533 Airport Boulevard, Ste. 400

Burlingame, CA 94005

(Address of Principal Executive Offices) (Zip Code)

(650) 243-3100 

(Registrant’s Telephone Number, Including Area Code)

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

TABLE OF CONTENTS

Humanigen, Inc.

Form 10-K

Index

SUMMARY OF PRINCIPAL RISK FACTORS

This summary briefly states the principal risks and uncertainties facing our business that could affect our common stock, which are only a select portion of those risks. A more complete statement of those risks and uncertainties is set forth in “Part I, Item 1A - Risk Factors” of this report. This summary is qualified in its entirety by that more complete statement. You should carefully read the entire statement and “Risk Factors” when considering the risks and uncertainties as part of your evaluation of an investment in our common stock.

PART I

ITEM 1.  BUSINESS

Overview

During 2019, we completed our transformation intoWe are a clinical stage biopharmaceutical company, developing our clinical stage immuno-oncology and immunology portfolio of proprietary Humaneered^® anti-inflammatory immunology and immuno-oncology monoclonal antibodies. Our proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. We have developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied our Humaneered technology to optimize them. Our lead product candidate, lenzilumab, and our other two product candidates, ifabotuzumab (“iFab”) and HGEN005, are Humaneered monoclonal antibodies. Our Humaneered antibodies are closer to human antibodies than chimeric or conventionally humanized antibodies and have a high affinity for their target. In addition, we believe our Humaneered antibodies offer further important advantages, such as high potency, a slow off-rate and a lower likelihood to induce an inappropriate immune response or infusion related reaction.

We are focusing our efforts on the development of our lead product candidate, lenzilumab, our proprietary Humaneered®lenzilumab. Lenzilumab is a monoclonal antibody that has been demonstrated to neutralize human granulocyte-macrophage colony-stimulating factor (“Humaneered” or “Humaneered®”GM-CSF”) anti-human GM-CSF immunotherapy, through a clinical research agreement (the “Kite Agreement”) with Kite Pharmaceuticals, Inc., a Gilead company (“Kite”)cytokine that we believe is of critical importance in the hyperinflammatory cascade, sometimes referred to study the effect of lenzilumab on the safety of Yescarta®, axicabtagene ciloleucel (“Yescarta” or “Yescarta®”) includingas cytokine release syndrome (“CRS”), which is sometimes also referred to as cytokine storm, and neurotoxicity, with a secondary endpoint of increased efficacy in a multicenter Phase Ib/II clinical trial in adults with relapsed or refractory large B-cell lymphoma. We believe this study, designated the nomenclature ‘ZUMA-19’, may be the basis for the registration of lenzilumab, given the similar trial design to Yescarta’s andNovartis’s Kymriah® (“Kymriah” or “Kymriah®”) registration trials.

We are also exploring the effectiveness of our GM-CSF neutralization technologies (either through the use of lenzilumab as a neutralizing antibody, or through GM-CSF gene knockout) in combination with other CAR-T, T-cell engaging, and immunotherapy treatments to break the efficacy/toxicity linkage including the prevention and/or treatment of graft-versus-host disease (“GvHD”) while preserving graft-versus-leukemia (“GvL”) benefits in patients undergoing allogeneic HSCT. In this context, GvHD is akin to CRS, or cytokine storm, associated with COVID-19, chimeric antigen receptor T-cell (“CAR-T”) therapy and we believeacute Graft versus Host Disease (“aGvHD”) associated with bone marrow transplants.

Our Pipeline

Our product candidates are in the mechanismclinical stage of development and require substantial time, resources, research and development, and regulatory approval prior to commercialization. Our current pipeline is depicted below:

Lenzilumab

We are developing lenzilumab for potential commercial use in several indications:

Our development programs in COVID-19, CAR-T and aGvHD are complementary in that all are focused on preventing or reducing cytokine storm in those disease states. It is possible that results observed from the Phase 3 trials in COVID-19 described below may be drivenpredictive of results in these other settings, which are also characterized by GM-CSF levels. The recent coronavirus pandemic which is due tocytokine storm.

Lenzilumab in COVID-19

Scientific Rationale

Following the emergence of the SARS-CoV-2 virus andthat leads to the condition referred to as COVID-19, scientific literature suggested that GM-CSF is critical for the initiation of the hyperinflammatory cascade experienced by many hospitalized patients characterized in the later and sometimes fatal stages by lung dysfunction which is triggered by CRS, or cytokine storm. Recentand, in many patients, multi-organ impairment. Multiple publications pointhave pointed to GM-CSF as being a keysignature cytokine in this process, with elevated GM-CSF levels especially in those patients who transitioncorrelated to thepoorer outcomes, including ventilator use, Intensive Care Unit (ICU). We have established several partnerships with leading institutions to advance our innovative pipeline(“ICU”) admission, and are in active discussion with several government and commercial organizations.

We believe that we have a dominant intellectual property position in the area of GM-CSF neutralization through multiple approaches and mechanisms, as they pertain to COVID-19, CAR-T, GvHD and multiple other oncology/transplantation, inflammation, fibrosis and autoimmune conditions which may be driven by GM-CSF.

During 2019, we also advanced our preclinical next-generation cell and gene therapies for the treatment of cancers via our novel human granulocyte-macrophage colony-stimulating factor (“GM-CSF”) neutralization and gene-knockout platforms.

As a leader in GM-CSF pathway science, we believe that we have the ability to transform prevention of CRS in SARS-CoV-2 infection. The virus associated with the current COVID-19 pandemic, SARS-Cov-2, is one of a group of several betacoronaviruses, which includes the viruses responsible for Severe Acute Respiratory Syndrome (SARS-CoV) and Middle East Respiratory Syndrome (MERS-CoV). These viruses infect predominantly the lower lung and cause fatal pneumonia. Other coronaviruses infect the upper respiratory tract and cause some cases of the common cold. The clinical course of COVID-19 can be mistaken for influenza infection – patients in both cases often suffer from aches and pains throughout the body, fever, cough and general malaise. COVID-19 is not typically associated with a productive cough – rather it tends to be a dry cough – and sneezing is less common. A nasal or throat swab can be used to test for SARS-CoV-2 infection, and blood tests can be run to check for viral titers. Travel to areas where COVID-19 appears to have a large number of cases and exposure to people who are known to have suffered from the condition or carriers of SARS-CoV-2 also increases the clinical suspicion of possible infection. Data generated during the SARS and MERS outbreaks point to cytokine storm as a phase of the illness which is characterized by an immune hyperactive phase, which then can progress to lung dysfunction and death. The natural history of SARS infection shows viral load actually decreases as patients enter the second phase.

Source: WHO

Recent data from China and the subject of a pre-publication titled “Aberrant pathogenic GM-CSF+ T cells and inflammatory CD14+CD16+ monocytes in severe pulmonary syndrome patients of a new coronavirus”, supports the hypothesis that cytokine storm-induced immune mechanisms have contributed to patient mortality with the current pandemic strain of coronavirus.mortality.

The severe clinical features associated with some COVID-19 infections result from an inflammation-induced lung injury requiring Intensive Care Unit (ICU) carewhich may require supplemental oxygen through a nasal cannula, non-invasive or invasive mechanical ventilation or Extra Corporeal Mechanical Oxygenation (“ECMO”) and mechanical ventilation.sometimes ICU care. This lung injury is a result of a hyperinflammatory dysregulation of the immune system and associated with cytokine storm resulting from a hyper-reactive immune response.storm. The lung injury that leads to death is not directly related to the virus but appears to be a result of a hyper-reactive immune response to the virus triggering a cytokine storm that can continue even after viral titers remain stable or even begin to fall. 

CRS is characterized by an elevation of inflammatory cytokines resulting in fever, hypotension, capillary leak syndrome, pulmonary edema, disseminated intravascular coagulation, respiratory failure, and Acute Respiratory Distress Syndrome (“ARDS”). The authorsdevelopment of the study assessed samples fromCRS as a direct result of immune hyper-stimulation has been previously described in patients with severe pneumonia resultingautoimmune and lymphoproliferative diseases, as well as in patients with B-cell malignancies receiving CAR-T therapy. Over the last several years, preclinical studies and correlative science from COVID-19 infection to identify whether inflammatory factors such as GM-CSF, G-CSF, IL-6, MCP-1, MIP 1 alpha, IFN-gammaclinical trials in CAR-T therapy have shed light on the pathophysiology, development, characterization, and TNF-alpha were implicated.management of CRS.

CRS is also characterized by activation of myeloid cells and release of inflammatory cytokines, including GM-CSF, monocyte chemoattractant protein-1 (MCP-1), macrophage inflammatory protein 1α (MIP-1α), interferon gamma-induced protein 10 (IP-10), interleukin-6 (IL-6), and interleukin-1 (IL-1). The cascade, once initiated, can quickly evolve into a cytokine storm, resulting in further activation, expansion and trafficking of myeloid cells, leading to abnormal endothelial activation, increased vascular permeability, and disseminated intravascular coagulation.

Data from National Scientific Review (2020, Vol. 7, No. 6) titled “Pathogenic T-cells and inflammatory monocytes incite inflammatory storms in severe COVID-19 patients”, supports the hypothesis that GM-CSF induced cytokine storm immune mechanisms have contributed to patient mortality with the current pandemic strain. We believe that there is increasing acceptance that this pathophysiology may be responsible for worsening of clinical status and poor outcomes. The authors noted that steroid treatment in such cases has been disappointing in terms of outcome but suggested that a monoclonal antibody that targets GM-CSF may prevent or curb the hyper-active immune response caused by COVID-19 in this setting. Humanigen believes that the authors’ findings are worthy of further investigation, suggesting that to reduce or eradicate ICU care and prevent deaths from COVID-19 infection, an intervention may be needed to prevent cytokine storm.

SeparateSeveral publications confirm that cytokine storm is characterized by surge of high levels of circulating inflammatory cytokines, and is an overreaction of the immune system under the conditions, such as CAR-T therapy and patients infected with SARS-CoV-2. These recent studies revealed that high levels of GM-CSF, along with a few other cytokines, are critically associated with severe clinical complications in COVID-19 patients. High concentration of GM-CSF was found in the plasma of severe and critically ill patients, which account for approximately 20% of all patients, especially in those requiring intensive care.

Lenzilumab has been shown to prevent cytokine storm in animal models and this work has been published in peer reviewed journals. Patients are expected to be enrolled soon in a clinical study to determine lenzilumab’s effect on cytokine storm associated with the hyper-active immune response associated with CAR-T therapy in collaboration with Kite Pharma.

We believe that these new data suggest that GM-CSF may be a critical triggering cytokine in the increased mortality in the current coronavirus pandemic. A potential program in COVID-19 to prevent cytokine storm is complementary to the programs in CAR-T and GvHD, which are also focused on preventing or reducing cytokine storm in those disease states. 

As a leader in GM-CSF pathway science, we believe that we have the ability to transform chimeric antigen receptor T-cell (“CAR-T”) therapy and a broad range of other T-cell engaging therapies, including both autologous and allogeneic cell transplantation. There is a direct correlation between the efficacy of CAR-T therapy and the incidence of life-threatening toxicities (referred to as the efficacy/toxicity linkage).

We believe that our GM-CSF neutralization and gene-editing CAR-T platform technologies have the potential to reduce the inflammatory cascade associated with serious and potentially life-threatening CAR-T therapy-related side-effects while preserving and potentially improving the efficacy of the CAR-T therapy itself, thereby breaking the efficacy/toxicity linkage. Clinical correlative analysis and preclinicalin vivoevidence pointspoint to GM-CSF as a so-called ‘signature cytokine’ including the key initiator of thelargest inflammatory cascade resultingmarker study in CAR-T therapy’s side-effects, including cytokine release syndrome (CRS) and neurotoxicity (NT). GM-CSF has also been linked to the suppressive myeloid cell axis through recruitment of myeloid-derived suppressor cells (“MDSCs”) that reduce CAR-T cell expansion and hamper CAR-T cell efficacy. Our strategy is to continue to pioneer the use of GM-CSF neutralization and GM-CSF gene knockout technologies to improve efficacy and prevent or significantly reduce the serious side-effects associated with CAR-T therapy.

We believe that our GM-CSF pathway science, assets and expertise create two technology platforms to assistover 600 patients from a multicenter study in the development of next-generation CAR-T therapies. Lenzilumab has the potential to be usedUK. (Uncontrolled Innate and Impaired Adaptive Immune Responses in combinationPatients with any United States Food and Drug Administration (“FDA”)-approved or development stage T-cell therapy, including CAR-T therapy, as well asCOVID-19 ARDS, deProst et al, AJRCCM Articles in combination with other cell therapies such as allogeneic hematopoietic stem cell therapy (“HSCT”) to make these treatments safer and more effective.

We have utilized a precision medicine approach and personalized the development of lenzilumab based on specific genetic mutations or biomarkers at baseline. We recently reported on a Phase I study of lenzilumab as monotherapy in refractory chronic myelomonocytic leukemia (CMML) and are now planning a potential Phase II study of lenzilumab in combination with azacitidine (current standard therapy) in newly-diagnosed CMML patients with certain genetic mutations. We are also planning a potential Phase II/III study focused on early intervention with lenzilumab in patients at high risk for acute Graft versus Host Disease (GvHD) based on specific biomarkers. We have also reported on a Phase II studyPress., American Thoracic Society, August 31, 2020, 10.1164/rccm.202005-1885OC) (The dysregulated innate immune response in severe asthma utilizing lenzilumab, which showedCOVID-19 pneumonia that could drive poorer outcome, Blot et al. J Transl Med (2020) 18:457) (Elevated antiviral, myeloid and endothelial inflammatory markers in severe COVID-19, Openshaw et al, MedRxIV, doi). In March 2021, Thwaites RS et al and several, ISARIC4C (Coronavirus Clinical Characterisation Consortium)investigators published “Inflammatory profiles across the spectrum of disease reveal a statistically significant improvementdistinct role for GM-CSF in efficacy and favorable safety profilesevere COVID-19”, in patientsScience Immunology, further confirming elevated GM-CSF levels are correlated with eosinophilic asthma, 21 of whom received lenzilumab vs. 20 patients who received placebo. In addition, our GM-CSF knockout gene-editing CAR-T platform has the potential to create next-generation CAR-T therapies that may inherently avoid any efficacy/toxicity linkage, thereby potentially preserving the benefits of the CAR-T therapy while reducing or altogether avoiding its serious and potentially life-threatening side-effects.

Our immediate focus is combining FDA-approved and development stage CAR-T therapies with lenzilumab, our lead product candidate. A clinical collaboration with Kite was recently announced to evaluate the use of lenzilumab with Yescarta.

We are also creating next-generation combinatory gene-edited CAR-T therapies using strategies to improve efficacy while employing GM-CSF gene knockout technologies to control toxicity. This includes developing our own portfolio of proprietary first-in-class EphA3-CAR-Ts for various solid cancers and EMR1-CAR-Ts for various eosinophilic disorders.

Our Pipeline

Our clinical-stage pipeline comprises a further Phase I study which is almost fully enrolled with ifabotuzumab in GBM and potentially other solid cancers, a Phase Ib/II study which is enrolling alongside YESCARTA in the CAR-T arena (ZUMA-19), an additional Phase II study, in CMML and a Phase II/III study in acute GvHD, the latter two of which are in advanced planning stages. We also have a focus on creating safer and more effective CAR-T therapies in hematologic malignancies and solid tumors via three key modalities:

We are also developing our own CAR-T programs based on the backbone of ifabotuzumab and HGEN005, in high unmet medical need and rare/orphan oncology conditions. 

These product candidates are in the early stage of development and will require substantial time, resources, research and development, and regulatory approval prior to commercialization. Furthermore, none of these product candidates has advanced into a pivotal registration study and it may be years before such a study is initiated, if at all. Our current pipeline is depicted below: 

Lenzilumab

Lenzilumab neutralizes human GM-CSF and has the potential to prevent or reduce certain serious side-effects associated with CAR-T therapy (CRS and neurotoxicity) and improve upon the efficacy of CAR-T therapy. This same mechanism we believe to be the causation of CRS/cytokine storm which precedes the decline in lung function seen with severe cases of COVID-19. Preclinical data generated in collaboration with the Mayo Clinic (the “Mayo Clinic”), which was published in ‘blood®’, a premier journal in hematology, indicates that the use of lenzilumab in combination with CAR-T therapy may also enhance the proliferation and improve the efficacy of CAR-T therapy. This may also result in durable, or longer term, responses in CAR-T therapies.COVID-19 mortality (doi: 10.1126/sciimmunol.abg9873. PMID: 33692097; PMCID: PMC8128298).

Our Development Program

In response to the scientific literature, we designed and conducted a Phase 3 clinical trial of lenzilumab in newly hospitalized COVID-19 patients, which we refer to as the “LIVE-AIR” study, to examine whether lenzilumab’s neutralization of human GM-CSF could prevent or reduce poor outcomes associated with COVID-19.

There are currently no

The LIVE-AIR study enrolled 520 patients in 35 sites in the U.S. and Brazil who were at least 18 years of age; experienced blood oxygen saturation (“SpO₂”) of less than or equal to 94%; or required low-flow supplemental oxygen, or high-flow oxygen support, or non-invasive positive pressure ventilation; and were hospitalized but did not require invasive mechanical ventilation (“IMV”). Following enrollment, subjects were randomized to receive three infusions of either lenzilumab or placebo, with each infusion separated by eight hours over a 24-hour period. The primary objective was to assess whether lenzilumab, in addition to standard of care, which included dexamethasone (or other steroids) and/or remdesivir, could prevent or alleviate the immune-mediated cytokine storm and improve survival without ventilation (“SWOV”) (sometimes referred to as “ventilator-free survival”). SWOV is a composite endpoint of time to death and time to IMV and SWOV is an important composite clinical endpoint that measures mortality, mechanical ventilation.

The LIVE-AIR Phase 3 randomized, double-blind, placebo-controlled trial investigated the efficacy and safety of lenzilumab to assess the potential for lenzilumab to improve the likelihood of SWOV, beyond standard supportive care, in hospitalized subjects with severe COVID-19. Subjects with COVID-19 (n=520), >18 years, and ≤94% oxygen saturation on room air and/or requiring supplemental oxygen, but not invasive mechanical ventilation, were randomized to receive lenzilumab (600 mg, n=261) or placebo (n=259) via three intravenous infusions administered 8 hours apart. Subjects were followed through Day 28 following treatment.

In March 2021, we announced results from our LIVE-AIR study. Baseline demographics were comparable between the two modified intention-to-treat (“mITT”) populations: male, 65%; mean age, 61 years; mean BMI, 33 kg/m²; median CRP, 79 mg/L; CRP was <150 mg/L in 77.9% of subjects. The most common comorbidities were hypertension (66%), obesity (55%), diabetes (53%), chronic kidney disease (14%), and coronary artery disease (14%). Subjects received steroids (94%), remdesivir (72%), or both (69%). Lenzilumab improved the likelihood of SWOV by 54% in the mITT population (HR: 1.54; 95%CI: 1.02-2.32, p=0.040) compared to placebo. SWOV also relatively improved by 82% in subjects who received both corticosteroids and remdesivir (1.82; 1.16-2.86, nominal p=0.0092); by 3.04-fold in subjects with CRP<150 mg/L and age <85 years (3.04; 1.68–5.51, nominal p=0.0003). Survival was improved by 2.22-fold in subjects with CRP<150 mg/L and age <85 years (2.22; 1.07-4.67, nominal p=0.034).

Lenzilumab improved SWOV in hospitalized, hypoxic subjects with COVID-19 pneumonia over and above treatment with remdesivir and/or corticosteroids. Subjects with C-reactive protein level (“CRP”)<150 mg/L and age <85 years demonstrated an improvement in survival and had the greatest benefit from lenzilumab.

Following completion of the LIVE-AIR study, we commenced a series of efforts to attain authorization to commercialize lenzilumab for use in hospitalized COVID-19 patients in the United States and other territories. We filed an application for Emergency Use Authorization (“EUA”) with U.S. Food and Drug Administration (“FDA”) at the end of May 2021. We also submitted an application for marketing authorization of lenzilumab in hospitalized COVID-19 patients to Medicines and Healthcare products approvedRegulatory Agency (“MHRA”) of the United Kingdom and conducted a series of exploratory discussions with representatives of European Medicines Agency (“EMA”) regarding our potential submission of lenzilumab for marketing authorization in the European Union. In addition, we commenced significant manufacturing efforts in support of potential commercialization, as described below under “—Manufacturing and Raw Materials.”

On September 8, 2021, FDA declined our EUA request, stating in its letter that it was unable to conclude that the known and potential benefits of lenzilumab outweigh the known and potential risks of its use as a treatment for COVID-19. In addition to raising similar concerns around efficacy, MHRA requested further information related to clinical, manufacturing and quality processes.

The results from the LIVE-AIR study were published in the peer-reviewed journal, The Lancet Respiratory Medicine (“The Lancet”), on December 1, 2021. Per the Lancet paper, the implication from all the available evidence is that “Lenzilumab significantly improved survival without invasive mechanical ventilation in hospitalized patients with COVID-19 who were treated concurrently with other available therapies”. The Lancet paper concluded that “LIVE-AIR showed that lenzilumab treatment of hospitalized patients with COVID-19 can improve the likelihood of survival without the need for mechanical ventilation, with a safety profile similar to that of placebo”. As a result, we continue to believe in the potential therapeutic benefits of lenzilumab and remain committed to our efforts to develop lenzilumab for patients hospitalized with COVID-19.

The next anticipated step in our development program for lenzilumab in COVID-19 is the release of results from the Accelerating COVID-19 Therapeutic Interventions and Vaccines-5 (“ACTIV-5”) and Big Effect Trial, in the “B” arm of the trial (“BET-B”), referred to as the ACTIV-5/BET-B trial, which is sponsored and funded by the FDA for the preventionNational Institutes of CRS/cytokine storm associated with COVID-19. Also there are currently no products approved by the FDA for the prevention of CAR-T therapy-related side effects, nor are there any approved therapies for the treatment of CAR-T therapy related NT. We continue to advance the development ofHealth (“NIH”). This study is evaluating lenzilumab in combination with CAR-T therapy throughremdesivir, compared to placebo and remdesivir, in hospitalized COVID-19 patients as described more fully below. We provided lenzilumab for the study.

A retrospective analysis of the LIVE-AIR study suggested that patients under the age of 85 and with a non-exclusive clinical collaborationbaseline CRP below 150 mg/L (the “CRP subgroup”) appeared to derive the greatest benefit from lenzilumab, therefore, the ACTIV-5/BET-B study protocol was modified to include baseline CRP below 150 mg/L as the primary analysis population. The ACTIV-5/BET-B study has reached its target enrollment with Kite, pursuantover 400 patients enrolled that met this criterion. Topline results from ACTIV-5/BET-B are expected to be released late in the first quarter or early in the second quarter of 2022. If confirmatory of the results of the findings of the CRP subgroup from the LIVE-AIR study, we plan to include the results from ACTIV-5/BET-B in an amendment to our EUA submission, and to include these results in a responsive submission to MHRA along with certain performance process qualification (“PPQ”) data around drug product batches, in the second quarter of 2022. In addition, as a result of feedback received from representatives of EMA, if the ACTIV-5/BET-B data are confirmatory of the results of the findings of the CRP subgroup from the LIVE-AIR study, we intend to submit a Conditional Marketing Authorization (“CMA”) for lenzilumab with an Accelerated Approval request to EMA later in 2022.

Through partners in Australia, we have also initiated a study of lenzilumab in cancer patients with COVID-19. The trial, known as C-SMART (“COVID-19 Prevention and Treatment in Cancer; a Sequential Multiple Assignment Randomized Trial”), is a multi-center, four arm trial, which weaims to evaluate several different immune modulating drugs for prevention and treatment of COVID-19 in the cancer population. C-SMART will include 2,282 cancer patients at risk of, or known positive for, COVID-19 infection. The study contemplates prophylaxis of 957 patients with IFN-alpha, 957 patients on placebo; post-exposure prophylaxis of 85 patients with IFN-alpha, 85 patients on placebo; 63 COVID-19 hospitalized patients on selinexor, 85 patients on placebo; 36 COVID-19 hospitalized pneumonia on lenzilumab and 36 patients on placebo. The C-SMART study is led by the National Centre for Infections in Cancer at the Peter MacCallum Cancer Centre and will be conducted at five Australian sites in Melbourne and Sydney. The study is supported by a grant from the Australian Government's Medical Research Future Fund.

In addition, our partners in South Korea are conducting a multi-center Phase Ib/II1 bridging study in 20 healthy volunteers. This Phase 1 clinical study is being conducted to explore the safety, tolerability, and pharmacokinetic (“PK”) properties of lenzilumab with Kite’s Yescarta in patients with relapsed or refractory B-cell lymphoma, including diffuse large B-cell lymphoma (“DLBCL”) (the “Study”). The Study has been designated the nomenclature ‘ZUMA-19’, consistent with the other Kite CAR-T studies, which also receive a ‘ZUMA’ designation. The primary objective of ZUMA-19 is to determine the effect of lenzilumab on the safety and efficacy of Yescarta. Kite’s Yescarta is one of two CAR-T therapies that have been approved by the FDAcompare it between Koreans and is the CAR-T therapy market leader, and our collaboration with Kite is currently the only clinical collaboration which is now enrolling patients with the potential to improve both the safety and efficacy of CAR-T therapy. We also plan to measure other potentially beneficial effects on efficacy and healthcare resource utilization. In addition, lenzilumab’s success in preventing serious and potentially life-threatening side-effects could offer economic benefits to medical system payers by making the CAR-T therapy capable of being administered, and follow-up care subsequently monitored and managed, potentially on an out-patient basis in certain patients and circumstances. In turn, we believe that delivering such provider and payer benefits might accelerate the use of the CAR-T therapy itself, and thereby permit us to generate further revenues from sales of lenzilumab.

Caucasians.

In addition to COVID-19 and CAR-T therapy, we are committed to advancing our diverse platform for GM-CSF axis suppression for a broad range of other T-cell engaging therapies, including both autologous and allogeneic next generation CAR-T therapies, bi-specific antibody therapies, as well as other cell-based immunotherapies in development, including allogeneic HSCT, with our current and future partners.Our Commercial Opportunity

In July 2019,If an EUA in the U.S. or equivalent marketing authorization in the EU or UK were granted, we entered into an exclusive worldwide license agreement (the “Zurich Agreement”) with the University of Zurich (“UZH”). Under the Zurich Agreement, we have in-licensed certain technologies that we believe mayintend to commercialize lenzilumab for COVID-19. Our goal would be used to prevent or treat GvHD, thereby expanding our development platform to include improving the safety and effectiveness of allogeneic HSCT, a potentially curative therapy for patients with hematological cancers. There are currently no FDA-approved agents for the prevention of GvHD nor treatment of GvHD in patients identified as high risk by certain biomarkers. We believe that GM-CSF neutralization with lenzilumab has the potential to prevent or treat GvHD without compromising, and potentially improving, the beneficial GvL effect in patients undergoing allogeneic HSCT, thereby making allogeneic HSCT safer. Several recent papers have been published which support this approach, including in Science Translational Medicine in November 2018 and in ‘blood advances’ in October 2019.

We aim to position lenzilumab as a necessary companion productfront-line therapeutic for use in hypoxic COVID-19 patients.

Lenzilumab is intended to any allogeneic HSCT and as a partbe used in patients hospitalized for COVID-19 with oxygen saturation levels below 94%. Since the beginning of the standard pre-conditioningpandemic through January 31, 2022 over 4.3 million patients have been hospitalized and the current number of hospitalized patients is estimated by the CDC to be over 120,000. As of the end of January 2022, the vaccination rate in the United States is over 80%; however, given the emergence of new variants, waning protection from vaccinations and boosters, lack of efficacy from neutralizing monoclonals primarily due to emerging variants and potential limited efficacy of some oral anti-virals, and the 20% of people that allremain unvaccinated, we believe patients receiving allogeneic HSCT should receive or asinfected with COVID-19 will continue to be admitted to the hospital for treatment, particularly immunocompromised populations. Scientists and experts have stated beliefs that the COVID-19 pandemic will become endemic. Hospitalization rates due to influenza over the past decade have ranged from 140,000 to 800,000 per year. We believe the commercial opportunity to treat COVID-19 hospitalized patients with lenzilumab will continue to exceed 100,000 patients in the U.S. on an early treatment optionannual basis in patients identified as high risk for GvHD.the future.

Lenzilumab in CAR-T

Given our interest

Scientific Rationale

FDA-approved CAR-T therapies have demonstrated the effectiveness of using targeted immuno-cellular engineering to cause a patient’s own T-cells to fight certain cancers that have not responded to standard therapies. T-cells are often called the “workhorses” of the immune system because of their role in developing lenzilumab to prevent CRS/cytokine storm in COVID-19 as well as incoordinating the immune response and killing cells infected by pathogens and cancer cells. As depicted below, each of the FDA-approved CAR-T therapies are currently a one-time treatment of rare cancers and other orphan conditions such as GvHD, we believe that we have the opportunity to benefit from various regulatory incentives, such as orphan drug exclusivity, breakthrough therapy designation, fast track designation, priority review and accelerated approval.involves multiple steps:

GM-CSF Gene Knockout

We are advancing our GM-CSF knockout gene-editing CAR-T platform through an exclusive worldwide license agreement (the “Mayo Agreement”) that we entered into in June 2019 with the Mayo Foundation for Medical Education and Research (the “Mayo Foundation”). Under the Mayo Agreement, we have in-licensed certain technologies that we believe may be used to create CAR-T cells lackingGM-CSFexpression through various gene-editing tools, including CRISPR-Cas9. We believe that our GM-CSF knockout gene-editing CAR-T platform has the potential to create next-generation CAR-T therapies that improve the efficacy and safety profile of CAR-T therapy. In addition, we have and continue to file intellectual property encompassing a broad range of gene-editing approaches related to GM-CSF knockout.

Preclinical data indicates that GM-CSF gene knockout CAR-T cells show improved overall survival in animals compared to wild-type CAR-T cells in addition to

As of the expected benefits of reduced serious side-effects associated with CAR-T therapy. We are establishing a platform of next-generation combinatorial gene knockout CAR-T cells that have potential to be applied across both autologous and allogeneic approaches and we are also investigating multiple CAR-T cell designs using precise dual and triple gene editing to significantly enhance the anti-tumor activity while simultaneously preventing CAR-T therapy induced toxicities. Through targeted gene expression and modulating cytokine activation signaling, we may be able to increase the proportion of fitter T-cells produced during expansion, increase their proliferative potential, and inhibit activation-induced cell death, thereby improving the cancer killing activity of our engineered CAR-T cells thereby making them more effective and safer in the treatment of cancers. Initial data were published in an abstract that was presented at the December 2019 American Society of Hematology (ASH) meeting and also won an ASH Abstract Achievement award.

We plan to continue developmentdate of this technology in combination approaches that could add to the observed efficacy benefits of current generationfiling, five CAR-T products. In addition, we anticipate that our GM-CSF knockout gene-editing CAR-T platform may be a future backbone for controlling the serious side-effects that hamper CAR-T therapy that lead to serious and sometimes fatal outcomes for patients as a result of the CAR-T therapy itself. 

EphA3-CAR: Targeting Tumor Stroma and Tumor Vasculature

We have begun to generate our own pipeline of CAR-T therapies including an EphA3-CAR-T based on the ifabotuzumab v-region and backbone. Ifabotuzumab is a Humaneered anti-EphA3 monoclonal antibody (“EphA3”). Ifabotuzumab has the potential to kill tumor cells by targeting tumor stroma that protects them and the vasculature that feeds them. This unique combination of activities as a backbone of a CAR-T therapy may provide the potential to generate durable responses in a range of solid tumors by targeting the tissues that surround, protect, and nourish a growing cancer.

By developing an EphA3-CAR-T using ifabotuzumab as the backbone, we may have the ability to target the tumor, tumor stroma, and tumor vasculature in a novel manner. We are collaborating with the Mayo Clinic and plan to move to clinical testing with an anti-EphA3 construct for a range of cancer types after completing Investigational New Drug (“IND”)-enabling work. We have published initial data from our Phase I study in an abstract that was accepted for the November 2019 Society of Neuro-Oncology (“SNO”) meeting, showing data in glioblastoma multiforme, a form of brain cancer.

EMR1-CAR: Targeting Eosinophils

Our epidermal growth factor-like module containing mucin-like hormone receptor 1 (“EMR1”)-CAR-T product is based on the HGEN005 (anti-EMR1 Humaneered monoclonal antibody) backbone and targets epidermal growth factor-like module containing mucin-like hormone receptor 1 (“EMR1”). Our EMR1-CAR-T based on the HGEN005 backbone is another approach in our growing platform of CAR-T therapies. We believe that because of its high selectivity, EMR1-CAR-T has significant potential to treat serious eosinophil diseases.

In preclinical work, HGEN005’s anti-EMR1 activity resulted in dramatically enhanced killing of eosinophils from normal and eosinophilic donors and also induced a rapid and sustained depletion of eosinophils in a non-human primate model without any clinically significant adverse events. We have engaged with U.S. National Institutes of Health (“NIH”) to discuss expanding the initial work they have conducted utilizing HGEN005 and discussions are underway with a leading center in the U.S. to perform the IND-enabling testing in eosinophilic leukemia, an orphan condition with significant unmet need, as well as with several other potential partners, although we cannot assure you that we will reach any agreements for these next steps. 

CAR-T Overview and Market Opportunity

Development and implementation of individualized treatments based on T-cell therapies has the potential to revolutionize the fight against cancer. The two CAR-T therapies that have been approved by the FDA,FDA: Gilead/Kite’s Yescarta, and Tecartus, Novartis’s Kymriah, Bristol Myers Squibb’s Breyanzi  and Abecma, which seek to treat forms of B-cell cancers such as various types of Non-HodgkinNHL, including DLBCL, Follicular Lymphoma (“NHL”FL”), including DLBCL Mantle Cell Lymphoma (“MCL”) and adult acute lymphoblastic leukemia (“ALL”) that are refractory or in second or later stage relapse. Although patients suffering from these aggressive cancers frequently undergo multiple treatments, including chemotherapy, radiation and targeted therapy including stem cell transplants, the five-year survival rate has been severely limited and patients who do not respond to, or have relapsed following at least two courses of standard treatment, have no other treatment options and a very poor outcome. According to U.S. governmental sources, including theSurveillance, Epidemiology, and End Results (“SEER”) program of the National Cancer Institute, which is a source of epidemiologic information on the incidence and survival rates of cancer in the U.S., it is estimatedbased on incidence data, we estimate that up to 10,000there are 21,000 patients per year in the U.S. with relapsed or refractory (r/r) B-cell NHLDLBCL and FL (Yescarta) and 7,000 with MCL and ALL (Tecartus). The number of patients eligible for Yescarta and Tecartus will be lower than the incidence rate as only patients who have failed at least two prior systemic therapies may beare currently eligible for CAR-T therapy. In addition, ifboth Yescarta and Breyanzi have reported positive data in second line therapy for (r/r) B-cell NHL. If CAR-T therapy is approved as an earliera second line option versus stem cell transplantation, an additional 10,000 to 12,000 patients may be eligible for treatment. However, this is predicated on improving the benefit-to-risk profile of CAR-T therapy, addressing the severe life threatening adverse events currently associated with these agents and breaking the efficacy/toxicity linkage

The FDA-approved CAR-T therapies have demonstrated the effectiveness of using targeted immuno-cellular engineering to cause a patient’s own T-cells to fight certain cancers that have not responded to standard therapies. T-cells are often called the “workhorses” of the immune system because of their role in coordinating the immune response and killing cells infected by pathogens and cancer cells. As depicted below, each of the FDA-approved CAR-T therapies is currently a one-time treatment that involves multiple steps:

Both Kymriah and Yescarta received FDA approval for adults with r/r DLBCL on the basis of one single-arm Phase II study which served as the pivotal registration trial for each product in this indication, a markedly accelerated process that indicates the FDA’s view of the strong potential of these novel CAR-T therapy treatments to address an unmet need and improve patient outcomes. The number of evaluable patients in the studies that led to FDA approval for Kymriah and Yescarta in large B-cell lymphoma was 68 and 101, respectively. Moreover, Kymriah also received FDA approval for the treatment of pediatrics and adolescents with r/r ALL based on a single phase II study.The Novartis-sponsored Kymriah study in ALL showed that 83% of pediatric and adolescent patients with r/r ALL who received treatment with Kymriah (52 of 63; 95% confidence interval: 71%-91%) achieved acomplete response rate (CR)or a CR with incomplete blood count recovery within three months of infusion. In addition, Novartis announced that no minimal residual disease, a blood marker that indicates potential relapse, was detected among responding patients.The Novartis-sponsored Kymriah study in adults with r/r DLBCL showed that 32% of adults achieved a CR within three months of infusion,which dropped to 30% after six months. In the Kymriah registration study in the DLBCL population, 160 patients were enrolled and 68 were evaluable.

The single Phase II study that led to the FDA approval of Yescarta in r/r DLBCL showed similarly positive results. The study enrolled 111 patients (101 were evaluable) with large B-cell lymphoma at advanced stages despite having undergone at least two previous treatments, with approximately 20% of patients already having undergone a stem cell transplant.The CR rate within three months of CAR-T treatment, given as a single infusion, was 58%, which dropped to 46% after six months. The CR rate after two years of CAR-T treatment, given as a single infusion, has been reported as 37%.

Encouraged by the success of the Phase II studies, since the initial FDA approvals were granted to Novartis for Kymriah, the CAR-T therapy market has seen rapid expansion, with Gilead/Kite and Novartis and scores of other biotechnology companies actively working to progress CAR-T therapies as potential treatments for numerous blood and solid tumor cancers. The third entrant to the U.S. market, lisocabtagene maraleucel (liso-cel) from BMS, is expected to be approved in 2020.

Kymriah, Yescarta and liso-cel are autologous individualized CD19 targeted CAR-T therapies. Development is also ongoing to move each agent to earlier lines of therapy for DLBCL(rather than as salvage therapy for patients who have exhausted other options), in other types of B-cell NHL and for the treatment of chronic lymphocytic leukemia (“CLL”). According to SEER, as well as the American Cancer Society's Cancer Statistics Center and World Health Organization Union for International Cancer Control, it is estimated that up to 10,000 patients with r/r B-cell hematologic malignancies (including DLBCL, ALL, CLL) per year may potentially benefit from CD19 targeted CAR-T therapies.In addition, if CAR-T therapy is approved as an earlier second-line option versus stem cell transplantation, an additional 10,000 to 12,000 patients may be eligible for treatment.Moreover, there are twomultiple B-cell maturation antigen (“BCMA”) targeted CAR-T therapies in phase IIPhase 2 development for relapsed or refractory multiple myeloma and several other novel CAR-T therapies targeting various antigens and neo-antigens in development for a number of hematologic and solid cancers. While there may be individual differences between CAR-T therapy products, the overall toxicity profile is generally expected to be generally consistent with that reported for Yescarta and for Kymriah.

Former FDA Commissioner Scott Gottlieb and FDA Center for Biologics Evaluation and Research (CBER) Director Peter Marks detailed plans for the FDA to keep pace with an expected influx of applications for cell and gene therapies over the coming years. Gottlieb and Marks have indicated that by 2020, FDA expects to receive more than 200 active IND applications for cell and gene therapies each year, adding to the 800 active IND applications for such products already filed with FDA. By 2025, they predict that FDA will be approving between 10 and 20 cell and gene therapy products annually. The FDA has also issued final guidance to gene therapy and cell therapy developers, whereby under the Regenerative Medicine Advanced Therapy (“RMAT”) designation, qualified applications will be eligible for FDA priority review and accelerated approval.

The global CAR-T therapy market is projected to grow from approximately $300 million in 2018 to greater than $2 billion in 2021, with continued growth up to $8.5 billion in 2028, according to ‘Evaluatepharma’.

Allogeneic HSCT Overview and Market Opportunity

Allogeneic HSCT, which involves transferring stem cells from a healthy donor to the patient, has demonstrated effectiveness in treating hematological cancers. As depicted below, allogeneic HSCT involves multiple steps:

The overall number of allogeneic HSCT treatments continues to increase annually in the U.S. and abroad. In 2019, approximately 10,000 allogeneic HSCT treatments are expected to be performed in the U.S., with similar trends expected in Europe. 

Market Opportunity

CAR-T Therapy

The twofive FDA-approved CAR-T therapies are not withouthave significant limitations. Despite the exciting prospects for treating patients with limited options, significant and potentially life-threatening side-effects fromare associated with CAR-T therapy, including NTImmune Effector Cell Associated Neurotoxicity (“ICANS”) and CRS. While there may be individual differences between CAR-T therapy products, the overall toxicity profile is generally consistent with that reported for Yescarta and Tescartus, and it is known that various development-stage BCMA and other CAR-T therapies are hampered by the emergence of cytokine storm, ICANS and other serious and potentially fatal side-effects.

Both CRS and ICANS are caused by a large-scale release of pro-inflammatory cytokines and chemokines induced by the CAR-T therapy and remain a significant unmet needneeds that must be addressed.Because NTICANS and CRS can be life-threatening and have proven fatal in many instances, and because each product bears a “Boxed” warning“Boxed Warning” from the FDA (the strictest FDA warning label intended to alert patients and providers about serious and life-threatening risks associated with a particular drug), patients seeking to benefit from Yescarta or Kymriahand Tescartus, generally may only do so if the treatment center is in compliance with theRisk Evaluation and Mitigation Strategy (“REMS”) program required by FDA.

REMS is a drug safety program that the FDA can require forrequires certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risksadhere to strict on-going monitoring and are reporting and is intended to assist and train certified treatment centers on the management of these serious side-effects. For example, each hospital and its associated clinics are required to have a minimum of two doses of tocilizumab available on-site for each patient for the potential treatment of moderate to severe cases of CRS. We believe the REMS requirement may have adversely impacted both market uptake and usage to date. Both CRS and NT are caused by a large-scale release of pro-inflammatory cytokines and chemokines induced by the CAR-T therapy, sometimes referred to as a “cytokine storm”.

According to the original package inserts for Yescarta and Kymriah, up to 94%Tecartus, 81% (NHL), 81% (MCL), 87% (ALL) of patients treated with Yescarta or Kymriah in the clinical trial setting experienced CRSICANS (with up to 49%35% of cases being severe, or grade>33). The package insert for Yescarta was recently updated to include the use of prophylactic corticosteroids across all approved indications. The update was based on the safety update from Cohort 6 of the ZUMA-1 study which showed that in nature)39 patients, prophylactic or early use of corticosteroids resulted in neurological events (Grade ≥3) in 13% or patients and up to 87% experienced NT (with up to 31%0% of cases being severe or grade>3the patients had CRS. These original rates may be more prevalent in nature)practice, despite the availability and utilization of tocilizumab.tocilizumab and corticosteroids. Moreover, based on feedback from leading treatment centers in the U.S., approximately 3030% to 60% of patients receiving CAR-T therapy require admission to the intensive care unit (“ICU”)ICU and in some cases require an extended stay, with multiple interventions, including ventilator support and other supportive measures, to be urgently administered to manage these side-effects.Some patients can suffer seizures, coma, brain swelling, heart arrhythmias, organ failure and serious and life-threatening clotting disorders, not only causing more complex and potentially fatal medical consequences, but significantly adding to cost of patient care. These can be particularly challenging and concerning issues, especially in younger and pediatric patients.

Researchers who evaluated 1,254 patients who underwent CAR-T therapy at 86 hospitals over the past two years reported that the median ICU stay was 15 to 19 days with a median overall cost ranging from $85,726 to $242,730, not including the cost of the CAR-T therapy itself (Harris, et al. TCT 2019 Abstracts 500, 501). In addition,there have also been deaths reported as a result of these serious side-effects. A publication assessing 636 patients who had received either of the two FDA-approved CAR-T therapies (348 patients on Yescarta and 288 on Kymriah) authored by Anand and Burns, et al. in the Journal of Clinical Oncology (37, 2019 (suppl; abstract 2540)) reported that 15% of CAR-T treated patients (10% receiving Yescarta and 21% receiving Kymriah) died from factors not associated with disease progression (i.e., non-relapse mortality) and the primary driver of non-relapse mortality was NT and/or CRS. Therefore these serious side-effects are associated with significant mortality rates, despite the availability of approved supportive care measures, even as CAR-T therapies are administered only in trained and certified treatment centers staffed by experts in the field. We expect that the CAR-T therapies under development may be hampered by the same significant side-effects. If such side-effects can be ameliorated or eradicated, and adequate data is submitted to FDA, the “Black Box” warning and REMS program could potentially be scaled back or removed.Our Development Program

There are currently no FDA-approved products for the prevention or treatment of NT orCAR-T therapy-related side effects, nor are there any approved therapies for the prevention of CRS associated with CAR-T therapy. Medicines used to manage NT and CRS, such as tocilizumab and corticosteroids, have not adequately controlled the side-effects, and steroids may have a detrimental impact on the efficacy of the CAR-T therapy itself while tocilizumab may increase the risktreatment of CAR-T therapy induced NT andrelated ICANS. Tocilizumab, among other indications, is correlated with an increased risk of infections, including severe infections. Further, these medicines have not undergone prospective clinical trials for use in this patient population. Tocilizumab is only approved for the treatment of CAR-T induced severe casesCRS. We believe lenzilumab has the potential to improve the efficacy and safety of CAR-T therapy and that the use of lenzilumab may minimize or eradicate the incidence, frequency, duration and/or severity of ICANS and/or CRS but is not approved for prevention of CRS, nor is it approved for either prevention or treatment of NT.

that frequently appear in CAR-T patients.

The approval in CRS was grantedAccordingly, we are developing lenzilumab as a treatment for cytokine storm associated with ICANS and CRS in certain CD19-targeted CAR-T cell therapies. Further, GM-CSF neutralization may enhance CAR-T proliferation and effector functions and potentially confer additional benefits in terms of durable efficacy and healthcare resource utilization. Preclinical data generated in collaboration with the Mayo Clinic, which was published in Blood, a premier journal in hematology, indicates that the use of lenzilumab in combination with CAR-T therapy may also enhance the proliferation and improve the efficacy of CAR-T therapy. This may also result of case studies and notin durable, or longer term, responses in CAR-T therapies.

Lenzilumab has been studied in a multi-center Phase 1b trial as a resultsequenced therapy with Yescarta to prevent CRS and ICANS in patients with relapsed or refractory diffuse large B-cell lymphoma (“DLBCL”) (NCT04314843), for which we announced positive results in April 2021. We intend to initiate a randomized, placebo-controlled, double-blind, registrational, Phase 3 study to evaluate the efficacy and safety of lenzilumab combined with Yescarta and Tecartus CAR-T therapies in non-Hodgkin lymphoma in 2022. This study is known as SHIELD (Study on How to Improve Efficacy and toxicity with Lenzilumab in DLBCL and other NHL patients treated with CAR-T therapy). We have alignment with FDA on the design of the Phase 3 study. Following a planned, prospective clinicaldose run-in period in approximately 25 patients, we currently plan to enroll more than 150 patients in the study. SHIELD will study in this patient population, as would be typical. Studies testing tocilizumablenzilumab for the prevention of NT have shown tocilizumab to significantly worsenCAR-T therapy-related toxicities including ICANS and CRS.

Our Commercial Opportunity

Revenues from the rate of NT across all grades as well as the more serious grades 3 and above, as compared to the rate in patients who did not receive tocilizumab prophylactically. In addition, recent publications question the efficacy of tocilizumab in CRS. For example, studies testing tocilizumab as a prophylactic therapy for CRS have shown the rates of overall CRS remained unaltered as compared to the rate in patients who did not receive tocilizumab prophylactically (Locke et al. American Society of Hematology (“ASH”) 2017, Abstract 1547). Further, a publication authored by Le, et al. in The Oncologist (2018, 28(8); 943-947) assessing 60 patients who had received either Yescarta or Kymriah and had suffered from CRS having received tocilizumab and/or steroids after the onset of CRS, reported that only approximately halfsales of the five approved CAR-T therapies exceeded $1.7 billion in 2021. We estimate that over 3,000 patients responded at day 11.

These data, alongwere treated with the Anand/Burns data and the Locke data discussed above, demonstrateCAR-T therapy in 2021. Analysts predict that improvementsYescarta only will reach peak sales in excess of $1.5 billion as additional patients become eligible for treatment. We believe we have the ability to prevent or mitigate NT and CRS are needed. Such improvements would help remove these major impediments to uptake and utility of CAR-T therapies, improve healthcare utilization and improve overall patient outcomes. Managing patients with these side-effects can consume a significant amount of in-hospital resources, including extended stays in the ICU. The primary driver of non-drug related costs associated withtransform CAR-T therapy is the length of stay in the hospital, particularly if this includes ICU admission. Non-drug related costs for patients who develop CRS and/or NT are approximately double that of patients who do not develop these serious toxicities. Further, as the potential benefit of CAR-T therapies are explored in earlier lines of hematologic cancers (rather than as salvage therapy for patients who have exhausted other options), as well as moving use of CAR-T therapies into solid tumors, the need to address serious side-effects becomes paramount.

In addition to improving patient outcomes, the ability to significantly reduce the incidence and severity of NT and prevent CRS associated with CAR-T therapy may offer significant benefits in making these treatments more cost-effective. Hospital reimbursement for patients who are treated only as an out-patient is profoundly different from, and more favorable to the hospital than, the reimbursement afforded to treatments for patients who are admitted or re-admitted to the hospital within a 72 hour period. Unfortunately, at present, the need to identify, treat and manage NT and CRS generally has prevented CAR-T therapies from being administered, and follow-up care monitored and managed, potentially on an out-patient basis.Again, 30-60% of patients receiving CAR-T therapy require admission to the ICU, in some cases requiring an extended stay, with multiple interventions, investigations and treatments needing to be urgently administered.

As a result, in some institutions, the treating physician may require the hospital to reserve a bed in the ICU as a prerequisite to administering the CAR-T therapy in case the patient needs to be hospitalized in an attempt to manage the adverse effects from NT and CRS. At other institutions, the patient is admitted as an in-patient and is required to remain in the hospital for at least a week, with discharge being subject to satisfactory short-term outcomes and no emergence of complications. Even in institutions where the CAR-T therapy is initially administered in an out-patient setting, the patient is closely monitored daily for several weeks and is required to stay within a short distance from the hospital in case the patient needs to be admitted to the hospital on an emergency basis, requiring additional lodging, food and other costs to be incurred by the patient, the payer, or both.In some situations these patients are re-admitted to the hospital on an emergency basis as an in-patient if complications ensue. If a patient is admitted or re-admitted to the hospital as an in-patient, the hospital reimbursement dynamics may change in a manner which is negative for the hospital, the payer and the patient. This dynamic also changes typical hospital reimbursement, depending on when in the treatment cycle the patient is admitted or re-admitted. In addition, certain treatment centers do not accept patients who are not potentially able to be treated as an out-patient and refer such patients to other centers who may be willing to treat them as in-patients, primarily as a result of the reimbursement handicap that would accrue as a result of in-patient coding, billing and reimbursement, which generally leads to the hospital system losing money because of the in-patient care reimbursement.

The reimbursement challenges associated with CAR-T therapies are also proving to be an impediment to greater utilization of Kymriah and Yescarta in Europe and the United Kingdom, where the National Institute of Clinical Excellence (“NICE”) initially recommended that the UK National Health Service not reimburse Yescarta based on their assessment of the cost per quality-adjusted life-year (“QALY”).A key driver of the cost per QALY is in-patient and potential ICU-related costs.This led to Yescarta having to be funded through other mechanisms.A positive recommendation for use of Yescarta within the Cancer Drugs Fund (“CDF”) was subsequently made by the NICE appraisal committee in January 2019, but only in compliance with a managed access agreement. When the data collection period finishes (anticipated by February 2022), the process for exiting the CDF will begin and the review of NICE’s guidance for Yescarta will start.

While both Kymriah and Yescarta have been approved by European regulators for market authorization, prescriptions have been limited as Kite and Novartis work to establish reimbursement arrangements intended to facilitate access to the treatments on a discounted basis consistent with the governmental mandates to curb healthcare spending. These dynamics, and the additional complexity of treating patients with serious and potentially life-threatening side-effects in the hospital and/or ICU, mean that enabling true out-patient administration and follow-up would confer significant benefits to patients, payers and the hospital system. Lenzilumab, if proven to be able to abrogate these serious side-effects as well as improve efficacy, may offer a solution.

Other T-cell Engaging Therapies

In addition to CAR-T therapy, we are committed to advancing our diverse platform for GM-CSF axis suppression for a broad range of other T-cell engaging therapies, including both autologous and allogeneic next generationcell transplantation. There is a direct correlation between the efficacy of CAR-T therapies, bi-specific antibody therapies, as well as other cell-based immunotherapies in development, to breaktherapy and the efficacy/toxicity linkage,incidence of life-threatening toxicities, including for the prevention and/or treatment of GvHD in patients undergoing allogeneic HSCT. Many of these treatment options may lead to serious side-effectsICANS and have ample room for improved efficacy.CRS.

We believe that our GM-CSF neutralization with lenzilumab haspathway science, assets and expertise create two technology platforms to assist in the potential to prevent or reducedevelopment of next-generation CAR-T therapies:

Lenzilumab in Acute GvHD without compromising, and potentially improving, the beneficial GvL effect in patients undergoing allogeneic HSCT, thereby making allogeneic HSCT safer.

Scientific Rationale

Allogeneic HSCT is hematopoietic stem cell therapy (“HSCT”), a potentially curative therapy for patients with hematological cancers, involves transferring stem cells from a healthy donor to the patient. HSCT has demonstrated effectiveness in treating these cancers. As depicted below, allogeneic HSCT involves multiple steps:

Although a potentially life-saving treatment for patients suffering from hematological cancers, between 40-60% of patients receiving HSCT treatments experience acute or chronic GvHD,aGvHD, which together carries a 50% mortality rate. After being transplanted into the patient, donor-derived T cells are responsible for mediating the beneficial GvLgraft versus leukemia (“GvL”) effect. In many cases, however, donor-derived T cells that remain within the graft itself have also been linked to destruction of healthy tissue in the patient (the host), with particular risk of destroying cells in the patient’s skin, gut, and liver, resulting in GvHD.aGvHD. Although depleting donor grafts of T cells can prevent or reduce the risk of GvHD,aGvHD, this results in a reduced GvL effect, thereby having a detrimental impact on the efficacy of the allogeneic HSCT treatment itself and leading to increased relapse rates. We expect that the use of allogeneic HSCT may be hampered by GvHD complications. A recent study published in ‘blood advances’ an official journal of the American Society of Hematology, suggests that neutralizing or blocking GM-CSF may limit or prevent GvHD in the gastrointestinal tract (Gartlan, K., et al, October 8, 2019, vol 3, no.19).

There are currently no FDA-approved agents for the prevention of GvHD, andDespite new therapies, there isremains a significant unmet medical need for an agent that can uncouple the beneficial GvL effect from harmful GvHD. At this time,aGvHD. The FDA has recently approved Orencia (abatacept) from Bristol Myers Squibb for the prevention of aGvHD and in 2019 Jakafi (ruxolitinib) from Incyte Corporation was approved for steroid-refractory aGvHD. Other treatments include pre-conditioning regimens for HSCT treatments that can vary significantly by treatment centers, including by unapproved, or “off-label”,“off-label,” use of agents that have been approved by the FDA for other uses only. We believe there to be a significant unmet medical need and lenzilumab, if proven to be able to prevent GvHD in allogeneic HSCTs, may offer a solution.

Preclinical studies have shown lenzilumab can potentially be used to cause apoptosis in CMML cells by depriving them of GM-CSF. We completed dosing in a Phase 1 clinical trial in patients with CMML to identify the MTD or recommended Phase 2 dose of lenzilumab and to assess lenzilumab’s safety, pharmacokinetics, and clinical activity and reported the results at the 2019 American Society of Hematology (ASH) conference. 

Our Solution

We believe that our GM-CSF pathway science, assets and expertise create two technology platforms to assist in the development of next-generation CAR-T therapies. Lenzilumab has the potential to be used in combination with any FDA-approved or development stage T-cell therapies, including CAR-T therapy, as well as in combination with other cell therapies such as HSCT, to make these treatments safer and more effective. In addition, our GM-CSF knockout gene-editing CAR-T platform has the potential to create next-generation CAR-T therapies that may inherently avoid any efficacy/toxicity linkage, thereby potentially preserving the benefits of the CAR-T therapy while reducing or altogether avoiding its serious and potentially life-threatening side-effects.

In our reviewWe believe that cytokine storm may be responsible, at least in part, for the emergence of results of CAR-T clinical trials, as well as preclinical animal models that seek to understand the causation of side-effects, we noted from independent researchers that CAR-T infusion leads to an early riseGvHD in levels of soluble GM-CSF, a cytokine that wethis setting. We believe is of critical importance in the inflammatory cascade associated with CAR-T therapy related side-effects. GM-CSF is one of only two cytokines that have been clearly demonstrated to be associated with severe NT and early rise in, and peak levels of, GM-CSF are associated with NT. GM-CSF is also implicated in the growth of certain hematologic malignancies, such as chronic myelomonocytic leukemia (“CMML”), juvenile myelomonocytic leukemia (“JMML”), hemophagocytic lymphohistiocytosis (“HLH”), macrophage activation syndrome (“MAS”), certain solid tumors and other serious conditions, particularly a broad range of auto-immune conditions.Moreover, there is an abundance of data demonstrating that GM-CSF is upstream in the cytokine cascade and that the neutralization of GM-CSF is known to inhibit the release of key downstream cytokines known to be associated with CRS and NT.

Combining CAR-T Therapies with Lenzilumab

Lenzilumabbinds to and neutralizes soluble, circulating GM-CSF, and has been shown to be generally safe and well tolerated in 113 patients in three Phase I and two Phase II studies conducted for other purposes, including a form of leukemia, CMML. As a result, we have an extensive safety, tolerability and pharmacokinetics data package on lenzilumab in clinical use in healthy human volunteers as well as in patients.Accordingly, we believe lenzilumab has the potential to improve the efficacy and safety of CAR-T therapy and that the use of lenzilumab may minimizeprevent or eradicate the incidence, frequency, duration and/or severity of NT and/or CRS associated with CAR-T therapy while also enhancing CAR-T proliferation and effector functionstreat GvHD without compromising, and potentially confer additional benefits in terms of durable efficacy and healthcare resource utilization. We also believe lenzilumab may further improve the value proposition of CAR-T therapies and facilitate their use and acceptance throughout the healthcare systems in the U.S. and abroad.

A strong scientific rationale exists for GM-CSF neutralization using lenzilumab for the improvement of safety, efficacy and cost-effectiveness of CAR-T therapy. Lenzilumab is in development to significantly reduce the incidence and severity of CAR-T therapy induced NT and CRS, and to improve the overall efficacy and duration of response of CAR-T therapy. Robust scientific rationale and independent scientific research from leading institutions support GM-CSF neutralization as a validated target in this setting. In December 2017, we held a scientific advisory board at the 2017 ASH annual meeting with leading key opinion leaders in the CAR-T field to validate the scientific rationale of lenzilumab prophylactic therapy in combination with CAR-T therapy. Based on feedback received from the advisory board, we created the development plan for lenzilumab. To that end, we initiated preclinical studies using proprietary xenograft models in collaboration with the Mayo Clinic. In addition, and following subsequent scientific advisory boards convened at the 2018 American Society of Clinical Oncology and the 2018 ASH annual meeting, we continued to work with leading key opinion leaders and CAR-T centers to advance lenzilumab into phase Ib/II pivotal trials in combination with FDA-approved, CD19 targeted CAR-T therapies such asKite’s Yescarta and potentially with Novartis’s Kymriah.

Following outreach to key opinion leaders and innovators in the CAR-T field, we have tested the hypothesis of using lenzilumab as a prophylaxis against these side-effects. A preclinical study conducted in 2018 in collaboration with leading researchers at the Mayo Clinic, validated our hypothesis that the use of lenzilumab along with CD19 targeted CAR-T therapy neutralized GM-CSF and significantly reduced NT and CRS. In addition, the Mayo Clinic study showed that the use of lenzilumab enhanced CAR-T proliferation and effector functions, generally improving, the efficacy of the CAR-T therapy. This was the first time it has been demonstrated that the toxicities associated with CAR-T therapy can be effectively abrogatedin vivo. These data were submitted as an abstract to the ASH and led to a presentation during the CAR-T plenary session at the 2018 annual meeting of the ASH, the receipt of one of ASH’s coveted ‘Outstanding Abstract Achievement Awards’, and an invitation to submit a manuscript to ‘blood’, a premier journal in hematology and the official journal of ASH. The manuscript entitled “GM-CSF inhibition reduces cytokine release syndrome and neuroinflammation but enhances CAR-T cell function in xenografts” was published as a first edition paper by ‘blood’ in the November 21, 2018 online edition. In February 2019, the editors of ‘blood’ selected our study and a key image from the associated manuscript for the front cover of the February 14, 2019 edition of the journal.

Our current clinical and regulatory development plan centers around the collaboration agreement we executed with Kite in May 2019 (the “Kite Agreement”). Pursuant to the Kite Agreement, the parties have agreed to conduct a multi-center Phase 1b/2 study (ZUMA-19) of lenzilumab with Kite’s Yescarta in patients with relapsed or refractory B-cell lymphoma. The primary objective of ZUMA-19 is to determine the effect of lenzilumab on the safety of Yescarta. In addition, efficacy and healthcare resource utilization will be assessed.The Kite Agreement is non-exclusive. Depending upon FDA feedback, we believe ZUMA-19 may serve as the basis for registration for lenzilumab.

Combining Allogeneic HSCT with Lenzilumab

In addition to CAR-T therapy, we are committed to advancing our diverse platform for GM-CSF axis suppression for a broad range of other T-cell engaging therapies, including both autologous and allogeneic next generation CAR-T therapies, bi-specific antibody therapies as well as other cell-based immunotherapies in development, with our current and future partners.

We believe that GM-CSF neutralization using lenzilumab has the potential to make allogeneic HSCT safer and more effective. Similar to GM-CSF neutralization with lenzilumab breaking the efficacy/toxicity linkage with CAR-T therapy, GM-CSF neutralization has demonstrated potential to attenuate GvHD while maintaining the beneficial GvL effect in patients undergoing allogeneic HSCT.

In July 2019, we entered into the Zurich Agreement with UZH. Under the Zurich Agreement, we have in-licensed certain technologies that we believe may be used to prevent or treat GvHD,HSCT, thereby expanding our development platform to include improving the safety and effectiveness ofmaking allogeneic HSCT a potentially curative therapy for patients with hematological cancers.safer. The technology was recently featured in a November 2018 research article published in Science Translational Medicine, where the authors demonstrated in a murine model of GvHD, that donor T cell-derived GM-CSF drives GvHD through activation, expansion, and trafficking of myeloid cells but has no effect on the GvL response. Neutralization of GM-CSF (either using a neutralizing antibody or through GM-CSF gene knock-out) was able to uncouple the myeloid-mediated immunopathology resulting in GvHD from the T cell-mediated control of leukemic cells. This discovery provides a clear mechanistic proof-of-concept for neutralizing GM-CSF to prevent GvHD without compromising, and potentially improving, the GvL effect in patients undergoing allogeneic HSCT. Corroborating data related to the critical effect GM-CSF has on GvHD development in HSCT was published recentlyin blood advances in October 2019 by Gartlan et al.

The strong link between T cell-mediated efficacy and myeloid cell mediated toxicity mirrors the findings that have been reported with CAR-T therapies where T cell-produced GM-CSF has emerged as a key driver of the myeloid inflammatory cascade resulting in NT and CRS and potentially impairing improved CAR-T therapy efficacy through effects on myeloid-derived suppressor cells. GM-CSF neutralization has the potential to eliminate or reduce the off-target inflammatory cascade while preserving the on-target efficacy of T cell therapies, thereby breaking the efficacy/toxicity linkage.Our Development Program

We believe that GM-CSF neutralization withusing lenzilumab has the potential to prevent or treatmake allogeneic HSCT safer and more effective. Similar to GM-CSF neutralization with lenzilumab breaking the efficacy/toxicity linkage with CAR-T therapy, GM-CSF neutralization has demonstrated potential to attenuate acute GvHD without compromising, and potentially improving,while maintaining the beneficial GvL effect in patients undergoing allogeneic HSCT, thereby making allogeneic HSCT safer.HSCT. Accordingly, we aim to position lenzilumab as a “must have” companion product to any allogeneic HSCT and as a part of the standard pre-conditioning that all patients receiving allogeneic HSCT should receive or as an early treatment option in patients identified as high risk for GvHD. We believe lenzilumab has potential to prevent or reduce aGvHD in allogeneic HSCT, thereby making allogeneic HSCT safer as a potentially curative therapy for patients with hematological cancers.

We plan to study lenzilumab as a companion to allogeneic HSCT for patients with hematological cancers. We plan to commence a Phase 2/3 potentially registrational trial for lenzilumab to treat patients who have undergone allogeneic HSCT who are at high and intermediate risk for aGvHD, known as the RATinG study. The study will be conducted by the IMPACT Partnership, a collection of 22 stem cell transplant centers located in the United Kingdom and is expected to begin enrollment in the first half of 2022. We will provide lenzilumab for the study including the cost of import, labeling and distribution of the study drug, and support certain laboratory tests related to the study, but the majority of the study costs will be borne by the IMPACT Partnership. The goal of the trial, as it is currently contemplated, would be to determine the efficacy and safety of lenzilumab in reducing non-relapse mortality at six months.

Our Commercial Opportunity

The overall number of allogeneic HSCT treatments continues to increase annually in the U.S. and abroad. According to the Center for International Blood & Bone Marrow Transplant Research (“CIBMTR”), in 2019, approximately 10,000 allogeneic HSCT treatments were expected to be performed in the U.S., with similar trends expected in Europe (Phelan, et al Current use and outcome of hematopoietic stem cell transplantation: CIBMTR US summary slides 2020).

Lenzilumab in CMML

Scientific Rationale

We believe that lenzilumab also holds promise in CMML, a rare form of hematologic cancer with no FDA-approved treatment options and a three-year overall survival rate of 20% and median overall survival of 20 months, and potentially in JMML, a rare pediatric form of leukemia.months. CMML is a clonal stem cell disorder of which monocytosis is a key feature. Approximately 40% of CMML patients carry NRAS/KRAS/CBL mutations which are associated with GM-CSF hypersensitivity. CMML has features of myelodysplastic syndrome (“MDS”), including abnormal, dysplastic bone marrow cells; cytopenia; transfusion dependence; and of myeloproliferative neoplasms, including overproduction of white blood cells, organomegaly (e.g., splenomegaly and hepatomegaly) and extramedullary disease. About 15 to 20% of CMML cases progress to acute myeloid leukemia, or AML. According to the American Cancer Society, approximately 1,100 individuals in the United States are newly diagnosed annually with CMML, with the majority of these new patients being age 60 or older. These patients are typically unsuitable for stem cell transplants.

Our Development Program

In a recently conducted Phase I1 study, 3 of 6 patients with NRAS/KRAS/CBL mutations demonstrated a clinical response to lenzilumab by the MDS/MPN International Working Group criteria. The Phase 1 clinical trial in patients with CMML identified the Maximum Tolerated Dose (“MTD”) or recommended Phase 2 dose of lenzilumab, and assessed lenzilumab’s safety, pharmacokinetics, and clinical activity. Final results of this study were presented at the 2019 ASH annual meetingAnnual Meeting and published in ‘blood’blood. Building on this successful Phase I1 study in CMML, with lenzilumab, we may initiateare running a Phase II2 study in newly-diagnosedcombination with azacitidine in newly diagnosed CMML patients who express NRAS/KRAS/CBL mutations which are known to be hypersensitive to GM-CSF and therefore may lend themselves to responsiveness to lenzilumab treatment. The Phase 2 study, known as “PREcision Approach to Chronic Myelomonocytic Leukemia” or “PREACH-M”, is being conducted in partnership with the South Australian Health & Medical Research Institute (“SAHMRI”) and the University of Adelaide. The study has begun enrollment at five sites in Australia and the first patient has been dosed. We will provide lenzilumab for this study and the majority of the study costs will be borne by the partner and funded by a grant from the Medical Research Futures Fund, a research fund set up by the Australian Government. 

Gene-edited CAR-T Therapies using GM-CSF Gene Knockout

We believe that our GM-CSF knockout gene-editing CAR-T platform has the potential to create next-generation CAR-T therapies that improve the efficacy and safety profile of CAR-T therapy via gene-edited CAR-T cells which can be engineered to lack the ability to produce GM-CSF, thereby avoiding any efficacy/toxicity linkage and potentially preserving and improving upon the benefits of the CAR-T therapy while altogether avoiding its serious and potentially life-threatening side-effects.

We are advancing our GM-CSF knockout gene-editing CAR-T platform through the Mayo Agreement that we entered into in June 2019 with the Mayo Foundation. Under the Mayo Agreement, we have in-licensed certain technologies that we believe may be used to create CAR-T cells lackingGM-CSFexpression through various gene-editing tools including CRISPR-Cas9. The Mayo Agreement broadened our leadership position in the GM-CSF neutralization space and expanded our discovery platform aimed at improving CAR-T therapy to include gene-edited CAR-T cells.

Preclinical data indicates that GM-CSF gene knockout CAR-T cells show improved overall survival compared to GM-CSF-expressing CAR-T cells in addition to the expected benefits of reduced serious side-effects associated with CAR-T therapy. We are establishing a platform of next-generation combinatorial gene knockout CAR-T cells that have potential to be applied across both autologous and allogeneic approaches and we are also investigating multiple CAR-T cell designs using precise dual and triple gene editing to significantly enhance the anti-tumor activity while simultaneously preventing CAR-T therapy induced toxicities. Through targeted gene expression and modulating cytokine activation signaling, we may be able to increase the proportion of fitter T-cells produced during expansion, increase the proliferative potential, and inhibit activation induced cell death, thereby improving the cancer killing activity of our engineered CAR-T cells thereby making them more effective and safer in the treatment of cancers. Preclinical data indicates that CAR-T cells express GM-CSF and signal through GM-CSF receptors upon activation in an autocrine fashion. GM-CSF knockout CAR-T cells are not able to signal through this pathway which results in a gene expression profile distinct from GM-CSF-expressing CAR-T cells afterin vitro expansion. This includes lower levels of Fas expression which may indicate a less differentiated state of the CAR-T cells. These data were presented at the 2019 ASH annual meeting and the abstract was the recipient of an Abstract Achievement Award. We continue to explore the phenotypic pattern of GM-CSF knockout CAR-T cells relative to GM-CSF-expressing CAR-T cells and possible implications for improved safety and efficacy. We plan to continue development of this technology in combination approaches that could add to the observed efficacy benefits of current generation CAR-T products. 

EphA3-CAR: Targeting Tumor Stroma and Tumor Vasculature

We have begun to generate our own pipeline of CAR-T therapies including an EphA3-CAR-T based on the ifabotuzumab v-region and backbone. Ifabotuzumab is a Humaneered anti-EphA3 monoclonal antibody. Ifabotuzumab has the potential to kill tumor cells by targeting tumor stroma that protects them and the vasculature that feeds them. This unique combination of activities as a backbone of a CAR-T therapy may provide the potential to generate durable responses in a range of solid tumors by targeting the tissues that surround, protect, and nourish a growing cancer.

Given our interest in developing lenzilumab to prevent CRS/cytokine storm in COVID-19 as well as in the treatment of rare cancers and other orphan conditions such as aGvHD and CMML, we believe that we have the opportunity to benefit from various regulatory and commercial incentives, such as orphan drug exclusivity, breakthrough therapy designation, fast track designation, priority review and accelerated approval.

Eph receptors are criticalIfabotuzumab

Ifabotuzumab is a Humaneered monoclonal antibody, formerly referred to as KB004, which targets the EphA3 receptor, and in which the antibody carbohydrate chains lack fucose, thereby enhancing the targeted cell-killing activity of the antibody. We believe that ifabotuzumab as part of an antibody drug conjugate has the potential for treating solid tumors. In 2006, we entered into a license agreement with Ludwig Institute of Cancer Research (“LICR”) pursuant to which LICR granted certain exclusive rights to the ifabotuzumab prototype (referred to as IIIA4) as well as EphA3 intellectual property.

Ifabotuzumab binds to EphA3, which plays an important role in cell positioning and movement intissue organization during fetal development. However, in the adult, EphA3development but is not expressed in normal tissue but it is thought to be expressed nor play a significant role in healthy adults. EphA3 is a tyrosine kinase receptor, aberrantly expressed on the tumor vasculature and tumor stroma in several solid tumors including melanoma, breast cancer, stemsmall and non-small cell compartment,lung cancer (“SCLC” and “NSCLC”), colorectal cancer, gastric cancer, renal cancer, glioblastoma multiforme (“GBM”), and prostate cancer, making it an attractive target for a range of cancers. Publications related to certain cancers have indicated that EphA3 tumor cell expression correlates with cancer growth and a poor prognosis. EphA3 appears to be critically involved in particularmaintaining tumor cells in a less differentiated state by modulating mitogen-activated protein kinase signaling. EphA3 knockdown or depletion of EphA3-positive tumor cells may reduce tumorigenic potential to a degree comparable to treatment with a therapeutic radiolabeled EphA3-specific monoclonal antibody. We believe EphA3 is a functional, targetable receptor in solid tumors. A study published in December 2018 in ‘Cancers’ showed that an antibody drug conjugate (“ADC”) comprising IIIA4 (a predecessor monoclonal antibody and prototype for ifabotuzumab) showed significant survival benefit in mice with GBM.

Anti-EphA3 treatment has shown encouraging preclinical results in multiple experiment types, including patient primary tumor cell assays, colony forming assays, and xenograft mouse models. Upon binding to EphA3, ifabotuzumab causes cell killing to occur either through antibody-dependent, cell-mediated cytotoxicity or through direct apoptosis, and in the stroma that surroundscase of tumor neovasculature, through cell rounding and protectsblood vessel disruption. Given the expression pattern of EphA3 in multiple tumor types, ifabotuzumab may have the potential to kill cancer cells and the tumor vasculature that feeds them. EphA3 expression has been reportedstem cell microenvironment, providing for long-term responses while sparing normal cells.

On April 10, 2021, we presented top-line results from the Phase 1 safety and bioimaging trial of ifabotuzumab in patients with GBM at the tumor vasculatureAmerican Association for Cancer Research 2021 Annual Meeting. The Phase 1 study primarily sought to determine the safety and recommended Phase 2 dose of human cancers of the brain, kidney, skin, lung, colon, and bladder.ifabotuzumab in patients with GBM, is the most common formfrequent and lethal primary brain neoplasm, with 5-year survival rates of brain cancer10%. There were no dose-limiting toxicities observed and the most deadly. Targeting antigens expressed by GBMall adverse events were readily manageable. Additional studies are being planned to evaluate ifabotuzumab as an ADC in patients with solid tumors, such as, IL-13Ra2colon, breast, prostate, and EGFRvIII is associated withpancreatic cancer. These studies include the development of antigen loss variants. There are safety concerns targeting HER2 given its expression in normal adult tissue. EphA3 is increasingly being recognized as a therapeutic target for GBM given its lack of expression in normal adult tissues and its expression on stromal cells that support the cancer’s growth and metastatic potential.

Using ifabotuzumab as the backbone, we have generated an EphA3-CAR-T that may be useful in the treatment of a range of solid tumors and presented data at the 2019 SNO annual meeting. EphA3 expression in tumor stroma is controlled by HIF in response to the low oxygen environment that characterizes solid tumors. Preclinical data has shown the EphA3 expressing stroma cells are important for tumor neovascularization.

A Phase I safety and imaging trial of radio-labeled ifabotuzumab in recurrent glioblastoma multiforme (GBM), a particularly aggressive and deadly form of brain cancer, is enrolling at two centers in Australia, the Olivia-Newton JohnOlivia Newton-John Cancer Research Institute which plans to conduct a Phase 1b dose-escalation and imaging study in Melbourne (the “ONJCRI”) and the Queensland Institute for Medical Researchnon-CNS solid tumors that is scheduled to begin in Brisbane. Preliminary imaging data reported at AACR in early 2019 and at SNO in late 2019, demonstrated that administration of ifabotuzumab resulted in rapid, specific targeting of GBM tumors in all patients. Whole body bio-distribution imaging demonstrated no normal tissue uptake of the antibody. Post-treatment MRI scans showed predominant T2/Flair changes which were consistent with treatment effect on tumor vasculature.2022.

By developing an EphA3-CAR-T using ifabotuzumabHGEN005

HGEN005 is a Humaneered monoclonal antibody, formerly referred to as KB005, which selectively targets the backbone, we may have the ability to target the tumor, tumor stroma, and tumor vasculature ineosinophil receptor EMR1. HGEN005 is being explored as a novel manner. We are collaborating with the Mayo Clinic and plan to move to clinical testing with an anti-EphA3 constructpotential treatment for a range of cancer types after completing IND-enabling work.

EMR1-CAR: Targeting Eosinophils

Our EMR1-CAR-T product is based oneosinophilic diseases including eosinophilic leukemia both as an optimized naked antibody and as the HGEN005 (anti-EMR1 Humaneered monoclonal antibody) backbone and targets EMR1.for a novel CAR-T construct.

A major limitation of current eosinophil-targeted therapies is incomplete depletion of tissue eosinophils and/or lack of cell selectivity. Eosinophils are a type of white blood cell. If too many eosinophils are produced in the body, chronic inflammation and tissue and organ damage may result. The origin and development of eosinophilic disorders is mostly due to eosinophils infiltrating tissue. EMR1 is expressed exclusively on eosinophils, making it an ideal target for the treatment of eosinophilic disorders. Regardless of the eosinophilic disorder, mature eosinophils express EMR1 in tissue, blood and bone marrow in patients with eosinophilia. Our EMR1-CAR-T based on the HGEN005 backbone is another approach in our growing platform of CAR-T therapies. We believe that because of its high selectivity, EMR1-CAR-THGEN005 has significant potential to treat serious eosinophil diseases.

In preclinical work, HGEN005’s anti-EMR1 activity resulted in dramatically enhanced NK killingNatural Killer (“NK”) of eosinophils from normal and eosinophilic donors and also induced a rapid and sustained depletion of eosinophils in a non-human primate model without any clinically significant adverse events. The development of HGEN005 is on hold while we focus on lenzilumab and ifabotuzumab.

Intellectual Property

Intellectual property is an important part of our strategy and has been a key focus area for Humanigen. We have engaged with NIHand continue to discuss expanding the initial work they have conducted utilizing HGEN005file aggressively on our own inventions and discussionsin-license intellectual property and technology as it relates to our therapeutic interests. We believe that we are underway with a leading centerleader in the U.S.field of GM-CSF neutralization to perform the IND-enabling testing in eosinophilic leukemia, an orphan condition with significant unmet need,ameliorate cytokine storm as well as with several other potential partners, although we cannot assure you that we will reach any agreements for these next steps.it relates to COVID-19, CAR-T and GvHD. 

Licensing and Collaborations

Kite CollaborationThe Mayo Foundation for Medical Education and Research

Our current clinical and regulatory development plan centers around the Kite Agreement we executed in May 2019. Pursuant to the Kite Agreement, the parties have agreed to conduct a multi-center Phase 1b/2 study (ZUMA-19) of lenzilumab with Kite’s Yescarta in patients with relapsed or refractoryB-cell lymphoma, includingDLBCL. The primary objective of ZUMA-19 is to determine the effect of lenzilumab on the safety of Yescarta. In addition, efficacy and healthcare resource utilization will be assessed. Kite is the sponsor of ZUMA-19 and responsible for its conduct.

The Kite Agreement provides that we and Kite will split only the out-of-pocket costs incurred in conducting the ZUMA-19 study, including third-party expenses incurred in accordance with a mutually agreed budget. We currently project we will be responsible for an aggregate of up to approximately $8 million in out-of-pocket costs, assuming up to a total of 72 patients are recruited for a multi-center study. Each party will otherwise be responsible for its own internal costs, including internal personnel costs, incurred in connection with the Study.

In addition, the parties have agreed to enter into certain additional agreements in connection with ZUMA-19, including a quality and a supply agreement that will obligate us, at our expense, to supply certain quantities of lenzilumab in final form for administration to subjects in ZUMA-19. Kite is responsible, at its expense, to supply Yescarta. Kite will be responsible for other costs related to ZUMA-19.

The parties have formed a Joint Development Committee (“JDC”) to oversee ZUMA-19, its progress and administration, and other matters between the parties and their obligations set forth in the Kite Agreement. The JDC comprises representatives of each of Humanigen and Kite. Kite’s JDC designees will have decision-making authority with respect to (1) certain operational matters in conducting ZUMA-19, such as selection of participating sites and engagement of third party service providers; and (2) amendments to the ZUMA-19 protocol established by the JDC that do not directly relate to our investigational product or the part of the ZUMA-19 Study combination that consists solely of our investigational product; but only, in each case, to the extent that such decisions by the Kite JDC designees do not result in an increase in the mutually agreed-upon budget by fifteen percent or more. Neither Kite designees nor our designees will have final decision making authority on matters directly related to the investigational product of the other party, including the other party’s investigational product that is used in or a part of ZUMA-19.

We and Kite will jointly own all ZUMA-19 data and sample data, including case report forms, findings, conclusions and other results from ZUMA-19 that relates to each party’s investigational product that is used in combination or sequence in ZUMA-19, and not solely to either party’s investigational product. ZUMA-19 data and sample data that relates solely to a party’s own investigational product will be owned solely by that party. We and Kite will own our respective background intellectual property and neither party has been granted a commercial license to use the respective background intellectual property of the other party. Each party will own any inventions that relate to its own investigational product used in ZUMA-19 or sample data, however, any new inventions related to, or covering, the combination of each party’s investigational product used in ZUMA-19 will be jointly owned by the parties. Kite will control any preparation, filing, prosecution and maintenance of any patent covering any new inventions related to, or covering, the combination of each party’s investigational product used in ZUMA-19 and the parties will equally share costs for all such patents. We will continue to own all world-wide rights to lenzilumab and the intellectual property related to lenzilumab, including use of lenzilumab with CAR-T therapy.

Unless previously terminated, the Kite Agreement will continue until the first anniversary of the date Kite provides the final ZUMA-19 Study report to us or the termination of the Study. Kite may elect to terminate or suspend the Study at any time. Each party may terminate the Kite Agreement under certain circumstances, including (1) for an uncured breach by the other party; (2) if a party determines that the Study may unreasonably affect patient safety; (3) upon certain actions by regulatory authorities that are adverse to the Study; or (4) if a party determines to discontinue the development of its investigational product.

The Kite Agreement imposes additional obligations on the parties, such as confidentiality obligations, obligations to comply with applicable law related to patient privacy and data protection, and potential indemnification obligations. The Kite Agreement is non-exclusive.

Worldwide License for the Prevention of GvHD through GM-CSF Neutralization from UZH

In JulyOn June 19, 2019, we entered into the ZurichMayo Agreement with UZH. Under the Zurich Agreement, we have in-licensed certain technologies that we believe may be used to prevent GvHD through GM-CSF neutralization. The Zurich Agreement covers various patent applications filed by UZH which complement and broaden our position in the application of GM-CSF neutralization and expands our development platform to include improving allogeneic HSCT.

Worldwide License to Gene-Editing Technology from the Mayo Foundation

In June 2019, we entered into an exclusive worldwide license with the Mayo Foundation. Under the Mayo Agreement, we have in-licensed certain technologies that we believe may be used to create CAR-T cells lacking GM-CSF expression through various gene-editing tools including CRISPR-Cas9. The license covers various patent applications and know-how developed by the Mayo Foundation in collaboration with us. These licensed technologies complement and broaden our leadership position in the CAR-T/GM-CSF neutralization space and expand our discovery platform aimed at improving CAR-T therapy to include gene-edited CAR-T cells. With this license agreement, we significantly expanded our intellectual property portfolio to include gene-edited CAR-T cells which can be engineered to lackThe Mayo Agreement requires the ability to produce GM-CSF which may improvepayment of milestones and royalties upon the efficacyachievement of certain regulatory and safety profile of CAR-T therapy. In addition, we have and continue to file intellectual property encompassing a broad range of gene-editing approaches related to GM-CSF knockout. commercialization milestones.

Lenzilumab

Overview and MechanismThe term of Action

Lenzilumab, previously referred to as KB003, is a novel monoclonal antibody designed to target and neutralize human GM-CSF, which could also be described as a ‘myeloid inflammatory factor’. We used our proprietary and patent-protected Humaneered antibody development platform to develop lenzilumab. 

We have completed a 160 patient Phase II study with lenzilumab in severe asthma. Lenzilumab was found to be safe and well-tolerated in the 78 patients who received it in the active treatment arm of the study. There was a trend toward improved respiratory function and a statistically significant improvement in patients with eosinophilic asthma (measured by standard forced expiratory volume measures at 24 weeks vs. baseline). These data were published in the British Medical Journal.

There is extensive evidence linking GM-CSF expression to serious and potentially life-threatening side-effects in CAR-T therapy and reduced efficacy through recruitment of MDSCs. Our focus for lenzilumab development is investigating its potential to improve efficacy of CAR-T therapy and to prevent or ameliorate CAR-T therapy-related NT and CRS. Following CAR-T therapy administration, GM-CSF produced by CAR-T cells initiates a signaling cascade of inflammation that results in the trafficking and recruitment of myeloid cells to the tumor site. These myeloid cells produce key cytokines known to be associated with the development of NT and CRS thereby perpetuating the inflammatory cascade. Peer-reviewed publications in leading journals by well-recognized experts have reported that GM-CSF blood levels are elevated early after CAR-T cell administration and reach significant peak levels in patients who suffer serious NT as a side-effect of CAR-T therapy.

GM-CSF seems to be critical for the initiation of CRS, NT and the inflammatory cascade following CAR-T administration. GM-CSF acts as an upstream ‘initiator’ and the precursor to other cytokines involved in the cascade. GM-CSF gene knock-out (k/o) mice, or animals that lack a functional myeloid compartment, do not develop CRS and have normal levels of downstream cytokines, including IL-6, IL-1 and MCP-1/CCL2. Animals that are k/o for IL-1, INF-gamma and IL-6 still develop CRS in models which recapitulate this syndrome. This is very telling, given that some investigators believe IL-6 to be causative of CRS. In addition, in pivotal clinical studies, IL-6 has not been shown to correlate with severe NT or CRS emergence. The lack of GM-CSF does not affect T-cell mediated cancer-killing, or cytotoxicity, as GM-CSF k/o animals had equivalent effector to target cell (E:T) ratios and cytotoxic activity against tumor cells in our published studies. GM-CSF is required for CCR2⁺monocytes to initiate and sustain neuro-inflammation. It is postulated that GM-CSF induces CCR2+ inflammatory myeloid derived cells to infiltrate into the CNS, activating microglial cells; the activated microglial cells then increase their expression of CCL2/MCP-1 to further recruit inflammatory myeloid cells in a self-perpetuating manner, forming a positive feedback loop. Research from CAR-T clinical trials demonstrated that fever and elevated MCP-1 levels 36 hours post CAR-T treatment were most predictive of severe CRS and NT across patients with NHL, ALL and CLL, providing further support for the mechanism by which GM-CSF may contribute to these toxicities. 

There are many other publications that point to the pivotal role of GM-CSF in CRS and NT, as well as potentially hampering efficacy. Based on these publications and extensive discussions with leading key opinion leaders, we believe that lenzilumab, used as alongside CAR-T therapy offers a number of potential benefits, including:

Preclinical studies in mice conducted at the Mayo Clinic using human ALL blasts, human CD19 CAR-T, and human peripheral blood mononuclear cells (PBMCs), demonstrated that blockade of GM-CSF with lenzilumab prevented the onset of CRS, reduced neuro-inflammation by 75% (as assessed by quantitative MRI) and maintained the integrity of the blood-brain barrier (BBB) compared to CAR-T plus control antibody treatment, where CRS, neuro-inflammation and BBB disruption can be profoundly affected. The administration of lenzilumab in combination with CAR-T therapy led to a significant (5-fold) increase in proliferation of CAR-T cells and improved CAR-T effector function, presumably due to a decrease in MDSC expansion and trafficking which is known to be promulgated by GM-CSF. GM-CSF neutralization in combination with CAR-T therapy reduced relapse, enhanced anti-tumor response and improved overall survival compared to CAR-T therapy alone and these data were published in ‘blood’. Moreover, the combination of lenzilumab and CAR-T reduced myeloid cell infiltration into the CNS and resulted in significantly better leukemic control as quantified by flow cytometry compared to CAR-T and control antibody. Human data from CAR-T clinical trials suggests that the only cytokines associated with grade> 3 NT are GM-CSF, IL-2 and IL-15. Moreover, in patients who developed severe NT, there was a 17-fold increase in myeloid cell trafficking into the CNS further establishing the role of GM-CSF in the expansion and trafficking of myeloid cells in the toxicities associated with CAR-T therapy.

We are also developing lenzilumab alongside allogeneic HSCT for patients with hematological cancers. Accordingly, we are assessing plans to investigate use oflenzilumab as a necessary companion product to any allogeneic HSCT and as a part of the standard pre-conditioning that all patients receiving allogeneic HSCT should receive or as an early treatment option for patients identified as high risk by certain biomarkers.

Clinical data also shows the potential for lenzilumab as a treatment for certain autoimmune and other inflammatory conditions, including eosinophilic asthma, rheumatoid arthritis (RA), ankylosing spondylitis (“AS”), psoriatic arthritis (“PsA”), inflammatory bowel disease (“IBD”), juvenile idiopathic arthritis (“JIA”), giant cell arteritis (“GCA”), atopic dermatitis (“AD”) and systemic lupus erythematosus (“SLE”). There is potential for a range of other oncology, immunology and autoimmune conditions and we are investigating partnering lifecycle management opportunities for lenzilumab in high value markets with strong unmet medical needs. 

Development Program

As a Sequenced Therapy In Combination with CD19 Targeted CAR-T Therapies

Our current clinical and regulatory development plan centers around the Kite Agreement we executed in May 2019. Pursuant to the Kite Agreement, the parties have agreed to conduct a multi-center Phase 1b/2 study (ZUMA-19) of lenzilumab with Kite’s Yescarta in patients with relapsed or refractory B-cell lymphoma, includingDLBCL which is currently enrolling. Kite is the sponsor ofZUMA-19 and is responsible for its conduct. The primary objective ofZUMA-19 is to determine the effect of lenzilumab on the safety of Yescarta. In addition, efficacy and healthcare resource utilization will be assessed.

Kite’s Yescarta is one of two CAR-T therapies that have been approved by FDA and is the leading CAR-T by revenue. Our collaboration with Kite is the only current clinical collaboration that is enrolling patients with the potential to improve both the safety and efficacy of CAR-T therapy. The Kite Agreement is non-exclusive. Depending upon FDA feedback, we believeZUMA-19 may serve as the basis for registration for lenzilumab.

As a Companion to Allogeneic HSCT

We believe lenzilumab has potential to prevent or reduce GvHD in allogeneic HSCT, thereby making allogeneic HSCT safer as a potentially curative therapy for patients with hematological cancers. In July 2019, we entered into an exclusive worldwide license agreement with UZH. Under the Zurich Agreement, we have in-licensed certain technologies that we believe may be used to prevent GvHD through GM-CSF neutralization, thereby expanding our development platform to include improving the safety and effectiveness of allogeneic HSCT. A recent study published in ‘blood advances’, an official journal of the American Society of Hematology, suggests that neutralizing or blocking GM-CSF may limit or prevent GvHD in the gastrointestinal tract (Gartlan, K., et al, October 8, 2019, vol 3, no.19).

We plan to study lenzilumab as a companion to allogeneic HSCT for patients with hematological cancers. Accordingly, we are working to initiate pivotal Phase II/III studies of lenzilumab prophylaxis or early treatment in combination with allogeneic HSCT with a primary objective of preventing or reducing acute GvHD. 

COVID-19

We are exploring the potential for use of lenzilumab to prevent the emergence of CRS in COVID-19. According to a recent paper published in The Lancet, patients infected with SARS-CoV-2 have high serum amounts of GM-CSF, MCP1, IL1b, INFg, IP10; patients requiring ICU admission had higher concentrations of GCSF, IP10, MCP1, MIP1a, and TNFa and it has been shown that GM-CSF, MCP1, MIP1a, IL1b, and IP10 are all produced byGM-CSF activated myeloid cells. The cytokine storm seen in the context of CAR-T therapy appears to follow the same cascade as in SAR-CoV-2 infection and the COVID-19 disease process.

Other Inflammatory Conditions

Previous clinical studies of lenzilumab include a repeat-dose, Phase II clinical trial of lenzilumab in RA with the inclusion of a safety run-in portion. On completing the safety run-in portion of this trial, which showed lenzilumab to be well tolerated with no clinically significant adverse events, we reassessed the increasingly competitive RA market and chose to redirect our study of lenzilumab to other areas given the competitive intensity and diminishing levels of unmet need in RA relative to some other medical areas. Results from a subsequent randomized, double-blinded, placebo-controlled, repeat dose, Phase II clinical trial in severe asthma, showed a statistically significant benefit on patients with eosinophilic asthma. As a result of a strategic shift and other corporate activities, we terminated development of lenzilumab in severe asthma. We have generated safety and tolerability data in 113 patients in various clinical studies, including in CMML, and have demonstrated lenzilumab to be safe and well- tolerated in these settings.

Gene-edited CAR-T Therapies using GM-CSF Gene Knockout

We believe that our GM-CSF knockout gene-editing CAR-T platform has the potential to create next-generation CAR-T therapies that improve the efficacy and safety profile of CAR-T therapy via gene-edited CAR-T cells which can be engineered to lack the ability to produce GM-CSF, thereby avoiding any efficacy/toxicity linkage and potentially preserving and improving upon the benefits of the CAR-T therapy while altogether avoiding its serious and potentially life-threatening side-effects. 

We are advancing our GM-CSF knockout gene-editing CAR-T platform through the Mayo Agreement that we entered into in Juneruns from May 29, 2019 withuntil the Mayo Foundation. Underlater of: (i) the Mayo Agreement, we have in-licensed certain technologies that we believe may be usedexpiration date of the last to create CAR-T cells lackingGM-CSFexpression through various gene-editing tools including CRISPR-Cas9. The Mayo Agreement broadened our leadership positionexpire of the patent rights granted; or (ii) the conclusion of a period of ten (10) years from the date of the first commercial sale, subject to termination rights specified in the GM-CSF neutralization space and expanded our discovery platform aimed at improving CAR-T therapy to include gene-edited CAR-T cells.

Preclinical data indicates that GM-CSF knockout CAR-T cells show improved overall survival compared to GM-CSF-expressing CAR-T cells, in addition to the expected benefits of reduced serious side-effects associated with CAR-T therapy. We are establishing a platform of next-generation combinatorial gene knockout CAR-T cells that have potential to be applied across both autologous and allogeneic approaches and we are also investigating multiple CAR-T cell designs using precise dual and triple gene editing to significantly enhance the anti-tumor activity while simultaneously preventing CAR-T therapy induced toxicities. Through targeted gene expression and modulating cytokine activation signaling, we may be able to increase the proportion of fitter T-cells produced during expansion, increase the proliferative potential, and inhibit activation-induced cell death, thereby improving the cancer killing activity of our engineered CAR-T cells thereby making them more effective and safer in the treatment of cancers. Preclinical data indicates that CAR-T cells express GM-CSF and signal through GM-CSF receptors upon activation in an autocrine fashion. GM-CSF knockout CAR-T cells are not able to signal through this pathway which results in a gene expression profile distinct from GM-CSF-expressing CAR-T cells after in vitro expansion. This includes lower levels of Fas expression which may indicate a less exhausted state of the CAR-T cells. These data were presented at the 2019 ASH annual meeting.

We continue to explore exhaustion markers of GM-CSF knockout CAR-T cells relative to GM-CSF-expressing CAR-T cells and possible implications for improved safety and efficacy. We plan to continue development of this technology in combination approaches that could add to the observed efficacy benefits of current generation CAR-T products.

Ifabotuzumab

Ifabotuzumab is a Humaneered immunotherapy, formerly referred to as KB004, which targets the EphA3 receptor, and in which the antibody carbohydrate chains lack fucose, thereby enhancing the targeted cell-killing activity of the antibody. We believe that ifabotuzumab has the potential for treating solid tumors, hematologic malignancies and serious pulmonary conditions. In 2006, we entered into a license agreement with Ludwig Institute of Cancer Research (“LICR”) pursuant to which LICR granted certain exclusive rights to the ifabotuzumab prototype (referred to as IIIA4) as well as EphA3 intellectual property.

Ifabotuzumab binds to the EphA3 receptor, which plays an important role in cell positioning and tissue organization during fetal development, but is not thought to be expressed nor play a significant role in healthy adults. EphA3 is a tyrosine kinase receptor, aberrantly expressed on the tumor cell surface in a number of hematologic malignancies and solid tumors. It is also expressed in the stem cell compartment, which includes malignant stem cells, the vasculature that feeds them, and the stromal cells that protect them. EphA3 expression has been documented in a number of hematologic and solid tumor types, including AML, chronic myelogenous leukemia (“CML”), CLL, MDS, myelofibrosis, multiple myeloma, melanoma, breast cancer, small and non-small cell lung cancer (“SCLC” and “NSCLC”), colorectal cancer, gastric cancer, renal cancer, GBM, and prostate cancer, making it an attractive target for a range of cancers. Publications related to certain cancers have indicated that EphA3 tumor cell expression correlates with cancer growth and a poor prognosis. EphA3 is overexpressed in GBM and, in particular, in the most aggressive mesenchymal subtype. Importantly, EphA3 is highly expressed on the tumor-initiating cell population in glioma and appears to be critically involved in maintaining tumor cells in a less differentiated state by modulating mitogen-activated protein kinase signaling. EphA3 knockdown or depletion of EphA3-positive tumor cells may reduce tumorigenic potential to a degree comparable to treatment with a therapeutic radiolabeled EphA3-specific monoclonal antibody. We believe EphA3 is a functional, targetable receptor in GBM and other solid tumors as well as certain lymphomas and leukemias. A study published in December 2018 in ‘Cancers’ showed that an antibody drug conjugate (“ADC”) comprising IIIA4 (a predecessor monoclonal antibody and prototype for ifabotuzumab) showed significant survival benefit in mice with GBM. 

Anti-EphA3 treatment has shown encouraging preclinical results in multiple experiment types, including patient primary tumor cell assays, colony forming assays, and xenograft mouse models. Upon binding to EphA3, ifabotuzumab causes cell killing to occur either through antibody-dependent, cell-mediated cytotoxicity or through direct apoptosis, and in the case of tumor neovasculature, through cell rounding and blood vessel disruption. Given the expression pattern of EphA3 in multiple tumor types, ifabotuzumab may have the potential to kill cancer cells and the tumor stem cell microenvironment, providing for long-term responses while sparing normal cells.

Further, by developing ifabotuzumab as the backbone for a next generation CAR-T construct, we may have the ability to target both the tumor, tumor stroma, and tumor vasculature in a novel manner and build on the experience with current second generation CD19 CAR-T therapies. We are collaborating with the Mayo Clinic to make a series of CAR-T constructs based on ifabotuzumab, of which initial constructs have been created and data presented at the 2019 SNO annual meeting, and plan to move to preclinical testing with these constructs for a range of cancer types. EphA3 is a tumor specific antigen expressed on the surface of a multitude of solid tumor cells, tumor stroma cells and tumor vasculature in certain cancers. We completed the Phase I dose escalation portion of a Phase I/II clinical trial of ifabotuzumab in multiple hematologic malignancies for which the preliminary results were published in the journal Leukemia Research in 2016. A Phase I safety and imaging trial of radio-labeled ifabotuzumab in recurrent glioblastoma multiforme, a particularly aggressive and deadly form of brain cancer, has almost fully enrolled at two centers in Australia, the ONJCRI in Melbourne and the Queensland Institute for Medical Research in Brisbane and data have been presented at both AACR and SNO in 2019. The lead investigators at the ONJCRI, are also evaluating an antibody-drug conjugate (“ADC” or “ADCs”) based on ifabotuzumab in tumor models. The current clinical trial has enrolled eight patients to date, and is expected to complete enrollment with a total of twelve patients. Preliminary imaging data reported at AACR and at SNO demonstrated that administration of ifabotuzumab resulted in rapid, specific targeting of GBM tumors in all patients. Whole body bio-distribution imaging demonstrated no normal tissue uptake of the antibody. Post-treatment MRI scans showed predominant T2/Flair changes which were consistent with treatment effect on tumor vasculature. We continue to explore partnering opportunities to facilitate the further development of ifabotuzumab in a range of cancer types.

We are in discussions with separate and various parties and may initiate partnerships to pursue some of the following activities:

We have conducted a Phase I/II trial for ifabotuzumab in multiple hematologic malignancies. The most common adverse event attributed to ifabotuzumab in this trial was infusion reactions (chills, fever, nausea, hypertension, and rapid heart rate) which is an expected safety finding based on the mechanism of action. The majority of infusion reactions were mild-to-moderate in severity and resolved with temporary stoppage of infusion and/or use of medications to treat symptoms. In 2014, we completed the Phase I dose escalation portion of our study, primarily treating patients with AML as well as patients with MDS and myelofibrosis (“MF”). Responses were observed in patients with AML, MF and MDS. In this study, ifabotuzumab was well tolerated and clinically active when given as a weekly infusion.

Centers in Australia have worked independently on IIIA4, the murine antibody parent of ifabotuzumab, as an ADC in mice and a December 2018 publication in the journal ‘Cancers’ showed that in mice engrafted with GBM, treatment with an ADC based on IIIA4 showed significantly improved survival. 

HGEN005

Our EMR1-CAR-T product is based on the HGEN005 (anti-EMR1 monoclonal antibody) backbone and targets EMR1.

A major limitation of current eosinophil-targeted therapies is incomplete depletion of tissue eosinophils and/or lack of cell selectivity. Eosinophils are a type of white blood cell. If too many eosinophils are produced in the body, chronic inflammation and tissue and organ damage may result. The origin and development of eosinophilic disorders is mostly due to eosinophils infiltrating tissue. EMR1 is expressed exclusively on eosinophils, making it an ideal target for the treatment of eosinophilic disorders. Regardless of the eosinophilic disorder, mature eosinophils express EMR1 in tissue, blood and bone marrow in patients with eosinophilia. Our EMR1-CAR-T based on the HGEN005 backbone is another approach in our growing platform of CAR-T therapies. We believe that because of its high selectivity, EMR1-CAR-T has significant potential to treat serious eosinophil diseases.

In preclinical work, HGEN005’s anti-EMR1 activity resulted in dramatically enhanced NK killing of eosinophils from normal and eosinophilic donors and also induced a rapid and sustained depletion of eosinophils in a non-human primate model without any clinically significant adverse events. We have engaged with NIH to discuss expanding the initial work they have conducted utilizing HGEN005 and discussions are underway with a leading center in the U.S. to perform the IND-enabling testing in eosinophilic leukemia, an orphan condition with significant unmet need, as well as with several other potential partners, although we cannot assure you that we will reach any agreements for these next steps.

Our Humaneered Technology

Our proprietary and patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly for chronic conditions. We have developed or in-licensed targets or research (mouse) antibodies, typically from academic institutions, and then applied our Humaneered technology to them. Lenzilumab, ifabotuzumab and HGEN005 are Humaneered antibodies. In aggregate, our Humaneered antibodies have been tested clinically in more than 200 patients with no evidence of serious immunogenicity. Our Humaneered antibodies are closer to human antibodies than chimeric or conventionally humanized antibodies and have a high affinity for their target but low immunogenicity. Specifically, our Humaneered technology generates an antibody from an existing antibody with the required specificity as a starting point and, we believe, provides the following additional advantages:

As we are focused on progressing our current portfolio of antibodies through clinical development and out-licensing, we are not currently dedicating additional resources to the research or development of additional Humaneered antibodies other than our existing portfolio of lenzilumab, ifabotuzumab and HGEN005. 

Intellectual Property

Intellectual property is an important part of our strategy. We have and continue to file aggressively on our own inventions and in-license intellectual property and technology as it relates to our therapeutic interests.

Licensing and Collaborationsagreement.

The University of Zurich

On July 19, 2019, we entered into an exclusive worldwide license agreement (the “Zurich Agreement”) with the University of Zurich Agreement with UZH.(“UZH”). Under the Zurich Agreement, we have in-licensed certain technologies that we believe may be used to prevent GvHD through GM-CSF neutralization. The Zurich Agreement covers various patent applications filed by UZH which complement and broaden our position in the application of GM-CSF neutralization and expands our development platform to include improving allogeneic HSCT.

The Zurich Agreement required an initial one-time payment of $100,000, which we paid to UZH on July 29, 2019. The Zurich Agreement also requires the payment of annual license maintenance fees, as well as milestones and royalties upon the achievement of certain regulatory and commercialization milestones.

The Mayo Foundation for Medical Educationterm of the Zurich Agreement runs from July 19, 2019 until the expiration date of the longest-lived patent right, subject to termination rights specified in the agreement.

Clinical Trial Agreement with the National Institute of Allergy and ResearchInfectious Diseases

On June 19, 2019,July 24, 2020, we entered into a clinical trial agreement (the “Clinical Trial Agreement”) with NIAID, part of the Mayo Agreement withNational Institutes of Health, which is part of the Mayo Foundation. UnderUnited States Government Department of Health and Human Services, as represented by the Mayo Agreement, we have in-licensed certain technologies that we believe may be used to create CAR-T cells lackingGM-CSFexpression through various gene-editing tools including CRISPR-Cas9. The license covers various patent applicationsDivision of Microbiology and know-how developed by Mayo Foundation in collaboration with us. These licensed technologies complement and broaden our position in the GM-CSF neutralization space and expand our discovery platform aimed at improving CAR-T to include gene-edited CAR-T cells.

Infectious Diseases. Pursuant to the MayoClinical Trial Agreement, lenzilumab is being evaluated in the NIAID-sponsored ACTIV-5/ BET in hospitalized patients with COVID-19. The ACTIV-5/BET-B study protocol was modified to include baseline CRP below 150 mg/L (the CRP subgroup) as the primary analysis population. The ACTIV-5/BET-B study has reached its target enrollment with over 400 patients enrolled that met this criterion and we were required to pay $200,000anticipate top-line data in late first quarter or early second quarter of 2022.

 Pursuant to the Mayo Foundation within six monthsClinical Trial Agreement, NIAID serves as sponsor and is responsible for supervising and overseeing ACTIV-5/BET-B. We provided lenzilumab to NIAID without charge and in quantities to ensure a sufficient supply of the effective date of the Mayo Agreement, or upon completion of a qualified financing, whichever is earlier. We did not make the initial payment as of the due date and until the payment is made, the overdue amount will incur interest on the unpaid balance at the prime rate plus 2%. The Mayo Agreement also requires the payment of milestones and royalties upon the achievement of certain regulatory and commercialization milestones.  lenzilumab.

Kite

On May 30, 2019, we entered into the Kite Agreement. Pursuant to the Kite Agreement, the parties agreed to conduct a multi-center Phase Ib/II study (ZUMA-19) of lenzilumab with Kite’s Yescarta in patients with relapsed or refractory B-cell lymphoma. The primary objective of ZUMA-19 is to determine the effect of lenzilumab on the safety of Yescarta. Various other important parameters, including efficacy and healthcare resource utilization, will also be measured. Kite is the sponsor of ZUMA-19 and responsible for its conduct.

The Kite Agreement provides that we and Kite will split only the out-of-pocket costs incurred in conducting ZUMA-19, including third-party expenses incurred in accordance with a mutually agreed budget. We currently project we will be responsible for an aggregate of up to approximately $8 million in out-of-pocket costs, assuming up to a total of 72 patients are recruited for ZUMA-19 as a multi-center Study. Each party will otherwise be responsible for its own internal costs, including internal personnel costs, incurred in connection with ZUMA-19.

The Ludwig Institute for Cancer Research

In 2004, we entered into a license agreement with the LICRLudwig Institute for Cancer Research (“LICR”) pursuant to which LICR granted to us an exclusive license for intellectual property rights and materials related to chimeric anti-GM-CSF antibodies that formed the basis for lenzilumab. Under the agreement, we were granted an exclusive license to develop antibodies related to LICR’s antibodies against GM-CSF. We are responsible for using commercially reasonable efforts to research, develop, and sell lenzilumab. We pay LICR a quarterly license fee and are obligated to pay to LICR a royalty from 1.5% to 3% of net sales of licensed products, subject to certain potential offsets and deductions. Our royalty obligation applies on a country-by-country and licensed product-by-licensed product basis, and will begin on the first commercial sale of a licensed product in a given country and end on the later of the expiration of the last to expire patent covering a licensed product in a given country (which in the U.S. is currently expected in 2029 for the composition of matter and 2038 for methods of use in CAR-T) or 10 years from first commercial sale of such licensed product in the country. We must also pay to LICR a certain percentage of sublicensing revenue received by us. Payments made to LICR under this license for each of the twelve months ended December 31, 20192021 and 20182020 were $0.1 million and $0.1 million, respectively. 

million.

Other License Agreements

LICR and ifabotuzumab

In 2006, we entered into a license agreement with LICR pursuant to which LICR granted to us certain exclusive rights to the ifabotuzumab prototype (IIIA4) which targets the EphA3 receptor and EphA3-related intellectual property. Under the agreement, we obtained rights to develop and commercialize products made through use of licensed patents and any improvements thereto, including human or Humaneered antibodies that bind to or modulate EphA3. We paid LICR an upfront option fee of $0.05 million and a further $0.05 million upon our exercise of the option for the exclusive license outlined above. We are responsible for contingent milestone payments of less than $2.5 million and royalties of 3% of net sales subject to certain potential offsets and deductions. In addition, we are obligated to pay to LICR a percentage of certain payments we receive from any sublicensee in consideration for a sublicense. Our royalty obligation exists on a country-by-country and licensed product-by-licensed product basis, which will begin on the first commercial sale and end on the later of the expiration of the last to expire patent covering such licensed product in such country, which in the U.S. is currently expected in 2031, or 10 years from first commercial sale of such licensed product in such country.

BioWa and Lonza

In 2010, we entered into a license agreement with BioWa, Inc. (“BioWa”), and Lonza Sales AG (“Lonza”) pursuant to which BioWa and Lonza granted us a non-exclusive, royalty-bearing, sub-licensable license under certain know-how and patents related to antibody expression and antibody-dependent cellular cytotoxicity enhancing technology using BioWa and Lonza’s Potelligent^® CHOK1SV technology. This technology is used to enhance the cell killing capabilities of antibodies and is currently used by us in connection with our development of ifabotuzumab. Under this agreement, we owe annual license fees, milestone payments in connection with certain regulatory and sales milestones and royalties in the low single digits on net sales of products developed under the agreement. The agreement expires upon the expiration of royalty payment obligations under the agreement, is terminable at will by us upon written notice, is terminable by BioWa and Lonza if we challenge or otherwise oppose any licensed patents under the agreement and is terminable by either party upon the occurrence of an uncured material breach or insolvency. Payment made to BioWa under this license for the twelve months ended December 31, 2018 was $0.1 million. We have not made a payment for the annual license fee in 2019 as of December 31, 2019, but have accrued the related expense as of December 31, 2019.

Patents and Trade Secrets

We use a combination of patent, trade secret and other intellectual property protections to protect our product candidates and platforms. We will be able to protect our product candidates from unauthorized use by third parties only to the extent they are covered by valid and enforceable patents or to the extent our technology is effectively maintained as trade secrets. Intellectual property is an important part of our strategy. We have and continue to file aggressively on our own inventions and in-license intellectual property and technology as it relates to our therapeutic interests. Our success will depend in part on our ability to obtain, maintain, defend and enforce patent rights for and to extend the life of patents covering lenzilumab, ifabotuzumab, HGEN005, our Humaneered technology, and our GM-CSF gene-editing CAR-T platform technologies, to preserve trade secrets and proprietary know how, and to operate without infringing the patents and proprietary rights of third parties. We actively seek patent protection, if available, in the U.S. and select foreign countries for the technology we develop. We have 111131 registered patents, including 1416 registered in the U.S. and 97115 registered in foreign countries. Of the 111131 registered patents, 86107 are owned by us, 9 are owned jointly with a third party and 1615 are exclusively licensed from a third party. We also have 1979 patent applications pending globally, of which 1233 are owned by us, 420 are owned jointly with a third party and 326 are exclusively licensed from a third party. 

Using our Humaneered technology, we have developed and own two composition of matter U.S. patents covering lenzilumab and related anti-GM-CSF antibodies that provide patent protection through April 2029, a granted composition of matter patent in Europe15 European countries and certain foreign countries, and have fivefour U.S. patents and nine additional pending patent applications in the U.S., 21 foreign patent applications, and one PCT international patent application covering various methods of treatment, including in the CAR-T space covering a broad and comprehensive range of approaches to neutralizing GM-CSF, including the use of GM-CSF k/o CAR-T cells, which, if granted, are expected to confer protection to at least October 2038.September 2039. We also have threeone currently pending foreign patent applications in the U.S. and selected foreign countriesapplication that is jointly owned with a third party for anti-EphA3 antibodies and their use, and we developed and own an issued U.S. composition of matter patent covering ifabotuzumab and related anti-EphA3 antibodies, which is currently expected to expire in 2031, and own 22 foreign patents to anti-EphA3 antibodies and therapeutic uses, in addition to threeowning four U.S. patents to therapeutic methods using anti-EphA3 antibodies, one European patent to be validated in 19 countries, and seven foreign patents owned jointly with a third party covering methods of treatment with anti-EphA3 antibodiesantibodies. The two U.S. and six45 foreign patents countries. The nine patents to our Humaneered technology cover methods of producing human antibodies that are very specific for target antigens using only a small region from mouse antibodies.

We cannot be certain that any of our pending patent applications, or those of our licensors, will result in issued patents. In addition, because the patent positions of biopharmaceutical companies are highly uncertain

Manufacturing and involve complex legal and factual questions, the patents we own and license, or any further patents we may own or license, may not prevent other companies from developing similar or therapeutically equivalent products, even though we may be able to prevent their commercial use without our permission if our intellectual property allows for such limitations. Patents also will not protect our products if competitors devise ways of making or using these products without legally infringing our patents. We cannot be assured that our patents will not be challenged by third parties or that we will be successful in any defense we undertake.

In addition, changes in patent laws, rules or regulations or in their interpretations by the courts may materially diminish the value of our intellectual property or narrow the scope of our patent protection, which could have a material adverse effect on our business and financial condition. However, prospective partners may have to license or otherwise come to an agreement with us if they wish to use our products and those products and methods of use of such products have issued patents in those territories.

We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position. We seek to protect our proprietary information by requiring our employees, consultants, contractors, outside scientific collaborators and other advisors to execute non-disclosure and confidentiality agreements and our employees to execute assignment of invention agreements to us on commencement of their employment. Agreements with our employees also prevent them from bringing any proprietary rights of third parties to us. We also require confidentiality or material transfer agreements from third parties that receive our confidential data or materials.

ManufacturingRaw Materials

We outsource all development activities, including the development of formulation prototypes, andprototypes. We do not have, nor do we plan to have, any manufacturing facilities. Instead, we have adopted a manufacturing strategy of contracting with third partiesparty contract manufacturing organizations (“CMOs”) for the manufacture of bulk drug substance (“BDS”) and product. Additional contract manufacturers are used to fill, label, package,finish, labeling, packaging and distribute investigational drug products. Thisdistribution work for our product candidates. We believe our outsourcing approach allows us to maintain a leaner staff and a more flexible infrastructure, while focusingallowing us to focus our expertise on developing our products. It does however mean

The successful execution of our manufacturing strategy is a key component of our overall business strategy, as we believe that our ability to obtain regulatory approval for lenzilumab to be used commercially depends at least in part on our ability to demonstrate to regulators that we havewill be able to scale the manufacturing to produce a sufficient quantity of dosages to address the potential demand for the product. Our experience has been that the overall time to manufacture a 2-to-4-thousand-liter batch of lenzilumab BDS at an existing CMO and to complete the fill, finish, labeling and packaging of the vials is approximately 6 to 9 months. Accordingly, our reliance on CMOs requires us to carefully plan the availability of manufacturing ‘slots’slots and the availability of drug for investigation in preclinical and clinical trials. The use of contract manufacturers can be expensive, complicated and time consuming and could delay clinical trials drug approval and, potential product launch.commercialization. Further, our current agreements with CMOs represent large financial commitments, including upfront amounts prior to commencement of manufacturing and progress payments through the course of the manufacturing process and include payments for the initial technology transfer, which takes several months in advance of any manufacturing taking place. For a description of risks related to our manufacturing strategy, including our complete reliance on CMOs, see “Item 1A. Risk Factors.”

In 2020 and the first half of 2021, we were aggressive in pursuing manufacturing slots for lenzilumab in contemplation of its potential commercialization under an EUA in the U.S. or an equivalent authorization in the UK and EU. Please refer to “Part II, Item 7. Management’s Discussion and Analysis” for a further discussion of the costs we incurred in these efforts. Our production efforts were less successful than we had anticipated, as we experienced shortages of raw materials and critical components necessary for our manufacturing processes, delays in production and availability of manufacturing slots and failures in production at the BDS and DP level resulting in lower than anticipated yields. Further, certain of our CMOs had difficulties in producing BDS within specifications or were unable to produce BDS on a timely basis due to challenges in the supply of materials used in the production process.

In addition, MHRA in the UK has advised us that it requires certain validation work to be conducted related to production of lenzilumab prior to potential approval for sale. Guidance from FDA is that validation is not required for materials produced for sale under EUA, that validation could be completed and submitted as part of the subsequent regulatory process and that lenzilumab made prior to validation may be available for sale under an EUA, if FDA were to grant such an authorization. For lenzilumab for which no validation is planned, FDA would rely on a comparability report to ensure lenzilumab would be available for sale under an EUA. As of February 15, 2022, lenzilumab treatments for approximately 67,000 patients were in various stages of the validation process and another approximately 24,000 lenzilumab treatments had been produced, or were in process of being produced, for which we do not plan to complete validation. Another 41,000 treatments are in production at one of our CMOs for which material has not yet been released, and which may require reprocessing prior to release. At this time, it is not possible to predict if these 41,000 treatments would be released and available for sale if authorization or approval for lenzilumab were to be attained.

We have sought to mitigate our financial commitments while continuing to position lenzilumab for a future authorization or approval in the U.S., EU and UK. Our mitigation efforts included the amendment or in some cases cancelation of certain of our agreements with CMOs for future manufacturing work, some of which were contingent on EUA, in an effort to reduce our future spending. We incurred cancellation fees for several of these modifications. We also have disputed several invoices for cancellation fees and for production batches for lenzilumab that had been submitted by CMOs that failed to produce BDS within our stated release specifications, but our mitigation efforts may not be successful to recoup any such loss of lenzilumab BDS or DP. See Item 3. To this Annual Report on Form 10-K and Note 11 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on these disputes. In the event of authorization by MHRA, EMA, or FDA, we anticipate that the demand for commercial product could exceed the in process and planned production of lenzilumab through 2022. We intend to seek additional manufacturing capacity if authorization is obtained. We expect to use a portion of the revenues generated from commercial sale of lenzilumab following receipt of a regulatory authorization to support our efforts to expand production capacity in 2023 and beyond.

Sales and Marketing

We do not currently have theintend to outsource our sales and marketing infrastructure in place that would be necessary to market and sell our products, if authorized or approved. The establishment of a sales and marketing operation can be expensive, complicated and time consuming and could delay any potential product launch. As our drug candidates progress, while we may build or contract with expert commercial vendors the type of infrastructure that would be needed to successfully market and sell any successful drug candidate on our own, we may also seek strategic alliances and partnerships with third parties including those with existing infrastructure. 

infrastructure and with government bodies.

Competition

We compete in an industry characterized by rapidly advancing technologies, intense competition, a changing regulatory and legislative landscape and a strong emphasis on the benefits of intellectual property protection and regulatory exclusivities. Our competitors include pharmaceutical companies, other biotechnology companies, academic institutions, government agencies and other private and public research organizations. We compete with these parties to develop potential biologic therapies to treat COVID-19, to make CAR-T therapy and allogeneic HSCT safer and more effective and to develop a potential treatment for hematologic cancers, in addition to recruiting highly qualified personnel. Our product candidates, if successfully developed and approved, may compete with established therapies, with new treatments that may be introduced by our competitors, including competitors relying to a large extent on our drug approvals or on our biologics approvals, or with generic copies of our product approved by FDA, as bio-similars, referencing our drug products. Many of our potential competitors have substantially greater scientific, research, and product development capabilities, as well as greater financial, marketing, sales and human resources capabilities than we do.

In addition, many specialized biotechnology firms have formed collaborations with large, established companies to support the research, development and commercialization of products that may be competitive with ours. Accordingly, our competitors may be more successful with respect to their products than we may be in developing, commercializing, and achieving widespread market acceptance for our products. In addition, our competitors’ products may be more effective or more effectively marketed and sold than any treatment we or our development partners may commercialize and may render our product candidates obsolete or non-competitive before we can recover the expenses related to developing and supporting the commercialization of any of our product candidates. Developments by competitors may render our product candidates obsolete or noncompetitive. After one of our product candidates is approved, FDA may also approve a generic version with the same or similar dosage form, safety, strength, route of administration, quality, performance characteristics and intended use as our product. These bio-similar equivalents would be less costly to bring to market and could generally be offered at lower prices, thereby limiting our ability to gain or retain market share. However, our product candidates are all biologics and, as such, would benefit from 12 years market exclusivity from launch in the U.S.

The current standard of care for aGvHD is daily systemic steroids, with a patient response rate of approximately 50%. CMML is currently treated via stem cell transplant, surgery or chemotherapy, typically azacytidine or decitabine. Competition for the treatment of solid tumors varies by tumor type. Surgery and/or radiation treatment is typically the first-line therapy, followed by chemotherapy. Chemotherapy may be used as front-line treatment in the case of inoperable tumors and targeted therapies may be used as second-line therapy for specific solid tumors that exhibit certain mutations. There are currently no known therapies that target EpAh3 antigen. 

Lenzilumab and COVID-19 competition

There are currently no FDA-approved immunomodulators for the prevention of the hyperinflammatory state associated with COVID-19; however, Emergency Use Authorization has been granted to tocilizumab and baricitinib, two compounds that are approved for certain inflammatory conditions. The NIH treatment guidelines for therapeutic management of hospitalized adults with COVID-19 (as of December 2021) are shown below:

The acquisition or licensing of pharmaceutical products is also very competitive, and a number of more established companies, which have acknowledged strategies to in-license or acquire products, may have competitive advantages as may other emerging companies taking similar or different approaches to product acquisitions. The more established companies may have a competitive advantage over us due to their size, cash flows, institutional experience and historical corporate reputation. 

Lenzilumab and CAR-T-related toxicities competition

Significant ongoing concerns for clinicians, care-givers, patients and FDA regarding CAR-T therapy include, durability of response, long-term outcomes, manufacturing process, time to delivery of active CAR-T product, serious and potentially life-threatening side-effects, namely NT and CRS, frequency and duration of hospitalization and ICU admission, health resource utilization, cost effectiveness and reimbursement. Both Kymriah and Yescarta carry “Black Box” warnings in their labels for NT and CRS andThere are subject to a REMS program, such that on-going data has to be provided to FDA and CAR-T therapy can only be administered in strictly controlled environments at trained centers.

FDA approval of tocilizumab (anti-IL-6 receptor blocker, Genetech’s Actemra^®) with or without high-dose corticosteroids, for the management of severe cases of CRS, was announced in conjunction with approval of Kymriah solely as part of its REMS program based on a retrospective analysis of 45 patients who received tocilizumab. Approval was subsequently also granted for tocilizumab as a treatment (not prevention) of moderate to severe CRS, despite the lack of an IND application, NDA or conduct of a prospective trial of tocilizumab in this setting. Only 20% of Kymriah or Yescarta patients treated with tocilizumab had resolution of signs and symptoms 6 days after onset of CRS and ~50% patients responded 11 days after onset of CRS. Tocilizumab is not approved for the prevention of CRS orcurrently no FDA-approved products for the prevention or treatment of NT. Tocilizumab is also not approved for the treatment of mild cases of CRS. 

There are no FDA-approved therapiesICANS or for the prevention of CRS associated with CAR-T therapy. Medicines used to manage ICANS and CRS, such as tocilizumab and corticosteroids, have not adequately controlled the side-effects, and steroids may have a detrimental impact on the efficacy of the CAR-T therapy induced NT and CRS or foritself while tocilizumab may increase the treatmentrisk of CAR-T therapy induced NT. The CAR-T therapy-associated TOXicity Working Group currently recommends intensive monitoring, accurate gradingICANS and aggressive supportive careis correlated with the anti-IL-6 receptor blocker tocilizumab and/or high-dose corticosteroids. These agents are reservedan increased risk of infections, including severe infections. Further, these medicines have not undergone prospective clinical trials for use in this patient population. Tocilizumab is only approved for the treatment of severe cases of CRS, and arebut is not approved for prevention. Since corticosteroids have been reported to suppress T-cell function and/or induce T-cell apoptosis, they may limit the effectivenessprevention of CAR-T therapy and use has been generally limited toCRS, nor is it approved for either prevention or treatment of severe cases of CRS refractory to tocilizumab and severe cases of NT. Sometimes high-dose corticosteroids are used alongside tocilizumab. Tocilizumab has not been found to be effective in the prevention or management of CAR-T therapy induced NT. In fact, the prophylactic use of tocilizumab has been shown to increase both overall rates of NT and rates of severe NT with overall rates of CRS remaining unchanged in an expanded safety cohort from a CAR-T trial. As tocilizumab is an anti-IL-6 receptor blocker, serum IL-6 levels have been shown to increase shortly after administration of tocilizumab which may increase passive diffusion of IL-6 into the CNS and increase the risk of NT. In patients who received prophylactic tocilizumab, a 17-fold increase in CD14+ myeloid cells was seen in the CSF of patients who developed severe NT vs those who did not. A similar dynamic may occur with other cytokine receptor blocking monoclonal antibodies that are also being explored in this setting (e.g. anti-IL-1Ra, anti-GM-CSFRa). As the antibody directly binds the cytokine receptor, the receptor may get saturated causing the cytokine to get dislodged which leads to an initial increase in the level of the circulating cytokine. In this setting, elevated levels of pro-inflammatory cytokines can further propagate the inflammatory cascade and result in higher levels of NT and CRS when the receptor blocker is administered prophylactically. In addition, IL-1 levels have not been shown to correlate to CRS and NT in CAR-T clinical trials and there is no evidence in the clinical or preclinical setting available to support the use of GM-CSF receptor alpha blockade with CAR-T cell therapy. There are data that suggest that the mechanism of GM-CSF receptor alpha blockade may be interfere with CAR-T expansion and potentially efficacy. Our approach with lenzilumab is a different mechanism of action entirely and we have published data which shows expansion of CAR-T cells and potential beneficial effects on efficacy in animal models.ICANS.

Other experimental approaches being explored include development of next-generation, CAR-T constructs, including introducing suicide genes into CAR-T cells using herpes simplex virus thymidine kinase (HSV-TK)(“HSV-TK”) or inducible caspase-9 (iCasp9)(“iCasp9”) genes with “on / off” switches, incorporating a co-stimulatory molecule into T-cells, using RNA-guided DNA targeting technology or other epitope-based / gene-editing technology. While it is possible that some of these approaches could result in lower rates of NTICANS and/or CRS, preliminary data suggests that improvements in the safety profile are associated with lower rates of efficacy and durable response. This is not surprising given the linkage that has been shown to exist between CAR-T cell expansion, efficacy and toxicity. In addition, an agent comprised of a mixture of single-stranded oligonucleotides that is purified from the intestinal mucosa of pigs, defibrotide (Jazz Pharmaceuticals, Defitelio^®) is being evaluated to reduce NT although there is no preclinical data supporting its use in this indication and the mechanisms of action is uncertain. Defibrotide is approved for the treatment ofsevere veno-occlusive disease (VOD) in adults and children who have undergone chemotherapy and a stem-cell transplant and is associated with a 37% rate of hypotension, or low blood pressure. Hypotension is a hallmark of CRS, which occurs very frequently with patients receiving CAR-T therapy.There are also several other anti-GM-CSF compounds that are in various stages of development, however the focus of these compounds appears to be in chronic autoimmune disorders such as rheumatoid arthritis, ankylosing spondylitis, giant cell arteritis and related disorders.

Government Regulation

Drug Development and Approval in the U.S.

As a biopharmaceutical company operating in the U.S., we are subject to extensive regulation by FDA and by other federal, state, and local regulatory agencies. FDA regulates biological products such as our product candidates under the U.S. Federal Food and Cosmetic Act (FDCA)(“FDCA”), the Public Health Service Act (PHSA)(“PHSA”) and their implementing regulations. Under the PHSA, an FDA-approved biologics license application (BLA) is required to market a biological product, or biologic, in the U.S. These laws and regulations set forth, among other things, requirements for preclinical and clinical testing, development, approval, labeling, manufacture, storage, record keeping, reporting, distribution, import, export, advertising, and promotion of our products and product candidates. Under the PHSA, in most circumstances an FDA-approved BLA is required to market a biological product, or biologic, in the U.S. Biologics receive 12 years market exclusivity from first licensure. During the COVID-19 public health emergency, however, FDA has certain authority, under the FDCA and The Pandemic and All Hazards Preparedness Reauthorization Act of 2013, to bypass the BLA pathway and issue an EUA for certain medical products, including biologics, intended for use during the emergency. An EUA, once issued for a biologic, lasts only for a limited amount of time, after which a BLA will be required for continued marketing.

Emergency Use Authorization

FDA’s EUA authority allows the agency to facilitate greater availability and use of medical countermeasures, including biologics, when the Secretary of Health and Human Services (“HHS”) has declared that circumstances exist that justify such authorization. Under such circumstances, companies may request an EUA to permit the marketing and use of a product before that product has received FDA approval, or to permit the otherwise unapproved use of an approved product. FDA may only issue an EUA if it concludes that: the chemical, biological, radiological or nuclear agent referred to in the HHS Secretary’s public health emergency declaration is capable of causing a serious or life-threatening disease; the product at issue “may be effective” to prevent, diagnose, or treat serious or life-threatening diseases or conditions that can be caused by that agent or to mitigate a disease or condition caused by an FDA-regulated product used to diagnose, treat, or prevent a disease or condition caused by that agent; and launch.that there are no adequate, approved, and available alternatives.

The EUA “may be effective” standard requires a lower level of evidence than the “effectiveness” standard required for a BLA. FDA assesses the potential effectiveness of a possible EUA product on a case-by-case basis using a risk-benefit analysis. In deciding whether to authorize emergency use, FDA will evaluate whether the known and potential benefits of the product outweigh the known and potential risks, taking into account the totality of the scientific evidence. Such evidence may include clinical trial data, in vivo efficacy data from animal models, and in vitro data. Even where a product “may be effective,” FDA may only issue an EUA if there is no adequate, approved, and available alternative to the candidate product, either because there is no alternative product at all or because of, for example, an insufficient supply of an approved alternative to meet the emergency need; contraindications for use of an approved product in certain populations or circumstances; or the agent at issue in the public health emergency is resistant to approved and available products.

When an EUA is issued, FDA will typically limit or restrict the amount of promotional activity that may be conducted for the medical product granted an EUA and may reissue an EUA to change the terms based on a change in circumstances, such as the emergence of new clinical trial data that change the risk-versus-benefit analysis.

An EUA is not a permanent marketing authorization. Rather, an EUA may be terminated once the Secretary of HHS declares that the public health emergency is terminated; when a product that is marketed under an EUA obtains full marketing approval (for example, under a BLA); or when circumstances change (such as, for example, new data emerge that change the risk-benefit calculation). As a practical matter, where the HHS Secretary declares an end to the public health emergency that gave rise to FDA’s EUA authority, the Secretary must provide advance notice that allows for disposition of an unapproved product.

Applications Relying on the Applicant’s Clinical Data

The approval process for a BLA under the PHSA requires the conduct of extensive studies and the submission of large amounts of data by the applicant. The biologic development process for these applications will generally include the following phases:

Preclinical Testing. Before testing any new biologic in human subjects in the U.S., a company must generate extensive preclinical data. Preclinical testing generally includes laboratory evaluation of product chemistry and formulation, as well as toxicological and pharmacological studies in several animal species to assess the quality and safety of the product. Animal studies must be performed in compliance with FDA’s Good Laboratory Practice (GLP)(“GLP”) regulations and the U.S. Department of Agriculture’s Animal Welfare Act.

IND Application. Human clinical trials in the U.S. cannot commence until an IND application is submitted and becomes effective. A company must submit preclinical testing results to FDA as part of the IND application, and FDA must evaluate whether there is an adequate basis for testing the product in initial clinical studies in human volunteers. Unless FDA raises concerns, the IND application becomes effective 30 days following its receipt by FDA. Once human clinical trials have commenced, FDA may stop the clinical trials by placing them on “clinical hold” because of concerns about the safety of the product being tested, or for other reasons.

Clinical Trials. Clinical trials involve the administration of the product to healthy human volunteers or to patients, under the supervision of a qualified investigator. The conduct of clinical trials is subject to extensive regulation, including compliance with FDA’s bioresearch monitoring regulations and Good Clinical Practice (“GCP”) requirements, which establish standards for conducting, recording data from, and reporting the results of clinical trials. GCP requirements are intended to assure that the data and reported results are credible and accurate, and that the rights, safety, and well-being of study participants are protected.

Clinical trials must be conducted under protocols that detail the study objectives, parameters for monitoring safety, and the efficacy criteria, if any, to be evaluated. Each protocol is submitted to FDA as part of the IND application. In addition, each clinical trial must be reviewed, approved, and conducted under the auspices of an Institutional Review Board (IRB)(“IRB”), at the institution conducting the clinical trial. Companies sponsoring the clinical trials, investigators, and IRBs also must comply with regulations and guidelines for obtaining informed consent from the study subjects, complying with the protocol and investigational plan, adequately monitoring the clinical trial, and timely reporting of adverse events. Foreign studies conducted under an IND application must meet the same requirements that apply to studies being conducted in the U.S. Data from a foreign study not conducted under an IND application may be submitted in support of a BLA if the study was conducted in accordance with GCP and FDA is able to validate the data. A study sponsor is required to publicly post certain details about active clinical trials and clinical trial results on the government website clinicaltrials.gov.

Human clinical trials are typically conducted in three sequential phases, although the phases may overlap with one another and, notably, in the CAR-T setting, FDA has granted approval to bothall five currently marketed CAR-T therapies (Kite’s(Gilead/Kite’s Yescarta, and Tecartus, Novartis’s Kymriah)Kymriah and Bristol Myers Squibb’s Breyanzi and Abecma) based on Phase II2 data and to tocilizumab without any prospective data in the CAR-T setting:

The sponsoring company, FDA, or the IRB may suspend or terminate a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk. Further, success in early-stage clinical trials does not assure success in later-stage clinical trials. Data obtained from clinical activities are not always conclusive and may be subject to alternative interpretations that could delay, limit, or prevent regulatory approval.

BLA Submission and Review

After completing clinical testing of an investigational biologic product, a sponsor must prepare and submit a BLA for review and approval by FDA. A BLA is a comprehensive, multi-volume application that must include, among other things, sufficient data establishing the safety, purity and potency of the proposed biological product for its intended indication. The application includes all relevant data available from pertinent preclinical and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling. When a BLA is submitted, FDA conducts a preliminary review to determine whether the application is sufficiently complete to be accepted for filing. If it is not, FDA may refuse to fileaccept the application for filing and may request additional information, in which case the application must be resubmitted with the supplemental information and review of the application is delayed.

FDA performance goals, which are target dates and other aspirational measures of agency performance to which the agency, Congressional representatives, and industry agree through negotiations that occur every five years, generally provide for action BLA applications within 10 months of submission or 10 months from acceptance for filing for an original BLA. FDA is not expected to meet those target dates for all applications, however, and the deadline may be extended in certain circumstances, such as when the applicant submits new data late in the review period. In practice, the review process is often significantly extended by FDA requests for additional information or clarification. In some circumstances, FDA can expedite the review of new biologics deemed to qualify for priority review, such as those intended to treat serious or life-threatening conditions that demonstrate the potential to address unmet medical needs. In those cases, the targeted action date is six months from submission, or for biologics constituting original biological products, six months from the date that FDA accepts the application for filing.

As part of its review, FDA may refer a BLA to an advisory committee for evaluation and a recommendation as to whether the application should be approved. Although FDA is not bound by the recommendation of an advisory committee, the agency usually has followed such recommendations. FDA may also determine that a REMS program is necessary to ensure that the benefits of a new product outweigh its risks, and that the product can therefore be approved. A REMS program may include various elements, ranging from a medication guide or patient package insert to limitations on who may prescribe or dispense the product, depending on what FDA considers necessary for the safe use of the product. Under the Pediatric Research Equity Act, a BLA must include an assessment, generally based on clinical study data, of the safety and effectiveness of the subject drug or biological product in relevant pediatric populations, unless the requirement is waived or deferred. Receiving orphan drug designation from FDA is one situation where such a requirement may be waived.

After review of a BLA, FDA may determine that the product cannot be approved, or may determine that it can only be approved if the applicant cures deficiencies in the application, in which case the agency endeavors to provide the applicant with a complete list of the deficiencies in correspondence known as a Complete Response Letter (“CRL”). A CRL may request additional information, including additional preclinical or clinical data. Even if such additional information and data are submitted, FDA may decide that the BLA still does not meet the standards for approval. Data from clinical trials are not always conclusive and FDA may interpret data differently than the sponsor interprets them. Additionally, as a condition of approval, FDA may impose restrictions that could affect the commercial success of a drug or require post-approval commitments, including the completion within a specified time period of additional clinical studies, which often are referred to as “Phase IV” studies or “post-marketing requirements.” Obtaining regulatory approval often takes a number ofseveral years, involves the expenditure of substantial resources, and depends on a number of factors, including the severity of the disease in question, the availability of alternative treatments, and the risks and benefits demonstrated in clinical trials.

Post-approval modifications to the drug or biologic product, such as changes in indications, labeling, or manufacturing processes or facilities, may require a sponsor to develop additional data or conduct additional preclinical or clinical trials. The proposed changes would need to be submitted in a new or supplemental BLA, which would then require FDA approval.

Regulatory Exclusivities

Biologics Price Competition and Innovation Act

In 2010, theBiologics Price Competition and Innovation Act (BPCIA)(“BPCIA”) was enacted, creating an abbreviated approval pathway for biologic products that are biosimilar to, and possibly interchangeable with, reference biological products licensed under a BLA. The BPCIA also provides innovator manufacturers of original reference biological products 12 years of exclusive use from first licensure before biosimilar versions can be licensed in the U.S..U.S. This means that FDA may not approve an application for a biosimilar version of a reference biological product until 12 years after the date of approvalfirst licensure of the reference biological product (with a potential six-month extension of exclusivity if certain pediatric studies are conducted and the results reported to FDA), although a biosimilar application may be submitted four years after the date of first licensure of the reference biological product. Additionally, the BPCIA establishes procedures by which the biosimilar applicant must provide information about its application and product to the reference product sponsor, and by which information about potentially relevant patents is shared and litigation over patents may proceed in advance of approval of the biosimilar product, although the interpretation of those procedures has been subject to litigation and appears to continue to evolve. The BPCIA also provides a period of exclusivity for the first biosimilar to be determined by FDA to be interchangeable with the reference product.

FDA approved the first biosimilar product under the BPCIA in 2015, and the agency continues to refine the procedures and standards it will apply in implementing this approval pathway. FDA has released guidance documents interpreting specific aspects of the BPCIA in each of the last four years.years since. We would expect lenzilumab, ifabotuzumab and HGEN005, as biologics, to each receive at least 12 years exclusivity from approval,first licensure if they are approved.

Pediatric Studies and Exclusivity

Under thePediatric Research Equity Act, a BLA must contain data adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. Sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests and other information required by regulation. The applicant, the FDA, and the FDA’s internal review committee must then review the information submitted, consult with each other and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at any time.

For products intended to treat a serious or life-threatening disease or condition, the FDA must, upon the request of an applicant, meet to discuss preparation of the initial pediatric study plan or to discuss deferral or waiver of pediatric assessments. In addition, FDA will meet early in the development process to discuss pediatric study plans with sponsors and FDA must meet with sponsors by no later than the end-of-Phase I meeting for serious or life-threatening diseases and by no later than ninety (90) days after FDA’s receipt of the study plan.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after licensing of the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained inFood and Drug Administration Safety and Innovation Act(FDASIA)(“FDASIA”). Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation.

The FDA Reauthorization Act of 2017 established new requirements to govern certain molecularly targeted cancer indications. Any company that submits a BLA three years after the date of enactment of that statute must submit pediatric assessments with the BLA if the biologic is intended for the treatment of an adult cancer and is directed at a molecular target that FDA determines to be substantially relevant to the growth or progression of a pediatric cancer. The investigation must be designed to yield clinically meaningful pediatric study data regarding the dosing, safety and preliminary potency to inform pediatric labeling for the product. Deferrals and waivers as described above are also available.

Pediatric exclusivity is another type of exclusivity in the U.S. and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity. This six-month exclusivity may be granted if a BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by a further six-months.six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot license another application.

Orphan Drug Designation

The Orphan Drug Act provides incentives for the development of therapeutic products intended to treat rare diseases or conditions. Rare diseases and conditions generally are those affecting less than 200,000 individuals in the U.S., but also include diseases or conditions affecting more than 200,000 individuals in the U.S. if there is no reasonable expectation that the cost of developing and making available in the U.S. a drug for such disease or condition will be recovered from sales in the U.S. of such product.

If a sponsor demonstrates that a therapeutic product, including a biological product, is intended to treat a rare disease or condition, and meets certain other criteria, FDA grants orphan drug designation to the product for that use. FDA may grant multiple orphan designations to different companies developing the same product for the same indication, until the one company is the first to be able to secure successful approval for that product. The first product approved with an orphan drug designated indication is granted seven years of orphan drug exclusivity from the date of approval for that indication. During that period, FDA generally may not approve any other application for the same product for the same indication, although there are exceptions, most notably when the later product is shown to be clinically superior to the product with exclusivity. FDA can also revoke a product’s orphan drug exclusivity under certain circumstances, including when the holder of the approved orphan drug application is unable to assure the availability of sufficient quantities of the product to meet patient needs.

A sponsor of a product application that has received an orphan drug designation is also granted tax incentives for clinical research undertaken to support the application. In addition, FDA will typically coordinate with the sponsor on research study design for an orphan drug and may exercise its discretion to grant marketing approval based on the basis of more limited product safety and efficacy data than would ordinarily be required, based on the limited size of the applicable patient population.

We anticipate submitting applications for orphan drug designation for all of our current pipeline candidates and the targeted therapeutic indications.

Expedited Programs for Serious Conditions

FDA has implemented a number of expedited programs to help ensure that therapies for serious or life-threatening conditions, and for which there is unmet medical need, are approved and available to patients as soon as it can be concluded that the therapies’ benefits justify their risks. Among these programs are the following:

Fast Track Designation

FDA may designate a product for fast trackfast-track review if it is intended, whether alone or in combination with one or more other products, for the treatment of a serious or life-threatening disease or condition and where non-clinical or clinical data demonstrates the potential to address unmet medical need for such a disease or condition. A product can also receive fast track review if it receives breakthrough therapy designation.

For fast trackfast-track products, sponsors may have greater interactions with FDA and FDA may initiate review of sections of a fast trackfast-track product’s application before the application is complete, also referred to as a ‘rolling review’. This rolling review may be available if FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a fast trackfast-track product may be effective. The sponsor must also provide, and FDA must approve, a schedule for the submission of the remaining information and the sponsor must pay applicable user fees. Furthermore, FDA’s time period goal for reviewing a fast trackfast-track application does not begin until the last section of the complete application is submitted. Finally, the fast trackfast-track designation may be withdrawn by FDA if FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Breakthrough Therapy Designation

A product may be designated as a breakthrough therapy if it is intended, either alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the features of fast trackfast-track designation, as well as more intensive FDA interaction and guidance. FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process; providing timely advice to the product sponsor regarding development and approval; involving more senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to design efficient clinical trials.

Accelerated Approval

Under the accelerated approval pathway, FDA may approve a drug or biologic based on a surrogate endpoint that is reasonably likely to predict clinical benefit; qualifying products must target a serious or life-threatening illness and provide meaningful therapeutic benefit to patients over existing treatments. In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A product candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase IV4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or to confirm a clinical benefit during post-marketing studies, would allow FDA to withdraw the product from the market on an expedited basis. All promotional materials for product candidates approved under accelerated regulations are subject to prior review by FDA.

Priority Review

FDA may designate a product for priority review if it is a product that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. FDA generally determines, on a case-by-case basis, whether the proposed product represents a significant improvement in safety and effectiveness when compared with other available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting product reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such applications and will shorten FDA’s goal for taking actionacting on a marketing application from the standard targeted ten months to a target of six months review.

Created in 2012 under the FDASIA and extended with the21^st Century Cures Act in 2016, FDA is authorized under section 529 of the FDCA to grant a PRV to BLA sponsors receiving FDA approval for a product to treat a rare pediatric disease, defined as a disease that affects fewer than 200,000 individuals in the U.S., and where more than 50% of the patients affected are aged from birth to 18 years. We believe that our product candidates which may assist with the treatment of rare pediatric cancers or other rare pediatric diseases may qualify for a PRV under this program, depending on the indication.

The PRV program allows the voucher holder to obtain priority review for a product application that would otherwise not receive priority review, shortening FDA’s target review period to a targeted six months following acceptance of filing of an NDA or BLA, or four months shorter than the standard review period. The voucher may be used by the sponsor who receives it, or it may be sold to another sponsor for use in that sponsor’s own marketing application. The sponsor who uses the voucher is required to pay additional user fees on top of the standard user fee for reviewing an NDA or BLA.

We anticipate submitting applications for one or more of these expedited programs for all of our current pipeline candidates and the targeted therapeutic indications.

Regenerative Medicine Advanced Therapy Designation

Recently, through the21st Century Cures Act(the “Cures Act”), or Cures Act, Congress also established another expedited program, called a RMAT designation. The Cures Act directs the FDA to facilitate an efficient development program for and expedite review of RMATs. To qualify for this program, the product must be a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or a combination of such products, and not a product solely regulated as a human cell and tissue product. The product must be intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and preliminary clinical evidence must indicate that the product has the potential to address an unmet need for such disease or condition. Advantages of the RMAT designation include all the benefits of the fast track and breakthrough therapy designation programs, including early interactions with the FDA. These early interactions may be used to discuss potential surrogate or intermediate endpoints to support accelerated approval.

Post-Licensing Regulation

Once a BLA is approved and a product marketed, a sponsor will be required to comply with all regular post-licensing regulatory requirements as well as any post-licensing requirements that the FDA may have imposed as part of the licensing process. The sponsor will be required to report, among other things, certain adverse reactions and manufacturing problems to the FDA, provide updated safety and potency or efficacy information and comply with requirements concerning advertising and promotional labeling requirements. Manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMP regulations, which impose certain procedural and documentation requirements upon manufacturers. Changes to the manufacturing processes are strictly regulated and often require prior FDA approval before being implemented. Accordingly, the sponsor and its third-party manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain compliance with cGMP regulations and other regulatory requirements.

In addition, the distribution of prescription pharmaceutical products is subject to thePrescription Drug Marketing Act (PDMA)(“PDMA”) and its implementing regulations, as well as theDrug Supply Chain Security Act (DSCA)(“DSCA”), which regulate the distribution and tracing of prescription drug samples at the federal level and set minimum standards for the regulation of distributors by the states. The PDMA, its implementing regulations and state laws limit the distribution of prescription pharmaceutical product samples, and the DSCA imposes requirements to ensure accountability in distribution and to identify and remove counterfeit and other illegitimate products from the market.

EmployeesDrug Development and Approval in the European Union and United Kingdom

WeIn order to market a drug product outside of the United States, a company must comply with a variety of foreign regulatory requirements governing clinical studies, product approval, and commercial sale and distribution of the product. Regardless of whether a company obtains FDA approval for the product, it must obtain any necessary approvals from foreign regulatory authorities prior to commencing clinical trials or marketing the product in the relevant countries. The approval process and regulatory requirements vary significantly across jurisdictions, and the time to approval and marketing may be longer or shorter than that required for FDA approval.

European Union

The process governing approval of medicinal products in the European Union generally follows the same lines as in the United States. It entails satisfactory completion of preclinical studies and adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication. It also requires the submission to the relevant competent authorities of a marketing authorization application, or MAA, and granting of a marketing authorization by these authorities before the product can be marketed and sold in the EU. As in the United States, the EU also has a standard marketing authorization approval process and a conditional authorization process that can be used to bring medicine to the market more quickly during a public health emergency.

The EU’s Clinical Trials Regulation (“CTR”) went into effect on January 31, 2022. The CTR repeals the Clinical Trials Directive (“CTD”) and national implementing legislation in EU Member States, which previously regulated clinical trials in the EU. The evaluation, authorization, and supervision of clinical trials are the responsibilities of EU Member States and European Economic Area (EEA) countries. Prior to the CTR, clinical trial sponsors had to submit clinical trial applications separately to regulatory authorities in each country to gain regulatory approval to conduct clinical trials. The new CTR aims to harmonize the process for assessment and supervision of clinical trials by enabling sponsors to submit a single online application for approval to run a clinical trial in several European countries, making it more efficient to carry out such multinational trials. A three-year phased-in transition period has been established.

Traditional marketing authorization in the EU may be obtained under a centralized procedure, a decentralized procedure, or a mutual recognition procedure. The data requirements and standards governing drug authorization are the same in the EU regardless of the authorization route.

The centralized procedure provides for a grant of a single marketing authorization that is valid for all EU Member States. Under the centralized procedure, drug companies submit a single marketing authorization application to European Medicines Agency (“EMA”). EMA’s Committee for Medicinal Products for Human Use (“CMPH”) will carry out a scientific assessment of the application and recommend whether or not the drug should be marketed. The European Commission will then make a legally binding decision based on the CMPH recommendation. Once granted by the European Commission, the centralized marketing authorization is valid in all EU Member States and in European Economic Area countries, although decisions about pricing and reimbursement will take place at the national and regional level before a medicine will be made available in a particular EU country. The centralized procedure is mandatory for drugs that contain a new active substance to treat certain condition (such as cancer); drugs derived from biotechnology processes, such as genetic engineering; advanced-therapy medicines, such as gene-therapy; orphan medicines for rare diseases; and some veterinary medicines. It is optional for other drugs.

The decentralized procedure allows an applicant to apply for simultaneous authorization by more than one EU Member State where a drug product has not yet been authorized by any EU Member State and does not fall within the mandatory scope of the centralized procedure. Under the decentralized procedure, one of the proposed EU Member States is asked by the applicant to act as a Reference Member State (“RMS”). The RMS conducts the initial evaluation of the product and issues a draft assessment report and related materials. The assessment report is submitted to the other “Concerned Member States” (“CMS”) who must decide whether to approve the report and related materials or to ask further questions and/or raise objections. If all issues are resolved and the application is successful, each Member State will then issue a Marketing Authorization for the product permitting it to be marketed in their country. If a CMS cannot approve the assessment report and related materials due to concerns regarding potential serious risk to public health, disputed elements may be referred to the European Commission, whose decision is binding on all Member States.

Finally, the Mutual Recognition Procedure must be used when a product has already been authorized in at least one Member State on a national basis and the Marketing Authorization Holder wishes to obtain a marketing authorization for the same product in at least one other Member State. The Member State that has already authorized the product (known as the RMS) submits its evaluation of the product to one or more other Concerned Member States, which are then asked to mutually recognize the marketing authorization of the RMS. If the application it successful, the Concerned Member State(s) will then issue a marketing authorization permitting the marketing of the product in their country.

As in the U.S., companies may apply for designation of a product as an orphan drug for the treatment of a specific indication in the EU before the application for marketing authorization is made. Orphan drugs in Europe enjoy economic and marketing benefits, including up to 11 years of exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product.

In the EU, companies developing a new medicinal product must agree to a Pediatric Investigation Plan (“PIP”) with EMA and must conduct pediatric clinical trials in accordance with that PIP, unless a deferral or waiver applies, (e.g., because the relevant disease or condition occurs only in adults). The marketing authorization application for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Products that are granted a marketing authorization on the basis of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six-month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two-year extension of the orphan market exclusivity. This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.

European Union – Conditional Marketing Authorization

The EMA may grant a conditional marketing authorization for medicines that address unmet needs, on the basis of less comprehensive clinical data than normally required, where the benefit of immediate availability of the medicine outweighs the risk inherent in the fact that additional data are still required. Drugs for human use, including orphan drugs, are eligible for conditional marketing authorization if they are intended to treat, prevent, or diagnose serious debilitating or life-threatening diseases, if: (1) the risk-benefit balance of the product is positive; (2) it is likely that the applicant will be in a position to provide the required comprehensive clinical study data; (3) unmet medical needs will be fulfilled; and (4) the benefit to the public health of the immediate availability on the market of the product outweighs the risk inherent in the need for additional data. Conditional marketing authorization, which may specify additional requirements regarding completion of ongoing or new studies and collection of pharmacovigilance data, is valid for one year, and may be renewed annually if the risk-benefit balance remains positive, and after assessment of the need for additional or modified conditions.

During the COVID-19 pandemic, EMA is using the conditional marketing authorization procedure to expedite the approval of safe and effective COVID-19 treatments and vaccines in the EU. In a public health emergency such as the pandemic, the conditional marketing authorization procedure can be combined with a rolling review of data during the development of a promising medication to further expedite evaluation.

The United Kingdom

Since the exit of the UK from the European Union, Great Britain (England, Scotland, and Wales) is no longer covered by EU procedures for the grant of marketing authorizations and a separate marketing authorization will be required to market drugs (Northern Ireland is covered by the centralized authorization procedure and can be covered under the decentralized or mutual recognition procedures). It will be necessary for applicants to make a separate application to the UK Medicines and Healthcare products Regulatory Agency ("MHRA") for a UK marketing authorization. For a period of two years from January 1, 2021, MHRA may rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure, in order to more quickly grant a new Great Britain marketing authorization. A separate application, however, is still required. There is currently haveno procedure for mutual EU/UK recognition of new medicinal products.

MHRA has introduced a national conditional marketing authorization scheme for new drugs in Great Britain. This scheme has the same eligibility criteria as the EU scheme and is intended for drugs that fulfill an unmet medical need, such as drugs for serious and life-threatening diseases where no satisfactory treatment methods are available or where the product offers a major therapeutic advantage. MHRA may grant a conditional marketing authorization where comprehensive clinical data is not yet complete, but it is judged that such data will become available soon. The marketing authorization application must still contain adequate evidence of safety and efficacy to enable MHRA to conclude that the risk-benefit balance of the drug is positive. MHRA may take into account the designation by EMA (or another jurisdiction) of a drug as eligible for conditional marketing authorization, but MHRA will make the final decision on eligibility of the product under the Great Britain framework. Conditional marketing authorizations will be valid for one year and will be renewable annually.

With the exit of the UK from the European Union, the UK will not be implementing the CTR and the UK provisions implementing the current law as set out in the CTD will continue to apply until amended by the UK.

Data exclusivity periods in the United Kingdom are currently in line with those in the European Union; however, the Trade and Cooperation Agreement that outlines the future trading relationship between the UK and EU provides that the periods for both data and market exclusivity are to be determined by domestic law; therefore, exclusivity periods in the two jurisdictions could diverge in the future.

Gaining orphan drug designation in Great Britain following Brexit is based on the prevalence of the condition in Great Britain (rather than in the EU). It is, therefore, possible that conditions that are currently designated as orphan conditions in Great Britain will no longer be and that conditions that are not currently designated as orphan conditions in the EU will be designated as such in Great Britain. Unlike in the EU, applications for orphan drug designation in Great Britain are reviewed in parallel with the corresponding marketing authorization application.

Employees and Human Capital Resources

As of December 31, 2021, we employed 11 full-time employees. Weemployees, and no part-time employees, the majority of whom work remotely in various locations throughout the United States and the world. In addition, we contract with several part-time independent consultants performing manufacturing, supply chain, quality assurance and control, regulatory and clinical development, intellectual property, public relations, investor relations, commercial, and finance and accounting functions. None of our employees are represented by labor unions or covered bysubject to a collective bargaining agreements.agreement. We consider our relationship with our employees to be good.

BankruptcyInformation about our Executive Officers

As previously reported, on December 29, 2015, we filed a voluntary petition for bankruptcy protection under Chapter 11The following sets forth the names, ages and current positions of the U.S. Bankruptcy Code. The filing was made in the U.S. Bankruptcy Court for the Districtour executive officers as of Delaware (the “Bankruptcy Court”) (Case No. 15-12628 (LSS))February 16, 2022.

On May 9, 2016, we filed with the Bankruptcy Court a Second Amended Plan of Reorganization (the “Plan”), and related amended disclosure statement pursuant to Chapter 11 of the Bankruptcy Code. On June 16, 2016, the Bankruptcy Court entered an order confirming the Plan. On June 30, 2016 (the “Effective Date”), the Plan became effective and we emerged from our Chapter 11 bankruptcy proceedings.

Cameron Durrant, M.D., MBA, age 61, has served as our Chairman of our Board since January 2016, and as our Chief Executive Officer since March 2016. In addition, Dr. Durrant served as our Interim Chief Financial Officer from July 1, 2019 to July 31, 2020. From May 2014 to January 2016, Dr. Durrant served as Founder and Director of Taran Pharma Limited, a private semi-virtual specialty pharma company developing and registering treatments in Europe for orphan conditions. Dr. Durrant served as President and Chief Executive Officer of ECR Pharmaceuticals Co., Inc., a subsidiary of Hi-Tech Pharmacal Co., Inc., from September 2012 to April 2014 until its acquisition by Akorn. He previously has been a senior executive at Johnson and Johnson, Pharmacia Corporation, GSK and Merck. Dr. Durrant was a director of Immune Pharmaceuticals Inc. from July 2014 to September 2018 and serves on the boards of directors of two privately held healthcare companies. Dr. Durrant earned his medical degree from the Welsh National School of Medicine, Cardiff, UK, his DRCOG from the Royal College of Obstetricians and Gynecologists, London, UK, his MRCGP from the Royal College of General Practitioners, London, UK, and his MBA from Henley Management College, Oxford, UK.

On September 17, 2018 the Bankruptcy Court issued a Final DecreeTimothy Morris, CPA, age 60, joined Humanigen as Chief Operating and OrderFinancial Officer on August 1, 2020. Prior to close the bankruptcy case and terminate the remaining claims and noticing services.

Restructuring Transactions

On December 1, 2017, our obligations matured under the Credit and Security Agreement dated December 21, 2016, as amended on March 21, 2017 and on July 8, 2017 (the “Term Loan Credit Agreement”) with Black Horse Capital Master Fund Ltd., as administrative agent and lender (“BHCMF”), Black Horse Capital LP,assuming his position as a lender (“BHC”), Cheval Holdings, Ltd.,Humanigen officer, Mr. Morris served as a lender (“Cheval” and collectively with BHCMF and BHC, the “Black Horse Entities”) and Nomis Bay LTD, as a lender (“Nomis” and, together with the Black Horse Entities, the “Term Loan Lenders”).

On December 21, 2017, we entered into a Securities Purchase and Loan Satisfaction Agreement (the “Restructuring Purchase Agreement”) and a Forbearance and Loan Modification Agreement (the “Forbearance Agreement” and, together with the Restructuring Purchase Agreement, the “Restructuring Agreements”), each with the Term Loan Lenders, in connection with a series of transactions providing for, among other things, the satisfaction and extinguishment of our outstanding obligations under the Term Loan Credit Agreement and the infusion of $3.0 million of new capital. As of February 27, 2018, the date the Restructuring Transactions were completed, the aggregate amount of our obligations under the Term Loan Credit Agreement, including the Bridge Loan, the Claims Advances extended by Nomis Bay (each as discussed below) and all accrued interest and fees, approximated $18.4 million (the “Term Loans”). 

On February 27, 2018 (the “Restructuring Effective Date”), the Restructuring Transactions were completed in accordance with the Restructuring Agreements. As a result, on the Restructuring Effective Date, we: (i) in exchange for the satisfaction and extinguishment of the entire $18.4 million balance of the Term Loans, including the Bridge Loan, the Claims Advances extended by Nomis Bay (each as discussed below) and all accrued interest and fees, (a) issued to the Term Loan Lenders an aggregate of 59,786,848 shares of our common stock (the “New Lender Shares”), and (b) transferred and assigned to Madison Joint Venture LLC owned 70% by Nomis Bay and 30% by us (Madison), all of our assets related to benznidazole (the “Benz Assets”), our former drug candidate, capable of being so assigned; and (ii) issued to Cheval an aggregate of 32,028,669 shares of our common stock (the “New Black Horse Shares” and, collectively with the New Lender Shares, the “New Common Shares”) for total consideration of $3.0 million (collectively, the “Restructuring Transactions”), $1.5 million of which we received on December 22, 2017 in the form of a bridge loan (the “Bridge Loan”).

On the Restructuring Effective Date, the aggregate amount of the Term Loans that were deemed to be satisfied and extinguished (i) previously owed to the Black Horse Entities, including the Bridge Loan and all accrued interest and fees, approximated $9.9 million, and (ii) previously owed to Nomis Bay, including certain advances previously extended to us by Nomis Bay totaling $0.1 million (the Claims Advances) and all accrued interest and fees, approximated $8.5 million. In addition, on the Restructuring Effective Date, (i) each of the Term Loan Credit Agreement, all promissory notes issued thereunder and the Intellectual Property Security Agreement, dated as of December 21, 2016, by and between us and the Term Loan Lenders, were terminated and are of no further force or effect, and (ii) all security interests of the Black Horse Entities and Nomis Bay in our assets were released. Although the Term Loans were satisfied and extinguished, if Madison elected to keep the Benz Assets after the Restructuring Effective Date, Nomis Bay would be obligated to pay or cause Madison to pay $0.3 million in legal fees and expenses owed by us to our litigation counsel, which remain unpaid in our Accounts payable at December 31, 2017. On August 23, 2018 Madison elected to keep the Benz Assets and these amounts were paid by Madison to our litigation counsel.

Upon completion of the Restructuring Transactions, Nomis Bay held 33,573,530 of our common stock, or approximately 31.4% of our outstanding common stock, and the Black Horse Entities collectively held 66,870,851 shares of our common stock, or approximately 62.6% of our outstanding common stock. Accordingly, the completion of the Restructuring Transactions on the Restructuring Effective Date resulted in a change in control of our company, as the Black Horse Entities and their affiliates owning more than a majority of our outstanding common stock. Dr. Dale Chappell, a member of our boardBoard since June 2016. Mr. Morris served as the Chief Financial Officer of directorsIovance Biotherapeutics, Inc., a biopharmaceutical company, from August 2017 until June 2020. From March 2014 to June 2017, Mr. Morris served as Chief Financial Officer and Head of Business Development of AcelRx Pharmaceuticals, Inc., a specialty pharmaceutical company. From November 2004 to December 2013, Mr. Morris served as Senior Vice President Finance and Global Corporate Development, Chief Financial Officer of VIVUS, Inc. a biopharmaceutical company. Mr. Morris received his BS in Business with an emphasis in Accounting from California State University, Chico, and is a Certified Public Accountant (Inactive).

Dale Chappell, M.D., MBA, age 51, was appointed as our Chief Scientific Officer on July 6, 2020. Dr. Chappell is the managing member of BH Management, a private investment manager that specializes in biopharmaceuticals and a significant stockholder, a position he has held since 2002. Since April 2015, Dr. Chappell has served as CEO, President and CFO of Cheval U.S. Holdings, Inc., a private investment company with holdings in the hospitality industry. Previously, Dr. Chappell was an associate with Chilton Investment Company, covering healthcare, and an analyst at W.P. Carey & Company. Dr. Chappell, who received his MD from Dartmouth Medical School and his MBA from Harvard Business School, began his career as a Howard Hughes Medical Institute fellow at the National Cancer Institute where he studied tumor immunology, worked as a researcher in the labs of Dr. Steven A. Rosenberg (widely thought of as one of the pioneers in CAR-T therapy) and Dr. Nicholas P. Restifo (a leading researcher in the field of immunology) and is published in the field of GM-CSF. Dr. Chappell served as a member of the Board from June 30,2016 to November 2017. Prior to joining Humanigen in a full-time role as our Chief Scientific Officer, Dr. Chappell advised and consulted with management as our ex-officio chief scientific officer.

Edward P. Jordan, MBA, age 54, was appointed as our Chief Commercial Officer on August 24, 2020. Mr. Jordan has more than two decades of commercial operations experience at leading biotechnology and pharmaceutical companies, having launched over a dozen products and developed new therapeutic markets in the U.S. and abroad. From 2016 until November 10, 2017, controlsjoining Humanigen, Mr. Jordan served as Senior Vice President of DBV Technologies, where he built the Black Horse EntitiesNorth American commercial organization in preparation for the launch of a lifesaving pediatric biologic. Prior to DBV Technologies, from January 2014 to July 2015, Mr. Jordan was the Senior Vice President, Hematology and accordingly, will be ableOncology Sales and Marketing at AMAG Pharmaceuticals. Prior to exert control over mattersAMAG Pharmaceuticals, Mr. Jordan served in executive roles at Teva Pharmaceuticals. Mr. Jordan began his career at Schering-Plough, prior to the acquisition by Merck, and spent 18 years in sales and marketing leadership positions. Mr. Jordan received dual undergraduate degrees from The University of our companyRhode Island and will be able to determine all matters of our company requiring stockholder approval.an MBA from Southern New Hampshire University.

Adrian Kilcoyne, MD, MBA, MPH, age 51, was appointed as our Chief Medical Officer on April 21, 2021. Dr. Kilcoyne has significant global pharmaceutical and biotechnology industry experience and an extensive clinical background. From June 2019 until joining Humanigen, Dr. Kilcoyne served as Vice President of Oncology Global Medical Affairs, AstraZeneca most recently as Head of Evidence Generation and External Alliances, where he oversaw the global evidence strategy across the company’s entire oncology portfolio. Previously, Dr. Kilcoyne held several leadership positions at Celgene Corporation including Executive Medical Director, Global Lymphoma Program Lead, Clinical Research and Development, overseeing the development of lenalidomide in DLBCL and worked closely on the development of Breyanzi. Dr. Kilcoyne graduated from Trinity College, Dublin and holds a MSc in Public Health from the London School of Hygiene and Tropical Medicine, along with a MSc in Business Administration from the Warwick Business School.

Available Information

We were incorporated on March 15, 2000 in California and reincorporated as a Delaware corporation in September 2001. Effective August 7, 2017, we changed our legal name to Humanigen, Inc. Our principal executive offices are located at 533 Airport Boulevard, Suite 400, Burlingame, CA 94010,830 Morris Turnpike, 4^th Floor, Short Hills, NJ 07078 and our telephone number is (650) 243-3100.(973) 200-3010. Our website address is www.humanigen.com. Our common stock is currently tradedlisted on the OTCQB Venture Market.Nasdaq Capital Market under the symbol HGEN. We operate in a single segment.

Our website and the information contained on, or that can be accessed through, the website will not be deemed to be incorporated by reference in, and are not considered part of, this Annual Report on Form 10-K. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Investor Relations portion of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, the SEC maintains an internet site that contains the reports, proxy and information statements, and other information we electronically file with or furnish to the SEC, located atwww.sec.gov. www.sec.gov.

ITEM 1A.  RISK FACTORS

Our business faces significant risks and uncertainties. Certain factors may have a material adverse effect on our business prospects, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety, in addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.

Risks Related to Our Business and Industry

Risks Related to Our Efforts to Develop Lenzilumab for COVID-19

FDA declined our initial request for emergency use authorization for lenzilumab as a therapy for hospitalized patients with COVID-19. The MHRA also has not approved our application for marketing authorization of lenzilumab in this indication. We are continuing to pursue an authorization or approval for lenzilumab’s use in hospitalized patients with COVID-19 in the U.S., UK and EU, but may not obtain one.

On September 8, 2021, FDA informed us that it had declined to issue an EUA for lenzilumab for patients hospitalized with COVID-19. FDA has advised us that we will need to submit further safety and efficacy data in an amended application for EUA. Likewise, MHRA raised a number of questions in its review of our application for marketing authorization, including around efficacy, to which we need to respond. It is possible, but not assured, that the results from the Accelerating COVID-19 Therapeutic Interventions and Vaccines-5 (“ACTIV-5”) and Big Effect Trial, in the “B” arm of the trial (“BET-B”), referred to as the ACTIV-5/BET-B trial, being conducted by NIH, if confirmatory of the findings of the CRP subgroup from the LIVE-AIR study, may support our efficacy claim in such a way as to support an amendment to the EUA application and our response to MHRA. In addition, if the results from ACTIV-5/BET-B are not confirmatory of the results of the findings of the CRP subgroup from the LIVE-AIR study, we would either conduct a new clinical trial of our own or abandon this development program altogether. Unfavorable results likely would have a material and adverse impact on our stock price and ability to obtain future financing needed to continue as a going concern, as well.

If ACTIV-5/BET-B results confirm our findings from the CRP subgroup from the LIVE-AIR study, we may be required to obtain and submit additional information related to the Chemistry Manufacturing and Control (“CMC”) aspects of lenzilumab production before we attain EUA or any other authorization or approval. We are in the process of obtaining additional CMC information but there is no assurance as to exactly when or if we will generate sufficient information to satisfy regulatory requirements.

More broadly, in the context of EUA or any other request for a conditional marketing authorization or approval, there is no requirement that FDA or any regulatory body reach a favorable conclusion about our submissions. A myriad of factors, including the regulator’s assessment of the urgency of the need for a therapeutic such as lenzilumab; the efficacy of lenzilumab in new or different variants that have emerged or may evolve; and other factors such as the development of more efficacious vaccines or therapies, may influence a regulator’s decision on any submissions we may make.

Furthermore, if an EUA is granted to permit lenzilumab to be commercialized for use in the treatment of COVID-19, the authorization would only remain in effect while a “Public Health Emergency” is underway and might be expressly conditioned or limited by FDA. An EUA, if granted, could also be terminated if, in the future, there are changes in available data that bear on the risk-benefit analysis, or if alternative approved products become available.

Accordingly, it is possible that FDA and other regulatory authorities may not authorize or approve lenzilumab for the treatment of COVID-19, or that any such authorization or approval, if granted, may have significant limitations on its use or subsequently be rescinded or terminated. We may never successfully commercialize lenzilumab for use in COVID-19 patients or realize a return on our significant investment in the development, supply, and commercialization of lenzilumab for this purpose.

We need to obtain additional financing to fund our operations and, if we are unable to obtain such financing, we may be unable to continue to operate as a going concern.

During 2021, we incurred significant costs associated with our development program for lenzilumab in COVID-19 without attaining a regulatory authorization or approval to commercialize it. Our liquidity position is highly constrained as a result. We need to obtain additional financing to pursue the development of lenzilumab and our other product candidates pending our ability to commence commercialization and begin generating revenues from product sales if lenzilumab were to be authorized or approved by a regulatory agency.

Until we can generate a sufficient amount of revenue, we intend to attempt to finance future cash needs through our at-the-market offering program or other public or private equity offerings, license agreements, grant financing and support from governmental agencies, convertible debt, other debt financings, collaborations, strategic alliances, extending and managing amounts owed to vendors and marketing, supply, distribution or licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. We expect that the results of the ACTIV-5/BET-B trial will be important to potential investors in evaluating an investment in our company. Accordingly, our ability to raise capital on favorable terms in the future is linked closely to the success of that trial, which we cannot assure. Unfavorable results likely would have a material and adverse impact on our stock price and ability to obtain future financing.

If we are unsuccessful in efforts to raise additional capital, based on our current levels of operating expenses, our current capital is not expected to be sufficient to fund our operations for the next twelve months. These conditions raise substantial doubt about our ability to continue as a going concern.

The consolidated financial statements for the year ended December 31, 2021 were prepared on the basis of a going concern, which contemplates that we will be able to realize our assets and discharge liabilities in the normal course of business. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

In addition, the presence of the explanatory paragraph about our ability to continue as a going concern in our financial statements, could also make it more difficult to raise the capital necessary to address our current needs.

Our commercial opportunity in COVID-19 may be reduced or eliminated if competing products for the same segment of patients that lenzilumab targets are authorized or approved.

We may not be successful in attaining any authorization or approval for lenzilumab in hospitalized COVID-19 patients before competitors receive authorization or approval of competitive therapeutics. In addition, vaccines, neutralizing antibodies, and oral antivirals which have been granted EUA and/or FDA approval to prevent COVID-19 may indirectly compete for the same patients by preventing hospitalization. As discussed in greater detail under “Item 1. Business—–Lenzilumab and COVID-19 Competition,” several neutralizing antibodies have been approved to prevent progression in the early stages of infection, multiple vaccines and boosters have been authorized by FDA and other regulatory agencies, and there are numerous other companies working on therapies and/or vaccines to treat COVID-19. If additional competing therapies and/or vaccines are approved, such approval could have a material adverse impact on our ability to attain regulatory approvals needed to commercialize lenzilumab as a therapy for COVID-19.

Manufacturing efforts relating to our lenzilumab program in COVID-19 have been extremely costly and inefficient in producing treatments for use in our clinical development program or potential sale.

Our complete reliance on third-party manufacturers to produce lenzilumab subjects us to a number of risks, as described in more detail under “—Other Risks Related to Our Business and Industry” below. We believe that our ability to obtain the requisite regulatory authorizations or approvals to permit lenzilumab to be used commercially for hospitalized patients with COVID-19 depends at least in part on our ability to demonstrate that we will be able to scale the manufacturing to produce a sufficient quantity of treatments, satisfying all applicable process performance qualification (“PPQ”) requirements, to address the potential demand for the product. Our efforts to develop that manufacturing scale have been impaired by the following:

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

From time-to-time, we may publicly disclose preliminary, “top-line” or other data from clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analysis of all data related to the particular trial. We may also seek to publish additional ad-hoc, retrospective or exploratory data, including results from patients with baseline CRP levels <150 mg/L. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, such results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results once additional data have been received and fully evaluated. Such data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim, top-line, or preliminary data should be viewed with caution until the final data are available. Such data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between such data and final data could significantly harm our business prospects. Further, disclosure of interim, top-line or preliminary data by us or by our competitors could result in volatility in the price of shares of our common stock and dramatic spikes in trading volume, as we experienced following our announcement of top-line data from the LIVE-AIR study in March 2021.

In addition, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product, and our business in general. FDA’s action to decline our initial request for EUA represents a dramatic manifestation of this risk. In addition, the information we choose to publicly disclose or to publish via a preprint publication regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, product candidate, or our business. If the top-line data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our current or any our future product candidate, our business, operating results, prospects or financial condition may be harmed.

Target enrollment in the ACTIV-5/BET-B study has been reached in the primary analysis group (CRP<150 mg/L < 85 years old). Analysis of data can begin once the database lock has occurred. The NIH controls the data analysis and we may be unable to influence the timeline for completion. The primary endpoint is based on an assessment 29 days after treatment, and accordingly we believe top-line data from this study could be available in late first quarter or early in the second quarter of 2022, but the NIH may choose to wait until day 60 to complete their analysis. In addition, the COVID-19 pandemic, and in particular the widespread transmission of the omicron variant even among vaccinated people, has had a significant negative impact on worker productivity. It is possible that, due to COVID-19 or other reasons, the timeline to collect and analyze the data from ACTIV-5/BET-B may be delayed, causing the anticipated timeline to slip. There can be no assurance that we will be able to report top-line results within the timeline established by our guidance or that the top-line results will be consistent with the final results as reported after Day 60.

We cannot predict public reaction or the impact on the market price of our common stock once further announcements regarding lenzilumab or developments from ACTIV-5/BET-B are announced. Given the attention being paid to the COVID-19 pandemic and the public scrutiny of COVID-19 development announcements and data releases to date, any public announcements we make in the coming months regarding the ongoing development and regulatory process for lenzilumab may attract significant attention and scrutiny and as a result, the price of our common stock may be volatile during this time. 

If an authorization or approval were granted for lenzilumab, we may be unable to accurately predict demand for lenzilumab or to produce sufficient quantities on a timely basis to meet demand.

If lenzilumab were authorized or approved for commercial use, we may be unsuccessful in estimating user demand and may not be effective in matching inventory levels and locations to actual end user demand, in particular if the COVID-19 pandemic, including emerging variants, is effectively contained or the risk of patients being hospitalized as a result of coronavirus infection is significantly diminished. In addition, adverse changes in economic conditions, increased competition, including through approved/authorized vaccines or other therapeutics (including neutralizing antibodies and oral antivirals), or other factors may cause hospitals or other users or distributors of lenzilumab to reduce inventories of our products, which would reduce their orders for lenzilumab, even if end user demand has not changed. As a result, our revenues could be difficult to predict and vulnerable to extreme fluctuations.

There can be no assurance that lenzilumab, even if approved, would ever become profitable, due to government or healthcare provider or payer interest and public perception regarding vaccines and treatments for COVID-19 related complications.

As a result of the emergency situations in many countries, there is a heightened risk that a COVID-19 therapy or other treatments for COVID-19 symptoms may be subject to adverse governmental actions in certain countries, including intellectual property expropriation, compulsory licenses, strict price controls or other actions. Additionally, we may need, or we may be required by governmental or non-governmental authorities, to set aside specific quantities of doses of lenzilumab for designated purposes or geographic areas. We may face challenges related to the allocation of supply of lenzilumab, particularly with respect to geographic distribution. Thus, even if lenzilumab is approved, such governmental actions may limit our ability to recoup our current and future expenses incurred to develop and commercialize lenzilumab.

Furthermore, public sentiment regarding commercialization of a COVID-19 therapy or other treatment may limit or negate our ability to generate revenues from sales of lenzilumab. If authorized or approved, we may face significant public attention and scrutiny over any future business models and pricing decisions with respect to lenzilumab. If we are unable to successfully manage these risks, we could face significant reputational harm, which could negatively affect the price of our common stock.

We currently have no internal sales and marketing capabilities and will rely on third parties to market and sell lenzilumab if we attain an EUA or other regulatory approval for its commercialization, and any product candidates we may successfully develop. We or they may not be able to effectively market and sell any such product candidates.

We currently do not have internal sales and marketing infrastructure in place that would be necessary to sell and market products and we may choose to not build this capability in-house. As is the case with many, if not most, small companies seeking to commercialize their products and who have not yet partnered with a larger biotech or pharmaceutical company, we have entered into an arrangement to outsource logistics and distribution services as described under “Item 1. Business—Sales and Marketing.” There can be no assurance that our partner will be effective in distributing lenzilumab.

If we or any of our potential partners fail to hire, train, retain and manage qualified sales personnel, market our product successfully or on a cost-effective basis, our ability to generate revenue will be limited and we will need to identify and retain an alternative third-party, or develop our own sales and marketing capability. The establishment of an in-house sales and marketing operation can be expensive and time consuming and could delay any product candidate launch.

Other Risks Related to Our Business and Industry

We have a history of operating losses, we expect to continue to incur losses, and we may never become profitable.

We have incurred net losses in nearly every year since our inception. For the fiscal year ended December 31, 20192021, we incurred a net loss of $10.3$236.6 million, and we have an accumulated deficit of $284.9$611.1 million as of December 31, 2019.

2021. Since inception, we have only recognized a nominal amount of revenue from payments for funded research and development and for license or collaboration fees, none$3.6 million of which was recognized in either of the last two years.year ended December 31, 2021. We expect to make substantial expenditures and incur additional operating losses in the future to further develop and commercialize our product candidates. Our accumulated deficit is expected to increase significantly as we continue our development and clinical trial efforts. Our ability to achieve and sustain profitability depends on obtaining regulatory approvals for and successfully commercializing our product candidates, either alone or with third parties. We do not currently have the required approvals to market any of our product candidates and we may never receive them. We may not be profitable even if we or any future development partners succeed in commercializing any of our product candidates. Because of the numerous risks and uncertainties associated with developing and commercializing our product candidates, we are unable to predict the extent of any future losses or when we will become profitable, if at all.

Our auditor has expressed substantial doubt about our ability to continue as a going concern and absent additional financing we may be unable to remain a going concern.

We need additional capital to continue to operate our business. If we are unsuccessful in our efforts to raise additional capital, including in the immediate future, based on our current levels of operating expenses, our current capital is not expected to be sufficient to fund our operations for the next twelve months. These conditions raise substantial doubt about our ability to continue as a going concern. The Report of Independent Registered Public Accounting Firm at the beginning of theConsolidated Financial Statementsincluded in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K includes an explanatory paragraph about our ability to continue as a going concern.

TheConsolidated Financial Statementsfor the year ended December 31, 2019 were prepared on the basis of a going concern, which contemplates that we will be able to realize our assets and discharge liabilities in the normal course of business. Our ability to meet our liabilities and to continue as a going concern is dependent upon the availability of future funding. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

In addition, our current financial situation, and the presence of the explanatory paragraph about our ability to continue as a going concern, could also make it more difficult to raise the capital necessary to address our current needs.

Our ability to execute on all of the initiatives in our development pipeline is substantially dependent on third parties to plan and conduct the referenced studies and clinical trials.

We do not have sufficient capital to pursue the actions in the development pipeline for our product candidates as depicted elsewhere in this Form 10-K. Accordingly, absent our ability to raise sufficient capital to carry out these actions independently, our success depends on our ability to negotiate agreements with third parties with resources to plan and conduct the initiatives, studies and clinical trials we are pursuing. If we are not able to reach agreements with current or future partners for it, we will not be able to execute on each of these particular initiatives, studies and trials. Our inability to identify and complete negotiations with any such third party therefore could have a material and adverse impact on our ability to pursue our business plan in respect of the applicable element of our pipeline, which in turn could have a material adverse effect on our business.

We review and explore strategic alternatives on an on-going basis, but there can be no assurance that we will be successful in identifying or completing any strategic alternative or that any such strategic alternative will yield additional value for our stockholders.

We regularly review strategic alternatives to ensure our current structure optimizes our ability to execute our strategic plan and to maximize stockholder value. The review of strategic alternatives could result in, among other things, a sale, merger, consolidation or business combination, asset divestiture, partnering, licensing or other collaboration agreements, or potential acquisitions or recapitalizations, in one or more transactions, or continuing to operate with our current business plan and strategy. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction.

In addition, we may incur substantial expenses associated with identifying and evaluating potential strategic alternatives. The process of exploring strategic alternatives may be time consuming and disruptive to our business operations and if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely affected. We also cannot assure that any potential transaction or other strategic alternative, if identified, evaluated and consummated, will provide greater value to our stockholders than that reflected in our current stock price. Any potential transaction would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in our business or product candidates and the availability of financing to potential buyers on reasonable terms.

We need substantial additional capital to develop and commercialize our product candidates, and our access to funding is uncertain. If we cannot obtain additional financing, we may not be able to pursue our collaboration with Kite or other business objectives.

As previously disclosed, we do not expect to recognize any revenues while we continue to pursue the development of lenzilumab and our other product candidates. We require substantial additional capital to support our business efforts, including our collaboration with Kite. Under the Kite Agreement, the parties have agreed to conduct a multi-center Phase 1/2 study (ZUMA-19) of lenzilumab with Kite’s Yescarta in patients with relapsed or refractory B-cell lymphoma. We currently project we will be responsible for an aggregate of approximately $8 million in out-of-pocket costs assuming a total of 72 patients are enrolled in ZUMA-19, of which $2 million will be required to be paid to Kite thirty days prior to the initiation of the Study.

We will also require substantial additional capital to support our other business efforts, including obtaining regulatory approvals for our other product candidates, clinical trials and other studies, and, if approved, the commercialization of our product candidates. The amount of capital we will require and the timing of our need for additional capital will depend on many factors, including:

As of December 31, 2019, our current liabilities of approximately $13.6 million exceeded our current assets of approximately $0.5 million.

We have defaulted on $1.1 million of unsecured obligations incurred upon our emergence from bankruptcy in 2016.

Our cash position as of June 30, 2019 was insufficient for us to satisfy in full at maturity on June 30, 2019 all of the outstanding principal amount and accrued but unpaid interest on unsecured promissory notes we made to certain of our vendors upon our emergence from bankruptcy. As of December 31, 2019, the aggregate principal amount and accrued but unpaid interest on these notes approximates $1.1 million. The outstanding principal amount and accrued but unpaid interest on these notes is currently payable to the respective holders without demand, notice or declaration, and the holders, without demand or notice of any kind, may exercise any and all other rights and remedies available to them under the notes, our bankruptcy plan, at law or in equity. We do not have sufficient funds to repay the principal and accrued but unpaid notes, as our available cash balance as of March 13, 2020 was approximately $268,000.

Our business depends on the success of our current product candidates. We cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, any of our product candidates.

We have a limited pipeline of product candidates and we do not plan to conduct active research at this time for discovery of new molecules or antibodies. We depend on the successful continued development and attainment of regulatory authorization or approval of our current product candidates for our future business success. Since the fall of 2017, our primary focus has been the development of lenzilumab for use with FDA-approved CAR-T therapies. We are also working to create next-generation gene-edited CAR-T therapies using GM-CSF gene knockout technologies, as well as working to develop ifabotuzumab and related products. We will need to successfully enroll and complete clinical trials of lenzilumab and ifabotuzumab, and potentially obtain regulatory approval to market these products. The future clinical, regulatory and commercial success of our product candidates is subject to a number of risks, including the following:

Furthermore, even if we do receiveIn addition, the fluid and unpredictable nature of the COVID-19 pandemic may affect our ability to conduct our ongoing clinical trials, delay the initiation of planned and future clinical trials, cause interruptions in the supply of raw materials or products, delay the collection of clinical trial data, and disrupt regulatory approval to market any of our product candidates, any such approval may be subject to limitations on the indicated uses for which we may market the product. If any of our product candidates are unsuccessful, that could have a substantial negative impact on our business.

activities. Accordingly, even if we are able to obtain the requisite financing to continue to fund our development programs, we cannot assure you that our product candidates will be successfully developed or commercialized. If we or any future development partners are unable to develop, or obtain regulatory approval for or, if approved, successfully commercialize one or more of our product candidates, we may not be able to generate sufficient revenue to continue our business.

Our product candidates are at an early stage of development and may not be successfully developed or commercialized.

Our product candidates are in the early stages of development and will require substantial clinical development, testing, andFurthermore, even if we do receive regulatory approval prior to commercialization. Nonemarket any of our product candidates, have advanced into a pivotal study and itany such approval may be years before such a study is initiated, if at all. Ofsubject to limitations on the large number of drugs in development, only a small percentage successfully completeindicated uses for which we may market the FDA regulatory approval process and are commercialized. Accordingly, even if we are able to obtain the requisite financing to continue to fund our development programs, we cannot assure you that our product candidates will be successfully developed or commercialized.product. If we or any future development partners are unable to develop, or obtain regulatory approval for or, if approved, successfully commercialize, one or more of our product candidates we may not be able to generate sufficient revenue to continueare unsuccessful, that could have a substantial negative impact on our business.

The adoption of CAR-T therapies as the potential standard of care for treatment of certain cancers is uncertain, and dependent on the efforts of a limited number of market entrants, and if not adopted as anticipated, the market for lenzilumab or next-generation gene-edited CAR-T therapies may be limited or not develop.

We are seeking to advance the development of lenzilumab to address, among other things, the serious side-effectsand potentially fatal side effects, specifically ICANS and CRS associated with CAR-T therapies and to improve the efficacy of these treatments. We, through our collaboration with Mayo Clinic, are also working to create next-generation gene-edited CAR-T therapies using GM-CSF gene knockout technologies. Although twofive CAR-T therapies have been approved by FDA to date, the use of engineered T cells as a potential cancer treatment is a recent development and may not be broadly accepted by physicians, patients, hospitals, cancer treatment centers, payers and others in the medical community. The degree of market acceptance of any approved product candidates will depend on a number of factors, including:

If the medical and payer community is not sufficiently persuaded of the safety, efficacy and cost-effectiveness of CAR-T therapy and the potential advantages of using lenzilumab compared to existing and future therapeutics, and there is not significant market acceptance of CAR-T therapy as the standard of care for treatment of certain cancers, the market for lenzilumab or next-generation gene-edited CAR-T therapies may be limited or not develop, and our stock price could be adversely affected.

CAR-T therapies currently in early development purport to incorporate technology that may minimize or eliminate the adverse side-effects, namely ICANS and CRS, and improve on efficacy, that we believe have impaired the uptake of the approved CAR-T therapies. If these developing therapies are proven safer and equally or more efficacious in their proposed indications and approved for use by FDA and other regulatory agencies, the market growth for the currently-approvedcurrently approved CAR-T therapies may be limited, impairing demand for lenzilumab.

In recent months,years, several biotechnology companies describing business plans focusing on development of CAR-T therapies have completed or announced they are pursingpursuing initial public offerings or “IPOs”(“IPOs”). Several of these companies have described their belief that their therapies will not result in the same level of CRSICANS or NTCRS as has been experienced in use of previously FDA-approved CAR-T therapies. While these products are in early stageearly-stage development, the data is limited and these products have not yet been approved for use by FDA, if any such product were also proven equally efficaciousnew CAR-T therapies with lower occurrences of CRS and subsequentlyICANS are approved, the market for lenzilumab in conjunction with CAR-T therapy may not develop or grow as anticipated.be diminished. Any such failure of a market for lenzilumab to develop could adversely affect our stock price.

In addition, if new CAR-T therapies that offer improved efficacy, either with or without improved safety, are approved, the market for lenzilumab which is used in conjunction with CAR-T therapy may be diminished if such CAR-T therapy is used in preference to existing CAR-T therapy. For more information regarding FDA-approved CAR-T therapies, see “Item 1. Business—Lenzilumab in CAR-T.”

Our business could target benefits from various regulatory incentives, such as orphan drug exclusivity, breakthrough therapy designation, fast track designation, and priority review, but we may not ultimately qualify for or benefit from these arrangements.incentives.

We may seek various regulatory incentives, such as orphan drug exclusivity, breakthrough therapy designation, fast track designation, accelerated approval, priority review and Priority Review Vouchers (“PRVs”), where available, that provide for certain periods of exclusivity, expedited review and/or other benefits, and we may also seek similar designations elsewhere in the world. Often, regulatory agencies have broad discretion in determining whether or not products qualify for such regulatory incentives and benefits. We cannot guarantee that we will be able to receive orphan drug status from FDA or equivalent regulatory designations elsewhere. We also cannot guarantee that we will obtain breakthrough therapy or fast track designation, which may provide certain potential benefits such as more frequent meetings with FDA to discuss the development plan, intensive guidance on an efficient drug development program, and potential eligibility for rolling review or priority review. Legislative developments in the U.S., including recent proposed legislation that would restrict eligibility for PRVs, may affect our ability to qualify for these programs in the future.

Even if we are successful in obtaining beneficial regulatory designations by FDA or other regulatory agency for our product candidates, such designations may not lead to faster development or regulatory review or approval and it does not increase the likelihood that our product candidates will receive marketing approval. We may not be able to obtain or maintain such designations for our product candidates, and our competitors may obtain these designations for their product candidates, which could impact our ability to develop and commercialize our product candidates or compete with such competitors, which would adversely impact our business, financial condition or results of operations.

There is a limited amount of information about us upon which investors can evaluate our product candidates and business prospects, including because we have a limited operating history developing product candidates, and we have not yet successfully commercialized any products, have changed our strategy and have a relatively small management team.

On August 29, 2017, we shifted ourOur primary focus towardis developing our proprietary monoclonal antibody portfolio, which comprisesprimarily lenzilumab and ifabotuzumab and HGEN005, for use in addressing significant unmet needs in oncology and CAR-T therapy. We are also currently developing our GM-CSF knockout gene-editing CAR-T platform to create next-generation CAR-T therapies that preserve the benefits of CAR-T therapy while altogether avoiding its serious and potentially life-threatening side-effects.iFab. Our relatively new team, new strategic business focus and limited operating history developing clinical-stage product candidates may make it more difficult for us to succeed or for investors to be able to evaluate our business and prospects. In addition, as an early-stage clinical development company, we have limited experience in development activities, including conducting clinical trials, or seeking and obtaining regulatory approvals, even though our executives have had relevant experience at other companies. We onlycurrently have twoten full-time employees and therefore are heavily dependent on external consultants and expert vendors for clinical, scientific, clinicalcontract manufacturing and regulatory expertise. We have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in the biopharmaceutical area. To execute our business plan, we will need to successfully:

If we are unsuccessful in accomplishing these objectives, we may not be able to develop product candidates, raise capital, expand our business, or continue our operations.

Our collaboration with Kite is critically important to our business. If we are unable to maintain this collaboration, or if this collaboration is not successful, our business could be adversely affected.

In May 2019, we entered into the Kite Agreement to conduct a multi-center Phase 1b/2 study (ZUMA-19)of lenzilumab with Kite’s Yescarta in patients with relapsed or refractoryB-cell lymphoma.See "Business — Kite Collaboration."

Pursuant to the terms of the Kite Agreement, Kite may elect to terminate or suspend the Study at any time. Because we currently rely on Kite for a substantial portion of our discovery capabilities, if Kite delays or fails to perform its obligations under the Kite Agreement, disagrees with our interpretation of the terms of the collaboration or our discovery plan or terminates the Kite Agreement, our pipeline of product candidates would be adversely affected. Kite may also fail to properly maintain or defend the intellectual property we have licensed from them, or even infringe upon, our intellectual property rights, leading to the potential invalidation of our intellectual property or subjecting us to litigation or arbitration, any of which would be time-consuming and expensive. Additionally, either party has the right to terminate the Kite Agreement under certain circumstances. If our collaboration with Kite is terminated, the development oflenzilumabwould be materially delayed or harmed.

In addition to our collaborationcollaborations with Kite,the NIH, Mayo Clinic, IMPACT Partnership, SAHMRI and the University of Adelaide, and the Olivia Newton-John Cancer Research Centre, we may, in the future, seek to enter into collaborations with other third parties for the discovery, development and commercialization of our product candidates. If our collaborators cease development efforts under our collaboration agreements, or if any of those agreements are terminated, these collaborations may fail to lead to commercial products, and we may never receive milestone payments or future royalties under these agreements.

We may in the future seek to enter into agreements with other third-party collaborators for research, development and commercialization of other therapeutic technologies or product candidates. Biopharmaceutical companies are our likely future collaborators for any marketing, distribution, development, licensing, or broader collaboration arrangements. If we fail to enter into future collaborations on commercially reasonable terms, or at all, or such collaborations are not successful, we may not be able to execute our strategy to develop our product candidates or therapies that we believe could benefit from the resources of either larger biopharmaceutical companies or those specialized in a particular area of relevance.

With respect to our existing Kite Agreement and with any future collaboration agreements, we have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Moreover, our ability to generate revenues from these arrangements will depend on our collaborators'collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

Collaborations involving our product candidates pose the following risks to us:us, among others:

As a result of the foregoing, our current and any future collaboration agreements may not lead to development or commercialization of our product candidates in the most efficient manner or at all. If a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated. Any failure to successfully develop or commercialize our product candidates pursuant to our current or any future collaboration agreements could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Moreover, to the extent that any of our existing or future collaborators were to terminate a collaboration agreement, we may be forced to independently develop these product candidates, including funding preclinical studies or clinical trials, assuming marketing and distribution costs and defending intellectual property rights, or, in certain instances, abandon product candidates altogether, any of which could result in a change to our business plan and have a material adverse effect on our business, financial condition, results of operations and prospects.

We have relied and may in the future rely on third parties to conduct investigator-sponsored trialsInvestigator Sponsored Trials (“ISTs”) of our products, which is cost-effective for us but affords the investigators the ability to retain significant control over the design and conduct of the trials, as well as the use of the data generated from their efforts.

We have relied and may in the future rely on third parties to conduct and sponsor clinical trials relating tolenzilumab, our GM-CSF gene knockout platform and our other immunotherapies, ifabotuzumabimmunotherapy product candidates, iFab and HGEN005. Such ISTs may provide us with valuable clinical data that can inform our future development strategy in a cost-efficient manner, but we do not control the design or conduct of the ISTs, and it is possible that the FDA or non-U.S. regulatory authorities will not view these ISTs as providing adequate support for future clinical trials, whether controlled by us or third parties, for any one or more reasons, including elements of the design or execution of the trials or safety concerns or other trial results.

These arrangements provide us limited information rights with respect to the ISTs, including access to and the ability to use and reference the data, including for our own regulatory filings, resulting from the ISTs. However, we would not have control over the timing and reporting of the data from ISTs, nor would we own the data from the ISTs. If we are unable to confirm or replicate the results from the ISTs or if negative results are obtained, we would likely be further delayed or prevented from advancing further clinical development. Further, if investigators or institutions breach their obligations with respect to the clinical development of our product candidates, or if the data proves to be inadequate compared to the first-hand knowledge, we might have gained had the ISTs been sponsored and conducted by us, then our ability to design and conduct any future clinical trials ourselves may be adversely affected.

If the third parties conducting our clinical trials do not conduct the trials in accordance with our agreements with them, our ability to pursue our clinical development programs could be delayed or unsuccessful and we may not be able to obtain regulatory approval for or commercialize our product candidates when expected or at all.

We do not have the ability to conduct all aspects of our preclinical testing or clinical trials ourselves. Therefore, the timing of the initiation and completion of these trials is uncertain and may occur on substantially different timing from our estimates. We also use contract research organizations (“CROs”)CROs to conduct our clinical trials and rely on medical institutions, clinical investigators, CROs, and consultants to conduct our trials in accordance with our clinical protocols and regulatory requirements. Our CROs, investigators, and other third parties play a significant role in the conduct of these trials and subsequent collection and analysis of data.

There is no guarantee that NIH, any CROs, investigators, or other third parties on which we rely for administration and conduct of our clinical trials will devote adequate time and resources to such trials or perform as contractually required. If any of these third parties fails to meet expected deadlines, fails to adhere to our clinical protocols, or otherwise performs in a substandard manner, our clinical trials may be extended, delayed, or terminated. If any of our clinical trial sites terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in our ongoing clinical trials unless we are able to transfer those subjects to another qualified clinical trial site. In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to timetime-to-time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be jeopardized.

We may experience delays in commencing or conducting our clinical trials, in receiving data from third parties or in the continuation or completion of clinical testing, which could result in increased costs to us, and delay our ability to generate product candidate revenue.revenue or, ultimately, render us unable to complete the development and commercialization of our product candidates.

We have product candidates in clinical development and preclinical development. To obtain marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Before we can initiate clinical trials in the U.S. for any new product candidates, we are required to submit the results of preclinical testing to FDA as part of an IND application, along with other information including information about product candidate chemistry, manufacturing, and controls and our proposed clinical trial protocol. For

In order to continue with our testing programs already underway, we are required to report or provide information to appropriate regulatory authorities, in orderand any failure to continue with our testing programs. If we are unable to make timely regulatory submissions for any of our programs, itsubmit such reports or information will delay our plans for our clinical trials. If those third parties conducting our trials do not make the required data available to us, we will likely have to identify and contract with another third party and/or develop all necessary preclinical and clinical data on our own, which will lead to significant delays and increase development costs of the product candidate.delays. In addition, FDA may require us to conduct additional preclinical testing for any product candidate before it allows us to initiate clinical testing under any IND application, which may lead to additional delays and increase the costs of our preclinical development.delays. Moreover, despite the presence of an active IND application for a product candidate, clinical trials can be delayed for a variety of reasons, including delays in:

Once a clinical trial has begun, recruitment and enrollment of subjects may be slower than we anticipate. Numerous companies and institutions are conducting clinical studies in similar patient populations which can result in competition for qualified patients. In addition, clinical trials will take longer than we anticipate if we are required, or believe it is necessary, to enroll additional subjects than originally planned. Clinical trials may also be delayed as a result of ambiguous or negative interim results. Further, a clinical trial may be suspended or terminated by us, an IRB, an ethics committee, or a data safety monitoring committee overseeing the clinical trial, any of our clinical trial sites with respect to that site, or FDA or other regulatory authorities, due to a number ofseveral factors, including:

Additionally, if any future development partners do not develop the licensed product candidates in the time and manner that we expect, or at all, the clinical development efforts related to these licensed product candidates could be delayedtrial presents unacceptable health risks, or terminated. In addition, our ability to enforce our partners’ obligations under any future collaboration efforts may be limited due to time and resource constraints, competing corporate prioritieslack of our future partners, and other factors.adequate funding.

Any delays in the commencement of our clinical trials may delay or preclude our ability to further develop or pursue regulatory approval for our product candidates. Changes in U.S. and foreign regulatory requirements and guidance also may occur, and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for re-examination, which may affect the costs, timing, and likelihood of a successful completion of a clinical trial.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or do not meet the standard for acceptability by regulatory authorities or if there are safety concerns, we may:

Our product development costs will also increase if we experience delays in testing or in obtaining marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. We may also determine to change the design or protocol of one or more of our clinical trials, including to add additional arms or patient populations, which could result in increased costs and expenses and/or delays. If we or any future development partners experience delays in the completion of, or if we or any future development partners must terminate, any clinical trial of any product candidate, our ability to obtain regulatory approval for that product candidate will be delayed and the commercial prospects, if any, for the product candidate may suffer as a result. In addition, many of these factorsSignificant preclinical study or clinical trial delays also could shorten any periods during which we may also ultimately leadhave the exclusive right to the denial of regulatory approval of acommercialize our product candidate. 

The scientific rationale behind the hypothesis that GM-CSF is a cause of the cytokine storm that leadscandidates or allow our competitors to adverse results in COVID-19 patients is still being testedbring products to market before we do and impair our ability to successfully commercialize our product candidates and may not prove accurate.

The hypothesis that elevated GM-CSF+ T cells may contribute to cytokine storm-induced immune mechanisms that places patients at greater riskharm our business and results of ICU admission and mortality with the current pandemic strain of coronavirus is unproven. Certain data are the subject of pre-publication papers that have not been peer-reviewed and may not be substantiated. If this hypothesis is not ultimately proven, the potential for lenzilumab to play a meaningful role in a COVID-19 therapy likely would decrease or be eliminated. We cannot assure you that our exploratory efforts in this respect will be fruitful.

operations.

Our product candidates are subject to extensive regulation, compliance with which is costly and time consuming, may cause unanticipated delays, or may prevent the receipt of the required approvals to commercialize our product candidates.candidates, or may result in substantial harm to our business if we fail to comply with these requirements.

The clinical development, approval, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing, and distribution of our product candidates are subject to extensive regulation by FDA in the U.S. and by comparable authorities in foreign markets. In the U.S., we are not permitted to market our product candidates until we receive regulatory approval or other authorization, such as EUA, from FDA. The process of obtaining regulatory approval is expensive, often takes many years, and can vary substantially based upon the type, complexity, and novelty of the products involved, as well as the target indications. Approval policies or regulations may change, and FDA has substantial discretion in the drug approval process, including the ability to delay, limit, or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed. FDA or other comparable foreign regulatory authorities can delay, limit, or deny approval of a product candidate for many reasons, including:

With respect to foreign markets, approval procedures vary widely among countries and, in addition to the aforementioned risks, can involve additional product testing, administrative review periods, and agreements with pricing authorities. In addition, events raising questions about the safety of certain marketed pharmaceuticals may result in increased caution by FDA and comparable foreign regulatory authorities in reviewing new drugs based on safety, efficacy or other regulatory considerations and may result in significant delays in obtaining regulatory approvals. Any delay in obtaining, or inability to obtain, applicable regulatory approvals may delay or prevent us or any future development partners from commercializing our product candidates.

If we receive regulatory approval for our product candidates, we will be subject to ongoing FDA obligations and continued regulatory oversight and review, such as continued safety reporting requirements, and we may also be subject to additional FDA post-marketing obligations. If we are not able to maintain regulatory compliance, we may not be permitted to market our product candidates, may be subject to product recalls, import and export restrictions or seizures, and/or may be subject to civil and/or criminal penalties.

The results of preclinical studies and early clinical trials are not always predictive of future results. Any product candidate we or any future development partners advance into clinical trials may not have favorable results in later clinical trials, if any, or receive regulatory approval.

Drug development has substantial inherent risk. We or any future development partners will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates are effective, with a favorable benefit-risk profile, for use in their target populations for their intended indications before we can seek regulatory approvals for their commercial sale. Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of development, including after commencement of any of our clinical trials. Success in early clinical trials does not mean that later clinical trials will be successful because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety or efficacy despite having progressed through initial clinical testing. In addition, serious adverse or undesirable side-effects may emerge or be identified during later stages of development that were not observed in earlier stages. Furthermore, our future trials will need to demonstrate sufficient safety and efficacy for approval by regulatory authorities in larger patient populations. Companies frequently suffer significant setbacks in advanced clinical trials, even after earlier clinical trials have shown promising results. In addition, only a small percentage of drugs under development result in the submission of a New Drug Application (“NDA”)an NDA or Biologic License Application (“BLA”)BLA to FDA, and even fewer are approved for commercialization.

We face risks associated with clinical operations abroad, which may adversely affect our financial condition and results of operations, and we may not be able to receive conditional marketing or other approvals for lenzilumab in COVID-19 patients in markets outside the U.S.

Partners are conducting or planning to conduct clinical trials involving lenzilumab in the UK, Korea and Australia, as well as potentially in other countries in patients with COVID-19 and other indications. In addition, we are working to seek CMA for lenzilumab in hospitalized COVID-19 patients in the European Union and the United Kingdom. We have not received any authorization or approval to sell lenzilumab in any country but would expect to commence commercial operations, through a partner or on our own, only after such authorization or approval were received. As with our development programs in the U.S., our product candidates must be approved for marketing and sale by regulatory authorities in each jurisdiction to which we may apply for approval and, once approved, are subject to extensive regulation by regulatory agencies in other countries. We anticipate that we may file for marketing approval in additional countries and for additional indications and products over the next several years. These and any future marketing applications we file may not be approved by the regulatory authorities on a timely basis, or at all. Even if marketing approval is granted for these products, there may be significant limitations on their use. We cannot state with certainty when or whether any of our product candidates under development will be approved by any foreign regulators or launched; whether we will be able to develop, license or acquire additional product candidates or products; or whether any products, once launched, will be commercially successful.

International operations involve risks that are different from those faced in the U.S. and would subject us to complex and frequently changing laws and regulations, including differing labor laws, such as the United Kingdom (“UK”) Modern Slavery Act. In addition, operations abroad are accompanied by certain financial, political, economic and other risks, including those listed below:

Other risks inherent in conducting foreign operations include:

If we were to encounter any of these risks, our foreign operations may be adversely affected, which could have an adverse effect on our overall business and results of operations.

If we fail to attract and retain key management and clinical development personnel, or if the attention of such personnel is diverted, we may be unable to successfully manage our business and develop or commercialize our product candidates.

We will need to effectively manage our managerial, operational, financial, and other resources in order to successfully pursue our clinical development and commercialization efforts. As a company with a limited number of personnel, we are heavily affected by turnover and highly dependent on the expertise of the members of our senior management team,management. If we are unable to provide competitive compensation to these employees, it may be difficult to retain them. For 2021, the Board of Directors froze the salary levels of all but one employee who was promoted and did not award any cash bonuses for 2021 performance, opting instead to grant options to employees to purchase shares of common stock in particularsatisfaction of amounts earned under the Company's 2021 annual incentive plan. There can be no assurance that these decisions will not have a negative impact on the retention of our Chief Executive Officer, Dr. Cameron Durrant, and Dr. Dale Chappell, the controlling owner of the Black Horse Entities and our current ex-officio chief scientific officer.employees. Furthermore, we rely on third party consultants for a variety of services. We cannot predict the impact of the loss of such individuals or the loss of services of any of our other senior management, should they occur, or the difficulty in replacing such individuals. Such losses could delay or prevent the further development and potential commercialization of our product candidates and, if we are not successful in finding suitable replacements, could harm our business.

Any product candidate we or any future development partner may advance into clinical trials may cause unacceptable adverse events or have other properties that may delay or prevent its regulatory approval or commercialization or limit its commercial potential.

Unacceptable adverse events caused by any of our product candidates that we advance into clinical trials could cause us or regulatory authorities to interrupt, delay, or halt clinical trials and could result in the denial of regulatory approval by FDA or other regulatory authorities for any or all targeted indications and markets. This in turn could prevent us from completing development or commercializing the affected product candidate and generating revenue from its sale.

We have not yet successfully completed testing of any of our product candidates for the treatment of the indications for which we intend to seek approval in humans, and we currently do not know the extent of adverse events, if any, that will be observed in individuals who receive any of our product candidates. If any of our product candidates cause unacceptable adverse events in clinical trials, we may not be able to obtain regulatory approval or commercialize such product candidates.

If our competitors develop similar or comparable treatments for the target indications of our product candidates that are approved more quickly, marketed more successfully or are demonstrated to be safer or more effective than our product candidates, or if FDA approves generic or biosimilar competitors to our products post-approval, our commercial opportunity will be reduced or eliminated.

We compete in an industry characterized by rapidly advancing technologies, intense competition, a changing regulatory and legislative landscape and a strong emphasis on the benefits of intellectual property protection and regulatory exclusivities. Our competitors include pharmaceutical companies, other biotechnology companies, academic institutions, government agencies and other private and public research organizations. We compete with these parties in immunotherapy and oncology treatments and in recruiting highly qualified personnel. Our product candidates, if successfully developed and approved, may compete with established therapies, with new treatments that may be introduced by our competitors, including competitors relying on our biologics approvals under section 351(k) of the Public Health Service Act, or with generic copies of our products approved by FDA under an abbreviated new drug application (“ANDA”), referencing our drug products. We believe that competitors are actively developing competing products to our product candidates. See “Competition” in the “Business” section of this Annual Report on Form 10-K“Item 1. Business—Competition” for a discussion of competition with respect to our current product candidates.

Many of our competitors and potential competitors have substantially greater scientific, research, and product development capabilities, as well as greater financial, marketing, sales and human resources capabilities than we do. In addition, many specialized biotechnology firms have formed collaborations with large, established companies to support the research, development and commercialization of products that may be competitive with ours. Accordingly, our competitors may be more successful with respect to their products than we may be in developing, commercializing, and achieving widespread market acceptance for our products. If a competitor obtains approval for an orphan drug that is the same drug or the same biologic as one of our candidates before we do, we will be blocked from obtaining FDA approval for seven years from the date of the competitor’s product, unless we can establish that our product is clinically superior to the previously-approved competitor’s product or we can meet another exception, such as by showing that the competitor has failed to provide an adequate supply of its product to patients after approval. In addition, our competitors’ products may be more effective or more effectively marketed and sold than any treatment we or our development partners may commercialize and may render our product candidates obsolete or non-competitive before we can recover the expenses related to developing and supporting the commercialization of any of our product candidates. Developments by competitors may render our product candidates obsolete or noncompetitive. After one of our product candidates is approved, FDA may also approve a generic version with the same dosage form, safety, strength, route of administration, quality, performance characteristics and intended use as our product. These generic equivalents would be less costly to bring to market and could generally be offered at lower prices, thereby limiting our ability to gain or retain market share.

The acquisition or licensing of pharmaceutical products is also very competitive, and a number of more established companies, which have acknowledged strategies to in-license or acquire products, may have competitive advantages as may other emerging companies taking similar or different approaches to product acquisitions. The more established companies may have a competitive advantage over us due to their size, cash flows, institutional experience and historical corporate reputation.

We are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our products.products and rely completely on third parties to manufacture drug product, which could adversely impact our business.

WeThe process of manufacturing our products is complex, costly, highly regulated, and subject to several risks. As such, we have no present plan or intention of developing in-house manufacturing capabilities for nonclinical, clinical or commercial scale production, and are and will for the foreseeable future continue to be, wholly dependent on third party contract manufacturers for the timely supply of adequate quantities of our products which meet or exceed requisite quality and production standards for use in clinical and nonclinical studies. GivenOur dependence on CMOs increases our manufacturing risks, including the extensive risks, scope, complexity, cost, regulatory requirementspossible breach of the manufacturing agreement by the CMO, the possible cancellation, delay or modification of contracted manufacturing slots by the CMO, or the termination or nonrenewal of the agreement by the CMO at a time that is costly or inconvenient for us, and commitment of resources associated with developing the capabilitiescould adversely affect our ability to manufacture one or more ofdevelop and commercialize our products, we have no present plan or intention of developing in-house manufacturing capabilities for nonclinical, clinical or commercial scale production, beyond our current supervision and management of our third-party contract manufacturers.product candidates on a timely basis. In addition, in order to balance risk and conserve financial and human resources, we have and may continue from time to timetime-to-time to defer commitment to production of product, which could result in delays to the continued progress of our clinical and nonclinical testing.

In addition to the foregoing, the process of manufacturing our products is complex, highly regulated and subject to several risks, including but not limited to the following:

We, and our CMOs, must comply with extensive Good Manufacturing Practices (“cGMP”) regulations and are subject to inspections by FDA and comparable agencies in other jurisdictions to confirm compliance with applicable regulatory requirements. If, as a result of these inspections, a regulatory authority determines that the equipment, facilities, laboratories or processes do not comply with applicable regulations and conditions of product approval, the regulatory authority may suspend the manufacturing operations. Suppliers of key components and materials must also be named in the EUA, BLA or other marketing authorization application filed with the regulatory authority for any product candidate for which we are seeking marketing approval, and significant delays can occur if the qualification of a new supplier is required. Foreign agencies have not inspected the Catalent site in Madison, WI. This site is the primary source of BDS for lenzilumab.

We, and our CMOs, may encounter difficulties in achieving quality control and quality assurance and may experience shortages in qualified personnel. Any failure to follow cGMP or other regulatory requirements or any delay, interruption or other issues that arise in the manufacture, fill-finish, packaging, or storage of our products as a result of a failure of our or our CMOs’ facilities, could significantly impair our ability to develop and commercialize our products, including leading to significant delays in the availability of products for our clinical studies or the termination or hold of a clinical study, or the delay or prevention of a filing or approval of marketing applications for our product candidates. Further, we may have to pay the costs of manufacturing any batch produced by a CMO that fails to pass quality inspection or meet regulatory approval.

Significant noncompliance with manufacturing regulations could also result in the imposition of sanctions, including injunctions, civil penalties, failure of regulatory authorities to grant marketing approvals for our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions, adverse publicity, and criminal prosecutions, any of which could damage our reputation. If we are not able to maintain regulatory compliance, we may not be permitted to market our products and/or may be subject to product recalls, seizures, injunctions, or criminal prosecution. Any adverse developments affecting manufacturing operations for our products may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other interruptions in the supply of our products. Once our product candidates are approved, we may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives.

As is the case with MHRA, we are required to provide information from the PPQ runs at certain CMOs. It is our belief that lenzilumab manufactured at CMOs that have not completed PPQ will not be available for commercial sale in the UK. Historically, FDA provided guidance that we would not have to complete PPQ at all of our CMOs and that we could rely on compatibility reports to sell product under EUA. We believe EMA may require PPQ information similar to the requirements from MHRA. We do not know if FDA’s position on the PPQ requirement has changed. If FDA requires similar PPQ information, our ability to commercialize a significant amount of the lenzilumab produced to date will be limited.

In addition, the manufacturing facilities in which our products are made could be adversely affected by equipment failures, plant closures, capacity constraints, competing customer priorities or changes in corporate strategy or priorities, process changes or failures, changes in business models or operations, materials or labor shortages, natural disasters, power failures and numerous other factors.

Our third-party manufacturers are independent entities subject to their own unique operational and financial risks that are out of our control. Additionally, our third-party manufacturers may only be able to produce some of our products at one or a limited number of facilities and, therefore, we have limited manufacturing capacity for certain products, and we may not be able to locate additional or replacement facilities on a reasonable basis or at all. Our sales of such products could also be adversely impacted by our reliance on such limited number of facilities. To the extent these risks materialize and affect their performance obligations to us, our financial results may be adversely affected.

In addition, we, our third-party suppliers and our CMOs have experienced disruptions in supply of product candidates and/or procuring items that are essential for our research, development and manufacturing activities, including raw materials and components used in the manufacturing of our product candidates for which there have been shortages because of ongoing efforts to address the COVID-19 pandemic. These delays have impacted our overall manufacturing supply chain operations to date, and while we continue to explore back up or alternative sources of supply, any future disruption in the supply chain from the COVID-19 outbreak, or any continued outbreak, could have a material adverse impact on our clinical trial plans, manufacturing activities and business operations.

If any product candidate that we successfully develop does not achieve broad market acceptance among physicians, patients, healthcare payers and the medical community, the revenue that it generates may be limited.

Even if our product candidates receive regulatory approval, they may not gain market acceptance among physicians, patients, healthcare payers, and the medical community. Coverage and reimbursement of our product candidates by third-party payers, including government payers, generally is also necessary for commercial success. The degree of market acceptance of any approved product candidates will depend on a number ofseveral factors, including:

If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payers, and patients, we may not generate sufficient revenue from that product candidate and may not become or remain commercially attractive as a standalone indication for that product.

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 profitably.

Market acceptance and sales of our product candidates will depend significantly on the availability of adequate insurance coverage and reimbursement from third-party payers for any of our product candidates and may be affected by existing and future health care reform measures. Government authorities and third-party payers, such as private health insurers and health maintenance organizations, decide which drugs they will pay for and establish reimbursement levels. Reimbursement by a third-party payer may depend upon a number of factors including the third-party payer’s determination that use of a product candidate is:

Obtaining coverage and reimbursement approval for a product candidate from a government or other third-party payer is a time-consuming and costly process that could require us to provide supporting scientific, clinical, and cost effectiveness data for the use of our product candidates to the payer. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. We cannot be sure that coverage or adequate reimbursement will be available for any of our product candidates. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our product candidates. If reimbursement is not available or is available only to limited levels or with restrictions, we may not be able to commercialize certain of our product candidates profitably, or at all, even if approved.

In the U.S. and in certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could affect our ability to sell our product candidates profitably. In particular, the Medicare Modernization Act of 2003 revised the payment methods for many product candidates under Medicare. This has resulted in lower rates of reimbursement. There have been numerous other federal and state initiatives designed to reduce payment for pharmaceuticals.

As a result of legislative proposals and the trend toward managed health care in the U.S., third-party payers are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new drugs. They may also refuse to provide coverage of approved product candidates for medical indications other than those for which FDA has granted market approvals. As a result, significant uncertainty exists as to whether and how much third-party payers will reimburse patients for their use of newly approved drugs, which in turn will put pressure on the pricing of drugs. We could be subject to pricing pressures in connection with the sale of our product candidates due to the trend toward managed health care, the increasing influence of health maintenance organizations, and additional legislative proposals as well as country, regional, or local healthcare budget limitations.

Similar concerns about the costs of treatment have been raised in Europe and the United Kingdom, where the cost effectiveness ofCAR-T therapies have been an impediment to utilization of Kymriah and Yescarta. If CAR-T companies are not able to convince regulators and payers in national healthcare systems that the benefits of a CAR-T therapy outweigh its costs, the market for lenzilumab might not develop.

If we are unable to establish sales and marketing capabilities or fail to enter into agreements with third parties to market and sell any product candidates we may successfully develop, we may not be able to effectively market and sell any such product candidates.

We do not currently have the sales and marketing infrastructure in place that would be necessary to sell and market products. As our drug candidates progress, while we may build the infrastructure that would be needed to successfully market and sell any successful drug candidate, we currently anticipate seeking strategic alliances and partnerships with third parties, particularly for any drug candidates that we determine would require larger sales efforts. The establishment of a sales and marketing operation can be expensive and time consuming and could delay any product candidate launch.

Governments may impose price controls, which may adversely affect our future profitability.

We intend to seek approval to market our future product candidates in the U.S. and potentially in foreign jurisdictions. If we obtain approval in one or more foreign jurisdictions, we will be subject to rules and regulations in those jurisdictions relating to our product candidates. In some foreign countries, particularly in the European Union, the pricing of prescription pharmaceuticals and biologics is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product candidate. If reimbursement of our future products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability.Kingdom.

We face potential product liability exposure and, if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization.

The use of our product candidates in clinical trials and the sale of any product candidates for which we may obtain marketing approval expose us to the risk of product liability claims. Product liability claims may be brought against us or any future development partners by participants enrolled in our clinical trials, patients, health care providers, or others using, administering, or selling our product candidates. If we cannot successfully defend ourselves against any such claims, or have insufficient insurance protection, we would incur substantial liabilities. Regardless of merit or eventual outcome, product liability claims may result in:

We have obtained limited product liability insurance coverage for our clinical trials domestically and in selected foreign countries where we are conducting clinical trials. As such, our insurance coverage may not reimburse us or may not be sufficient to reimburse us for anyall expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to product liability. We intend to expand our insurance coverage for product candidates to include the sale of commercial products if we obtain marketing approval for our product candidates in development; however, we may be unable to obtain commercially reasonable product liability insurance for any product candidates approved for marketing. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side-effects.side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our working capital and adversely affect our business.

Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities.

We do not carry insurance for all categories of risk that our business may encounter. Some of the policies we currently maintain include general liability, employment practices liability, property, auto, workers’ compensation, products liability, and directors’ and officers’ insurance. We do not know, however, if we will be able to maintain existing insurance with adequate levels of coverage. Any significant, uninsured liability may require us to pay substantial amounts, which would adversely affect our working capital and results of operations.

Our employees and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees or consultants could include intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, failure to provide accurate information to FDA or comparable foreign regulatory authorities, failure to comply with manufacturing standards, failure to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, failure to report financial information or data accurately, violations of anti-bribery laws, or failure to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee or consultant misconduct could also involve the improper use of confidential information obtained in the course of our business, which could result in civil or criminal legal actions, regulatory sanctions, or serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics and other corporate policies, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity 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. 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 and results of operations, including the imposition of significant fines or other sanctions.

We may encounter difficulties in managing our growth and expanding our operations successfully.

As we seek to advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, marketing, and sales capabilities, and contract with third parties to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various development partners, suppliers, and other third parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend in part on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively. We may not be able to accomplish these tasks and our failure to accomplish any of them could prevent us from successfully growing our company. 

We and any current or future development partners, third-party manufacturers and suppliers may use hazardous materials, and any claims relating to improper handling, storage, or disposal of these materials could be time consuming or costly.

We and any current or future development partners, third-party manufacturers and suppliers may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety or the environment. Our operations and the operations of our development partner,partners, third-party manufacturers and suppliers also produce hazardous waste products. Federal, state, and local laws and regulations govern the use, generation, manufacture, storage, handling, and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive and current or future environmental laws and regulations may impair our product development efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. We do not carry specific biological or hazardous waste insurance coverage and our property, casualty, and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.

Our internal computer systems,Legislative or those of our current or future development partners, third-party clinical research organizations or other contractors or consultants,regulatory healthcare reforms in the U.S. may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Despite the implementation of security measures, our internal computer systemsmake it more difficult and those of our development partners, third-party clinical research organizations and other contractors and consultants are vulnerablecostly for us to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. While we have not experienced any such system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs. For example, the loss of clinical trial data for anyobtain regulatory approval of our product candidates and to produce, market, and distribute our products after approval is obtained.

From time-to-time, legislation is drafted and introduced in Congress that could result in delays in oursignificantly change the statutory provisions governing the regulatory approval, effortsmanufacture, and marketing of regulated products or the reimbursement thereof. In addition, FDA regulations and guidance are often revised or reinterpreted by FDA in ways that may significantly increaseaffect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs to recover or reproduce the data. To the extent that any disruption or security breach results in a losslengthen review times of or damage to our data or applications or other data or applications relating to our technology orcurrent product candidates or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of ourany future product candidates could be delayed.

Healthcare reform measures, when implemented, could hinder or prevent our commercial success.

candidates. There have been, and likely will continue to be, legislative and regulatory proposals at the federal and state levels directed at broadening the availability of health care and containing or lowering the overall cost of health care. 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 payers of healthcare services to contain or reduce costs of health care may adversely affect:

In addition, such changes could, among other things, require:

Each of these would likely entail substantial time and cost and could materially harm our business and our financial results. In addition, delays in receipt of or failure to receive regulatory approvals for any future products would harm our business, financial condition, and results of operations.

We and any of our current or future development partners will be required to report to regulatory authorities if any of our approved products cause or contribute to adverse medical events, and any failure to do so would result in sanctions that would materially harm our business.

If we and any future development partners are successful in commercializing our products, FDA and foreign regulatory authorities would require that we and any future development partners report certain information about adverse medical events if those products may have caused or contributed to those adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We and any future development partners may fail to report adverse events we become aware of within the prescribed timeframe. We and any future development partners may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products. If we and any future development partners fail to comply with our reporting obligations, FDA or a foreign regulatory authority could take action including criminal prosecution, the imposition of civil monetary penalties, seizure of our products, or delay in approval or clearance of future products.

Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.