[8-K] Obsidian Therapeutics, Inc. Reports Material Event
Filing Explained
The completed merger issued 61,727,211 shares, with PIPE investors receiving 47.2% of the combined company and resale registration still to come.
Obsidian Therapeutics’s Form 8-K, which reports specified material events, discloses that the mergers with Galera Therapeutics and the related financing were completed on
The transaction issued approximately
The PIPE was a private placement of Series C preferred stock with an aggregate purchase price of
The filing also establishes future equity capacity through an initial reserve of 7,494,541 shares under the 2026 Equity Incentive Plan and 749,464 shares under the employee stock purchase plan, subject to the plans’ stated increases. The immediate follow-up items are the resale-registration filing within 30 calendar days and the expected Nasdaq trading start on
8-K Event Classification
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Explanatory Note
On August 3, 2026 (the “Closing Date”), Obsidian Therapeutics, Inc., a Delaware corporation (formerly known as Gazelle Parent, Inc.) (the “Parent”), completed the previously announced Mergers (as defined below) pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated April 14, 2026, by and among Parent, Obsidian Therapeutics Sub, Inc. (formerly known as Obsidian Therapeutics, Inc.), a Delaware corporation (“Legacy Obsidian”), Onyx MergerSub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Parent (“Obsidian Merger Sub”) Galera Therapeutics, Inc. (“Legacy Galera”) and Gazelle Merger Subsidiary, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Parent (“Galera Merger Sub”). On the Closing Date, pursuant to the Merger Agreement and on the terms and conditions set forth therein, (a) Obsidian Merger Sub merged with and into Legacy Obsidian, pursuant to the provisions of the General Corporation Law of the State of Delaware, as amended (the “DGCL”), with Legacy Obsidian as the surviving entity (the “Obsidian Merger”) and (b) immediately following the Obsidian Merger, Galera Merger Sub merged with and into Legacy Galera pursuant to the DGCL, with Legacy Galera as the surviving entity (the “Galera Merger”, and together with the Obsidian Merger, the “Mergers”).
As used in the descriptions below, “Legacy Obsidian” refers to Obsidian Therapeutics, Inc., a Delaware corporation, prior to the consummation of the Obsidian Merger and a current wholly owned subsidiary of Parent; “Parent” refers to Obsidian Therapeutics, Inc., a Delaware corporation, following the consummation of the Obsidian Merger; “Legacy Parent” refers to Gazelle Parent, Inc., a Delaware corporation, prior to the consummation of the Mergers; and “Legacy Galera” refers to Galera Therapeutics, Inc., a Delaware corporation, prior to the consummation of the Galera Merger and a current wholly owned subsidiary of Parent.
All defined terms used in this Current Report on Form 8-K that are not otherwise defined herein have the meanings ascribed to such terms in the Merger Agreement.
| Item 1.01. | Entry into a Material Definitive Agreement. |
As a result of the consummation of the Mergers (as defined in Item 2.01 of this Current Report on Form 8-K), the following agreements of our wholly owned subsidiaries, Obsidian Therapeutics Sub, Inc. (formerly known as Obsidian Therapeutics, Inc.) and Galera Therapeutics, Inc., a Delaware corporation (formerly known as Gazelle Merger Subsidiary, Inc.), effectively became our agreements.
Securities Purchase Agreement
Concurrently with entering into the Merger Agreement, on April 14, 2026, Legacy Parent and Legacy Galera entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain qualified institutional buyers and/or accredited investors (the “Investors”). Pursuant to the Securities Purchase Agreement, and subject to the terms and conditions therein, the Investors agreed to purchase, and Legacy Galera agreed to issue and sell, immediately prior to the effective time of the Obsidian Merger (the “Obsidian Effective Time”), shares of Legacy Galera’s Series C Non-Voting Convertible Preferred Stock, par value $0.001 per share (“Series C Preferred Stock”), for an aggregate purchase price of $350.0 million (the “Concurrent PIPE Financing”).
The foregoing description of the Securities Purchase Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, a copy of which is filed hereto as Exhibit 10.1 and is incorporated herein by reference.
Registration Rights Agreement
In connection with the Concurrent PIPE Financing, Legacy Galera, Legacy Parent and the investors in the Concurrent PIPE Financing entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which, among other things, Parent agreed to register for resale certain shares of common stock of Parent, par value $0.001 per share (“Parent Common Stock”) held by such Investors from time to time, including shares of Parent Common Stock issued in the Mergers in exchange for the shares of common stock, par value $0.001 per share, of Legacy Galera (“Legacy Galera Common Stock”) issued in the Concurrent PIPE Financing.
Pursuant to the Registration Rights Agreement, Parent is obligated to prepare and file a shelf registration statement covering the resale of covered shares of Parent Common Stock within thirty (30) calendar days following the closing of the Mergers, subject to certain exceptions, pursuant to Rule 415 of the Securities Act of 1933, as amended (“Securities Act”). Parent also agreed to use reasonable best efforts to keep such registration statement continuously effective under the Securities Act until the earlier of the date that all registrable securities covered by such registration statement (a) have been declared effective by the SEC or (b) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for us to be in compliance with the current public information requirement under Rule 144. The Registration Rights Agreement also provides that we will pay certain expenses of the securityholders and indemnify the applicable securityholders against certain liabilities.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, a copy of which is filed hereto as Exhibit 10.2 and is incorporated herein by reference.
Contingent Value Rights Agreement
On August 3, 2026, in connection with the consummation of the Mergers, Legacy Parent and Legacy Obsidian entered into a Contingent Value Rights Agreement (the “CVR Agreement”) with Equiniti Trust Company, LLC (the “Rights Agent”), pursuant to which stockholders of Legacy Galera of record as of July 31, 2026 will receive (1) one contingent value right, (each a “CVR”), for each outstanding share of Legacy Galera Common Stock held by such stockholder on such date, representing the right to receive a pro rata portion of 80% of any potential future net proceeds received by Parent or its affiliates from the development, commercialization, licensing, sale or other disposition of the Legacy Product (as defined in the CVR Agreement), or related intellectual property during the five years following the closing and (2) one CVR for each outstanding share of Legacy Galera Common Stock held by such stockholder on such date, representing the right to receive a pro rata portion of 95% of any potential future net proceeds received by Parent or its affiliates from the Supportive-Care Product Divestiture (as defined in the CVR Agreement) during the ten years following the closing.
The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent for subsequent distribution to the holders of the CVRs. There can be no assurance that any holders of CVRs will receive payments with respect thereto.
The right to the contingent payments contemplated by the CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the CVR Agreement. The CVRs will not be evidenced by a certificate or any other instrument and are not registered with the U.S. Securities and Exchange Commission (the “SEC”). The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in us or any of our affiliates. No interest will accrue on any amounts payable in respect of the CVRs.
The foregoing description of the CVR Agreement does not purport to be complete and is qualified in its entirety by the full text of the CVR Agreement, a copy of which is filed hereto as Exhibit 10.4 and is incorporated herein by reference.
Lock-Up Agreements
In connection with the closing of the Mergers, Parent entered into lock-up agreements with certain stockholders, directors and executive officers of Legacy Obsidian, including Madan Jagasia, Peter Barrett, Maria Fardis, Julie Feder, Heidi Hagen, Robert Ross, Matthew Norkunas, Parameswaran Hari and Dana Alexander, which restrict transfer of their shares (other than any shares acquired in the Concurrent PIPE Financing) for a period of 180 days following the Closing Date of the Mergers, subject to certain limited exceptions.
The foregoing description of the lock-up agreements does not purport to be complete and is qualified in its entirety by the full text of the form of lock-up agreement, which is filed hereto as Exhibit 10.3 and incorporated herein by reference.
Indemnification Agreements
In connection with the closing of the Mergers, on August 3, 2026, Parent entered into indemnification agreements with each director and executive officer of Legacy Parent that provide for indemnification of certain expenses (including attorneys’ fees), judgments, fines, settlement amounts and costs reasonably incurred in any action or proceeding arising from each individual’s service as an officer or status as a director of our company, as applicable, to the maximum extent permitted by applicable law.
The foregoing description of the indemnification agreements is qualified in its entirety by the full text of the forms of indemnification agreement, which are filed hereto as Exhibits 10.5 and 10.6 and incorporated herein by reference.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
The information set forth in the Explanatory Note of this Current Report on Form 8-K is incorporated herein by reference.
Parent is a clinical-stage biopharmaceutical company harnessing novel protein-regulation technology to develop engineered tumor-infiltrating lymphocyte cell therapies. Effective at 8:30 a.m. eastern time on August 3, 2026, the parties to the Merger Agreement consummated the Mergers, and effective at 4:39 p.m. eastern time on July 31, 2026, our company changed its name from “Gazelle Parent, Inc.” to “Obsidian Therapeutics, Inc.”
In accordance with the terms and subject to the conditions of the Merger Agreement:
| (a) | at the Obsidian Effective Time, following the conversion into Legacy Obsidian Common Stock (as defined below) of Legacy Obsidian’s preferred stock, as well as certain outstanding Banc of California warrants, each then-outstanding share of common stock of Legacy Obsidian (the “Legacy Obsidian Common Stock”) (excluding Legacy Obsidian Common Stock held by stockholders who have exercised and perfected appraisal rights for such shares) converted into the right to receive a number of shares of Parent Common Stock calculated in accordance with the Merger Agreement, in each case, based on an exchange ratio of 0.1383 (the “Obsidian Exchange Ratio”). Each then-outstanding option to purchase shares of Legacy Obsidian Common Stock was assumed by Parent and converted into an option to acquire shares of Parent Common Stock on the same terms and conditions, with the number of shares and exercise price adjusted to reflect the Obsidian Exchange Ratio. |
| (b) | immediately following the Obsidian Effective Time, at the effective time of the Galera Merger (the “Galera Effective Time”) and following the conversion into Legacy Galera Common Stock of Legacy Galera’s Series C Preferred Stock issued in connection with the Concurrent PIPE Financing, each then-outstanding share of Legacy Galera Common Stock (excluding any shares of Legacy Galera Common Stock held by stockholders who have exercised and perfected appraisal rights for such shares) converted into the right to receive a number of shares of the Parent Common Stock calculated in accordance with the Merger Agreement, in each case, based on an exchange ratio of 0.7019 (the “Galera Exchange Ratio”). Each then-outstanding option and pre-funded warrant to purchase shares of Legacy Galera Common Stock with an exercise price per share less than the closing trading price of a share of Legacy Galera Common Stock, on the last full trading day on which the Legacy Galera Common Stock was traded prior to the date on which the Galera Effective Time occurred converted into shares of Parent Common Stock, on a “net exercise” basis and subject to adjustment as set forth in the Merger Agreement. Each outstanding option to purchase shares of Galera Common Stock with an exercise price equal to or greater than such closing trading price was cancelled for no consideration; and |
| (c) | immediately prior to the Galera Effective Time, each outstanding pre-funded warrant to purchase shares of Galera Common Stock was exercised in accordance with its terms and the resulting shares of Galera Common Stock were converted into the right to receive shares of Parent Common Stock based on the Galera Exchange Ratio. Outstanding Galera Terminable Warrants were terminated in accordance with their terms. Outstanding Galera Exchangeable Warrants remained outstanding and became warrants exercisable for shares of Parent Common Stock pursuant to their terms. |
The Mergers are intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).
At the effective time of the Mergers, we issued an aggregate of approximately (i) 31,831,595 shares of Parent Common Stock to Legacy Obsidian securityholders, (ii) 730,057 shares of Parent Common Stock to Legacy Galera securityholders, and (iii) 29,165,559 shares of Parent Common Stock to investors in the Concurrent PIPE Financing, resulting in approximately 61,727,211 shares of Parent Common Stock being issued and outstanding immediately following the effective time of the Mergers.
Under the Obsidian Exchange Ratio and Galera Exchange Ratio formulas in the Merger Agreement, immediately following the effective time of the Mergers, the (i) Legacy Obsidian securityholders owned approximately 51.6% of the outstanding shares of the combined company’s common stock, (ii) Legacy Galera securityholders owned approximately 1.2% of the outstanding shares of the combined company’s common stock and (iii) investors in the Concurrent PIPE Financing owned approximately 47.2% of the combined company’s common stock.
Upon closing of the Mergers, we assumed the Legacy Obsidian 2016 Stock Option and Grant Plan (the “Legacy Obsidian Plan”), and each outstanding and unexercised option to purchase Legacy Obsidian shares at such time, each of which converted into an option to purchase shares of Parent Common Stock, with necessary adjustments to the number of shares and exercise price to reflect the Obsidian Exchange Ratio. In addition, upon the closing of the Mergers, we assumed those certain warrants, dated as of February 17, 2023, to purchase Legacy Galera shares at such time, each of which converted into a warrant to purchase shares of Parent Common Stock, with necessary adjustments to the number of shares and exercise price to reflect the Galera Exchange Ratio.
We registered the issuance of Parent Common Stock to Legacy Obsidian securityholders and Legacy Galera securityholders in the Mergers on a registration statement on Form S-4, as amended (SEC File No. 333-295249) (the “Registration Statement”). We intend to register the issuance of Parent Common Stock to investors in the Concurrent PIPE Financing on a registration statement on Form S-1, covering the resale of the Parent Common Stock. For more information, reference the “Registration Rights Agreement” section in Item 1.01 above.
Effective July 30, 2026, Parent Common Stock was approved for trading on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “OBX,” represented by the CUSIP number, 67448A106. The Parent Common Stock is expected to commence trading on Nasdaq on August 4, 2026.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, a copy of which is filed hereto as Exhibit 2.1 and is incorporated herein by reference.
| Item 2.02. | Results of Operations and Financial Condition. |
The audited financial statements of Legacy Obsidian for the years ended December 31, 2025 and 2024 and the related notes thereto are included in the information statement/prospectus which formed a part of the Registration Statement, and are incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy Obsidian for the years ended December 31, 2025 and 2024 is filed as Exhibit 99.4 hereto and incorporated herein by reference.
| Item 3.02. | Unregistered Sales of Equity Securities. |
To the extent required by this Item 3.02, the information included in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 3.03. | Material Modification to Rights of Security Holders. |
The information set forth in the Explanatory Note and Items 1.01, 2.01, 5.01 and 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.
| Item 4.01. | Changes in Registrant’s Certifying Accountant. |
(b) Appointment of New Independent Registered Public Accounting Firm
On August 3, 2026, the Audit Committee recommended, and the Board subsequently approved, the engagement of KPMG LLP (“KPMG”) as the independent registered public accounting firm of the Parent to audit the consolidated financial statements of the Parent as of and for the year ended December 31, 2026. KPMG served as the independent registered public accounting firm of Legacy Obsidian since 2024.
| Item 5.01. | Changes in Control of Registrant. |
The information set forth in Item 2.01 of this Current Report on Form 8-K regarding the Mergers and the information set forth in Item 5.02 of this Current Report on Form 8-K regarding the board of directors of Parent (the “Board”) and executive officers following the Mergers are incorporated by reference into this Item 5.01.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Resignation of Directors
In accordance with the Merger Agreement, immediately prior to the Mergers, J. Mel Sorensen, M.D. and Julie Feder resigned from the Board and committees of the Board on which they respectively served, which resignations were not the result of any disagreements with our company relating to our operations, policies or practices.
Appointment of Directors
Effective upon the closing of the Mergers, on August 3, 2026, the Board was reconstituted as follows: Peter Barrett, Ph.D., Matthew Norkunas, M.D., M.B.A., Heidi Hagen, Madan Jagasia, M.D., M.S., Maria Fardis, Ph.D., M.B.A., and Robert Ross, M.D. (each designated by Legacy Obsidian). The classification of the Board was confirmed as follows:
Peter Barrett, Ph.D. was appointed as a Class I director (terms expire at our 2027 annual meeting), Matthew Norkunas, M.D., M.B.A. and Heidi Hagen were appointed as Class II directors (terms expire at our 2028 annual meeting), and Madan Jagasia, M.D., M.S., Maria Fardis, Ph.D, M.B.A, and Robert Ross, M.D. were appointed as Class III directors (terms expire at our 2029 annual meeting). In addition, Maria Fardis, Ph.D. was appointed Chairperson of the Board. Under the listing rules of Nasdaq (the “Nasdaq Listing Rules”), a majority of the members of the Board must qualify as “independent,” as affirmatively determined by the Board. Under the Nasdaq Listing Rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has determined that each of Dr. Ross, Dr. Fardis and Ms. Hagen qualify as “independent directors” as defined by the Nasdaq Listing Rules.
Each of the newly appointed directors’ biographical information is set forth below.
Madan Jagasia, M.D., M.S., has served as Legacy Obsidian’s Chief Executive Officer and a member of the Legacy Obsidian Board since January 2023. From August 2020 to January 2023, Dr. Jagasia served in various roles at Iovance Biotherapeutics, Inc. (Nasdaq: IOVA) (“Iovance”), a biopharmaceutical company, and most recently as Executive Vice President, Medical Affairs. Previously, Dr. Jagasia worked at Vanderbilt University Medical Center since 2001 in various roles and most recently as Chief Medical Officer and Executive Medical Director of the Vanderbilt-Ingram Cancer Center (“VICC”), where he co-led the Translational Research and Interventional Oncology Research Program at VICC. Dr. Jagasia holds a M.B.B.S. from the GS Medical College & KEM Hospital and an M.S. and a Master of Management in Health Care Management from Vanderbilt University. We believe Dr. Jagasia is qualified to serve on the Board because of his scientific and professional background and based on his current role as Chief Executive Officer.
Maria Fardis, Ph.D., M.B.A., is chairperson of Legacy Obsidian board of directors and has served as a member of the Legacy Obsidian board of directors since October 2021. Dr. Fardis has served as the Chief Executive Officer of AirNexus Therapeutics, a biotechnology company, since January 2026, and as a Venture Partner at Frazier Life Sciences Management, L.P., or Frazier, a healthcare investment firm, since September 2021. Dr. Fardis served as the Chief Executive Officer of Lassen Therapeutics, a biotechnology company, from April 2021 to January 2026. Dr. Fardis previously served as President and Chief Executive Officer of Iovance and as a member of its board of directors from June 2016 through June 2021. Dr. Fardis previously served as the Chief Operating Officer of Acerta Pharma B.V., a biopharmaceutical company, from January 2015 to March 2016. From April 2011 to December 2014, she worked at Pharmacyclics, Inc. (formerly Nasdaq: PCYC; acquired by AbbVie Inc.) in various roles and most recently served as Chief of Oncology Operations and Alliances. Prior to that, from 2001 to 2011, Dr. Fardis held increasingly senior positions in medicinal chemistry and project and portfolio management at Gilead Sciences, Inc. (Nasdaq: GILD). Dr. Fardis has served on the board of directors of CRISPR Therapeutics AG (Nasdaq: CRSP), a biopharmaceutical company, since June 2022. Dr. Fardis holds a B.S. in chemistry from the University of Illinois, Urbana-Champaign, a Ph.D. in Organic Chemistry from the University of California, Berkeley, and an M.B.A. from Golden Gate University. We believe Dr. Fardis is qualified to serve on the Board because of her experience as an executive in the life sciences industry, extensive experience in drug development, and strong scientific background.
Peter Barrett, Ph.D., has served as a member of the Legacy Obsidian board of directors since September 2015. Since 2002, Dr. Barrett has worked at Atlas Venture, an early-stage life sciences venture capital fund, and is a partner in the life sciences group, where he has been involved in the creation of several therapeutic and drug discovery platform companies. Previously, he was a co-founder, Executive Vice President and Chief Business Officer of Celera Genomics. Dr. Barrett has served as the Chairman of Synlogic, Inc. (Nasdaq: SYBX), a biotechnology company, since 2017 and on the board of directors of Revvity, Inc. (NYSE: RVTY), a life sciences and diagnostics company, since 2012. Dr. Barrett is also on the Advisory Council of the Blavatnik Fellowship program. Dr. Barrett previously served on the board of Larimar Therapeutics, Inc. (Nasdaq: LRMR), a biotechnology company, until 2023, and previously served on the board of Cadent Therapeutics (acquired by Novartis AG), Vitae Pharmaceuticals, Inc. (formerly Nasdaq: VTAE; acquired by Allergan PLC), Stromedix, Inc. (acquired by Biogen Idec), NovaMed Pharmaceuticals, Inc. (acquired by SciClone Pharmaceuticals, Inc.), Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), Harbour Antibodies BV (acquired by Harbour BioMed), Momenta Pharmaceuticals, Inc. (Nasdaq: MNTA), Sirion Therapeutics, Inc. (acquired by Alcon Inc. and Bausch + Lomb Corporation), and Archemix (acquired by Baxter International Inc.). In addition, Dr. Barrett is a board member of Nucleate, a student-run nonprofit organization representing the global community of bio-innovators. Dr. Barrett holds a B.S. in chemistry from Lowell Technological Institute (now known as the University of Massachusetts, Lowell) and a Ph.D. in analytical chemistry from Northeastern University. We believe Dr. Barrett is qualified to serve on the Board because of his extensive experience in the life sciences industry.
Heidi Hagen, M.B.A., has served as a member of the Legacy Obsidian board of directors since November 2021. Ms. Hagen has over 30 years of experience in the Biotechnology industry primarily as an operations executive. Ms. Hagen has served as a member of the board of directors of Vericel Corporation (Nasdaq: VCEL; formerly known as Aastrom Biosciences, Inc.), a biopharmaceutical company, since August 2013. Ms. Hagen also serves as a member of the board of directors of Dimension Bio, Applied StemCell, Inc., and A-Alpha Bio, Inc. She previously served as the Chief Technical Officer of Sonoma Biotherapeutics, Inc., a biotechnology company, from November 2021 to June 2023. Prior to that, Ms. Hagen served as the Interim Chief Executive Officer and member of the board of directors of Ziopharm Oncology, Inc. (formerly Nasdaq: ZIOP; now Alaunos Therapeutics, Inc.), a biopharmaceutical company, from 2019 to 2021. Ms. Hagen also co-founded Vineti, Inc., a software platform company for cell and gene therapy supply chain management, where she served as Advisor and Chief Strategy Officer from 2015 to 2021. Prior to those experiences, Ms. Hagen was Senior Vice President of Operations at Dendreon (2002 to 2012) where she oversaw the commercialization of the first active cellular therapy, Provenge. And, she held various operational and project management roles at Immunex Corporation from 1993 to 2002. Ms. Hagen holds a B.S. in cell biology, an M.S. in bioengineering, and an M.B.A. from the University of Washington. We believe Ms. Hagen is qualified to serve on the Board because of her significant leadership experience in the biopharmaceutical industry.
Matthew Norkunas, M.D., M.B.A., has served as a member of the Legacy Obsidian board of directors since April 2023. Since January 2025, Dr. Norkunas has served as the Chief Financial Officer and President of Tubulis, Inc., a biotechnology company. From July 2020 to January 2025, Dr. Norkunas served as the Chief Financial Officer of Generation Bio Co. (formerly Nasdaq: GBIO; acquired by XOMA Royalty Corporation), a genetics medicine company. Previously, Dr. Norkunas served as the Chief Financial Officer and Head of Corporate and Business Development at SomaLogic, Inc. (acquired by Illumina, Inc.), a protein biomarker discovery and clinical diagnostics
company, from February 2016 to June 2020. From July 2012 to January 2016, Dr. Norkunas served as a senior equity analyst at Marsico Capital Management, LLC, an investment company, where he served as the firm’s primary health care investment specialist. Dr. Norkunas began his career as a practicing anesthesiologist. Dr. Norkunas holds a B.A. from St. Mary’s College of Maryland, an M.D. from University of Maryland School of Medicine, and an M.B.A. from Columbia Business School. We believe Dr. Norkunas is qualified to serve on the Board because of his significant financial experience with biotechnology companies and clinical background.
Robert Ross, M.D., has served as a member of the Legacy Obsidian board of directors since September 2020. Since November 2023, Dr. Ross has served as the Chief Executive Officer of Clasp Therapeutics, Inc., a pharmaceutical company. Prior to that, Dr. Ross served as the Chief Executive Officer and a member of board of directors of Surface Oncology, Inc. (formerly Nasdaq: SURF; acquired by Coherus BioSciences, Inc.), an immuno-oncology company, from April 2021 until July 2023 and had previously served as the Chief Medical Officer from October 2016 to March 2021. Dr. Ross served as Head of Oncology at bluebird bio, Inc. (formerly Nasdaq: BLUE; now Genetix Biotherapeutics, Inc.) from October 2015 to October 2016, Senior Vice President of Clinical Development and Pharmacovigilance from January 2015 to October 2016, and Vice President of Clinical Development from October 2012 to January 2015. Prior to that, he worked at Infinity Pharmaceuticals, Inc. from October 2007 to October 2012. Dr. Ross was a Fellow in Medical Oncology and a faculty member at the Dana Farber Cancer Institute from July 2003 to August 2007, and then maintained a clinical practice at Dana Farber Cancer Institute from August 2007 to October 2015. Dr. Ross has served on the board of directors of Xilio Therapeutics, Inc. (Nasdaq: XLO), a biotechnology company, since June 2022. Dr. Ross holds a B.S. in Biological Sciences and a B.A. in Philosophy from Stanford University, an M.S. in Medical Science as part of the Clinical Investigator Training Program from Harvard Medical School, and an M.D. from Columbia University College of Physicians and Surgeons. He completed his residency training in Internal Medicine at the University of California, San Francisco. We believe that Dr. Ross is qualified to serve on the Board because of his extensive executive experience in the life science industry and clinical background.
Board Committees
Immediately after the closing of the Mergers, on August 3, 2026, the Board reconstituted its various standing committees as follows:
Audit Committee
Matthew Norkunas, M.D., M.B.A., Peter Barrett, Ph.D., and Maria Fardis, Ph.D. were appointed to the Audit Committee of the Board. Dr. Norkunas was appointed chair of the Audit Committee and designated as the “audit committee financial expert.”
Compensation Committee
Robert Ross, M.D., Maria Fardis, Ph.D., and Heidi Hagen were appointed to the Compensation Committee of the Board. Ms. Hagen was appointed chair of the Compensation Committee.
Nominating and Corporate Governance Committee
Heidi Hagen, Peter Barrett, Ph.D., and Robert Ross, M.D. were appointed to the Nominating and Corporate Governance Committee of the Board. Ms. Hagen was appointed chair of the Nominating and Corporate Governance Committee.
Non-Employee Director Compensation
Following the closing of the Mergers, each non-employee director will receive compensation for his or her service on the Board in accordance with our non-employee director compensation policy, which became effective upon the completion of the Mergers and provides for the following cash and equity retainers:
| • | an annual cash retainer of $40,000 for members of the Board (or $70,000 for the non-executive chair of the Board); |
| • | an additional annual cash retainer of $10,000 for service on the Audit Committee (or $20,000 for service as chair of the Audit Committee); |
| • | an additional annual cash retainer of $7,500 for service on the Compensation Committee (or $15,000 for service as chair of the Compensation Committee); |
| • | an additional annual cash retainer of $5,000 for service on the Nominating and Corporate Governance Committee (or $10,000 for service as chair of the Nominating and Corporate Governance Committee); and |
In addition, the non-employee director compensation policy provides that, upon initial election to the Parent Board, each non-employee director will be granted an initial stock option award to purchase a number of shares of Parent Common Stock equal to 0.122% of the total number of outstanding shares of Parent Common Stock on the date of grant (the “Initial Grant”). The Initial Grant will vest in equal monthly installments over three years following the date of grant, subject to continued service through the applicable vesting date. Furthermore, upon the closing of the Mergers and on the date of each annual meeting of stockholders following the completion of the Mergers, each non-employee director who is serving as a non-employee director as of the closing of the Mergers or who continues as a non-employee director following such meeting, as applicable, will be granted an annual stock option award to purchase a number of shares of Parent Common Stock equal to 0.061% of the total number of outstanding shares of Parent Common Stock on the date of grant (the “Annual Grant”). The Annual Grant will vest in full on the earlier of the first anniversary of the date of grant and Parent’s next annual meeting of stockholders, subject to continued service through the applicable vesting date. All outstanding awards granted to non-employee directors will become fully vested and exercisable upon a sale event, as defined in the Obsidian Therapeutics, Inc. 2026 Equity Incentive Plan (the “2026 Plan”).
The grant date fair value of all awards and all other cash compensation paid by Parent to any non-employee director during any one calendar year for services as a non-employee director may not exceed $750,000; provided, however, that such amount shall be $1,000,000 for the calendar year in which the applicable non-employee director is initially elected or appointed to the Parent Board. We will also reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending meetings of the Parent Board and committees thereof.
In connection with the closing of the Mergers, our directors received certain option grants as described below under “Closing Option Grants”.
Departure of Executive Officers
Immediately after closing of the Mergers, J. Mel. Sorensen resigned as the President and Principal Executive Officer and Joel Sussman resigned as the Treasurer and Principal Financial and Accounting Officer of Legacy Galera.
Appointment of Executive Officers
On July 31, 2026, the Board appointed Madan Jagasia as our Chief Executive Officer and principal executive officer, Julie Feder as our Chief Financial Officer and Principal Financial Officer and Principal Accounting Officer, Parameswaran Hari as our Chief Medical Officer, and Dana Alexander as our Chief Technical Officer.
There are no family relationships among any of our newly appointed executive officers. None of our newly appointed executive officers has a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Each of the newly appointed executive officers’ biographical information is set forth below.
Madan Jagasia, M.D., M.S. has served as Legacy Obsidian’s Chief Executive Officer and a member of the Board since January 2023. From August 2020 to January 2023, Dr. Jagasia served in various roles at Iovance Biotherapeutics, Inc. (Nasdaq: IOVA), or Iovance, a biopharmaceutical company, and most recently as Executive Vice President, Medical Affairs. Previously, Dr. Jagasia worked at Vanderbilt University Medical Center since 2001 in various roles and most recently as Chief Medical Officer and Executive Medical Director of the Vanderbilt-Ingram Cancer Center, or VICC, where he co-led the Translational Research and Interventional Oncology Research Program at VICC. Dr. Jagasia holds a M.B.B.S. from the GS Medical College & KEM Hospital and an M.S. and a Master of Management in Health Care Management from Vanderbilt University. We believe Dr. Jagasia is qualified to serve on the Board because of his scientific and professional background, and his familiarity with our company as Chief Executive Officer.
Julie Feder has served as Legacy Obsidian’s Chief Financial Officer since January 2026. Previously, from August 2018 to October 2024, she served as Chief Financial Officer of Aura Biosciences, Inc. (Nasdaq: AURA), a biopharmaceutical company. Previously, Ms. Feder served as Chief Financial Officer at Verastem, Inc. (Nasdaq: VSTM), a biopharmaceutical company, from July 2017 to June 2018. Prior to joining Verastem, Ms. Feder served as the Chief Financial Officer at the Clinton Health Access Initiative, Inc. from September 2011 to July 2017. Ms. Feder began her career at Deloitte & Touche LLP, where she was senior manager of Audit, Consulting and Enterprise Risk Services. Ms. Feder holds a B.S. in Accounting from Yeshiva University’s Sy Syms School of Business.
Parameswaran Hari, M.D., M.S. has served as Legacy Obsidian’s Chief Medical Officer since January 2023. Previously, Dr. Hari served as Senior Vice President, Clinical Science at Iovance from November 2021 to January 2023. Prior to Iovance, Dr. Hari was the Chief of Hematology and Oncology at the Medical College of Wisconsin from March 2017 to November 2021. Dr. Hari also served the American Society of Transplantation and Cellular Therapy as its Secretary. Dr. Hari holds a M.B.B.S. from Kerala University, an M.D. from Central University of Pondicherry, and an M.S. from the Medical College of Wisconsin.
Dana Alexander, M.B.A. has served as Legacy Obsidian’s Chief Technical Officer since April 2024. Previously, Mr. Alexander served as Senior Vice President of Technical Operations at AlloVir, Inc. (formerly Nasdaq: ALVR), a late-stage T cell therapy company, from September 2020 to April 2024. Prior to that, Mr. Alexander served as Vice President of Operations including Head of Business Operations, from January 2020 to September 2020 and Site General Manager, from January 2018 to January 2020 at Brammer Bio, now part of Thermo Fisher Scientific Inc. (NYSE: TMO). He also previously served as Chief Operations Officer at Anika Therapeutics, Inc. (Nasdaq: ANIK), a joint preservation company, and Senior Director of Manufacturing Operations at Genzyme, now part of Sanofi SA (Nasdaq: SNY), a global pharmaceutical company. Mr. Alexander holds a B.S. in Chemical Engineering from Northeastern University and an M.B.A. from Boston University.
Executive Employment Arrangements
Madan Jagasia, M.D., M.S. Executive Employment Agreement
In connection with the closing of the Mergers, Parent entered into an executive employment agreement with Dr. Jagasia for the position of Chief Executive Officer (the “Jagasia Employment Agreement”). Pursuant to the Jagasia Employment Agreement, Dr. Jagasia is eligible to receive an annual base salary of $638,200, subject to annual review and adjustment at our discretion and an annual cash incentive bonus, as determined by Parent’s Board, which bonus has a target of 55% of Dr. Jagasia’s base salary. Dr. Jagasia is eligible to participate in the employee benefit plans generally available to Parent’s employees, subject to the terms of those plans, and Severance Plan (as defined in the Severance Plan) as a Tier 1 Executive, as defined in the Severance Plan.
Dana Alexander, M.B.A. Executive Employment Agreement
In connection with the closing of the Mergers, Parent entered into an executive employment agreement with Mr. Alexander for the position of Chief Technical Officer (the “Alexander Employment Agreement”). Pursuant to the Alexander Employment Agreement, Mr. Alexander is eligible to receive an annual base salary of $461,480, subject to annual review and adjustment at our discretion and an annual cash incentive bonus, as determined by Parent’s Board, which bonus has a target of 40% of Mr. Alexander’s base salary. Mr. Alexander is eligible to participate in the employee benefit plans generally available to Parent’s employees, subject to the terms of those plans, and the Severance Plan as a Tier 2 Executive, as defined in the Severance Plan.
Parameswaran Hari, M.D., M.S. Executive Employment Agreement
In connection with the closing of the Mergers, Parent entered into an executive employment agreement with Dr. Hari for the position of Chief Medical Officer (the “Hari Employment Agreement”). Pursuant to the Hari Employment Agreement, Dr. Hari is eligible to receive an annual base salary of $538,167, subject to annual review and adjustment at our discretion and an annual cash incentive bonus, as determined by Parent’s Board, which bonus has a target of 40% of Dr. Hari’s base salary. Dr. Hari is eligible to participate in the employee benefit plans generally available to Parent’s employees, subject to the terms of those plans, and the Severance Plan as a Tier 2 Executive, as defined in the Severance Plan.
Executive Severance Plan
In connection with the Mergers, Parent has adopted an Executive Severance Plan (the “Severance Plan”), effective as of the Closing Date, in which the named executive officers and certain other employees will be eligible to participate.
The Severance Plan provides that upon a (i) termination of a named executive officer’s employment by Parent for any reason other than due to “cause,” death or “disability” or (ii) a named executive officer’s resignation for “good reason” (each as defined in the Severance Plan), in each case outside of the period beginning three months prior to and ending on the one-year anniversary of a “change in control” (as defined in the Severance Plan) (such period, the “Change in Control Period”), each named executive officer will be entitled to receive, subject to the execution and delivery of an effective and irrevocable separation agreement containing, among other things, a general release of claims in Parent’s favor and continued compliance with all applicable continuing obligations: (A) continued payment of the named executive officer’s base salary for 12 months following termination (such period, the “Severance Period”) and, for the Chief Executive Officer, a pro-rated target bonus and any earned but unpaid annual incentive compensation for the prior year; and (B) an amount equal to the employer portion of the monthly COBRA premium until the earliest of (x) the end of the Severance Period, (y) the date the named executive officer becomes eligible for group medical plan benefits under any other employer’s group medical plan or (z) the cessation of the named executive officer’s health continuation rights under COBRA.
The Severance Plan also provides that upon a (i) termination of a named executive officer’s employment by Parent other than for cause or due to death or disability or (ii) resignation by a named executive officer for good reason, in each case within the Change in Control Period, each named executive officer will be entitled to receive, in lieu of the payments and benefits above and subject to the execution and delivery of an effective and irrevocable separation agreement containing, among other things, a general release of claims in Parent’s favor and continued compliance with all applicable continuing obligations: (A) a lump sum amount equal to one times (or, in the case of the Chief Executive Officer, one and a half times) the sum of the named executive officer’s base salary and target annual bonus in effect immediately prior to the date of termination or immediately prior to the change in control, if higher; (B) any earned but unpaid annual incentive compensation for the prior year; (C) an amount equal to the employer portion of the monthly COBRA premium until the earliest of (x) 12 months (or, in the case of the Chief Executive Officer, 18 months) following termination of employment, (y) the date the named executive officer becomes eligible for group medical plan benefits under any other employer’s group medical plan or (z) the cessation of the named executive officer’s health continuation rights under COBRA; and (D) accelerated vesting of all outstanding and unvested equity awards held by the named executive officer that are subject solely to time-based vesting and, for the Chief Executive Officer, all vested stock options will remain exercisable until the earlier of six months following the date of termination and the original expiration date of the stock option.
Pursuant to Section 280G of the Code, Parent may not be eligible for a U.S. federal income tax deduction on the payments and benefits provided under the Severance Plan in connection with a change in control. These payments and benefits may also subject an eligible participant, including the named executive officers, to an excise tax under Section 4999 of the Code. If the payments or benefits payable in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to the eligible participant.
A more complete summary of the terms of the Severance Plan is included in the Registration Statement in the section titled “Executive Severance Plan.” That summary and the foregoing description of the Severance Plan are qualified in their entirety by reference to the full text of the Severance Plan, a copy of which is filed as Exhibit 10.11 to this Current Report on Form 8-K and incorporated herein by reference.
2026 Equity Incentive Plan
On June 30, 2026, the Board of Directors of Legacy Parent adopted and Legacy Parent’s sole stockholder approved the 2026 Plan, which became effective on the day immediately preceding the closing of the Mergers. The 2026 Plan allows Parent to make equity-based and cash-based incentive awards to officers, employees, non-employee directors and consultants. Parent’s Board of Directors (the “Parent Board”) anticipates that providing such persons with a direct stake in Parent will assure a closer alignment of the interests of such individuals with those of Parent and its stockholders, thereby stimulating their efforts on Parent’s behalf and strengthening their desire to remain with Parent.
The 2026 Plan will be administered by the compensation committee of the Parent Board or such other similar committee pursuant to the terms of the 2026 Plan. The plan administrator will have full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2026 Plan. The plan administrator may delegate to a subcommittee consisting of one or more members of the Parent Board, or a committee consisting of one or more officers of Parent, the authority to grant stock options and other awards to employees who are not subject to the reporting and other provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and not members of the delegated committee, subject to certain limitations and guidelines.
The total number of shares of Parent Common Stock initially reserved for issuance under the 2026 Plan is 7,494,541 shares (the “Initial Limit”). The 2026 Plan provides that the number of shares reserved and available for issuance under the 2026 Plan will automatically increase on January 1, 2027 and each January thereafter during the term of the 2026 Plan, by (i) 5% of the sum of (A) the number of shares of Parent Common Stock issued and outstanding on the immediately preceding December 31, (B) the number of shares of Parent preferred stock issued and outstanding on the immediately preceding December 31 and (C) the number of shares of Parent stock issuable pursuant to the exercise of any outstanding warrants to acquire such Parent Common Stock or Parent preferred stock on the immediately preceding December 31 (the “Outstanding Shares”), or (ii) such lesser number of shares as determined by Parent’s compensation committee (the “Annual Increase”). The number of shares of Parent Common Stock reserved for issuance under the 2026 Plan is subject to adjustment in the event of a stock split, stock dividend or other change in Parent’s capitalization.
A more complete summary of the terms of the 2026 Plan is included in the Registration Statement in the section titled “2026 Equity Incentive Plan.” That summary and the foregoing description of the 2026 Plan are qualified in their entirety by reference to the 2026 Plan, which is filed as an Exhibit 10.7 this Current Report on Form 8-K and incorporated herein by reference.
2026 Employee Stock Purchase Plan
The Obsidian Therapeutics, Inc. 2026 Employee Stock Purchase Plan (the “2026 ESPP”) was adopted by the Board of Directors of Legacy Parent and approved by Legacy Parent’s sole stockholder on June 30, 2026, and became effective on the date immediately preceding the closing of the Mergers. The 2026 ESPP will be administered by the person or persons appointed by the Parent Board and the administrator of the 2026 ESPP will have full authority to make, administer and interpret such rules and regulations regarding the 2026 ESPP as it deems advisable. It is intended that a component of the 2026 ESPP qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). All individuals classified as employees on the payroll records of Parent or a “designated company,” as defined in the 2026 ESPP, will be eligible to participate in the 2026 ESPP, provided that the administrator may determine, in advance of any offering, that such employees are eligible only if, as of the first day of the applicable offering (the “Offering Date”), (a) they are customarily employed by Parent or a designated company for more than (i) 20 hours a week or (ii) five months per calendar year, (b) they have completed a minimum period of service prior to the Offering Date (provided such service requirement does not exceed two years of employment) and/or (c) they are not highly compensated employees (within the meaning of Section 414(q) of the Code). No person who owns or holds, or as a result of participation in the 2026 ESPP would own or hold, Parent Common Stock or options to purchase Parent Common Stock, that together equal 5% or more of total combined voting power or value of all classes of stock of Parent or any parent or subsidiary of Parent is entitled to participate in the 2026 ESPP. No employee may exercise an option granted under the 2026 ESPP that permits the employee to purchase Parent Common Stock having a value of more than $25,000 (determined using the fair market value of the stock at the time such option is granted) in any calendar year.
The number of shares of Parent Common Stock initially reserved for issuance under the 2026 ESPP is 749,464 shares of Parent Common Stock (the “Initial ESPP Limit”). The 2026 ESPP provides that the number of shares reserved and available for issuance under the 2026 ESPP will automatically increase each January 1, beginning on January 1, 2027 and ending on January 1, 2036, by the least of (i) the Initial ESPP Limit, (ii) 1% of the Outstanding Shares on the immediately preceding December 31 and (iii) such number of shares of Parent Common Stock as determined by the 2026 ESPP administrator. If Parent’s capital structure changes because of a stock dividend, stock split or similar event, the number of shares that can be issued under the 2026 ESPP will be appropriately adjusted.
A more complete summary of the terms of the 2026 ESPP is included in the Registration Statement in the section titled “2026 Employee Stock Purchase Plan.” That summary and the foregoing description of the 2026 ESPP are qualified in their entirety by reference to the full text of the 2026 ESPP, a copy of which is filed as Exhibit 10.8 to this Current Report on Form 8-K and incorporated herein by reference.
Senior Executive Cash Incentive Bonus Plan
On June 22, 2026, the board of directors of Legacy Parent (the “Legacy Parent Board”) adopted the Senior Executive Cash Incentive Bonus Plan (the “Bonus Plan”). The Bonus Plan provides for cash bonus payments based upon Parent and individual performance targets established by Parent’s compensation committee. The performance targets will be related to financial or operational measures or objectives with respect to Parent (“Corporate Performance Goals”), as well as individual performance objectives.
Parent’s compensation committee may select Corporate Performance Goals from among the following: research and development, publication, clinical, and/or regulatory milestones; revenue; corporate revenue; earnings before interest, taxes, depreciation, and amortization; net income (loss) (either before or after interest, taxes, depreciation, and/or amortization); changes in the market price of Parent Common Stock; economic value-added; acquisitions or strategic transactions, including licenses, collaborations, joint ventures, or promotion arrangements; financing or other capital raising transactions; operating income (loss); return on capital, assets, equity, or investment; stockholder returns; return on sales; gross or net profit levels; productivity; expense efficiency; margins; operating efficiency; customer satisfaction; working capital; earnings (loss) per share of Parent Common Stock; sales or market shares; number of prescriptions or prescribing physicians; coverage decisions; leadership development, employee retention and recruiting, and other human resources matters; operating income; and/or net annual recurring revenue; or any other performance goal selected by the compensation committee, any of which may be (A) measured in absolute terms or as compared to any incremental increase, (B) measured in terms of growth, as compared to results of a peer group, or (C) measured against the market as a whole, compared to applicable market indices, and/or measured on a pre-tax or post-tax basis.
The Bonus Plan also permits Parent’s compensation committee to approve additional bonuses to executive officers in its sole discretion.
A more complete summary of the terms of the Bonus Plan is included in the Registration Statement in the section titled “Senior Executive Cash Incentive Bonus Plan.” That summary and the foregoing description of the Bonus Plan are qualified in their entirety by reference to the full text of the Bonus Plan, a copy of which is filed as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
To the extent required by this Item, the information included in Item 2.01 and Item 3.03 of this Current Report on Form 8-K is incorporated herein by reference.
On July 31, 2026, Legacy Parent filed its amended and restated certificate of incorporation (the “Amended and Restated Certificate”) with the Secretary of State of the State of Delaware. Legacy Parent Board and its stockholders previously approved the Amended and Restated Certificate to be filed in connection with, and to be effective immediately prior to, the completion of the Mergers. The Amended and Restated Certificate amended and restated Legacy Parent’s existing certificate of incorporation in its entirety to, among other things: (i) change Legacy Parent’s name to “Obsidian Therapeutics, Inc.”; (ii) authorize 500,000,000 shares of common stock; (iii) eliminate all references to the previously-existing series of preferred stock; and (iv) authorize 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Board in one or more series.
In addition, the amended and restated bylaws of Parent (the “Amended and Restated Bylaws”), previously approved by the Legacy Parent Board and stockholders, became effective immediately upon, and contingent upon, the consummation of the Mergers. The Amended and Restated Bylaws amend and restate Legacy Parent’s bylaws in their entirety to, among other things: (i) eliminate the ability of Parent’s stockholders to take action by written consent in lieu of a meeting and call special meetings of stockholders; (ii) establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board; and (iii) conform to the amended provisions of the Amended and Restated Certificate.
The foregoing descriptions of the Amended and Restated Certificate and the Amended and Restated Bylaws of Parent is qualified by reference to the Amended and Restated Certificate and the Amended and Restated Bylaws of Parent, copies of which are attached as Exhibits 3.1 and 3.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
On August 3, 2026, we issued a press release announcing, among other things, the closing of the Mergers. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference, except that the information contained on the websites referenced in the press releases is not incorporated herein by reference.
The information in this Item 7.01, including Exhibit 99.1 attached to this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(c) Exhibits.
| Exhibit No. |
Description | |
| 2.1*# |
Agreement and Plan of Merger, dated as of April 14, 2026, by and among Galera Therapeutics, Inc., Obsidian Therapeutics, Inc., Gazelle Parent, Inc., Onyx MergerSub, Inc. and Gazelle Merger Subsidiary, Inc. (incorporated by reference from Exhibit 2.1 to Gazelle Parent, Inc.’s Registration Statement on Form S-4 (File No. 333-295249) filed with the Securities and Exchange Commission on July 2, 2026). | |
| 3.1 |
Amended and Restated Certificate of Incorporation of Obsidian Therapeutics, Inc. | |
| 3.2 |
Amended and Restated Bylaws of Obsidian Therapeutics, Inc. | |
| 4.1 |
Galera Therapeutics, Inc. Warrant to Purchase Common Stock dated February 17, 2023. | |
| 10.1* |
Securities Purchase Agreement, dated as of April 14, 2026, by and among Gazelle Parent, Inc., Galera Therapeutics, Inc., Obsidian Therapeutics, Inc. and each of the Investors listed on Exhibit A thereto. | |
| 10.2* |
Registration Rights Agreement, dated as of April 14, 2026, by and among Parent, Galera Therapeutics, Inc. and each of the Investors signatory thereto. | |
| 10.3 |
Form of Lock-Up Agreement. | |
| 10.4 |
Contingent Value Rights Agreement dated August 3, 2026, by and among Obsidian Therapeutics, Inc., Gazelle Parent, Inc. and Equiniti Trust Company, LLC. | |
| 10.5+ |
Form of Indemnification Agreement for Officers of Obsidian Therapeutics, Inc. | |
| 10.6+ |
Form of Indemnification Agreement for Directors of Obsidian Therapeutics, Inc. | |
| 10.7+ |
Obsidian Therapeutics, Inc. 2026 Equity Incentive Plan, and form of award agreements thereunder. | |
| 10.8+ |
Obsidian Therapeutics, Inc. 2026 Employee Stock Purchase Plan. | |
| 10.9+ |
Obsidian Therapeutics, Inc. Non-Employee Director Compensation Policy. | |
| 10.10+ |
Obsidian Therapeutics, Inc. Senior Executive Cash Incentive Bonus Plan. | |
| 10.11+ |
Executive Severance Plan. | |
| 10.12+ |
Form of Executive Employment Agreement | |
| 10.13 |
Nonexclusive License Agreement, by and between Obsidian Therapeutics, Inc. and The University of Texas M.D. Anderson Cancer Center, dated October 19, 2021. | |
| 10.14 |
Lease by and between Obsidian Therapeutics, Inc. and Cambridge 1030 Mass Ave, LLC, dated May 19, 2017, as amended. | |
| 10.15 |
Lease by and between Obsidian Therapeutics, Inc. and Patriots Park Owner, LLC, dated August 19, 2021. | |
| 21.1 |
Subsidiaries of Obsidian Therapeutics, Inc. | |
| 99.1 |
Press release issued on August 3, 2026. | |
| 99.2 |
Risk Factors of Obsidian Therapeutics, Inc. | |
| 99.3 |
Business Section of Obsidian Therapeutics, Inc. | |
| 99.4 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Obsidian Therapeutics Sub, Inc. (formerly Obsidian Therapeutics, Inc.) for the years ended December 31, 2025 and 2024. | |
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
| + | Indicates management contract or compensatory plan |
| # | Filed previously |
| * | Annexes, schedules and exhibits have been omitted pursuant to Item 601(b)(2) or 601(a)(5), as applicable, of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OBSIDIAN THERAPEUTICS, INC. | ||||||
| Date: August 3, 2026 | By: | /s/ Madan Jagasia | ||||
| Name: | Madan Jagasia | |||||
| Title: | Chief Executive Officer, Director | |||||
Exhibit 99.1
Obsidian Therapeutics Completes Closing of Transaction with Galera
Therapeutics and Previously Announced Private Placement of $350 Million
| • | Obsidian Therapeutics to focus on the advancement of its pipeline of novel engineered TIL cell therapies for the treatment of patients with solid tumors |
| • | Post-transaction cash, cash equivalents and investments of approximately $350 million expected to fund operations into 2H 2028, including NSCLC Phase 1 data expected in 1H 2027 and melanoma registration-enabling data expected year-end 2027 |
| • | Shares to begin trading on Nasdaq under ticker symbol “OBX” on August 4, 2026 |
CAMBRIDGE, Mass., August 3, 2026 – Obsidian Therapeutics, Inc. (“Obsidian”) (Nasdaq: OBX), a clinical-stage biopharmaceutical company harnessing novel protein-regulation technology to develop engineered tumor-infiltrating lymphocyte (TIL) cell therapies, today announced the completion of its previously announced transaction with Galera Therapeutics, Inc. (“Galera”). The combined company will operate under the name Obsidian Therapeutics, Inc., and its shares are expected to begin trading on Nasdaq on August 4, 2026 under the ticker symbol “OBX”.
Prior to closing the merger, Obsidian completed a previously announced oversubscribed private placement financing of $350 million in gross proceeds from a syndicate of new investors, including Balyasny Asset Management, Caligan Partners LP, Eventide Asset Management, Nantahala Capital, Octagon Capital, Redmile, Spruce Street Capital and Trails Edge Capital Partners, and with participation from current Obsidian investors, including Atlas Venture, Deep Track Capital, Foresite Capital, Janus Henderson Investors, Logos Capital, Novo Holdings A/S, Paradigm BioCapital Advisors, Pivotal bioVenture Partners, RA Capital Management, RTW Investments, TCGX and Wellington Management, among other leading investment management firms.
The combined company’s cash and cash equivalents balance at closing, including the funds from the private placement financing, is anticipated to fund the combined company’s operations into the second half of 2028 and provide runway through key clinical milestones for Obsidian’s lead product candidate, OBX-115. These include Phase 1 data from the ongoing non-small cell lung cancer (NSCLC) trial expected in the first half of 2027, and topline data from the melanoma registration-enabling trial, which are expected by year-end 2027. The combined company will also continue to support Galera’s pipeline.
“The completion of the merger with Galera and closing of our $350 million private placement mark a transformative milestone that propels Obsidian into its next stage of growth,” said Madan Jagasia, M.D., Chief Executive Officer of Obsidian. “With a strong financial position backed by a syndicate of leading biotechnology investors, robust leadership team, and promising early Phase 2 clinical data from our lead product candidate, OBX-115, we are well-positioned to deliver best-in-class TIL cell therapies to patients with solid tumors. We look forward to continuing to advance OBX-115 through the clinic and we are on track to begin enrolling patients with melanoma in the registration-enabling cohort of our multicenter study in mid-2026.”
Obsidian leverages its cytoDRIVE® platform to develop engineered TIL cell therapies. OBX-115 is a novel engineered TIL cell therapy armored with pharmacologically regulatable membrane-bound IL15 and designed to deliver an improved, patient-centric treatment regimen. OBX-115 has the potential to reduce overall treatment burden with the option for minimally invasive core needle biopsy tumor tissue procurement, exclusively low-dose lymphodepletion compatible with outpatient administration and elimination of IL2 in the treatment regimen.
OBX-115 has been granted Fast Track and Regenerative Medicine Advanced Therapy designations from the U.S. Food and Drug Administration for the treatment of patients with unresectable or metastatic melanoma that is resistant to immune checkpoint inhibitor therapy. OBX-115 is currently in a Phase 2 clinical trial for the treatment of advanced melanoma and a Phase 1 clinical trial for the treatment of NSCLC (NCT06060613).
Transaction Details
Prior to the closing of the transaction, Galera effected a 1-for-200 reverse stock split of its common stock. In connection with the closing of the transaction, Galera issued a non-transferable contingent value right (a “CVR”) to Galera stockholders of record as of July 31, 2026, which does not include the former holders of shares of Obsidian or the private placement investors, representing the right to receive contingent payments upon the occurrence of certain events. Pursuant to the merger agreement and based on the final exchange ratio in each of the mergers, at the closing of the mergers, former Galera stockholders own approximately 1.2%, and former Obsidian stockholders own approximately 51.6%, and investors in the concurrent financing own approximately 47.2% of the combined company’s outstanding common stock.
Leerink Partners served as the exclusive financial advisor and Goodwin Procter LLP served as legal counsel to Obsidian. Leerink Partners, TD Cowen, Piper Sandler, William Blair and LifeSci Capital acted as placement agents in connection with the concurrent private placement financing. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. served as legal counsel to the placement agents. Sidley Austin LLP served as legal counsel to Galera. Lucid Capital Markets provided a fairness opinion to Galera’s Board of Directors.
About Obsidian Therapeutics
Obsidian Therapeutics, Inc. is a clinical-stage biopharmaceutical company harnessing novel protein-regulation technology to develop engineered TIL cell therapies for the treatment of patients with solid tumors. Obsidian’s proprietary cytoDRiVE® technology is designed to precisely regulate the timing and level of protein function by using FDA-approved small-molecule drugs. Obsidian has offices in Cambridge and Bedford, MA. For more information, please visit www.obsidiantx.com.
About OBX-115
Obsidian leverages its cytoDRIVE® platform to develop engineered TIL cell therapies. Obsidian’s lead investigational TIL program, OBX-115, is a novel engineered tumor-derived autologous T cell immunotherapy (tumor-infiltrating lymphocyte [TIL] cell therapy) armored with pharmacologically regulatable membrane-bound IL15 (mbIL15). OBX-115 has the potential, if approved, to become a
meaningful therapeutic option for patients with advanced (unresectable or metastatic) melanoma and other solid tumors by leveraging the expected benefits of mbIL15 and Obsidian’s proprietary, differentiated manufacturing process designed to enhance persistence, antitumor activity, and clinical safety of TIL cell therapy. Obsidian is investigating OBX-115 in the phase 1/2 Agni-01 multicenter trial in patients with advanced solid tumors (NCT06060613).
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, implied and express statements concerning beliefs and expectations regarding: future clinical development activities, therapeutic potential, clinical benefits and safety of our product candidates, the transaction and completion of the concurrent private placement financing, the expected effects, perceived benefits or opportunities and related timing with respect thereto, cash runway, and expectations regarding timing, progress, objectives or plans for the combined company’s development of its clinical pipeline.
These forward-looking statements relate to Galera, Obsidian and the newly formed company (together, “us” or “we”), our business, prospects and our results of operations and are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described under the heading “Risk Factors” included in Registration Statement on Form S-4 filed with the SEC on July 2, 2026 (SEC file No. 333-295249). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “aim,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that might subsequently arise, except as required by applicable law.
These forward-looking statements are based upon our current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, including, without limitation: statements about the synergies or benefits of the proposed transaction, including future financial and operating results, plans, objectives, expectations and intentions; the anticipated timing of closing of the proposed transaction and the private placement financing; negative effects of the announcement or consummation of the proposed transaction on the market price of our capital stock and our operating results; risks relating to the value of shares of the newly formed company to be issued in
the proposed transaction; risks related to the ability to obtain approval of the Galera stockholders; changes in capital resource requirements; risks related to our inability to obtain sufficient additional capital to continue to advance our product candidates; our and our collaborators’ ability to execute clinical programs for our product candidates; timing, progress, enrollment or results of clinical trials with our product candidates; our ability to obtain and maintain intellectual property rights and regulatory exclusivities; and our ability to establish a market for our product candidates if the combined company receives regulatory approval therefor.
Inquiries:
Caroline Code
VP Corporate Development and Investor Relations
ir@obsidiantx.com
Exhibit 99.2
RISK FACTORS
You should carefully consider the following risk factors. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to the businesses of Obsidian. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to realize the anticipated benefits of the mergers, and may have a material adverse effect on the combined company and its financial condition or results of operations. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by Obsidian which later may prove to be incorrect or incomplete. Obsidian may face additional risks and uncertainties that are not presently known to Obsidian, or that are currently deemed immaterial, which may also impair their business or financial condition.
Risks Relating to Obsidian
Unless the context otherwise requires, references in this section to “we,” “us,” “our” and the “Company” refer to Obsidian.
Risks Related to Our Financial Condition, Need for Additional Capital and Manufacturing and Commercialization Efforts
We are a clinical-stage biopharmaceutical company and have incurred significant financial losses since our inception and anticipate that we will continue to incur significant financial losses for the foreseeable future. We may never achieve or maintain profitability.
We are a clinical-stage biopharmaceutical company with a limited operating history and have incurred losses since our inception. We were formed in September 2015, and our operations to date have been limited to pre-commercial activities. We have not yet demonstrated an ability to generate revenue, obtain regulatory approvals, manufacture any product on a commercial scale or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. We will encounter risks and difficulties frequently experienced by clinical-stage biopharmaceutical companies in rapidly evolving fields, and we have not yet demonstrated an ability to successfully overcome such risks and difficulties. If we do not address these risks and difficulties successfully, our business will suffer.
We have no products approved for commercial sale and have not generated any revenue from product sales to date. We will continue to incur significant research and development and other expenses related to our preclinical and clinical development and ongoing operations. As a result, we are not profitable and have incurred losses in each period since our inception. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital. Our net losses totaled $100.6 million and $83.1 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we have not yet generated revenues. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidate.
We anticipate that our expenses will increase substantially if, and as, we:
| • | continue to advance our product candidate through clinical development, including conducting our ongoing clinical trials; |
| • | seek regulatory approvals for our product candidate or any future product candidates that successfully complete clinical trials; |
| • | expand our operational, financial and management systems and increase personnel, including personnel to support our clinical and preclinical development, manufacturing and commercialization efforts; |
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| • | undertake any pre-commercial or commercial activities to establish sales, marketing, and distribution capabilities; |
| • | advance any future product candidates into clinical development; |
| • | seek to identify, acquire, and develop additional product candidates, including through business development efforts to invest in or in-license other technologies or product candidates; |
| • | maintain, expand, and protect our intellectual property portfolio; |
| • | make milestone, royalty, or other payments due under our license and collaboration agreements and any future license, collaboration or other agreements; |
| • | make milestone, royalty, interest, or other payments due under any future financing or other arrangements with third parties; |
| • | incur additional legal, accounting or other expenses in operating our business, including the additional costs associated with operating as a public company; |
| • | establish sales, marketing, distribution, manufacturing, supply chain and other commercial infrastructure in the future to commercialize any product candidates for which we may obtain regulatory approval; and |
| • | add equipment and physical infrastructure to support our research and development. |
Biopharmaceutical product development entails substantial up-front capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval, secure market access and reimbursement, or become commercially viable, and therefore any investment in us is highly speculative. Accordingly, before making an investment in us, you should consider our prospects, factoring in the costs, uncertainties, delays, and difficulties frequently encountered by companies in clinical development, especially clinical-stage biopharmaceutical companies such as ours. Any predictions you make about our future success or viability may not be as accurate as they would otherwise be if we had a longer operating history or a history of successfully developing and commercializing biopharmaceutical products. We may encounter unforeseen expenses, difficulties, complications, delays, and other known or unknown factors in achieving our business objectives.
Additionally, our expenses could increase beyond our expectations if we are required by the FDA, the European Medicines Agency (the “EMA”), or other comparable regulatory authorities to perform clinical trials in addition to those that we currently expect, or if there are any delays in establishing appropriate manufacturing arrangements for or in completing our clinical trials or the development of our product candidate or any future product candidates.
There is substantial doubt regarding our ability to continue as a going concern.
In its report on our consolidated financial statements for the year ended December 31, 2025, our independent registered public accounting firm included an explanatory paragraph that expressed substantial doubt about our ability to continue as a going concern. Our current cash level and current operating plans raise substantial doubt about our ability to continue as a going concern. In addition, our future consolidated financial statements may include similar qualifications about our ability to continue as a going concern. Our consolidated financial statements were prepared assuming that we will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to meet our current operating costs, we will need to seek additional financing or modify or cease our operational plans. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.
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Even if the mergers and concurrent financing are successful, we will require additional funding in order to finance operations. If we are unable to raise capital when needed, or on acceptable terms, we could be forced to delay, reduce, or eliminate our product development programs or commercialization efforts.
Developing biopharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive, and uncertain process that takes years to complete. We expect our expenses to continue to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek regulatory and marketing approval for, our product candidate. Even if our current or future product candidates are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. To date, we have funded our operations principally through private financings. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the clinical and preclinical development of our product candidate, commence additional preclinical studies and clinical trials, and continue to identify and develop additional product candidates either through internal development or through acquisitions or in-licensing product candidates.
As of December 31, 2025, we had $80.5 million of cash, cash equivalents, and marketable securities. Based upon our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities, together with the estimated net proceeds from the mergers and concurrent financing, will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may also raise additional financing on an opportunistic basis in the future. For example, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop our product candidate. Our future capital requirements will depend on many factors, including but not limited to:
| • | the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current or future product candidates; |
| • | the number of clinical trials required for regulatory approval of our current or future product candidates; |
| • | the costs, timing, and outcome of regulatory review of our current or any future product candidates; |
| • | the costs associated with acquiring or licensing additional product candidates, technologies, or assets, including the timing and amount of any milestones, royalties, or other payments due in connection with our acquisitions and licenses; |
| • | the cost of manufacturing clinical and commercial supplies of our current or future product candidates; |
| • | the costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights; |
| • | the effectiveness of our approach at identifying target patient populations and utilizing our approach to enrich our patient population in our clinical trials; |
| • | our ability to maintain existing, and establish new, strategic collaborations or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty, or other payments due under any such agreement; |
| • | the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for our product candidate or any future product candidates for which we receive marketing approval; |
| • | the revenue, if any, received from commercial sales of our product candidate or any future product candidates for which we receive marketing approval; |
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| • | expenses to attract, hire, and retain skilled personnel; |
| • | the costs of operating as a public company; |
| • | our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payors; |
| • | the effect of macroeconomic trends including inflation, tariffs, and interest rates; |
| • | addressing any potential supply chain interruptions or delays; |
| • | the effect of competing technological and market developments; and |
| • | the extent to which we acquire or invest in business, products, and technologies. |
Because of the numerous risks and uncertainties associated with research and development of product candidates, we are unable to predict the timing or amount of our working capital requirements. In addition, if we obtain regulatory approval for our product candidate, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales, and distribution which make it difficult to predict when or if we will be able to achieve or maintain profitability. Furthermore, upon the completion of the mergers and concurrent financing, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in order to support our continuing operations. Our ability to raise additional funds will depend on financial, economic, political, and market conditions and other factors, over which we may have no or limited control. Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce, or terminate our product development programs, future commercialization efforts, or other operations.
Raising additional capital may cause dilution to our stockholders, restrict our operations, or require us to relinquish rights to our product candidate.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, the net proceeds from the mergers and concurrent financing, any future equity or debt financings, and upfront and milestone and royalties payments, if any, received under any future licenses or collaborations. If we raise additional capital through the sale of equity or convertible debt securities, or issue any equity or convertible debt securities in connection with a collaboration agreement or other contractual arrangement, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our common stock. In addition, the possibility of such issuance may cause the market price of our common stock to decline. Debt financing, if available, may result in increased fixed payment obligations and involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, or acquiring, selling, or licensing intellectual property rights or assets, which could adversely impact our ability to conduct our business. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, technologies, future revenue streams, or product candidates or grant licenses on terms that may not be favorable to us. We could also be required to seek funds through arrangements with collaborators or others at an earlier stage than otherwise would be desirable. Any of these occurrences may have a material adverse effect on our business, operating results and prospects.
We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions and changes in financial regulations and policies can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position. In addition, changes in regulations governing financial institutions are beyond our control and difficult to predict; consequently, the impact of such changes on our business and results of operations is difficult to predict and may have an adverse effect on us.
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Risks Related to Our Business Operations and Industry
Our business is highly dependent on the success of our product candidate, OBX-115. If we are unable to successfully complete clinical development, obtain regulatory approval for or commercialize our product candidate, or if we experience delays in doing so, our business will be materially harmed.
To date, as an organization, we have not completed the development of any product candidates and our current product candidate remains in clinical development. Our future success and ability to generate revenue from our product candidate is dependent on our ability to successfully develop, obtain regulatory approval for, and commercialize our product candidate or any future product candidate. Our product candidate and any future product candidates will require substantial additional investment for clinical development, regulatory review, and approval in one or more jurisdictions. If our product candidate or any future product candidates encounter safety or efficacy problems, development delays or regulatory issues or other problems, our development plans and business would be materially harmed.
We may not have the financial resources to continue development of our product candidate if we experience any issues that delay or prevent regulatory approval of, or our ability to commercialize, our product candidate, including:
| • | our ability to demonstrate to the satisfaction of the FDA, EMA, or other comparable regulatory authorities that our product candidate is safe and effective for one or more intended uses; |
| • | the sufficiency of our financial and other resources to complete the necessary clinical trials and preclinical studies; |
| • | negative or inconclusive results from our clinical trials, preclinical studies, or the clinical trials of others for product candidates similar to ours, leading to a decision or requirement to conduct additional clinical trials or preclinical studies or abandon a program; |
| • | product-related adverse events experienced by subjects in our clinical trials, including unexpected toxicity results, or by individuals using drugs or therapeutic biologics similar to our product candidate; |
| • | delays in submitting an Investigational New Drug application (“IND”), or other regulatory submission to the FDA, EMA, or other comparable regulatory authorities, or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial or a suspension, termination, or hold, of a clinical trial once commenced, including any delays caused by prolonged government shutdowns, inadequate funding, loss of employees, changes in regulations, leadership, or policies by a new administration or other disruptions of regulatory authorities; |
| • | conditions imposed by the FDA, the EMA, or other comparable regulatory authorities regarding the scope or design of our clinical trials; |
| • | poor effectiveness of our product candidate during clinical trials; |
| • | better than expected performance of control arms, such as placebo groups, which could lead to negative or inconclusive results from our clinical trials; |
| • | delays in recruiting or enrolling subjects in our clinical trials; |
| • | high drop-out rates of subjects from our clinical trials; |
| • | inadequate supply or quality of our product candidate or other materials necessary for the conduct of our clinical trials; |
| • | higher than anticipated clinical trial or manufacturing costs; |
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| • | unfavorable FDA, EMA, or other comparable regulatory authority inspections and review of our clinical trial sites; |
| • | failure of our third-party contractors or investigators to comply with regulatory requirements or the clinical trial protocol or otherwise to meet their contractual obligations in a timely manner, or at all; |
| • | delays and changes in regulatory requirements, policies, leadership, and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our investigational therapies in particular; or |
| • | varying interpretations of data by the FDA, EMA, and other comparable regulatory authorities. |
We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.
The biotechnology industry is intensely competitive and subject to rapid and significant technological change. Our current or future product candidates may face competition from major pharmaceutical companies, specialty pharmaceutical companies, universities, and other research institutions and from products and therapies that currently exist or are being developed, some of which products and therapies we may not currently know about. Many of our competitors have significantly greater financial, manufacturing, marketing, product development, technical, and human resources than we do. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining marketing approvals, recruiting patients, and manufacturing pharmaceutical products, and they may also have products that have been approved or are in late stages of development, and collaborative arrangements in our target markets with leading companies and research institutions. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel cell therapies or to in-license novel cell therapies that could make the product candidates that we develop obsolete. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. As a result of all of these factors, our competitors may succeed in obtaining patent protection and/or FDA or other regulatory approval or discovering, developing, and commercializing products in our field before we do, which could result in our competitors establishing a strong market position before we are able to enter the market.
Our competitors may obtain FDA or other regulatory approval of their product candidates more rapidly than we may or may obtain patent protection or other intellectual property rights that limit our ability to develop or commercialize our product candidates or platform technologies. Our competitors may also develop cell therapies or other platform technologies that are more effective, more convenient, more widely used, or less costly than our product candidate or, in the case of drugs, have a better safety profile than our product candidate. These competitors may also be more successful than us in manufacturing and marketing their products and have significantly greater financial resources and expertise in research and development.
There are a large number of companies developing or marketing treatments for cancer, including many major pharmaceutical and biotechnology companies. We may compete with other cell therapy or immunotherapy companies such as Iovance Biotherapeutics Inc., AbelZeta Inc., Biosyngen Pte Ltd, GRIT Biotechnology Co., Ltd., Shanghai Juncell Therapeutics Co., Ltd., Immatics N.V., Immunocore Holdings plc, Intima Bioscience, Inc., KSQ Therapeutics, Inc., Marker Therapeutics, Inc., TILT Biotherapeutics Ltd, and others. In addition, numerous compounds are in clinical development for cancer treatment. Many of these companies are well-capitalized and have significant clinical experience.
Smaller and other early-stage companies may also prove to be significant competitors. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our current and any future product candidates. In addition, the biopharmaceutical industry is characterized by rapid technological change. If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Technological advances or products developed by our competitors may render our product candidates obsolete, less competitive, or not economical.
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Universities and public and private research institutions in the United States and Europe are also potential competitors. For example, a Phase 3 M14TIL clinical trial comparing TIL to standard ipilimumab in patients with metastatic melanoma is currently being conducted in Europe by the Netherlands Cancer Institute, the Copenhagen County Herlev University Hospital, and the University of Manchester. Results from the M14TIL clinical trial were presented at the European Society for Medical Oncology Congress in September 2022. In patients with advance melanoma, progression-free survival was significantly longer among those who received TIL cell therapy than among those who received ipilimumab. While these universities and public and private research institutions primarily have educational objectives, they may develop proprietary technologies that lead to other FDA approved therapies or that secure patent protection that we may need for the development of our technologies and products.
Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, have a broader label, are marketed more effectively, are reimbursed, or are less expensive than any products that we may develop. Even if our product candidates achieve marketing approval, they may be priced at a significant premium over competitive products if any, which have been approved by then, resulting in reduced competitiveness. If we do not compete successfully, we may not generate or derive sufficient revenue from any product candidate for which we obtain marketing approval and may not become and remain profitable.
Due to the significant resources required for the development of our pipeline, and depending on our ability to access capital, we must prioritize the development of certain product candidates over others. Moreover, we may fail to expend our limited resources on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Our lead product candidate, OBX-115, is currently in Phase 2 clinical development for the treatment of advanced melanoma and is currently in Phase 1 clinical development for the treatment of non-small cell lung cancer (“NSCLC”), and our other product candidates and programs are at various stages of preclinical development. We seek to develop engineered TIL cell therapies for the treatment of patients with solid tumors.
Due to the significant resources required for the development of OBX-115, we must decide which product candidates and indications to pursue and advance and the amount of resources to allocate to each. Our decisions concerning the allocation of research, development, collaboration, management, and financial resources toward particular product candidates, therapeutic areas, or indications may not lead to the development of viable commercial products and may divert resources away from better opportunities. Similarly, our decisions to delay, terminate, or collaborate with third parties in respect of certain product development programs may also prove not to be optimal and could cause us to miss valuable opportunities. If we make incorrect determinations regarding the viability or market potential of our current or future product candidates or misread trends in the pharmaceutical industry, our business, financial condition, and results of operations could be materially and adversely affected. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases and disease pathways that may later prove to have greater commercial potential than those we choose to pursue, or relinquish valuable rights to such product candidates through collaboration, licensing, or royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization rights.
We may seek to grow our business through acquisitions or investments in new or complementary businesses, products, or technologies, through the licensing of products or technologies from third parties or other strategic alliances. The failure to manage acquisitions, investments, licenses, or other strategic alliances, or the failure to integrate them with our existing business, could have a material adverse effect on our operating results, dilute our stockholders’ ownership, increase our debt, or cause us to incur significant expense.
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Our success depends on our ability to continually enhance and broaden our product offerings in response to changing clinician and patients’ needs, competitive technologies, and market pressures. Accordingly, from time to time we may consider opportunities to acquire, make investments in, or license other technologies, products, and businesses that may enhance our capabilities, complement our existing products and technologies, or expand the breadth of our markets or customer base. Potential and completed acquisitions, strategic investments, licenses, and other alliances involve numerous risks, including difficulty integrating acquired or licensed technologies, products, employees, or business operations, unanticipated costs associated with acquisitions or strategic alliances, and diversion of management’s attention from our core business and disruption of ongoing operations.
We do not know if we will be able to identify acquisitions or strategic relationships we deem suitable, whether we will be able to successfully complete any such transactions on favorable terms, if at all. Our ability to successfully grow through strategic transactions depends upon our ability to identify, negotiate, complete, and integrate suitable target businesses, technologies, or products and to obtain any necessary financing. These efforts could be expensive and time-consuming and may disrupt our ongoing business and prevent management from focusing on our operations. To finance any acquisitions, investments, or strategic alliances, we may choose to issue shares of our common stock as consideration, which could dilute the ownership of our stockholders. Additional funds may not be available on terms that are favorable to us, or at all.
Our employees, independent contractors, consultants, including CDMOs and CROs, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk of employee fraud or other illegal activity by our current and any future employees, independent contractors, consultants, CDMOs, and vendors including but not limited to CROs. Misconduct by these parties could include intentional, unintentional, reckless, and/or negligent conduct that fails to comply with FDA or other comparable regulations, provide true, complete and accurate information to the FDA and other comparable regulatory authorities, comply with manufacturing standards we may establish, comply with healthcare fraud and abuse laws and regulations, report financial information or data accurately, or disclose unauthorized activities to us. If we obtain FDA approval of our product candidate or any future product candidates and begin commercializing those products in the United States, our potential exposure under these laws will increase significantly, and our costs associated with compliance with these laws are likely to increase. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. 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 comply 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 material and adverse effect on our business, financial condition, results of operations, and prospects.
We, our collaborators, and our service providers are subject to a variety of privacy and data security laws, regulations, and contractual obligations, which may require us to incur substantial compliance costs, and any failure or perceived failure by us to comply with them could expose us to significant fines and other penalties and otherwise harm our business and operations.
The legislative and regulatory framework for the collection, use, safeguarding, sharing, transfer, and other processing of personal information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Globally, numerous jurisdictions, including those in which we operate or collect personal information, have established their own data security and privacy frameworks with which we must comply. In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state information security and data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), that govern
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the collection, use, disclosure, and protection of health-related and other personal information, could apply to our operations or the operations of our collaborators and service providers. In particular, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act (“HIPAA”), establish privacy and security standards that limit the use and disclosure of individually identifiable health information, or protected health information, and impose requirements regarding the privacy and security of individually identifiable health information, including mandatory contractual terms, for covered entities, or certain healthcare providers, health plans and healthcare clearinghouses, and their business associates that provide services to the covered entity that involve individually identifiable health information and their subcontractors that use, disclose or otherwise process individually identifiable health information. While pharmaceutical and biotechnology companies are typically not directly regulated by HIPAA, our business may be indirectly impacted by HIPAA in our interactions with providers, payors, and others that have HIPAA compliance obligations. If we are unable to properly protect the privacy and security of protected health information, we could be found to have violated these privacy and security laws and/or breached certain contracts. Further, if we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security standards, we could face significant civil and criminal penalties. U.S. Department of Health & Human Services (“HHS”), enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources.
At the state level, numerous states have or are in the process of enacting or considering comprehensive data privacy and security laws, rules, and regulations while other states have focused on more narrow aspects of privacy. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The existence of comprehensive privacy laws in different states in the country would make our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance. In the state of Washington, for example, the My Health My Data Act, which has a private right of action that further increases the relevant compliance risk, requires regulated entities to obtain consent to collect health-related information and grants consumers certain rights, including to request deletion of their information. Connecticut and Nevada have also passed similar laws regulating consumer health data. In addition, other states have proposed and/or passed legislation that regulates the privacy and/or security of certain specific types of information. For example, a small number of states, such as Illinois and Texas, have passed laws that regulate biometric data specifically. Although many of the existing state privacy laws exempt clinical trial information and health information governed as “protected health information” by HIPAA, future privacy and data protection laws may be broader in scope. Taken together, these state and federal laws may be subject to varying interpretations by the courts and government agencies and are subject to frequent change. Further, these varying interpretations could create complex compliance issues for us and our partners and potentially expose us to additional expense, liability, penalties, negatively impact our business, and lead to adverse publicity, and all of these risks could adversely affect our business in the short and long term. In addition, contractual obligations and in the future, legislation may limit, forbid or regulate the use or transmission of health information outside of the United States or across other national borders, which could make reliance on non-U.S. resources for work related to such processing personal information impracticable or substantially more expensive.
All of these evolving compliance and operational requirements impose significant costs, such as costs related to organizational changes, implementing additional protection technologies, training employees and engaging consultants and legal advisors, which are likely to increase over time. In addition, such requirements may require us to modify our data processing practices and policies, utilize management’s time and/or divert resources from other initiatives and projects. Any failure or perceived failure by us to comply with any applicable federal, state or foreign laws and regulations relating to data privacy and security could result in damage to our reputation, as well as proceedings or litigation by governmental agencies or other third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, injunctions, penalties or judgments. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.
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If we are unable to protect the confidentiality of our proprietary information, the value of our technology and products could be adversely affected.
In addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets and/or confidential know-how, unpatented know-how, and/or other proprietary information. We may rely on other proprietary rights, including protection of trade secrets, confidential know-how, unpatented know-how, and/or other proprietary information to protect our technology, especially where patent protection is believed to be of limited value. However, trade secrets and/or confidential know-how can be difficult to maintain as confidential.
To maintain the confidentiality of this type of information, it is our policy to enter into confidentiality agreements with our employees, consultants, advisors, collaborators, contractors (including CDMOs and CROs) and others upon the commencement of their relationships with us. These agreements require that all confidential information developed by the individual(s) or made known to the individual by us during the course of the individual’s relationship or work with us be kept confidential and not disclosed to third parties. Our agreements with employees and our personnel policies also provide that any inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. However, we may not obtain these agreements in all circumstances, and/or individuals with whom we have these agreements may not comply with their terms, intentionally or unintentionally. Thus, despite such agreements, inventions may become assigned to third parties. In the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidential information. To the extent that our employees, consultants, contractors, or others use technology or know-how owned by third parties in their work for us, disputes may arise between us and those third parties as to the rights in related inventions. To the extent that an individual who is not obligated to assign rights in intellectual property to us or a current or future licensor is rightfully an inventor of intellectual property, we may need to obtain an assignment or a license to that intellectual property from that individual, or a third party, or from that individual’s assignee. Such assignment or license may not be available at all or on commercially reasonable terms. The disclosure of our trade secrets could impair our competitive position and may materially harm our business, financial condition, and results of operations.
Enforcing a claim that a third party illegally obtained our trade secrets and/or confidential know-how and is using these is expensive, time consuming, and unpredictable. The enforceability of confidentiality agreements and theft of trade secret claims may vary from jurisdiction to jurisdiction. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret. As such, adequate remedies may not exist in the event of unauthorized use or disclosure of our proprietary information.
In addition, others may independently discover or develop our trade secrets and proprietary information, and the existence of our own trade secrets afford no protection against such independent discovery. Such persons may even apply for patent protection in respect of the same. If successful in obtaining such patent protection, such persons could limit our use of our trade secrets and/or confidential know-how. Under certain circumstances and to guarantee our freedom to operate, we may also decide to publish some know-how to prevent others from obtaining patent rights covering such know-how.
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Risks Related to the Discovery and Development of Our Current or Future Product Candidates
Our business is dependent on our ability to advance our current and future product candidates through clinical trials, obtain marketing approval, and ultimately commercialize them.
Our ability to generate product revenues, which we do not expect will occur for several years, if ever, will depend heavily on the successful development and eventual regulatory approval and commercialization of our current product candidate or future product candidates we develop, which may never occur. Our current product candidate and any future product candidates we develop will require significant preclinical or clinical development, management of clinical, preclinical, and manufacturing activities, efforts toward obtaining marketing approval in the United States and other jurisdictions, and if approved, demonstration of effectiveness to pricing and reimbursement authorities, sufficient manufacturing supply for both preclinical and clinical development and, if approved, for commercial production, as well as investments to build a commercial organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales.
The clinical and commercial success of our current and future product candidates will depend on several factors, including the following:
| • | timely and successful completion of our preclinical studies and clinical trials; |
| • | sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials; |
| • | our plans to successfully submit amendments to existing INDs or new INDs with the FDA for our current and future product candidates; |
| • | our ability to complete preclinical studies for current or future product candidates; |
| • | successful enrollment of subjects in, and completion of clinical trials; |
| • | successful data from our clinical program that supports an acceptable risk-benefit profile of our product candidate in the intended patient populations; |
| • | our ability to establish and maintain agreements with third-party manufacturers on a timely and cost-efficient manner; |
| • | whether we are required by the FDA or comparable foreign regulatory authorities to conduct additional clinical trials or other studies beyond those planned or anticipated to support approval of our lead product candidate OBX-115; |
| • | acceptance of our proposed indications and the primary endpoint assessments evaluated in the clinical trials of our product candidate by the FDA and comparable foreign regulatory authorities; |
| • | timely receipt and maintenance of marketing approvals from applicable regulatory authorities; |
| • | successfully launching commercial distribution and sales of our product candidate, if approved; |
| • | the prevalence, duration, and severity of potential side effects or other safety issues experienced with our product candidate, if approved; |
| • | entry into collaborations to further the development of our product candidate; |
| • | obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidate; |
| • | acceptance of the benefits and uses of our product candidate, if approved, by patients, the medical community, and third-party payors; |
| • | maintaining an acceptable safety, tolerability, and efficacy profile of the product candidates following approval; |
| • | our compliance with any post-approval requirements imposed on our products, such as post-marketing studies, a REMS, or additional requirements that might limit the promotion, advertising, distribution, or sales of our products or make the products cost prohibitive; |
| • | competing effectively with other therapies; |
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| • | obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors; and |
| • | enforcing and defending intellectual property rights and claims. |
These factors, many of which are beyond our control, could cause us to fall behind our competitors, experience significant delays or an inability to obtain regulatory approvals or commercialize our current or future product candidates, and could otherwise materially harm our business. Successful completion of preclinical studies and clinical trials does not mean that any other current or future product candidates we develop will receive regulatory approval. Even if regulatory approvals are obtained, we could experience significant delays or an inability to successfully commercialize our current and any future product candidates we develop, which would materially harm our business. If we are not able to generate sufficient revenue through the sale of any current or future product candidate, we may not be able to continue our business operations or achieve profitability.
Clinical development involves a lengthy and expensive process with uncertain outcomes. We may incur additional costs and experience delays in developing and commercializing or be unable to develop or commercialize our current and future product candidates.
To obtain the requisite regulatory approvals to commercialize our product candidates or any future product candidates, we must demonstrate through data from extensive preclinical studies and clinical trials that our product candidate and any future product candidates are safe, pure, and potent in humans. Clinical trials are expensive and can take many years to complete, with a highly uncertain outcome. Failure can occur at any time during the clinical trial process and our current or future clinical trial results may not be successful. We may experience delays in completing our clinical trials or preclinical studies and initiating or completing additional clinical trials. We cannot be certain the ongoing and planned preclinical studies or clinical trials for our current or any other future product candidates will begin on time, not require redesign, enroll an adequate number of eligible subjects on time, or be completed on schedule, if at all. We may also experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize the product candidates we develop, including:
| • | results from preclinical studies or clinical trials may not be predictive of results from later clinical trials of any product candidate; |
| • | the FDA or other regulatory authorities, Institutional Review Boards (“IRBs”), or independent ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; |
| • | the FDA or other regulatory authorities may require us to submit additional data such as long-term toxicology studies, or impose other requirements on us, before permitting us to initiate a clinical trial; |
| • | we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, as the terms of these agreements can be subject to extensive negotiation and vary significantly among different CROs and trial sites; |
| • | clinical trials of any product candidate may fail to show safety, purity or potency, or may produce negative or inconclusive results, which may cause us to decide, or regulators to require us, to conduct additional nonclinical studies or clinical trials or which may cause us to decide to abandon product candidate development programs; |
| • | the number of patients required for clinical trials may be larger than we anticipate, or we may have difficulty in recruiting and enrolling patients to participate in clinical trials, including as a result of the size and nature of the patient population, the proximity of patients to clinical trial sites, eligibility criteria for the clinical trial, the nature of the clinical trial protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications and clinical trial subjects; |
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| • | enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials or may fail to return for post-treatment follow-up at a higher rate than we anticipate; |
| • | our CROs and other third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators; |
| • | we may elect to, or regulators, IRBs, or ethics committees may require, that we or our investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that participants are being exposed to unacceptable health risks; |
| • | our product candidates could cause undesirable side effects that could result in significant negative consequences, including the inability to enter clinical development or receive regulatory approval; |
| • | the cost of preclinical or nonclinical testing and studies and clinical trials of any product candidates may be greater than we anticipate; |
| • | we may face hurdles in addressing subject safety concerns that arise during the course of a trial, causing us or our investigators, regulators, IRBs or ethics committees to suspend or terminate trials, or reports may arise from nonclinical or clinical testing of other cancer therapies that raise safety or efficacy concerns about our product candidates; |
| • | the supply, quality, or timeliness of delivery of materials for product candidates we develop or other materials necessary to conduct clinical trials may be insufficient or inadequate; and |
| • | we may need to change the manufacturing site and potentially the CDMO for our product candidates from those that are able to produce clinical supply for our clinical trials to those with the capacity and ability to perform commercial manufacturing and/or the production of clinical material for our later stage clinical trials. |
We could encounter delays if a clinical trial is suspended or terminated by us, or by the IRBs of the institutions in which such trials are being conducted, ethics committees, or the Safety Review Committee (“SRC”), the DSMB, for such trial or by the FDA, the EMA, or other regulatory authorities. Such authorities may impose a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, the EMA, or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions, or lack of adequate funding to continue the clinical trial. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval of our product candidate. The FDA, the EMA, or other regulatory authorities may change the expectations for approval even after they have reviewed and commented on the design for our clinical trials. Further, the FDA, the EMA, or other regulatory authorities may disagree with our clinical trial design or our interpretation of data from clinical trials. For example, we are conducting and may in the future continue to conduct “open-label” clinical trials. An “open-label” clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect because patients may be subject to a “patient bias” where they perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. Moreover, patients selected for early clinical trials often include the most severe sufferers and their symptoms may have been bound to improve notwithstanding the new treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge.
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Principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time 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, or a regulatory authority concludes that the financial relationship may have affected the interpretation of the trial results, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any future marketing application we submit. Any such delay or rejection could prevent or delay us from commercializing our current or future product candidates.
If we experience delays in the completion, or termination, of any clinical trial of our lead product candidate OBX-115, the commercial prospects of our product candidate will be harmed and our ability to generate product revenues from our product candidate will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down the development and approval process for our product candidate, and jeopardize our ability to commence product sales and generate revenues. Significant clinical trial delays could also allow our competitors to bring products to market before we do or shorten any periods during which we have the exclusive right to commercialize our product candidate.
Any such events would impair our ability to successfully commercialize our product candidate and may harm our business and results of operations. Any of these occurrences may significantly harm our business, financial condition, and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidate or result in the development of our product candidate stopping early.
Preclinical development is uncertain. Any preclinical programs we pursue may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all.
The risk of failure for product candidates still in the discovery or preclinical stage is high. In addition, any one or more of our product candidates that have not yet entered the clinic may never advance into clinical development. In order to obtain FDA approval to market a new biologic we must demonstrate proof of safety, purity, and potency, including efficacy, in humans. To meet these requirements, we will have to conduct adequate and well-controlled clinical trials. Before we can commence clinical trials for a product candidate, we must complete extensive preclinical testing and studies that support our planned clinical trials in humans. We cannot be certain of the timely completion or outcome of our preclinical testing and studies and cannot predict if the FDA will accept our proposed clinical programs or if the outcome of our preclinical testing and studies will ultimately support the further development of our current or future product candidates. As a result, we cannot be sure that we will be able to submit INDs or similar applications for our preclinical candidates on the timelines we expect, if at all, and we cannot be sure that submission of INDs or similar applications will result in the FDA, the EMA, or other regulatory authorities allowing clinical trials to begin.
Conducting preclinical testing is a lengthy, time-consuming, and expensive process. The length of time of such testing may vary substantially according to the type, complexity, and novelty of the program, and often can be several years or more per program. The commencement and rate of completion of preclinical studies and clinical trials for a product candidate may be delayed by many factors, including but not limited to:
| • | failure of animal studies to generate compelling toxicity data; |
| • | failure of new non-animal methods for preclinical work to be accepted by regulators; and |
| • | delays or failures by third party CROs conducting the nonclinical studies on our behalf. |
Delays associated with programs for which we are conducting preclinical testing and studies may cause us to incur additional operating expenses.
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We may in the future conduct clinical trials for current or future product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials.
We may in the future conduct clinical trials for current or future product candidates outside the United States, and the FDA and comparable foreign regulatory authorities may not accept data from such trials. We are currently conducting clinical trials in the United States. The acceptance of data from clinical trials conducted outside the United States or another jurisdiction by the FDA or comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice, (ii) the trials were performed by clinical investigators of recognized competence and pursuant to good clinical practice, or GCP, regulations and (iii) the FDA is able to validate the data through an on-site inspection or other appropriate means. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many foreign regulatory authorities have similar approval requirements. In addition, foreign clinical trials are subject to the applicable local laws of the foreign jurisdictions where such trials are conducted. There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction. If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which could be costly and time-consuming, and which may result in current or future product candidates that we may develop being delayed or not receiving approval for commercialization in the applicable jurisdiction.
Positive results from preclinical studies and early-stage clinical trials may not be predictive of future results. Initial positive results in any of our clinical trials may not be indicative of results obtained when the trial is completed or in later stage trials.
The results of preclinical studies may not be predictive of the results of clinical trials. Preclinical studies and early-stage clinical trials are primarily designed to (i) test safety, (ii) study pharmacokinetics and pharmacodynamics, and (iii) understand the side effects of product candidates at various doses and schedules, and the results of any early-stage clinical trials may not be predictive of the results of later-stage, large-scale efficacy clinical trials. In addition, initial success in clinical trials may not be indicative of results obtained when such trials are completed. There can be no assurance that any of our current or future clinical trials will ultimately be successful or support further clinical development our product candidates. There is a high failure rate for drugs and biological products proceeding through clinical trials. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies, and any such setbacks in our clinical development could have a material adverse effect on our business and operating results.
Even if our clinical trials are completed, the results may not be sufficient to obtain regulatory approval for our product candidates. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit, or prevent regulatory approval. In addition, the results of our preclinical studies may not be predictive of the results of outcomes in human clinical trials. For example, our current or future product candidates may demonstrate different chemical, biological, and pharmacological properties in patients than they do in laboratory studies or may interact with human biological systems in unforeseen or harmful ways. Product candidates in later stages of clinical trials may fail to show desired pharmacological properties or produce the necessary safety and efficacy results despite having progressed through preclinical studies and initial clinical trials. In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy during the period of our product candidate development. Any such delays could negatively impact our business, financial condition, results of operations, and prospects.
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Interim, “top-line,” and preliminary results from our preclinical studies and clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit, validation, and verification procedures that could result in material changes in the final data.
From time to time, we may publish interim data, including interim, top-line, or preliminary data from our preclinical studies and clinical trials. Any interim data and results from our preclinical studies and 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. We also may make assumptions, estimations, calculations and conclusions as part of our analyses of preliminary or topline data and we may not have received or had the opportunity to fully and carefully evaluate all data. Preliminary or top-line results also remain subject to audit, validation, and verification procedures that may result in the final data being materially different from the interim and preliminary data we previously published. As a result, interim and preliminary data may not be predictive of final results and should be viewed with caution until the final data are available. Material differences between preliminary or interim data and final data could significantly harm our business prospects and may cause the trading price of our common stock to fluctuate significantly.
Furthermore, third parties, including regulatory authorities, 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 delay or prevent regulatory approval of, or limit commercial prospects for, the particular product candidate. In addition, the information we choose to publicly disclose 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 to disclose. If regulatory authorities disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.
Our current or future product candidates may cause undesirable, unacceptable, or serious adverse side effects or have other properties when used alone or in combination with other approved products or investigational new drugs that could halt their clinical development, delay or prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences.
Before obtaining regulatory approvals for the commercial sale of our product candidate, we must demonstrate through lengthy, complex, and expensive preclinical testing and clinical trials that our product candidate are safe, pure, and potent for use in each target indication, and failures can occur at any stage of testing. As with most biological products, use of our current or future product candidates could be associated with side effects or adverse events which can vary in severity from minor reactions to death and in frequency from infrequent to prevalent. There have been serious adverse side effects reported in response to engineered TIL cell therapies in oncology.
Immuno-oncology drugs have been observed to cause side effects, generally related to over activation of the immune system. These include colitis, diabetes, pituitary inflammation, thyroiditis, myocarditis, liver inflammation, thrombocytopenia, pneumonitis, hypoxia, cytokine release syndrome, late autoimmune side effects/autoimmune disease states, and risk of death, among others. Our immuno-oncology product candidates, and combination drug regimens may have similar or additional side effects including late autoimmune side effects, autoimmune disease states or secondary malignancies. Treatment-related side effects may emerge at a later time in our trials. In addition to any potential side effects caused by the product candidate or combination regimen, the administration process or related procedures also can cause adverse side effects. If unacceptable adverse events occur, our clinical trials could be suspended or terminated, or any future marketing authorization could be suspended, revoked, or varied. Additionally, we may be required to repeat or conduct additional clinical trials or nonclinical studies for our product candidate beyond those that we currently contemplate. There can be no assurance that any of our current or future product candidates will not demonstrate unacceptable toxicities in later testing that may render them unsafe or intolerable.
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If unacceptable side effects arise in the development of our product candidates, we, the FDA, the IRBs at the institutions in which our trials are conducted or the DSMB or SRC could suspend or terminate our clinical trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete any of our clinical trials or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We expect to have to train medical personnel using our product candidates to understand the side effect profiles for our clinical trials and upon any commercialization of any of our product candidates and train them in the tumor procurement surgical and core needle biopsy processes. There are additional risks of complications from tumor tissue procurement, including surgical complications and core needle biopsy complications, including the risk of death Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death. Any of these occurrences may harm our business, financial condition, and prospects significantly.
Although our current and future product candidates have undergone and will undergo safety testing to the extent possible and, where applicable, under such conditions discussed with regulatory authorities, not all adverse effects of drugs can be predicted or anticipated. Engineered TIL cell therapeutics and their method of action of harnessing the body’s immune system are powerful and could lead to serious side effects that we only discover in clinical trials or during commercial marketing. Unforeseen side effects could arise either during clinical development or after a product candidate has been approved by regulatory authorities and the approved product has been marketed, following the exposure of additional patients. So far, we have not demonstrated that our current product candidate is safe in humans, and we cannot predict if ongoing or future clinical trials will do so. If any of our current or future product candidates fail to demonstrate safety and efficacy in clinical trials or do not gain marketing approval, we will not be able to generate revenue and our business will be harmed.
In addition, we intend to pursue our product candidate in combination with other therapies and may develop future product candidates in combination with other therapies, which exposes us to additional risks relating to undesirable side effects or other properties. For example, the other therapies may lead to toxicities that are improperly attributed to our product candidate or the combination of our product candidate with other therapies may result in toxicities that the product candidate or other therapy does not produce when used alone. The other therapies we are using in combination may be removed from the market, or we may not be able to secure adequate quantities of such materials for which we have no guaranteed supply contract, and thus such therapies may be unavailable for testing or commercial use with any of our approved products. The other therapies we may use in combination with our product candidate may also be supplanted in the market by newer, safer, or more efficacious products or combinations of products.
Even if we successfully advance our lead product candidate OBX-115 or any future product candidates through clinical trials, such trials will likely only include a limited number of subjects and limited duration of exposure to the candidate. As a result, we cannot be assured that adverse effects of our product candidates will not be uncovered when a significantly larger number of patients are exposed to the product candidate. Further, any clinical trial may not be sufficient to determine the effect and safety consequences of taking a particular candidate over a multi-year period.
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Even if we successfully develop a product candidate and it receives marketing approval, the FDA could require us to adopt a REMS to ensure that the benefits of treatment outweigh the risks for each potential patient, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients, a communication plan to health care practitioners, extensive patient monitoring, or distribution systems and processes that are highly controlled, restrictive, and more costly than what is typical for the industry. If our current product candidate or any of our future product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result in the following, including but not limited to:
| • | regulatory authorities may limit, suspend, or withdraw their approval of the product or may refuse to approve supplemental applications for such product; regulatory authorities may refuse to approve pending applications or supplements to approved applications we file; |
| • | we may be required to recall a product or change the way such product is administered to patients; |
| • | additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof; |
| • | regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contraindication; |
| • | we may be required to implement a REMS or create a medication guide outlining the risks of such side effects for distribution to patients; |
| • | we could be sued and held liable for harm caused to patients; |
| • | the product may become less competitive; and |
| • | our reputation may suffer. |
Any of the foregoing events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and result in the loss of significant revenues, which would materially harm our business. In addition, if our product candidates or our engineered TIL cell therapeutic development approach generally proves to be unsafe, our entire technology platform and pipeline could be affected, which would also materially harm our business.
If we or our collaborators encounter difficulties enrolling eligible patients in our clinical trials, our clinical development activities could be delayed or otherwise be adversely affected.
The successful and timely completion of clinical trials in accordance with their protocols depends on, among other things, our ability to recruit and enroll a sufficient number of eligible patients who remain in the trial until the trial’s conclusion, including any follow-up period. We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The enrollment of patients depends on many factors, including:
| • | the patient eligibility criteria defined in the protocol; |
| • | the nature and size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying patients; |
| • | the number and location of participating and available clinical sites or patients; |
| • | delays in the ability or failure to add new clinical trial sites; |
| • | the design of the trial; |
| • | our ability to recruit qualified clinical trial investigators with the appropriate competencies and experience; |
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| • | clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating; |
| • | the availability of competing commercially available therapies; |
| • | our ability to obtain and maintain patient informed consents for participation in our clinical trials; and |
| • | the risk that patients enrolled in clinical trials will drop out of the trials before completion or, because they may be late-stage cancer patients, will not survive the full terms of the clinical trials. |
In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our current and potential future product candidates. It is also likely that we may compete with competitors developing product candidates in the same therapeutic areas for clinical trial sites. This competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such sites. Moreover, because our current and potential future product candidates may represent a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy, rather than enroll in our ongoing or any future clinical trial.
Delays or difficulties in patient enrollment may result in increased costs or may affect the timing, outcome, or completion of clinical trials, which would adversely affect our ability to advance the development of the product candidates we develop.
Because the number of subjects in our clinical trials are small, the results from these trials, once completed, may be less reliable than results achieved in larger clinical trials.
A trial design that is considered appropriate includes a sufficiently large sample size with appropriate statistical power, as well as proper control of bias, to allow a meaningful interpretation of the results. The preliminary results of trials with smaller sample sizes and heterogeneous patient populations, can be disproportionately influenced by the impact the treatment had on a few individuals, which limits the ability to generalize the results across a broader community, thus making the trial results less reliable than trials with a larger number of subjects and with more homogeneous patient populations. As a result, there may be less certainty that our product candidates would achieve a statistically significant effect in any future clinical trials. If we conduct any future clinical trials, we may not achieve a statistically significant result or the same level of statistical significance seen, if any, in our clinical trials.
Risks Related to Our Dependence on and Work with Third Parties
We rely, and expect to continue to rely, on third parties, including independent clinical investigators, CROs and CDMOs to conduct certain aspects of our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our current and future product candidates and our business could be substantially harmed.
We have relied upon and plan to continue to rely upon third parties, including independent clinical investigators, third-party CROs and CDMOs to conduct certain aspects of our preclinical studies and clinical trials and to monitor and manage data for our ongoing preclinical and clinical programs. We rely on these parties for execution of our preclinical studies and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies and trials is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards, and our reliance on these third parties does not
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relieve us of our regulatory responsibilities. We and our third-party contractors and CROs are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA, the competent authorities of the member states of the European Economic Area (“EEA”), and comparable foreign regulatory authorities for our current and future product candidates in clinical development. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of these third parties or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, the EMA, or comparable foreign regulatory authorities, may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with the product candidate produced under the FDA’s current good manufacturing practice, or cGMP, regulations or similar foreign regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.
Further, these investigators and CROs are not our employees and we will not be able to control, other than by contract, the amount of resources, including time, which they devote to our current and future product candidates and clinical trials. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other product development activities, which could affect their performance on our behalf. If independent investigators or CROs fail to devote sufficient resources to the development of our current and future product candidates, or if their performance is substandard, it may delay or compromise the prospects for approval and commercialization of any product candidates that we develop. In addition, the use of third-party service providers may require us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated.
Our CROs have the right to terminate their agreements with us in the event of an uncured material breach. In addition, some of our CROs have an ability to terminate their respective agreements with us if it can be reasonably demonstrated that the safety of the subjects participating in our clinical trials warrants such termination, if we make a general assignment for the benefit of our creditors or if we are liquidated.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. If CROs do not successfully carry out their contractual duties or obligations, comply with applicable regulatory requirements or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed, or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidate and any of our future product candidates. As a result, our results of operations and the commercial prospects for our product candidate or any future product candidates would be harmed, our costs could increase, and our ability to generate revenues could be delayed.
Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Additionally, CROs may lack the capacity to absorb higher workloads or take on additional capacity to support our needs. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition, and prospects.
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We may depend on other third-party collaborators for the discovery, development, and commercialization of certain of our current and future product candidates. If our collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.
We have formed, and in the future, we may form or seek strategic alliances, joint ventures, or collaborations, or enter into licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to product candidates we develop. Such potential future collaborations involving our product candidates may pose various risks to us, including:
| • | collaborators may have significant discretion in determining the efforts and resources that they will apply to these collaborations and collaborators may not perform their obligations as expected. In some situations, we may not be able to influence our collaborators’ decisions regarding the development of our product candidates, and as a result, our collaborators may not pursue or prioritize the development of those product candidates in a manner that is in our best interest or that we agree with; |
| • | collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; |
| • | collaborators may not properly obtain, enforce, maintain, or defend our intellectual property rights or proprietary rights or may use our proprietary information in a way that gives rise to actual or threatened litigation or that could jeopardize or invalidate our intellectual property or proprietary information, exposing us to potential litigation or other intellectual property proceedings; |
| • | collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; |
| • | disputes may arise between a collaborator and us that cause the delay or termination of the research, development, or commercialization of the product candidate, or that result in costly litigation or arbitration that diverts management attention and resources. Such disputes may also impact our intellectual property ownership and other rights; |
| • | a collaborator with marketing and distribution rights to our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such products; |
| • | collaborators may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of the product candidate, potentially leading to regulatory investigations or proceedings that may slow down product development; |
| • | collaborators may delay clinical trials, provide insufficient funding or resources for clinical trials or marketing and distribution of a product, stop a clinical trial, abandon a product candidate or repeat or conduct new clinical trials; |
| • | we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control; |
| • | if a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished, or terminated; and |
| • | collaboration agreements may restrict our right to independently pursue new product candidates. |
If we enter into collaboration agreements and strategic partnerships or license our intellectual property, products, or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations, which could delay our timelines or otherwise adversely affect our business. We also cannot be certain that, following a strategic transaction or license, we will achieve the revenue or net income that justifies the entry into such transaction. Any of the factors set forth above, among others, could delay the development and commercialization of our product candidate, which would harm our business prospects, financial condition, and results of operations.
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We may seek to establish collaborations, and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.
The advancement of our product candidate and development programs and the potential commercialization of our current and future product candidates will require substantial additional cash to fund expenses. For some of our current or future product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies with respect to development and potential commercialization. Any of these relationships may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders, or disrupt our management and business.
We face significant competition in seeking appropriate collaborators and the negotiation process is time-consuming and complex. Whether we reach a definitive agreement for other collaborations will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the progress of our clinical trials, the likelihood of approval by the FDA, the EMA, or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. The terms of any collaboration or other arrangements that we may establish may not be favorable to us.
Further, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for future product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view them as having the requisite potential to demonstrate safety and efficacy.
We may also be restricted under existing collaboration agreements from entering into future agreements on certain terms with potential collaborators. Such exclusivity could limit our ability to enter into strategic collaborations with future collaborators. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.
We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any marketing or sales activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our product candidate or any future product candidates or bring them to market and generate product revenue.
In addition, any future collaboration that we enter into may not be successful. The success of future collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the collaboration arrangement. These disagreements can be difficult to resolve if neither of the parties has final decision-making authority. Collaborations with pharmaceutical or biotechnology companies and other third parties can often be terminated by the other party. Any such termination or expiration would adversely affect us financially and could harm our business reputation.
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We are required to pay royalty and milestone payments under our license agreement with M.D. Anderson, and we must also meet certain development milestones to maintain our license rights.
In October 2021, we entered into a license agreement with The Board of Regents (the “Board of Regents”), of The University of Texas System, on behalf of M.D. Anderson Cancer Center (“M.D. Anderson”), for our engineered TIL cell therapy (the “M.D. Anderson License Agreement”). Under the M.D. Anderson License Agreement, we are required to pay both substantial milestone payments and royalties to M.D Anderson based on the net sales of our products utilizing the licensed technologies. These payments could adversely affect the overall profitability for us of any products that we may seek to commercialize under the M.D. Anderson License Agreement. In order to maintain our license rights under the M.D. Anderson License Agreement, we also need to meet certain specified development milestones, subject to certain cure or extension provisions. There is no assurance that we will continue to be able to meet these development milestones on a timely basis, or at all.
Risks Related to Manufacturing of Our Product Candidates
We currently rely on and expect to continue to rely on a network of third-party suppliers and other third parties for production of our current and future product candidates including TIL products and viral vectors as well as custom critical materials such as anti-41BB and iFeeders, and our dependence on these third parties may impair the advancement of our research and development programs and the development of our current and future product candidates.
We rely on and expect to continue to rely on a network of third-party CDMOs for the supply of cGMP-grade clinical trial materials and commercial quantities of our current and future product candidates as well as custom critical materials. Specifically, we collaborate with a network of leading CDMOs to manufacture OBX-115 including membrane-bound IL15 carbonic anhydrase 2 (“mbIL15-CA2”), DRD, viral vector, anti-41BB and iFeeders. Reliance on a network of third-party providers may expose us to more risk than if we were to manufacture our product candidates and the associated critical materials ourselves. The facilities used by our CDMOs to manufacture our engineered TIL candidates and the associated materials must be approved by the FDA and foreign regulatory authorities pursuant to inspections that will be conducted after we submit our BLA to the FDA, or similar applications to foreign regulatory authorities. We have limited control over the manufacturing process of, and beyond contractual terms, we are largely dependent on our CDMOs for compliance with cGMP, and applicable product tracking and tracing requirements, or similar foreign requirements for the manufacture of our product candidate. If our CDMOs cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or comparable foreign regulatory authorities, or are unable to do so in a timely manner, they may not be able to secure or maintain regulatory approval for their manufacturing facilities and could result in delay of our ability to obtain marketing authorization of our current and future product candidates. In addition, we have limited control over the ability of our CDMOs to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our current and future product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for, or if approved, market our product candidate. In addition, any failure to achieve and maintain compliance with these laws, regulations, and standards could subject us to the risk that we may have to suspend the manufacturing of our product candidate or that obtained approvals could be revoked, which would adversely affect our business and reputation. Furthermore, third-party providers may breach existing agreements they have with us because of factors beyond our control. They may also terminate or refuse to renew their agreement with us because of their own financial difficulties or business priorities, at a time that is costly or otherwise inconvenient for us. If we were unable to find an adequate replacement or another acceptable solution in time, our clinical trials could be delayed or our commercial activities could be harmed. Any such changes could cause
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our current and future product candidates to perform differently and affect the results of clinical trials conducted with the altered materials, and limit our ability to rely on data from clinical trials conducted with an earlier version of our product candidates. In addition, the fact that we are dependent on our collaborators, our CDMOs, and other third parties for the manufacture, filling, storage, and distribution of our current and future product candidates means that we are subject to the risk that the products may have manufacturing defects that we have limited ability to prevent or control. The sale of products containing such defects could adversely affect our business, financial condition, and results of operations.
We rely on our CDMOs to purchase from third-party suppliers the materials necessary to produce our current product candidate for our clinical trials, and will rely on our existing and future collaborators to purchase from third-party suppliers the materials necessary to develop and produce our product candidates for future clinical trials and, upon approval, our products for commercialization.
Moreover, if approved, we intend to rely on third parties to produce commercial supplies of our engineered TIL candidates and viral vectors as well as custom critical materials such as anti-41BB and iFeeders. Our commercialization of any of our product candidate could be stopped, delayed, or made less profitable if those third parties fail to obtain approval of the FDA or comparable foreign regulatory authorities following inspection of their facilities and procedures to manufacture our product candidate and products, fail to provide us with sufficient quantities of product or product components and materials, or fail to do so at acceptable timing, quality levels, or prices, or fail to otherwise complete their duties in compliance with their obligations to us or other parties.
We are dependent on a limited number of suppliers and, in some instances, a sole supplier, for some of our components and materials used in our product candidates.
There are a limited number of suppliers for raw materials that we use to manufacture our product candidates and there may be a need to assess alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce our product candidate for our clinical trials, and if approved, ultimately for commercial sale. Apart from contractual measures, we do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers or manufacturers paid by our collaborators. Moreover, we currently do not have any agreements for the commercial production of these raw materials. Although we generally do not begin a clinical trial unless we believe we have a sufficient supply of our product candidate to complete the clinical trial or have secured resupply capacity, any significant delay in the supply of our product candidate, or the raw material components thereof, for a planned or an ongoing clinical trial due to the need to replace a third-party manufacturer could considerably delay completion of our clinical trials, product testing, and potential regulatory approval of our product candidate.
In addition, the manufacturing of our product candidate is expensive and time-consuming. If we are successful in obtaining regulatory approval for any of our product candidates, we might have limited quantities of such product candidates available to us in connection with a potential commercial launch, and these supplies may be further limited by our ongoing clinical development activities. If our manufacturers, collaborators or we are unable to purchase or produce sufficient quantities of raw materials or of our product candidate after regulatory approval has been obtained for our product candidate, the commercial launch of our product candidate could be delayed or there could be a shortage in supply, which in either case, would impair our ability to generate revenues from the sale of our product candidate.
We rely on our manufacturers and other subcontractors to comply with and respect the proprietary rights of others in conducting their contractual obligations for us. If our manufacturers or other subcontractors fail to acquire the proper licenses or otherwise infringe third-party proprietary rights in the course of completing their contractual obligations to us, we may have to find alternative manufacturers or defend against claims of infringement, either of which would significantly impact our ability to develop, obtain regulatory approval for, or market our product candidate, if approved.
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The operations of our suppliers are subject to additional risks that are beyond our control and that could harm our business, financial condition, results of operations and prospects.
We currently rely on and engage third-party manufacturers to provide critical raw materials, all of the active pharmaceutical ingredients (“APIs”), and the final drug product formulation of our product candidate that are being used in our clinical trials and preclinical studies. If a replacement manufacturer became necessary in the future, we may incur added costs and delays in identifying and qualifying another manufacturer. As a result of our global suppliers, we may be subject to risks associated with doing business abroad, including:
| • | geopolitical tensions, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured; |
| • | the imposition of new laws and regulations, including those relating to labor conditions, quality, and safety standards, information and data transfer, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed on imports from countries where our suppliers operate, |
| • | greater challenges and increased costs with enforcing and periodically auditing or reviewing our suppliers’ and manufacturers’ compliance with cGMPs or status acceptable to the FDA or comparable foreign regulatory authorities; |
| • | reduced protection for intellectual property rights, including trademark protection, in some countries,; |
| • | disruptions in operations due to global, regional, or local epidemics, pandemics, public health crises or other emergencies or natural disasters; |
| • | disruptions or delays in shipments; and |
| • | changes in local economic conditions in countries where our manufacturers or suppliers are located. |
The National Defense Authorization Act for Fiscal Year 2026 enacted in December 2025 includes a section titled, “Prohibition on Contracting with Certain Biotechnology Providers,” also known as the BIOSECURE Act, aimed at discouraging federal contracting with certain biotechnology companies for biotechnology equipment or services in China and other countries of concern. The statute prohibits federal executive agencies from procuring any biotechnology equipment or service from a biotechnology company of concern, or BCC, or contracting with any such company or any entity that procures or uses equipment or services from a BCC. Any company on the Department of Defense’s Chinese Military Companies List (1260H list) is considered a BCC under the new law and the White House Office of Management and Budget also is empowered to designate companies as BCCs based on consultations with Cabinet Secretaries and other key leaders from the executive branch. This legislation may have the effect of restricting the ability of biopharmaceutical companies that enter into contracts with or receive funding from U.S. federal agencies from purchasing services or equipment from certain and other foreign Chinese biotechnology companies.
These and other factors beyond our control could interrupt our suppliers’ production, influence the ability of our suppliers to export our clinical supplies cost-effectively or at all, and inhibit our supplier’s ability to procure certain materials, any of which could delay our clinical trials or otherwise harm our business, financial condition, results of operations, and prospects.
Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay.
As product candidates proceed through preclinical studies to late-stage clinical trials towards potential approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results. In addition, we will likely need to change or expand our CDMO network for manufacturing our product candidates to one that can support commercial-scale manufacturing. Such changes carry the risk that they will
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not achieve these intended objectives. Any of these changes could cause our product candidate to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the materials manufactured using altered processes. Such changes may also require additional testing, FDA notification, or FDA approval. This could delay completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidate, and jeopardize our ability to commence sales, if approved, and generate revenue.
We are subject to multiple manufacturing risks, any of which could substantially increase our costs and limit supply of our product candidate.
The process of manufacturing our engineered TIL product candidates is complex, time-consuming, highly regulated, and subject to several risks, including:
| • | Manufacturing cellular therapies is complicated and tightly regulated by the FDA and comparable regulatory authorities around the world, and although alternative third-party suppliers with the necessary manufacturing and regulatory expertise and facilities exist, it could be expensive and take a significant amount of time to arrange for alternative suppliers, transfer manufacturing procedures to these alternative suppliers, and demonstrate comparability of material produced by such new suppliers. New manufacturers of any product candidate or intermediate would be required to qualify under applicable regulatory requirements. These manufacturers may not be able to manufacture our product candidates at costs, or in sufficient quantities, or in a timely manner necessary to complete development of our product candidates or make commercially successful products. If we are unable to arrange for alternative third-party manufacturing sources, or to do so on commercially reasonable terms or in a timely manner, we may not be able to complete development of our product candidates, or market or distribute them. In addition, should the FDA or comparable regulatory authorities not agree with our product candidate specifications and comparability assessments for these materials, further clinical development of our product candidates could be substantially delayed and we would incur substantial additional expenses. |
| • | product loss during the manufacturing process, including loss caused by contamination, equipment failure or improper installation or operation of equipment, or operator error. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects, and other supply disruptions. If microbial, viral, or other contaminations are discovered in our products or in the manufacturing facilities in which our products are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination; |
| • | we will likely continue to expand our CDMO network for manufacturing our product candidate to meet clinical and commercial demand; |
| • | we will need to expand and develop relationships with suppliers of critical starting materials or reagents, increase the scale of production and demonstrate comparability of the material produced at these facilities to the material that was previously produced. Transferring manufacturing processes and know-how is complex and involves review and incorporation of both documented and undocumented knowledge that may have evolved over time. In addition, transferring production to different facilities may require utilization of new or different processes to meet the specific requirements of a given facility. We would expect additional comparability work will also need to be conducted to support the transfer of certain manufacturing processes and process improvements. We cannot be certain that all relevant know-how and data have been adequately incorporated into the manufacturing process until the completion of studies and the related evaluations intended to demonstrate the comparability. If we are not able to successfully transfer and produce comparable product candidates, our ability to further develop and manufacture our product candidates may be negatively impacted; |
| • | the manufacturing facilities in which our products are made could be adversely affected by equipment failures, labor and raw material shortages, natural disasters, power failures, and numerous other factors; |
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| • | differences in tumor procurement across sites may give us a suboptimal starting material; |
| • | it may be difficult to meet comparability standards across multiple CDMOs; and |
| • | 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. 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. |
Our OBX-115 product candidate comprises a live cell suspension of autologous TIL derived from the patient’s tumor that have been engineered to express mbIL15. As an autologous cell therapy, the manufacture of our OBX-115 product candidate involves complex processes, including tumor collection, tumor processing, pre-Rapid Expansion Protocol (“Pre-REP”), harvest and cryopreservation, LN2 storage, Pre-REP thaw, activation, transduction, Rapid Expansion Protocol (“REP”), harvest, and cryopreservation, LN2 storage, quality testing and release, LN2 shipment, clinical site receipt, thaw and patient administration. Our manufacturing process may be susceptible to product loss or failure due to logistical issues associated with collection of the patients’ tumor materials, shipping such material to the manufacturing site, shipping the final product back to the patient, and infusing the patient with the finished cell therapy product. Product loss or failure may also be caused by manufacturing issues associated with the variability in patient starting material, differences in tumor procurement across clinical sites, interruptions in the manufacturing process, contamination, equipment or utility failure, assay failures, improper installation or operation of equipment, vendor or operator error, GMP issues, inconsistency in cell growth, and variability in product characteristics. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects, and other supply disruptions.
We may also make changes to our manufacturing processes at various points during development, for a number of reasons, such as improving process performance, introducing new raw materials, decreasing processing time, increasing manufacturing success rate, costs improvement, achieving scale, or other reasons. Such changes carry the risk that they will not achieve their intended objectives, and any of these changes could cause our product candidate to perform differently and affect the results of our ongoing or future clinical trials. In some circumstances, changes in the manufacturing process may require us to perform ex vivo comparability studies and to collect additional data from patients prior to undertaking more advanced clinical trials. For instance, changes in our process during the course of clinical development may require us to show the comparability of the product used in earlier clinical phases or at earlier portions of a trial to the product used in later clinical phases or later portions of the trial.
Risks Related to Government Regulation
The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time-consuming, and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidate, our business will be materially harmed.
The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval, or maintain approval, may change during the course of a product candidate’s clinical development and may vary among jurisdictions. For example, the Oncology Center of Excellence within the FDA has advanced Project Optimus, which is an initiative to reform the dose optimization and dose selection paradigm in oncology drug development to emphasize selection of an optimal dose, which is a dose or doses that maximizes not only the efficacy of a drug but the safety and tolerability as well. This shift from the prior approach, which generally determined the maximum tolerated dose, may require sponsors to spend additional time and resources to further explore a product candidate’s dose-response relationship to facilitate optimum dose selection in a target population. Other recent Oncology Center of
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Excellence initiatives have included Project FrontRunner, a new initiative with a goal of developing a framework for identifying candidate drugs for initial clinical development in the earlier advanced setting rather than for treatment of patients who have received numerous prior lines of therapies or have exhausted available treatment options; and Project Confirm, which is an initiative to promote the transparency of outcomes related to accelerated approvals for oncology indications and provide a framework to foster discussion, research, and innovation in approval and post-marketing processes, with the goal to enhance the balance. We are considering these and other policy changes as they relate to our programs.
We have not obtained regulatory approval for any of our product candidates. Neither we nor any future collaborator is permitted to market any biological product in the United States until we or the future collaborator receives regulatory approval of a BLA, from the FDA. It is possible that none of our current or future product candidates will ever obtain regulatory approval from the FDA or comparable foreign regulatory authorities.
Our current and future product candidates could fail to receive regulatory approval for many reasons, including the following:
| • | the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; |
| • | we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate has an acceptable risk-benefit profile in the proposed indication; |
| • | we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that the facility in which a product candidate is manufactured meets standards designed to assure that the product candidate is safe, pure, and potent; |
| • | the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; |
| • | the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from clinical trials or preclinical studies; |
| • | the data collected from clinical trials of our product candidate may not be sufficient to support the submission of a BLA to the FDA or regulatory submissions to comparable regulatory authorities to obtain regulatory approval in such jurisdiction; and |
| • | the FDA or comparable foreign regulatory authorities may find deficiencies with or fail to approve our manufacturing processes or facility or the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies. |
This lengthy approval process as well as the unpredictability of clinical trial results may result in our failing to obtain regulatory approval to market any product candidate we develop, which would significantly harm our business, results of operations, and prospects. The FDA and other comparable foreign authorities have substantial discretion in the approval process and in determining when or whether regulatory approval will be granted for any product candidate that we develop. Even if we believe the data collected from ongoing and future clinical trials of our product candidates are promising, such data may not be sufficient to support approval by the FDA or any other regulatory authority.
In addition, even if we were to obtain approval, the FDA may approve any of our product candidates for fewer or more limited indications, or a more limited patient population, than we request, may grant approval contingent on the performance of costly clinical trials or other post-marketing requirements, or may approve a product candidate with a label that does not include the labeling claims we believe are necessary or desirable for the successful commercialization of such product candidates. Even if we obtain regulatory approval for our product candidate, we will be required to submit new or supplemental applications and obtain approval for certain changes to the approved product, product labeling, or manufacturing process and the FDA or comparable foreign regulatory authority may refuse to approve such applications or supplements.
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In addition, the FDA or comparable foreign regulatory authorities may change their policies, promulgate additional regulations, revise existing regulations, or take other actions that may prevent or delay approval of our future products under development on a timely basis. Such policy or regulatory changes could impose additional requirements upon us that could delay our ability to obtain approvals, increase the costs of compliance, or restrict our ability to maintain any marketing authorizations we may have obtained. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidate.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy personnel, and substantial leadership, personnel and policy changes or otherwise, could prevent new or modified products from being developed, approved, or commercialized in a timely manner or at all, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Without the appropriation of adequate funding to federal agencies, our business operations related to our product development activities for the U.S. market could be impacted.
Disruptions at the FDA and other agencies, including substantial leadership, personnel, and policy changes, may also slow the time necessary for biological products or modifications to approved biological products to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. Changes and cuts in FDA staffing during 2025 have been seen as resulting in delays in the FDA’s responsiveness or in its ability to review IND submissions or marketing applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion.
With the change in the U.S. presidential administration in 2025, there is substantial uncertainty as to the extent and manner in which the administration will continue to seek to modify or revise the requirements and policies of the FDA and other regulatory agencies with jurisdiction over our product candidates any products for which we obtain approval. This uncertainty could present new challenges and/or opportunities as we navigate development and approval of our product candidates. Additionally, the administration could issue or promulgate executive orders, regulations, policies or guidance that adversely affect us or create a more challenging or costly environment to pursue the development of new therapeutics candidates. Also, state governments may seek to address or react to changes at the federal level with changes to their regulatory frameworks in a manner that could impact our operations.
We may be required to suspend, repeat, or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive, or the trials are not well designed.
Clinical trials must be conducted in accordance with GCP requirements, which are regulations and guidelines enforced by the FDA, the competent authorities of the member states of the EEA, and comparable foreign regulatory authorities. Clinical trials are subject to oversight by the FDA, other foreign governmental agencies, and IRBs or ethical committees at the trial sites where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates manufactured in accordance with applicable cGMP requirements. Clinical trials may be suspended by the FDA, other foreign regulatory authorities, us, or by an IRB or ethics committee with respect to a particular clinical trial site, for various reasons, including:
| • | deficiencies in the conduct of the clinical trials, including failure to conduct the clinical trial in accordance with regulatory requirements or trial protocols; |
| • | deficiencies in the clinical trial operations or trial sites; |
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| • | unforeseen adverse side effects or the emergence of undue risks to trial subjects; |
| • | deficiencies in the trial design necessary to demonstrate efficacy; |
| • | the product candidate may not appear to offer benefits over current therapies; or |
| • | the quality or stability of the product candidate may fall below acceptable standards. |
Even if we receive marketing approval of our product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expenses. If we fail to comply or experience unanticipated problems with our products, we may be subject to administrative and judicial enforcement, including monetary penalties, for non-compliance and our approved products, if any, could be deemed misbranded or adulterated and prohibited from continued distribution.
Any marketing approvals that we receive for any current or future product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or the conditions of approval, or contain requirements for potentially costly post-market testing and surveillance to monitor the safety and efficacy of the product candidate. The FDA may also require implementation of a REMS as a condition of approval of any product candidate, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves a product candidate, the manufacturing processes, quality control, labeling, packaging, distribution, tracking and tracing, adverse event and deviation reporting, storage, advertising, promotion, import and export, and record keeping for the product candidate will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP regulations and with GCP requirements for any clinical trials that we may conduct post-approval. Problems with our or our third-party manufacturers’ manufacturing processes or facilities, or failure to comply with regulatory requirements, may result in, among other things:
| • | suspension of, or imposition of restrictions on, the marketing or manufacturing of the product, withdrawal of the product from the market, or product recalls; |
| • | adverse inspectional observations (FDA Form 483s), Warning Letters or Untitled Letters, or holds on clinical trials; |
| • | suspension of production or distribution; |
| • | product seizure or detention, monetary penalties, refusal to permit the import or export of the product, or placement on Import Alert; and |
| • | permanent injunctions and consent decrees including the imposition of civil or criminal penalties. |
Given the nature of biological product manufacturing, there is a risk of contamination. Any contamination could materially adversely affect our ability to produce product candidates on schedule and could, therefore, harm our results of operations and cause reputational damage. Some of the raw materials and other components required in our manufacturing process are derived from biologic sources. Such raw materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of our product or product candidates could adversely impact or disrupt the commercial manufacturing or the production of clinical material, which could materially and adversely affect our development and commercialization timelines and our business, financial condition, results of operations and prospects and could adversely affect our ability to meet our supply obligations.
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Moreover, the FDA and the U.S. Department of Justice strictly regulate the promotional claims that may be made about drug and biological products. In particular, an approved product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling, or off-label uses. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. The FDA has issued guidance on the factors that it will consider in determining whether a firm’s product communication is consistent with the FDA-required labeling for that product, and those factors contain complexity and potential for overlap and misinterpretation. A company that is found to have improperly promoted off-label uses of their products may be subject to significant civil, criminal, and administrative penalties.
The FDA and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay marketing approval of a product. We cannot predict the likelihood, nature, or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.
In addition, if we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.
While we intend to seek designations for our potential product candidates with the FDA and comparable foreign regulatory authorities that are intended to confer benefits such as a faster development process or an accelerated regulatory pathway, there can be no assurance that we will successfully obtain such designations. In addition, even if one or more of our potential product candidates are granted such designations, we may not be able to realize the intended benefits of such designations or maintain such designations.
The FDA and comparable foreign regulatory authorities offer certain designations for product candidates that are designed to encourage the research and development of product candidates that are intended to address conditions with significant unmet medical need. These designations may confer benefits such as additional interaction with regulatory authorities, a potentially accelerated regulatory pathway, and priority review.
OBX-115 has been granted Fast Track and RMAT designation from the FDA for the treatment of patients with unresectable or metastatic melanoma that is resistant ICI therapy. We may seek designations for other indications, or for future product candidates. However, there can be no assurance that we will successfully obtain such designations for any additional indications or future product candidates, or that we will be able to maintain the designations we have been granted. In addition, while such designations could expedite the development or approval process, they generally do not change the standards for approval. Even if we obtain such designations for one or more of our potential product candidates, there can be no assurance that we will realize their intended benefits. For example, we may seek fast track designation for additional indications or for our other potential product candidates. If a therapy is intended for the treatment of a serious or life-threatening condition and its nonclinical or clinical data demonstrates the potential to address unmet medical needs for this condition, the therapy sponsor may apply for Fast Track Designation. The FDA has broad discretion whether to grant this designation, so even if we believe a particular product candidate is eligible for this designation, there can be no assurance that the FDA would decide to grant it. Even if Fast Track Designation has been granted, we may not experience a faster development process, review or approval compared to conventional FDA procedures, and receiving a Fast Track Designation does not provide assurance of the product’s ultimate FDA approval. In addition, the FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development program.
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Additionally, we may seek a Breakthrough Therapy designation for some of our potential product candidates. A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For therapies that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Therapies designated as breakthrough therapies by the FDA may also be eligible for accelerated approval. Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our potential product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a breakthrough therapy designation for a product candidate may not result in a faster development process, review, or approval compared to therapies considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our potential product candidates qualify as breakthrough therapies, the FDA may later decide that such product candidates no longer meet the conditions for qualification.
In addition, we may seek a RMAT designation for additional indications or for our other potential product candidates. RMAT is defined as cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, with limited expectations. Gene therapies, including genetically modified cells that lead to a durable modification of cells or tissues may meet the definition of a regenerative medicine therapy. The RMAT program is intended to facilitate efficient development and expedite review of RMATs, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition. A BLA for an RMAT may be eligible for priority review or accelerated approval through (1) surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit or (2) reliance upon data obtained from a meaningful number of sites. Benefits of such designation also include early interactions with the FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval. A regenerative medicine therapy that is granted accelerated approval and is subject to post-approval requirements may fulfill such requirements through the submission of clinical evidence, clinical trials, patient registries, or other sources of real world evidence, such as electronic health records; the collection of larger confirmatory data sets; or post-approval monitoring of all patients treated with such therapy prior to its approval. RMAT designation is within the discretion of the FDA. Accordingly, even if we believe one of our potential product candidates meets the criteria for designation as a regenerative medicine advanced therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of RMAT designation for a product candidate may not result in a faster development process, review, or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our potential product candidates qualify as for RMAT designation, the FDA may later decide that the biological products no longer meet the conditions for qualification.
We may also seek rare pediatric disease designation for some of our potential product candidates. The FDA defines “rare pediatric disease” as a (i) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents; and (ii) a rare disease or condition within the meaning of the Orphan Drug Act. Designation of a product candidate as a product for a rare pediatric disease does not guarantee that a marketing application for such product candidate will meet the eligibility criteria for a rare pediatric disease priority review voucher (“PRV”), at the time the application is approved. Under the U.S. Federal Food, Drug, and Cosmetic Act (“FDCA”), we will need to request a rare pediatric disease PRV in our original marketing application for any eligible potential product candidates. The FDA may determine that a marketing application for any such product candidate, if approved, does not meet the eligibility criteria for a PRV. Vouchers for rare pediatric disease drugs are awarded for qualifying applications when the drug receives approval. Under current law, after September 30, 2029, the FDA may not award any rare pediatric disease priority review vouchers, although the FDA’s authority to do so could be extended by Congress in the future.
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In the future, we may also seek approval of product candidates under the FDA’s accelerated approval pathway. A product may be eligible for accelerated approval if it is designed to treat a serious or life-threatening disease or condition and generally provides a meaningful advantage over available therapies upon a determination that the product candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality (“IMM”), that is reasonably likely to predict an effect on IMM or other clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease, such as IMM. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit. The accelerated approval pathway may be used in cases in which the advantage of a new biologic over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval may be contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the biologic’s clinical benefit. In case of an accelerated BLA approval, FDA may mandate a Phase 4 clinical trial prior to full approval. Under the Food and Drug Omnibus Reform Act of 2022 (“FDORA”), the FDA is permitted to require, as appropriate, that a post-approval confirmatory study or studies be underway prior to approval or within a specified time period after the date of approval for a product granted accelerated approval.
FDORA also requires sponsors to send updates to the FDA every 180 days on the status of such studies, including progress toward enrollment targets, and the FDA must promptly post this information publicly. FDORA also gives the FDA increased authority to withdraw approval of a biologic granted accelerated approval on an expedited basis if the sponsor fails to conduct such studies in a timely manner, send the necessary updates to the FDA, or if such post-approval studies fail to verify the drug’s predicted clinical benefit. Under FDORA, the FDA is empowered to take action, such as issuing fines, against companies that fail to conduct with due diligence any post-approval confirmatory study or submit timely reports to the agency on their progress. There can be no assurance that the FDA would allow any of the product candidates we may develop to proceed on an accelerated approval pathway, and even if the FDA did allow such pathway, there can be no assurance that such submission or application will be accepted or that any expedited development, review or approval will be granted on a timely basis, or at all. Moreover, even if we received accelerated approval, any post-approval studies required to confirm and verify clinical benefit may not show such benefit, which could lead to withdrawal of any approvals we have obtained. Receiving accelerated approval does not assure that the product’s accelerated approval will eventually be converted to a traditional approval.
If the FDA determines that a product candidate offers a treatment for a serious condition and, if approved, the product would provide a significant improvement in safety or effectiveness, the FDA may designate the product candidate’s marketing application for priority review. A priority review designation means that the goal for the FDA to review an application is six months from the filing date, rather than the standard review period of ten months. We may request priority review for the product candidates that we develop. The FDA has broad discretion with respect to whether to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily result in an expedited regulatory review or approval process or necessarily confer any advantage with respect to approval compared to conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or at all.
In addition, in the European Union, we may seek to participate in the PRIority Medicines (“PRIME”), scheme for our potential product candidates. The PRIME scheme is intended to encourage development of products in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation, where the marketing authorization application will be made through the centralized procedure in the European Union. Products from small-and medium-sized enterprises may qualify for earlier entry into the
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PRIME scheme than larger companies on the basis of compelling non-clinical data and tolerability data from initial clinical trials. Eligible products must target conditions for which there is an unmet medical need (no treatment option exists in the European Union or, they can offer a major therapeutic advantage over existing treatments). Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated marketing authorization application assessment once a dossier has been submitted. There is no guarantee, however, that our potential product candidates would be deemed eligible for the PRIME scheme and even if we do participate in the PRIME scheme, where during the course of development a product no longer meets the eligibility criteria, support under the PRIME scheme may be withdrawn. PRIME eligibility does not change the standards for product approval, and there is no assurance that any such designation or eligibility will result in expedited review or approval.
Risks Related to Commercialization
The commercial success of our product candidate or any future product candidates will depend upon the degree of market acceptance of such product candidates by physicians, patients, healthcare payors, and others in the medical community.
Our product candidate and any future product candidates may not be commercially successful. Even if our product candidate or any future product candidates receive regulatory approval, they may not gain market acceptance among physicians, patients, healthcare payors, or the medical community. The commercial success of our lead product candidate OBX-115 or any future product candidates will depend significantly on the broad adoption and use of the resulting marketed product by these individuals and organizations for approved indications. The degree of market acceptance of our products will depend on a number of factors, including:
| • | demonstration of clinical efficacy and safety, including as compared to any more-established products; |
| • | the indications for which our product candidate or any future product candidates are approved, if any; |
| • | the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling; |
| • | acceptance of a new drug for the relevant indication by healthcare providers and their patients; |
| • | the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; |
| • | our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers, and other third-party payors; |
| • | the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage and adequate reimbursement; |
| • | any restrictions on the use of our products, and the prevalence and severity of any adverse effects; |
| • | potential product liability claims; |
| • | the timing of market introduction of our products as well as availability, safety, and efficacy of competitive drugs; |
| • | the effectiveness of our or any current or future collaborators’ sales and marketing strategies; and |
| • | unfavorable publicity relating to the product. |
If our product candidate or any future product candidates is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors, or patients, we may not generate sufficient revenue from that product and may not become or remain profitable. Our efforts to educate the medical community and third-party payors regarding the benefits of our products may require significant resources and may never be successful.
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The market opportunities for any current or future product candidate we develop, if approved, may be limited to those patients who are ineligible for established therapies or for whom prior therapies have failed, and may be small.
Any revenue we are able to generate in the future from product sales will be dependent, in part, upon the size of the market in the United States and any other jurisdiction for which we gain regulatory approval and have commercial rights. If the markets or patient subsets that we are targeting are not as significant as we estimate, we may not generate significant revenues from sales of such products, even if approved. The number of patients who have the types of cancer or autoimmune diseases we are targeting may turn out to be lower than expected. Additionally, the potentially addressable patient population for our current or future product candidates may be limited, if and when approved. Even if we obtain significant market share for any product candidate, if and when approved, if the potential target populations are small, we may never achieve profitability without obtaining marketing approval for additional indications, including to be used as first- or second-line therapy.
Cancer therapies are sometimes characterized as first-line, second-line, or third-line, and the FDA often approves new therapies initially only for third-line use. When cancer is detected early enough, first-line therapy, usually chemotherapy, hormone therapy, surgery, radiation therapy or a combination of these, is sometimes adequate to cure the cancer or prolong life without a cure. Second- and third-line therapies are administered to patients when prior therapy is not effective. The number of patients who receive second- and third-line treatment is significantly smaller than the number of patients who receive first-line treatment, and the prognosis of patients who receive second- or third-line treatment is often poorer than that of patients who receive first-line treatment.
We may initially seek approval for any other product candidates we develop as second- or third-line therapies. If we do so, for those products that prove to be sufficiently beneficial, if any, we would expect potentially to seek approval as a first-line therapy, but there is no guarantee that any product candidate we develop, even if approved, would be approved for first-line therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.
If approved, our product candidate that is regulated as a biological product, or biologic, may face competition from biosimilars approved through an abbreviated regulatory pathway.
The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), established an abbreviated pathway for the approval of biosimilar and interchangeable biologics with an FDA-licensed reference biologic product. Under the BPCIA, a reference biological product is granted 12 years of non-patent data exclusivity from the time of first licensure of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still develop and receive approval of a competing biologic, so long as their BLA does not rely on the reference product or sponsor’s data and is not submitted as a biosimilar application. Certain changes and supplements to an approved BLA, and subsequent applications filed by the same sponsor, manufacturer, licensor, predecessor in interest, or other related entity do not qualify for the 12-year exclusivity period. The law is complex and any new policies or processes adopted by the FDA could have a material adverse effect on the future commercial prospects for our biological products.
We believe that any of the product candidates we develop that is approved in the United States as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider the subject product candidate to be a reference product for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. Moreover, biosimilars compete with, and in some circumstances may be deemed under state law to be substitutable for, the previously approved reference product. The approval of a biosimilar of our product candidate could have a material adverse impact on our business due to increased competition and pricing pressure. It is also possible that payors will give reimbursement preference to biosimilars over reference biological products, even absent a determination of interchangeability.
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Laws and regulations outside the United States differ, including the length and extent of patent and exclusivity protection and pathways for competition to enter the market. Other countries may have significantly shorter or longer periods of exclusivity. In addition, other countries may have different standards in determining similarity to a reference biological product. Any market entry of competing products to our product candidate in these other regions could adversely affect our business in those regions.
To the extent that we do not receive any anticipated periods of regulatory exclusivity for our current product candidate or any future product candidates it could adversely affect our business, financial condition, results of operations and prospects.
We currently have no marketing and sales organization and have no experience as a company in marketing products. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, if approved, we may not be able to generate product revenue.
We currently have no sales, marketing or distribution capabilities and have no experience in marketing products. We intend to develop an in-house marketing organization and sales force, which will require significant capital expenditures, management resources and time. We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.
If we are unable or decide not to establish internal sales, marketing and distribution capabilities, we will pursue arrangements with third-party sales, marketing and distribution collaborators regarding the sales and marketing of our products, if approved. However, there can be no assurance that we will be able to establish or maintain such arrangements on favorable terms or if at all, or if we are able to do so, that these third-party arrangements will provide effective sales forces or marketing and distribution capabilities. Any revenue we receive will depend upon the efforts of such third parties, which may not be successful. We may have little or no control over the marketing and sales efforts of such third parties and our revenue from product sales may be lower than if we had commercialized our product candidates ourselves. We also face competition in our search for third parties to assist us with the sales and marketing efforts of our product candidates. If we are not successful in commercializing any approved products, our future product revenue will suffer and we may incur significant additional losses.
There can be no assurance that we will be able to develop in-house sales and distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize any product in the United States, Canada or overseas. Any failure or delay in the development of our internal or a third parties’ sales, marketing and distribution capabilities would adversely impact the commercialization of our product candidates.
Off-label use or misuse of our product candidate may harm our reputation in the marketplace or result in injuries that lead to costly product liability suits.
If our product candidate OBX-115 or any future product candidates are approved by the FDA, we may only promote or market such product candidates in a manner consistent with their FDA-approved labeling. We will train our marketing and sales force against promoting our product candidates for uses outside of the approved indications for use, known as “off-label uses.” We cannot, however, prevent a physician from using our product candidates off-label, when in the physician’s independent professional medical judgment he or she deems it appropriate. Furthermore, the use of our product candidates for indications other than those approved by the FDA may not effectively treat such conditions. Any such off-label use of our product candidates could harm our reputation in the marketplace among physicians and patients. There may also be increased risk of injury to patients if physicians attempt to use our product candidates for these uses for which they are not approved, which could lead to product liability suits that might require significant financial and management resources and that could harm our reputation.
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If we or any third-party manufacturer we engage now or in the future fails to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs or liabilities that could have a material adverse effect on our business.
We and third-party manufacturers we engage now are, and any third-party manufacturer we may engage in the future will be, subject to numerous environmental, health, and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment, and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and waste. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.
Although we maintain general liability insurance as well as workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.
In addition, we may incur substantial costs in order to comply with current or future environmental, health, and safety laws and regulations. These current or future laws and regulations may impair our research, development, or commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties, or other sanctions.
Further, with respect to the operations of our current and any future third-party contract manufacturers, it is possible that if they fail to operate in compliance with applicable environmental, health, and safety laws and regulations or properly dispose of wastes associated with our products, we could be held liable for any resulting damages, suffer reputational harm, or experience a disruption in the manufacture and supply of our product candidate or products. In addition, our supply chain may be adversely impacted if any of our third-party contract manufacturers become subject to injunctions or other sanctions as a result of their non-compliance with environmental, health, and safety laws and regulations.
Risks Related to Our Intellectual Property
Our ability to compete may decline if we do not adequately protect our proprietary rights.
Our commercial success depends, in part, on obtaining and maintaining patents and other forms of intellectual property rights for our technology, including product candidates (including clinical product candidates and preclinical product candidates), methods used to produce, purify, and manufacture those product candidates, and methods of utilizing the product candidates, including methods for treating patients, among other aspects of our technology or on licensing-in such rights. Failure to protect or to obtain, maintain, or extend adequate patent and other intellectual property rights could materially adversely affect our ability to develop and market our product candidates or future product candidates.
Our strategy depends in part on our ability to identify and seek patent protection for our discoveries. The patent prosecution process is time-consuming and expensive, and we and our current or future licensors, licensees, or collaborators may not be able to prepare, file, and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner in all jurisdictions where protection may be commercially advantageous. It is also possible that we or our current or future licensors, licensees, or collaborators will fail to identify patentable aspects of inventions made in the course of development activities before it is too late to obtain patent protection on them.
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The standards which the USPTO and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change in the future. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable. The laws of some foreign countries do not protect proprietary information to the same extent as the laws of the United States. Outside the United States, patent protection must be sought in individual jurisdictions, further adding to the cost and uncertainty of obtaining adequate patent protection outside of the United States. Accordingly, the issuance, scope, validity, enforceability, and commercial value of our and our current or future licensors’, licensees’, or collaborators’ current and future patent rights are highly uncertain. We cannot predict whether additional patents protecting our technology will issue in the United States or in foreign jurisdictions, or whether any patents that do issue will have claims of adequate scope to provide a competitive advantage. Our and our current or future licensors’, licensees’, or collaborators’ pending and future patent applications may not result in patents being issued which protect our product candidates or other technology, in whole or in part, or which effectively prevent others from commercializing competitive products and technology. The patent examination process may require us or our current or future licensors, licensees, or collaborators to narrow the scope of the claims of our or our current or future licensors’, licensees’, or collaborators’ pending and future patent applications, which may limit the scope of patent protection that may be obtained.
We cannot confirm that all of the potentially relevant prior art relating to our patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, or have issued and even if such patents cover a product candidate, and/or other technologies, third parties may initiate an adversarial proceeding including opposition, interference, re-examination, post-grant review, inter partes review, litigation, nullification, or derivation action before patent offices or in court, or similar proceedings challenging the validity, enforceability, or scope, inventorship, or ownership of such patents, which may result in the patent claims being narrowed, invalidated, or held unenforceable or unavailable to us.
Patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after the filing of the first priority application, or in some cases not at all, and publications of discoveries in scientific literature lag behind actual discoveries. As such, we cannot be certain that we were the first to make the inventions claimed in our issued patents or pending patent applications, or that we were the first to file for protection of the inventions set forth in our patents or patent applications. As a result, we may not be able to obtain or maintain protection for certain inventions. Therefore, the enforceability and scope of our patents in the United States and in foreign countries cannot be predicted with certainty and, as a result, any patents that we own or license may not provide sufficient protection against competitors. We may not be able to obtain or maintain patent protection from our pending patent applications, from those we may file in the future, or from those we may license from third parties. Moreover, even if we are able to obtain patent protection, such patent protection may be of insufficient scope to achieve our business objectives.
In addition, changes in, or different interpretations of, patent laws in the United States and other countries may permit others to use our discoveries or to develop and commercialize our technology and products without providing any notice or compensation to us or may limit the scope of patent protection that we or our licensors are able to obtain. The laws of some countries do not protect intellectual property rights to the same extent as U.S. laws and those countries may lack adequate rules and procedures for defending our intellectual property rights.
Finally, our and our current and future licensors’, licensees’ or collaborators’ patent applications cannot be enforced against third parties practicing the claimed technology in such applications unless and until a patent issues from such application(s), and then only to the extent the issued claims cover the technology in the relevant jurisdiction, and, if applicable, until the patent survives an opposition, interference, re-examination, inter partes review, and the like with claims that continue to cover the technology.
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We will not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.
Filing, prosecuting, and defending patents on our product candidate or any future product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States, assuming that rights are obtained in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. As such, we will not file for patent protection in all national and regional jurisdictions in the world where such protection may be available.
Accordingly, competitors may use our and our existing or future licensors’, licensees’, or collaborators’ technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we and our existing or future licensors, licensees, or collaborators have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidate or other technologies, and our and our existing or future licensors’, licensees’, or collaborators’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Patent protection must be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. In addition, the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, and the requirements for patentability differ, in varying degrees, from country to country, and the laws of some foreign countries do not protect intellectual property rights, including trade secrets, to the same extent as federal and state laws of the United States. As a result, many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. Such issues may make it difficult for us to stop the infringement, misappropriation, or other violation of our intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. In those countries, we may have limited remedies if patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license. Similarly, if our trade secrets are disclosed in a foreign jurisdiction, competitors worldwide could have access to our proprietary information and we may be without satisfactory recourse. Such disclosure could have a material adverse effect on our business. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.
Furthermore, proceedings to enforce our patent rights and other intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuit that we initiate, and the damages or other remedies awarded to us, if any, may not be commercially meaningful, while the damages and other remedies we may be ordered to pay such third parties may be significant. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
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Issued patents covering our product candidates and related technology could be found invalid or unenforceable if challenged in court or before a patent office.
Issued patents may be challenged, narrowed, invalidated, or circumvented. We may from time to time need to resort to litigation (or other adversarial proceedings) to enforce or defend any patents or other intellectual property right owned by or licensed to us, or to determine or challenge the scope or validity of patents or other intellectual property rights of third parties. As enforcement of intellectual property rights is difficult, unpredictable, and expensive, we may fail in enforcing our rights-in which case our competitors may be permitted to use our technology without being enjoined, required to pay us any license fees, or compensate us for lost profits or reasonable royalty. In addition, litigation involving our patents carries the risk that one or more of our patents will be held invalid (in whole or in part, on a claim-by-claim basis) or held unenforceable. Such an adverse court ruling could allow third parties to commercialize technology covered by our patents we seek to enforce, such as those covering our product candidates and related methods, among other technologies, and then compete directly with us, without payment to us.
If we were to initiate legal proceedings against a third party to enforce a patent covering our product candidates or other technologies, the defendant could counterclaim that our patent is invalid and/or unenforceable, which is commonplace in patent litigation in the United States and in other foreign jurisdictions. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements for patentability, for example, lack of utility, novelty, obviousness, non-enablement, or lack of written description or as constituting unpatentable subject matter. Grounds for an unenforceability assertion could be an allegation that someone substantively involved in prosecution of the patent withheld but-for material information from the USPTO or engaged in affirmatively egregious misconduct, during prosecution, with a specific intent to deceive the USPTO.
The outcome following legal assertions of invalidity and unenforceability during patent litigation (or other adversarial proceedings) is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we could lose at least part, and perhaps all, of the patent protection on our product candidate or other technology. Such a loss of patent protection could have a material adverse impact on our business. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives. Patents and other intellectual property rights also will not protect our technology if competitors design around our protected technology without infringing our patents or other intellectual property rights.
If we are unsuccessful in defending against claims by competitors or others that we are infringing upon their intellectual property rights, our business could be materially harmed.
Our commercial success will depend, in part, on our ability to operate without infringing the proprietary rights of third parties. Other entities may have or obtain patents or other proprietary rights that could limit our ability to make, use, sell, offer for sale, or import a product candidate, a future approved product, or impair our competitive position. There may be issued patents and/or pending patent applications held by third parties that could be alleged as covering our product candidate, irrespective of the merits. Although we believe that these patents are not infringed, and/or are invalid and/or unenforceable, if a court should find that they cover our product candidates and we are unable to invalidate such patents, or if licenses for them are not available or on commercially reasonable terms, our business could be harmed, perhaps materially.
We believe that if such patents or patent applications were asserted against us, we would have counterclaims and defenses against such claims, including non-infringement, the affirmative defense of safe harbor designed to protect activity undertaken to obtain federal regulatory approval of a cell therapy, including under 35 U.S.C. § 271(e) and similar foreign exceptions to infringement, and defenses concerning patent invalidity and/or
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unenforceability. However, if such counterclaims and defenses are not successful and such patents are successfully asserted against us such that they are found to be valid and enforceable, and infringed, unless we obtain a license to such patents, which may not be available or on commercially reasonable terms or at all, we could be prevented from continuing to develop or commercialize our product candidate. We could also be required to pay substantial damages. We cannot confirm that we will ultimately prevail if any such third-party intellectual property is asserted against us.
In the biotechnology industry, significant litigation and other proceedings regarding patents, patent applications, trademarks, and other intellectual property rights have become commonplace. The types of situations in which we may become a party to such litigation or proceedings include:
| • | we or our collaborators may initiate litigation or other adversarial proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our products or processes do not infringe those third parties’ patents; |
| • | if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, opposition, or other proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; |
| • | if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings; and |
| • | if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings. |
These lawsuits (or other adversarial proceedings) would be costly and could affect our results of operations and divert the attention of our management and scientific personnel. The cost of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the cost of such litigation and proceedings more effectively than we can because of their substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.
In addition, if the breadth or strength of protection provided by our or our present or future licensors’, collaborators’, or partners’ patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize current or future product candidates. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
Third-party intellectual property right holders, including our competitors, may actively bring infringement claims against us. We may not be able to successfully settle, license (including on commercially acceptable terms), or otherwise resolve such potential infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage or continue costly, unpredictable, and time-consuming litigation and may be prevented from or experience substantial delays in marketing any approved products. If we fail in any such dispute, in addition to being forced to potentially pay damages, we or our collaborators may be temporarily or permanently prohibited from commercializing our product candidates that are held to be infringing or be forced to redesign product candidates so that we no longer infringe the third-party’s intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business, research, and development.
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The biotechnology industry has produced a significant number of patents, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform or predictable. If we are sued for patent infringement, we would need to demonstrate that our products or methods either do not infringe the patented claims of the relevant patent or that the patented claims are invalid, and we may not be able to do this. Proving invalidity can be difficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and divert management’s time and attention in pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action, or challenge the validity of the patents in court. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully, or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing our product candidate to market, and be precluded from manufacturing or selling our product candidates.
We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent which might adversely affect our ability to develop and market our products.
It is also possible that in our evaluation of third-party intellectual property, we failed to identify relevant patents or applications. We cannot guarantee that any of our patent searches or analyses, including but not limited to the identification of relevant patents, the scope of patented claims, or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidate in any jurisdiction.
The scope of a patented claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products. We may incorrectly determine that our products are not covered by a third-party patent or may incorrectly predict whether a third party’s pending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidate. Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our products.
For example, U.S. applications filed before November 29, 2000 and certain U.S. applications filed after that date that will not be filed outside the United States remain confidential until the patent issues. Patent applications in the United States and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Furthermore, we operate in a highly competitive field, and given our limited resources, it is unreasonable to monitor all patent applications purporting to claim broad coverage in the areas in which we are active. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidate or related technology. We cannot predict whether third parties will be able to successfully obtain claims or the breadth of such claims.
We may become involved in lawsuits involving our intellectual property, including patents, to protect or enforce our patents, which could be expensive, time consuming, and unsuccessful.
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We may become a party to litigation and other adversarial proceedings or disputes involving intellectual property in the US and in other jurisdictions. Such litigation (or other adversarial proceedings or disputes) include instances where we are asserting our intellectual property against third parties, or we are defending against an allegation of infringement. Even if such litigation (or other adversarial proceedings or disputes) is resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there will be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, this could have a substantial adverse effect on the price of our common shares. Such litigation or proceedings and the legal costs associated with them, could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.
If we fail to comply with our obligations under our intellectual property licenses with third parties, we could lose license rights that are important to our business.
We are currently party to intellectual property license agreements. These license agreements impose, and we expect that future license agreements may impose, various obligations on us. For example, we have entered into patent and know-how license agreements with the Board of Regents of The University of Texas System that grant us the right to use certain technologies related to our clinical product candidates and related methods. If we fail to comply with our obligations under the licenses, the licensor may have the right to terminate their respective license agreements, in which event we might not be able to market any product that is covered by the agreements. Termination of the license agreements or reduction or elimination of our licensed rights may result in our having to negotiate new or reinstated licenses with less favorable terms, which could adversely affect our competitive business position and harm our business.
We have rights in some intellectual property that have been discovered through United States government funded programs and thus are subject to federal regulations such as “march-in” rights, certain reporting requirements, and a preference for U.S. industry.
We have rights in some intellectual property that was developed through U.S. government funded programs and thus are subject to federal regulations such as “march-in” rights, certain reporting requirements, and a preference for U.S. industry. For example, some of the intellectual property rights licensed to us under our M.D. Anderson License Agreement were generated using U.S. government funds. As a result, the U.S. government has certain rights to intellectual property embodied in certain current or future products pursuant to the Bayh-Dole Act of 1980. These U.S. government rights in certain inventions developed under government-funded programs include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if the government determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). The U.S. government also has the right to take title to these inventions if the applicable licensor fails to disclose the invention to the government, elect title, and file an application to register the intellectual property within specified time limits. In addition, the U.S. government may acquire title to these inventions in any country in which a patent application is not filed within specified time limits. Intellectual property generated under U.S. government-funded programs is also subject to certain reporting requirements, compliance with which may require us, or the applicable licensor, to expend substantial resources. In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the U.S. This requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that, under the circumstances, domestic manufacture is not commercially feasible. This preference for U.S. manufacturing may limit our ability to license the applicable patent rights on an exclusive basis under certain circumstances.
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We may be unsuccessful in licensing or acquiring third-party intellectual property that may be required to develop and commercialize our product candidate.
We have rights, through patents that we have in-licensed or own, to the intellectual property to develop our product candidates. Because our programs may involve additional product candidates that may require the use of intellectual property or proprietary rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-license, or use such intellectual property and proprietary rights of others. We may be unable to acquire or in-license any third-party intellectual property or proprietary rights or to do so on commercially reasonable terms. For example, we sometimes collaborate with public or private academic institutions to accelerate our research or development under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the strategic collaboration. Regardless of such option, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us, and the institution may license such intellectual property rights to third parties, potentially blocking our ability to pursue our development and commercialization plans. The same situation may occur with a present or future development partner.
The licensing and acquisition of third-party intellectual property and proprietary rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property and proprietary rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size and greater capital resources and development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license intellectual property and proprietary rights to us.
If we are unable to successfully acquire or in-license rights to required third-party intellectual property and proprietary rights or maintain our intellectual property and proprietary rights, we may have to cease development of the relevant program, product, or product candidate, which could have a material adverse effect on our business.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
The USPTO and various foreign patent offices require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent prosecution and post grant or issuance. We employ reputable law firms and other professionals to help us comply. Additionally, periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on patents and/or patent applications will be due to the USPTO and various foreign patent offices at various points over the lifetime of our patents and/or patent applications. We rely on our outside counsel or our agents to pay these fees when due. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents. If such an event were to occur, it could have a material adverse effect on our business.
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In addition, we may be responsible for the payment of patent fees for patent rights that we license from third parties. If any licensor of these patents does not itself elect to make these payments, and we fail to do so, we may be liable to the licensor for any costs and consequences of any resulting loss of patent rights. If we or our existing or future licensors fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which would have an adverse effect on our business.
If we do not obtain protection under the Hatch-Waxman Amendments and similar foreign legislation for extending the term of patents covering each of our product candidates, our business may be materially harmed.
Patents typically have a limited lifespan. In the United States and in most ex-U.S. jurisdictions, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest non-provisional filing date, not including potential patent term extensions or adjustments that may be available in the United States, and under comparable laws applicable outside the United States, where certain conditions are met. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be open to competition from competitive cell therapies. Given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours, causing our revenue from applicable products to be reduced, possibly materially, and potentially harming our ability to recover our investment in such product or obtain a reasonable return on that investment.
Depending upon the timing, duration, and conditions of FDA marketing approval of our product candidates or any future product candidates, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Amendments”). The Hatch-Waxman Amendments permit a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during the FDA regulatory review process. However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents, or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that product will be shortened and our competitors may obtain approval to market competing products sooner. As a result, our revenue from applicable products could be reduced, possibly materially.
We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
As is common in the biotechnology and pharmaceutical industries, we employ individuals who were previously or are concurrently employed at other biotechnology or pharmaceutical companies, universities, and/or research institutions and the like, including our competitors or potential competitors. We may be subject to claims that these employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former or concurrent employers, or that patents and applications we have filed to protect inventions of these employees, even those related to our product candidate, are rightfully owned by their former or concurrent employer.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel or sustain damages. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to commercialize our technology or products. Such a license may not be available or on commercially reasonable terms or at all.
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Any trademarks we have obtained or may obtain may be infringed or successfully challenged, resulting in harm to our business.
We expect to rely on trademarks as one means to distinguish our product candidates that are approved for marketing from the products of our competitors. However, our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversions of resources and could adversely affect our business, financial condition, and growth prospects.
In addition, any proprietary name we propose to use with any product candidates in the United States must be approved by the FDA, regardless of whether we have registered it or applied to register it as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of the potential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify an alternate proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties, and be acceptable to the FDA.
Risks Related to Healthcare, Insurance and Legal Matters
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of our product candidate.
We face an inherent risk of product liability exposure related to the testing of our product candidate in human trials and may face greater risk if we commercialize any products that we develop. Product liability claims may be brought against us by subjects enrolled in our trials, patients, healthcare providers, or others using, administering, or selling our products. If we cannot successfully defend ourselves against such claims, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
| • | decreased demand for any product candidate we may develop; |
| • | withdrawal of trial participants; |
| • | termination of clinical trial sites or entire trial programs; |
| • | injury to our reputation and significant negative media attention; |
| • | initiation of investigations by regulators; |
| • | significant time and costs to defend the related litigation; |
| • | substantial monetary awards to trial subjects or patients; |
| • | diversion of management and scientific resources from our business operations; and |
| • | the inability to commercialize any product candidates that we may develop. |
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While we currently hold product liability insurance coverage for clinical trials consistent with industry standards, the amount of coverage may not adequately cover all liabilities that we may incur. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain marketing approval for our product candidate, but we may be unable to obtain commercially reasonable product liability insurance. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business and financial condition.
The successful commercialization of our product candidate or any future product candidates, if approved, will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels, and favorable pricing policies. Failure to obtain or maintain coverage and adequate reimbursement for our products could limit our ability to market those products and decrease our ability to generate revenue.
The availability of coverage and the adequacy of reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers, and other third-party payors are essential for most patients to be able to afford prescription medications such as our product candidate or any future product candidates, if approved. Our ability to achieve coverage and acceptable levels of reimbursement for our products by third-party payors will have an effect on our ability to successfully commercialize those products. Accordingly, we will need to successfully implement a coverage and reimbursement strategy for any approved product candidate. Even if we obtain coverage for a given product by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. For more information, see the section of this information statement/prospectus entitled “Information Regarding Obsidian-Coverage, Pricing and Reimbursement” beginning on page 257 of this information statement/prospectus.
If we participate in the Medicaid Drug Rebate Program or other governmental pricing programs, in certain circumstances, our products would be subject to ceiling prices set by such programs, which could reduce the revenue we may generate from any such products. Participation in such programs would also expose us to the risk of significant civil monetary penalties, sanctions, and fines should we be found to be in violation of any applicable obligations thereunder.
Third-party payors increasingly are challenging prices charged for biopharmaceutical products and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a third-party payor may consider our products as substitutable and offer to reimburse patients only for the less expensive product. Even if we are successful in demonstrating improved efficacy or improved convenience of administration with our products, pricing of existing drugs may limit the amount we will be able to charge for our products. These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our products and may not be able to obtain a satisfactory financial return on products that we may develop.
There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs will be covered. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for our product candidate or any future product candidates.
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Obtaining and maintaining reimbursement status is time-consuming, costly, and uncertain. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs. However, no uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, and, in some cases, at short notice, and we believe that changes in these rules and regulations are likely. For products administered under the supervision of a physician (including products administered in the clinical setting), obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself or the administration of the product, or the treatment or procedure in which the product is used may not be available, which may impact physician utilization.
Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe and other countries has and will continue to put pressure on the pricing and usage of our product candidate or any future product candidates, if approved in these jurisdictions. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our products. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.
Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our products. We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, and prescription drugs, surgical procedures, and other treatments in particular, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Government authorities currently impose mandatory discounts for certain patient groups, such as Medicare and Medicaid beneficiaries, and may seek to increase such discounts at any time. Future regulation may negatively impact the price of our products, if approved. We cannot predict the likelihood, nature, or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. In addition, the U.S. Supreme Court’s June 2024 decision to overturn established case law giving deference to regulatory agencies’ interpretations of ambiguous statutory language has introduced uncertainty regarding the extent to which the FDA’s regulations, policies and decisions may become subject to increasing legal challenges, delays and/or changes. If we are slow or unable to adapt to changes to existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our product candidate may lose any marketing approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.
We are subject to various U.S. federal, state, and foreign healthcare laws and regulations, which could increase compliance costs, and our failure to comply with these laws and regulations could harm our reputation, subject us to significant fines and liability, or otherwise adversely affect our business.
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Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations, and customers may expose us to broadly applicable foreign, federal, and state fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, and plan to market, sell, and distribute any products for which we obtain regulatory approval. In particular, the research of our product candidates, as well as the promotion, sales and marketing of our product candidates is subject to extensive laws designed 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, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. For more information about the applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate, see the section of this information statement/prospectus entitled “Information Regarding Galera-Government Regulation-Other U.S. Healthcare Laws and Compliance Requirements” beginning on page 201 of this information statement/prospectus.
Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare and privacy laws and regulations will involve ongoing substantial costs. It is possible that governmental authorities will conclude that our business practices, including certain agreements we have entered into with physicians who are paid, in part, in the form of stock or stock options, may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other healthcare laws and regulations. Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant penalties, including civil, criminal, and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government-funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations. Defending against any such actions can be costly and time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business are found not to be in compliance with applicable laws or regulations, they may be subject to significant criminal, civil, or administrative sanctions, including exclusions from government-funded healthcare programs. If any of the above occur, our ability to operate our business and our results of operations could be adversely affected.
Current and future healthcare reform legislation or regulation may increase the difficulty and cost for us to obtain coverage for and commercialize our product candidate or any future product candidates and may adversely affect the prices we may set.
In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell our product candidate or any future product candidates for which we obtain regulatory approval. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For example, the Inflation Reduction Act of 2022 (“IRA”) includes several provisions that will impact our business to varying degrees, including provisions that allow the U.S. government to negotiate Medicare Part B and Part D pricing for certain high-cost drugs and biologics without generic or biosimilar competition, among others. Our lead product candidate, OBX-115, is being developed in indications that may rely on Medicare reimbursement. Accordingly, these price-negotiation provisions may have a negative impact on our future revenue and profits. Further, the IRA also imposed rebates with respect to certain drugs and biologics covered under Medicare Part B or Medicare Part D to penalize price increases that outpace inflation.
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The One Big Beautiful Bill Act of 2025 (the “OBBBA”), also included significant reforms to Medicaid, including an estimated $1 trillion in reduced federal Medicaid spending from 2025 through 2034, the imposition of work requirements for certain adult enrollees, more frequent eligibility redeterminations, and increased cost-sharing for beneficiaries. These changes are expected to reduce overall Medicaid enrollment and access to care. Although the effect on our business is currently unknown, any decrease in the number of insured patients or reimbursement levels for our products could adversely affect our revenue and commercial prospects.
For more information, see the section of this information statement/prospectus entitled “Information Regarding Galera-Government Regulation-Healthcare Reform” beginning on page 203 of this information statement/prospectus.
Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, financial condition, results of operations, and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our product candidate and any future product candidates, if approved, or put pressure on our product pricing, which could negatively affect our business, financial condition, results of operations, and prospects.
We expect that these existing laws and other federal and state healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies, and additional downward pressure on the price that we receive for any approved product. Reductions in reimbursement levels may negatively impact the prices we receive or the frequency with which our potential products are prescribed or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidate or any future product candidates, if approved.
Failure to comply with laws and regulations related to the protection of research subjects could result in fines, penalties, and litigation, and have a material adverse effect upon our business.
We may be subject to regulation under international, federal, state, and local laws and regulations relating to the protection of research subjects. Federally funded human-subject research in the United States, including the collection of identifiable human biospecimens, is governed by 45 CFR Part 46, also known as the Health and Human Services Policy for Protection of Human Research Subjects or the “Common Rule.” Use of biospecimens in certain other research is subject to FDA regulations for the Protection of Human Subjects and Institutional Review Boards at 21 CFR Parts 50 and 56. While we believe that we are in compliance with these laws, we may not be aware of all such laws or may fail to properly audit and identify gaps in compliance. Similarly, we may find errors in our product candidate and processes and may fail to properly match the compliance requirements of our researchers to the compliance requirements of our suppliers. Failure of our company or our suppliers to comply with international, federal, state, and local laws and regulations could subject us to denial of the right to conduct business, fines, criminal penalties, and/or other enforcement actions which could have a material adverse effect on our business.
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Risks Related to Employee Matters and Managing Growth
Our ability to develop product candidates and our future growth depends on attracting, hiring, and retaining our key personnel and recruiting additional qualified personnel. If we are not successful in attracting, motivating, and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. Additionally, we will need to grow the size of our organization, and we may experience difficulties in managing this growth.
We are highly dependent on members of our executive team. The loss of the services of any of them may adversely impact the achievement of our objectives. The loss of services of any of these individuals could delay or prevent the successful development of our product candidate, completion of our planned clinical trials, or the commercialization of our product candidate and any future product candidates.
Our success also depends upon the continued contributions of our key management and scientific personnel, many of whom have been instrumental for us and have substantial experience with developing therapies, identifying potential product candidates, and building the technologies related to the clinical development of our product candidate. Historically, we have experienced significant turnover in our research and development workforce and have operated with a limited team of scientific and technical personnel. Given the specialized nature of engineered TIL technology and our approach, there is an inherent scarcity of experienced personnel in these fields. As we continue developing our product candidate in our pipeline, we will require personnel with medical, scientific, or technical qualifications specific to each program. The loss of key personnel, in particular our scientists, would delay our research and development activities. Despite our efforts to retain valuable employees, members of our team may terminate their employment with us on short notice. The competition for qualified personnel in the biotechnology and biopharmaceutical industries is intense, and our future success depends upon our ability to attract, retain, and motivate highly skilled scientific, technical, and managerial employees. We face competition for personnel from other companies, universities, public and private research institutions, and other organizations. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages. In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived benefits of our stock awards decline, it may harm our ability to recruit and retain highly skilled employees. If our recruitment and retention efforts are unsuccessful in the future, it may be difficult for us to implement our business strategy, which would have a material adverse effect on our business.
As our development plans and strategies develop, and as we continue operating as a public company, we expect to need additional managerial, operational, marketing, sales, financial, and other personnel. Future growth would impose significant added responsibilities on members of management, including:
| • | managing our internal development efforts effectively, including the clinical and FDA review process for our current product candidates and any future product candidates we develop, while complying with our contractual obligations to contractors and other third parties; and |
| • | improving our operational, financial, and management controls, reporting systems, and procedures. |
Our future financial performance and our ability to advance development of and, if approved, commercialize our current product candidates and any future product candidates we develop will depend, in part, on our ability to effectively manage any future growth, and our management may have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
We currently rely, and for the foreseeable future will continue to rely, in substantial part, on certain independent organizations, advisors, and consultants to provide certain services. We cannot assure you that the services of independent organizations, advisors, and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage
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our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed, or terminated, and we may not be able to obtain marketing approval of any current or future product candidates or otherwise advance our business. We cannot assure you that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize our current product candidates and any future product candidates we develop and, accordingly, may not achieve our research, development and commercialization goals.
Other General Risks
If the Galera merger and the Obsidian merger, taken together, do not qualify as a transaction described in Section 351 of the Code (or, in the case of the Obsidian stockholders, if the Obsidian merger, by itself, does not qualify as a reorganization within the meaning of Section 368(a) of the Code), Obsidian stockholders may recognize substantial taxable gain as a result of the mergers, and may be required to pay substantial additional U.S. federal income taxes, in the taxable year in which the transactions occur.
The Galera merger and the Obsidian merger, taken together, are intended to qualify as a transaction described in Section 351 of the Code. The Obsidian merger, by itself, is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code. The positions of Galera and Obsidian are not binding on the IRS or the courts, and the parties do not intend to request a ruling from the IRS with respect to the transactions described in the merger agreement. Accordingly, there can be no assurance that the IRS will not challenge the qualification of the Galera merger and the Obsidian merger taken together, as a transaction described in Section 351 of the Code or that a court will not sustain such a challenge. If the IRS were to be successful in any such contention, or if for any other reason the Galera merger and the Obsidian merger, taken together, were not treated as a transaction described in Section 351 of the Code (and if the Obsidian merger does not qualify as a reorganization within the meaning of Section 368(a) of the Code), then the Obsidian stockholders would not be entitled to defer any portion of the gain realized as a result of receiving shares of Parent common stock in the transactions and may be required to pay substantial additional U.S. federal income taxes with respect to the taxable year in which such transactions occur.
Unfavorable global economic and geopolitical conditions could adversely affect our business, financial condition, stock price, and results of operations.
Our business could be adversely affected by unstable economic and political conditions within the United States and foreign jurisdictions, including as a result of an economic downturn and geopolitical events, such as changes in U.S. federal policy that affect the geopolitical landscape. Changes to policy implemented by the U.S. Congress, the current administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. For example, in 2025, the United States imposed tariffs on imports on its trading partners, including Canada, Mexico, the EU and China. Historically, tariffs have led to increased trade and political tensions, between not only the United States and China, but also between the United States and other countries in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations.
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The global credit and financial markets have also experienced extreme volatility and disruptions (including as a result of actual or perceived changes in interest rates, inflation, and macroeconomic uncertainties), which has included severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, high inflation, uncertainty about economic stability, global supply chain disruptions, and increases in unemployment rates. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the ongoing conflicts between Russia and Ukraine, the conflicts in the Middle East, terrorism, or other geopolitical events. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. A severe or prolonged economic downturn could result in a variety of risks to our business, including a decrease in the demand for our product candidates and in our ability to raise additional capital when needed on acceptable terms, if at all. For example, there has been proposed U.S. legislation that may restrict the ability of U.S. biopharmaceutical companies to purchase services or products from, or otherwise collaborate with, certain Chinese biotechnology companies of concern without losing the ability to contract with, or otherwise receive funding from, the U.S. government. We continue to assess the legislation as it develops to determine whether it could have an effect on our contractual relationships. Furthermore, any disruptions to our supply chain as a result of unfavorable global economic conditions, including due to geopolitical conflicts or public health crises, could negatively impact the timely execution of our ongoing and future clinical trials. In addition, current inflationary trends in the global economy may impact salaries and wages, costs of goods and transportation expenses, among other things, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures may create market and economic instability. We cannot anticipate all of the ways in which the foregoing, and the current economic climate and financial market conditions generally, could adversely impact our business.
We, or the third parties upon whom we depend, may be adversely affected by natural disasters, public health crises, or other business interruptions and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters or public health crises could severely disrupt our operations, and have a material adverse impact on our business, results of operations, financial condition, and prospects. If a natural disaster, power outage, public health crisis, or other event occurred that prevented us from conducting our clinical trials, releasing clinical trial results, or delaying our ability to obtain regulatory approval for our product candidate, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
Our information technology systems, or those used by our CROs or other contractors or consultants, may fail or suffer cybersecurity incidents or breaches, which could adversely affect our business.
Despite the implementation of security measures, our information technology systems and data and those of our current or future CROs or other contractors and consultants are vulnerable to compromise or damage from computer hacking, computer viruses, social engineering (e.g. phishing attacks) and malware (e.g., ransomware malicious software), fraudulent activity, employee misconduct, human error, telecommunication and electrical failures, natural disasters, or other cybersecurity attacks or accidents. Future acquisitions could expose us to additional cybersecurity risks and vulnerabilities from any newly acquired information technology infrastructure. Cybersecurity attacks are constantly increasing in frequency and sophistication and are made by groups and individuals with a wide range of motives (including industrial espionage) and expertise, including by organized criminal groups, “hacktivists,” nation states, and others. As a result of a continued hybrid working environment, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. Further, as a company with an increasingly global presence, our systems are subject to frequent attacks, which are becoming more commonplace in the industry, including attempted hacking, phishing attempts, such as cyber-related threats involving spoofed or manipulated electronic communications, which increasingly represent considerable risk. Due to the nature of some of the attacks described herein, there is a risk that an attack may remain undetected for
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a period of time. Even if identified, we may be unable to adequately investigate or remediate cybersecurity incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. While we continue to make investments to improve the protection of data and information technology, including in the hiring of IT personnel, periodic cyber security awareness trainings, and improvements to IT infrastructure and controls, and conduct regular testing of our systems, there can be no assurance that our efforts will prevent service interruptions or cybersecurity incidents or breaches.
We and certain of our service providers are from time to time subject to cyberattack attempts or incidents and cybersecurity incidents. Any cybersecurity incident could adversely affect our business, by leading to, for example, the loss of trade secrets or other intellectual property, demands for ransom or other forms of blackmail, or the unauthorized disclosure of personal or other sensitive information of our employees, clinical trial patients, customers, and others. Although to our knowledge we have not experienced any significant cybersecurity incident to date, if such an event were to occur, it could seriously harm our development programs and our business operations. We could be subject to cybersecurity incident or breach notification requirements, regulatory actions taken by governmental authorities, litigation under laws that protect the privacy of personal information, or other forms of legal proceedings, which could result in significant liabilities or penalties, result in substantial costs, and require attention from management. Further, a cybersecurity incident may disrupt our business or damage our reputation, which could have a material adverse effect on our business, prospects, operating results, share price and stockholder value, and financial condition. We could also incur substantial remediation costs, including the costs of investigating the incident, repairing, or replacing damaged systems, restoring normal business operations, implementing increased cybersecurity protections, and paying increased insurance premiums.
For example, the loss of clinical trial data from completed, ongoing, or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. If a cybersecurity breach or other incident were to result in the unauthorized access to or unauthorized use, disclosure, release, or other processing of clinical trial data or personal data, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media, and other parties pursuant to privacy and security laws. Likewise, we rely on our third-party research institution collaborators for research and development of our product candidate and other third parties for the manufacture of our product candidate and to conduct clinical trials, and similar events relating to their information technology systems could also seriously harm our business. Any security compromise affecting us, our collaborators, or our industry, whether real or perceived, could harm our reputation, erode confidence in the effectiveness of our security measures, and lead to regulatory scrutiny. To the extent that any disruption or cybersecurity incident or breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential or proprietary or personal information, we could incur liability, our competitive position could be harmed, and the further development and commercialization of our product candidate could be delayed, result in substantial costs and require attention from management.
If we fail to establish and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.
We are not currently required to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be reevaluated frequently. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting
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principles. In connection with this offering, we intend to begin the process of documenting, reviewing, and improving our internal controls and procedures for compliance with Sections 302 and 404 of the Sarbanes-Oxley Act, which will require annual management assessment of the effectiveness of our internal control over financial reporting. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
We will be required to disclose changes made in our internal controls and procedures on a quarterly basis and our management will be required to assess the effectiveness of these controls annually. However, for as long as we are an “emerging growth company” or a non-accelerated filer, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We could be an emerging growth company for up to five years following completion of the mergers. An independent assessment of the effectiveness of our internal controls over financial reporting could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls over financial reporting could lead to restatements of our financial statements and require us to incur the expense of remediation. When we lose our status as an “emerging growth company” and reach an accelerated filer threshold, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. To comply with the requirements of being a reporting company under the Exchange Act, we may need to upgrade our information technology systems; implement additional financial and management controls, reporting systems, and procedures; and hire additional accounting and finance staff. If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Upon the completion of the mergers and concurrent financing, we will become subject to the periodic reporting requirements of the Exchange Act. We must design our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement causing us to fail to make a required related party transaction disclosure. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.
Our ability to use our net operating loss carryforwards and other tax attributes may be limited.
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As of December 31, 2025 we had approximately $186.5 million of federal net operating losses (“NOLs”). Federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of our taxable income. As of December 31, 2025, we had approximately $171.0 million of state NOLs. Of the state NOLs, some are of indefinite life, but most are of definite life with various expiration dates, beginning in 2037. As of December 31, 2025, we had approximately $17.1 million of federal research and development tax credit carryforwards. Federal tax credit carryforwards expire at various dates, beginning in 2037. As of December 31, 2025, we had approximately $7.7 million of state research and development tax credit carryforwards. The state tax credits, which have various carryforward rules, begin to expire in 2031. Our ability to utilize these NOLs and tax credits to offset future tax liabilities depends on the successful development of our product candidates and future financial performance.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by “5 percent shareholders” over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income or taxes may be limited. A corporation that experiences an ownership change will generally be subject to an annual limitation on the use of its pre-ownership change NOLs equal to the value of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate (subject to certain adjustments). We may have experienced ownership changes in the past and may experience ownership changes as a result of our acquisitions of assets and as a result of the mergers and concurrent financing and/or subsequent shifts in our stock ownership (some of which are outside our control). There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs by federal or state taxing authorities or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities. As a result, our ability to use our pre-change NOLs and tax credits to offset future taxable income, if any, could be subject to limitations. Similar provisions of state tax law may also apply. As a result, even if we attain profitability, we may be unable to use a material portion of our NOLs and tax credits.
Changes in tax law could adversely affect our business and financial condition.
The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application), including with respect to NOLs and research and development tax credits, could adversely affect us or holders of our common stock. For example, the OBBBA was signed into law on July 4, 2025 and made significant changes to U.S. federal tax law. Under Section 174 of the Code, in taxable years beginning after December 31, 2021, expenses that are incurred for research and development performed outside the U.S. will be capitalized and amortized, which may have an adverse effect on our cash flow. The OBBBA provides that for taxable years beginning after December 31, 2024, expenses that are incurred for research and development performed in the United States may, at the taxpayer’s election, be immediately deducted or capitalized and amortized. In addition, the OBBBA provides that for taxable years beginning after December 31, 2021 and before January 1, 2025, certain eligible taxpayers generally may elect to retroactively deduct expenses for research and development performed in the United States in such taxable years by filing amended tax returns for such taxable years, and all other taxpayers that are not eligible to make such an election and that amortized expenses for research and development performed in the United States in such taxable years generally may elect to accelerate and deduct the remaining unamortized amounts of such research and development expenses (i) in the first taxable year beginning after December 31, 2024, or (ii) ratably over the two-taxable year period beginning with the first taxable year beginning after December 31, 2024. In recent years, many changes to tax laws have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition, or results of operations. We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock.
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We may become involved in securities class action litigation, which is expensive, and could divert management’s attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages.
In the past, securities class action litigation has often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, or the announcement of negative events, such as negative results from clinical trials. These events may also result in or be concurrent with investigations by the SEC. We may be exposed to such litigation or investigation even if no wrongdoing occurred. Litigation and investigations are usually expensive and divert management’s attention and resources, which could adversely affect our business and cash resources and our ability to consummate a potential strategic transaction or the ultimate value our stockholders receive in any such transaction.
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Exhibit 99.3
BUSINESS
Unless the context otherwise requires, references in this section to “we,” “us,” “our” and the “Company” refer to Obsidian.
Overview
We are a clinical-stage biopharmaceutical company harnessing novel protein-regulation technology to develop engineered tumor infiltrating lymphocyte, or TIL, cell therapies for the treatment of patients with solid tumors. Our proprietary cytoDRiVE™ platform is highly versatile and allows us to leverage drug responsive domains, or DRDs, to control protein function, with our initial focus on TIL cell therapies developed from this platform, or cytoTILs™. Our lead product candidate, OBX-115, is a novel, genetically engineered, autologous TIL cell therapy currently in a Phase 2 clinical trial for the treatment of advanced melanoma and a Phase 1 clinical trial for the treatment of non-small cell lung cancer, or NSCLC. Our proprietary cytoDRiVE platform has enabled OBX-115 to have the potential to drive superior tumor-killing activity with a significantly more tolerable safety profile. In contrast to other TIL approaches, OBX-115 is designed with regulatable membrane-bound IL15, or mbIL15, which drives TIL persistence, eliminates the need to dose toxic interleukin-2, or IL2, and enables outpatient administration of low-dose lymphodepletion. We currently own or in-license the intellectual property rights to OBX-115 and own the intellectual property to our proprietary cytoDRiVE platform. Furthermore, OBX-115 can be manufactured using tumor tissue procurement from an outpatient, minimally invasive core needle biopsy. Across a cohort of fifteen patients with treatment-resistant or refractory melanoma in our Phase 1/2 clinical trial, OBX-115 administration at the recommended Phase 2 dose demonstrated a 67% confirmed objective response rate, or ORR, and significant tumor burden reduction, including two confirmed complete responses, or CRs. This response rate, to our knowledge, is the highest current ORR shown in this setting across modalities. We believe that, if approved, the more favorable product profile will support rapid market adoption of OBX-115 relative to currently available TIL cell therapies. OBX-115 has been granted Fast Track and Regenerative Medicine Advanced Therapy, or RMAT, designations from the U.S. Food and Drug Administration, or FDA, for the treatment of patients with unresectable or metastatic melanoma that is resistant to immune checkpoint inhibitor, or ICI, therapy. These designations are advantageous to facilitate and expedite the review of therapies, allow for more frequent meetings with FDA to discuss the development plan for the product candidate, and enable potential eligibility for rolling review and priority review, however such designations do not guarantee marketing approval, either on an accelerated basis or otherwise. In our Phase 1 clinical trial in NSCLC, early clinical results show robust tumor shrinkage and include multiple confirmed partial responses, or PRs. We expect additional NSCLC Phase 1 clinical data will be available in the first half of 2027 and expect to announce melanoma registration-enabling data by the end of 2027. We believe our product candidates are distinct from current cell therapies and have the potential to significantly impact the treatment of solid tumors and clinical outcomes of patients with cancer.
Cell therapies have delivered transformational benefits in treating hematological malignancies; however, their impact in treating solid tumors has been limited. Approved chimeric antigen receptor, or CAR-T, cell therapies or engineered T-cell receptor, or TCR-T, cell therapies, which target single antigens, have demonstrated limited efficacy in solid tumors while leading to significant toxicities. Solid tumors present formidable barriers to immune and cell therapies, including antigen heterogeneity, physical exclusion of immune cells, immunosuppressive tumor microenvironments, and adverse effects due to overlapping expression of tumor targets in tumor cells with non-tumor host cells. Furthermore, while immunotherapies such as ICIs have improved outcomes for patients, more than 85% of cancer patients fail to respond to ICI therapy. As such, solid tumors represent an area of high unmet clinical need, accounting for over 90% of cancer deaths.
We believe that by using TIL, which are immune cells extracted from a patient’s own tumor, and our cytoDRiVE platform to develop OBX-115, we will be able to overcome the challenges faced by traditional cell therapies. As TIL contain T cells that recognize a broad spectrum of tumor antigens, the potential for loss of antitumor activity due to antigen heterogeneity is limited. In addition, TIL, being tumor-derived, has an advantage over T cell therapies manufactured from circulating T cells based on their ability to migrate to tumors.
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Clinical trials with standard non-engineered TIL, the first generation of TIL cell therapy that involves isolation and expansion of all TIL in the tumor sample, have shown objective responses in clinical trials in limited solid tumor types. OBX-115 cells are engineered TIL expressing pharmacologically regulatable mbIL15, which has been shown to enhance their inherent tumor homing and broaden their targeting.
We have a growing library of internally discovered DRDs of varying sizes and purposes, and our cytoDRiVE platform is designed to enable rapid optimization of tunable and functional proteins. We have developed an extensive synthetic biology engineering toolkit to potentially optimize protein functionality in any cell type, including but not limited to, type I/II membrane proteins, membrane-tethered cytokines, intracellular proteins, secreted proteins, and genome editing proteins. In addition to the development of our cytoTILs, we are exploring the breadth of our cytoDRiVE platform by developing novel approaches that expand its potential applications to additional cell therapies, including the ability to regulate secreted proteins and expression of messenger RNA, or mRNA, or small interfering RNA, or siRNA. cytoDRiVE is highly versatile and can be applied across a broad range of therapeutic applications, including to broaden the reach of cell therapies (including CAR-T) and gene therapies outside of oncology. Our cytoDRiVE platform has led to the development of our lead cytoTIL product candidate, OBX-115, with carbonic anhydrase 2, or CA2, as the DRD which is pharmacologically regulated by acetazolamide, or ACZ, to allow for control of mbIL15 expression.
Our Product Candidate: OBX-115
Our lead product candidate, OBX-115, is designed to significantly improve upon existing cell therapies, including non-engineered TIL cell therapies, that have demonstrated limited success due to moderate efficacy, unfavorable adverse event profile, and manufacturing challenges. We designed our proprietary manufacturing process to ensure OBX-115 would contain tumor-reactive TIL with high antitumor activity and phenotypically enriched for expansion and persistence. In addition, we have optimized our manufacturing process across the continuum of pre-Rapid Expansion Protocol, or Pre-REP, activation, transduction of CA2-mbIL15 construct, Rapid Expansion Protocol, or REP, and cryopreservation to potentially allow for robustness, reproducibility, and a high manufacturing success rate. By leveraging our cytoDRiVE and our robust proprietary manufacturing process, we believe OBX-115 has key attributes required to address the unmet need in the treatment of solid tumors and to meaningfully expand the targetable patient population. These attributes include:
| • | Transduced to express mbIL15: We utilize ACZ, an oral, FDA approved drug, to regulate the expression of mbIL15 on OBX-115. The presence of ACZ, both in our manufacturing process and in patients, stabilizes our mbIL15 construct, allowing it to be expressed on the cell surface where it can activate T cells as well as other immune cells such as natural killer, or NK, cells. This dosing schedule also enables longer term cell persistence. In the absence of ACZ, mbIL15 is degraded by the cell’s disposal mechanism, known as the cellular proteasome system. |
| • | No IL2 needed during REP nor after TIL infusion: Regulated mbIL15 expression drives TIL persistence, eliminating the need for IL2 both during the REP of manufacturing and after TIL infusion. IL2 stimulation of T cells during the REP causes T cell exhaustion, which may translate to reduced T cell persistence after infusion and activation-induced cell death, a form of programmed cell death. Use of IL2 also leads to expansion of regulatory T cells, or Tregs, immune cells that have the potential to suppress T cell cytotoxicity. Further, systemic administration of IL2 has been shown to induce severe toxicities, including capillary leak syndrome with potential for multi-organ failure, myocardial infarction, acute renal failure, and immune-mediated neuropathy. |
| • | Utilizes low-dose lymphodepletion: Presence of regulated mbIL15 enables the use of low-dose lymphodepletion for OBX-115. As compared to non-engineered TIL, treatment with OBX-115 utilizes approximately 50% less cyclophosphamide and is compatible with outpatient administration. Standard-dose lymphodepletion has approximately four times more cyclophosphamide than CAR-T regimens and predominantly requires inpatient administration. The administration of standard-dose lymphodepletion and high-dose IL2 in first generation, non-engineered, approved TIL cell therapies further elevates risk of adverse event severity. |
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| • | More convenient tissue procurement and reduced burden on patients: Our clinical data has shown that our optimized manufacturing process allows us to utilize core needle biopsy for tumor tissue procurement, which is an outpatient procedure with minimal scheduling complexity compared to surgical resection. |
| • | Manufacturing innovation driving superior phenotype: Optimization and innovation of our manufacturing process, including the use of 4-1BB agonism, engineered iFeeder cells, and pharmacologically regulatable mbIL15 creates a drug product that consists of minimally exhausted, memory-rich CD8+ cells. These attributes allow for robust expansion and persistence with enhanced cytotoxicity of OBX-115 post-infusion into the patient. |
Together, we believe the innovation of regulated mbIL15 engineering, along with the proprietary technology and optimization of our manufacturing process, drives a differentiated product profile with a potentially decreased treatment burden for patients, while demonstrating multiple profile advantages over other cell therapies.
In our Phase 1/2 trial, in a cohort of 15 patients with advanced melanoma and confirmed radiological progression post-ICI therapy, an indication of high unmet medical need, treatment with OBX-115 at the recommended Phase 2 dose, or RP2D, led to an unprecedented ORR of 67% with rapid and durable tumor regression. Furthermore, there was no treatment-related mortality, or TRM, dose-limiting toxicities, or DLTs, or discontinuations due to adverse events. There were no cases of immune effector-cell associated neurotoxicity syndromes, or ICANS. Our optimized regimen enables outpatient administration of low dose lymphodepletion.
Amtagvi®, or lifileucel, was the first TIL cell therapy to receive accelerated FDA approval in 2024 for the treatment of adult patients with unresectable or metastatic melanoma previously treated with a PD-1 blocking antibody, and if B-Raf proto-oncogene, or BRAF, V600 mutation positive, a BRAF inhibitor with or without a mitogen-activated protein kinase enzyme, or MEK, inhibitor. Amtagvi’s approval was based on a 31.5% ORR and the label carries a boxed warning for multiple serious risks, including 7.5% rate of TRM, prolonged severe cytopenia, internal organ hemorrhage, and severe infections. During Amtagvi’s registrational clinical trial, capillary leak syndrome occurred in 13.5% and encephalopathy in 17.3% of Amtagvi treated patients. Additionally, grade ≥ 3 febrile neutropenia was seen in 46.8% of patients and 23.6% of patients were transferred to the intensive care unit, or ICU, post-infusion. Many patients in this trial experienced an extended hospital length-of-stay. The boxed warning restricts use of Amtagvi to use only in the inpatient setting with the availability of cardiopulmonary or intensive care specialists. These fatal treatment-related adverse effects are potentially attributed to the multicomponent regimen including standard-dose lymphodepletion and IL2. OBX-115 treatment regimen does not include standard-dose lymphodepletion or IL2 and it has a zero rate of TRM and a 10% rate of ≥ Grade 3 febrile neutropenia. Additionally, there have been no cases of capillary leak syndrome or encephalopathy, nor have any ICU transfers occurred among patients with melanoma treated with OBX115.
The U.S. incidence of second-line advanced melanoma is about 10,300 with about 8,500 deaths annually. Our analyses suggest that based on its favorable product profile, OBX-115 has the potential to double the number of treatment-eligible patients with advanced melanoma compared to existing non-engineered TILs.
The FDA granted OBX-115 Fast Track and RMAT designations for the treatment of patients with unresectable or metastatic melanoma that is resistant to ICI therapy. Candidates receiving RMAT designation may also be eligible for accelerated approval and priority review. We plan to initiate our registration-enabling study for OBX-115 in second-line advanced melanoma in support of an accelerated approval in mid-2026, with a potential regulatory filing as early as 2028.
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Based on the encouraging clinical trial results demonstrated to date, we believe OBX-115’s product profile may enable the application for earlier lines of therapy. We intend to evaluate the feasibility of OBX-115 in the first-line setting in patients with advanced melanoma.
Advanced NSCLC is another attractive indication to pursue with OBX-115 as it is an immune sensitive tumor with a prevalence approximately ten times greater than that of advanced melanoma. In our Phase 1 regimen optimization NSCLC trial, OBX-115 has shown reductions in tumor burden, including multiple PRs in patients that had previously been treated with ICI. We believe OBX-115 has an optimal product profile to drive greater applicability and adoption.
Our Pipeline
We are building an innovative pipeline of genetically engineered TIL cell therapies, led by OBX-115, for the treatment of solid tumors. We own worldwide rights to OBX-115 and our earlier stage product candidates. Our current pipeline is summarized in the diagram below.
Our Pipeline
| * | Intended to obtain sufficient efficacy and safety data to support an NDA or BLA submission to obtain regulatory approval. Although registration-enabling clinical studies are often Phase 3 trials, the FDA has approved drugs based on Phase 2 registration-enabling clinical studies through its accelerated approval program. |
Our Strategy
Our goal is to leverage our cytoDRiVE platform to unlock the full potential of cell therapies to treat solid tumors. We believe that our ability to dynamically regulate the activity of our cell therapies in the body using our cytoDRiVE platform is key to achieving this goal. Our strategy is as follows:
| • | Advance OBX-115 for the treatment of melanoma and NSCLC. Clinical results in patients with second-line advanced melanoma with previous ICI experience provide compelling support for the differentiated antitumor and tolerability profile of OBX-115. We plan to initiate our registration-enabling study for OBX-115 in second-line advanced melanoma in pursuit of an accelerated approval in mid-2026 with a potential regulatory filing as early as 2028. A registration-enabling study is a clinical trial that is intended to obtain sufficient efficacy and safety data to support an NDA or BLA submission to obtain regulatory approval. Although registration-enabling clinical studies are often Phase 3 trials, the FDA has approved drugs based on Phase 2 registration-enabling clinical studies through its accelerated approval program, provided the product is eligible and meets the conditions of accelerated approval. We also intend to initiate a clinical trial to evaluate the potential of OBX-115 as part of first-line treatment of advanced melanoma. In NSCLC, early clinical results in patients previously treated with ICIs suggest that OBX-115 has the potential to deliver meaningful antitumor activity in NSCLC while maintaining a generally well-tolerated profile. We intend to continue enrolling patients in our ongoing trial and, upon review of the Phase 1 clinical data in the first half of 2027, potentially further advance the clinical development in NSCLC. Similar to melanoma, we believe that the observed tolerability profile of OBX-115 may provide an opportunity to evaluate the potential of OBX-115 earlier in the course of disease. |
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| • | Evaluate the potential of OBX-115 for the treatment of other solid tumors. OBX-115 may be applicable to additional solid tumor types where scientific rationale or prior TIL activity supports development, including tumors with prognostic TIL associations, supportive preclinical findings, or clinical responses to non-engineered TIL. This rationale extends to tumor types with FDA approved ICI therapies, where endogenous TIL activity is a mediator of response and progression following ICI therapy may indicate exhaustion of TIL function. By leveraging cytoDRiVE and our proprietary manufacturing process, in contrast to what is currently feasible with non-engineered TIL, OBX-115 may be manufactured from these tumors, whether they harbor suppressed tumor reactive TIL that regulatable mbIL-15 may functionally enhance or fewer TIL overall that are potentially expandable in the REP phase leading to robust cell dose yields. |
| • | Advance our manufacturing capabilities in anticipation of our biologics license application, or BLA, and, if approved, commercial launch. We believe our proprietary manufacturing process enables advantages in phenotype, yield, process robustness, and tumor procurement flexibility. We collaborate with leading contract development manufacturing organizations, or CDMOs, with cell therapies expertise to manufacture OBX-115, and plan to expand our capacity with these partners as we approach potential regulatory approval. |
| • | Commercialize OBX-115 in the United States and evaluate partnership opportunities in other regions. We intend to retain commercial rights to OBX-115 in the United States and opportunistically evaluate strategic collaborations to maximize the commercial potential of OBX-115 in other regions. |
| • | Continue to invest in our cytoDRiVE platform and intellectual property for our cytoTIL product candidates while actively exploring strategic partnerships and collaborations for other applications of our platform. Our cytoDRiVE platform is designed to be highly versatile and fit-for-purpose, with the ability to drive on- or off-activity across multiple classes of proteins and cell types. We believe there are potential next-generation applications across oncology and broader therapeutic areas. This abundance of potential treatment opportunities may enable us to selectively enter strategic collaborations involving our cytoDRiVE platform to maximize the patient benefit and long-term value of our research and development portfolio. |
Our History and Team
Obsidian was founded in 2015 by Atlas Venture to enable a new generation of cell therapies. We are led by a management team with extensive experience in cell therapy, including TIL cell therapies. Madan Jagasia, M.D., our Chief Executive Officer, previously served as Executive Vice President, Medical Affairs at Iovance Biotherapeutics, or Iovance. Prior to Iovance, Dr. Jagasia was Chief Medical Officer and Executive Medical Director of Cancer Patient Care Center, Vanderbilt-Ingram Cancer Center. Parameswaran Hari, M.D., our Chief Medical Officer, has decades of experience leading cell and gene therapy programs. Dr. Hari previously served as Senior Vice President, Clinical Science at Iovance; Chief of Hematology and Oncology at the Medical College of Wisconsin and Secretary of the American Society of Transplantation and Cellular Therapy. Dana Alexander, our Chief Technical Officer, has over 25 years of experience across cell, gene therapy and biologics process development and chemistry, manufacturing, and controls, or CMC, from Phase 1 through commercialization, including serving as Senior Vice President of Technical Operations at AlloVir. Julie Feder, our Chief Financial Officer, has extensive experience in driving the financial and corporate growth of life sciences companies, including serving as Chief Financial Officer for Aura Biosciences, Verastem Oncology, and the Clinton Health Access Initiative.
To date, we have raised over $335 million from leading institutional investors, including: Atlas Venture, Celgene Corporation, Deep Track Biotechnology Master Fund and TCG Crossover Fund. Prospective investors should not rely on the investment decisions of our existing investors, as these investors may have different risk tolerances and have received their shares in prior offerings at prices lower than the price offered to the public in connection with transactions contemplated by the merger agreement.
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Background on Solid Tumors and Cell Therapies
Solid Tumors: A Remaining Unmet Need in Cancer
Despite advances across the treatment landscape, solid tumors remain a significant unmet medical need, with mortality and clinical outcomes generally worsening as disease advances. In 2026, there will be an estimated 2.1 million new cancer cases and 600,000 cancer deaths in the United States, with approximately 90% attributable to solid tumors, according to the American Cancer Society. Several key factors such as tumor heterogeneity, as well as challenging tumor microenvironments, have made solid tumors very difficult to treat. When tumors become refractory to early lines of treatment, options for further therapy are currently limited to alternate forms of chemotherapy, clinical trials of agents in development or palliative care. Each of these alternatives presents a low likelihood of cure, while generally exposing patients to safety and tolerability concerns. As a result, metastatic solid tumors where the disease has progressed after initial therapy continue to account for a disproportionate share of cancer-related mortality.
Characteristics of Existing Cell Therapies
Overview of cell therapies and their limitations
Cellular immunotherapies leverage the innate abilities of immune effector cell, such as tumor trafficking, expansion, and persistence, and address the limitations of conventional cancer treatments. Autologous cell therapies reengineer a patient’s own immune system to recognize tumors with high specificity and enable long-term immune surveillance and durable responses. FDA-approved autologous cell therapies have achieved major advances in multiple hematologic malignancies, including B-cell lymphomas, leukemias, and myeloma, as well as in two solid tumor types: metastatic melanoma and synovial sarcoma. Current autologous approaches fall into three primary categories: CAR-T, TCR-T, and TIL cell therapies.
The central challenge for cellular immunotherapies is to achieve cancer-specific cell killing while sparing normal healthy tissues. The immune system distinguishes normal from abnormal cells through two major recognition mechanisms. Antibodies or antibody fragments bind with high specificity to antigens such as cell surface proteins, whereas T cells use their receptors, or TCRs, to detect peptide fragments derived primarily from the breakdown of intracellular proteins and presented on the surface by major histocompatibility complex, or MHC, molecules. Because MHC displays a broad repertoire of intracellular peptides, TCR-based recognition enables deeper surveillance of cellular abnormalities than antibody binding alone. In cancer immunity, professional antigen presenting cells can produce specific cancer directed CD8 T cell responses by presenting tumor-derived antigens derived from dying cancer cells. TIL cell therapies and TCR-T therapies use TCR mediated recognition to mediate cancer cell specific cytotoxicity.
CAR-T cells are engineered T cells that rely on an antibody-derived binding domain to recognize target cells. The antigenic targets of currently available CAR-T therapies reflect the normal cell lineages from which the cancer arose. This approach has had major success in certain hematologic malignancies, where B cell or plasma cell lineage restricted surface antigens such as CD20 or BCMA can be safely targeted because the hematologic system can regenerate itself and thereby tolerate the toxicity arising from temporary off-tumor toxicity. However, in most solid tumors, truly tumor-specific surface antigens are uncommon, increasing the risk of on-target, off-tumor toxicity and limiting the application of CAR-T therapies.
As solid tumors account for approximately 90% of cancer deaths, the lack of tumor specific CAR-T targetable surface antigens reflects a substantial unmet need. Therefore, researchers have continued to investigate ways to redirect T cells, driven by their native TCRs, to recognize and kill tumor cells with greater specificity and reduced off-tumor toxicity. Leveraging the TCR offers the key advantage of enabling immune cells to target intracellular tumor antigens that cannot be accessed by antibody-based approaches or CAR-T cells. Tecelra®, approved by the FDA in 2024, is the first approved engineered TCR therapy. Tecelra recognizes MAGE-A4, an intracellular protein that is generally absent in healthy tissues. However, the potential of TCR-engineered T cell therapies is limited because of two main factors:
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| 1. | MHC molecules exist in numerous variants known as allelic variants within individuals and vary extensively between individuals, and each allele presents a distinct peptide repertoire. As a result, TCR therapies can only be administered to patients who express MHC alleles compatible with the engineered receptor. |
| 2. | Engineered TCR-T therapies target a single antigen and therefore cannot address the heterogeneity of tumor antigen expression within a tumor. Loss or downregulation of the targeted antigen is a common immune-evasion strategy in cancer which can render the therapy ineffective. |
In contrast, TIL cell therapies offer a broader TCR-based approach. By expanding a patient’s own tumor-derived T cell population, which naturally recognizes a diverse set of intracellular peptides presented by MHC, TIL offer a breadth of antigen recognition, reduces vulnerability to single-antigen loss and are not subject to MHC allele restriction constraints of TCR-T therapies.
Table 1 below summarizes certain characteristics of existing cell therapy modalities, including CAR-T, TCR-T and non-engineered TIL cell therapies, and highlights key differences in targeting, safety considerations and practical limitations.
| CAR-T Therapy |
TCR-T Therapy |
Non-Engineered TIL Cell Therapy | ||||
| Advantages | • Target antigens beyond peptides on cell surface independent of MHC
• Lower cumulative cyclophosphamide dose in lymphodepletion regimen compared to non-engineered TIL cell therapy |
• Accessibility to intracellular target through MHC
• Utilizes natural TCR signaling pathways for potentially better effect
• -Lower cumulative cyclophosphamide dose in lymphodepletion regimen compared to non-engineered TIL cell therapy |
• Broad repertoire of TCRs that target both defined and undefined tumor antigens
• Because TIL are isolated from tumors, they are enriched with T cells that specifically recognize tumor cells and have demonstrated the ability to traffic to, and survive in, the tumor microenvironment | |||
| Disadvantages | • Limited availability of truly tumor-exclusive surface antigens and antigen heterogeneity in solid tumors can limit efficacy and increase on-target/off-tumor toxicity risk
• Evasion by loss of target antigen surface expression |
• Treatment limited by HLA type
• Target single antigens and may not address antigen heterogeneity within a single tumor
• Can cross-react with off-target peptides in healthy tissues and cause toxicities
• Evasion by loss of antigen presentation machinery can render the therapy ineffective
• Some TCR-Ts require IL-2 dosing |
• Require surgical tumor resection for T cell isolation and cause delays in generating TIL
• Need for IL-2 dosing
• Higher cumulative cyclophosphamide dose in lymphodepletion regimen | |||
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| CAR-T Therapy |
TCR-T Therapy |
Non-Engineered TIL Cell Therapy | ||||
| Target Antigen | Lineage-specific surface antigens also expressed by normal cells (e.g., CD19, BCMA) | Intracellular tumor-associated antigens bound to MHC (e.g., NY-ESO-1, MAGE-A4) |
Neoantigens or tumor-associated antigens bound to MHC | |||
| Tumor Cell Specificity | Low | High | High | |||
| HLA Restriction | No | Yes | No | |||
| Tumor Types | Hematological malignancies (e.g., B-cell leukemia, lymphoma) Solid tumors with limited efficacy |
Solid tumors and hematological malignancies | Solid tumors, including melanoma, NSCLC, ovarian, cervical and sarcoma | |||
| Toxicity | Cytokine release syndrome (CRS), neurotoxicity | Off-target effects, CRS | Lymphodepletion and IL-2-related toxicities | |||
TIL cell therapy for the treatment of solid tumors
One of the earliest demonstrations of the antitumor potential of cell therapies came from the work of Steven Rosenberg, M.D., Ph.D. and colleagues at the National Institutes of Health in the 1980s, before the discovery of ICIs. These researchers found that TIL from melanoma patients could be expanded ex vivo in cell culture to boost their antitumor activity. TIL cell therapy offers a way to potentially avoid the limited effectiveness of CAR-T therapies in solid tumors while taking advantage of the ability of the TCR to more specifically recognize tumor cells. Because TIL are isolated from tumors, they are enriched with T cells that specifically recognize tumor cells and have demonstrated the ability to traffic to, and survive in, the tumor microenvironment. Furthermore, TIL contain polyclonal T cells that are capable of recognizing a spectrum of tumor-specific antigens that may be present in any given tumor.
The first FDA-approved TIL cell therapy, Amtagvi, received accelerated approval in 2024 to treat patients with unresectable or metastatic melanoma who have been previously treated with a PD-1 blocking antibody, and if BRAF V600 mutation positive, a BRAF inhibitor with or without a MEK inhibitor. Amtagvi was approved based on 31.5% ORR, including three complete responses. The median overall survival, or OS, from a follow-up analysis of patients in this trial was 13.9 months, with a five-year OS of 19.7%.
The limitations of current TIL cell therapies
Traditional TIL cell therapies, such as Amtagvi, which use TIL that are not genetically modified, have a number of limitations that result in increased morbidity and mortality. These include:
| • | Manufacturing challenges. Non-engineered TIL cell therapies require that tumor tissue be obtained by surgical resection. The need for an invasive surgical procedure poses challenges such as ensuring a patient is eligible for anesthesia and surgery and ensuring availability of specialized surgeons (e.g. thoracic surgeons) for the area of surgical biopsy. These requirements result in significant tumor tissue harvest delays because it requires scheduling with a surgeon trained in the appropriate specialty. Furthermore, the number of TIL generated using these processes is not always sufficient to deliver effective therapy to patients. Of the 111 patients who underwent tumor resection in the Amtagvi registrational trial, 22 (20%) were not infused with Amtagvi for clinical or manufacturing reasons. Of the 89 patients who were infused, seven patients were excluded from the primary efficacy analysis because their infused product did not meet product specification or comparability criteria. An additional nine infused patients received Amtagvi at a dose below the lower bound of the recommended dosing range of 7.5 x 10 viable cells. Thus, 34% of patients were not included in the primary efficacy population within the recommended dosing range. |
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| • | Use of IL2 for ex vivo TIL expansion. IL2 is a powerful cytokine that critically affects the features and effectiveness of T cells. IL2 drives T cell expansion and leads to their ability to maximally secrete interferon gamma, or IFNg, in response to antigen stimulation. Hence, IL2 is used throughout the manufacturing process for non-engineered TIL, including the REP. However, IL2 stimulation of T cells during the REP can cause T cell exhaustion and may translate to reduced T cell persistence after infusion. Use of IL2 also leads to expansion of Tregs which have the potential to suppress T cell cytotoxicity. Although the use of IL2 during the REP can drive rapid expansion of TIL, the cytotoxicity of the expanded product may be compromised. |
| • | Need for lymphodepletion. Treatment with non-engineered TIL cell therapies requires that the patient first undergo standard lymphodepletion, which is generally administered using fludarabine and cyclophosphamide. Lymphodepletion serves a number of purposes including eliminating potentially suppressive endogenous T cells, reducing suppressive cytokines, and creating a regenerative immune niche that administered cells could colonize. It has been shown that lymphodepletion is essential for cellular immunotherapies of cancer. However, not all patients are eligible to undergo standard lymphodepletion. Because individuals with poor organ function, poor performance status or active infections are ineligible for the standard lymphodepletion procedure, these individuals are unable to receive non-engineered TIL cell therapies. |
| • | Requirement for inpatient IL2 dosing after TIL infusion. In conventional TIL regimens, physicians administer several doses of high-dose IL2 intravenously in the inpatient setting after delivering TIL cells. For this to be effective, high doses of IL2 are required due to the lower affinity of the IL2 receptor on cytotoxic T cells. High dose IL2 has been associated with life-threatening adverse events, such as capillary leak syndrome, hypotension and tachycardia. |
Our Solution: OBX-115
Overview
We are advancing OBX-115, an engineered cytoTIL cell therapy for the treatment of advanced melanoma and NSCLC. OBX-115 was developed using our proprietary cytoDRiVE platform technology and designed to overcome the limitations of existing therapies. A key differentiating feature of OBX-115 is the introduction of a genetic construct that encodes a mbIL15 protein whose expression can be regulated using ACZ, an orally available FDA approved drug. The expression of IL15 by OBX-115 eliminates the need for IL2 in the treatment regimen in both the REP phase of manufacturing and inpatient treatment. In a cohort of 15 patients with advanced melanoma and confirmed radiological progression post-ICI inhibitor therapy, treatment with OBX-115 at the RP2D led to an ORR of 67% with rapid and durable tumor regression. Also notable is that robust antitumor responses were obtained using low dose lymphodepletion and, in some patients, with core needle biopsies instead of surgical resections. There was no TRM and there were no DLTs or discontinuations due to adverse events. OBX-115 has Fast Track and RMAT designations from the FDA for the treatment of patients with unresectable or metastatic melanoma that is resistant to ICI therapy. In our Phase 1 clinical trial in NSCLC, early clinical results show robust tumor shrinkage and include multiple confirmed PRs.
We continue to enroll patients with melanoma in our Phase 2 trial and NSCLC patients in our Phase 1 trial. We plan to initiate our registration-enabling study in advanced melanoma in mid-2026 and potentially initiate a subsequent study in NSCLC after review of the Phase 1 clinical data, which is expected in the first half of 2027.
Engineering OBX-115 with mbIL15
By utilizing our cytoDRiVE technology and incorporating mbIL15 into OBX-115, we are able to eliminate the need for IL2 in the treatment regimen. IL15 and IL2 are structurally related cytokines that share common receptor subunits. Similar to IL2, IL15 expands cytotoxic T cells and NK cells. Unlike IL2, IL15 does not preferentially expand Tregs, which are associated with an immunosuppressive tumor microenvironment. A further advantage of IL15 is that it promotes survival and maintenance of long-lived memory CD8 T cells, including subsets with stem-cell like properties. By contrast, IL2 leads to higher activation of short-lived effector T cells which are predisposed to terminal exhaustion both during manufacturing and in vivo after infusion.
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Whereas IL2 has been approved by the FDA for the treatment of cancer, notwithstanding its association with significant toxicities, no systemic IL15 therapy has received FDA regulatory approval to date. Clinical experience with the administration of exogenous soluble IL15 found that it led to robust T cell proliferation, but its therapeutic benefit was limited with no responses among patients with melanoma. Additionally, a number of severe toxicities were observed including hypotension, thrombocytopenia and elevated liver enzymes. These limitations have prevented the clinical development of soluble exogenous IL15 in a therapeutic context. To leverage the benefits of IL15 while avoiding these undesired effects, OBX-115 has membrane bound expression of IL15 with its levels regulated via our cytoDRiVE platform.
OBX-115 is engineered to express a proprietary IL15 construct with two key features:
| • | IL15 is anchored to the membrane through a flexible linker (“mbIL15”). The linker of mbIL15 has been engineered to avoid shedding of mbIL15 and thereby limit systemic exposure. Further, the linker length was optimized such that mbIL15 possesses the ability to both act in cis to directly activate transduced TIL cells, as shown in Figure 1 below (blue, left panel), and in trans to activate other immune cells such as NK cells shown in Figure 1 below (red, right panel). Figure 1. mbIL15 activation of TIL and NK cells. |
Figure 1. mbIL15 activation of TIL and NK cells.
| • | The expression of mbIL15 is regulated by ACZ, an orally available FDA-approved drug. Our mbIL15 construct was designed to be regulated by cytoDRiVE. In the absence of ACZ, known as the “basal state” in the left panel in Figure 2 below, the DRD is degraded in the cell by the proteasome, thus limiting mbIL15 expression. As shown on the right panel of Figure 2 below, cytoDRiVE regulation enables the CA2-DRD construct to be stabilized in the presence of a paired ligand, ACZ, which enables dose-dependent, reversible mbIL15 expression on the TIL cell surface. ACZ is a CA2 inhibitor that functions as a diuretic for the treatment of edema and elevated intraocular pressure and is used to treat altitude sickness. It has been used in the clinic for over fifty years. This ability to alter the expression of mbIL15 using an oral drug is designed to dynamically regulate its expression to achieve an appropriate balance between efficacy while minimizing potential adverse events. Should a patient’s lymphocytes expand more than desired which may be associated with certain toxicities, mbIL15 expression can be suspended by stopping ACZ administration. |
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Figure 2. Regulation of mbIL15 activity using ACZ.
Our Proprietary Manufacturing Process
We designed our manufacturing process to ensure OBX-115 would contain tumor-reactive TIL with high antitumor activity and phenotypically enriched for expansion and persistence. In addition, we have optimized our manufacturing process across the continuum of Pre-REP, activation, transduction of CA2-mbIL15 construct, REP, and cryopreservation to potentially allow for robustness, reproducibility and a high manufacturing success rate. Our manufacturing process for OBX-115 delivers consistently robust cell yield and high process consistency with a greater than 95% demonstrated success rate. By leveraging our cytoDRiVE platform and our proprietary manufacturing process, we believe OBX-115 has key attributes required to address the unmet need in the treatment of solid tumors and to meaningfully expand the targetable patient population.
Figure 3 below summarizes the various challenges in the manufacturing process of non-engineered TIL cell therapies and illustrates the potential opportunities to expand access and improve outcomes.
Figure 3. Manufacturing process of non-engineered TIL cell therapies.
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Our manufacturing process can be divided into five stages, as summarized in Figure 4 below:
| • | Tissue acquisition. OBX-115 is a patient-specific product that requires isolation of TIL from a patient’s tumor. We have used tumor tissue, both from surgical resections or from minimally invasive core needle biopsies to manufacture OBX-115 in our clinical trials with no differential impact on cell dose or product phenotype. An advantage of core needle biopsies is that they can typically be obtained in an interventional radiology procedure under local anesthesia, which is faster than surgical excision. Surgical procedures may delay treatment by several weeks due to the need to coordinate schedules with a surgeon, anesthesiologist and operating room. |
| • | Pre-REP. In Pre-REP stage, we isolate the TIL from the tissue sample and treat them with an antibody that serves as an agonist for 4-1BB. This process optimization has been shown to increase TIL expansion, enrich for putative tumor-specific clones and enhance antitumor cytotoxicity. |
| • | Activation and transduction. We transduce the patient’s TIL with a genetically inactivated viral vector containing our CA2-mbIL15 construct and activate them using a CD3 antibody. |
| • | REP. The expansion stage of TIL cell therapy manufacturing process typically involves two components: IL2 and feeder cells. We do not use IL2 in this stage to generate OBX-115 and instead induce expression of our mbIL15 construct using ACZ. Also, whereas the feeder cells used to generate other TIL cell therapies consist of irradiated allogeneic peripheral blood mononuclear cells, or PBMCs, from healthy donors, OBX-115 is manufactured using an irradiated engineered cell line that expresses both IL21 and 4-1BB ligand, or iFeeder cells, and use of this cell line improves our ability to expand TIL to generate OBX-115 with a more favorable phenotype while reducing the cost and variability associated with using donor PBMCs. These REP process modifications drive further amplification of the CD8+ memory rich T cell phenotype. |
| • | Cryopreservation. Through optimization of our processes, we are able to cryopreserve OBX-115 while maintaining potency. This provides us with the ability to ship our finished drug product from central manufacturing facilities to treatment centers. |
Figure 4. Overview of the OBX-115 ex vivo manufacturing stages.
| * | Anti-CD3 Ab; retroviral vector |
Melanoma Disease Background
Melanoma is the fifth most common malignancy in the United States and the most lethal form of skin cancer. The National Cancer Institute estimates that there were approximately 105,000 diagnoses of melanoma and approximately 8,500 deaths from melanoma in the United States in 2025. While most patients diagnosed with localized melanoma have an excellent prognosis, advanced melanoma is associated with widespread metastasis and has a five-year survival rate of only 34.6%.
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The primary risk factor for developing melanoma is exposure to ultraviolet light, including sunlight and tanning beds. Ultraviolet light and other environmental insults can cause DNA damage, which in turn leads to an increased rate of mutations. Melanoma is one of the most highly mutated cancers. It has frequent driver mutations, such as mutations in the gene for BRAF, that directly contribute to tumorigenesis, as well as a wide array of passenger mutations, which accumulate but do not directly alter the propensity of the tumor to grow or spread. These mutations, both driver and passenger mutations, are a differentiating feature between melanoma cells and healthy cells that have led to the development of a number of therapies.
In patients who are diagnosed early and have few cancerous lesions, surgical excision can lead to long-term cures. In patients with more advanced and metastatic disease, unfortunately, surgical treatment has more limited benefit. Two types of systemic therapies are commonly used to treat these patients: ICIs and inhibitors of the BRAF pathway. Other approved systemic therapies, including combinations that target multiple immune checkpoints, have further expanded options for select patients.
Multiple immunotherapies including inhibitors of the PD-1/PD-L1 and CTLA-4 checkpoints have been approved to treat metastatic melanoma. These groundbreaking therapies have changed the treatment landscape for metastatic melanoma and dramatically improved both response and survival rates for patients. Treatment of patients with previously untreated unresectable melanoma with a combination of nivolumab and ipilimumab had an ORR of 58% and a median OS of 72.1 months. Grade 3/4 treatment-related AEs were reported in roughly 55% of patients, including 41.5% of patients with Grade 3/4 immune-related AEs.
Despite the immense improvement of survival upon ICI therapy, a significant subgroup of metastatic melanoma patients see no tumor response or subsequently lose initial response. Up to 60% of patients treated first-line with PD-1 monotherapy and up to 40% of those treated with PD-1 plus CTLA-4 combination do not respond to ICI treatment. 72% of patients do not respond to second-line CTLA-4 plus ICI combination therapy in the post ICI setting.
Approximately half of cutaneous melanomas have a mutation in the BRAF gene resulting in constitutive or always-on BRAF activity, which in turn promotes cancer cell proliferation. Treatment with inhibitors of BRAF has been shown to lead to an OS rate of about 70% at one year. Combination therapy using a BRAF inhibitor and a MEK inhibitor provides additional suppression of BRAF signaling and delays the development of resistance resulting in a slight increase in OS to about 75% at one year. However, responses to BRAF and MEK inhibitors have limited durability because resistance typically develops at around twelve months post-treatment.
Until recently, there was no FDA-approved therapy for patients with melanoma who are refractory to or have relapsed following treatments such as ICI and BRAF inhibitors. In 2024, Amtagvi, the first FDA-approved TIL cell therapy, received accelerated approval for the treatment of these patients. The ORR in a single-arm open-label trial of Amtagvi in 73 patients was 31.5%. Non-engineered TIL, including Amtagvi, have multiple safety and logistical challenges, including regimen complexity and inpatient resource utilization, that impact broader adoption.
NSCLC Disease Background
Globally, an estimated 1.8 million people die of lung cancer each year. It is the leading cause of cancer-related death, accounting for approximately 18% of all cancer deaths. There were an estimated 227,000 new cases of lung cancer diagnosed and 125,000 deaths in the United States in 2025. NSCLC is the most common subtype of lung cancer, accounting for approximately 80 to 85% of lung cancers. The treatment paradigm for NSCLC has significantly changed over the past few years. Previously patients were primarily treated with radiation therapy or combinations of cytotoxic drugs. Recent developments have led to the emergence of targeted therapies based on alteration in the genes for epidermal growth factor receptor, or EGFR, and anaplastic lymphoma kinase gene, or ALK, and ICI for those without actionable gene mutations.
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Prior to the introduction of ICI, the five-year OS rate for patients with metastatic NSCLC was approximately 5%. Current standard of care front-line treatment for patients with metastatic NSCLC and no targetable mutations consists of ICI therapy alone or in combination platinum-based chemotherapy with ICI with or without anti-angiogenic therapy; however, response rates are at between 48% to 58% based on histologic subtype. Even if achieved, responses are generally short-lived, and durable responses are relatively uncommon. Standard treatment after progression on ICI-based treatment typically entails single-agent chemotherapies, which have modest response rates (approximately 16%), and are typically not durable (median progression free survival, 2.9 months). An unmet need thus continues to exist for patients with metastatic NSCLC without actionable mutations whose disease is relapsed or refractory to ICI-based treatments. Similarly, in the case of patients with targetable mutations, the unmet need is for effective and safe therapy after the mutation targeted agents are no longer effective.
Clinical Trials with OBX-115
We are conducting Agni-01, an ongoing, multicenter Phase 1/2 clinical study evaluating cryopreserved OBX-115 in patients with advanced solid tumors, including melanoma and NSCLC. In melanoma, dose optimization has established our recommended Phase 2 dose with encouraging antitumor activity observed in patients, and Phase 2 enrollment is ongoing to support a potential registrational path. In NSCLC, dose escalation through dose level three, or DL3, has been completed, with continued regimen optimization underway to inform a Phase 2 study. Collectively, our results to date demonstrate clinical activity supporting continued advancement of OBX-115 in melanoma and NSCLC.
Clinical antitumor activity
Melanoma
OBX-115 was first tested in the clinic in a first-in-human Phase 1 trial initially with fresh non-cryopreserved (n=8) and then cryopreserved (n=9) OBX-115 product at The University of Texas M.D. Anderson Cancer Center. This study treated 17 patients with advanced melanoma who had relapsed or who were refractory to ICI therapy. After lymphodepletion, patients received a single intravenous infusion of OBX-115 followed by oral treatment(s) with ACZ to drive the expression of mbIL15 using our cytoDRiVE technology. The Phase 1 trial was designed to optimize the cell dose cap of OBX-115 as well as the dosing regimen of ACZ. The primary and secondary endpoints for this trial were safety and tolerability of OBX-115 and investigator-assessed preliminary efficacy, respectively. and both endpoints were met Despite the exploratory nature of this trial, an ORR of 40%, including two CRs, was observed in the first ten evaluable patients, providing strong evidence of the antitumor potential of OBX-115. The safety profile indicated no DLTs or Grade 4 nonhematologic treatment related adverse events and three Grade 3 nonhematologic treatment-emergent adverse events in two patients (abdominal pain, ALT elevation, syncope) and no substantive difference between fresh and cryopreserved products.
We then initiated Agni-01, a multicenter, Company-sponsored Phase 1/2 trial of cryopreserved OBX-115 in patients with treatment relapsed or refractory advanced melanoma. We identified three parameters to further optimize in the Phase 1 portion of this trial: the maximal number of OBX-115 cells to be infused; the daily and cumulative dose of ACZ; and the dosing schedule for ACZ. As shown in Figure 5 below, in the DL1 cohort which consisted of three patients, OBX-115 dose was capped at 30 × 109 cells and ACZ 250 mg daily for up to 14 days. In DL2, which consisted of two patients, OBX-115 dose was capped at 100 × 109 cells and ACZ 250 mg daily for up to 14 days. DL3, which consisted of 15 patients across the Phase 1 and Phase 2 arms, targeted OBX-115 dose cap of 100 × 109 cells and ACZ 500 mg daily for two 7-day periods (Week 1 and Week 3), separated by a 7-day break with no ACZ. Patients in DL3 received 7 days of ACZ at 6-week intervals starting approximately at week 5-6. In addition, for patients in DL1, DL2 and DL3, protocol guided treatment consisted of additional 7-day periods of ACZ at 6 week intervals starting approximately weeks 5 to 6. DL3 was found to lead to maximal TIL expansion in patients while minimizing toxicities and was chosen as the recommended Phase 2 dose, or RP2D.
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Figure 5. Design of the Agni-01 Phase 1/2 trial in melanoma.
Ten of the fifteen patients treated with DL3 / RP2D dosing achieved either a complete (n=2) or partial response (n=8), resulting in an ORR of 67%. We believe that the demonstrated frequency of antitumor responses observed to date with OBX-115 is attributable to both our mbIL15 cytoDRiVE engineering and our differentiated manufacturing processes.
OBX-115 treatment was associated with significant antitumor activity across these 15 patients with ongoing responses in eight patients as of January 22, 2026 (~18 weeks median follow-up). Of note, robust antitumor activity was observed using OBX-115 created from surgical resections as well as from core needle biopsies independent of the anatomic site of tumor procurement or doses manufactured and infused. We believe that the ability to use core needle biopsies for patients as the source of their TIL provides the opportunity to significantly shorten the time from the decision of the clinician to treat with OBX-115 to the ability to deliver the manufactured product to patients. We believe core needle biopsies will further enhance adoption and improve patient outcomes with increased operational efficiency relative to approaches that typically rely on surgical tumor resection. Our optimized regimen enables outpatient administration of low dose lymphodepletion. All the melanoma patients treated with OBX-115 at the RP2D had four-day low dose lymphodepletion regimen consisting of cyclophosphamide 750 mg/m2/day for three days and Fludarabine 30 mg/m2/day for four days. On average, this lymphodepletion regimen represents an approximate 50% reduction in cyclophosphamide dose.
NSCLC
The Agni-01 trial is currently evaluating the potential of various dosing regimens of OBX-115 in both melanoma and NSCLC as summarized in Figure 6 below. In our NSCLC cohort, one patient received OBX-115 at DL1, one patient at DL2 and four patients at DL3. The patients treated at DL3 could not tolerate similar ACZ dosing intensity as in melanoma DL3 patients due to inflammatory pulmonary toxicity or pneumonitis leading to ACZ withdrawal. We addressed this issue by introducing an intermediate cell dose cap of 60 billion cells. At this dose cap, the tolerability issues due to ACZ were alleviated. In addition, we have augmented the extended ACZ redosing regimen and dosed patients with ACZ for seven days every other week after week three. By contrast, in the melanoma DL3 cohort, ACZ was administered every six weeks beyond week three.
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Figure 6. Melanoma and NSCLC patient dosing in the Agni-01 trial.
We have also modified the low-dose lymphodepletion regimen used with OBX-115 in NSCLC to include a single dose of gemcitabine which enables a further 66% reduction in cyclophosphamide dose as compared to the current low dose lymphodepletion with the intent of improving tolerability. Optimization of dosing and treatment regimen are still under investigation in NSCLC.
Of the six efficacy evaluable patients across both DL3 regimens shown in Figure 7 below, there were two cases where rapid tumor shrinkage was observed by week six. In patient 43L (DL3 intermediate cell dose cap), levels of circulating tumor DNA, or ctDNA, were undetectable on day 14 and day 42. Three patients who received an intermediate cell dose of OBX-115 did not require prolonged corticosteroid dosing for inflammatory adverse events, they demonstrated lymphocyte expansion in peripheral blood and were able to receive augmented longitudinal ACZ redosing.
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Figure 7. Initial antitumor activity in NSCLC patients treated with OBX-115.
Safety and tolerability
Melanoma
In all trials observed to date, OBX-115 was generally well-tolerated with no TRM, DLTs or discontinuation due to AEs. In addition, no cases of immune effector-cell associated neurotoxicity syndromes, or ICANS, or capillary leak syndromes have been observed. The most frequently reported events are consistent with the reversible myelosuppression expected with lymphodepletion or electrolyte abnormalities secondary to the known diuretic effect of ACZ, all of which were managed with standard of care supportive measures. Adverse events considered specifically associated with OBX-115 were predominantly low-grade and responsive to protocol-guided ACZ interruption, dose adjustment, or with supportive treatment.
NSCLC
In ten Phase 1 NSCLC patients infused with OBX-115, there was no TRM. Expected differences from melanoma were consistent with disease pathophysiology and co-morbidities associated with lung cancer. Consistent with the underlying pulmonary comorbidities, the primary distinction was Grade ≥3 pneumonitis, occurring in three patients (30%), with all cases resolving prior to discharge. One subject in DL3 experienced Grade 3 ICANS, which resolved to baseline following protocol directed management. Grade 3 cytokine release syndrome, or CRS, was observed in four patients (40%). Additional frequent or severe adverse events were aligned with reversible lymphodepletion-related myelosuppression or laboratory changes attributable to the known diuretic effects of ACZ.
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Established AE Profile of Non-engineered TIL
Melanoma
The Amtagvi label carries a boxed warning for multiple serious risks, including a 7.5% rate of TRM, prolonged severe cytopenia, internal organ hemorrhage, and severe infections. Amtagvi requires the use of high dose IL2, which has been associated with risks including capillary leak syndrome and neurologic toxicities. Capillary leak syndrome occurred in 13.5% and encephalopathy in 17.3% of Amtagvi treated patients. During Amtagvi’s registrational clinical trial, grade ≥ 3 febrile neutropenia was seen in 46.8% of patients and 23.6% of patients were transferred to the intensive care unit, or ICU, post-infusion. Many patients in this trial experienced an extended hospital length-of-stay. The boxed warning restricts use of Amtagvi to use only in the inpatient setting with the availability of cardiopulmonary or intensive care specialists. These fatal treatment-related adverse effects are potentially attributed to the multicomponent regimen including standard-dose lymphodepletion and IL2.
NSCLC
The largest dataset on non-engineered TIL safety in NSCLC comes from the FDA’s review of 59 patients treated with the lifileucel regimen (as part of the Amtagvi BLA assessment). Grade ≥4 respiratory disorders occurred more frequently in NSCLC than in melanoma cohorts (15.3% vs. 6.9%). In addition, about 12% of NSCLC patients died from respiratory complications within 30 days of starting treatment. Two additional patients died of hemophagocytic lymphohistiocytosis. Other notable adverse events included febrile neutropenia (28.8%) and dyspnea (52.5%).
Pharmacodynamic evidence for the role of mbIL15 in OBX-115 treatment
The pharmacodynamic features of OBX-115, including the nature of mbIL15 that limits shedding to avoid systemic exposure, and the regulatable nature of mbIL15 due to the optimized ACZ dose and schedule drives the early expansion and persistence of OBX-115 in patients after infusion, and may potentially explain the favorable AE profile.
OBX-115 is designed to express mbIL15 using our cytoDRiVE drug-regulated expression technology, which we believe is a key aspect of our safety and tolerability profile. Levels of soluble IL15 were elevated at the time of OBX-115 administration as expected due to lymphodepletion and persisted for the subsequent several days. As shown in the left panel in Figure 8, each line in the graphic is representative of a patient with melanoma, the presence of elevated levels of IL15 in plasma at the time of the first administration of OBX-115 and ACZ is consistent with its induction as a response to lymphodepletion. There was no correlation between activation of mbIL15 expression with ACZ and levels of IL15 in plasma. One of the benefits of lymphodepletion before administration of TIL cell therapy is the reduction in immune suppressor cells which have the potential to counteract the TIL antitumor activity. Another factor that contributes to the importance of lymphodepletion to the success of immune cell therapies is a surge in cytokines, in particular IL15 that occurs in response to immune activation caused by lymphodepletion-related cell death. There was no evidence that mbIL15 expression contributed to IL15 in plasma.
Figure 8. In patients with melanoma, treatment with OBX-115 and ACZ does not lead to an increase in IL15 levels in plasma (left panel), and OBX-115 at RP2D persisted in peripheral blood for 42 days (right panel).
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As shown in the right panel in Figure 8, we observed that the persistence of OBX-115 in peripheral blood was higher using the RP2D dosing regimen in which the two initial seven day periods of ACZ were separated by a week. This dosing regimen enabled a higher overall dose of ACZ to be delivered, which was better tolerated than the continuous two-week dosing regimens in DL1 and DL2. These results demonstrate the regulated expression of mbIL15 using our cytoDRiVE technology without causing high systemic plasma IL15 levels after OBX-115 infusion and ACZ administration. Consistent with the longer persistence of OBX-115, we observed higher antitumor activity in patients with melanoma who received the RP2D dose than DL1 or DL2.
As shown in Figure 9 below, patients with melanoma dosed with OBX-115 and then treated with two seven-day periods of ACZ separated by a week of no treatment did not experience elevations in serum levels of IL6, a cytokine that serves as a biomarker of classical CRS caused by other immunotherapies. Therefore, the treatment of CRS occurring with OBX-115 is different than those occurring with CAR-T therapies and with T-cell engagers, and does not warrant the use of tocilizumab. Treatment may involve transient interruption in ACZ dosing and/or short course of corticosteroids as guided by the protocol.
Figure 9. In patients with melanoma, treatment with OBX-115 and ACZ does not lead to an increase in IL6 levels in plasma.
Clinical Development Strategy for OBX-115
Melanoma
We plan to initiate our registration-enabling study in second-line advanced melanoma in support of an accelerated approval in mid-2026, with a potential regulatory filing as early as 2028.
Based on our RMAT designation and Iovance’s precedent with Amtagvi, as well as the data we have generated in our ongoing Phase 2 trial, we believe that a convincing argument could be made for the FDA to set us on a path toward potential accelerated approval of OBX-115 in advanced melanoma. A registration-enabling study is a clinical trial that is intended to obtain sufficient efficacy and safety data to support an NDA or BLA submission to obtain regulatory approval. Although registration-enabling clinical studies are often Phase 3 trials, the FDA has approved drugs based on Phase 2 registration-enabling clinical studies through its accelerated approval program, provided the product is eligible and meets the conditions of accelerated approval.
We plan to enroll approximately 100 patients in a registration-enabling cohort in the existing multicenter study in melanoma and expect data from this trial by year-end 2027. The registration-enabling cohort will be a single-arm open label study in patients with advanced melanoma progressing after immune checkpoint inhibitor-based therapy with blinded independent reviewer assessed ORR as the primary endpoint. Secondary endpoints include safety, duration of response (DOR), progression-free survival (PFS) and overall survival (OS).
Given the tolerability and antitumor activity observed to date in melanoma, we believe that there is potential for OBX-115 to be used as a first-line treatment as well. We intend to evaluate this by enrolling a cohort of patients in this setting in our ongoing Phase 2 melanoma trial.
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NSCLC
In NSCLC, we continue to enroll patients in our Phase 1 trial, and we expect additional clinical data to become available in the first half of 2027. Our current trial in NSCLC is focused on patients who have previously been treated with ICI. The primary endpoint is the incidence of dose limiting toxicities, and investigator-assessed ORR is a secondary endpoint.
We believe that the observed treatment burden of OBX-115 compared to other TIL cell therapies may provide an opportunity to evaluate the potential of OBX-115 earlier in the course of disease.
Market Opportunity
Melanoma
Advanced melanoma remains a significant driver of mortality despite substantial therapeutic advances. A large fraction of patients treated with frontline ICIs develop primary or acquired resistance to ICIs, resulting in a meaningful pool of patients requiring additional lines of treatment.
Based on market research that we commissioned, we estimate that approximately 10,000 patients in the United States were eligible for second-line treatment of unresectable or metastatic melanoma in 2023. Not all patients in this pool are appropriate candidates for cell therapies, and real-world attrition is driven by (i) adequate baseline fitness and health status, (ii) disease progression that allows sufficient time to complete the treatment journey, and (iii) access to a qualified caregiver, resulting in an estimated cell therapy treatable population of approximately 65% of this patient subgroup. Within this cell therapy treatable population, additional factors further narrow eligibility for TIL cell therapies, including ability to tolerate lymphodepletion, feasibility of tumor procurement via surgical resection or core needle biopsy, and clinical stability during the manufacturing and scheduling period.
Currently, an estimated 25% of 2L+ melanoma patients are eligible to receive Amtagvi; however given OBX-115’s potentially differentiated profile we believe we will be able to address around 50% of these same patients. Amtagvi, the only approved TIL cell therapy for patients with unresectable or metastatic melanoma previously treated with an ICI, had an ORR of 31.5%. Meanwhile, we observed a 67% ORR in advanced melanoma with OBX-115. In addition, the antitumor activity of OBX-115 has been associated with a low rate of serious adverse events including no cases of TRM or capillary leak syndrome. We believe the need to use high doses of cyclophosphamide for lymphodepletion and high dose IL2 limits the number of patients who are eligible to receive Amtagvi.
We believe there is an opportunity for OBX-115 to deliver significant clinical benefit in the large population of patients who have previously been treated with ICI. The tolerability of OBX-115, as well as the ability to create OBX-115 using core needle biopsies and to deliver an outpatient administration of low-dose lymphodepletion provide the potential to advance our medicine into earlier lines of therapy, an option that is not as readily available for current therapies with significant toxicities and treatment challenges.
A key limitation for cell therapies has been the inability to scale both the manufacturing and the number of clinical sites where the therapy is available. In addition to our current CDMO that is supporting our ongoing clinical trials, using our expertise we collaborate with CDMOs to scale our manufacturing capacity not only for clinical trials but for our subsequent commercialization. We believe these efforts will allow us to provide improved patient and physician experience through reliable treatment delivery and broader site activation. We have learned from the launch of Amtagvi that there is a viable path to bringing TIL cell therapy to market. Iovance has already qualified 85 treatment centers across the United States to treat patients with Amtagvi. By Iovance’s estimate, 95% of addressable patients are within 200 miles of a treatment center qualified to treat patients with TIL cell therapy and there are more than 85 treatment centers as of December 31, 2025. Amtagvi has achieved rapid market access across 250 million covered lives, mostly covered by private payers with 3-week financial turnaround, and recommendation by the National Comprehensive Cancer Network. The expansion of qualified centers and demonstrated commercial uptake indicate that the operational and reimbursement framework for TIL cell therapy delivery is becoming increasingly established.
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NSCLC
There were an estimated 227,000 new cases of lung cancer diagnosed and 125,000 deaths in the United States in 2025. NSCLC is the most common subtype of lung cancer, accounting for approximately 80 to 85% of those cases. Some patients will progress to the later stages of the disease, and other patients already have locally advanced or metastatic disease at the time of diagnosis. There are approximately 90,000 patients with advanced/metastatic NSCLC per year. Current standard of care front-line treatment for patients with metastatic NSCLC and no targetable mutations consists of single-agent ICI therapy or combination platinum-based chemotherapy with ICI or anti-angiogenic therapy. Most patients receiving ICI therapy do not have durable responses. Standard treatment after progression on ICI-based treatment typically entails single-agent chemotherapies, which have modest response rates (approximately 16%), and are typically not durable (median PFS, 2.9 months). For example, in a randomized Phase 3 trial in previously treated metastatic NSCLC, docetaxel demonstrated an objective response rate of 12.8%. Even incremental improvements in overall response rate and durability of responses could be clinically meaningful, especially relative to first-line treatment responses in other settings like melanoma. There are approximately 36,000 patients who will progress into the second line setting representing a significant unmet need for more efficacious therapies that can deliver durable responses, especially for chemotherapy-free alternatives with superior tolerability. Given the substantially larger incidence, we believe the commercial opportunity in advanced NSCLC is up to 5 times larger than that of advanced melanoma. If approved, we believe we will be able to leverage our manufacturing infrastructure and commercial capabilities, initially from our melanoma program, to drive significant market adoption of OBX-115 for the treatment of NSCLC.
Our cytoDRiVE Platform - a Key Component of Our Next Generation Therapies
A key element of our cytoDRiVE platform is the ability to express mbIL15 in OBX-115 and to dynamically regulate its expression in patients. cytoDRiVE is designed to leverage the tendency for intracellular misfolded and unstable proteins to be degraded by the cellular proteasome system. To build cytoDRiVE constructs, we create mutant versions of small molecule binding domains that are stable in the presence of their ligands but have a propensity to be degraded in their absence. Through the fusion of one of these binding domains, which we refer to as DRD, to a protein of interest, such as mbIL15, we impart the ability to control expression of the protein of interest by a small molecule ligand. While no immunogenicity or safety issues have been detected with CA2 and mbIL15 (DRD-protein pairing) in OBX-115 clinical or laboratory studies to date, the potential for immunogenicity or other serious side effects have not yet been studied for other future DRD-protein pairs. By carefully selecting the DRD, we can use FDA-approved, orally available drugs to control the stability of our cytoDRiVE constructs. We believe that this makes cytoDRiVE a flexible, multipurpose approach for delivering regulators of expression of proteins.
As illustrated in Figure 10 below, in absence of ligand binding, the unstable DRD (red) is recognized by the cellular unfolded protein system and the DRD and fused protein of interest (orange) are targeted for degradation, eliminating the expression of the protein of interest. In the presence of a small molecule ligand (yellow), the DRD is stabilized, avoiding degradation and allowing the protein of interest to be expressed.
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Figure 10. Ligand-dependent regulation of the cellular unfolded protein system.
In OBX-115, we fused a CA2 DRD to a proprietary mbIL15 construct. The CA2 DRD was engineered with mutations to reduce its stability in the absence of ligand binding. We use ACZ, an FDA approved oral CA2 inhibitor, with no known anti-neoplastic activity as a stabilizing ligand to regulate mbIL15 expression on the cell surface of OBX-115. ACZ is generally well-tolerated, penetrates the blood brain barrier and has a favorable pharmacokinetic profile. It does not interfere with T cell function and is widely available as a generic product.
Next Generation Cellular Therapies: Future Oncology Applications of our cytoDRiVE Platform
We are actively exploring future applications of our cytoDRiVE platform to enhance the ability of our product candidates to treat less TIL infiltrated (colder) tumors. Two examples from our early-stage research programs illustrate the application of cytoDRiVE to enhance immune-cell antitumor activity, including co-regulated expression of Lymphotoxin-like, inducible, competes with herpesvirus glycoprotein D for HVEM, a receptor expressed by T lymphocytes, or LIGHT, and mbIL15, and spatio-temporal regulation of IL12 using T cell activation dependent elements. Further, we believe the flexibility of our platform may allow cytoDRiVE to be incorporated into a range of engineered immune cell therapies beyond TIL and potentially into other non-oncology settings where controlled protein expression is desirable. We are evaluating collaboration and partnership opportunities to continue development of these promising early-stage research programs.
Regulated expression of LIGHT and mbIL15
LIGHT is a member of the tumor necrosis factor super family (“TNFSF”) that interacts with the lymphotoxin beta receptor (“LTbR”) and regulates the formation of lymphoid organs. In preclinical studies, LIGHT expression within a tumor has been linked to the formation of tertiary lymphoid structures and vascular normalization, both of which are associated with favorable prognosis in many tumor types. Figure 11 below shows the application of cytoDRiVE to develop cytoTIL15-LIGHT cells, where the CA2 DRD co-regulates both mbIL15 and LIGHT. In a fibrotic tumor model where non-engineered TIL are unlikely to show benefit, co-expression of mbIL15 and LIGHT upon induction with ACZ leads to better tumor control compared to mbIL15 or LIGHT alone.
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Figure 11. Dual regulated expression of LIGHT and mbIL15 inhibited growth in a fibrotic colon cancer model.
Spatial and temporal regulation of IL12
IL12 is a potent cytokine known to remodel immunosuppressive tumor microenvironments and promote antitumor immunity through diverse innate and adaptive immune mechanisms. Early clinical trials in the mid-1990s showed that systemic delivery of IL12 incurred dose-limiting toxicities.
We combined our cytoDRiVE technology with NFAT-dependent transcription to enable the ability to temporally control mb-IL12 expression following T cell recognition of tumor (spatial regulation). In these cells, the expression of a cytoDRiVE construct containing the gene for mbIL12 fused to DRD is under control of an NFAT responsive promoter, a genetic element that drives transcription only upon activation of T cells, such as when T cells recognize tumor. Only upon T cell activation is the IL12/DRD fusion protein synthesized, but is rapidly degraded if the DRD ligand is not present, providing a second level of control.
We assessed the tolerability and antitumor activity of this construct in a B16-F10 tumor model in mice as shown in Figure 12 below. Survival in this model with no treatment was between 20 and 25 days. Treatment with control T cells increased survival by a few days in both the untreated mice (gray in the figure below) or control-treated mice (black in the figure below). Treatment with NFAT (only) regulated expression of soluble IL12 (purple in the figure below) resulted in early mortality for half of treated mice due to toxicities associated with IL12. Treatment with cells engineered with our NFAT/cytoDRiVE mbIL12 led to 100% survival to the end of the study at day 35 (orange in the figure below).
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Figure 12. Spatial and temporal regulation of IL12 increased survival in a B16-F10 tumor model.
Potential Applications of our CytoDRiVE Platform Outside of Oncology
While our current focus is on the application of cytoDRiVE to enhance the antitumor activity of cell therapies, potential applications of cytoDRiVE are not limited to specific classes of proteins of interest or to particular cell types. cytoDRiVE technology has the potential to broaden the reach cell therapies and for diseases outside of oncology, such as autoimmune disorders. By enabling temporal control of protein activity or expression with activation-dependent regulatory elements, cytoDRiVE is designed to provide controlled expression of potent cytokines or other immune-modulating proteins. We believe this flexibility may allow cytoDRiVE to be incorporated into a range of engineered immune cell therapies beyond TIL and potentially into other non-oncology settings where controlled protein expression is desirable.
Manufacturing
We do not own or operate GMP manufacturing facilities for the production of OBX-115 and currently have no plans to build our own clinical or commercial GMP manufacturing capabilities. We have a proprietary manufacturing process and collaborate with leading CDMOs to manufacture OBX-115 and, if we receive regulatory approval, we intend to rely on such third parties for commercial GMP manufacture. Our manufacturing process for OBX-115 consistently delivers a robust cell yield with a greater than 95% demonstrated manufacturing success rate in meeting the current product release criteria. These release criteria often evolve based on increased manufacturing experience and based on regulatory input. This may affect the manufacturing success rate over time. We believe our manufacturing capacity strategy will support drug supply for our future clinical trials and commercial demand for OBX-115 for the treatment of advanced melanoma, if approved. We do not have long-term supply agreements, and we purchase our required drug product on a development manufacturing services agreement or purchase order basis. We expect to continue to rely on third-party manufacturers for the commercial supply of any of our product candidates for which we obtain marketing approval. We have personnel with significant technical, manufacturing, analytical, quality, regulatory, including cGMP, and project management experience to oversee our third-party manufacturers and to manage manufacturing and quality data and information for regulatory compliance purposes.
Our product candidates for clinical trial use must be manufactured in compliance with cGMP regulations. The cGMP regulations include requirements relating to personnel, buildings and facilities, equipment, control of components and drug product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports, and returned or salvaged products.
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Commercialization
We have exclusive commercial rights to our product candidates globally. Given our stage of development, we have not yet established a commercial organization or sales and distribution capabilities. A key challenge for cell therapies, such as OBX-115, is the ability to scale both the manufacturing and the number of clinical sites where the therapy is available. We have transferred our expertise and knowledge to CDMOs, which manufacture OBX-115 for our clinical trials and will also do so for commercialization, if approved by FDA.
We plan to independently commercialize our products, if approved, in the United States and other regions where we determine it makes commercial sense to do so. At the appropriate time, we will build the required commercial infrastructure including recruiting a sales force and a medical affairs team. As product candidates advance through our pipeline, our plans may change.
Competition
The biotechnology industry is intensely competitive and subject to rapid and significant technological change. Our competitors include multinational pharmaceutical companies, specialized biotechnology companies, universities, and other research institutions. Ultimately, the diseases our product candidate and any future product candidates target, and for which we may receive marketing authorization, will determine our competition. Our product candidate, if approved, will have to compete with existing therapies and new therapies that may become available in the future. Many of our competitors have substantially greater financial, technical, human and other resources than we do and may be better equipped to develop, manufacture and market technologically superior products. In addition, many of these competitors have significantly greater experience than we have in undertaking nonclinical studies and human clinical trials of new pharmaceutical products and in obtaining regulatory approvals of human therapeutic products. Accordingly, our competitors may succeed in obtaining FDA approval for superior products. Many of our competitors have established distribution channels for the commercialization of their products, whereas we have no such channel or capabilities. In addition, many competitors have greater name recognition and more extensive collaborative relationships. Smaller and earlier-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.
Our competitors may obtain regulatory approval of their products more rapidly than we do or may obtain patent protection or other intellectual property rights that limit our ability to develop or commercialize our product candidate or any future product candidates. Our competitors may also develop drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than our products and these competitors may also be more successful than we are in manufacturing and marketing their products. If we are unable to compete effectively against these companies, then we may not be able to commercialize our product candidate or any future product candidates or achieve a competitive position in the market. This would adversely affect our ability to generate revenue. Our competitors also compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
We believe the key competitive factors affecting the success of our product candidate, OBX-115, if approved, are likely to include efficacy, safety, manufacturing, treatment logistics, patient eligibility, physician adoption, and the availability of reimbursement.
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Patients with melanoma are treated using a range of therapeutic approaches, including surgery, radiation therapy, chemotherapy, targeted therapies, ICIs, biologic therapies such as monoclonal antibodies, and emerging immunotherapies, including cell-based therapies. Accordingly, we believe OBX-115, if approved, would face competition from pharmaceutical, biotechnology and other companies developing therapies for cancer, including for patients with melanoma or NSCLC whose disease has progressed following prior treatment with checkpoint inhibitors and chemotherapy. There are a large number of companies developing or marketing treatments for cancer, including many major pharmaceutical and biotechnology companies. We may compete with other cell therapy or immunotherapy companies such as Iovance Biotherapeutics Inc. (Amtagvi), AbelZeta Inc., Biosyngen Pte Ltd, GRIT Biotechnology Co., Ltd., Shanghai Juncell Therapeutics Co., Ltd., Immatics N.V., Immunocore Holdings plc, Intima Bioscience, Inc., KSQ Therapeutics, Inc., Marker Therapeutics, Inc., TILT Biotherapeutics Ltd, and others. In addition, numerous compounds are in clinical development for cancer treatment. Any of these compounds may prove to be safer, more effective, more convenient, more broadly applicable or more commercially successful than our product candidates.
Intellectual Property
We strive to protect and strengthen our proprietary platforms and technologies, product candidates, inventions, improvements, and other intellectual property that are commercially relevant to the success of our business by, among other things, acquiring, maintaining, and defending patent rights, whether developed internally or licensed from third parties, and preserving the confidentiality of our trade secrets and know-how. We also rely on trade secrets, know-how and continuing technological innovation to develop and maintain our proprietary and intellectual property position. Additional regulatory protection may also be available via data exclusivity, market exclusivity, and patent term extensions on a jurisdiction-by-jurisdiction basis. Our commercial success may depend, in part, on our ability to protect and strengthen the intellectual property rights relevant to our proprietary platforms and technologies, and to operate without infringing on any valid and enforceable third-party intellectual property rights.
The patent position of most biopharmaceutical companies is highly uncertain, involves complex legal and factual questions, and has in recent years been the subject of much litigation, resulting in court decisions, including U.S. Supreme Court decisions, which have increased uncertainties as to the ability to enforce patent rights in the future. Because of this, some of our current and future patent applications may not result in patents being issued. Additionally, the laws of foreign countries may not protect our rights to the same degree as the laws of the United States, or vice versa.
As of March 1, 2026 our owned and in-licensed patent portfolio from the Board of Regents of the University of Texas System consists of 7 granted US patents, 20 pending US patent applications, 28 foreign granted patents and 91 pending foreign patent applications. As of March 1, 2026, we have 26 registered trademarks and 4 pending trademark applications. Additionally, we have had no outstanding litigation related to our intellectual property nor any threat to initiate claims against us. Our owned patents, patent applications and licensed intellectual property from the Board of Regents of the University of Texas System on behalf of M.D. Anderson cover various aspects of our programs and technology, including our cytoDRiVE platform and OBX-115 as further described herein. Owned patents and patent applications include composition of matter and methods of making and using various aspects of the cytoDRiVE platform and OBX-115. We have issued patents in the United States, Japan, Singapore, Korea, Mexico, Australia, Europe, Canada, and China and pending applications in those and other jurisdictions such as Israel, and India. The intellectual property licensed from M.D. Anderson includes OBX-115, specifically around the manufacturing process and know-how. Under the M.D. Anderson License Agreement, ownership of improvements is determined based on inventorship. In particular, the licensed intellectual property represents one component of our broader development program. Specifically, we currently rely in part on the in-license from M.D. Anderson for the development and commercialization of OBX-115, but we are not materially dependent on the license from M.D. Anderson for our continued development and commercialization efforts for OBX-115. We do not believe the termination of the M.D. Anderson License Agreement would materially delay our currently planned development timelines for OBX-115. In addition, we believe we would otherwise mitigate any immaterial impact of such a termination. For additional information about the M.D. Anderson License Agreement, please see the sections entitled “Rest of the World Government Regulation-M.D. Anderson License Agreement”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Obsidian-License and Collaboration Agreements-Collaboration and License Agreement with University of Texas M.D. Anderson Cancer Center” and Notes 9 and 10 to the Consolidated Financial Statements of Obsidian.
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In the future, there may be the need to engage in litigation to enforce patents issued or licensed to us, to protect our trade secrets or know-how or to defend against claims of infringement of the rights of others. Litigation is costly and could divert our attention and resources from other business functions and responsibilities. Furthermore, even if we were to prevail and our patents were found to be valid and infringed, a court could refuse to grant injunctive relief against the infringer and instead grant us monetary damages and/or ongoing royalties. Such compensation could be insufficient to adequately offset the damages to our business caused by the infringer’s competition in the market. Furthermore, adverse determinations in litigation could subject us to significant liabilities to third parties, could require us to seek licenses and/or pay significant royalties to such third parties and could also prevent us from manufacturing, selling or using our product, platform, or technologies, any of which could severely harm our business.
Although we rely on intellectual property rights as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, the discovery of new solutions, features and functionality, and ongoing enhancements to our platform are also essential to establishing and maintaining our competitive and technological advantage.
We control the access to and use of our proprietary platforms, technologies, and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors and partners. Our employees, consultants and other third parties are required to enter into confidentiality and proprietary rights agreements with us and we control and monitor access to our proprietary technology, documentation, and other confidential information. We require all employees and independent contractors to sign agreements assigning to us any inventions, trade secrets, works of authorship, developments, processes and other intellectual property generated by them on our behalf and under which they agree to protect our confidential information. In addition, as needed, we enter into confidentiality agreements with our partners.
Government Regulation and Product Approval
Government authorities in the United States (at the federal, state and local level) and in other countries extensively regulate, among other things, the research, development, testing, manufacturing, quality control, safety, effectiveness, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of biopharmaceutical products such as those we are developing.
Our product candidates must be approved by the FDA before they may be legally marketed in the United States and by the appropriate foreign regulatory authority before they may be legally marketed in foreign countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. Additionally, some significant aspects of regulation in the European Union are addressed in a centralized way, but country-specific regulation remains essential in many respects. The process for obtaining regulatory approvals and the subsequent compliance with federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
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U.S. Product Development Process
In the United States, the FDA regulates biological products, or biologics, under the Federal Food, Drug and Cosmetic Act, or FDCA, the Public Health Service Act, or PHSA, and their implementing regulations. The process required by the FDA before a biological product may be marketed in the United States generally involves the following:
| • | completion of nonclinical laboratory tests and animal studies according to good laboratory practices, requirements, or GLPs, and applicable requirements for the humane use of laboratory animals or other applicable regulations; |
| • | submission to the FDA of an Investigational New Drug application, or IND, which must become effective before human clinical trials may begin; |
| • | approval by an independent Institutional Review Board or ethics committee before a clinical trial commences; |
| • | performance of adequate and well-controlled human clinical trials according to the FDA’s regulations as well as international standards for good clinical practice, or GCP, and any additional requirements for the protection of human research patients and their health information, to establish the safety, purity and potency of the proposed biological product for its intended use; |
| • | submission to the FDA of a biologics license application, or BLA, seeking marketing approval with such application providing substantial evidence of safety, purity, and potency from results of nonclinical testing and clinical trials; |
| • | a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; |
| • | satisfactory completion of an FDA Advisory Committee review, if applicable; |
| • | satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with current good manufacturing practice regulations, or cGMPs, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity; |
| • | potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA to confirm compliance with GCPs and data integrity, among other things; and |
| • | FDA review and approval, or licensure, of the BLA. |
Before testing any biological product candidate, including our product candidates, in humans, the product candidate enters the preclinical testing stage. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs.
The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some nonclinical testing may continue even after the IND is submitted and clinical trials are initiated. An IND is an exemption that allows a biological product candidate to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer a biological product candidate to humans. An IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises safety concerns or questions regarding the proposed clinical trials and places the trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a biological product candidate’s IND at any time before or during clinical trials due to safety concerns or non-compliance. If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA.
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In addition to the submission of an IND to the FDA before initiation of a clinical trial in the United States, certain human clinical trials involving recombinant or synthetic nucleic acid molecules are subject to oversight at the local level as set forth in the National Institutes of Health Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines. Under the NIH Guidelines, recombinant and synthetic nucleic acids are defined as: (i) molecules that are constructed by joining nucleic acid molecules and that can replicate in a living cell (i.e., recombinant nucleic acids); (ii) nucleic acid molecules that are chemically or by other means synthesized or amplified, including those that are chemically or otherwise modified but can base pair with naturally occurring nucleic acid molecules (i.e., synthetic nucleic acids); or (iii) molecules that result from the replication of those described in (i) or (ii). Specifically, under the NIH Guidelines, supervision of human gene transfer trials includes evaluation and assessment by an Institutional Biosafety Committee, or IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment, and such review may result in some delay before initiation of a clinical trial. While the NIH Guidelines are not mandatory unless the research in question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, companies and other institutions not otherwise subject to the NIH Guidelines may voluntarily follow them.
Clinical trials involve the administration of the biological product candidate to subjects under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all subjects provide informed consent. Further, each clinical trial must be reviewed and approved by an independent IRB at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives. Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.
Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their www.clinicaltrials.gov website. Information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. Although sponsors are obligated to disclose the results of their clinical trials after completion, disclosure of the results can be delayed in some cases for some time. Failure to timely register a covered clinical study or to submit study results as provided for in the law can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal government. Manufacturers or distributors of biological product candidates being developed for the diagnosis, monitoring, or treatment of one or more serious diseases or conditions must also have a publicly available policy on evaluating and responding to expanded access requests.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
| • | Phase 1. The biological product candidate is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety. These studies are designed to test the safety, dosage tolerance, absorption, metabolism, and distribution of the biological product candidate in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness. |
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| • | Phase 2. The biological product candidate is evaluated in a limited patient population with a specified disease or condition to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for the specific targeted diseases or condition and to determine dosage tolerance, optimal dosage and dosing schedule. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials. |
| • | Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population, generally at geographically dispersed clinical trial sites, and to generate enough data to statistically evaluate the efficacy and safety of the biological product candidate for approval. These clinical trials are intended to establish the overall risk to benefit ratio of the product and provide an adequate basis for product approval. |
In addition, post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
During all phases of clinical development, regulatory authorities require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials and other developments related to the IND must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA, and the trial’s investigators for serious and unexpected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar product, findings from, animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction over that listed in the clinical protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within 7 calendar days after the sponsor’s initial receipt of the information.
In addition, during the development of a new biological product, sponsors are given opportunities to meet with the FDA at certain points, including prior to submission of an IND, at the end of Phase 2, and before a BLA is submitted. Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach alignment on the next phase of development. Sponsors typically use the meetings at the end of the Phase 2 trial to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the product candidate.
Concurrently with clinical trials, companies usually complete additional studies and must also develop additional information about the physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHSA emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the biological product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.
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U.S. Review and Approval Processes
After the completion of clinical trials, all required testing of a biological product candidate in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies, and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the biological product candidate for one or more indications. FDA approval of a BLA must be obtained before commercial marketing of the biological product begins. The BLA must include results of all relevant data available from preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things. Data can come from Company-sponsored clinical studies intended to test the safety and effectiveness of the use of the product candidate, or from a number of alternative sources, including studies initiated by independent investigators.
Under the Prescription Drug User Fee Act, or PDUFA, each BLA must be accompanied by a significant user fee. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual program fee for approved and marketed biological products. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.
Within 60 days following submission of the application, the FDA reviews a submitted BLA to determine if it is substantially complete before the FDA accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. If the submission is accepted for filing and substantive review, the FDA’s goal is to review standard applications within ten months after the filing date, or, if the application qualifies for priority review, six months after the filing date. In both standard and priority reviews, the review process may also be extended, such as by the sponsor’s submission of a major amendment, which extends the goal date by three months.
The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, pure and potent for the proposed indication, and the facility in which it is manufactured, processed, packed or held meets standards designed to assure and preserve the product’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Before approving a BLA, the FDA will generally inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND requirements and GCP requirements. To assure cGMP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.
Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and deny approval. If the FDA decides not to approve the BLA in its present form, the FDA will issue a complete response letter that describes all of the specific deficiencies in the BLA identified by the FDA. Should the FDA determine that the data supporting the application are inadequate to support approval, the FDA may issue the complete response letter without first conducting required inspections, testing submitted product lots, or reviewing proposed labeling. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the
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application. Even if additional data and information are submitted following receipt of a complete response letter, the FDA may decide that the BLA does not satisfy the criteria for approval. In September 2025, the FDA began publishing complete response letters soon after issuing them to the respective sponsors, breaking with long standing agency tradition of publishing complete response letters with approval documentation after the product is approved.
When the FDA determines the sponsor’s BLA and the biological product candidate meet the standards for approval, it will issue an approval, or licensure, letter. If a product receives regulatory approval, the approval may be limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a biological product and to enable patients to have continued access by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized, and may further limit marketing of the product based on the results of these post-marketing studies.
In addition, under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA must contain data 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. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any product for an indication for which orphan designation has been granted. However, if only one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for the non-orphan indication(s).
Orphan Drug Designation and Exclusivity
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product candidate intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug or biologic. Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.
If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same approved use or indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee.
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A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
Expedited Development and Review Programs
The FDA has a fast track designation program that is intended to expedite or facilitate the process for reviewing new products that meet certain criteria. Specifically, new products are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. As part of the fast track program, the FDA may review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.
Any product submitted to the FDA for approval, including a product with a fast track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. A product is eligible for priority review if the biological product candidate is designed to treat a serious or life-threatening disease or condition, and if approved, would provide a significant improvement in safety or effectiveness compared to available alternatives for such disease or condition. The FDA will attempt to direct additional resources to the evaluation of an application for a new product designated for priority review in an effort to facilitate the review. For original BLAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (as compared to ten months under standard review).
Additionally, a product may be eligible for accelerated approval. Products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. Under the Food and Drug Omnibus Reform Act of 2022, the FDA may require, as appropriate, that such trials be underway prior to approval or within a specific time period after the date of approval for a product granted accelerated approval. In addition, for products being considered for accelerated approval, the FDA generally requires, unless otherwise informed by the FDA, that all advertising and promotional materials intended for dissemination or publication within 120 days of marketing approval be submitted to the FDA for review during the pre-approval review period.
In addition, following a request from the sponsor, the FDA may grant breakthrough therapy designation to a biological product candidate for its indication under study. Breakthrough therapy designation is intended to expedite the development and review of products that are intended to treat serious or life-threatening conditions and that preliminary clinical evidence demonstrates that the biological product candidate, alone or in combination with other drugs and biologics, shows substantial improvement over currently available therapy on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy. Breakthrough therapy designation comes with all of the benefits of fast track designation, which means that the
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sponsor may file sections of the BLA for review on a rolling basis if certain conditions are satisfied, including an agreement with FDA on the proposed schedule for submission of portions of the application and the payment of applicable user fees before the FDA may initiate a review. The breakthrough therapy designation is a distinct status from both accelerated approval and priority review, though the same biological product candidate may be eligible for these other expedited pathways if relevant criteria are met.
The FDA may also designate a product candidate as a regenerative medicine advanced therapy, or RMAT. The RMAT designation is intended to facilitate an efficient development program for, and expedited review of, any product candidate that meets the following criteria: (i) the product candidate qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; (ii) the product candidate is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (iii) preliminary clinical evidence indicates that the product candidate has the potential to address unmet medical needs for such a disease or condition. RMAT designation provides potential benefits that include more frequent meetings with FDA to discuss the development plan for the product candidate, and eligibility for rolling review and priority review of BLAs. Cell therapy candidates granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites, as appropriate. RMAT-designated cell therapy candidates that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through the completion of clinical studies, patient registries, or through submission of other sources of real world evidence (such as electronic health records), through the collection of larger confirmatory data sets, or via post-approval monitoring of all patients treated with such therapy prior to approval of the therapy.
In 2025, the FDA created a new voucher program called the Commissioner’s National Priority Voucher, or CNPV, with the goal of radically expediting therapeutic product review and approval processes. The agency may award a CNPV to a company or a specific biological product candidate that demonstrates alignment with certain national health priorities. The FDA aims to take action on a marketing application for which a CNPV is used within one to two months after the filing date.
None of these programs changes the standards for approval but they may expedite the development or approval process. Even if a biological product candidate qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.
The FDA defines “rare pediatric disease” as a (i) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents; and (ii) a rare disease or condition within the meaning of the Orphan Drug Act. Designation of a biological product candidate as a product for a rare pediatric disease does not guarantee that a marketing application for such biological product candidate will meet the eligibility criteria for a rare pediatric disease priority review voucher, or PRV, at the time the application is approved. The FDA may determine that a marketing application for any such product candidates, if approved, does not meet the eligibility criteria for a PRV. Vouchers for rare pediatric disease drugs are awarded for qualifying applications when the drug receives approval. Under current law, after September 30, 2029, the FDA may not award any rare pediatric disease priority review vouchers, although the FDA’s authority to do so could be extended by Congress in the future.
Post-Approval Requirements
Biological products are subject to pervasive and continuing regulation by the FDA after approval, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, providing the FDA with updated safety and efficacy information, product sampling and distribution, and advertising and promotion of the product.
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In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements to ensure the long-term stability of the product and its continued safety, efficacy, purity, and potency. cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMPs. Manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including, among other things, recall or withdrawal of the product from the market. In addition, changes to the manufacturing process are strictly regulated, and depending on the significance of the change, may require prior FDA approval before being implemented. Other types of changes to the approved product, such as adding new indications and claims, are also subject to further FDA review and approval.
After a BLA is approved, the product also may be subject to official lot release. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer must submit samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. The FDA also may perform certain confirmatory tests on lots of some products before releasing the lots for distribution by the manufacturer. In addition, the FDA may conduct laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products. Systems need to be put in place to record and evaluate adverse events reported by health-care providers and patients and to assess product complaints. An increase in severity or new adverse events can result in labeling changes or product recall. Defects in manufacturing commercial products can result in product recalls.
The FDA may withdraw approval of a BLA if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Manufacturers and other parties involved in the supply chain for prescription biological products must also comply with product tracking and tracing requirements and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products or products that are otherwise unfit for distribution in the United States.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved label to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS. Other potential consequences include, among other things:
| • | restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; |
| • | fines, warning letters, or untitled letters; |
| • | clinical holds on clinical studies; |
| • | refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals; |
| • | product seizure or detention, or refusal to permit the import or export of products; |
| • | consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; |
| • | mandated modification of promotional materials and labeling and the issuance of corrective information; |
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| • | the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or |
| • | injunctions or the imposition of civil or criminal penalties. |
The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company can make only those claims that are in accordance with the provisions of the approved label. The FDA and other authorities actively enforce the laws and regulations prohibiting the promotion of products for uses or inpatient populations that are not described in the product’s approved labeling (known as “off-label use”). Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe, in their independent professional medical judgment, legally available products for uses that are not described in the product’s labeling and that differ from those tested and approved by the FDA. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. The federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined companies from engaging in off-label promotion. The FDA and other regulatory agencies have also required that companies enter into consent decrees and/or imposed permanent injunctions under which specified promotional conduct is changed or curtailed. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labeling.
U.S. Marketing Exclusivity
The Biologics Price Competition and Innovation Act of 2009, or BPCIA, amended the PHSA to authorize the FDA to approve similar versions of innovative biologics, commonly known as biosimilars. Biosimilarity, which requires that the biological product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.
Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.
Pediatric exclusivity is another type of regulatory market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods for biological products. This six-month exclusivity may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.
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Other U.S. Healthcare Laws and Compliance Requirements
In the United States, our current and future operations are subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to, the Centers for Medicare & Medicaid Services, or CMS, other divisions of the U.S. Department of Health and Human Services, or HHS, (e.g., the Office of Inspector General, Office for Civil Rights and the Health Resources and Service Administration), the U.S. Department of Justice, or DOJ, and individual U.S. Attorney offices within the DOJ, and state and local government agencies. For example, our business practices, including our clinical research program and any future sales, marketing and scientific/educational grant programs may be required to comply with the anti-fraud and abuse provisions of the Social Security Act, the false claims laws, transparency requirements, and similar state laws, each as amended, as applicable.
The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. The term remuneration has been interpreted broadly to include anything of value. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. The AKS is an intent-based statute; however, it has been interpreted to cover any arrangement in which a single purpose of the remuneration is to pay for referrals or to induce future referrals. The federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. Violations are subject to civil and criminal fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from government healthcare programs. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution. The exceptions and safe harbors are drawn narrowly and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.
The federal civil and criminal false claims laws, including the False Claims Act, or FCA, which can be enforced through civil “qui tam” or “whistleblower” actions, and civil monetary penalty laws, which impose criminal and civil penalties against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other federal health-care programs that are false or fraudulent; knowingly making or causing a false statement material to a false or fraudulent claim or an obligation to pay money to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing such an obligation. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. The FCA also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery.
The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), imposes requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. Even when HIPAA does not apply, according to the Federal Trade Commission (“FTC”), failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards.
Additionally, the federal Physician Payments Sunshine Act (the “Sunshine Act”), and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report information related to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (such as physician assistants and nurse practitioners), and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually to CMS certain ownership and investment interests held by physicians and their immediate family members. Failure to report accurately could result in penalties. In addition, many states also govern the reporting of payments or other transfers of value, many which differ from each other in significant ways, are often not pre-empted, and may have a more prohibitive effect than the Sunshine Act, thus further complicating compliance efforts.
We may also become subject to federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs under federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.
Many states and foreign jurisdictions have laws and regulations, such as state and foreign anti-kickback, false claims, consumer protection and unfair competition laws which may apply to pharmaceutical business practices, including but not limited to, research, distribution, sales, and marketing arrangements as well as submitting claims involving healthcare items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to healthcare providers and other potential referral sources; and state and local laws requiring the registration of pharmaceutical sales representatives.
There are significant compliance costs associated with ensuring business arrangements with third parties comply with applicable healthcare laws and regulations. If our operations are found to be in violation of any of the federal and state healthcare laws described above or any other current or future governmental regulations that apply to us, we may be subject to significant penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
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Coverage, Pricing and Reimbursement
Sales of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. These third-party payors are increasingly reducing reimbursements for medical products, drugs and services.
Factors payors consider in determining reimbursement are based on whether the product is:
| • | a covered benefit under its health plan; |
| • | safe, effective and medically necessary; |
| • | appropriate for the specific patient; |
| • | cost-effective; and |
| • | neither experimental nor investigational. |
No uniform policy for coverage and reimbursement for products exists among third-party payors in the U.S. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our biological product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases on short notice, and we believe that changes in these rules and regulations are likely.
In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product. Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product and also have a material adverse effect on sales.
Healthcare Reform
In the United States and some foreign jurisdictions, there have been, and continue to be, significant legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of biological product candidates, restrict or regulate post-approval activities, and affect the ability to profitably sell biological product candidates for which marketing approval is obtained. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
For example, Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the ACA, has substantially changed healthcare financing and delivery by both governmental and private insurers. Among the ACA provisions of importance to the pharmaceutical and biotechnology industries, in addition to those otherwise described above, are the following:
| • | increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the average manufacturer price; |
| • | required collection of rebates for drugs paid by Medicaid managed care organizations; |
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| • | required manufacturers to participate in a coverage gap discount program, under which they must agree to offer 70 percent point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D (a requirement later replaced under the Inflation Reduction Act of 2022 (the “IRA”) by the Medicare Part D manufacturer discount program); and |
| • | imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federal government programs. |
There has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. Both the Trump administration and Congress have indicated that they will continue to seek new legislative and executive measures to control drug costs. In addition, other legislative and regulatory changes have been proposed and adopted in the United States since the ACA was enacted:
| • | The U.S. Budget Control Act of 2011, among other things, included aggregate reductions of Medicare payments to providers of 2% per fiscal year that remain in effect through 2031. |
| • | The U.S. American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. |
| • | The American Rescue Plan Act of 2021 eliminates the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024. Due to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases resulting from the American Rescue Plan Act of 2021, and subsequent legislation, Medicare payments to providers were further reduced starting in 2025 absent further legislation. |
| • | The IRA also includes several provisions that will impact our business to varying degrees, including provisions that create a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, impose new manufacturer financial liability on all drugs in Medicare Part D, allow the U.S. government to negotiate Medicare Part B and Part D pricing for certain high-cost drugs and biologics without generic or biosimilar competition, require companies to pay rebates to Medicare for drug prices that increase faster than inflation, and delay the rebate rule that would require pass through of pharmacy benefit manager rebates to beneficiaries. Further, under the IRA, orphan drugs are exempted from the Medicare drug price negotiation program (regardless of the number of orphan designations) provided that the drug is only approved for rare disease indications. The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program. The effect of IRA on our business and the healthcare industry in general is not yet known. |
| • | The One Big Beautiful Bill Act, which was enacted in July 2025, imposes significant reductions in the funding of the Medicaid program. Such reductions are expected to apply significant funding pressure on state Medicaid budgets, decrease the number of persons enrolled in Medicaid, and reduce the services covered by Medicaid. |
| • | In February 2026, President Trump signed into law several pharmacy benefit manager, or PBM, regulatory reforms as part of a federal budget package, including but not limited to requirements for PBMs to pass back 100% of rebates and fees to commercial health plan sponsors; to provide extensive informational disclosures related to patients’ coverage and benefits; and to accept only bona fide service fees from drug companies when providing services under Medicare Part D. Additionally, the Department of Labor (“DOL”) also issued a proposed rule in January 2026 that would mandate specific |
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| PBM fee disclosures to self-insured plan fiduciaries under the Employment Retirement Income Security Act. If finalized as proposed, the DOL rule would also allow plan fiduciaries to audit those PBM disclosures to confirm accuracy. Significant efforts to change the PBM industry as it currently exists may affect the entire pharmaceutical supply chain and the business of other stakeholders, including biological product developers like us. |
Recent executive and regulatory actions include President Trump’s 2025 executive orders directing HHS to pursue most-favored-nation, or MFN, pricing targets for prescription drugs and to evaluate reforms under the Inflation Reduction Act, including potential elimination of the so-called “pill penalty” that subjects small molecule drugs to Medicare price negotiation four years earlier than biologics. Additional regulatory actions taken include a voluntary MFN-based framework for Medicaid manufacturers and two proposed CMS rules that would introduce MFN pricing principles into Medicare Part B and Part D reimbursement, respectively, with implementation currently anticipated to begin as early as 2026, though legal challenges could delay or modify these proposals. The scope, timing, and ultimate impact of these and any further actions remain uncertain, and if implemented, such measures could adversely affect the pricing, reimbursement, and commercial viability of our biological product candidate, if approved.
Individual states have also been increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health-care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health-care programs. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services. We expect additional state, federal and foreign healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal, state and foreign governments will pay for health products, which could result in reduced demand for our products, if approved or additional pricing pressure.
The Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
Data Privacy and Security Laws
Numerous state, federal and foreign laws, regulations and standards govern the collection, use, access to, confidentiality and security of health-related and other personal information, and could apply now or in the future to our operations or the operations of our partners. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information. In addition, certain foreign laws govern the privacy and security of personal data, including health-related data. For example, the GDPR imposes strict requirements for processing the personal data of individuals within the EEA, including requirements relating to processing health-related and other sensitive data, establishing a legal basis for processing such as obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to
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protect the security and confidentiality of personal data, providing notification of data breaches, imposing limitations on retention of personal data; maintaining a record of data processing, complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA to countries that the EU does not consider to have in place adequate data protection legislation, including the United States. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the non-compliant company, whichever is greater. Further, from January 1, 2021, companies have had to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e. fines up to the greater of €20 million (£17.5 million) or 4% of global turnover. The European Commission has adopted an adequacy decision in favor of the UK, enabling data transfers from EU member states to the UK without additional safeguards. However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews/extends that decision, and remains under review by the Commission during this period. In September 2021, the UK government launched a consultation on its proposals for wide-ranging reform of UK data protection laws following Brexit. There is a risk that any material changes which are made to the UK data protection regime could result in the European Commission reviewing the UK adequacy decision, and the UK losing its adequacy decision if the European Commission deems the UK to no longer provide adequate protection for personal data. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.
Additional Regulation
In addition to the foregoing, state, federal and foreign laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business. These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations. If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines. We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these laws may affect our future operations.
Foreign Government Regulation
To market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.
Whether or not we obtain FDA approval of a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. Approval by one regulatory authority does not ensure approval by regulatory authorities in other jurisdictions. The approval process varies from country to country, can involve additional testing beyond that required by FDA, and may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing, promotion, and reimbursement vary greatly from country to country. Failure to comply with applicable foreign regulatory requirements, may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
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Non-Clinical Studies and Clinical Trials
Similarly to the United States, the various phases of non-clinical and clinical research in the European Union, or EU are subject to significant regulatory controls.
Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances. Non-clinical studies must be conducted in compliance with the principles of good laboratory practice, as set forth in EU Directive 2004/10/EC. These GLP standards reflect the Organization for Economic Co-operation and Development requirements.
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Conference on Harmonization, or ICH, guidelines on GCPs, as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. If the sponsor of the clinical trial is not established within the EU, it must appoint an EU entity to act as its legal representative. The sponsor must take out a clinical trial insurance policy, and in most EU countries, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial.
The regulatory landscape related to clinical trials in the EU has been subject to recent changes. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. Unlike directives, the CTR is directly applicable in all EU member states without the need for EU member states to further implement it into national law. The CTR notably harmonizes the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU portal and database.
The CTR introduced a centralized process for the submission and review of clinical trial authorization applications, which allows sponsors to make a single submission to both the competent authority and an ethics committee in each EU member state in which the clinical trial is to be conducted, leading to a single decision per EU member state. The application must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation. The assessment procedure of the application has been harmonized as well, including a joint assessment by all EU member states concerned, and a separate assessment by each EU member state with respect to specific requirements related to its own territory, including ethics rules. Each EU member state’s decision is communicated to the sponsor via the centralized EU portal. Once the application is approved, clinical study development may proceed.
Medicinal products used in clinical trials must be manufactured in accordance with Good Manufacturing Practice, or cGMP. Other national and EU-wide regulatory requirements may also apply.
Marketing Authorization
In the EU, medicinal products can only be commercialized after obtaining a marketing authorization, or MA. To obtain regulatory approval of a product candidate under EU regulatory systems, we must submit a marketing authorization application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
| • | “Centralized MAs” are issued by the European Commission through the centralized procedure following an opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and are valid throughout the EU. The centralized procedure is compulsory for certain types of medicinal products such as (i) medicinal products derived from biotechnological processes, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products, or ATMPs (i.e. gene therapy, somatic cell therapy and tissue engineered products) and (iv) medicinal products containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases or autoimmune diseases and other immune dysfunctions, and viral diseases. The centralized procedure is optional for products containing a new active substance not yet authorized in the EU, or that represent a significant therapeutic, scientific or technical innovation, or whose authorization would be in the interest of public health in the EU. |
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| • | “National MAs” are issued by the competent authorities of individual EU member states, only cover their respective territory, and are available for product candidates not falling within the mandatory scope of the centralized procedure. Where a product has already been authorized for marketing in an EU member state, this national MA can be recognized in another member state through the mutual recognition procedure. If the product has not received a national MA in any EU member state at the time of application, it can be approved simultaneously in various member states through the decentralized procedure. Under the decentralized procedure an identical dossier is submitted to the competent authorities of each of the member states in which the MA is sought, one of which is selected by the applicant as the reference member state. |
Under the centralized procedure the maximum timeframe for the evaluation of an MAA by the EMA is 210 days, excluding clock stops. In exceptional cases, the CHMP might perform an accelerated review of a MAA in no more than 150 days, excluding clock stops, where a medicinal product is of major interest from a public health perspective. Clock stops may extend the timeframe of evaluation of an MAA considerably beyond 210 days. Where the CHMP gives a positive opinion, the EMA provides the opinion together with supporting documentation to the European Commission, who makes the final decision to grant an MA, which is issued within 67 days of receipt of the EMA’s recommendation. In March 2016, the EMA launched an initiative, the PRIME scheme, a voluntary scheme aimed at enhancing the EMA’s support for the development of medicines that target unmet medical needs. It is based on increased interaction and early dialogue with companies developing promising medicines, to optimize their product development plans and speed up their evaluation to help them reach patients earlier. Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated MAA assessment once a dossier has been submitted. Importantly, a dedicated contact and rapporteur from the CHMP is appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s committee level. An initial meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies.
In the EU, a “conditional” MA may be granted in cases where all the required safety and efficacy data are not yet available. The conditional MA is subject to conditions to be fulfilled for generating the missing data or ensuring increased safety measures. It is valid for one year and has to be renewed annually until fulfillment of all the conditions. Once the pending studies are provided, it can become a “standard” MA. However, if the conditions are not fulfilled within the timeframe set by the EMA, the MA ceases to be renewed.
Furthermore, an MA may also be granted “under exceptional circumstances” when the applicant can show that it is unable to provide comprehensive data on the efficacy and safety under normal conditions of use even after the product has been authorized and subject to specific procedures being introduced. This may arise in particular when the intended indications are very rare and, in the present state of scientific knowledge, it is not possible to provide comprehensive information, or when generating data may be contrary to generally accepted ethical principles. This MA is close to the conditional MA as it is reserved to medicinal products to be approved for severe diseases or unmet medical needs and the applicant does not hold the complete data set legally required for the grant of a standard MA. However, unlike the conditional MA, the applicant does not have to provide the missing data and will never have to. Although the MA “under exceptional circumstances” is granted definitively, the risk-benefit balance of the medicinal product is reviewed annually and the MA is withdrawn if it is determined that the risk-benefit ratio is no longer favorable.
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The European Commission introduced legislative proposals in April 2023 that, if implemented, will replace the current regulatory framework in the EU for all medicines (including those for rare diseases and for children). The European Commission has provided the legislative proposals to the European Parliament and the European Council for their review and approval. In April 2024, the European Parliament adopted its position on the legislative proposals and, in June 2025, the European Council adopted its position. As of December 2025, the European Council, European Parliament and European Commission were engaged in trilogue negotiations aimed at reaching a consensus on a final version of the legislation. Once negotiations are complete, the European Parliament and the Council of the EU will vote on whether to approve the Directive and Regulation. If adopted and implemented, these revisions will significantly change several aspects of drug development and approval in the European Union.
Rest of the World Government Regulation
For other countries outside of Europe, such as some countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials must be conducted in accordance with GCP requirements and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
If we or our potential collaborators fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
M.D. Anderson License Agreement
In October 2021, we entered into the M.D. Anderson License Agreement with the Board of Regents of The University of Texas System, on behalf of M.D. Anderson. The entry into the M.D. Anderson License Agreement followed our exercise of rights granted to us under the parties’ prior Collaborative Research & Option Agreement dated November 16, 2020 (the “Collaboration Agreement”), under which M.D. Anderson granted us an option to obtain a license to specified technologies. Under the M.D. Anderson License Agreement, M.D. Anderson granted to us (a) an exclusive, worldwide, sublicensable license under certain intellectual property arising under the Collaboration Agreement and certain patent rights, (b) a non-exclusive, worldwide, sublicensable license under certain other intellectual property and (c) a non-exclusive, worldwide, sublicensable license under additional intellectual property to practice certain intellectual property arising under the Collaboration Agreement, in each case (a)—(c), to make, have made, use, sell, offer for sale, import, develop, and commercialize certain products developed during the Collaboration Agreement (the “Developed Products”) and licensed products for use in human therapeutics, diagnostics, and prophylactics.
Under the M.D. Anderson License Agreement, we are obligated to use commercially reasonable efforts to develop and seek marketing authorization for Developed Products and licensed products, and to commercialize such Developed Products and licensed products.
Under the M.D. Anderson License Agreement, we are obligated to pay to M.D. Anderson (a) a royalty on net sales of Developed Products and licensed products at a low single digit percentage, (b) milestone payments of up to $75.0 million upon the achievement of certain specified clinical and regulatory milestones and up to $90.0 million upon the achievement of certain specified sales milestone events, which milestones may be payable with respect to multiple products and indications and (c) a share of certain consideration received by us from sublicensees under any sublicense agreements with third parties.
As of December 31, 2025, we have made approximately $11.1 million in aggregate payments to M.D. Anderson in connection with the Collaboration Agreement and the M.D. Anderson License Agreement, including with respect to the payment of option exercise fees, milestone payments and certain reimbursable patent expenses and research fees which were incurred by M.D. Anderson prior to entering into the M.D. Anderson License Agreement.
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The term of the M.D. Anderson License Agreement continues until the last to occur of: (a) the expiration of the last valid claim within certain licensed patent rights or (b) a specified period following the first commercial sale of a licensed product or Developed Product in any country.
We have the right to terminate the M.D. Anderson License Agreement for convenience upon certain prior written notice or by giving written notice to M.D. Anderson upon a material breach that is not remediated within a specified period of time. M.D. Anderson may terminate the M.D. Anderson License Agreement due to our insolvency or bankruptcy or by giving written notice to us upon a material breach that is not remediated within a specified period of time. The M.D. Anderson License Agreement may be terminated by the Board of Regents upon notice for an uncured challenge of the Board of Regents’ patents and by mutual agreement of us and the Board of Regents.
Employees and Human Capital Resources
As of March 31, 2026, we had 71 full-time employees; 26 of whom have M.D. or Ph.D. degrees. We also engage consultants and advisors with specialized expertise in clinical development, regulatory affairs, and other technical areas as needed to support our operations. Within our workforce, 53 employees are engaged in research and development and 17 are engaged in business development, finance, information technology, and general management and administration. Our human capital resources objectives include identifying, recruiting, engaging, incentivizing, developing, and retaining our existing and new employees. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.
Facilities
Our corporate headquarters is located in Cambridge, Massachusetts, where we lease and occupy 17,807 square feet of office and laboratory space. The current term of our Cambridge lease expires on January 31, 2027. In addition, our technical development facility is located in Bedford, Massachusetts, where we lease and occupy 9,896 square feet of office and laboratory space pursuant to a lease agreement that expires on December 31, 2028 with an option to extend the lease term for an additional five year period. We believe our existing facilities are sufficient for our needs for the foreseeable future. To meet the future needs of our business, we may lease additional or alternate space, and we believe suitable additional or alternative space will be available in the future on commercially reasonable terms.
Legal Proceedings
From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
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Exhibit 99.4
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, references in this section to “we,” “us,” “our” and the “Company” refer to Obsidian. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements for the years ended December 31, 2025 and 2024, unaudited condensed consolidated financial statements for the three months ended March 31, 2026 and 2025, and the related notes and other financial information included elsewhere in this Current Report on Form 8-K. This discussion and analysis and other parts of this Current Report on Form 8-K contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, strategies, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Current Report on Form 8-K. You should carefully read the “Risk Factors” section of this Current Report on Form 8-K to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see “Cautionary Statement Regarding Forward-Looking Statements.”
Overview
We are a clinical-stage biopharmaceutical company harnessing novel protein-regulation technology to develop engineered tumor infiltrating lymphocytes, or TIL, cell therapies for the treatment of patients with solid tumors. Our proprietary cytoDRiVE™ platform is highly versatile and allows us to leverage drug responsive domains to control protein function, with our initial focus on TIL cell therapies developed from this platform, or cytoTILs™. Our lead product candidate, OBX-115, is a novel, genetically engineered, autologous TIL cell therapy currently in a Phase 2 clinical trial for the treatment of advanced melanoma and a Phase 1 clinical trial for the treatment of non-small cell lung cancer, or NSCLC. Our proprietary cytoDRiVE platform has enabled OBX-115 to have the potential to drive superior tumor-killing activity with a significantly more tolerable safety profile. In contrast to other TIL approaches, OBX-115 is designed with regulatable membrane-bound IL15, or mbIL15, which drives TIL persistence, eliminates the need to dose toxic interleukin-2 and enables outpatient administration of low-dose lymphodepletion. Furthermore, OBX-115 can be manufactured using tumor tissue procurement from an outpatient, minimally invasive core needle biopsy. Across a cohort of fifteen patients with treatment-resistant or refractory melanoma in our Phase 1/2 clinical trial, OBX-115 administration at the recommended Phase 2 dose demonstrated a 67% confirmed objective response rate, or ORR, and significant tumor burden reduction, including two confirmed complete responses. This response rate, to our knowledge, is the highest current ORR shown in this setting across modalities. We believe that, if approved, the more favorable product profile will support rapid market adoption of OBX-115 relative to currently available TIL cell therapies. OBX-115 has been granted Fast Track and Regenerative Medicine Advanced Therapy designations from the U.S. Food and Drug Administration, or FDA, for the treatment of patients with unresectable or metastatic melanoma that is resistant to immune checkpoint inhibitor, or ICI, therapy. In our Phase 1 clinical trial in NSCLC, early clinical results show robust tumor shrinkage and include multiple confirmed partial responses, or PRs. We expect to announce additional data in the first half of 2027. We believe our product candidates are distinct from current cell therapies and have the potential to significantly impact the treatment of solid tumors and clinical outcomes of patients with cancer.
To date, we have not generated any revenue from product sales. Our historical revenue has been derived solely from certain collaboration and license agreements, all of which have since expired or concluded. As a result, we currently do not have any active revenue-generating arrangements, and we do not expect revenue in the near term unless and until we enter into new collaboration agreements or successfully commercialize one of our product candidates.
Since inception, we have incurred significant operating losses and negative cash flows from operations, reflecting our primary focus on advancing our research and development programs, building our platform, and supporting early-stage clinical and preclinical activities. We expect operating losses and negative cash flows to
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continue for the foreseeable future as we further develop our product candidates, expand our organization, and incur additional costs associated with becoming and operating as a public company. Our net losses were $19.6 million and $25.0 million for three months ended March 31, 2026 and 2025, respectively, and $100.6 million and $83.1 million for the years ended December 31, 2025 and 2024, respectively. As of March 31, 2026, we had an accumulated deficit of $315.6 million.
We expect our expenses and operating losses will increase substantially as we:
| • | conduct our ongoing preclinical studies and ongoing and planned clinical trials of OBX-115; |
| • | utilize third parties to manufacture OBX-115 and any future product candidates and related raw materials or, should we decide to do so, build and maintain a commercial-scale current Good Manufacturing Practices, or cGMP, manufacturing facility; |
| • | continue our early research and development activities; |
| • | seek to identify additional research programs and program candidates to expand our pipeline; |
| • | hire additional research and development, clinical, commercial, and operational personnel; |
| • | maintain, expand, enforce, defend and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio; |
| • | seek regulatory approvals for OBX-115 and any of our future product candidates for which we successfully complete clinical trials; |
| • | ultimately establish a sales, marketing and distribution infrastructure to commercialize any therapies for which we may obtain marketing approval; and |
| • | incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with an exchange listing and Securities and Exchange Commission, or SEC, requirements, director and officer insurance premiums and investor relations costs. |
In addition, we have clinical development, regulatory, and commercial milestone payment obligations under our licensing arrangement with the University of Texas M.D. Anderson Cancer Center, or M.D. Anderson, as described below. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies and our ongoing and planned clinical trials and our expenditures on other research and development activities.
We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of OBX-115 or any future product candidates, which will not be for at least the next several years, if ever. If we obtain regulatory approval for any of OBX-115 or future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until such time as we can generate significant revenue from sales of OBX-115 or any future product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements.
On April 14, 2026, the Company entered into a definitive merger agreement with Galera Therapeutics, Inc. (“Galera”), pursuant to which both companies are expected to become wholly owned subsidiaries of a newly formed holding company. In connection with the proposed merger, the Company and Galera announced commitments for a private placement financing with expected gross proceeds of approximately $350.0 million, which is expected to close immediately prior to completion of the merger.
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The completion of the merger and the related private placement financing is subject to a number of conditions outside the Company’s control, including regulatory approvals, effectiveness of the applicable registration statement, approval by Galera stockholders, and satisfaction of other customary closing conditions. As of the date these financial statements are issued, those approvals have not been obtained and the transactions have not been consummated.
Although management believes that the merger and private placement financing, if completed, would provide sufficient liquidity to fund the combined company’s operations beyond the one-year look-forward period, management cannot conclude that the completion of these transactions is probable as of the financial statement issuance date, as their successful execution depends on approvals and actions by third parties that are outside of management’s control.
Accordingly, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. See “-Liquidity and Capital Resources.”
As of March 31, 2026, we had cash and cash equivalents and marketable securities of $58.8 million. Based upon our current operating plans, we believe that the estimated net proceeds from this offering, together with our existing cash and cash equivalents and short-term investments in marketable securities, will be sufficient to fund our operations into the second half of 2028.
Components of Results of Operations
Revenue
To date, we have not recognized any revenues from product sales. We do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for OBX-115 or any future product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation charges for those individuals in research and development functions, other internal and external costs associated with our research and development activities, our discovery and research efforts, and the preclinical and clinical development of OBX-115 and any future product candidates. Our research and development expenses include:
| • | personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation for employees engaged in research and development functions; |
| • | costs related to compliance with regulatory requirements; |
| • | external expenses, including expenses incurred under arrangements with third parties, such as sponsored research agreements, contract research organizations, contract development and manufacturing organizations, consultants and our scientific advisors; |
| • | the cost of developing and validating our manufacturing process for use in our preclinical studies and ongoing and future clinical trials; |
| • | the cost to obtain licenses to intellectual property and related future payments should certain development and regulatory milestones be achieved; |
| • | costs for laboratory supplies, research materials and reagents; and |
| • | facility costs, depreciation, and other expenses, which include direct and allocated expenses. |
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We expense all research and development costs in the periods in which they are incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as expenses as the goods are delivered or the related services are performed, or until it is no longer expected that such goods will be delivered, or such services will be rendered. Most of our research and development expenses have been related to identifying and developing our product candidates. We have not reported program costs because we have not historically tracked or recorded our research and development expenses on a program-by-program basis. In the future, external research and development costs for any individual product candidate will be tracked commencing upon product candidate nomination. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our technology platform and, as such, are not separately classified.
We plan to substantially increase our research and development expenses for the foreseeable future as we continue to conduct our ongoing research and development activities, advance our preclinical research programs toward clinical development, and conduct our current and planned clinical trials.
The timelines and costs with research and development activities are uncertain and can vary significantly for OBX-115 and any future product candidate and development program due to the inherently unpredictable nature of preclinical and clinical development. We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to preclinical and clinical results, regulatory developments, and ongoing assessments as to each program’s commercial potential.
Our future development costs may vary significantly based on various factors such as timely and successful completion of preclinical studies and ongoing and future clinical trials, positive results from our current and future clinical trials, receipt of marketing approvals from applicable regulatory authorities, establishment and maintenance of arrangements with third parties, intellectual property updates, the amount and timing of any milestone payment due under any existing or future license or collaboration agreement or asset acquisition, and continued acceptable safety, tolerability and efficacy profile of OBX-115 and any future product candidates that we may develop following approval.
A change in the outcome of any of these variables with respect to the development of OBX-115 or any future product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, the EMA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate would be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to slower than expected patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation charges for those individuals in executive, legal, finance, human resources, facility operations, and other administrative functions. Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for auditing, accounting, tax and consulting services, office and information technology costs, insurance costs, and facilities, depreciation and other general and administrative expenses, which include direct or allocated expenses for rent and maintenance of facilities and utilities.
We anticipate that our general and administrative expenses will increase in the foreseeable future to support our increased research and development activities. These increases will likely include increased costs related to the hiring of additional personnel and fees paid to outside consultants, among other expenses. We also anticipate increased expenses related to audit, accounting, legal, regulatory, and tax-related services associated with maintaining compliance with the Nasdaq Stock Exchange, or Nasdaq, and SEC requirements, director and officer insurance premiums, and investor relations costs associated with operating as a public company.
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Other Income, net
Other income, net consists primarily of interest income earned on our cash, cash equivalents and marketable securities.
Income Tax Benefit (Expense)
We have historically not incurred significant income taxes. We continue to maintain a full valuation allowance against all of our deferred tax assets based on management’s evaluation of all available evidence, including our history of incurring significant losses from operations. As a result, we do not expect to incur material income taxes for the foreseeable future.
Results of Operations
Comparison of the Three Months Ended March 31, 2026 and 2025
The following table summarizes our results of operations for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, |
Change | |||||||||||
| 2026 | 2025 | $ | ||||||||||
| Operating expenses: |
||||||||||||
| Research and development |
$ | 15,732 | $ | 21,126 | $ | (5,394 | ) | |||||
| General and administrative |
4,548 | 5,477 | (929 | ) | ||||||||
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|
|
|
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| Total operating expenses |
20,280 | 26,603 | (6,323 | ) | ||||||||
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|
|
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| Other income, net |
647 | 1,617 | (970 | ) | ||||||||
| Income tax benefit (expense) |
— | — | — | |||||||||
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|
|
|
|
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| Net loss |
$ | (19,633 | ) | (24,986 | ) | $ | 5,353 | |||||
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Research and Development Expenses
The following table summarizes our research and development costs for each of the periods presented (in thousands):
| Three Months Ended March 31, |
Change | |||||||||||
| 2026 | 2025 | $ | ||||||||||
| Clinical and manufacturing activities |
$ | 7,644 | $ | 12,009 | $ | (4,365 | ) | |||||
| Compensation and related expenses (including stock-based compensation) |
5,928 | 6,914 | (986 | ) | ||||||||
| Drug discovery and platform |
198 | 150 | 48 | |||||||||
| Occupancy and all other costs |
1,962 | 2,053 | (91 | ) | ||||||||
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|
|
|
|
|
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| Total research and development expenses |
$ | 15,732 | $ | 21,126 | $ | (5,394 | ) | |||||
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Research and development expenses were $15.7 million for the three months ended March 31, 2026, compared to $21.1 million for the three months ended March 31, 2025. The decrease of $5.4 million was primarily due to a $4.4 million decrease in clinical and manufacturing activities related to the multi-center Phase 1/2 Agni-01 clinical trial reflecting lower levels of activity in 2026 as the study winds down as well as a $1.0 million decrease in costs related to compensation and related expenses (including stock-based compensation), driven by decreased headcount,. These decreases were primarily related to organizational actions taken to streamline operations and align the Company’s cost structure with current business needs.
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General and Administrative Expenses
General and administrative expenses were $4.6 million for the three months ended March 31, 2026, compared to $5.5 million for the three months ended March 31, 2025. The decrease of $0.9 million was primarily due to a decrease in compensation and related activities. These decreases were primarily related to organizational actions taken to streamline operations and align the Company’s cost structure with current business needs.
Other Income, net
Other income, net was $0.7 million for the three months ended March 31, 2026, compared to $1.6 million for the three months ended March 31, 2025. The decrease of $1.0 million was due to decreased interest income based on a lower marketable securities balance in 2026 compared to 2025.
Comparison of the Years Ended December 31, 2025 and 2024
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands):
| Year Ended December 31, | Change | |||||||||||
| 2025 | 2024 | $ | ||||||||||
| Operating expenses: |
||||||||||||
| Research and development |
$ | 86,113 | $ | 73,187 | $ | 12,926 | ||||||
| General and administrative |
19,554 | 18,068 | 1,486 | |||||||||
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|
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| Total operating expenses |
105,667 | 91,255 | 14,412 | |||||||||
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|
|
|
|
|
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| Other income, net |
5,060 | 8,146 | (3,086 | ) | ||||||||
| Income tax benefit (expense) |
— | — | — | |||||||||
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| Net loss |
$ | (100,607 | ) | (83,109 | ) | $ | (17,498 | ) | ||||
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Research and Development Expenses
The following table summarizes our research and development costs for each of the periods presented (in thousands):
| Year Ended December 31, |
Change | |||||||||||
| 2025 | 2024 | $ | ||||||||||
| Unallocated research and development expenses: |
||||||||||||
| Clinical and manufacturing activities |
$ | 52,065 | $ | 36,831 | $ | 15,234 | ||||||
| Compensation and related expenses (including stock-based compensation) |
25,561 | 27,475 | (1,914 | ) | ||||||||
| Drug discovery and platform |
1,026 | 844 | 182 | |||||||||
| Occupancy and all other costs |
7,461 | 8,037 | (576 | ) | ||||||||
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|
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| Total research and development expenses |
$ | 86,113 | $ | 73,187 | $ | 12,926 | ||||||
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Research and development expenses were $86.1 million for the year ended December 31, 2025, compared to $73.2 million for the year ended December 31, 2024. The increase of $12.9 million was primarily due to a $15.2 million increase in clinical and manufacturing activities as well as $0.2 million increase in drug discovery and platform related to the multi-center Phase 1/2 Agni-01 clinical trial. These increases were partially offset by a decrease in costs related to compensation and related expenses (including stock-based compensation), and occupancy and all other costs of $1.9 million and $0.6 million, respectively. These decreases were primarily related to organizational actions taken to streamline operations and align the Company’s cost structure with current business needs.
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General and Administrative Expenses
General and administrative expenses were $19.6 million for the year ended December 31, 2025, compared to $18.1 million for the year ended December 31, 2024. The increase of $1.5 million was primarily due to an increase in compensation and related activities and an increase in consulting and professional services costs related to additional investments made to support our growth and prepare to operate as a public company.
Other Income, net
Other income, net was $5.1 million for the year ended December 31, 2025, compared to $8.1 million for the year ended December 31, 2024. The decrease of $3.0 million was due to decreased interest income based on a lower marketable securities balance in 2025 compared to 2024.
Liquidity and Capital Resources
Sources of Liquidity
To date, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. Our historical revenue has been derived solely from certain collaboration and license agreements, all of which have since expired or concluded. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our pipeline. Further, upon the completion of the merger and the related private placement financing, we expect to incur additional costs associated with operating as a public company. From our inception through March 31, 2026, we have received aggregate gross proceeds of $336.5 million from the issuance of convertible preferred stock, Simple Agreements for Future Equity and convertible notes in private placements and $122.5 million in upfront and milestone payments under our prior collaboration agreements.
Future Funding Requirements
As of March 31, 2026, we had cash equivalents and short-term investments in marketable securities of $58.8 million. Based upon our current operating plans, we believe that the estimated net proceeds from the concurrent financing, together with our existing cash equivalents and marketable securities, will be sufficient to fund our operations into the second half of 2028. Without additional funding, we will not have sufficient funds to meet our obligations within the next twelve months after the date that our financial statements included in this information statement/prospectus are issued. However, our forecast for the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. We will need to raise substantial additional capital in the future.
Our future capital requirements will depend on many factors, including but not limited to:
| • | the type, number, scope, progress, expansions, results, costs, and timing of, discovery, preclinical studies and clinical trials of OBX-115 and any future product candidates; |
| • | the costs and timing of manufacturing for OBX-115 and any future product candidates and commercial manufacturing; |
| • | the costs, timing, and outcome of regulatory review of OBX-115 and any future product candidates; |
| • | the terms and timing of establishing and maintaining licenses and other similar arrangements; |
| • | our ability to establish and maintain additional collaborations, partnerships or licenses on favorable terms, if at all; |
| • | the achievement of milestones or occurrence of other developments that trigger payments under any future collaboration agreements, if any; |
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| • | the extent to which we are obligated to reimburse, or entitled to reimbursement of, research and development, clinical or other costs under future collaboration agreements, if any; |
| • | the legal costs of obtaining, maintaining, and enforcing our patents and other intellectual property rights; |
| • | our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company; |
| • | the costs associated with hiring additional personnel and consultants as our preclinical and potential future clinical activities increase; |
| • | the costs and timing of establishing or securing sales and marketing capabilities if OBX-115 and any future product candidate is approved; |
| • | our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; and |
| • | costs associated with any products or technologies that we may in-license or acquire. |
Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, potentially including collaborations, licenses, and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, OBX-115 or any future product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market OBX-115 and any future product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Cash Flows
Comparison of the Three Months Ended March 31, 2026 and 2025
The following table sets forth a summary of the net cash flow activity for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, |
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| 2026 | 2025 | |||||||
| Net cash used in operating activities |
$ | (22,013 | ) | $ | (24,368 | ) | ||
| Net cash provided by (used in) investing activities |
8,000 | 13,502 | ||||||
| Net cash provided by financing activities |
47 | 6 | ||||||
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| Net decrease in cash and cash equivalents and restricted cash |
$ | (13,966 | ) | $ | (10,860 | ) | ||
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Operating Activities
For the three months ended March 31, 2026, net cash used in operating activities of $22.0 million was comprised of the net loss of $19.6 million and $1.5 million of non-cash items and a $3.9 million change in operating assets and liabilities.
For the three months ended March 31, 2025, net cash used in operating activities of $24.4 million was comprised of the net loss of $25.0 million, $1.6 million of non-cash items and $1.0 million change in operating assets and liabilities.
Investing Activities
For the three months ended March 31, 2026, net cash provided by investing activities of $8.0 million was comprised of the maturities of marketable securities. For the three months ended March 31, 2025, net cash used in investing activities of $13.5 million was primarily comprised of $36.0 million of maturities of marketable securities, partially offset by $22.4 million of marketable securities purchases.
Financing Activities
For the three months ended March 31, 2026 and 2025, the cash provided by financing activities did not have a meaningful impact on our operations.
Comparison of the Years Ended December 31, 2025 and 2024
The following table sets forth a summary of the net cash flow activity for the years ended December 31, 2025 and 2024 (in thousands):
| Year Ended December 31, |
||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities |
$ | (90,393 | ) | $ | (75,002 | ) | ||
| Net cash provided by (used in) investing activities |
81,017 | (53,874 | ) | |||||
| Net cash provided by financing activities |
20 | 162,515 | ||||||
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| Net decrease in cash and cash equivalents and restricted cash |
$ | (9,356 | ) | $ | (33,639 | ) | ||
Operating Activities
For the year ended December 31, 2025, net cash used in operating activities of $90.4 million was comprised of the net loss of $100.6 million, $7.7 million increase of non-cash items and $2.6 million increase of changes in operating assets and liabilities. For the year ended December 31, 2024, net cash used in operating activities of $75.0 million was comprised of the net loss of $83.1 million, $6.4 million increase of non-cash items and $1.8 million increase of changes in operating assets and liabilities.
Investing Activities
For the year ended December 31, 2025, net cash provided by investing activities of $81.0 million was primarily comprised of $162.0 million from the maturities of marketable securities offset by $80.9 million of purchases of marketable securities. For the year ended December 31, 2024, net cash used in investing activities of $53.9 million was primarily comprised of $131.1 million of purchases of marketable securities, partially offset by $78.0 million from the maturities of marketable securities.
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Financing Activities
For the year ended December 31, 2025, the cash provided by financing activities did not have a meaningful impact on our operations. For the year ended December 31, 2024, net cash provided by financing activities of $162.5 million was primarily comprised of $160.5 million of proceeds from the Series C financing.
Contractual Obligations and Commitments
We enter into contracts in the normal course of business with third parties for preclinical research studies, upcoming clinical trials and testing and manufacturing services. These contracts typically do not contain minimum purchase commitments and are generally cancelable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancelable obligations of the service providers, up to the date of cancellation and in the case of certain arrangements may include noncancelable fees.
Leases
The aggregate amount of future operating lease obligations over the term of our leases was $4.5 million as of December 31, 2025, of which $3.0 million is expected to be paid within one year. For additional information on our leases and timing of future payments, see Note 11, Leases, to our consolidated financial statements included in this Current Report on Form 8-K.
License and Collaboration Agreements
Below is a summary of the key terms for certain of our license and collaboration agreements. For a more detailed description of these agreements, see the section titled “Information Regarding Obsidian-M.D. Anderson License Agreement” beginning on page 262 of this Current Report on Form 8-K.
Collaboration and License Agreement with University of Texas M.D. Anderson Cancer Center
In November 2020, we entered into the Collaboration Agreement with the Board of Regents of The University of Texas System, on behalf of M.D. Anderson, designed to expedite the research and development of novel engineered tumor infiltrating lymphocytes, or TIL, for the treatment of solid tumors. Pursuant to the Collaboration Agreement, as amended, we agreed to fund research activities of up to $8.3 million over approximately two years and received the option to obtain a license to certain intellectual property arising from the collaboration. The collaboration focused on developing TIL containing regulated mbIL15 with the potential to enhance anti-tumor efficacy and reduce tumor burden in patients suffering from different types of solid tumors. The collaboration’s purpose was to accelerate the development of cytoTIL, including process and analytical development and clinical readiness activities. The Collaboration Agreement expired in 2023 and, prior to such expiration, we exercised our option to license certain intellectual property arising from the collaboration, and subsequently entered into the M.D. Anderson License Agreement, in October 2021.
Under the M.D. Anderson License Agreement, we are obligated to pay to M.D. Anderson (a) a royalty on net sales of Developed Products and licensed products at a low single digit percentage, (b) milestone payments of up to (i) $75.0 million upon the achievement of certain specified clinical and regulatory milestones and (ii) $90.0 million upon the achievement of certain specified sales milestones, which milestones may be payable with respect to multiple products and indications and (c) a share of certain consideration received by us from sublicensees under any sublicense agreements with third parties.
As of December 31, 2025, we have made approximately $11.1 in aggregate payments to M.D. Anderson in connection with the Collaboration Agreement and the M.D. Anderson License Agreement, including with respect to the payment of option exercise fees, milestone payments and certain reimbursable patent and research expenses which were incurred by M.D. Anderson prior to entering into the M.D. Anderson License Agreement.
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The M.D. Anderson License Agreement may be terminated by the Board of Regents upon notice for an uncured challenge of the Board of Regents’ patents and by mutual agreement of us and the Board of Regents.
There were no changes to the Company’s leases and license and collaboration agreements during the three months ended March 31, 2026.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements appearing elsewhere in this Current Report on Form 8-K, we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.
Research and Development Expenses and Accruals
We record research and development expenses to operations as incurred. Research and development expenses represent costs incurred by us for the discovery and development of our product candidates and the development of our technology and include employee salaries, benefits and stock-based compensation, third-party research and development expenses, including contract manufacturing and research services, consulting expenses, laboratory supplies, and certain allocated expenses, as well as amounts incurred under license agreements.
We record accrued liabilities for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of preclinical studies, clinical trials and contract manufacturing activities. We estimate preclinical study and clinical trial and other research and development expenses based on the services performed, pursuant to contracts with research institutions and third-party service providers that conduct and manage preclinical studies and clinical trials and research services on our behalf. We record the costs of research and development activities based upon the estimated services provided but not yet invoiced and include these costs in accrued expenses and other current liabilities in our consolidated balance sheets and in research and development expense in our consolidated statements of operations and comprehensive loss. We make significant judgments and estimates in determining the accrued balance in each reporting period. As actual costs become known, we adjust our accrued estimates. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed may vary from our actual results and could result in us reporting amounts that are too high or too low in any particular period. Our accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from external third-party service providers. Contingent milestone payments, if any, are expensed when the milestone results are probable and estimable, which is generally upon the achievement of the milestone.
Our expenses related to clinical trials are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services provided and efforts expended pursuant to contracts with multiple research institutions and CROs that may be used to conduct and manage clinical trials on our behalf. We generally accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity. If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis.
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Stock-Based Compensation
We measure stock-based awards granted to employees, nonemployees and directors based on the fair value on the date of the grant recognized using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected fair value of our common stock, the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield. We recognized compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are accounted for as they occur. Generally, we issue stock-based awards in the form of stock options with only service-based vesting conditions and records the expense for these awards using the straight-line method. We have also issued stock-based awards in the form of stock options with both performance and service-based vesting conditions. We record the expense for stock-based awards with both performance and service-based vesting using an accelerated attribution method, once the performance conditions are considered probable of being achieved, using management’s best estimates.
Refer to Note 2, “Summary of Significant Accounting Policies,” to our consolidated financial statements appearing elsewhere in this Current Report on Form 8-K for the detail on certain subjective assumptions relating to fair value measurement of stock-based awards granted.
Common Stock Valuation
As there has been no public market for our common stock, the estimated fair value of our common stock has been determined by the Obsidian Board after considering valuation reports provided by an independent third-party valuation firm and exercising reasonable judgment and considering numerous objective and subjective factors to determine the best estimate of the fair value of our common stock at each stock option grant date. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.
Our recent third-party valuations of common stock, in accordance with the Practice Aid, were prepared using the hybrid method, which we determined was the most appropriate method for determining the fair value of our common unit based on our stage of development and other relevant factors. The option-pricing method, or OPM, treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. The probability-weighted expected return method, or PWERM, is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for us, assuming various outcomes. The hybrid method is a combination of the PWERM and the OPM. In the hybrid method, various exit scenarios are analyzed and the equity value in one or more of the scenarios is calculated using an OPM with the term equal to the estimated time to liquidity. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock.
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Given the absence of a public trading market, the Obsidian Board, with input from management considered numerous objective and subjective factors to determine the fair value of our common stock. The factors included, but were not limited to:
| • | the prices at which we sold preferred stock and preferences of the preferred stock relative to our common stock at the time of each grant; |
| • | the progress of our research and development efforts, including the status of clinical development for our product candidates; |
| • | the lack of liquidity of our equity as a private company; |
| • | our stage of development and business strategy and the material risks related to our business and industry; |
| • | the achievement of enterprise milestones, including entering into collaboration agreements; and |
| • | the likelihood of achieving a liquidity event for the holders of our preferred stock and holders of our common stock, such as a sale of our company, given prevailing market conditions. |
The assumptions underlying these valuations were highly complex and subjective and represented management’s best estimates, which involved inherent uncertainties and the application of management’s judgment. As a result, if we had used significantly different assumptions or estimates, the fair value of our common stock and our stock-based compensation expense could have been materially different.
Once a public trading market for our common stock has been established in connection with the completion of the mergers, it will no longer be necessary for the Obsidian Board to estimate the fair value of our common stock in connection with our accounting for granted stock options and other such awards we may grant, as the fair value of our common stock will be determined based on the quoted market price of our common stock.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, “Summary of Significant Accounting Policies” to our audited consolidated financial statements and unaudited condensed financial statements included elsewhere in this Current Report on Form 8-K.
Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of loss that may impact our financial position because of adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure resulting from potential changes in interest rates, exchange rates or inflation. We do not hold financial instruments for trading purposes.
Interest rate risk
As of March 31, 2026, we had $58.8 million, in cash, cash equivalents and marketable securities, which consisted of cash, money market funds, and U.S. treasury bills.
As of December 31, 2025 and December 31, 2024, we had $80.5 million and $168.3 million, respectively, in cash, cash equivalents and marketable securities, which consisted of cash, money market funds, and U.S. treasury bills.
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Our cash and cash equivalents are maintained in accounts with multiple financial institutions in the United States. We may maintain cash and cash equivalent balances in excess of Federal Deposit Insurance Corporation (FDIC) limits. We do not believe that we are subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, we believe an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio. We have the ability to hold our investments until maturity, and therefore, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a change in market interest rates on our investment portfolio.
Foreign currency exchange risk
All of our employees and our operations are currently located in the United States and our expenses are generally denominated in U.S. dollars. However, we do utilize certain vendors outside of the United States in connection with our research and development activities. As such, our expenses are denominated in both U.S. dollars and foreign currencies. Therefore, our operations are and will continue to be subject to fluctuations in foreign currency exchange rates. To date, foreign currency transaction gains and losses have not been material to our consolidated financial statements, and we have not had a formal hedging program with respect to foreign currency. We do not believe that a hypothetical 10% increase or decrease in exchange rates during any of the periods presented would have had a material effect on our consolidated financial statements included elsewhere in this prospectus.
Effects of inflation
Inflation generally affects us by increasing our labor and research and development expenses. We do not believe that inflation had a material effect on our business, financial condition, or results of operations during the years ended December 31, 2025 and December 31, 2024.
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Filing Exhibits & Attachments
27 documentsPress Releases
Agreements & Contracts
- EX-10.1 EX-10.1 204.0 KB
- EX-10.2 EX-10.2 120.5 KB
- EX-10.3 EX-10.3 39.8 KB
- EX-10.4 EX-10.4 103.2 KB
- EX-10.5 EX-10.5 73.7 KB
- EX-10.6 EX-10.6 77.7 KB
- EX-10.7 EX-10.7 163.5 KB
- EX-10.8 EX-10.8 47.3 KB
- EX-10.9 EX-10.9 12.6 KB
- EX-10.10 EX-10.10 14.7 KB
- EX-10.11 EX-10.11 87.8 KB
- EX-10.12 EX-10.12 37.9 KB
- EX-10.13 EX-10.13 330.1 KB
- EX-10.14 EX-10.14 533.2 KB
- EX-10.15 EX-10.15 322.1 KB