爲從歷史上看，我們沒有逐個項目跟蹤或記錄我們的研究和開發費用。我們在整個研發活動中使用人員和基礎設施資源，旨在識別和開發候選產品。
我們在所有研發成本發生期間承擔費用。某些研發活動的成本是根據使用我們的供應商和第三方服務提供商向我們提供的信息和數據對特定任務完成進度的評估來確認的。
隨着我們項目的推進和臨床試驗的進行，我們預計我們的研發費用將在可預見的未來大幅增加，因爲我們將繼續投資於與開發候選產品相關的研發活動，包括對製造業的投資。進行必要的臨床研究以獲得監管機構批准的過程成本高昂且耗時，而且我們候選產品的成功開發也高度不確定。因此，我們無法確定研發項目的持續時間和完成成本，也無法確定何時以及在多大程度上我們將從任何候選產品的商業化和銷售中產生收入。
由於與產品開發相關的衆多風險和不確定性，我們無法確定當前或未來臨床前研究和臨床試驗的持續時間和完成成本，或者我們是否、何時或在多大程度上將從商業化和銷售中產生收入候選產品。我們可能永遠無法成功地獲得候選產品的監管批准。臨床前研究、臨床試驗和候選產品開發的持續時間、成本和時間將取決於多種因素，包括：
27
我們可能永遠不會成功地讓我們的任何候選產品獲得監管部門的批准。我們可能會從我們的臨床前研究和臨床試驗中獲得意想不到的結果。我們可能會選擇停止、推遲或修改一些候選產品的臨床試驗，或者專注於其他產品。這些因素的任何一個結果的變化都可能意味着與我們當前和未來的臨床前和臨床候選產品的開發相關的成本和時間的重大變化。例如，如果FDA或其他監管機構要求我們進行超出我們目前預期的完成臨床開發所需的臨床試驗，或者如果我們在執行或登記我們的任何臨床前研究或臨床試驗方面遇到重大延誤，我們可能需要花費大量額外的財政資源和時間來完成臨床前和臨床開發。我們預計，在可預見的未來，隨着我們繼續開發候選產品，我們的研發費用將會增加。
一般和行政費用
我們的一般和行政費用主要包括人事費用、與知識產權維護和備案有關的費用、折舊費用和外部專業服務的其他費用，包括法律、人力資源、信息技術、審計和會計服務。人員成本包括工資、福利和基於股票的薪酬費用。我們預計未來幾年我們的一般和行政費用將增加，以支持我們持續的研發活動、製造活動、上市公司運營成本的增加以及我們候選產品的潛在商業化。我們預計，在招聘更多人員、開發商業基礎設施、外部顧問、律師和會計師的費用以及與上市公司相關的成本增加(如與保持遵守納斯達克上市規則和美國證券交易委員會要求相關的服務費用)、保險和投資者關係成本方面，我們的一般和行政成本將會增加。
其他收入
其他收入包括現金、現金等值物和投資賺取的利息以及債券折扣或溢價的攤銷。
截至2024年和2023年9月30日的三個月經營業績
以下列出了截至2024年9月30日和2023年9月30日止三個月的經營業績：
|
|
截至9月30日的三個月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
變化 |
|
|||
|
|
(in數千） |
|
|
|
|
||||||
運營報表數據： |
|
|
|
|
|
|
|
|
|
|||
運營費用： |
|
|
|
|
|
|
|
|
|
|||
研發 |
|
$ |
26,290 |
|
|
$ |
13,787 |
|
|
$ |
12,503 |
|
一般及行政 |
|
|
6,756 |
|
|
|
4,881 |
|
|
|
1,875 |
|
總運營支出 |
|
|
33,046 |
|
|
|
18,668 |
|
|
|
14,378 |
|
運營虧損 |
|
|
(33,046 |
) |
|
|
(18,668 |
) |
|
|
(14,378 |
) |
其他收入： |
|
|
|
|
|
|
|
|
|
|||
利息收入 |
|
|
2,417 |
|
|
|
2,220 |
|
|
|
197 |
|
淨虧損 |
|
$ |
(30,629 |
) |
|
$ |
(16,448 |
) |
|
$ |
(14,181 |
) |
28
研究與開發
截至2024年9月30日的三個月，研發費用爲2630萬美元，而截至2023年9月30日的三個月爲1380萬美元。下表總結了我們的研發費用：
|
|
截至9月30日的三個月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
變化 |
|
|||
|
|
(in數千） |
|
|
|
|
||||||
知識產權許可 |
|
$ |
4 |
|
|
$ |
54 |
|
|
$ |
(50 |
) |
臨床前和臨床用品的製造 |
|
|
4,835 |
|
|
|
1,956 |
|
|
|
2,879 |
|
臨床試驗 |
|
|
6,228 |
|
|
|
2,236 |
|
|
|
3,992 |
|
人員 |
|
|
10,289 |
|
|
|
5,686 |
|
|
|
4,603 |
|
開發服務 |
|
|
4,495 |
|
|
|
3,552 |
|
|
|
943 |
|
其他 |
|
|
439 |
|
|
|
303 |
|
|
|
136 |
|
|
|
$ |
26,290 |
|
|
$ |
13,787 |
|
|
$ |
12,503 |
|
我們的研發費用逐年的具體變化包括：
一般和行政
截至2024年9月30日的三個月，一般和行政費用爲680萬美元，而截至2023年9月30日的三個月爲490萬美元。一般和行政費用增加190萬美元包括：
其他收入
與截至2023年9月30日的三個月相比，截至2024年9月30日的三個月的利息收入增加了20萬美元，主要是由於賺取了更高的現金利息，2023年5月融資和2023年第四季度根據2023年ATM計劃出售普通股的收益產生的現金等值物和投資餘額，以及2024年第一季度。
29
截至2024年和2023年9月30日的九個月經營業績
以下列出了截至2024年9月30日和2023年9月30日止九個月的經營業績：
|
|
截至9月30日的9個月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
變化 |
|
|||
|
|
(in數千） |
|
|
|
|
||||||
運營報表數據： |
|
|
|
|
|
|
|
|
|
|||
運營費用： |
|
|
|
|
|
|
|
|
|
|||
研發 |
|
$ |
71,671 |
|
|
$ |
38,019 |
|
|
$ |
33,652 |
|
一般及行政 |
|
|
19,685 |
|
|
|
13,495 |
|
|
|
6,190 |
|
總運營支出 |
|
|
91,356 |
|
|
|
51,514 |
|
|
|
39,842 |
|
運營虧損 |
|
|
(91,356 |
) |
|
|
(51,514 |
) |
|
|
(39,842 |
) |
其他收入： |
|
|
|
|
|
|
|
|
|
|||
利息收入 |
|
|
8,078 |
|
|
|
4,725 |
|
|
|
3,353 |
|
淨虧損 |
|
$ |
(83,278 |
) |
|
$ |
(46,789 |
) |
|
$ |
(36,489 |
) |
研究與開發
截至2024年9月30日的九個月，研發費用爲7170萬美元，而截至2023年9月30日的九個月爲3800萬美元。下表總結了我們的研發費用：
|
|
截至9月30日的9個月， |
|
|
|
|
||||||
|
|
2024 |
|
|
2023 |
|
|
變化 |
|
|||
|
|
(in數千） |
|
|
|
|
||||||
知識產權許可 |
|
$ |
1,519 |
|
|
$ |
2,378 |
|
|
$ |
(859 |
) |
臨床前和臨床用品的製造 |
|
|
12,176 |
|
|
|
5,067 |
|
|
|
7,109 |
|
臨床試驗 |
|
|
15,963 |
|
|
|
4,939 |
|
|
|
11,024 |
|
人員 |
|
|
27,453 |
|
|
|
15,365 |
|
|
|
12,088 |
|
開發服務 |
|
|
12,954 |
|
|
|
9,348 |
|
|
|
3,606 |
|
其他 |
|
|
1,606 |
|
|
|
922 |
|
|
|
684 |
|
|
|
$ |
71,671 |
|
|
$ |
38,019 |
|
|
$ |
33,652 |
|
我們的研發費用逐年的具體變化包括：
30
一般和行政
截至2024年9月30日的九個月，一般和行政費用爲1，970萬美元，而截至2023年9月30日的九個月爲1，350萬美元。一般和行政費用增加620萬美元包括：
其他收入
與截至2023年9月30日的九個月相比，截至2024年9月30日的九個月的利息收入增加了340萬美元，主要是由於現金利率上升，2022年12月和2023年5月融資產生的現金等值物和投資餘額以及根據2023年ATM計劃出售普通股的收益2023年第四季度和2024年第一季度。
流動性與資本資源
從2017年4月成立到首次公開募股（IPO），我們的運營資金來自出售可轉換票據和可轉換優先股的8640萬美元收益以及出售普通股的7100萬美元收益。自首次公開募股以來，我們通過公開發行普通股和預先融資的認購權來購買我們的普通股產生了現金，淨收益總額約爲28000萬美元。截至2024年9月30日，我們擁有18300萬美元的現金、現金等值物和投資。超過當前需求的現金根據我們的投資政策進行投資，主要是爲了流動性和資本保全。
自成立以來，我們一直出現虧損，截至2024年9月30日，我們的累計虧損爲31650萬美元。我們的現金主要用途是爲運營費用提供資金，其中主要包括研究和開發支出，以及較小程度的一般和行政支出。用於資助運營費用的現金受到我們支付這些費用時間的影響，這反映在我們未償還預付費用和其他流動資產、應付賬款和應計費用的變化中。
我們可能開發的任何候選產品都可能永遠不會實現商業化，我們預計在可預見的未來我們將繼續蒙受損失。我們預計我們的研發費用、一般和行政費用以及資本支出將繼續增加。因此，在我們能夠產生可觀的產品收入之前，我們預計將通過股票發行、債務融資或其他資本來源的組合來滿足我們的現金需求，包括潛在的合作、許可和其他類似安排。我們資本的主要用途是，我們預計將繼續用於補償和相關費用、第三方臨床研究、製造和開發服務、與擴建我們的總部、實驗室和製造設施相關的成本、可能產生的許可證付款或里程碑義務、實驗室和相關用品、臨床成本、製造成本、法律和其他監管費用以及一般管理費用。
根據我們目前的運營計劃，我們相信，截至2024年9月30日的現有現金、現金等價物和投資將使我們能夠爲2026年上半年的運營費用和資本支出需求提供資金。我們基於可能被證明是錯誤的假設做出了這一估計，我們可以比目前預期的更快地利用我們可用的資本資源。我們將繼續需要額外的資金，以推動我們目前的候選產品通過臨床開發，開發、收購或許可其他潛在的候選產品，併爲可預見的未來的運營提供資金。我們將繼續通過股票發行、債務融資或其他資本來源尋求資金，包括潛在的合作、許可證和其他類似安排。然而，我們可能無法在需要時以優惠條件或根本無法籌集額外資金或達成此類其他安排。如果我們確實通過公開或私募股權發行籌集更多資本，我們現有股東的所有權權益將被稀釋，這些證券的條款可能包括清算或其他對我們股東權利產生不利影響的優惠。如果我們通過債務融資籌集額外資本，我們可能會受到公約的限制或限制我們採取具體行動的能力，例如承擔額外債務、進行資本支出或宣佈股息。任何未能在需要時籌集資金的情況都可能對我們的財務狀況以及我們執行業務計劃和戰略的能力產生負面影響。如果我們無法籌集資金，我們將需要推遲、減少或終止計劃中的活動，以降低成本。
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市場銷售協議
2024年3月21日，我們提交了一份自動貨架登記聲明（文件編號：333-278126）或S-3 ASC，涉及普通股、優先股、債務證券、認購證和/或其任何組合的登記，目的是不時出售我們的普通股、債務證券或一項或多項發行中的其他股權證券。這款S-3 ASO立即生效。
我們與Cowen and Company，LLC或Cowen簽訂了銷售協議，規定根據S-3 ASB並遵守其限制，不時以「市場」發行或ATM計劃的方式發行、發行和銷售總額高達20，000萬美元的普通股。尚未根據2024年ATM計劃進行銷售。
我們之前與Cowen簽訂了銷售協議，根據我們在S-3表格（文件號333-270599）上的貨架登記聲明（該聲明於2023年4月26日宣佈生效），不時以「市場上」發行、發行和銷售總額高達10000萬美元的普通股。截至2023年12月31日止年度，我們根據2023年ATM計劃出售了4，760，899股股票，扣除佣金240萬美元后，淨收益爲9170萬美元。2024年第一季度，我們額外出售了258，070股股票，完成了2023年ATM計劃，扣除10萬美元佣金後，淨收益爲570萬美元。
2022年12月融資
2022年12月，我們以每股5.52美元的價格發行了126，815股普通股，並向某些投資者以每股5.51999美元的價格購買了6，213，776股普通股，以取代普通股的預融資證。每份預先融資的認購價代表普通股的每股發行價減去該預先融資的認購價每股0.00001美元。扣除承銷折扣和佣金以及發行費用240萬美元后，淨收益總額爲3260萬美元。截至2024年9月30日，已有5，589，202份預融資認購權已被行使，624，574份尚未行使。其餘未行使的認購權已於2024年9月30日之後行使。沒有尚未執行的逮捕令。
2023年5月融資
2023年5月，我們以承銷公開發行的方式發行了8，337，500股普通股，其中包括承銷商全額行使其選擇權以每股12.00美元的公開發行價格購買額外1，087，500股。扣除承銷折扣和佣金以及發行費用630萬美元后，淨收益總額爲9380萬美元。
由於與藥品的研究、開發和商業化相關的衆多風險和不確定性，我們無法估計運營資本需求的確切金額。我們未來的資金需求將取決於許多因素，包括但不限於：
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此外，我們的運營計劃可能會發生變化，我們可能需要額外的資金來滿足臨床試驗和其他研發活動的運營需求和資本要求。我們目前沒有信貸安排或承諾的資本來源。由於與我們候選產品的開發和商業化相關的衆多風險和不確定性，我們無法估計與我們當前和預期的產品開發計劃相關的資本支出和運營支出的增加金額。
現金流
下表彙總了所示期間的現金流：
|
|
截至9月30日的9個月， |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in數千） |
|
|||||
提供的現金淨額(用於)： |
|
|
|
|
|
|
||
經營活動 |
|
$ |
(65,100 |
) |
|
$ |
(37,101 |
) |
投資活動 |
|
|
35,165 |
|
|
|
(23,587 |
) |
融資活動 |
|
|
7,305 |
|
|
|
94,582 |
|
現金及現金等價物淨(減)增 |
|
$ |
(22,630 |
) |
|
$ |
33,894 |
|
經營活動
截至2024年9月30日的九個月內，經營活動使用的現金爲6510萬美元，歸因於我們淨經營資產和負債的淨虧損8330萬美元以及淨變化130萬美元，部分被主要來自股票補償、非現金租賃費用以及租賃負債和折舊的增加的1950萬美元的非現金費用所抵消。
截至2023年9月30日的九個月內，經營活動使用的現金爲3710萬美元，原因是淨虧損4680萬美元以及淨運營資產和負債減少50萬美元，部分被非現金費用淨變化1020萬美元所抵消，主要來自股票補償、非現金租賃費用、租賃負債和折舊的增加。
投資活動
截至2024年9月30日的九個月內，投資活動提供的現金爲3520萬美元，來自短期投資到期的3700萬美元，部分被購買的180萬美元財產和設備抵消。
截至2023年9月30日的九個月內，投資活動使用的現金爲2360萬美元，用於購買4810萬美元的短期投資以及50萬美元的財產和設備，部分被短期投資到期收益2500萬美元所抵消。
融資活動
截至2024年9月30日的九個月內，融資活動提供的現金爲730萬美元，來自普通股銷售的570萬美元（扣除已支付的發行成本），以及根據2019年員工股票購買計劃（即2019年ESPP）行使員工股票期權和購買股份的160萬美元。
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截至2023年9月30日的九個月內，融資活動提供的現金爲9460萬美元，主要來自我們承銷公開募股的淨收益9350萬美元以及行使員工股票期權和購買2019年ESPP下的股份的110萬美元。
合同義務和承諾
有關影響我們的合同義務和其他承諾的討論，請參閱我們截至2023年12月31日的年度10-k表格年度報告中包含的「財務狀況和運營結果的管理層討論和分析-合同義務和其他承諾」標題下的討論，該年度報告於2024年3月21日向SEC提交。
自2023年12月31日以來，公司的合同義務和其他承諾沒有發生重大變化。
關鍵會計政策與重大判斷和估計
我們於2024年3月21日向SEC提交的截至2023年12月31日的年度10-k表格年度報告中包含的關鍵會計政策以及重大判斷和估計沒有重大變化。
新興成長型公司的地位
我們是一家新興的成長型公司，正如2012年的JumpStart Our Business Startup Act或JOBS Act所定義的那樣。根據《就業法案》，新興成長型公司可以推遲採用在《就業法案》頒佈後發佈的新的或修訂後的會計準則，直到這些準則適用於私營公司。《就業法案》第107條規定，新興成長型公司可利用1933年《證券法》第7(A)(2)(B)節規定的延長過渡期，以遵守《就業法案》頒佈後發佈的新會計準則或修訂後的會計準則，直至這些準則適用於私營公司。《就業法案》第107條規定，我們可以在任何時候選擇退出延長的過渡期，這一選擇是不可撤銷的。我們選擇使用這一延長的過渡期來遵守新的或修訂的會計準則，這些準則對上市公司和私人公司具有不同的生效日期，直到我們(I)不再是一家新興成長型公司或(Ii)明確且不可撤銷地選擇退出《就業法案》規定的延長過渡期。因此，我們的合併財務報表可能無法與截至上市公司生效日期遵守新的或修訂的會計聲明的公司進行比較。
作爲一家新興的成長型公司，我們可能會利用特定的減少披露和其他適用於上市公司的其他要求。這些規定包括：(I)除了任何規定的未經審計的簡明合併財務報表外，只允許提交兩年的經審計財務報表，並相應減少「管理層對財務狀況和經營結果的討論和分析」的披露；(Ii)減少關於我們高管薪酬安排的披露；(Iii)不需要就高管薪酬舉行諮詢投票，也不需要獲得股東對任何先前未獲批准的金降落傘安排的批准；(Iv)根據2002年薩班斯-奧克斯利法案，在評估我們對財務報告的內部控制時，豁免核數師的認證要求；以及(V)豁免遵守上市公司會計監督委員會關於在核數師關於財務報表的報告中傳達關鍵審計事項的要求。我們將一直是一家新興的成長型公司，直到(1)財政年度的最後一天，即我們首次公開募股完成五週年之後的最後一天，也就是2024年12月31日，(B)我們的年總收入至少爲12.35億美元億或(C)我們被視爲大型加速申報公司，這要求截至前一個6月30日，非關聯公司持有的我們普通股的市值超過70000美元萬，和(2)我們在前三年期間發行了超過10美元億的不可轉換債券的日期.
近期發佈的會計公告
2023年11月，財務會計準則委員會（FASb）發佈了會計準則更新（ASO，2023-07） 分部報告（主題280）-可報告分部披露的改進.該ASO要求公共實體按中期和年度提供額外的分部披露。除非不切實際，否則本ASO中的修訂應追溯應用於財務報表中呈列的所有前期。過渡後，前期披露的分部費用類別和金額應基於採用期間識別和披露的重要分部費用類別。亞利桑那州立大學在2023年12月15日之後開始的財年和開始的財年內的過渡期有效
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2024年12月15日之後。允許提前收養。我們目前計劃在生效時採用該指南，並正在評估採用該指南對我們的綜合財務報表和隨附腳註的影響。
2023年12月，FASB發佈了ASU 2023-09， 改進所得稅披露. ASO 2023-09通過改進主要與稅率調節和已繳所得稅信息相關的所得稅披露，提高了所得稅信息的透明度。該指南自2024年12月15日之後開始的年度期間對公共商業實體有效。允許提前收養。我們目前計劃在生效時採用該指南，並正在評估採用該指南對我們的綜合財務報表和隨附腳註的影響。
項目3.數量和質量關於市場風險的披露。
我們在正常業務過程中面臨市場風險。這些風險主要包括利率敏感性。截至2024年9月30日，我們持有現金、現金等值物和投資18300萬美元。我們通常將現金持有在附息貨幣市場國債帳戶中，我們的投資是可供出售債務證券，投資於美國國債。我們面臨的主要市場風險是利率敏感性，它受到美國總體利率水平變化的影響。由於我們的現金等值物的期限較短，利率立即發生100個點子的變化不會對我們的現金等值物的公平市場價值產生重大影響。然而，利率下降將減少未來的投資收入。
我們沒有任何外幣或衍生金融工具。通貨膨脹通常通過增加勞動力成本和項目成本來影響我們。儘管我們不認爲通貨膨脹對我們迄今爲止的財務狀況或運營業績產生了重大影響，但由於對進行臨床試驗的成本、我們爲吸引和留住合格人員而產生的勞動力成本以及其他運營成本的影響，我們可能會在不久的將來經歷一些影響（特別是如果通貨膨脹率繼續上升）。通貨膨脹成本可能會對我們的業務、財務狀況和運營業績產生不利影響。
項目4.控制 和程序
信息披露控制和程序的評估
我們的管理層在首席執行官和首席財務官的參與下，評估了截至本報告所述期間結束時，我們的披露控制和程序(如修訂後的1934年證券交易法第13a-15(E)和15d-15(E)條或交易法所界定的)的有效性。基於這一評估，我們的首席執行官和首席財務官得出結論，截至本報告涵蓋的期間結束時，我們的披露控制和程序在合理的保證水平下有效，以確保我們根據交易所法案提交或提交的報告中要求披露的信息：(I)在美國證券交易委員會規則和表格中指定的時間段內被記錄、處理、彙總和報告；(Ii)積累並傳達給管理層，包括首席執行官和首席財務官，以便及時討論所需披露的內容。我們認爲，無論控制系統的設計和運作如何良好，都不能絕對保證控制系統的目標得以實現，而任何控制措施的評估都不能絕對保證公司內部的所有控制問題和舞弊事件(如果有)都已被發現。
財務報告內部控制的變化
截至2024年9月30日的財政季度，我們對財務報告的內部控制（定義見《交易法》第13 a-15（f）條和第15 d-15（f）條）沒有發生對我們對財務報告的內部控制產生重大影響或合理可能產生重大影響的變化。
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P第二條-其他信息
I主題1。法律訴訟。
我們公司可能會不時捲入訴訟或法律訴訟。雖然無法確定任何此類訴訟的結果，但截至2024年9月30日，我們沒有參與任何預計會對我們的財務狀況、經營業績或現金流產生重大不利影響的重大訴訟或法律訴訟。
I項目1A。危險因素
我們的業務涉及重大風險和其他風險，下面將對其中一些風險進行總結和說明。你應該仔細考慮以下描述的風險和不確定因素，以及這份10-Q表格季度報告中包含的所有其他信息，包括「管理層對財務狀況和經營結果的討論和分析」，以及精簡的綜合財務報表和相關附註。如果實際發生以下任何風險，可能會損害我們的業務、前景、經營業績和財務狀況以及未來前景。在這種情況下，我們普通股的市場價格可能會下跌，您可能會損失全部或部分投資。我們目前不知道或我們目前認爲無關緊要的其他風險和不確定性也可能損害我們的業務運營。這份Form 10-Q季度報告還包含涉及風險和不確定因素的前瞻性陳述。由於本季度報告下面和其他地方描述的因素，我們的實際結果可能與前瞻性陳述中預期的結果大不相同。
標有「*」（如果有的話）的風險因素是我們截至2023年12月31日年度的10-k表格年度報告中新添加的或已進行重大更新。
與我們的業務、技術和行業相關的風險
臨床開發相關風險
我們的開發工作還處於早期階段。如果我們無法通過臨床開發推進我們的候選產品、獲得監管機構批准並最終將我們的候選產品商業化，或者在這樣做時遇到重大延誤，我們的業務將受到重大損害。
我們的開發工作還處於早期階段，尚未完成任何臨床試驗。我們創造產品收入的能力（如果有的話）將在很大程度上取決於我們的一個或多個候選產品的成功開發和最終商業化。即使我們能夠開發和商業化可銷售的產品，我們也可能面臨從產品銷售中產生收入的挑戰。我們候選產品的成功將取決於幾個因素，包括以下因素：
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如果我們沒有及時或根本沒有實現其中一個或多個因素，我們可能會遇到重大延誤或無法成功將我們的候選產品商業化，這將對我們的業務造成重大損害。如果我們沒有獲得候選產品的監管批准，我們可能無法繼續運營。
細胞療法，包括我們工程化的嵌入抗原受體t細胞（CAR t）、嵌入自身抗體受體t細胞（CAAR t）候選產品，代表了治療自身免疫性疾病的新方法，這給我們帶來了重大挑戰。對我們開發的任何候選產品的負面看法或加強監管審查可能會對我們開展業務或爲此類候選產品獲得監管批准的能力產生不利影響。
細胞療法是一種新的方法，對我們開發的任何候選產品的負面看法或加強的監管審查可能會對我們開展業務或獲得此類候選產品的監管批准的能力產生不利影響。總的來說，細胞療法仍然是新的，到目前爲止，美國或歐盟還沒有獲得許可的細胞免疫療法來治療自身免疫性疾病或同種異體免疫反應。針對自身免疫性或同種異體免疫性疾病的CART或CAAR T細胞療法可能不會被公衆或醫學界接受。例如，CART和其他細胞療法在某些情況下造成了嚴重的副作用，包括死亡，因此它們的更廣泛使用可能會受到限制。未來，如果其他CART療法(包括使用CD19粘合劑的療法)出現如此嚴重的副作用，可能會增加人們對我們候選產品的負面看法和監管審查。例如，2023年11月，fda宣佈將對使用bcma或cd19指導的自體car t細胞免疫療法治療後的t細胞惡性腫瘤的報告進行調查。FDA還表示，接受此類批准產品治療的患者和臨床試驗參與者應該對新的惡性腫瘤進行終身監測。2024年1月，美國食品和藥物管理局決定，所有bcma和cd19基因修飾的自體t細胞免疫療法的標籤中都應該包括與t細胞惡性腫瘤相關的新的安全信息，並使用方框警告語言對這些惡性腫瘤進行標記。公衆的認知可能會受到這樣的說法的影響，即基因治療，包括植入轉基因，是不安全的，而含有基因治療的產品可能無法獲得公衆或醫學界的接受。我們的候選產品所針對的患者群體通常也不會面臨近期死亡的風險，即使他們可能會出現危及生命的症狀，因此患者需要認爲細胞治療的好處值得冒未知潛在不良副作用的風險。我們的成功將取決於專門治療我們候選產品所針對的自身免疫性疾病的醫生，他們開出的治療方案涉及使用我們的候選產品來替代或補充他們更熟悉的、可能有更多臨床數據的現有治療方法。我們候選產品的臨床試驗、其他開發類似產品的臨床試驗或批准後環境中的不良事件以及由此產生的宣傳，以及細胞療法領域的任何其他不良事件，都可能導致對我們可能開發的任何產品的需求減少。
我們正在開發CAR t和CAAR t候選產品管道，旨在用於治療患有自身免疫性疾病的個體。推進這些新穎候選產品給我們帶來了重大挑戰，包括：
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此外，臨床前小鼠和其他動物模型可能不存在或不足以治療某些或所有自身免疫性疾病，在這些疾病中，b細胞可能在啓動或維持我們在計劃中選擇的疾病方面發揮作用，而且由於我們處於臨床開發過程的早期，我們無法預測我們開發的任何候選產品治療可能會產生短期或長期影響。在開發我們的候選產品時，我們並沒有窮盡地探索製造CART或CAAR T電池的方法的不同選擇。我們可能會發現，隨着未來設計或工藝的改變，我們現有的製造工藝可能會得到實質性的改進，這將需要進一步的臨床測試，推遲我們首批產品的商業發佈，並導致我們產生額外的費用。例如，雖然我們在製造過程中使用了慢病毒載體，但未來我們可能會發現另一種病毒載體或基於非病毒載體的過程提供了優勢。從一種慢病毒載體切換到另一種慢病毒載體或從慢病毒載體切換到另一種遞送系統需要額外的過程開發和臨床測試，這可能會推遲現有候選產品的開發。
此外，我們不知道關鍵試驗中需要評估的劑量，或者（如果獲得許可）商業化的劑量。尋找合適的劑量可能會推遲我們預期的臨床開發時間表，我們可能會選擇暫停臨床試驗以尋找合適的劑量或在繼續試驗之前進行評估。隨着我們開發候選產品並了解這些關鍵因素，我們對可擴展性和製造成本的期望可能會有很大差異。我們在開發可持續、可重複和可擴展的製造工藝或將該工藝轉移給商業合作伙伴時可能會遇到延誤，這可能會阻止我們及時或有利可圖地完成臨床研究或將候選產品商業化（如果有的話）。
此外，我們的候選產品可能無法在臨床試驗中成功表現，或者可能與不良事件相關，使其與之前已獲得許可的CAR t療法區分開來。例如，我們CAAR t臨床試驗中的受試者將輸注我們提出的療法，並且可能具有強激活的可溶性抗體，而腫瘤患者中不存在這種抗體，當它們與我們輸注的候選產品相互作用時，可能會導致潛在的不良副作用，例如CRS或ICANS。此外，即使是我們的CAR t或CAAR t候選產品之一引起的不良副作用也可能會對我們基於CABA開發未來候選產品的能力產生負面影響® 平台我們的任何候選產品的意外副作用或臨床結果都會對我們的業務產生重大影響。
此外，FDA、歐洲藥品管理局(EMA)和其他監管機構的臨床研究要求以及他們用來確定候選產品的安全性、有效性和純度的標準，是根據潛在產品的類型、複雜性、新穎性和預期用途和市場來確定的。像我們這樣的新產品候選產品的監管審批過程不那麼明確，可能會更復雜，因此與其他更知名或經過廣泛研究的藥品或其他產品候選產品相比，具有更高的開發風險、更昂貴的成本和更長的時間。FDA批准用於治療b細胞介導性疾病的現有細胞療法，如Kymriah(諾華製藥公司)和Yescarta®(吉利德科學公司)在腫瘤學適應症中，可能不表明FDA可能要求批准我們的自身免疫適應症的治療。任何監管機構的批准可能不表明任何其他監管機構可能需要批准什麼，或者這些監管機構可能需要批准與新產品候選有關的什麼。當我們推出我們的候選產品時，我們將被要求與這些監管機構協商，並遵守適用的要求和指導方針。如果我們未能做到這一點，我們可能被要求推遲或停止此類候選產品的開發。這些額外的流程可能會導致審查和批准過程比我們預期的要長。更具限制性的法律制度、政府法規或負面輿論將對我們的業務、財務狀況、運營結果和前景產生不利影響，並可能延遲或損害我們候選產品的開發和商業化，或對我們可能開發的任何產品的需求。
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此外，聯邦和州一級的機構對公衆的負面看法或道德關切的反應可能會導致新的立法或法規，可能會限制我們開發或商業化任何候選產品、獲得或維持監管批准或以其他方式實現盈利的能力。FDA已表示有興趣進一步監管生物技術產品，如細胞療法。美國聯邦和州一級的機構以及美國國會委員會和其他政府實體或管理機構也表示有興趣進一步監管生物技術行業。這樣的行動可能會推遲或阻止我們的部分或全部候選產品的商業化。其他人進行的細胞療法產品臨床試驗或批准後環境中的不利發展可能會導致FDA或其他監督機構改變對我們任何候選產品的批准要求。這些監管審查機構和委員會及其頒佈的新要求或指南可能會延長監管審查過程，要求我們進行額外的研究或試驗，增加我們的開發成本，導致監管立場和解釋的變化，推遲或阻止我們候選產品的批准和商業化，或者導致重大的批准後限制或限制。
接受基於t細胞的免疫療法（例如我們的候選產品）的患者過去和未來可能會經歷嚴重的不良事件，包括ICANS、CRS以及殺死表達自身抗體的預期b細胞以外的細胞。如果我們的候選產品被發現具有高度且不可接受的嚴重程度和/或普遍存在的副作用或意外特徵，其臨床開發、監管批准和商業潛力將受到負面影響，這將嚴重損害我們的業務、財務狀況和前景。
我們的候選產品是CART或CAAR T細胞免疫療法。在我們用於治療癌症的臨床試驗和其他類似設計的細胞免疫療法中，出現了與ICAN和CRS相關的危及生命的事件，需要進行激烈的醫療干預，如插管或用藥物維持血壓，在幾個案例中，還會導致死亡。在我們正在進行的CABA-201中，我們觀察到了CRS和ICAN的事件，恢復了自我容忍或重置TM，審判。ICANS是一種目前臨床上定義爲腦水腫、神志不清、嗜睡、言語障礙、震顫、癲癇或其他中樞神經系統副作用的疾病，當這些副作用嚴重到足以導致重症監護時。CRS是一種目前臨床上由與細胞因子釋放有關的某些症狀來定義的疾病，這些症狀可能包括髮熱、寒戰和低血壓，當這些副作用嚴重到足以導致使用機械通氣或重要的藥物來維持血壓的重症監護時。我們的候選產品可能會有類似的危及生命的嚴重不良副作用，如ICAN和CRS。
我們的候選產品可能會由於與CAR或CAAR的意外蛋白質相互作用而以體內細胞爲靶點，從而產生嚴重和潛在的致命後果。儘管我們已經完成了多項臨床前研究，旨在篩選DSG3 CAAR、麝香CAAR和CABA-201的細胞結合結構域意外靶向識別所造成的毒性，並打算篩選未來尚未通過臨床前研究在患者中測試的CAR和CAAR候選蛋白，但我們的候選產品仍可能識別一個或多個與預期表面免疫球蛋白目標蛋白無關的蛋白質並與其發生反應。如果正常組織發生意外結合，我們的候選產品可能會針對並殺死患者的正常組織，導致嚴重和潛在的致命不良事件、不良副作用、毒性或意外特徵。檢測到任何意想不到的目標可能會停止或推遲我們候選產品的任何正在進行的臨床試驗，並阻止或推遲監管部門的批准。雖然我們已經開發了一個臨床前篩選過程來確定我們的候選產品的交叉反應，但我們不能確定這個過程是否會識別我們的候選產品可能針對的所有潛在組織。例如，帶有DSG3-CAARt的膜蛋白陣列針對一種旨在與糖蛋白結合的蛋白產生一個微弱的信號，該蛋白在測試和控制條件下都被檢測到。在確證細胞分析中對該蛋白的進一步分析反覆證明DSG3-CAARt不識別或激活該蛋白。我們對麝香CAAR和CABA-201進行了類似的臨床前研究，沒有觀察到任何已證實的穆斯克-CAARt或CABA-201的非靶標活性。然而，這種進一步的分析可能被證明是不準確的。任何影響患者安全的意想不到的目標都可能對我們的候選產品進入臨床試驗或進入市場批准和商業化的能力產生實質性影響。此外，如果受試者再次接受治療，他們的反應可能與給予相同劑量的其他受試者不同，並且可能無法耐受該劑量或出現安全問題。
我們的研究結果可能揭示出副作用或意想不到的特徵的高度和不可接受的嚴重性和普遍性。我們的候選產品引起的不良副作用可能會導致我們或監管機構中斷、推遲或停止臨床試驗，並可能導致更嚴格的標籤或FDA或其他監管機構推遲或拒絕監管批准。2023年11月28日，fda發佈了一份聲明，稱正在調查bcma或cd19指導的自體car細胞免疫療法在癌症環境下發生t細胞惡性腫瘤的嚴重風險，並要求對接受這些療法的患者進行終身監測。我們CART和CAART研究中的患者也可能患上某些危及生命的癌症或惡性腫瘤。我們對CABA-201的臨床試驗代表了對該候選產品在患者中的首次評估，CABA-201針對所有表達CD19的b細胞；因此，存在延長b細胞再生障礙性疾病和/或低丙種球蛋白血癥的風險，這可能使患者容易受到感染。考慮到我們正在尋求治療的自身免疫和同種異體免疫疾病在某些情況下沒有使用其他免疫治療產品治療的晚期癌症那麼嚴重，我們相信fda和其他監管機構可能會應用不同的益處-風險評估閾值，這樣即使我們的候選產品顯示出與當前car t療法相似的安全性，fda最終可能會確定有害的副作用大於益處，並要求我們停止治療。
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臨床試驗或拒絕批准我們的候選產品。我們相信，我們的CAAR t和CAR t細胞療法在自身免疫和同種免疫適應症中追求的患者群體對不良事件的耐受性將低於腫瘤學，因此，這些毒性產生負面影響的風險對我們來說可能高於腫瘤學中的CAR t計劃。
此外，與治療相關的副作用也可能影響患者招募或納入患者完成研究的能力或導致潛在的產品責任索賠。此外，這些副作用可能沒有得到治療醫務人員的適當認識或處理，因爲基於T細胞的免疫療法引起的毒性通常不會在常規醫療中遇到。醫務人員可能需要對基於T細胞的免疫療法候選產品進行額外的培訓，以了解其副作用。在認識或未能有效管理基於T細胞的免疫療法候選產品的潛在副作用方面培訓不足，可能導致患者死亡。任何這些情況都可能對我們的業務、財務狀況和前景造成重大損害。除了我們的候選產品造成的副作用外，任何我們作爲流程改進和優化努力的一部分而不時評估的任何預調節、管理流程或相關程序，也可能會導致不利的副作用。例如，已注意到長期或持續的細胞減少症和ICAN與某些淋巴清除方案和CART療法的使用有關。
目前在我們的幾項臨床試驗中實施的預處理方案可能會增加不良副作用的風險，並影響我們準確評估候選產品功效的能力。
在接受CART細胞治療的腫瘤患者中，通常在CART細胞輸注之前使用淋巴清除預適應方案，以提高腫瘤的免疫原性並促進輸注的CART細胞的擴增。總而言之，這些效應已被證明可以增強腫瘤患者CART細胞的臨床活性。這些方案通常包括環磷酰胺和氟達拉濱，通常在CART細胞輸注前一週內給藥。我們在DesCAARTes實施了一種預適應方案TM某些受試者在注射DSG3-CAARt之前接受靜脈注射免疫球蛋白和環磷酰胺預治療，其他患者在注射DSG3-CAARt之前接受靜脈注射免疫球蛋白、環磷酰胺和氟達拉濱預治療的試驗，已在MusCAARTes中納入計劃劑量隊列TM試驗中，受試者在輸注Musk-CAARt之前接受氟達拉濱和環磷酰胺的預治療，我們在重置中加入了氟達拉濱和環磷酰胺的淋巴耗竭預適應方案TM臨床試驗。我們正在評估無預適應的CABA-201在MPV和MCPV患者中的RESET-PV試驗。在一些患者輸注CART細胞後觀察到了嚴重的不良反應，包括感染、細胞因子釋放綜合徵和ICAN。淋巴去除和免疫調節預適應方案可能導致這些不良事件的發生和嚴重程度，其作用是誘導血液中的白細胞減少或低水平的白細胞，包括血液中的淋巴細胞減少或低水平的淋巴細胞，並調節其他免疫細胞和抗體的激活和效應功能，以及增強CAT細胞的活性。
此外，淋巴清除療法可以消除我們的CAAR-T細胞候選產品所針對的致病b細胞。因此，我們使用的任何淋巴去除預適應方案都可能延遲或以其他方式不利地影響我們使用DSG3或Musk自身抗體效價(一種標準的臨床檢測方法)分別評估DSG3-CAARt和Musk-CAARt活性的能力。不能使用DSG3或穆斯克自身抗體水平來顯示我們的CAAR T細胞候選產品的特定活性，可能需要我們依賴於DesCAARTes中患者水泡形成的主觀測量TM馬斯卡蒂的肌肉無力或肌肉無力TM試驗，這可能是一種不那麼靈敏和準確的CAAR T細胞活性測量方法。因此，這可能會延遲CAAR潛在生物學活性的信號，因此可能會減緩臨床發展。我們將繼續評估來自MusCAARTes的新興數據TM正在進行的試驗以及自身免疫性疾病的其他相關臨床試驗，並可能酌情進行額外的修改。
除了淋巴消耗預處理外，還可以考慮具有免疫調節作用的其他預處理方案，爲身體準備CAR t或CAAR t輸注。例如，如果發現自身抗體會降低或抑制體內CAAR t的功能，則可以考慮對患者進行抗體降低療法（例如FcRN抑制劑、IVIG、血漿置換術）或利妥昔單抗治療後患者的預處理。其中一些類型的預處理是該自身免疫人群的標準護理，因此已被認爲在該患者人群中具有有益的風險特徵。這些其他預處理方案可能會導致嚴重的不良事件，包括低血壓、血栓栓和機會性感染。
我們收件箱中的主題TM 除我們的RESEt-PV試驗外，其他試驗將在CABA-201輸注之前採用由氟達拉濱和環磷胺組成的標準預處理方案進行治療。此外，淋巴細胞清除方案可能會消除CABA-201靶向的一些病原性b細胞。因此，淋巴細胞清除方案可能會導致CABA-201後可能觀察到的初始臨床反應，這可能會導致早期療效的解釋難以評估，並且還可能延遲我們獨立於氟達拉濱和環磷胺的影響來描述CABA-201活性的能力。我們打算通過與非淋巴細胞耗盡組的比較，在CAAR和CABA-201研究中評估預處理的潛在影響。
我們的臨床患者可能會經歷與預處理方案具體相關的增加或更嚴重的不良反應，例如嚴重的過敏反應、呼吸困難、嚴重頭痛、發燒和寒戰、嚴重感染、低血細胞計數、結腸炎症伴出血、膀胱刺激、血栓、某些癌症的發展、心臟、肺或腎臟損傷，甚至死亡。這些不良副作用，無論是與單獨的預處理方案有關還是組合有關
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使用我們的CAR t細胞候選產品或CAAR t細胞候選產品，可能會導致我們臨床試驗的患者入組延遲，可能會導致我們或監管機構中斷、延遲或停止臨床試驗，並可能導致我們的臨床試驗設計發生變化、更具限制性的標籤或延遲或拒絕FDA的監管批准。上述任何情況都可能會增加我們候選產品的臨床開發持續時間和費用，或限制此類候選產品的市場接受度（如果獲得批准），其中任何情況都可能對我們的業務和財務狀況產生重大不利影響。
我們的業務高度依賴於針對自身免疫性疾病的初始候選產品的成功，其中b細胞可能在引發或維持疾病方面發揮作用。我們所有候選產品都需要進行大量額外的臨床前和/或臨床開發，然後才能尋求監管機構批准並將產品投入商業市場。
我們的業務和未來的成功取決於我們獲得監管機構批准、然後成功推出和商業化針對自身免疫性疾病的初始候選產品的能力，其中b細胞可能在疾病的引發或維持中發揮作用。無法保證我們能夠通過臨床開發推進我們的候選產品或獲得我們的任何候選產品的營銷批准。任何候選產品獲得營銷批准的過程都是非常漫長且有風險的，爲了按計劃獲得營銷批准（如果有的話），我們將面臨重大挑戰。
我們觀察到的初步臨床結果可能無法預測本臨床試驗中後續隊列或任何未來臨床試驗的結果。由於CABA-201、DSG 3-CAARt和MuSk-CAARt是我們在臨床上測試的前三種候選產品，因此我們可能會遇到有關試驗設計、方案制定和執行、建立試驗方案、患者招募和入組、臨床劑量的質量和供應或安全問題的初步併發症。
此外，我們的DSG 3-CAARt、MuSk-CAARt或CABA-201 RST臨床試驗失敗TM 試驗可能會影響醫生和監管機構對CABA可行性的看法® 更廣泛的平台，特別是如果觀察到治療相關的副作用。任何這些風險的發生都可能嚴重損害我們的發展計劃和業務前景。如果使用DSG 3-CAARt、MuSk-CAARt或CABA-201觀察到治療相關的副作用，或者如果它們被認爲比其他療法更不安全、有效或純度，那麼我們開發其他CAAR t或CAR t細胞療法的能力可能會受到顯着損害。
我們從未成功完成任何臨床試驗，而且我們可能無法爲我們開發的任何候選產品做到這一點。
我們尚未證明我們有能力成功完成任何臨床試驗，包括大規模的關鍵臨床試驗、獲得監管批准、製造商業規模的產品、或安排第三方代表我們這樣做，或進行成功商業化所需的銷售和營銷活動。雖然我們的關鍵員工在領導臨床開發計劃方面擁有豐富的經驗，但我們使用我們的候選產品進行臨床試驗的經驗有限。我們可能無法在預期的時間線上提交任何其他候選產品的IND或CTA(如果有的話)。例如，我們不能確定爲我們未來的候選產品進行的IND或CTA研究是否會及時完成或成功，或者製造過程是否會及時得到驗證。即使我們爲未來的候選產品提交IND或CTA，FDA、EMA或其他外國監管機構也可能無法批准IND或CTA，並允許我們及時或根本不能開始臨床試驗。提交未來候選產品的時間將取決於臨床前和製造方面的進一步成功。此外，我們不能確定提交IND或CTA會導致FDA或其他外國監管機構允許開始進一步的臨床試驗，或者一旦開始，就不會出現要求我們暫停或終止臨床試驗的問題。根據與FDA和其他外國監管機構的討論，啓動這些臨床試驗中的每一項都需要最終確定試驗設計。我們從FDA或其他外國監管機構收到的任何指導意見都可能發生變化。這些監管機構可能會改變他們的立場，包括我們試驗設計的可接受性或所選的臨床終點，這可能要求我們完成更多的臨床試驗或施加比我們目前預期更嚴格的批准條件。
如果我們被要求對我們的候選產品進行超出我們目前預期的額外臨床試驗或其他測試，如果我們無法成功完成我們候選產品的臨床試驗或其他測試，如果這些試驗或測試的結果不呈陽性或僅爲輕微陽性，或者如果存在安全問題，我們可能會：
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如果對我們提起產品責任訴訟，我們可能會承擔大量責任，並可能被要求限制我們候選產品的商業化。
由於對候選產品進行臨床測試，我們面臨着固有的產品責任風險，如果我們將任何產品商業化，我們將面臨更大的風險。例如，如果我們的候選產品在臨床測試、製造、營銷或銷售期間造成或被認爲造成傷害，或者被發現在其他方面不適合，我們可能會被起訴。任何此類產品責任索賠可能包括對製造缺陷、設計缺陷、未能警告產品固有危險、疏忽、嚴格責任或違反保證的指控。也可以根據州消費者保護法提出索賠。如果我們無法成功保護自己免受產品責任索賠的影響，我們可能會承擔重大責任或被要求限制我們候選產品的商業化。即使成功的防禦也需要大量的財務和管理資源。無論優點或最終結果如何，責任索賠可能會導致：
由於我們還沒有開始銷售任何產品，我們還沒有爲我們的候選產品商業化投保產品責任保險。我們無法以可接受的成本獲得足夠的產品責任保險，以防範潛在的產品責任索賠，這可能會阻止或阻礙我們單獨或與公司合作伙伴開發的產品的商業化。我們的保險單也可能有各種例外，我們可能會受到產品責任索賠的影響，而我們沒有承保範圍。假設我們爲我們的臨床試驗獲得了臨床試驗保險，我們可能不得不支付法院裁決的或在和解協議中談判達成的超出我們承保範圍限制或不在我們保險覆蓋範圍內的金額，而我們可能沒有或能夠獲得足夠的資本來支付這些金額。即使我們與任何未來的公司合作伙伴達成的協議使我們有權獲得損失賠償，如果出現任何索賠，這種賠償可能是不可用的或足夠的。
行業相關風險
我們的候選產品可能會導致不良副作用或具有其他特性，可能會阻止其臨床開發、阻止其監管批准、限制其商業潛力或導致嚴重的負面後果。
我們的候選產品造成的不良或不可接受的副作用可能會導致我們或監管機構中斷、推遲或停止臨床試驗，並可能導致標籤更具限制性，或者FDA或其他外國監管機構延遲或拒絕監管批准。此外，臨床試驗本質上利用了潛在患者人群的樣本。由於受試者數量有限，暴露持續時間有限，我們候選產品的罕見和嚴重副作用只有在接觸該藥物的患者數量明顯增加的情況下才可能被發現。不良副作用還可能導致我們臨床試驗規模擴大，增加我們臨床試驗的預期成本和時間軸。此外，我們的臨床試驗的結果可能揭示了副作用或意外特徵的嚴重程度和普遍程度很高且不可接受。
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獲得許可的CAR t細胞療法和正在開發的療法顯示出CRS和ICANS的頻繁發生，不良事件已導致患者死亡。在使用我們當前或未來的CAR t或CAAR t細胞候選產品治療期間也發生過類似的不良事件，並且可能發生。例如，患者自身抗體或同種抗體激活CAAR t細胞可以刺激CRS。當輸注CAAR t細胞並且CAAR與治療患者血液或組織中的可溶性抗體結合時，這些可溶性抗體可能會導致CAAR t細胞繁殖，導致免疫系統激活過高，導致CRS。此外，由於對CAAR內抗原預先存在的免疫力，患者可能會表現出對CAAR t細胞的急性排斥反應。這可能會使我們的候選產品無效。
如果我們的候選產品開發過程中出現不可接受的毒性或健康風險，包括其他無關免疫療法試驗的推斷風險，我們可以暫停或終止我們的試驗，或FDA、我們試驗的安全監測委員會(例如數據安全監測委員會或獨立數據安全監測委員會，IDMC)，或當地監管機構，如機構審查委員會，IRBs，或獨立道德承諾，或IECS，可視情況建議或命令我們停止臨床試驗。監管機構，如FDA，也可以拒絕批准我們的任何或所有目標適應症的候選產品。與治療相關的副作用也可能影響患者招募或受試者完成試驗的能力或導致潛在的產品責任索賠。此外，治療醫務人員可能沒有適當地認識到或處理這些副作用，因爲T細胞療法引起的毒性通常不會出現在普通患者群體和醫務人員身上。我們預計必須培訓使用CART或CAAR T細胞候選產品的醫務人員，以了解我們的臨床前研究和臨床試驗的候選產品的副作用概況，以及我們的任何候選產品的任何商業化(如果獲得許可)。在識別或管理我們的候選產品的潛在副作用方面培訓不足可能會導致患者死亡。任何這些情況都可能對我們的業務、財務狀況和前景造成重大損害。
* 我們的臨床前研究和臨床試驗可能無法證明我們任何候選產品的安全性、效力和純度，這將阻止或推遲監管批准和商業化。
在我們的任何候選產品的商業銷售獲得監管部門的批准之前，我們必須通過漫長、複雜和昂貴的臨床前測試和臨床試驗來證明我們的候選產品是安全、有效和純粹的，可以用於每個目標適應症。臨床試驗費用昂貴，可能需要數年時間才能完成，而且其結果本身也不確定。在臨床試驗過程中，任何時候都可能發生失敗。我們候選產品的臨床前研究和早期臨床試驗的結果可能不能預測後期臨床試驗的結果，包括我們候選產品的任何批准後研究。此外，任何臨床試驗的初步成功可能並不代表這些試驗完成後所取得的結果。通常，由於候選產品在臨床試驗中失敗而導致的自然流失率極高。儘管在臨床前研究和初步臨床試驗中取得了進展，但臨床試驗後期階段的候選產品可能無法顯示出所需的安全性、有效性和純度。同樣，雖然我們認爲CABA-201的總體設計與用於患者的結構相似自然醫學， 《柳葉刀》、《風溼病與風溼學年鑑》但是，由於這些研究並未公開發表，這些研究涉及少量患者和不同的候選產品，而這些研究中觀察到的初步臨床結果可能不能預測使用CABA-201或我們的任何其他候選產品的臨床試驗結果，此外，由於這些研究不是我們自己的，我們可能無法獲得準確的後續信息或同行評議的結果。
儘管早期試驗取得了令人鼓舞的結果，但由於缺乏效力或功效、效力或功效的持久性不足或不可接受的安全問題，生物製藥行業的許多公司在先進的臨床試驗中遭遇了重大挫折，我們無法確定我們不會面臨類似的挫折。這些挫折是由臨床試驗進行時發現的臨床前和其他非臨床發現，或者臨床前研究和臨床試驗中發現的安全性或有效性觀察造成的，包括之前未報告的不良事件。此外，臨床前和臨床數據往往容易受到不同的解釋和分析，許多認爲其候選產品在臨床前研究和臨床試驗中表現令人滿意的公司，但未能獲得FDA或EMA的批准。大多數開始臨床試驗的候選產品從未被批准爲產品。
我們可能進行的任何臨床前研究或臨床試驗可能無法證明獲得監管部門批准將我們的候選產品推向市場所需的安全性、有效性和純度。如果我們正在進行的或未來的臨床前研究和臨床試驗的結果在評估我們的候選產品的有效性、安全性、效力和純度方面沒有確定的結果，如果我們沒有達到具有統計和臨床意義的臨床終點，或者如果我們的候選產品存在安全問題，我們可能會阻止或推遲獲得此類候選產品的上市批准。在某些情況下，由於許多因素，同一候選產品的不同臨床前研究和臨床試驗之間的療效、安全性、效力或純度結果的評估可能存在顯著差異，包括方案中規定的試驗程序的變化、患者群體的大小和類型的差異、臨床試驗方案的變化和遵守以及臨床試驗參與者的退學率。例如，由於我們的CAAR T細胞候選產品僅針對患者體內約0.01%至1%的b細胞，因此它們可能不足以達到消除所有致病b細胞所需的充分植入。臨床試驗中安全性或有效性不足可能會推遲產品開發，以便有時間爲下一代方法修改候選產品或進行製造更改，或者可能導致我們停止開發候選產品。
此外，我們正在進行的臨床試驗利用了「開放標籤」試驗設計，而且我們計劃的試驗可能利用了「開放標籤」試驗設計。「開放標籤」臨床試驗是指患者和研究者都知道患者是否正在接受候選研究產品、活性藥物或安慰劑的試驗。最典型的是，開放標籤臨床試驗僅測試候選研究產品，有時可能會以不同的劑量水平進行測試。開放標籤臨床試驗受到各種限制，這些限制可能會誇大任何治療效果，因爲開放標籤臨床試驗中的患者在接受治療時知道。開放標籤臨床試驗可能會受到「患者」的影響
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「偏見」，即患者認爲自己的症狀僅僅是因爲他們意識到接受實驗性治療而有所改善。此外，開放標籤臨床試驗可能會受到「研究者偏見」的影響，即那些評估和審查臨床試驗生理結果的人知道哪些患者已經接受了治療，並且可能會更有利地解釋治療組的信息。開放標籤試驗的結果可能無法預測我們的任何候選產品的未來臨床試驗結果，當在使用安慰劑或活性對照的受控環境中進行研究時，我們納入了開放標籤臨床試驗。
此外，我們不能保證FDA或其他外國監管機構會像我們一樣解釋我們任何正在進行或計劃進行的臨床試驗的結果，在我們提交候選產品批准之前，可能需要進行更多試驗。如果試驗結果不令FDA或其他外國監管機構滿意，無法支持上市申請，我們候選產品的批准可能會嚴重延遲，或者我們可能需要花費我們可能無法使用的大量額外資源來進行額外試驗，以支持我們候選產品的潛在批准。
爲了在美國境外營銷任何產品，公司還必須遵守其他國家和司法管轄區在質量、安全性和有效性以及對產品的臨床試驗、營銷授權、商業銷售和分銷等方面的衆多不同的監管要求。無論是否獲得FDA對產品的批准，申請人都需要獲得類似外國監管機構的必要批准，才能在這些國家或司法管轄區開始該產品的臨床試驗或營銷。例如，歐盟對醫藥產品的審批流程與美國大體相同，但也可能存在顯著差異。它需要令人滿意的完成臨床前研究和充分和良好控制的臨床試驗，以確定產品的安全性和有效性的每一個建議的適應症。它還要求向有關主管當局提交銷售授權申請，並由這些主管部門給予銷售授權，然後產品才能在歐洲聯盟銷售和銷售。
隨着更多數據的可用，我們進行的任何臨床前研究或臨床試驗的中期、總體或初步數據可能會發生變化，並且需要接受審計和驗證程序，這可能會導致最終數據發生重大變化。
我們的DesCAARTesTM 審判，MusCAARTesTM 審判和起訴TM 在系統性紅斑狼瘡、脊髓炎、SSc和gMG和RESEt中的試驗- 光伏TM 子研究設計爲開放標籤試驗。我們可能會不時公開披露臨床前研究和臨床試驗的中期、初步或總體數據，包括安全性數據和療效評估，這些數據將基於對當時可用數據的初步分析，在我們收到額外數據或對與特定研究相關的數據進行更全面的審查後，結果以及相關發現和結論可能會發生變化，或審判作爲數據分析的一部分，我們還做出假設、估計、計算和結論，我們可能尚未收到或沒有機會全面、仔細地評估所有數據。
因此，我們報告的背線結果可能與相同研究的未來結果不同，或者一旦收到更多數據並進行充分評估，不同的結論或考慮因素可能會使這些結果合格。背線數據仍需接受審計和核實程序，這可能會導致最終數據與我們之前公佈的初步數據大不相同。因此，在最終數據可用之前，應謹慎查看背線數據。有時，我們也可能在我們的臨床試驗中披露計劃中的中期分析的中期數據。我們可能完成的臨床試驗的中期數據面臨這樣的風險，即隨着患者登記的繼續和更多患者數據的獲得，一個或多個臨床結果可能會發生實質性變化。初步或中期數據與最終數據之間的不利差異可能會嚴重損害我們的業務前景。此外，由於試驗的開放標籤設計，如果我們或我們的競爭對手，或者知道患者正在接受研究產品的患者或護理人員披露臨時數據，可能會導致我們普通股的價格波動。
監管機構，包括FDA或其他外國監管機構，可能不接受或同意我們的假設、估計、計算、結論或分析，或者可能以不同的方式解釋或權衡數據的重要性，這可能會影響特定計劃的價值、特定候選產品或產品的可批准性或商業化以及我們的整個公司。
如果我們報告的中期、總體或初步數據與實際結果不同，或者如果包括監管機構在內的其他人不同意得出的結論，我們獲得候選產品批准和商業化的能力可能會受到損害，這可能會損害我們的業務、經營結果、前景或財務狀況。
社交媒體平台的使用越來越多，帶來了新的風險和挑戰。
社交媒體越來越多地被用來溝通我們的臨床開發計劃以及我們開發候選產品要治療的疾病。我們打算利用適當的社交媒體來溝通我們的開發計劃。生物製藥行業的社交媒體實踐不斷髮展，與此類使用相關的法規並不總是明確。這種演變帶來了不確定性和不遵守適用於我們業務的法規的風險。例如，患者可能會使用社交媒體渠道報告臨床試驗期間涉嫌不良事件。當發生此類披露時，我們可能無法監控和遵守適用的不良事件報告義務，或者我們可能無法辯護
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由於我們對研究產品的言論受到限制，因此面臨社交媒體產生的政治和市場壓力，我們的業務或公衆的合法利益。還存在在任何社交網站上不當披露敏感信息或關於我們的負面或不準確帖子或評論的風險，或者我們的任何員工在社交網站上發佈的帖子可能被解釋爲不當促銷的風險。如果發生其中任何事件或我們未能遵守適用法規，我們可能會承擔責任、面臨監管行動或對我們的業務造成其他損害。
我們的臨床試驗可能會遇到重大延誤，或者可能無法按照我們預期的時間表或根本無法進行試驗。
臨床測試昂貴、耗時且具有不確定性。我們無法保證任何臨床試驗將按計劃進行或按計劃完成（如果有的話）。即使這些試驗按計劃開始，也可能會出現暫停或終止此類臨床試驗的問題。一項或多項臨床試驗的失敗可能發生在測試的任何階段，並且我們正在進行的和未來的臨床試驗可能不會成功。可能阻礙臨床開發成功或及時完成的事件包括：
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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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