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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-265638


PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT
To the Stockholders of Caladrius Biosciences, Inc. and Cend Therapeutics, Inc.:
Caladrius Biosciences, Inc. (“Caladrius”) and Cend Therapeutics, Inc. (“Cend”) have entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) pursuant to which a wholly owned subsidiary of Caladrius will merge with and into Cend, with Cend surviving as a wholly owned subsidiary of Caladrius (the “Merger”).
At the effective time of the Merger (the “Effective Time”), each share of Cend’s common stock, par value $0.00001 per share (“Cend Common Stock”), and each share of Cend’s preferred stock, par value $0.00001 per share (“Cend Preferred Stock,” together with the Cend Common Stock, the “Cend Capital Stock”), outstanding immediately prior to the Effective Time will be converted into the right to receive approximately 8.5623 shares of Caladrius’ common stock, par value $0.001 per share (“Caladrius Common Stock”), subject to adjustment to account for the effect of a reverse stock split of Caladrius Common Stock, at a ratio mutually agreed to by Caladrius and Cend in the range of one new share for every five to fifteen shares outstanding (or any number in between) (the “Reverse Stock Split”), to be implemented prior to the consummation of the Merger as discussed in this proxy statement/prospectus/information statement, and further adjusted based on Caladrius’ net cash and Cend’s unpaid transaction costs immediately prior to the closing of the Merger (the “Exchange Ratio”). Because Caladrius’ net cash balance and Cend’s unpaid transaction costs will not be determined until immediately prior to the closing of the Merger, and because the number of shares of Caladrius Common Stock issuable to Cend is determined based on Caladrius’ net cash balance and Cend’s unpaid transaction costs immediately prior to the closing of the Merger, Caladrius’ stockholders cannot be certain of the exact number of shares of Caladrius Common Stock that will be issued to Cend stockholders when Caladrius’ stockholders vote on the proposals at the Annual Meeting of Caladrius stockholders. Caladrius will assume outstanding and unexercised options to purchase shares of Cend Common Stock granted under Cend’s 2016 Equity Incentive Plan, and each such option will be converted into an option to purchase shares of Caladrius Common Stock, with the number of shares of Caladrius Common Stock subject to such option and the exercise price being appropriately adjusted to reflect the Exchange Ratio. Caladrius stockholders will continue to own and hold their existing shares of Caladrius Common Stock. At the Effective Time, each (i) option or other right to purchase shares of Caladrius Common Stock issued by Caladrius (a “Caladrius Option”), (ii) restricted stock unit covering shares of Caladrius Common Stock issued or granted by Caladrius, which for the avoidance of doubt, shall include a performance stock unit covering shares of Caladrius Common Stock issued or granted by Caladrius and (iii) award of shares of Caladrius Common Stock subject to forfeiture and certain vesting criteria, in each case, that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, shall survive the closing of the Merger and remain outstanding in accordance with its terms.
Immediately following the consummation of the Merger, Cend’s stockholders are expected to own approximately 50% of the outstanding shares of Caladrius Common Stock, and Caladrius’ stockholders are expected to own approximately 50% of the outstanding shares of Caladrius Common Stock, subject to adjustment of the Exchange Ratio as set forth in the Merger Agreement.
Shares of Caladrius Common Stock are currently listed on The Nasdaq Capital Market under the symbol “CLBS.” Prior to consummation of the Merger, Caladrius intends to file a notification form with the Nasdaq Stock Market, LLC (“Nasdaq”) for the listing of additional shares with respect to the shares of Caladrius Common Stock to be issued to the holders of Cend Capital Stock in the Merger. After completion of the Merger, Caladrius will be renamed “Lisata Therapeutics, Inc.” and expects to trade on The Nasdaq Capital Market under the symbol “LSTA.” On July 25, 2022, the last trading day before the date of this proxy statement/prospectus/information statement, the closing sale price of Caladrius Common Stock was $0.51 per share.
Caladrius is holding an annual meeting of stockholders (the “Annual Meeting”) in order to obtain the stockholder approvals necessary to complete the Merger and related matters, hold an election of directors, hold a “say-on-pay” vote, and ratify the selection of an independent registered public accounting firm. At the Annual Meeting, which will be held at 9:00 a.m., New York time, on September 13, 2022, via live webcast on the internet where you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CLBS2022SM, unless postponed or adjourned to a later date, Caladrius will ask Caladrius’ stockholders to, among other things, (i) adopt the Merger Agreement thereby approving the Merger and the issuance of Caladrius Common Stock pursuant to the Merger Agreement, (ii) approve an amendment to Caladrius’ amended and restated certificate of incorporation effecting the Reverse Stock Split, (iii) approve an amendment to Caladrius’ amended and restated certificate of incorporation changing Caladrius’ corporate name from “Caladrius Biosciences, Inc.” to “Lisata Therapeutics, Inc.,” (iv) elect three Class III directors to hold office until the 2025 annual meeting of Caladrius’ stockholders or until their successors are elected (provided, however, that if the Merger is completed, Caladrius’ board of directors will be reconstituted as provided in the Merger Agreement), (v) ratify the selection by the audit committee of the Caladrius board of directors of Grant Thornton LLP as the independent registered public accounting firm of Caladrius for its calendar year ending December 31, 2022, (vi) approve, on a non-binding advisory basis, the executive compensation of Caladrius’ named executive officers as disclosed in this proxy statement/prospectus/information statement and (vii) approve an amendment to the Caladrius Biosciences, Inc. 2018 Equity Incentive Compensation Plan (the “Plan”) that increases the number of shares of common stock that may be issued under the Plan by 5,000,000, each as described in this proxy statement/prospectus/information statement.

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As described in this proxy statement/prospectus/information statement, certain of Cend’s stockholders who in the aggregate own 100% of the outstanding shares of Cend Series A Preferred Stock, approximately 88.8% of the outstanding shares of Cend Series B Preferred Stock and approximately 77.5% of the outstanding shares of Cend Capital Stock on an as converted to common stock basis (excluding shares held by Caladrius), and certain Caladrius stockholders who in the aggregate own approximately 1.8% of the outstanding shares of Caladrius Common Stock, are parties to support agreements with Caladrius and Cend, respectively, whereby such stockholders have agreed to vote in favor of the adoption or approval of the Merger Agreement, as applicable, and the approval of the transactions contemplated therein, including the Merger and the issuance of Caladrius Common Stock in the Merger pursuant to the Merger Agreement, respectively, subject to the terms of the support agreements. In addition, following the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, being declared effective by the U.S. Securities and Exchange Commission and pursuant to the conditions of the Merger Agreement, Cend’s stockholders who are party to the support agreements will each execute an action by written consent of Cend’s stockholders, referred to herein as the written consent, adopting the Merger Agreement, thereby approving the Merger and related transactions. Therefore, holders of a sufficient number of shares of Cend Capital Stock required to adopt the Merger Agreement will adopt the Merger Agreement, and no meeting of Cend stockholders is required to adopt the Merger Agreement and approve the Merger and related transactions and no meeting of Cend’s stockholders will be held. Nevertheless, all of Cend’s stockholders will have the opportunity to elect to adopt the Merger Agreement, thereby approving the Merger and related transactions, by signing and returning to Cend a written consent.
After careful consideration, the respective boards of directors of Caladrius and Cend have (i) determined that the transactions contemplated by the Merger Agreement are fair to, advisable and in the best interests of Caladrius or Cend, as applicable, and their respective stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that its stockholders vote to adopt or approve, as applicable, the Merger Agreement and, therefore, approve the transactions contemplated therein. Caladrius’ board of directors recommends that its stockholders vote “FOR” the proposals described in this proxy statement/prospectus/information statement, and Cend’s board of directors recommends that its stockholders sign and return to Cend the written consent indicating their approval of the Merger and adoption of the Merger Agreement and related transactions.
More information about Caladrius, Cend and the proposed transaction is contained in this proxy statement/prospectus/information statement. Caladrius and Cend urge you to read this proxy statement/prospectus/information statement carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER THE SECTION ENTITLED “RISK FACTORS” IN THIS PROXY STATEMENT/PROSPECTUS/INFORMATION STATEMENT.
Caladrius and Cend are excited about the opportunities the Merger brings to both Caladrius’ and Cend’s respective stockholders, and thank you for your consideration and continued support.
David J. Mazzo, Ph.D.
President and Chief Executive Officer
Caladrius Biosciences, Inc.
David Slack
President and Chief Executive Officer
Cend Therapeutics, Inc.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus/information statement. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus/information statement is dated July 29, 2022, and is first being mailed to Caladrius’ and Cend’s respective stockholders on or about August 2, 2022.

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CALADRIUS BIOSCIENCES, INC.
110 Allen Road, 2nd Floor
Basking Ridge, New Jersey 07920
(908) 842-0100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 13, 2022
Dear Stockholders of Caladrius:
On behalf of the board of directors of Caladrius Biosciences, Inc., a Delaware corporation (“Caladrius”), we are pleased to deliver this proxy statement/prospectus/information statement for the proposed merger between Caladrius and Cend Therapeutics, Inc., a Delaware corporation (“Cend”), pursuant to which CS Cedar Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Caladrius, will merge with and into Cend, with Cend surviving as a wholly owned subsidiary of Caladrius (the “Merger”). The annual meeting of stockholders of Caladrius (the “Annual Meeting”) will be held on September 13, 2022, at 9:00 a.m., New York time. The Annual Meeting will be held via live webcast on the internet. You will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CLBS2022SM. You will not be able to attend the Annual Meeting in person. The Annual Meeting is being held for the following purposes:
1.
To consider and vote upon a proposal to approve the Agreement and Plan of Merger and Reorganization, dated as of April 26, 2022, by and among Caladrius, CS Cedar Merger Sub, Inc. and Cend, a copy of which is attached as Annex A to this proxy statement/prospectus/information statement (the “Merger Agreement”), and the transactions contemplated thereby, including the Merger and the issuance of shares of Caladrius’ common stock to Cend’s stockholders pursuant to the terms of the Merger Agreement.
2.
To approve an amendment to the amended and restated certificate of incorporation of Caladrius to effect a reverse stock split of Caladrius’ common stock, at a ratio mutually agreed to by Caladrius and Cend in the range of one new share for every five to fifteen shares outstanding (or any number in between), in the form attached as Annex D to this proxy statement/prospectus/information statement.
3.
To approve an amendment to the amended and restated certificate of incorporation of Caladrius to change the corporate name of Caladrius from “Caladrius Biosciences, Inc.” to “Lisata Therapeutics, Inc.” in the form attached as Annex E to this proxy statement/prospectus/information statement.
4.
To elect three Class III directors to hold office until the 2025 annual meeting of Caladrius’ stockholders or until their successors are elected (provided, however, that if the Merger is completed, Caladrius’ board of directors will be reconstituted as provided in the Merger Agreement).
5.
To ratify the selection by the audit committee of the Caladrius board of directors of Grant Thornton LLP as the independent registered public accounting firm of Caladrius for its calendar year ending December 31, 2022.
6.
To approve, on a non-binding advisory basis, the executive compensation of Caladrius’ named executive officers as disclosed in this proxy statement/prospectus/information statement.
7.
To approve an amendment to the Caladrius Biosciences, Inc. 2018 Equity Incentive Compensation Plan (the “Plan”) that increases the number of shares of common stock that may be issued under the Plan by 5,000,000.
8.
To consider and vote upon an adjournment of the Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1 or 2.
9.
To transact such other business as may properly come before the stockholders at the Annual Meeting or any adjournment or postponement thereof.

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Caladrius’ board of directors has fixed July 25, 2022, as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. Only holders of record of shares of Caladrius’ common stock at the close of business on the Record Date are entitled to notice of, and to vote at, the Annual Meeting. At the close of business on the Record Date, there were 60,583,249 shares of Caladrius’ common stock outstanding and entitled to vote.
Your vote is important. The affirmative vote of the holders of a majority of the shares of Caladrius’ common stock having voting power present in person or represented by proxy at the Annual Meeting is required for approval of Proposal Nos. 1, 5, 6, 7 and 8. The affirmative vote of the holders of a majority of shares of Caladrius’ common stock having voting power outstanding on the Record Date for the Annual Meeting is required for approval of Proposal Nos. 2 and 3. With respect to Proposal No. 4, the three nominees receiving the most “FOR” votes (from the votes of shares present in person or represented by proxy and entitled to vote on the election of directors) will be elected. The approval of Proposal No. 1 is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal No. 1.
All Caladrius stockholders are cordially invited to participate in the online, live Annual Meeting. However, even if you plan to participate in the webcast Annual Meeting, we request that you vote by following the instructions in the Notice of Internet Availability of Proxy Materials that you previously received and submit your proxy by telephone or through the Internet or by mail as promptly as possible prior to the Annual Meeting to ensure that your shares of Caladrius stock will be represented at the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from the record holder.
By Order of Caladrius’ board of directors,
David J. Mazzo, Ph.D.
Caladrius Biosciences, Inc.
Basking Ridge, New Jersey
July 29, 2022
CALADRIUS’ BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, CALADRIUS AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. CALADRIUS’ BOARD OF DIRECTORS RECOMMENDS THAT CALADRIUS STOCKHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

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REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus/information statement incorporates important business and financial information about Caladrius that is not included in or delivered with this document. You may obtain this information without charge through the Securities and Exchange Commission (“SEC”) website (www.sec.gov) or upon your written or oral request by contacting Caladrius’ Corporate Secretary at Caladrius Biosciences, Inc., 110 Allen Road, 2nd Floor, Basking Ridge, New Jersey 07920 or by calling (908) 842-0100.
To ensure timely delivery of these documents, any request should be made no later than September 6, 2022, to receive them before the Annual Meeting.
For additional details about where you can find information about Caladrius, please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.

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QUESTIONS AND ANSWERS ABOUT THE MERGER
Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus/information statement does not give effect to the proposed reverse stock split described in Proposal No. 2, beginning on page 190 in this proxy statement/prospectus/information statement (the “Reverse Stock Split”).
The following section provides answers to frequently asked questions about the Merger (as defined below). This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.
Q:
What is the Merger?
A:
Caladrius Biosciences, Inc. (“Caladrius”) and Cend Therapeutics, Inc. (“Cend”) have entered into an Agreement and Plan of Merger and Reorganization, dated as of April 26, 2022 (the “Merger Agreement”). The Merger Agreement contains the terms and conditions of the proposed business combination of Caladrius and Cend. Under the Merger Agreement, CS Cedar Merger Sub, Inc., a wholly owned subsidiary of Caladrius (“Merger Sub”) will merge with and into Cend, with Cend surviving as a wholly owned subsidiary of Caladrius (the “Merger”).
At the effective time of the Merger (the “Effective Time”), each share of Cend’s common stock, par value $0.00001 per share (“Cend Common Stock”), and each share of Cend’s preferred stock, par value $0.00001 per share (“Cend Preferred Stock,” and together with Cend Common Stock, “Cend Capital Stock”) outstanding immediately prior to the Effective Time (excluding certain shares to be canceled pursuant to the Merger Agreement, and shares held by stockholders who have exercised and perfected appraisal rights or dissenters’ rights as more fully described in the section of this proxy statement/prospectus/information statement entitled “The Merger—Appraisal Rights and Dissenters’ Rights”) will be converted into the right to receive approximately 8.5623 shares of Caladrius’ common stock, par value $0.001 per share (“Caladrius Common Stock”), subject to adjustment to account for the Reverse Stock Split, and further adjusted based on Caladrius’ net cash and Cend’s unpaid transaction costs immediately prior to the closing (the “Closing”) of the Merger (the “Exchange Ratio”). Because Caladrius’ net cash balance and Cend’s unpaid transaction costs will not be determined until the Closing, and because the number of shares of Caladrius Common Stock issuable to Cend is determined based on Caladrius’ net cash balance and Cend’s unpaid transaction costs at Closing, Caladrius Stockholders (as defined below) cannot be certain of the exact number of shares that will be issued to Cend’s stockholders when Caladrius’ stockholders vote on the proposals at the annual meeting of stockholders of Caladrius Stockholders (the “Annual Meeting”). The Exchange Ratio is an estimate only and the final Exchange Ratio will be determined pursuant to a formula described in more detail in the Merger Agreement and in the attached proxy statement/prospectus/information statement. As a result of the Merger, current holders of shares of Cend Capital Stock (each holder of Cend Capital Stock, a “Cend Stockholder”) are expected to own, or hold rights to acquire, in the aggregate approximately 50% of the outstanding shares of Caladrius Common Stock and current stockholders of Caladrius (“Caladrius Stockholders”) are expected to own in the aggregate approximately 50% of the outstanding shares of Caladrius Common Stock and, in each case, following the Effective Time and subject to adjustment of the Exchange Ratio. After the consummation of the Merger, and assuming Caladrius Stockholders approve Proposal No. 3, Caladrius will change its corporate name to “Lisata Therapeutics, Inc.” as required by the Merger Agreement (the “Caladrius Name Change”).
Q:
What will happen to Caladrius if, for any reason, the Merger does not close?
A:
If, for any reason, the Merger does not close, the board of directors of Caladrius (the “Caladrius Board of Directors”) will continue to operate the existing business of Caladrius and may seek to continue to seek strategic transactions to diversify its pipeline of development product candidates.
Q:
Why are the two companies proposing to merge?
A:
Cend and Caladrius believe that the Merger will result in a drug discovery and development company aiming to diversify the indication and technology risk associated with its development pipeline and to increase opportunity for value creation of its shareholders. For a discussion of Caladrius’ and Cend’s reasons for the Merger, please see the section entitled “The Merger—Caladrius Reasons for the Merger” and “The Merger—Cend Reasons for the Merger” in this proxy statement/prospectus/information statement.
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Q:
Why am I receiving this proxy statement/prospectus/information statement?
A:
You are receiving this proxy statement/prospectus/information statement because you have been identified as a Caladrius Stockholder or Cend Stockholder as of the applicable Record Date (as defined below), and you are entitled, as applicable, to (i) vote at the Annual Meeting to approve the Merger Agreement and the transactions contemplated thereby, including the Merger and the issuance of shares of Caladrius Common Stock pursuant to the Merger Agreement, or (ii) sign and return the Cend written consent to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Merger. The Annual Meeting will be held via live webcast on the internet. You will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CLBS2022SM. You will not be able to attend the Annual Meeting in person. This document serves as:
a proxy statement of Caladrius used to solicit proxies for the Annual Meeting;
a prospectus of Caladrius used to offer shares of Caladrius Common Stock in exchange for shares of Cend Capital Stock in the Merger and issuable upon exercise of options to purchase Caladrius Common Stock, as applicable; and
an information statement of Cend used to solicit the written consent of Cend Stockholders for the adoption of the Merger Agreement and the approval of the Merger and related transactions.
Q:
What is required to consummate the Merger?
A:
To consummate the Merger, Caladrius Stockholders must approve the Merger and the issuance of Caladrius Common Stock pursuant to the Merger Agreement (Proposal No. 1) and Cend Stockholders must adopt the Merger Agreement and, thereby, approve the Merger and the other transactions contemplated by the Merger Agreement.
The approval of the Merger and the issuance of Caladrius Common Stock pursuant to the Merger Agreement by the Caladrius Stockholders requires the affirmative vote of the holders of a majority of the shares of Caladrius Common Stock having voting power present in person or represented by proxy at the Annual Meeting.
The adoption of the Merger Agreement and the approval of the Merger and related transactions by the Cend Stockholders requires the affirmative vote (or written consent) of the holders of a majority of (a) the outstanding shares of Cend Common Stock and Cend Preferred Stock, voting together as one class, (b) the holders of a majority of the outstanding shares of Cend Series A Preferred Stock, voting as a separate class, (c) the holders of a majority of the outstanding shares of Cend Series B Preferred Stock, voting as a separate class and (d) holders of a majority of the outstanding shares of Cend Series D Preferred Stock, voting as a separate class. In addition to the requirement of obtaining such stockholder approvals and appropriate regulatory approvals, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived.
The presence, in person or represented by proxy, at the Annual Meeting of the holders of a majority of the shares of Caladrius Common Stock outstanding and entitled to vote at the Annual Meeting is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes will be counted toward a quorum. The affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting, assuming a quorum is present, is required for approval of Proposal No. 1.
The approval of Proposal No. 1 is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal No. 1.
Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR,” “AGAINST” and “WITHHOLD” votes, abstentions and broker non-votes. Abstentions and broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes will not, however, be considered votes cast at the Annual Meeting and will therefore not have any effect with respect to Proposal No. 1.
As of June 13, 2022, certain Cend Stockholders who in the aggregate own 100% of the outstanding shares of Cend Series A Preferred Stock, approximately 88.8% of the outstanding shares of Cend Series B
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Preferred Stock and approximately 77.5% of the outstanding shares of Cend Capital Stock on an as converted to common stock basis (excluding shares held by Caladrius), and certain Caladrius Stockholders who in the aggregate own approximately 1.8% of the outstanding shares of Caladrius Common Stock, are parties to support agreements with Caladrius and Cend, respectively, whereby such stockholders have agreed to vote their shares in favor of the adoption or approval, as applicable, of the Merger Agreement and the transactions contemplated therein, including the Merger and the issuance of Caladrius Common Stock to Cend Stockholders pursuant to the Merger Agreement, subject to the terms of the support agreements. In addition, following the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, being declared effective by the U.S. Securities and Exchange Commission (the “SEC”) and pursuant to the conditions of the Merger Agreement, Cend Stockholders who are party to the support agreements will each execute written consents approving the Merger and related transactions.
Therefore, holders of a sufficient number of shares of Cend Capital Stock required to adopt the Merger Agreement, thereby approving the Merger, have agreed to adopt the Merger Agreement via written consent. Cend Stockholders, including those who are parties to support agreements, are being requested to execute written consents providing such approvals.
For a more complete description of the closing conditions under the Merger Agreement, Caladrius urges you to read the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus/information statement.
Q:
What proposals are to be voted on at the Annual Meeting, other than the proposals required in connection with the Merger?
A:
At the Annual Meeting, the Caladrius Stockholders will also be asked to consider the following proposals, along with any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof:
Proposal No. 2 to approve an amendment to the amended and restated certificate of incorporation of Caladrius to effect the Reverse Stock Split;
Proposal No. 3 to approve an amendment to the amended and restated certificate of incorporation of Caladrius to effect the Caladrius Name Change;
Proposal No. 4 to elect three Class III directors to hold office until the 2025 annual meeting of Caladrius Stockholders or until their successors are elected (provided, however, that if the Merger is completed, the Caladrius Board of Directors will be reconstituted as provided in the Merger Agreement);
Proposal No. 5 to ratify the selection of Grant Thornton LLP as Caladrius’ independent registered public accounting firm for the calendar year ending December 31, 2022;
Proposal No. 6 to approve, on a non-binding, advisory basis, the executive compensation of Caladrius’ named executive officers as described in this proxy statement/prospectus/information statement;
Proposal No. 7 to approve an amendment to the Caladrius Biosciences, Inc. 2018 Equity Incentive Compensation Plan that increases the number of shares of common stock that may be issued under the Plan by 5,000,000; and
Proposal No. 8 to approve an adjournment of the Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1 or 2.
The approval of Proposal Nos. 2, 3, 4, 5, 6, 7 and 8 are not conditions to the Merger. Such proposals, together with Proposal No. 1, are referred to collectively in this proxy statement/prospectus/information statement as the proposals.
The approval of the Reverse Stock Split (Proposal No. 2) is required in order to avoid a potential delisting of Caladrius Common Stock from The Nasdaq Capital Market. However, the approval of the Reverse Stock Split (Proposal No. 2) is not a condition to closing the Merger and is also not conditioned upon the consummation of the Merger, and as such the Reverse Stock Split may be implemented by the Caladrius Board of Directors even if the Merger does not take place.
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Caladrius Stockholders should understand, however, that if the Merger is completed, the effect of the approval of Proposal No. 4 will be limited since the composition of the Caladrius Board of Directors will be changed upon completion of the Merger in accordance with the Merger Agreement.
The election of Class III directors to the Caladrius Board of Directors requires a plurality of the votes cast at the Annual Meeting. The approval of the proposal to ratify the selection of an independent registered public accounting firm for the calendar year ending December 31, 2022 requires the affirmative vote of a majority of the votes cast in person or by proxy (not counting “abstentions” or “broker non-votes” as votes cast), assuming a quorum is present, at the Annual Meeting.
The presence, in person or represented by proxy, at the Annual Meeting of the holders of a majority of the shares of Caladrius Common Stock outstanding and entitled to vote at the Annual Meeting is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes will be counted toward a quorum. The affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting, assuming a quorum is present, is required for approval of Proposal Nos. 5, 6, 7 and 8. The affirmative vote of the holders of a majority of shares of Caladrius Common Stock having voting power outstanding on July 25, 2022 (the “Record Date”) is required for approval of Proposal Nos. 2 and 3. Broker non-votes will not be counted towards the vote total for Proposal Nos. 5, 6, 7 and 8. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” Proposal Nos. 2 and 3. With respect to Proposal No. 4, the three nominees receiving the most “FOR” votes (from the votes of shares present in person or represented by proxy and entitled to vote on the election of directors) will be elected. Broker non-votes will not be counted towards the vote total for Proposal No. 4.
Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count “FOR,” “AGAINST” and “WITHHOLD” votes, abstentions and broker non-votes. “WITHHOLD” votes with respect to the election of one or more nominees for director pursuant to Proposal No. 4 will not be voted with respect to the director or directors indicated, although they will be counted for purposes of determining the presence of a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes will also be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes will not, however, be considered votes cast at the Annual Meeting and will therefore not have any effect with respect to Proposal Nos. 5, 6, 7 and 8. Abstentions and broker non-votes will have the same effect as “AGAINST” votes for Proposal Nos. 2 and 3.
As of June 13, 2022, the directors and executive officers of Caladrius beneficially owned approximately 1.8% of the outstanding shares of Caladrius Common Stock entitled to vote at the Annual Meeting. As of June 13, 2022, Caladrius is not aware of any affiliate of Cend owning any shares of Caladrius Common Stock entitled to vote at the Annual Meeting.
Q:
What will Cend Stockholders and holders of Cend Options receive in the Merger?
A:
As a result of the Merger, Cend Stockholders will become entitled to receive shares, or rights to acquire shares, of Caladrius Common Stock equal to, in the aggregate, approximately 50% of the outstanding shares of Caladrius Common Stock. Following the Closing, holders of options or other rights to purchase Cend Capital Stock (“Cend Options”) will have their Cend Options converted into options to purchase shares of Caladrius Common Stock, with the number of shares of Caladrius Common Stock subject to such option and the exercise price being appropriately adjusted to reflect the Exchange Ratio between Caladrius Common Stock and Cend Capital Stock determined in accordance with the Merger Agreement.
For a more complete description of what Cend Stockholders and holders of Cend Options will receive in the Merger, please see the section entitled “The Merger—Merger Consideration and Adjustment” in this proxy statement/prospectus/information statement.
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Q:
Who will be the directors of Caladrius following the Merger?
A:
Following the consummation of the Merger, the size of the Caladrius Board of Directors will be maintained to include a total of up to nine directors. Pursuant to the terms of the Merger Agreement, the Caladrius Board of Directors will be reconstituted such that four of directors will be designated by Cend and four directors will be designated by Caladrius. Following the Closing, the eight Caladrius and Cend designees may mutually select a ninth director, though there are no current plans to do so. It is anticipated that, following the Closing, the Caladrius Board of Directors will be constituted as follows:
Name
Current Principal Affiliation
David J. Mazzo, Ph.D.
Caladrius Biosciences, Inc., President and Chief
Executive Officer and Director
Gregory B. Brown, M.D.
Caladrius Biosciences, Inc., Director
Steven M. Klosk
Caladrius Biosciences, Inc., Director
Cynthia L. Flowers
Caladrius Biosciences, Inc., Director
David Slack
Cend Therapeutics, Inc., President and Chief Executive
Officer and Director
Heidi Henson
Cend Therapeutics, Inc., Director
Erkki Ruoslahti, M.D., Ph.D.
Cend Therapeutics, Inc., Scientific Founder & Chairman
Mohammad Azab, MD, MBA
DURECT Corporation, Director
Q:
Who will be the executive officers of Caladrius immediately following the Merger?
A:
Immediately following the consummation of the Merger, the executive management team of Caladrius is expected to be composed of the following executive officers:
Name
Title
David J. Mazzo, Ph.D.
Chief Executive Officer
David Slack
President & Chief Business Officer
Kristen K. Buck, M.D.
Executive Vice President R&D and Chief Medical Officer
Q:
What are the material U.S. federal income tax consequences of the Reverse Stock Split?
A:
The Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes. As a result, a U.S. holder (as defined in the section of this proxy statement/prospectus/information statement entitled “Matters Being Submitted to a Vote of Caladrius Stockholders—Caladrius Proposal No. 2: Approval of an Amendment to the Amended and Restated Certificate of Incorporation of Caladrius Effecting the Reverse Stock Split—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split”) of Caladrius Common Stock generally should not recognize gain or loss upon the Reverse Stock Split, except with respect to cash received in lieu of a fractional share of Caladrius Common Stock, as discussed in the section of this proxy statement/prospectus/information statement entitled “Matters Being Submitted to a Vote of Caladrius Stockholders—Caladrius Proposal No. 2: Approval of an Amendment to the Amended and Restated Certificate of Incorporation of Caladrius Effecting the Reverse Stock Split—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split.” A U.S. holder’s aggregate tax basis in the shares of Caladrius Common Stock received pursuant to the Reverse Stock Split should equal the aggregate tax basis of the shares of the Caladrius Common Stock surrendered (excluding any portion of such basis that is allocated to any fractional share of Caladrius Common Stock), and such U.S. holder’s holding period in the shares of Caladrius Common Stock received should include the holding period in the shares of Caladrius Common Stock surrendered. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of Caladrius Common Stock surrendered to the shares of Caladrius Common Stock received in a recapitalization pursuant to the Reverse Stock Split. U.S. holders of shares of Caladrius Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares. For more information, please see the section of this proxy statement/prospectus/information statement entitled “Matters Being Submitted to a Vote of Caladrius Stockholders—Caladrius Proposal No. 2: Approval of an Amendment to the Amended and Restated Certificate of Incorporation of Caladrius Effecting the Reverse Stock Split—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split.”
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Q:
What are the material U.S. federal income tax consequences of the Merger?
A:
Caladrius and Cend intend the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), as described in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” in this proxy statement/prospectus/information statement. Assuming the Merger constitutes a reorganization, subject to the limitations and qualifications described in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” in this proxy statement/prospectus/information statement, Cend Stockholders generally should not recognize gain or loss for U.S. federal income tax purposes on the receipt of shares of Caladrius Common Stock issued in connection with the Merger (other than in respect of cash received in lieu of fractional shares). Each Cend Stockholder who receives cash in lieu of a fractional share of Caladrius Common Stock will be treated for U.S. federal income tax purposes as having received such fractional share pursuant to the Merger and then as having exchanged such fractional share for cash in a redemption by Caladrius. A Cend Stockholder should generally recognize gain or loss on such a deemed exchange of the fractional share.
If the Merger is not treated as a reorganization under Section 368(a) of the Code, then, subject to the limitations and qualifications described in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” in this proxy statement/prospectus/information statement, each Cend Stockholder will generally recognize gain or loss, for U.S. federal income tax purposes, on the receipt of shares of Caladrius Common Stock issued to such Cend Stockholder and on any cash received in lieu of fractional shares in connection with the Merger. The tax consequences to each Cend Stockholder will depend on that stockholder’s particular circumstances. Each Cend Stockholder should consult with his, her or its tax advisor for a full understanding of the tax consequences of the Merger to that stockholder.
Q:
As a Caladrius Stockholder, how does the Caladrius Board of Directors recommend that I vote?
A:
After careful consideration, the Caladrius Board of Directors recommends that Caladrius Stockholders vote:
“FOR” Proposal No. 1 to approve the Merger Agreement and the transactions contemplated thereby, including the Merger and the issuance of shares of Caladrius Common Stock to Cend Stockholders in the Merger;
“FOR” Proposal No. 2 to approve an amendment to the amended and restated certificate of incorporation of Caladrius to effect the Reverse Stock Split;
“FOR” Proposal No. 3 to approve an amendment to the amended and restated certificate of incorporation of Caladrius to effect the Caladrius Name Change;
“FOR” Proposal No. 4 to elect each of the Class III nominees for director to hold office until the 2025 annual meeting of Caladrius Stockholders or until their successors are elected;
“FOR” Proposal No. 5 to ratify the selection by the audit committee of the Caladrius Board of Directors of Grant Thornton LLP as the independent registered public accounting firm of Caladrius for its calendar year ending December 31, 2022;
“FOR” Proposal No. 6 to approve, on a non-binding, advisory basis, the executive compensation of Caladrius’ named executive officers as described in this proxy statement/prospectus/information statement;
“FOR” Proposal No. 7 to approve an amendment to the Caladrius Biosciences, Inc. 2018 Equity Incentive Compensation Plan that increases the number of shares of common stock that may be issued under the Plan by 5,000,000; and
“FOR” Proposal No. 8 to adjourn the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1 or 2.
Q:
As a Cend Stockholder, how does the Cend Board of Directors recommend that I vote?
A:
After careful consideration, the board of directors of Cend (the “Cend Board of Directors”) recommends that Cend Stockholders execute the written consent indicating their vote in favor of the adoption of the Merger Agreement and the approval of the Merger and the transactions contemplated by the Merger Agreement.
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Q:
What risks should I consider in deciding whether to vote in favor of the Merger or to execute and return the written consent, as applicable?
A:
You should carefully review the section of this proxy statement/prospectus/information statement entitled “Risk Factors,” which sets forth certain risks and uncertainties related to the Merger, risks and uncertainties to which the combined organization’s business will be subject, and risks and uncertainties to which each of Caladrius and Cend, as independent companies, are subject.
Q:
Who can vote at the Annual Meeting?
A:
Only Caladrius Stockholders of record at the close of business on the Record Date, July 25, 2022, will be entitled to vote at the Annual Meeting. As of July 25, 2022, there were 60,583,249 shares of Caladrius Common Stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If, at the close of business on the Record Date, your shares of Caladrius Common Stock were registered directly in your name with Caladrius’ transfer agent, Continental Stock Transfer & Trust Company, then you are a Caladrius Stockholder of record. As a Caladrius Stockholder of record, you may vote virtually at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, please vote as soon as possible by completing and returning the enclosed proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If, at the close of business on the Record Date, your shares of Caladrius Common Stock were not held in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.
Q:
How many votes do I have?
A:
On each matter to be voted upon, you have one vote for each share of Caladrius Common Stock you own as of the Record Date.
Q:
What is the quorum requirement?
A:
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the Annual Meeting. On July 25, 2022, there were 60,583,249 shares of Caladrius Common Stock outstanding and entitled to vote. Accordingly, Caladrius expects that the holders of at least 30,291,625 shares of Caladrius Common Stock must be present at the Annual Meeting for a quorum to exist. Your shares of Caladrius Common Stock will be counted toward the quorum at the Annual Meeting only if you attend the Annual Meeting in person or are represented at the Annual Meeting by proxy.
Abstentions and broker non-votes (as described below) will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present and entitled to vote at the meeting in person or represented by proxy may adjourn the Annual Meeting to another date.
Q:
What are “broker non-votes”?
A:
If you hold shares beneficially in street name and do not provide your broker or other agent with voting instructions, your shares may constitute “broker non-votes.” Broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. Proposals Nos. 1, 3, 4, 6, 7 and 8 are
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anticipated to be “non-routine” matters, but Proposal No. 2 regarding the Reverse Stock Split and Proposal No. 5 regarding the ratification of the selection of the independent registered public accounting firm are anticipated to be “routine” matters. Broker non-votes will not be counted toward the vote total for any proposal at the Annual Meeting.
Q:
How can I find out the results of the voting at the Annual Meeting?
A:
Caladrius will disclose final voting results in a Current Report on Form 8-K filed with the SEC within four business days after the Annual Meeting. If final voting results are unavailable at that time, then Caladrius intends to file a Current Report on Form 8-K to disclose preliminary voting results and file an amended Current Report on Form 8-K within four business days after the date the final voting results are available.
Q:
When are stockholder proposals due for next year’s annual meeting?
A:
To be considered for inclusion in the proxy materials for the 2023 annual meeting of Caladrius Stockholders, your proposal must be submitted in writing by April 4, 2023 to Caladrius’ Corporate Secretary at Caladrius Biosciences, Inc., 110 Allen Road, 2nd Floor, Basking Ridge, New Jersey 07920. However, if the meeting is more than 30 days from September 13, 2023, then the deadline for stockholder proposals will be a reasonable time before Caladrius begins to print and mail the proxy materials before the meeting.
If you wish to submit a proposal before the stockholders or nominate a director at the 2023 annual meeting of Caladrius Stockholders, but you are not requesting that your proposal or nomination be included in the proxy materials for that meeting, then you must follow the procedures set forth in Caladrius’ bylaws and, among other things, notify Caladrius’ Corporate Secretary in writing between May 16, 2023 and June 15, 2023. However, if the date of the 2023 annual meeting of Caladrius Stockholders is more than 30 days before or more than 60 days after September 13, 2023, then you must give notice no later than the 90th day prior to that meeting or, if later, the 10th day following the day on which public disclosure of that annual meeting date is first made. You are also advised to review Caladrius’ bylaws, which contain additional requirements regarding advance notice of stockholder proposals and director nominations.
Q:
When do you expect the Merger to be consummated?
A:
Caladrius and Cend anticipate that the Merger will occur sometime soon after the Annual Meeting to be held on September 13, 2022, but the companies cannot predict the exact timing. For more information, please see the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus/information statement.
Q:
What do I need to do now?
A:
Caladrius and Cend urge you to read this proxy statement/prospectus/information statement carefully, including its annexes, and to consider how the Merger affects you.
If you are a Caladrius Stockholder of record, you may provide your proxy instructions in one of two different ways. First, you can mail your signed proxy card in the enclosed return envelope. You may also provide your proxy instructions via telephone or via the Internet by following the instructions on your proxy card or voting instruction form. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction, and as soon as possible so that your shares can be voted at the Annual Meeting.
If you are a Cend Stockholder, you may execute and return your written consent to Cend in accordance with the instructions provided.
Q:
What happens if I do not return a proxy card or otherwise provide proxy instructions, as applicable?
A:
If you are a Caladrius Stockholder, the failure to return your proxy card or otherwise provide proxy instructions will reduce the aggregate number of votes required to approve Proposal Nos. 1, 4, 5 and 8 and will have the same effect as voting against Proposal Nos. 2 and 3 and your shares will not be counted for purposes of determining whether a quorum is present at the Annual Meeting.
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Q:
When and where is the Annual Meeting?
A:
The Annual Meeting will be held at 9:00 a.m., New York time, on September 13, 2022 via live webcast at www.virtualshareholdermeeting.com/CLBS2022SM. You will not be able to attend the Annual Meeting in person.
Q:
Why are you holding a virtual Annual Meeting?
A:
This year’s Annual Meeting will be held in a virtual meeting format only. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the Annual Meeting so that they can ask questions of the Caladrius Board of Directors or management, as time permits.
Q:
What happens if there are technical difficulties during the Annual Meeting?
A:
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual Annual Meeting, voting at the Annual Meeting or submitting questions at the Annual Meeting. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting login page.
Q:
What do I need to do now and how do I vote?
A:
Caladrius urges you to read this proxy statement carefully, including its appendices, as the actions contemplated by each of the Proposals may affect you.
If your shares of Caladrius stock are registered directly in your name with our transfer agent, you are considered, with respect to those shares, to be the “stockholder of record,” and the proxy materials and proxy card are being sent directly to you by Caladrius. There are four methods by which you may vote your shares at the Annual Meeting:
By Internet. You may vote your shares 24 hours a day by logging onto the secure website indicated in the instructions that are included in the Notice, or if you received printed materials, on the proxy card and following the instructions provided any time up until 11:59 pm, New York time, on September 12, 2022.
By Telephone. You may vote your shares 24 hours a day by calling the telephone number listed in the instructions that are included in the Notice, or if you received printed materials, on the proxy card and following the instructions provided by the recorded message any time up until 11:59 pm, New York time, on September 12, 2022.
By Mail. If you received a proxy card by mail, you may vote by completing, signing, dating and promptly returning the proxy card in the postage-paid return envelope provided with the proxy materials for receipt prior to the Annual Meeting.
At the Virtual Meeting. You may vote your shares electronically through the portal at the virtual Annual Meeting (if you satisfy the admission requirements, as described below). Even if you plan to attend the Annual Meeting virtually, we encourage you to vote in advance by telephone, through the Internet or by mail so that your vote will be counted in the event you later decide not to attend virtually the Annual Meeting.
The Annual Meeting will be a virtual meeting of stockholders conducted via a live webcast that provides stockholders the same rights and opportunities to participate as they would have at an in-person meeting. We believe that a virtual meeting will provide expanded stockholder access and participation and improved communications. You will be able to vote your shares electronically at the virtual meeting. To attend and submit your questions during the virtual meeting, please visit www.virtualshareholdermeeting.com/CLBS2022SM. To participate and vote during the Annual Meeting, you will need the 16-digit control number included on your Internet Notice or on your proxy card. Beneficial shareholders who do not have a control number may gain access to and vote at the meeting by logging in to their broker, brokerage firm, bank or other nominee’s website and selecting the stockholder communications mailbox to access the meeting; instructions should also be provided on the voting instruction card provided
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by your broker, bank, or other nominee. If you encounter any difficulties accessing the virtual meeting during check-in or the meeting, please call the technical support number that will be posted on the virtual shareholder meeting log-in page.
Q:
What happens if I do not sign and return my proxy card or vote by telephone, through the Internet before or during the Annual Meeting?
A:
If you are a stockholder of record of Caladrius and you do not sign and return your proxy card or vote by telephone, through the Internet or during the virtual meeting, your shares will not be voted at the Annual Meeting and will not be counted as present for the purpose of determining the presence of a quorum, which is required to transact business at the Annual Meeting. Assuming the presence of a quorum, the failure to return your proxy card or otherwise vote your shares during the Annual Meeting will have no effect on any of the Proposals.
Q:
If my Caladrius shares are held in “street name” by my broker, will my broker vote my shares for me?
A:
Unless your broker has discretionary authority to vote on certain matters, your broker will not be able to vote your shares of Caladrius Common Stock without instructions from you. Brokers are not expected to have discretionary authority to vote for Proposal No. 1, 2, 3, 4, 6 or 7. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.
Q:
May I change my vote after I have submitted a proxy or provided proxy instructions?
A:
Caladrius Stockholders of record, other than those Caladrius Stockholders who are parties to support agreements, may change their vote at any time before their proxy is voted at the Annual Meeting in one of three ways. First, a Caladrius Stockholder of record can send a written notice to the Secretary of Caladrius stating that it would like to revoke its proxy. Second, a Caladrius Stockholder of record can submit new proxy instructions either on a new proxy card or via the Internet. Third, a Caladrius Stockholder of record can attend the Annual Meeting and vote virtually. Attendance alone will not revoke a proxy. If a Caladrius Stockholder of record or a stockholder who owns shares of Caladrius Common Stock in “street name” has instructed a broker to vote its shares of Caladrius Common Stock, the stockholder must follow directions received from its broker to change those instructions.
Q:
Who is paying for this proxy solicitation?
A:
Caladrius will be responsible for the cost of printing and filing this proxy statement/prospectus/information statement and the proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Caladrius Common Stock for the forwarding of solicitation materials to the beneficial owners of Caladrius Common Stock. Caladrius will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.
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Q:
Who can help answer my questions?
A:
If you are a Caladrius Stockholder and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the Merger, including the procedures for voting your shares, you should contact:
Caladrius Biosciences, Inc.
110 Allen Road, 2nd Floor
Basking Ridge, New Jersey 07920
Tel: (908) 842-0100
Attn: David J. Mazzo, Ph.D., President and Chief Executive Officer
If you are a Cend Stockholder, and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the Merger, including the procedures for voting your shares, you should contact:
Cend Therapeutics, Inc.
12544 High Bluff Drive, Suite 400
San Diego, California 92130
Tel: (858) 795-5123
Attn: David Slack, President and Chief Executive Officer
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PROSPECTUS SUMMARY
This summary highlights selected information from this proxy statement/prospectus/information statement and may not contain all of the information that is important to you. To better understand the Merger, the proposals being considered at the Annual Meeting and Cend Stockholder actions that are the subject of the written consent, you should read this entire proxy statement/prospectus/information statement carefully, including the Merger Agreement attached as Annex A, the opinion of Back Bay Life Science Advisors, LLC. (“Back Bay”) attached as Annex B and the other annexes to which you are referred herein. For more information, please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.
The Companies
Caladrius Biosciences, Inc.
Caladrius Biosciences, Inc.
110 Allen Road, 2nd Floor
Basking Ridge, New Jersey 07920
Caladrius is a clinical-stage biopharmaceutical company dedicated to the development and commercialization of therapies to treat and/or reverse disease. Caladrius is developing what are intended to be first-in-class therapeutics based on the characteristics of naturally occurring CD34+ cells and their ability to stimulate the growth of new microvasculature. Caladrius’ technology is intended to leverage these cells to enable the body’s natural repair mechanisms using formulations unique to each medical indication.
Caladrius’ leadership team has decades of collective biopharmaceutical product development experience in a variety of therapeutic categories. Caladrius’ goal is to develop and commercialize products that address important unmet medical needs based on a broad and versatile portfolio of candidates. Caladrius’ current product candidates include:
XOWNA® (CLBS16), the subject of both a completed positive Phase 2a study (ESCaPE-CMD) and an ongoing follow-on Phase 2b study (the “FREEDOM Trial”) in the United States for the treatment of coronary microvascular dysfunction (“CMD”);
HONEDRA® (CLBS12), recipient of SAKIGAKE designation and eligible for early conditional approval in Japan for the treatment of critical limb ischemia (“CLI”) and Buerger’s disease is being sought based on the current results of a clinical trial executed in Japan; and
CLBS201, the subject of a study designed to assess the safety and efficacy of CD34+ cell therapy as a treatment for patients with chronic kidney disease related to type 2 diabetes (diabetic kidney disease or “DKD”).
Cend Therapeutics, Inc.
Cend Therapeutics, Inc.
12544 High Bluff Drive, Suite 400
San Diego, California 92130
Cend is a clinical stage biotech company focused on a tumor microenvironment (“TME”)-modifying approach to enable more effective treatment for a range of solid tumor cancers. Cend is advancing a pipeline of product and partnering opportunities based on the CendR Platform™ to potentially improve outcomes for patients with a range of solid tumor cancers that are currently poorly treated, representing high unmet medical needs.
Cend’s management team is comprised of a number of professionals who have decades of experience working with biotech, pharmaceutical and medical companies, many of which are publicly traded. Cend’s lead investigational drug, CEND-1, modifies the TME by targeting tumor vasculature by its affinity for alpha-v integrins that are selectively expressed in tumor, but not healthy tissue vasculature. CEND-1 is a cyclic peptide that, once bound to these integrins, is cleaved by proteases expressed in tumors to release a peptide fragment, called a CendR fragment, which binds to a second receptor, called neuropilin-1, to activate a novel uptake pathway that allows anticancer drugs to more selectively penetrate solid tumors. The ability of CEND-1 to modify the TME to enhance delivery and efficacy of co-administered drugs has been demonstrated in models, including tumor cell line models, multiple mouse xenograft models with human tumor cell lines and
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patient-derived tumors, and genetically engineered and syngeneic mouse models, of a range of solid tumors. Based on results from multiple pre-clinical mouse xenograft models of pancreatic and other human cancers, CEND-1 has also been shown in unpublished preclinical models of human tumors in xenograft mouse models as well as in genetically engineered and syngeneic mouse models to selectively deplete certain immunosuppressive cell types in tumors wherein the TME is dominated by such immunosuppressive cells, hampering the patients’ immune systems’ and immunotherapies’ abilities to fight disease. Cend plans to explore its potential for combination therapy with immunotherapies. As part of the CendR Platform™, Cend is also conducting preclinical research on a tumor-penetrating nanocomplex (“TPN”) technology that may enable nucleic acid-based drugs, such as antisense, small interfering RNA (“siRNA”) or messenger RNA (“mRNA”), to more effectively treat solid tumor cancers, which could potentially result in earlier stage product and partnership opportunities.
In February 2021, Cend entered an exclusive license and collaboration agreement with a major pharmaceutical company in China, Qilu Pharmaceutical Co., Ltd. (“Qilu”), in which Qilu gained rights to CEND-1 for development and commercialization in Greater China. Under the terms of the agreement, Cend received $10 million in up-front license fees and is eligible to receive development and commercial milestone payments up to $100 million and $125 million, respectively, tiered royalties on net sales in the Qilu territory ranging from 10% to 15%, and tiered sublicensing revenues ranging from 12% to 35%. The parties also have an active collaboration in which Qilu provides funding for development and regulatory activities within China.
Cend’s current product candidate development activities include:
CEND-1/gemcitabine/nab-paclitaxel, which is currently the subject of a Phase 2b clinical trial for pancreatic cancer;
CEND-1/FOLFIRINOX, which is currently the subject of a Phase 1b/2 clinical trial for pancreatic cancer;
CEND-1/FOLFIRINOX/ panitumumab (non-Ras mutated pts), which is currently the subject of a Phase 1b/2 clinical trial for colorectal and appendiceal cancers;
CEND1/gemcitabine/nab-paclitaxel +/- anti-PD(L)1, for which Cend expects to commence a Phase 1b/2 clinical trial for pancreatic cancer during either the fourth quarter of 2022 or the first quarter of 2023;
CEND-1/standard of care (SoC) for selected solid tumor cancers, which Cend expects to commence a Phase 1b/2 clinical trial during the first half of 2023; and
Potential development candidate(s) based on TPN.
CS Cedar Merger Sub, Inc.
Merger Sub is a wholly owned subsidiary of Caladrius and was formed solely for the purposes of carrying out the Merger.
The Merger (see page 110)
If the Merger is completed, Merger Sub will merge with and into Cend, with Cend surviving as a wholly owned subsidiary of Caladrius.
At the Effective Time, each outstanding share of Cend Capital Stock (excluding any shares of capital stock held by Caladrius) outstanding immediately prior to the Effective Time will automatically be converted solely into the right to receive a number of shares of Caladrius Common Stock equal to the Exchange Ratio, subject to adjustment to account for the Reverse Stock Split, for Caladrius’ net cash immediately prior to the Closing, for Cend’s unpaid transaction costs immediately prior to the Closing and in accordance with the Merger Agreement; each Cend Option outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, will be assumed by Caladrius and will become an option, subject to vesting (with acceleration of vesting triggered by the Merger in some instances), to purchase shares of Caladrius Common Stock, and, immediately after the Merger, based on the Exchange Ratio, current Cend Stockholders are expected to own, or hold rights to acquire, approximately 50% of the outstanding shares of Caladrius Common Stock with current Caladrius Stockholders expected to own approximately 50% of the outstanding shares of Caladrius Common
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Stock. The approximate post-Closing ownership will be subject to adjustment based on Caladrius’ net cash immediately prior to Closing and the amount of any unpaid transaction costs of Cend in excess of $250,000 immediately prior to Closing. Accordingly, such percentages are subject to change based upon the final Exchange Ratio as set forth in the Merger Agreement
For a more complete description of the Merger and the Exchange Ratio please see the section entitled “The Merger Agreement” in this proxy statement/prospectus/information statement.
The Closing will occur no later than the second business day after the last of the conditions to the Merger has been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of each such conditions), or at such other time as Caladrius and Cend agree. Caladrius and Cend anticipate that the consummation of the Merger will occur in the third quarter of the calendar year. However, because the Merger is subject to a number of conditions, neither Caladrius nor Cend can predict exactly when the Closing will occur or if it will occur at all. After completion of the Merger, assuming that Caladrius receives the required stockholder approval of Proposal No. 3, Caladrius will be renamed “Lisata Therapeutics, Inc.”
Reasons for the Merger
Following the Merger, the combined organization will be a drug discovery and development company focused on its diverse product development pipeline, including the advancement of product and partnering opportunities based on the CendR Platform™ technology. Caladrius and Cend believe that the combined organization will have the following potential advantages:
Emerging Development-Stage Company. Cend is a clinical-stage drug discovery and development company focused on a novel approach to enable more effective treatments for solid tumor cancers. The CendR Platform™ provides a tumor-targeted tissue penetration capability to specifically enhance drug delivery to tumors. Cend is also applying its technology to alter immunosuppression selectively within the tumor microenvironment to enable a patient’s immune system and immunotherapies to fight cancer with greater effectiveness. Caladrius and Cend believe that Cend’s development programs will diversify Caladrius’ product portfolio pipeline. Cend’s TPN technology platform holds significant potential to enable RNA-based drugs to work effectively in treating solid tumor cancers, which could potentially result in product and partnership opportunities.
Management Team. It is expected that the combined organization will be led by the existing experienced senior management team from Caladrius and David Slack from Cend and a board of directors of up to nine members with equal representation from each of Caladrius and Cend.
Cash Resources. The combined organization is expected to have at least $63.8 million in cash and cash equivalents at the Closing, assuming a Closing on September 30, 2022, which Caladrius and Cend believe is sufficient to enable Caladrius to pursue its near-term clinical trials for Cend’s technology and Caladrius’ ongoing clinical trials and business plans.
Each of the boards of directors of Caladrius and Cend also considered other reasons for the Merger, as described herein. For example, the Caladrius Board of Directors considered, among other things:
the strategic alternatives to the Merger available to Caladrius to expand and diversify its product candidate portfolio pipeline, including the discussions that Caladrius’ management and the Caladrius Board of Directors previously conducted with other potential target companies and licensing partners;
the fact that the stock market was not currently giving any value to Caladrius’ current product development programs;
the opportunity as a result of the Merger for Caladrius Stockholders to participate in the potential value of Cend’s product candidate portfolio and the potential growth of the combined organization following the Merger.
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In addition, the Cend Board of Directors approved the Merger based on a number of factors, including the following:
the potential increased access to sources of capital and a broader range of investors to support the clinical development of its products than it could otherwise obtain if it continued to operate as a privately held company;
the potential to provide its current stockholders with greater liquidity by owning stock in a public company;
the Cend Board of Directors’ belief that no alternatives to the Merger were reasonably likely to create greater value for Cend Stockholders after reviewing the various strategic options to enhance stockholder value that were considered by the Cend Board of Directors and the likelihood of achieving any alternative transaction compared to the likelihood of completing the Merger;
the $10 million of cash resources provided to Cend by Caladrius pursuant to the Purchase Agreement (as defined below) and the cash resources of the combined organization expected to be available at the Closing relative to the anticipated burn rate of the combined organization; and
the expectation that the Merger will be treated as a reorganization for U.S. federal income tax purposes.
Opinion of the Caladrius Financial Advisor (see page 120)
The Caladrius Board of Directors engaged Back Bay to provide strategic advisory and investment banking services in connection with evaluating and considering various strategic alternatives, and ultimately requested that Back Bay render an opinion as to whether the consideration to be paid by Caladrius in the Merger, as provided in the Merger Agreement, was fair, from a financial point of view, to Caladrius. At the April 25, 2022 meeting of the Caladrius Board of Directors, Back Bay rendered its oral opinion, subsequently confirmed by delivery of a written opinion dated April 25, 2022, to the Caladrius Board of Directors that, as of the date of such opinion, and based upon the assumptions made, procedures followed, matters considered, and qualifications and limitations of the review set forth in its written opinion, the consideration to be paid by Caladrius in the Merger was fair, from a financial point of view, to Caladrius. For purposes of Back Bay’s opinion, the term “consideration” means (i) the cancellation of 1,135,650 shares of Cend Series D Preferred Stock, $0.00001 par value per share, which were issued to Caladrius for an aggregate purchase price of $10.0 million pursuant to the Stock Purchase Agreement that was entered into by Caladrius and Cend concurrently with their entry into the Merger Agreement and (ii) the shares of Caladrius Common Stock to be issued to holders of Cend Capital Stock in the Merger.
The full text of Back Bay’s written opinion, which sets forth the procedures followed, assumptions made, matters considered, and qualifications and limitations of the review undertaken in connection with the opinion, is attached to this proxy statement/prospectus/information statement as Annex B and is incorporated by reference in its entirety to this proxy statement/prospectus/information statement. Back Bay’s opinion was intended solely for the benefit and use of the Caladrius Board of Directors (in its capacity as such) in connection with its consideration of the Merger. Back Bay’s opinion was not intended to be used for any other purpose without Back Bay’s prior written consent in each instance, except as expressly provided for in the engagement letter between Caladrius and Back Bay. Back Bay has consented to the use of Back Bay’s opinion in this proxy statement/prospectus/information statement. Back Bay’s opinion did not address Caladrius’ underlying business decision to enter into the Merger Agreement or complete the Merger or the merits of the Merger as compared to any alternative transactions that were or may be available to Caladrius, and did not constitute a recommendation to the Caladrius Board of Directors or to any Caladrius Stockholder as to how such stockholder should vote with respect to the Merger or otherwise.
Overview of the Merger Agreement
Merger Consideration (see page 137)
At the Effective Time, all outstanding shares of Cend Capital Stock shall convert into the right to receive Caladrius Common Stock as follows:
each share of Cend Capital Stock (excluding any shares of capital stock held by Caladrius) outstanding immediately prior to the Effective Time will automatically be converted solely into the right to receive
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a number of shares of Caladrius Common Stock equal to the Exchange Ratio, subject to adjustment to account for the Reverse Stock Split, for Caladrius’ net cash immediately prior to the Closing, for Cend’s unpaid transaction costs immediately prior to the Closing and in accordance with the Merger Agreement;
each Cend Option outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, will be assumed by Caladrius and will become an option, subject to vesting (with acceleration of vesting triggered by the Merger in some instances), to purchase shares of Caladrius Common Stock; and
immediately after the Merger, based on the Exchange Ratio, current Cend Stockholders are expected to own, or hold rights to acquire, approximately 50% of the outstanding shares of Caladrius Common Stock with current Caladrius Stockholders expected to own approximately 50% of the outstanding shares of Caladrius Common Stock. The approximate post-closing ownership will be subject to adjustment based on Caladrius’ net cash immediately prior to Closing and the amount of any unpaid transaction costs of Cend in excess of $250,000 immediately prior to Closing. Accordingly, such percentages are subject to change based upon the final Exchange Ratio as set forth in the Merger Agreement.
Treatment of Cend Options (see page 148)
Pursuant to the Merger Agreement, at the Effective Time, each Cend Option that is outstanding and unexercised immediately prior to the Effective Time granted under the Cend 2016 Equity Incentive Plan, whether or not vested, will be assumed by Caladrius and will become an option to purchase that number of shares of Caladrius Common Stock equal to the product obtained by multiplying (i) the number of shares of Cend Common Stock that were subject to such Cend Option immediately prior to the Effective Time by (ii) the Exchange Ratio, and rounding the resulting number down to the nearest whole number of shares of Caladrius Common Stock. The per share exercise price for Caladrius Common Stock issuable upon exercise of each Cend Option assumed by Caladrius shall be determined by dividing (a) the per share exercise price of Cend Common Stock subject to such Cend Option, as in effect immediately prior to the Effective Time, by (b) the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent. Any restriction on the exercise of any Cend Option assumed by Caladrius will continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Cend Option shall otherwise remain unchanged.
Treatment of Caladrius Options (see page 148)
At the Effective Time, each Caladrius Option that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, shall survive the Closing and remain outstanding in accordance with its terms.
Conditions to the Completion of the Merger (see page 149)
To consummate the Merger, Caladrius Stockholders must approve (a) the Merger Agreement and the transactions contemplated thereby, including the Merger and the issuance of shares of Caladrius Common Stock to Cend Stockholders in the Merger, and (b) an amendment to the certificate of incorporation of Caladrius effecting the Reverse Stock Split. Additionally, Cend Stockholders must adopt the Merger Agreement thereby approving the Merger and the other transactions contemplated by the Merger Agreement. In addition to obtaining such stockholder approvals, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived.
No Solicitation (see page 153)
Each of Caladrius and Cend have agreed that, except as described below, Caladrius and Cend and any of their respective subsidiaries will not, nor will either party or any of its subsidiaries authorize any of the directors, officers, employees, agents, attorneys, accountants, investment bankers, advisors or representatives retained by it or any of its subsidiaries to, directly or indirectly:
solicit, initiate or knowingly encourage, induce or facilitate the communication, making, submission or announcement of, any “Acquisition Proposal” (as defined in the section of this proxy
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statement/prospectus/information statement entitled “The Merger Agreement—No Solicitation”), or “Acquisition Inquiry” (as defined in the section of this proxy statement/prospectus/information statement entitled “The Merger Agreement—No Solicitation”);
furnish any non-public information with respect to it to any person in connection with or in response to an Acquisition Proposal or Acquisition Inquiry;
engage in discussions or negotiations with any person with respect to any Acquisition Proposal or Acquisition Inquiry;
approve, endorse or recommend an Acquisition Proposal; or
execute or enter into any letter of intent or similar document or any contract contemplating or otherwise relating to an Acquisition Transaction (as defined in the section of this proxy statement/prospectus/information statement entitled “The Merger Agreement—No Solicitation”).
Termination (see page 158)
Either Caladrius or Cend can terminate the Merger Agreement under certain circumstances, which would prevent the Merger from being consummated.
Termination Fee (see page 160)
If the Merger Agreement is terminated under certain circumstances, Caladrius will be required to pay Cend a termination fee of $1.0 million, and, if the Merger Agreement is terminated under certain separate circumstances, Cend will be required to pay Caladrius a termination fee of $4.0 million. In some circumstances, Caladrius or Cend will be required to reimburse the other party for expenses incurred in connection with the Merger, up to a maximum of $1.0 million.
Support Agreements (see page 163)
Certain Cend Stockholders are party to a support agreement with Caladrius pursuant to which, among other things, each of these stockholders agreed, solely in his, her or its capacity as a Cend Stockholder, to vote all of his, her or its shares of Cend Capital Stock in favor of the adoption of the Merger Agreement, the approval of the transactions contemplated thereby, including the Merger, and the approval of any other matter necessary to consummate the transactions contemplated by the Merger Agreement that are considered and voted upon by the Cend Stockholders and against any Acquisition Proposal. The parties to the support agreements with Caladrius include all directors and executive officers of Cend and certain major stockholders of Cend, including ER Trust 2/18/11, Innovation 2016 Kyoto Investment Limited Partnership, Leading Choice International Limited, Sanford Burnham Prebys Medical Discovery Institute, Kazuki Sugahara and Tambet Teesalu.
As of June 13, 2022, the Cend Stockholders that are party to a support agreement with Caladrius owned an aggregate of 3,823,674 shares of Cend Common Stock, 371,396 shares of Cend Series A Preferred Stock and 951,637 shares of Cend Series B Preferred Stock, representing approximately 77.5% of the outstanding shares of Cend Capital Stock on an as converted to common stock basis (excluding shares held by Caladrius). These stockholders include executive officers and directors of Cend and certain stockholders owning a significant portion of the outstanding shares of Cend Capital Stock. Following the effectiveness of the registration statement of which this proxy statement/prospectus/information statement is a part and pursuant to the Merger Agreement, Cend Stockholders holding a sufficient number of shares of Cend Capital Stock to adopt the Merger Agreement and approve the Merger and related transactions will execute written consents providing for such adoption and approval.
Caladrius’ directors and executive officers are party to a support agreement with Cend pursuant to which, among other things, such individuals have agreed, solely in his or her capacity as a Caladrius Stockholder, to vote all of his or her shares of Caladrius Common Stock in favor of (i) the Merger Agreement and the transactions contemplated thereby, including the Merger and the issuance of Caladrius Common Stock to Cend Stockholders, (ii) an amendment to the certificate of incorporation of Caladrius to effect the Reverse Stock Split, (iii) an amendment to the certificate of incorporation of Caladrius to effect the Caladrius Name Change, (iv) any proposal to adjourn or postpone the meeting to a later date, if there are not sufficient votes for the approval of
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the other matters to be approved on date of the Annual Meeting, and (v) any other matter necessary to consummate the transactions contemplated by the Merger Agreement that are considered and voted upon by Caladrius Stockholders at the Annual Meeting and against any Acquisition Proposal.
As of June 13, 2022, the Caladrius Stockholders that are party to a support agreement with Cend beneficially owned an aggregate of 1,099,314 shares of Caladrius Common Stock, representing approximately 1.8% of the outstanding shares of Caladrius Common Stock.
The support agreements are discussed in greater detail in the section entitled “Agreements Related to the Merger—Support Agreements” in this proxy statement/prospectus/information statement.
Lock-up Agreements (see page 163)
As a condition to the Closing, certain Caladrius Stockholders and Cend Stockholders have entered into lock-up agreements, pursuant to which such parties have agreed not to, except in limited circumstances, sell or transfer, or engage in swap or similar transactions with respect to, shares of Caladrius Common Stock, including, as applicable, shares received in the Merger and issuable upon exercise of certain options, in each case from the Closing until the date that is 120 days from the Closing.
As of June 13, 2022, Caladrius Stockholders who have executed lock-up agreements beneficially owned in the aggregate approximately 1.8% of the outstanding shares of Caladrius Common Stock.
Cend Stockholders who have executed lock-up agreements as of June 13, 2022 owned in the aggregate approximately 77.5% of the outstanding shares of Cend Capital Stock on an as if converted into common stock basis (excluding shares held by Caladrius).
The lock-up agreements are discussed in greater detail in the section entitled “Agreements Related to the Merger—Lock-up Agreements” in this proxy statement/prospectus/information statement.
Stock Purchase Agreement (see page 164)
Concurrently with the execution of the Merger Agreement and in order to provide Cend with capital for its development programs prior to the closing of the Merger, Caladrius and Cend entered into a Series D Preferred Stock Purchase Agreement (the “Purchase Agreement”), pursuant to which Caladrius agreed to purchase from Cend 1,135,628 shares of Series D Preferred Stock, $0.00001 par value per share (the “Series D Preferred Stock”), of Cend at a purchase price per share equal to $8.8057 per share (the “Series D Original Issue Price”), or approximately $10,000,000 in the aggregate. The Purchase Agreement contains customary representations, warranties and agreements by Caladrius and Cend and customary conditions to Closing. The Series D Preferred Stock ranks senior to Cend’s common stock and the other series of preferred stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of Cend. The Series D Preferred Stock has a liquidation preference equal to the Series D Original Issue Price plus an amount equal to any accrued and unpaid dividends to the date of payment and will participate with Cend’s common stockholders and other preferred stockholders thereafter on an as-converted basis, except in connection with the Merger. The Series D Preferred Stock shall vote with the shares of Caladrius Common Stock on an as-converted basis on any matters presented to the Cend Stockholders. Each share of Series D Preferred Stock is convertible, at the option of the holder thereof, into such number of shares of Cend Common Stock as is determined by dividing the Series D Original Issue Price by the conversion price in effect at the time of conversion, which conversion price shall be the Series D Original Issue Price as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of Cend common stock, and as adjusted pursuant to a weighted-average antidilution adjustment. The Series D Preferred Stock will automatically convert into shares of Cend common stock upon the closing of a firm-commitment underwritten initial public offering implying a pre-equity offering value of at least $250 million, resulting in at least $50 million of gross proceeds to Cend.
Collaboration Agreement (see page 164)
Concurrently with the execution of the Merger Agreement, Caladrius and Cend entered into a Collaboration Agreement (the “Collaboration Agreement”), pursuant to which Caladrius and Cend agreed to collaborate on certain developmental and clinical activities prior to the closing of the Merger. Under the Collaboration Agreement, Caladrius and Cend agreed to form a joint steering committee (the “Committee”) comprised of
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individuals from both entities. The Committee will meet regularly and be responsible for monitoring ongoing studies and making recommendations for development activity and trial planning. Cend has agreed to pay each member of the Committee from Caladrius an hourly consulting fee for such service.
Management Following the Merger (see page 253)
Effective as of the Closing, Caladrius’ officers are expected to include:
Name
Title
David J. Mazzo, Ph.D.
Chief Executive Officer
David Slack
President & Chief Business Officer
Kristen K. Buck, M.D.
Executive Vice President R&D and Chief Medical Officer
Interests of Certain Directors, Officers and Affiliates of Caladrius and Cend (see page 131, 134)
In considering the recommendation of the Caladrius Board of Directors with respect to issuing shares of Caladrius Common Stock pursuant to the Merger Agreement and the other matters to be acted upon by Caladrius Stockholders at the Annual Meeting, Caladrius Stockholders should be aware that certain members of the Caladrius Board of Directors and executive officers of Caladrius have interests in the Merger that may be different from, or in addition to, interests they have as Caladrius Stockholders. For example, all of Caladrius’ executive officers and four of Caladrius’ directors will remain in their positions immediately following the Merger.
As of June 13, 2022, the directors and executive officers of Caladrius beneficially owned, in the aggregate approximately 4.3% of the outstanding shares of Caladrius Common Stock.Certain of Caladrius’ officers and directors, and their affiliates, have also entered into support agreements in connection with the Merger. The support agreements are discussed in greater detail in the section entitled “Agreements Related to the Merger—Support Agreements” in this proxy statement/prospectus/information statement.
In considering the recommendation of the Cend Board of Directors with respect to approving the Merger and related transactions by written consent, Cend Stockholders should be aware that certain members of the Cend Board of Directors and certain executive officers of Cend have interests in the Merger that may be different from, or in addition to, interests they have as Cend Stockholders. For example, certain of Cend’s directors and executive officers have options, subject to vesting (with acceleration of vesting triggered by the Merger in some instances), to purchase shares of Cend Common Stock which, at Closing, shall be converted into and become options to purchase shares of Caladrius Common Stock; certain of Cend’s directors and executive officers are expected to become directors and executive officers of Caladrius upon the Closing; and all of Cend’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement.
As of June 13, 2022, all directors and executive officers of Cend, together with their affiliates, owned approximately 47.1% of the outstanding shares of Cend Capital Stock, on an as converted to common stock basis. Certain of Cend’s officers and directors, and their affiliates, have also entered into support agreements in connection with the Merger. The support agreements are discussed in greater detail in the section entitled “Agreements Related to the Merger—Support Agreements” in this proxy statement/prospectus/information statement.
Material U.S. Federal Income Tax Consequences of the Merger (see page 141)
As discussed in detail in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” in this proxy statement/prospectus/information statement, Caladrius and Cend intend the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. If the Merger is not treated as a reorganization within the meaning of Section 368(a) of the Code, then each U.S. holder generally will be treated as exchanging its shares of Cend Capital Stock in a fully taxable transaction in exchange for shares of Caladrius Common Stock. Cend Stockholders will generally recognize gain or loss in such exchange equal to the amount that such Cend Stockholder’s adjusted tax basis in the shares of Cend Capital Stock surrendered is less or more than the fair market value of the shares of Caladrius Common Stock (and cash in lieu of a fractional share)
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received in exchange therefor. Determining the actual tax consequences of the Merger to you may be complex and will depend on the facts of your own situation. You should consult your tax advisors to fully understand the tax consequences to you of the Merger, including estate, gift, state, local or non-U.S. tax consequences of the Merger.
Risk Factors (see page 27)
Both Caladrius and Cend are subject to various risks associated with their businesses and their industries. In addition, the Merger poses a number of risks to each company and its respective stockholders, including the possibility that the Merger may not be completed and the following risks:
the Exchange Ratio is not adjustable based on the market price of Caladrius Common Stock, so the merger consideration at the Closing may have a greater or lesser value than at the time the Merger Agreement was signed; failure to complete the Merger may result in Caladrius or Cend paying a termination fee or expenses to the other and could harm the per share price of Caladrius Common Stock and future business and operations of each company;
the Merger may be completed even though material adverse changes may result solely from the announcement of the Merger, general economic or political conditions or conditions generally affecting the industries in which Caladrius and Cend operate and other causes;
some Caladrius and Cend officers and directors have interests that are different from or in addition to those considered by stockholders of Caladrius and Cend and which may influence them to support or approve the Merger;
the market price of Caladrius Common Stock may decline as a result of the Merger;
Caladrius Stockholders and Cend Stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger;
during the pendency of the Merger, Caladrius and Cend may not be able to enter into a business combination with another party under certain circumstances because of restrictions in the Merger Agreement, which could adversely affect their respective businesses;
certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement;
because the lack of a public market for shares of Cend Capital Stock makes it difficult to evaluate the fairness of the Merger, the Cend Stockholders may receive consideration in the Merger that is less than the fair market value of the shares of Cend Capital Stock and/or Caladrius may pay more than the fair market value of the shares of Cend Capital Stock; and
if the conditions to the Merger are not met, the Merger will not occur.
These risks and other risks are discussed in greater detail under the section entitled “Risk Factors” in this proxy statement/prospectus/information statement. Caladrius and Cend both encourage you to read and consider all of these risks carefully.
Regulatory Approvals (see page 141)
In the United States, Caladrius must comply with applicable federal and state securities laws and the rules and regulations of the Nasdaq Stock Market LLC (“Nasdaq”) in connection with the issuance of shares of Caladrius Common Stock and the filing of this proxy statement/prospectus/information statement with the SEC.
Nasdaq Capital Market Listing (see page 143)
Prior to consummation of the Merger, Caladrius intends to file a notification form with Nasdaq for the listing of additional shares with respect to the shares of Caladrius Common Stock to be issued to the holders of Cend Capital Stock in the Merger. Caladrius anticipates that shares of Caladrius Common Stock will be listed on The Nasdaq Capital Market following the Closing under the trading symbol “LSTA.”
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Anticipated Accounting Treatment (see page 144)
The Merger is expected to be treated by Caladrius as an asset acquisition by Caladrius in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). To determine the accounting for this transaction under U.S. GAAP, a company must assess whether an integrated set of assets and activities should be accounted for as an acquisition of a business or an asset acquisition. The guidance requires an initial screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen is met, the set is not a business. In connection with the acquisition of Cend, substantially all the fair value is included in in-process research and development of CEND-1 and, as such, the acquisition is expected to be treated as an asset acquisition. For accounting purposes, Caladrius is considered to be acquiring Cend in the Merger.
Appraisal Rights and Dissenters’ Rights (see page 144)
Holders of shares of Caladrius Common Stock are not entitled to appraisal rights in connection with the Merger. Cend Stockholders are entitled to appraisal rights in connection with the Merger under Delaware law. For more information about such rights, see the provisions of Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) attached hereto as Annex C, and the section entitled “The Merger—Appraisal Rights and Dissenters’ Rights” in this proxy statement/prospectus/information statement.
Comparison of Stockholder Rights (see page 277)
Both Caladrius and Cend are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the DGCL. If the Merger is completed, Cend Stockholders will become Caladrius Stockholders, and their rights will be governed by the DGCL, the bylaws of Caladrius and, assuming Proposals No. 2 and 3 are approved by Caladrius Stockholders at the Annual Meeting, the amended and restated certificate of incorporation of Caladrius. The rights of Caladrius Stockholders contained in the amended and restated certificate of incorporation and bylaws of Caladrius differ from the rights of Cend Stockholders under the amended and restated certificate of incorporation and bylaws of Cend, as more fully described under the section entitled “Comparison of Rights of Holders of Caladrius Stock and Cend Stock” in this proxy statement/prospectus/information statement.
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SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL DATA
The following tables present summary historical financial data for Caladrius and Cend, summary unaudited pro forma condensed combined financial data for Caladrius and Cend, and comparative historical and unaudited pro forma per share data for Caladrius and Cend.
Selected Historical Financial Data of Caladrius
The selected statement of operations data for the years ended December 31, 2021, 2020 and 2019 and the selected balance sheet data as of December 31, 2021 and 2020 are derived from Caladrius’ audited financial statements prepared using U.S. GAAP, which are included in this proxy statement/prospectus/information statement. The selected statement of operations data for the years ended December 31, 2018 and 2017 and the selected balance sheet data as of December 31, 2019, 2018 and 2017 are derived from Caladrius’ audited financial statements, which are not included in this proxy statement/prospectus/information statement. The selected financial data for the three months ended March 31, 2022 and 2021, are derived from Caladrius’ unaudited condensed financial statements included in this proxy statement/prospectus/information statement. The financial data should be read in conjunction with “Caladrius Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Caladrius’ condensed financial statements and related notes appearing elsewhere in this proxy statement/prospectus/information statement. The historical results are not necessarily indicative of results to be expected in any future period.
 
Years Ended December 31,
Three Months Ended Mar 31,
 
2021
2020
2019
2018
2017
2022
2021
 
 
 
 
 
 
(unaudited)
(unaudited)
Statement of Operations Data:
(in thousands, except per share data)
Research and development
$17,680
$9,253
$10,797
$7,594
$15,843
$3,278
$5,076
General and administrative
11,370
9,892
9,295
9,393
11,750
3,342
3,010
Operating expenses
29,050
19,145
20,092
16,987
27,593
6,620
8,086
Operating loss
(29,050)
(19,145)
(20,092)
(16,987)
(27,593)
(6,620)
(8,086)
Other income (expense):
 
 
 
 
 
 
 
Investment income, net
151
132
740
824
273
63
23
Other (expense), net
(75)
(5)
(378)
(148)
 
76
132
740
819
(105)
(85)
23
Loss before taxes and noncontrolling interests
(28,974)
(19,013)
(19,352)
(16,168)
(27,698)
(6,705)
(8,063)
Benefit from income taxes
(1,508)
(10,872)
(11,527)
(2,479)
Net loss from continuing operations
(27,466)
(8,141)
(19,352)
(16,168)
(16,171)
(4,226)
(8,063)
Discontinued operations - net
38,399
Net (loss) income
(27,466)
(8,141)
(19,352)
(16,168)
22,228
(4,226)
(8,063)
Less - net income attributable to noncontrolling interests
9
9
(1)
(182)
Less - net loss from discontinued operations attributable to noncontrolling interests
(569)
Net loss attributable to Caladrius Biosciences, Inc. common shareholders
$(27,466)
$(8,150)
$(19,361)
$(16,167)
$22,979
$(4,226)
$(8,063)
Basic and diluted (loss) income per share
 
 
 
 
 
 
 
Caladrius Biosciences, Inc. common shareholders
$(0.50)
$(0.53)
$(1.88)
$(1.67)
$2.56
$(0.07)
$(0.19)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic and diluted shares
55,313
15,440
10,325
9,689
8,969
60,560
42,117
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At December 31,
At Mar 31,
 
2021
2020
2019
2018
2017
2022
Balance Sheet Data:
(in thousands)
 
Cash and cash equivalents
$24,647
$16,512
$14,032
$10,299
$29,163
$12,747
Restricted cash
5,005
Marketable securities
70,323
18,061
11,125
32,754
25,917
75,772
Total current assets
96,182
35,331
25,972
44,106
61,397
90,700
Total assets
97,008
36,002
27,153
44,580
63,376
91,463
Total current liabilities
4,523
3,506
5,976
5,619
9,314
2,801
Total liabilities
5,008
3,760
6,600
7,126
13,187
3,222
Accumulated deficit
(453,016)
(425,550)
(417,400)
(397,977)
(381,810)
(457,242)
Total equity
92,000
32,242
20,553
37,454
50,189
88,241
Selected Historical Financial Data of Cend
The selected financial data as of December 31, 2021 and 2020 and for the years ended December 31, 2021 and 2020 are derived from Cend’s audited consolidated financial statements prepared using U.S. GAAP, which are included in this proxy statement/prospectus/information statement. The statement of operations data for the three months ended March 31, 2022 and 2021, as well as the balance sheet data as of March 31, 2022, are derived from Cend’s unaudited condensed consolidated financial statements included in this proxy statement/prospectus/information statement. In the opinion of management of Cend, the unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary to state fairly Cend’s results of operations and financial position. These historical results are not necessarily indicative of results to be expected in any future period. The selected financial data should be read in conjunction with “Cend Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Cend’s financial statements and the related notes to those statements appearing elsewhere in this proxy statement/prospectus/information statement.
Summary Consolidated Balance Sheet
 
Three Months
Ended March 31,
Year Ended December 31,
 
2022
2021
2020
 
 
 
 
Cash
$4,716
$6,288
$684
Working capital
5,332
6,627
1,052
Total assets
6,432
7,487
1,529
Total liabilities
1,316
1,076
477
Accumulated deficit
(11,636)
(10,207)
(13,946)
Total stockholders' equity (deficit)
75
1,370
(3,989)
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Summary Consolidated Statement of Operations
 
Three Months
Ended March 31,
Year Ended December 31,
 
2022
2021
2021
2020
(in thousands)
(unaudited)
(unaudited)
 
 
Net revenues
$178
$9,736
$14,787
$
 
 
 
 
 
Operating expenses:
 
 
 
 
Research and development
1,291
3,200
8,148
1,555
Acquired in process research & development
520
1,584
6,572
General and administrative
316
237
1,150
598
Total operating expenses
1,607
3,957
10,882
8,725
Operating income (loss)
(1,429)
5,779
3,905
(8,725)
 
 
 
 
 
Other income (expense)
 
 
 
 
Interest income
4
5
Total other income (expense), net
4
5
Net income (loss) before taxes
$(1,429)
$5,779
$3,909
$(8,720)
Income tax expense
192
170
Consolidated net income (loss)
$(1,429)
$5,587
$3,739
$(8,720)
 
 
 
 
 
Income allocable to participating securities
(2,166)
(1,466)
Net income (loss) attributable to common shareholders
$(1,429)
$3,421
$2,273
$(8,720)
Selected Unaudited Pro Forma Condensed Combined Financial Data of Caladrius and Cend
The following information does not give effect to the Reverse Stock Split of Caladrius Common Stock.
The following selected unaudited pro forma condensed combined financial data was prepared using the acquisition method of accounting under U.S. GAAP. For accounting purposes, Caladrius is considered to be acquiring Cend in the Merger. The Caladrius and Cend unaudited pro forma combined balance sheet data assume that the Merger took place on March 31, 2022, and combines the Caladrius and Cend historical balance sheets as of March 31, 2022. The Caladrius and Cend unaudited pro forma condensed combined statements of operations data assume that the Merger took place on January 1, 2021, and combines the historical results of Caladrius and Cend for the three months ended March 31, 2022 and the year ended December 31, 2021.
The selected unaudited pro forma condensed combined financial data are presented for illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. The selected unaudited pro forma condensed combined financial data as of and for the three months ended March 31, 2022 and for the year ended December 31, 2021 are derived from the unaudited pro forma condensed combined financial information and should be read in conjunction with that information. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” in this proxy statement/prospectus/information statement.
The unaudited pro forma condensed combined financial information assumes that, at the Effective Time, each share of Cend Capital Stock will be converted into the right to receive shares of Caladrius Common Stock such that, immediately after the Merger, Caladrius Stockholders are expected to own approximately 50% of the outstanding common stock of the combined organization and Cend Stockholders are expected to own approximately 50% of the outstanding common stock of the combined organization, and is subject to adjustment to account for the occurrence of certain events discussed elsewhere in this proxy statement/prospectus/information statement.
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Unaudited Pro Forma Condensed Combined Statements of Operations Data
 
Three Months Ended
Mar 31,
Year Ended
December 31,
 
2022
2021
 
(unaudited)
(unaudited)
 
(in thousands, except per share data)
Net revenues
$178
$14,787
 
 
 
Operating Expenses:
 
 
Research and development
4,569
25,828
In-process research and development
36,595
General and administrative
3,700
18,837
Operating expenses
8,269
81,260
Operating loss
(8,091)
(66,473)
Other income (expense):
 
 
Investment income, net
63
151
Other expense, net
(148)
(75)
Interest income
4
Total other (expense) income
(85)
80
Net loss before benefit from income taxes
(8,176)
(66,393)
Benefit from income taxes
(2,479)
(1,338)
Net loss
$(5,697)
$(65,055)
Net loss per share attributable to common shareholders:
 
 
Basic
$(0.05)
$(0.56)
Diluted
$(0.05)
$(0.56)
Weighted average common shares outstanding:
 
 
Basic
121,081
115,243
Diluted
121,081
115,243
Unaudited Pro Forma Condensed Combined Balance Sheet Data
 
At Mar 31,
 
2022
 
(unaudited)
Balance Sheet Data (in thousands):
 
Cash and cash equivalents
$17,463
Marketable securities
75,772
Total current assets
97,132
Total assets
100,195
Total current liabilities
9,856
Total liabilities
10,493
Accumulated deficit
(495,320)
Total stockholders' equity (deficit)
89,702
Comparative Historical and Unaudited Pro Forma Per Share Data
The information below reflects the historical net loss and book value per share of Caladrius Common Stock and the historical net loss and book value per share of Cend Common Stock in comparison with the unaudited pro forma net loss and book value per share after giving effect to the Merger on a purchase basis. The unaudited pro forma net loss and book value per share does not give effect to the proposed Reverse Stock Split.
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You should read the tables below in conjunction with the audited and unaudited consolidated financial statements of Caladrius included in this proxy statement/prospectus/information statement and the audited and unaudited financial statements of Cend included in this proxy statement/prospectus/information statement and the related notes and the unaudited pro forma condensed combined financial information and notes related to such financial statements included elsewhere in this proxy statement/prospectus/information statement.
Caladrius
 
Year Ended
December 31,
2021
Three Months
Ended
March 31, 2022
Historical Per Common Share Data:
 
 
Basic and diluted net loss per share
$(0.50)
$(0.07)
Book value per share
$1.54
$1.46
Cend
 
Year Ended
December 31,
2021
Three Months
Ended
March 31, 2022
Historical Per Common Share Data:
 
 
Basic net loss per share
$0.54
$(0.33)
Diluted net loss per share
$0.48
$(0.33)
Book value per share
$0.32
$0.02
Caladrius and Cend
 
Year Ended
December 31,
2021
Three Months
Ended
March 31, 2022
Pro Forma Per Common Share Data:
 
 
Basic net loss per share
$(0.56)
$(0.05)
Diluted net loss per share
$(0.56)
$(0.05)
Book value per share
$1.56
$1.46
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RISK FACTORS
The combined organization will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus/information statement, you should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with the business of Caladrius because these risks may also affect the combined organization—these risks can be found in Caladrius’ Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus/information statement. You should also read and consider the other information in this proxy statement/prospectus/information statement and the other documents incorporated by reference into this proxy statement/prospectus/information statement. Please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.
Risks Related to the Merger
The Exchange Ratio is not adjustable based on the market price of Caladrius Common Stock so the merger consideration at the Closing may have a greater or lesser value than the market price at the time the Merger Agreement was signed.
The Merger Agreement has set the Exchange Ratio formula for Cend Capital Stock, and the Exchange Ratio is adjustable upward or downward based on Caladrius’ net cash and Cend’s unpaid transaction costs at the closing of the Merger and changes in the outstanding Cend Capital Stock or the outstanding Caladrius Common Stock, including in connection with the proposed Reverse Stock Split prior to completion of the Merger as described in the section entitled “The Merger—Merger Consideration and Adjustment” in this proxy statement/prospectus/information statement. Any changes in the market price of Caladrius Common Stock before the completion of the Merger will not affect the number of shares Cend Stockholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger, the market price of Caladrius Common Stock declines from the market price on the date of the Merger Agreement, then Cend Stockholders could receive merger consideration with substantially lower value. Similarly, if before the completion of the Merger, the market price of Caladrius Common Stock increases from the market price on the date of the Merger Agreement, then Cend Stockholders could receive merger consideration with substantially more value for their shares of Cend Capital Stock than the parties had negotiated in the establishment of the Exchange Ratio. The Merger Agreement does not include a price-based termination right. Because the Exchange Ratio does not adjust as a result of changes in the value of Caladrius Common Stock, for each one percentage point that the market value of Caladrius Common Stock rises or declines, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration issued to Cend Stockholders.
Caladrius’ net cash may be less than a range between $61.076 million and $73.579 million at the closing of the Merger, which, depending on when the closing of the Merger occurs, could result in Caladrius Stockholders owning a smaller percentage of the combined organization and could even result in the conditions to the closing of the Merger not being satisfied.
For purposes of the Merger Agreement, cash is subject to certain reductions, including, without limitation, accounts payable, accrued expenses (except those related to the Merger), current liabilities payable in cash, unpaid expenses related to the Merger and certain other unpaid obligations, including declared but unpaid dividends. In the event the amount of Caladrius’ cash is smaller or such reductions are greater than anticipated, Caladrius Stockholders could hold a significantly smaller portion of the combined organization. Additionally, the Merger Agreement includes a closing condition based upon a minimum net cash balance depending on when the closing of the Merger occurs. In the event that Caladrius’ net cash falls below this threshold, Cend would not be obligated to consummate the Merger.
Cend’s unpaid transaction costs may exceed $250,000 at the closing of the Merger, or Caladrius’ net cash may be in excess of certain targets in the Merger Agreement, both of which could result in Cend Stockholders owning a smaller percentage of the combined organization.
In the event the amount of Cend’s unpaid transaction costs exceed $250,000, Cend Stockholders could hold a significantly smaller portion of the combined organization. In addition, the provisions of the Merger Agreement
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providing for a reduction in the ownership of Caladrius Stockholders for cash shortfalls also provide for an increase in the ownership of Caladrius Stockholders in the even the amount of Caladrius’ cash is greater than certain other thresholds. These factors could combine to materially reduce the Cend Stockholders’ ownership of the combined organization.
Failure to complete the Merger may result in Caladrius and Cend paying a termination fee or expenses to the other party and could harm the price of Caladrius Common Stock and the future business and operations of each company.
If the Merger is not completed, Caladrius and Cend are subject to the following risks:
if the Merger Agreement is terminated under certain circumstances, Caladrius or Cend will be required to pay certain transaction expenses of the other party, up to a maximum of $1.0 million;
if the Merger Agreement is terminated under certain circumstances, Cend will be required to pay Caladrius a termination fee of $4.0 million, plus certain transaction expenses of Caladrius;
if the Merger Agreement is terminated under certain circumstances, Caladrius will be required to pay Cend a termination fee of $1.0 million, plus certain transaction expenses of Cend;
the price of Caladrius Common Stock may decline and remain volatile; and
some costs related to the Merger, such as certain portions of legal and accounting fees, must be paid even if the Merger is not completed.
In addition, if the Merger Agreement is terminated and the Caladrius Board of Directors or the Cend Board of Directors determines to seek another business combination, there can be no assurance that either Caladrius or Cend will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the Merger.
The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.
In general, either Caladrius or Cend can refuse to complete the Merger if there is a material adverse change affecting the other party between the date of the Merger Agreement, and the Closing. However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on Caladrius or Cend, including:
with respect to Caladrius, any rejection or non-acceptance by a governmental body of a registration statement or filing by Caladrius relating to certain intellectual property rights of Caladrius;
the taking of any action, or the failure to take any action, by either Caladrius or Cend required to comply with the terms of the Merger Agreement;
any effect resulting from the announcement or pendency of the Merger or any related transactions;
continued losses from operations or decreases in cash balances of Caladrius or Cend;
any natural disaster or any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation or armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing;
any change in accounting requirements or principles of any change in applicable laws, rules or regulations or the interpretation thereof;
any general economic or political conditions or conditions generally affecting the industries in which the Caladrius or Cend operate;
any epidemics, pandemics, disease outbreaks, or other public health emergencies or the escalation or worsening thereof, including COVID-19 or Caladrius’ or Cend’s compliance with any quarantine, “shelter in place,” “stay at home,” social distancing, shut down, closure, sequester, safety or similar law, guidelines or recommendations promulgated by any governmental body, the Centers for Disease Control and Prevention or the World Health Organization, in each case, in connection with, related to, or in response to COVID-19, including the CARES Act and Families First Coronavirus Response Act;
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with respect to Caladrius, any changes in or affecting research and development, clinical trials or other drug development activities conducted by or on behalf of Caladrius;
with respect to Caladrius, any change in the stock price or trading volume of Caladrius Common Stock excluding any underlying effect that may have caused such change; and
with respect to Cend, any change in the cash position of Cend that results from operations in the ordinary course of business.
If adverse changes occur and Caladrius and Cend still complete the Merger, the price of Caladrius Common Stock may suffer. This in turn may reduce the value of the Merger to the Caladrius Stockholders, the Cend Stockholders or both.
Some Caladrius and Cend officers and directors have interests in the Merger that are different from yours and that may influence them to support or approve the Merger without regard to your interests.
Certain officers and directors of Caladrius and Cend participate in arrangements that provide them with interests in the Merger that are different from yours, including, among others, the continued service as an officer or director of the combined organization, severance benefits, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined organization in accordance with Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). For example, Caladrius has entered into certain employment and severance benefits agreements with each of its current executive officers that may result in the receipt by such executive officers of cash severance payments and other benefits with a total value of approximately $3.0 million (collectively, not individually), based on data available as of June 13, 2022 and assuming a covered termination of employment of each executive officer’s employment as of such date. For more information concerning the treatment of Caladrius options in connection with the Merger, see the section entitled “The Merger Agreement—Treatment of Caladrius Options” in this proxy statement/prospectus/information statement. In addition, and for example, certain of Cend’s directors and executive officers have options, subject to vesting (with acceleration of vesting triggered by the Merger in some instances), to purchase shares of Cend Common Stock which, at the Closing, shall be converted into and become options to purchase shares of Caladrius Common Stock; certain of Cend’s directors and executive officers are expected to become directors and executive officers of Caladrius upon the Closing; and all of Cend’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. For more information concerning the interests of Caladrius and Cend executive officers and directors, see the sections entitled “The Merger—Interests of the Caladrius Directors and Executive Officers in the Merger” and “The Merger—Interests of the Cend Directors and Executive Officers in the Merger” in this proxy statement/prospectus/information statement.
The market price of Caladrius Common Stock following the Merger may decline as a result of the Merger.
The market price of Caladrius Common Stock may decline as a result of the Merger for a number of reasons if:
investors react negatively to the prospects of the combined organization’s business and prospects from the Merger;
the effect of the Merger on the combined organization’s business and prospects is not consistent with the expectations of financial or industry analysts; or
the combined organization does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts.
Caladrius Stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger, and Cend Stockholders may likewise receive less value than anticipated in the Merger.
If the combined organization is unable to realize the full strategic and financial benefits currently anticipated from the Merger, Caladrius Stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit, and likewise the value of the shares in the combined organization received by Cend Stockholders may be of significantly less value than anticipated, to the extent the combined organization is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.
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Caladrius Stockholders and Cend Stockholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined organization following the completion of the Merger as compared to their current ownership and voting interests in the respective companies.
After the completion of the Merger, the current Caladrius Stockholders and Cend Stockholders will own a smaller percentage of the combined organization than their ownership of their respective companies prior to the Merger. Immediately after the Merger, Caladrius Stockholders, whose shares of Caladrius Common Stock will remain outstanding after the Merger, will own approximately 50% of the outstanding Caladrius Common Stock and Cend Stockholders will own approximately 50% of the outstanding Caladrius Common Stock, in each case, excluding securities convertible or exercisable into shares of Caladrius Common Stock. These estimates are based on the anticipated Exchange Ratio and are subject to adjustment.
During the pendency of the Merger, Caladrius and Cend may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.
Covenants in the Merger Agreement impede the ability of Caladrius and Cend to make acquisitions, subject to certain exceptions relating to fiduciary duties, as set forth below, or to complete other transactions that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during such period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into certain extraordinary transactions, such as merger, sale of assets or other business combination outside the ordinary course of business with any third party, subject to certain exceptions relating to fiduciary duties, as set forth below. Any such transactions could be favorable to such party’s stockholders.
Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.
The terms of the Merger Agreement prohibit each of Caladrius and Cend from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when such party’s board of directors determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to be inconsistent with the board’s fiduciary duties. Moreover, even if a party receives what the party’s board of directors determine is a superior proposal, the Merger Agreement does not permit either party to terminate the Merger Agreement to enter into a superior proposal.
Because the lack of a public market for Cend Capital Stock makes it difficult to evaluate the value of Cend of Capital Stock, the Cend Stockholders may receive shares of Caladrius Common Stock in the Merger that have a value that is less than, or greater than, the fair market value of Cend Capital Stock.
The outstanding Cend Capital Stock is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Cend Capital Stock. Because the percentage of Caladrius equity to be issued to Cend Stockholders was determined based on negotiations between the parties, it is possible that the value of the Caladrius Common Stock to be received by Cend Stockholders will be less than the fair market value of Cend Capital Stock, or Caladrius may pay more than the aggregate fair market value of Cend Capital Stock.
If the conditions of the Merger are not met, the Merger will not occur.
Even if the Merger is approved by Caladrius Stockholders and Cend Stockholders, specified conditions must be satisfied or waived to complete the Merger. These conditions are set forth in the Merger Agreement and described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus/information statement. Caladrius and Cend cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the Merger will not occur or will be delayed, and Caladrius and Cend each may lose some or all of the intended benefits of the Merger.
The Merger may fail to qualify as a reorganization for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by Cend Stockholders in respect of their Cend Capital Stock.
Caladrius and Cend intend for the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, as described in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” in this proxy statement/prospectus/information statement. In the event that the Merger does not
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qualify as a reorganization, the Merger would result in taxable gain or loss for each Cend Stockholder, with the amount of such gain or loss determined by the amount that each Cend Stockholder’s adjusted tax basis in the Cend Capital Stock surrendered is less or more than the fair market value of the Caladrius Common Stock and any cash in lieu of a fractional share received in exchange therefor. Each holder of Cend Capital Stock is urged to consult with his, her or its own tax advisor with respect to the tax consequences of the Merger.
Risks Related to the Proposed Reverse Stock Split
The proposed Reverse Stock Split may not increase the combined organization’s stock price over the long-term.
The principal purpose of the proposed Reverse Stock Split is to increase the per-share market price of Caladrius Common Stock. It cannot be assured, however, that the proposed Reverse Stock Split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of Caladrius Common Stock will proportionally increase the market price of Caladrius Common Stock, it cannot be assured that the proposed Reverse Stock Split will increase the market price of Caladrius Common Stock by a multiple of the proposed Reverse Stock Split ratio, or result in any permanent or sustained increase in the market price of Caladrius Common Stock, which is dependent upon many factors, including the combined organization’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of the combined organization might meet the continued listing requirements for The Nasdaq Capital Market initially, it cannot be assured that it will continue to do so.
The proposed Reverse Stock Split may decrease the liquidity of the combined organization’s common stock.
Although the Caladrius Board of Directors believes that the anticipated increase in the market price of the combined organization’s common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the proposed Reverse Stock Split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for Caladrius Common Stock.
The proposed Reverse Stock Split may lead to a decrease in the combined organization’s overall market capitalization.
Should the market price of the combined organization’s common stock decline after the proposed Reverse Stock Split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the proposed Reverse Stock Split. A reverse stock split may be viewed negatively by the market and, consequently, can lead to a decrease in the combined organization’s overall market capitalization. If the per share market price does not increase in proportion to the proposed Reverse Stock Split ratio, then the value of the combined organization, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of Caladrius Common Stock will remain the same after the proposed Reverse Stock Split is effected, or that the proposed Reverse Stock Split will not have an adverse effect on the stock price of Caladrius Common Stock due to the reduced number of shares outstanding after the proposed Reverse Stock Split.
Risks Related to Caladrius
Risks Related to Caladrius’ Financial Condition and Capital Requirements
Caladrius has incurred substantial losses and negative cash flow from operations in the past and expect to continue to incur losses and negative cash flow for the foreseeable future.
Caladrius has a limited operating history, limited capital, and limited sources of revenue. Since Caladrius’ inception in 1980 through December 31, 2021, Caladrius has incurred aggregate net losses of approximately $453.0 million. Caladrius’ net losses from continuing operations attributable to common stockholders for the years ended December 31, 2021 and December 31, 2020 were approximately $27.5 million and $8.2 million, respectively. As of December 31, 2021, Caladrius’ cash and cash equivalents and marketable securities were $95.0 million. Caladrius’ current business has not generated revenues in the past and for the foreseeable future it does not expect it to generate revenue to be sufficient to cover costs attributable to that business or to Caladrius’
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operations as a whole, including Caladrius’ development activities associated with our product candidates. Ultimately, Caladrius may never generate sufficient revenue from its business to reach profitability, generate positive cash flow or sustain, on an ongoing basis, its current or projected levels of product development and other operations.
Caladrius anticipates that it will need substantial additional financing to continue its operations; if it is unable to raise additional capital, it may be forced to delay, reduce or eliminate one or more of our product development programs, and its business will be harmed.
Caladrius’ current operating plan will require significant levels of additional capital to fund the continued development of its cell therapy product candidates and its clinical development activities.
Caladrius’ clinical activities are expected to continue to grow as its programs are advanced and they will require significant investment over a period of several years before they could potentially be approved by the U.S. Food and Drug Administration (“FDA”) and commercialized by it or a partner, if ever. Even if data from Caladrius’ current clinical trials for its product candidates were deemed positive, it may be required to conduct additional clinical trials of the product candidates, including larger and more expensive pivotal Phase 3 trials, to pursue commercialization of the candidates. To do so, Caladrius will need to raise additional capital, enter into collaboration agreements with third parties or undertake any combination thereof. If Caladrius is unsuccessful in its efforts to raise capital or find collaborative partners, it will likely need to otherwise delay or abandon the trials.
The amount and timing of Caladrius’ future capital requirements also will likely depend on many other factors, including:
the scope, progress, results, costs, timing and outcomes of Caladrius’ cell therapy research and development programs and product candidates;
Caladrius’ ability to enter into any collaboration agreements with third parties for its product candidates and the timing and terms of any such agreements;
the costs associated with the consummation of one or more strategic transactions;
the timing of, and the costs involved in obtaining, regulatory approvals for our product candidates, a process which could be particularly lengthy, or complex given the FDA’s limited experience with marketing approval for cell therapy products;
the costs of maintaining, expanding and protecting Caladrius’ intellectual property portfolio, including potential litigation costs and liabilities relating thereto;
the cost of expansion of Caladrius’ development operations and personnel; and
the availability of, or Caladrius’ access to, state or federal government awards.
To both fund our clinical trials and support Caladrius’ future operations, it would likely seek to raise capital through a variety of different public and/or private financings vehicles. This could include, but not be limited to, utilization of Caladrius’ at-the-market (“ATM”) offering agreement with H.C. Wainwright & Co., LLC (“HCW”) potential issuances of other debt or equity securities in public or private financings and/or sale or licensing of assets. If Caladrius raises capital through the sale of equity, or securities convertible into equity, it will result in dilution to our then-existing stockholders. Servicing the interest and principal repayment obligations under debt Caladrius incurs, or whether any such debt is called, would divert funds that might otherwise be available to support research and development, clinical or commercialization activities. In addition, debt financing involves covenants that restrict Caladrius’ ability to operate its business. In certain cases, Caladrius also may seek funding through collaborative arrangements that would likely require it to relinquish certain rights to its technology or product candidates and diminish its share in the future revenues associated with the partnered product.
Ultimately, Caladrius may be unable to raise capital or enter into collaborative relationships on terms that are acceptable to it, if at all. Caladrius’ inability to obtain necessary capital or financing to fund our future operating needs could adversely affect its business, results of operations and financial condition.
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Caladrius has never generated any revenue from product sales and its ability to generate revenue from product sales and become profitable depends significantly on its success in a number of factors.
Caladrius has no products approved for commercial sale, has not generated any revenue from product sales, and does not anticipate generating any revenue from product sales until sometime after it has received regulatory approval for the commercial sale of a product candidate, which may never occur. Caladrius’ ability to generate revenue from product sales and achieve profitability depends significantly on its success in many factors, including:
completing research regarding, and nonclinical and clinical development of, Caladrius’ current and future product candidates;
obtaining regulatory approvals and marketing authorizations for product candidates for which Caladrius completes clinical trials;
developing a sustainable and scalable manufacturing process for Caladrius’ product candidates;
identifying and contracting with contract manufacturers that have the ability and capacity to manufacture Caladrius’ development products and make them at an acceptable cost;
launching and commercializing product candidates for which Caladrius obtains regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor;
obtaining market acceptance of Caladrius’ product candidates as viable treatment options;
ensuring ongoing regulatory compliance post-approval and with respect to sales and marketing of future products;
addressing any competing technological and market developments;
identifying, assessing, acquiring and/or developing new product candidates;
negotiating favorable terms in any collaboration, licensing, or other arrangements into which Caladrius may enter;
maintaining, protecting, and expanding Caladrius’ portfolio of intellectual property rights, including patents, trade secrets, and know-how; and
attracting, hiring, and retaining qualified personnel.
Even if one or more of the product candidates that Caladrius develops is approved for commercial sale, it anticipates incurring significant costs associated with commercializing any approved product candidate. Caladrius’ expenses could increase beyond expectations if we are required by the FDA, or other regulatory agencies, domestic or foreign, to change its manufacturing processes or assays, or to perform clinical, nonclinical, or other types of studies in addition to those that it currently anticipates. If Caladrius is successful in obtaining regulatory approvals to market one or more of its product candidates, its revenue will depend, in part, upon the size of the markets in the territories for which it obtains regulatory approval, the accepted price for the product, the ability to receive reimbursement at any price, and whether it owns the commercial rights for that territory. If the number of Caladrius’ addressable disease patients is not as significant as it estimates, the indication approved by regulatory authorities is narrower than it expects, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, it may not generate significant revenue from sales of such products, even if approved. If Caladrius is not able to generate revenue from the sale of any approved products, it may never become profitable.
If Caladrius’ status as a smaller reporting company changes, Section 404(b) of the Sarbanes-Oxley Act of 2002 may require an independent registered public accounting firm to report on the effectiveness of its internal control over financial reporting. Any delays or difficulty in satisfying these requirements could adversely affect Caladrius’ future results of operations and its stock price.
Section 404(b) of the Sarbanes-Oxley Act of 2002 requires an independent registered public accounting firm to test the internal control over financial reporting of public companies, and to report on the effectiveness of such controls, for each fiscal year ending after June 15, 2010. Under the Dodd Frank Wall Street Reform and
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Consumer Protection Act of 2010 (the “Dodd Frank Act”), Caladrius is exempt from Section 404(b) as long as it remains a smaller reporting company or a non-accelerated filer. If Caladrius’ status as a smaller reporting company changes, it may be required to comply with this auditor attestation requirement.
In addition, Caladrius may in the future discover areas of its internal controls that need improvement, particularly with respect to businesses that it may acquire. If so, we cannot be certain that any remedial measure Caladrius takes will ensure that it have adequate internal controls over its financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could harm Caladrius’ operating results or cause it to fail to meet its reporting obligations. If Caladrius is unable to conclude that it has effective internal controls over financial reporting, or if it becomes necessary for its independent registered public accounting firm to provide it with an unqualified report regarding the effectiveness of our internal control over financial reporting and it is unable to do so, investors could lose confidence in the reliability of its financial statements. This could result in a decrease in the value of Caladrius Common Stock.
Risks Related to Caladrius’ Cell Therapy Product Development Efforts
Caladrius’ future success may be dependent on the timely and successful continued development and commercialization of HONEDRA®, its experimental product candidate for CLI and Buerger’s Disease that has been in clinical development in Japan, XOWNA® or CLBS16 for CMD, and CLBS201 for DKD, and if Caladrius encounters delays or further difficulties in the development of these product candidates, its business prospects would be significantly harmed.
Caladrius is dependent upon the successful development, approval and commercialization of its product candidates. Before Caladrius is able to seek regulatory approval of its product candidates, it must conduct and complete extensive clinical trials to demonstrate their safety and efficacy in humans. Caladrius has never taken a product through the regulatory approval process or successfully to U.S. or international commercialization.
In early 2018, Caladrius treated the first patient in a clinical trial in Japan for HONEDRA® for use in CLI taking advantage of the paradigm of potential conditional approval for regenerative medicine products established by new regulations in Japan for products that show sufficient safety evidence and some evidence of efficacy. Because of difficulty enrolling the remaining patients in the trial and the costs of continued delays in such, Caladrius suspended enrollment of the trial at the end of 2021 and commenced talks with development partners as well as with Japan’s Pharmaceuticals and Medical Devices Agency (“PMDA”) to consider paths forward. There can be no assurance that Caladrius will find a partner or that PMDA will consider the drug for approval without completing enrollment of the trial, such that HONEDRA® may be delayed indefinitely or never commercialized.
In late 2020 Caladrius began enrolling patients in the FREEDOM Trial using CD34+ cells to treat CMD (CLBS16). That trial also has been delayed significantly by COVID-19-related challenges to enrollment and supply chain issues. Additionally, Caladrius currently has an open investigational new drug application (“IND”) for CLBS201 in a pilot study examining the effectiveness of CD34+ cells to treat diabetic kidney disease.
Clinical testing is expensive, difficult to design and implement, and can take many years to complete. Importantly, a failure of one or more of these or any other clinical trials can occur at any stage of testing. Caladrius may experience numerous unforeseen events during, or as a result of clinical trials that could delay or prevent its ability to complete its clinical trials, receive regulatory approval or commercialize its cell therapy product candidates, including the following:
suspensions, delays or changes in the design, initiation, enrollment, implementation or completion of required clinical trials;
adverse changes in its financial position or significant and unexpected increases in the cost of its clinical development program;
changes or uncertainties in, or additions to, the regulatory approval process that require Caladrius to alter its current development strategy;
clinical trial results that are negative, inconclusive or even less than desired as to safety and/or efficacy, which could result in the need for additional clinical trials or the termination of the product’s development;
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delays in its ability to manufacture its product candidates in quantities or in a form that is suitable for any required clinical trials;
intellectual property constraints that prevent Caladrius from making, using, or commercializing any of its cell therapy product candidates;
the supply or quality of its product candidates or other materials or equipment necessary to conduct clinical trials of these product candidates may be no longer available for purchase, insufficient or inadequate;
inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation of clinical trials;
delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs, CMOs and clinical trial sites;
delays in obtaining required institutional review board (“IRB”) approval at each clinical trial site;
inability to file INDs with the FDA for its development candidates or comparable clinical trial applications with other regulatory authorities outside of the United States;
imposition of a temporary or permanent clinical hold by the FDA or similar restrictions by other regulatory agencies for a number of reasons, including after review of an IND or amendment, or equivalent application or amendment; as a result of a new safety finding that presents unreasonable risk to clinical trial participants; a negative finding from an inspection of its clinical trial operations or clinical trial sites; developments on trials conducted by competitors or approved products post-market for related technology that raises FDA concerns about risk to patients of the technology broadly; or if the FDA finds that the investigational protocol or plan is clearly deficient to meet its stated objectives;
difficulty collaborating with patient groups and investigators;
failure by its CROs, CMOs other third parties, or Caladrius to adhere to clinical trial requirements;
failure to perform in accordance with the FDA or international good clinic practice (“GCP”) requirements;
failure to reach agreement with the FDA on a satisfactory development path of its development candidates;
delays in having patients qualify for or complete participation in a trial or return for post-treatment follow-up;
patients dropping out of a clinical trial;
occurrence of adverse events associated with the product candidate;
changes in the standard of care on which a clinical development plan was based, which may require new or additional trials or abandoning existing trials;
transfer of manufacturing processes from its academic collaborators to larger-scale facilities operated by either a contract manufacturing organization, or CMO, or by us, and delays or failure by its CMOs or Caladrius to make any necessary changes to such manufacturing process;
delays in manufacturing, testing, releasing, validating, or importing/exporting sufficient stable quantities of its product candidates for use in clinical trials or the inability to do any of the foregoing; and
the FDA may not accept clinical data from trials that are conducted in countries where the standard of care is potentially different from the United States.
Any inability to successfully complete nonclinical and clinical development could result in additional costs to Caladrius or impair its ability to generate revenue. In addition, if Caladrius makes manufacturing or formulation changes to its product candidates, it may be required to, or it may elect to, conduct bridging studies to demonstrate the equivalence of its modified product candidates to earlier versions. Clinical trial delays could also
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shorten any periods during which its products have patent protection and may allow its competitors to bring products to market before it does, which could impair its ability to successfully commercialize its product candidates and may harm its business and results of operations.
Caladrius’ business has been and may continue to be adversely affected by the COVID-19 pandemic.
The COVID-19 pandemic has affected Caladrius’ operations and may materially affect its business. In response to the pandemic, Caladrius has limited in-office operations, including implementing work from home and social distancing policies. Caladrius risks a delay, default and/or nonperformance under its existing agreements arising from force majeure.
In addition, COVID-19 has resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions, social distancing and business shutdowns. Caladrius has taken temporary precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily allowing all employees to work remotely. These measures could negatively affect its business. For instance, temporarily requiring all employees to work remotely may induce absenteeism, disrupt its operations, or increase the risk of a cybersecurity incident. COVID-19 has also caused volatility in the global financial markets and threatened a slowdown in the global economy, which may negatively affect Caladrius’ ability to raise additional capital on attractive terms or at all.
Caladrius’ clinical trials have suffered and may continue to suffer from delays and lower than anticipated patient recruitment or enrollment. Caladrius’ clinical study of HONEDRA® in Japan has experienced significant delays in enrollment due to the States of Emergency in effect in Japan for most of 2020 and re-implemented from January 7, 2021 through March 21, 2021 covering Tokyo and other regions in response to an increased number of COVID-19 infections. Due to reported increases in COVID-19 cases and a low rate of vaccination in Japan, States of Emergency were renewed on April 25, 2021 through May 11, 2021 and then re-implemented in Tokyo from July 12, 2021 through September 30, 2021. With Caladrius’ expectation that COVID-19 in Japan would continue to impact negatively enrollment of patients in the HONEDRA® clinical trial, it elected to suspend trial enrollment, seek a development partner and consult with the Japanese regulatory authorities regarding the submission of patient data already accrued. In addition, Caladrius’ Phase 2b trial of XOWNA® in the United States has experienced delays in enrolling patients as a result of COVID-19. In May 2022, Caladrius suspended enrollment in the Phase 2b trial pending results from an interim analysis, and there can be no assurance that enrollment will be resumed or that if resumed, that it will be successful.
COVID-19 could continue to disrupt production and cause delays in the supply and delivery of products used in our clinical trials, may affect our operations, including the conduct of clinical studies, or the ability of regulatory bodies to grant approvals, may further divert the attention and efforts of the medical community to coping with COVID-19 and disrupt the marketplace in which we operate and may have a material adverse effects on our operations. The extent to which COVID-19 will continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, the severity of COVID-19 or new variants or the effectiveness of actions to contain and treat COVID-19 and its variants, particularly in the geographies where Caladrius or its third party suppliers, contract manufacturers, or contract research organizations operate. Caladrius cannot presently predict the scope and severity of any potential business shutdowns or disruptions. If Caladrius or any of the third parties with whom it engages, however, were to experience shutdowns or other business disruptions, its ability to conduct its business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on its business and its results of operations and financial condition.
Even if Caladrius is able to successfully complete its clinical development programs for its product candidates and receive regulatory approval to market one or more of the products, if the commercial opportunities are smaller than it anticipates, its future revenues may be adversely affected, and its business may suffer.
If the size of the commercial opportunities in any of Caladrius’ target indications is smaller than it anticipates, or if the FDA grants its candidates approval to treat only specific subpopulations or otherwise approves the products for more narrow indications for use than Caladrius is seeking, it may not be able to achieve profitability and growth.
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Even if Caladrius is able to successfully complete its clinical development program for its product candidates, and ultimately receive regulatory approval to market one or more of the products, it may, among other things:
obtain approval for indications that are not as broad as the indications it sought;
have the product removed from the market after obtaining marketing approval;
encounter problems with respect to the manufacturing of commercial supplies;
be subject to additional post-marketing testing requirements; and/or
be subject to restrictions on how the product is distributed or used.
Caladrius may experience delays in enrolling patients in its clinical trials, which could delay or prevent the receipt of necessary regulatory approvals.
Caladrius may not be able to initiate or complete as planned any clinical trials if it is unable to identify and enroll a sufficient number of eligible patients to participate in the clinical trials required by the FDA or other regulatory authorities. Caladrius also may be unable to engage a sufficient number of clinical trial sites to conduct its trials. Moreover, Caladrius’ ability to conduct trials outside of the United States may be constrained by its inability to transport trial materials to foreign destinations within the expiry period of such materials unless and until it commences operation outside of the United States or find another source of supply.
Caladrius may face continuing challenges in enrolling patients to participate in its clinical trials due to the novelty of its cell-based therapies, the size of the patient populations, the eligibility criteria for enrollment in the trial and COVID-19 impact. Due, in whole or in part, to delays in enrolling patients as a result of COVID-19, Caladrius has suspended trial enrollment for its clinical study of HONEDRA® in Japan and its Phase 2b trial of XOWNA® in the United States. Moreover, changes to enrollment criteria may be prohibited by regulating agencies, may have no impact on enrollment rates and may change or harm the outcome of the study. In addition, some patients may have concerns or negative perceptions regarding cell therapy that may affect their decision to enroll in the trials. Furthermore, patients suffering from diseases within target indications may enroll in competing clinical trials, which could negatively affect its ability to complete enrollment of its trials. Enrollment challenges in clinical trials often result in increased development costs for a product candidate, significant delays and potentially the abandonment of the clinical trial.
Outside of the unique aspects of conducting a clinical trial for a cell therapy candidate, patient enrollment in general is affected by many factors, including:
size of the target patient population;
severity of the disease or disorder under investigation;
eligibility criteria for the clinical trial in question;
other clinical trials being conducted at the same time involving patients who have the disease or disorder under investigation;
perceived risks and benefits of the product candidate under study;
approval and availability of other therapies to treat the disease or disorder that is being investigated in the clinical trial;
willingness or unwillingness to participate in a placebo controlled clinical trial;
efforts to facilitate timely enrollment in clinical trials;
patient referral practices of physicians;
the ability to monitor patients adequately during and after treatment; and
proximity and availability of clinical trial sites for prospective patients.
Caladrius’ inability to enroll a sufficient number of patients in any of its planned clinical trials would result in significant delays or may require it to abandon one or more clinical trials altogether.
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Caladrius may have other delays in completing its clinical trials and it may not complete them at all.
Caladrius has not completed the clinical trials necessary to obtain FDA approval to market HONEDRA®, XOWNA® or CLBS201 or any of its other product candidates in development. Caladrius’ operational team lacks significant experience in completing Phase 3 pivotal clinical trials and bringing a drug or biological product through commercialization. Clinical trials for products in development may be delayed or terminated as a result of many factors, including the following:
patients failing to complete clinical trials due to dissatisfaction with the treatment, side effects or other reasons;
failure by regulators, IRBs, or independent ethics committees to authorize Caladrius or its investigators at individual sites to commence a clinical trial;
suspension or termination by regulators of clinical research for many reasons, including concerns about patient safety or failure of Caladrius’ contract manufacturers to comply with applicable current Good Manufacturing Practice (“cGMP”) or current Good Tissue Practice (“cGTP”) requirements for the clinical supplies of the cell therapy candidate;
delays or failure to obtain clinical supply for Caladrius’ product candidates necessary to conduct clinical trials from contract manufacturers, including commercial grade clinical supply for its trials;
Caladrius’ third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to Caladrius in a timely manner, or at all;
treatment candidates demonstrating a lack of efficacy during clinical trials;
inability to continue to fund clinical trials or to find a partner to fund the clinical trials;
competition with ongoing clinical trials and scheduling conflicts with participating clinicians; and
delays in completing data collection and analysis for clinical trials.
Any delay or failure to complete clinical trials and obtain FDA approval for Caladrius’ product candidates could have a material adverse effect on its cost to develop and commercialize, and its ability to generate revenue from, a particular product candidate.
Caladrius may be unable to manage multiple late stage clinical trials for a variety of product candidates simultaneously.
As Caladrius’ current clinical trials progress, it may need to manage multiple late stage clinical trials simultaneously in order to continue developing all of its current product candidates. Caladrius’ management team does not have significant experience in completing late stage clinical trials and the management of late stage clinical trials is more complex and time consuming than early stage trials. Typically, early stage trials involve several hundred patients in no more than 30 clinical sites. Late stage (Phase 3) trials may involve up to several thousand patients in up to several hundred clinical sites and may require facilities in several countries. Therefore, the project management required to supervise and control such an extensive program is substantially larger than early stage programs. As the need for these resources is not known until some months before the trials begin, it is necessary to recruit large numbers of experienced and talented individuals very quickly. If the labor market does not allow this team to be recruited quickly, the sponsor is faced with a decision to delay the program or to initiate it with inadequate management resources. This may result in recruitment of inappropriate patients, inadequate monitoring of clinical investigators and inappropriate handling of data or data analysis. Consequently, it is possible that conclusions of efficacy or safety may not be acceptable to permit submission of a Biological Licensing Application (“BLA”) for any one of the above reasons or a combination of several.
The development of Caladrius’ cell therapy product candidates is subject to uncertainty because autologous cell therapy is inherently variable.
When manufacturing an autologous cell therapy, the number and the composition of the cell population varies from patient to patient. Such variability in the number and composition of these cells could adversely affect its ability to manufacture autologous cell therapies in a cost-effective or profitable manner and meet acceptable product release specifications for use in a clinical trial or, if approved, for commercial sale. As a consequence,
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the development and regulatory approval process for autologous cell therapy products could be delayed or may never be completed. Caladrius’ product development costs will also increase if manufacturing processes and controls require unexpected investments, which could harm its business and results of operations.
Any disruption to Caladrius’ access to the reagents, devices, material or equipment it is using in the clinical development of its cell therapy product candidates could adversely affect its ability to perform clinical trials and seek future regulatory submissions.
Reagents, devices, materials and systems that Caladrius is using in its clinical trials, that it intends to use in its planned clinical trials and that it may need or use in commercial production, are provided by unaffiliated third parties. Any lack of continued availability of these reagents, devices, materials and systems for any reason would have a material adverse effect on its ability to complete these studies and could adversely impact its ability to achieve commercial manufacture of its planned therapeutic products. Although other available sources for these reagents, devices, materials and systems may exist in the marketplace, Caladrius has not evaluated its cost, effectiveness, or intellectual property foundation and therefore cannot guarantee the suitability or availability of such other potential sources.
The initiation of pivotal Phase 3 clinical trials for cell therapy product candidates requires the validation and establishment of manufacturing controls that may delay product development timelines.
To conduct pivotal Phase 3 clinical trials, Caladrius is required to have certain validated and established manufacturing controls with respect to the safety, purity and potency of its product candidates when administered to patients. If Caladrius determines that the results of any Phase 2 clinical trial it may conduct supports Phase 3 development, it expects to initiate and complete one or more pivotal Phase 3 clinical trials for such programs and would need to address any outstanding chemistry, manufacturing and control (“CMC”) issues raised by the FDA prior to initiating such trials. Caladrius may not be successful in its efforts to address any CMC issues raised by the FDA. If Caladrius cannot initiate, or if it is delayed in initiating, a pivotal Phase 3 clinical program as a result of its failure to satisfy the FDA’s CMC concerns or otherwise, the timing of regulatory submission for commercialization of its product candidates would be delayed, or it may be unable to seek regulatory approval to commercialize its products at all.
Product candidates that appear promising in research and development may be delayed or may fail to reach later stages of clinical development.
The successful development of pharmaceutical product candidates is highly uncertain. Product candidates that appear promising in research and development and early clinical trials may be delayed or fail to reach later stages of development. Decisions regarding the further development of product candidates must be made with limited and incomplete data, which makes it difficult to ensure or even accurately predict whether the allocation of limited resources and the expenditure of additional capital on specific product candidates will result in desired outcomes. Preclinical and clinical data can be interpreted in different ways, and negative or inconclusive results or adverse events during a clinical trial could delay, limit or prevent the development of a product candidate.
Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of its product candidates may not be predictive of the results of later-stage clinical trials. Exploratory trends and results observed in earlier stage clinical trials, particularly trends and results observed for small subsets that were not pre-specified, may not be replicated in later stage clinical trials. Product candidates in Phase 3 clinical trials may fail to demonstrate sufficient efficacy despite having progressed through initial clinical trials, even if certain exploratory subset analyses of primary or secondary endpoints in those early trials showed trends toward efficacy or, in some analyses, nominal statistical significance. The results of clinical trials in one set of patients or line of treatment may not be predictive of those obtained in another.
If serious or unacceptable side effects are identified during the development of any of Caladrius’ product candidates, it may need to abandon or limit its development of that product candidate.
All of Caladrius’ product candidates are in clinical development and their risk of failure is high. It is impossible to predict when or if any of Caladrius’ product candidates will prove effective or safe in humans or will receive marketing approval. If Caladrius’ product candidates are associated with undesirable side effects or have other unexpected, unacceptable characteristics, it may need to abandon its development or limit development to certain
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uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many investigational products that initially showed promise in clinical or earlier stage testing have later been found to cause side effects or other safety issues that prevented further development. Even if Caladrius receives regulatory approval for a candidate with a known safety risk, such an approved product may not achieve market acceptance by physicians, patients, third-party payors or others in the medical community, which would materially and adversely affect its business.
A Fast Track designation by the FDA and other similar regulatory designations may not lead to a faster development, regulatory review or approval process.
Caladrius was granted SAKIGAKE designation in Japan and Advanced Therapeutic Medicinal Product (“ATMP”) designation in Europe for HONEDRA® for the treatment of CLI and Buerger’s Disease. However, SAKIGAKE and ATMP designations do not ensure that Caladrius will experience a faster development, regulatory review or approval process compared to conventional FDA or Japan’s PMDA procedures. Additionally, a regulatory authority may withdraw a designation if it believes that the designation is no longer supported by data from the clinical development program. Moreover, award of a particular designation does not imply a higher probability of success of a product in the approval process.
Caladrius’ clinical trials may fail to demonstrate adequately the safety and efficacy of its product candidates, which would prevent or delay regulatory approval and commercialization.
The clinical trials of Caladrius’ product candidates are, and the manufacturing and marketing of its products will be, subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries where it intends to test and market its product candidates. Before obtaining regulatory approvals for the commercial sale of any of its product candidates, Caladrius must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that its product candidates are both safe and effective for use in each target indication. In particular, because Caladrius’ cell therapy candidates are subject to regulation as biological drug products, it will need to demonstrate that they are safe, pure, and potent for use in their target indications. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended use. The risk/benefit profile required for product licensure will vary depending on these factors and may include adequate duration of response, a delay in the progression of the disease, and/or an improvement in survival. For example, response rates from the use of its product candidates may not be sufficient to obtain regulatory approval unless Caladrius can also show an adequate duration of response.
Caladrius expects there may be greater variability in results for products processed and administered on a patient-by-patient basis, as anticipated for its product candidates, than for “off-the-shelf” products, like many other drugs. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.
Data from earlier studies conducted by the third-party research institutions should not be relied upon as evidence that later or larger-scale clinical trials will succeed. Some future trials may have different patient populations than current studies and will test Caladrius’ product candidates in different indications, among other differences. In addition, Caladrius’ proposed manufacturing processes for its product candidates include what it believes will be process improvements that are not part of the production processes that were previously used in the earlier conducted clinical trials being conducted by the research institutions. Accordingly, Caladrius’ results with its product candidates may not be consistent with the results of the clinical trials.
In addition, even if such trials are successfully completed, Caladrius cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as do it, and more trials could be required before it submits its product candidates for approval. To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, Caladrius may be required to expend significant resources, which may not be available to it, to conduct additional trials in support of potential approval of its product candidates.
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Caladrius presently relies on contract manufacturing organizations to produce its product candidates at development and commercial scale quantities and has not yet qualified an alternate manufacturing supply, which could negatively impact its ability to meet any future demand for the products.
Caladrius currently relies on one contract manufacturer, Cognate Bioservices, a Charles River Company (“Cognate”), to provide the cell processing services necessary for clinical production for its various CD34+ cell therapy product candidates. To date, Cognate has not produced any products at commercial scale quantities and Caladrius expects that Cognate would need to significantly expand its manufacturing capabilities to meet potential commercial demand for XOWNA® and CLBS201 and any other of its product candidates, if approved, as well as any of its other product candidates that might attain regulatory approval. Such expansion would require additional regulatory approvals. Even if they increase their manufacturing capabilities, it is possible that they may still lack sufficient capacity to meet demand. At present Caladrius has no contract manufacturer for the production of HONEDRA® in Japan. Ultimately, if Caladrius is unable to supply its products to meet commercial demand, whether because of processing constraints or other disruptions, delays or difficulties that it experiences, sales of the products and their long-term commercial prospects could be significantly damaged.
Caladrius does not presently have redundant suppliers for any of its product candidates. If the facilities where Caladrius’ product candidates are being manufactured and/or the associated equipment were significantly damaged or destroyed, or if there were other disruptions, delays or difficulties affecting manufacturing capacity, its planned and future clinical trials and commercial production for these product candidates would likely be significantly disrupted and delayed. It would be both time consuming and expensive to replace this capacity with third parties, particularly since any new facility would need to comply with regulatory requirements.
Ultimately, if Caladrius is unable to supply its cell therapy product candidates to meet commercial demand, were commercial approval to be obtained, whether because of processing constraints or other disruptions, delays or difficulties that it experiences, its production costs could increase dramatically, and sales of the product and its long-term commercial prospects could be significantly damaged.
Also, as a result of the current geopolitical tensions and the conflict between Russia and Ukraine following the recent and ongoing Russian invasion of Ukraine, the governments of the United States, the European Union, Japan and other jurisdictions have recently announced the imposition of sanctions on certain industry sectors and parties in Russia, as well as enhanced export controls on certain products and industries. These and any additional sanctions and export controls, as well as any counter responses by the governments of Russia or other jurisdictions, could adversely affect, directly or indirectly, the global supply chain, with negative implications on the availability and prices of raw materials, energy prices, and its customers, as well as the global financial markets and financial services industry.
The commercial potential and profitability of Caladrius’ product candidates are unknown and subject to significant risk and uncertainty.
Even if Caladrius successfully develops and obtains regulatory approval for its cell therapy product candidates, the market may not understand or accept the products, which could adversely affect both the timing and level of future sales. Ultimately, the degree of market acceptance of Caladrius’ product candidates (or any of its future product candidates) will depend on a number of factors, including:
the efficacy and potential advantages compared to alternative treatments or competitive products;
the prevalence and severity of any side effects;
physician acceptance of its cell therapy approach to its target disease indications, include the ease or difficulty of administering the future products;
restrictions on how the product is distributed or used;
the strength of its marketing and distribution support, including whether it receives support from any patient advocacy groups;
the adequacy of product supply in light of complex manufacturing and distribution processes;
our ability to distinguish its products (which involve adult cells) from any ethical and political controversies associated with stem cell products derived from human embryonic or fetal tissue; and
the cost of the product, the reimbursement policies of government and third-party payors and its ability to obtain sufficient third-party coverage or reimbursement.
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Even if Caladrius is successful in achieving sales of its product candidates, it is not clear to what extent, if any, the products will be profitable. The costs of goods associated with production of cell therapy products are significant. While Caladrius is working to improve the speed and efficiency and lower the cost of its manufacturing processes, there can be no assurance that Caladrius will be successful in these efforts. In addition, some changes in manufacturing processes or procedures generally require FDA or foreign regulatory authority review and approval prior to implementation. Thus, Caladrius may need to conduct additional nonclinical studies and clinical trials to support approval of any such changes. Furthermore, this review process could be costly and time-consuming and could delay or prevent the commercialization of product candidates. Even if a product is approved and has a medical benefit, it may not be widely adopted if insurers do not provide coverage or reimbursement.
Caladrius may enter into collaborations, strategic alliances, additional licensing arrangements, acquisitions, business combinations or other strategic transactions in the future, any of which could require it to issue securities that could significantly dilute the shares of its existing stockholders, and it may not realize the benefits of such alliances or licensing arrangements, acquisitions, business combinations or strategic transactions.
Caladrius may enter into collaborations, strategic alliances, additional licensing arrangements, acquisitions, business combinations or other strategic transactions with third parties that it believes are essential to product commercialization or will complement or augment its development and commercialization efforts with respect to its product candidates and any future product candidates that it may develop. Any of these relationships may require Caladrius to incur non-recurring and other charges, increase its near and long-term expenditures, issue securities that could significantly dilute the shares of its existing stockholders, or disrupt its management and business. In addition, Caladrius faces significant competition in seeking appropriate strategic partners and/or acquisition candidates and the negotiation process can be time-consuming and complex. Moreover, Caladrius may not be successful in its efforts to establish a strategic partnership or other alternative arrangements for its 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 its product candidates as having the requisite potential to demonstrate safety and efficacy. Furthermore, there can be no assurance that Caladrius’ exploration of potential acquisitions, business combinations or strategic alternatives will result in Caladrius entering or completing any transaction or that such transaction, if completed, will add to shareholder value.
Further, collaborations involving its product candidates, such as its collaborations with third-party research institutions, are subject to numerous risks, which may include the following:
collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration;
collaborators may not pursue development and commercialization of its product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities;
collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing;
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with its products or product candidates;
a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing and distribution;
collaborators may not properly maintain or defend its intellectual property rights or may use its intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate its intellectual property or proprietary information or expose Caladrius to potential liability;
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disputes may arise between Caladrius and a collaborator that cause the delay or termination of the research, development or commercialization of its product candidates, or that result in costly litigation or arbitration that diverts management attention and resources;
collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; and
collaborators may own or co-own intellectual property covering its products that results from its collaborating with them, and in such cases, Caladrius would not have the exclusive right to commercialize such intellectual property.
As a result, if Caladrius enters into collaboration agreements and strategic partnerships or license its products or businesses, it may not be able to realize the benefit of such transactions if Caladrius is unable to successfully integrate them with its existing operations and company culture, which could delay its timelines or otherwise adversely affect its business. Caladrius also cannot be certain that, following a strategic transaction or license, it will achieve the revenue or specific net income that justifies such transaction. Any delays in entering into new collaborations or strategic partnership agreements related to Caladrius’ product candidates could delay the development and commercialization of its product candidates in certain geographies for certain indications, which would harm its business prospects, financial condition and results of operations.
Caladrius has limited experience in the development and marketing of cell therapies and may be unsuccessful in its efforts to establish a profitable business.
Caladrius has limited experience in the areas of cell therapy product development and marketing, and in the related regulatory issues and processes. Although Caladrius has recruited a team that has experience with designing and conducting clinical trials, as a company it has limited experience in conducting clinical trials and no experience in conducting clinical trials through to regulatory approval of any product candidate. In part because of this lack of experience, Caladrius cannot be certain that ongoing or planned clinical trials will begin or be completed on time, if at all.
Caladrius’ cell therapy business is based on novel technologies that are inherently expensive, risky and may not be understood by or accepted in the marketplace, which could adversely affect its future value.
The clinical development, commercialization and marketing of cell and tissue-based therapies are at an early stage, substantially research-oriented and financially speculative. To date, very few companies have been successful in their efforts to develop and commercialize a cell therapy product. In general, cell-based or tissue-based products may be susceptible to various risks, including undesirable and unintended side effects, unintended immune system responses, inadequate therapeutic efficacy, or other characteristics that may prevent or limit their approval or commercial use. Regulatory approval of novel product candidates such as HONEDRA®, XOWNA® and CLBS201, which are each manufactured having novel and proprietary formulations, can be more complex and expensive and take longer than other, more well-known or extensively studied pharmaceutical or biopharmaceutical products, due to the FDA’s lack of experience with them. To Caladrius’ knowledge, the FDA has only approved five autologous cell therapy products to date.
This lack of experience may lengthen the regulatory review process, require Caladrius to conduct additional studies or clinical trials, which would increase its development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these product candidates or lead to significant post-approval limitations or restrictions. Furthermore, the number of people who may use cell or tissue-based therapies is difficult to forecast with accuracy. Caladrius’ future success is dependent on the establishment of a large global market for cell and tissue-based therapies and its ability to capture a share of this market with its product candidates.
If competitors develop and market products that are more effective, safer, or less expensive than Caladrius’ product candidates or offer other advantages, its commercial prospects will be limited.
Caladrius’ cell therapy development programs now face, and will continue to face, intense competition from pharmaceutical, biopharmaceutical and biotechnology companies, as well as numerous academic and research institutions and governmental agencies engaged in drug discovery activities or funding, both in the United States and abroad. Some of these competitors are pursuing the development of drugs and other therapies that target the same diseases and conditions that Caladrius is targeting with its product candidates.
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As a general matter, Caladrius also faces competition from many other companies that are researching and developing cell therapies. Many of these companies have financial and other resources substantially greater than ours. In addition, many of these competitors have significantly greater experience in testing pharmaceutical and other therapeutic products, obtaining FDA and other regulatory approvals, and marketing and selling FDA-approved products in highly regulated commercial health care markets. If Caladrius ultimately obtains regulatory approval for any of its product candidates, it also will be competing with respect to manufacturing efficiency and marketing capabilities, areas in which it has limited or no commercial-scale experience. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in resources being even more concentrated by its competitors. Competition may increase further as a result of advances made in the commercial applicability of Caladrius’ technologies and greater availability of capital for investment in these fields.
Caladrius’ cell therapy product candidates for which it intends to seek approval as biologic products may face competition sooner than anticipated.
The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated pathway for licensure of so-called biosimilar and interchangeable biological products, both of which have specific defined meanings under the law. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing reference product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original reference product is approved for marketing in the United States a stand-alone BLA. The law is complex and is still being interpreted and implemented by the FDA. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for Caladrius’ biological products.
There is a risk that the FDA will not consider any of Caladrius’ therapeutic candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Additionally, this period of regulatory exclusivity does not apply to companies pursuing regulatory approval via their own traditional BLA, rather than via the abbreviated pathway. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of its reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing, as well as unique state laws and government/private policies.
Caladrius may be subject to significant product liability claims and litigation, including potential exposure from the use of its product candidates in human subjects, and its insurance may be inadequate to cover claims that may arise.
Caladrius’ business exposes it to potential product liability risks inherent in the testing, processing and marketing of cell therapy products. Such liability claims may be expensive to defend and result in large judgments against us. Caladrius faces an inherent risk of product liability exposure related to the testing of its current and any future product candidates in human clinical trials and will face an even greater risk with respect to any commercial sales of its products should they be approved. None of Caladrius’ product candidates have been widely used over an extended period of time, and therefore relevant safety data are limited. Cell therapy companies also derive the raw materials for manufacturing of product candidates from human cell sources, and therefore the manufacturing process and handling requirements, including ensuring compliance with cGTPs, are extensive, which increases the risk of quality failures and subsequent product liability claims. Caladrius presently has product liability insurance limited to $10 million per incident and $10 million in annual aggregate.
Caladrius will need to increase its insurance coverage when it begins commercializing product candidates, if ever. At that time, Caladrius may not be able to obtain or maintain product liability insurance on acceptable terms with adequate coverage or at all, or if claims against it substantially exceed its coverage, then its financial position could be significantly impaired.
Whether or not Caladrius is ultimately successful in any product liability litigation that may arise, such litigation could consume substantial amounts of its financial and managerial resources, decrease demand for its products and injure its reputation.
Caladrius seeks to maintain errors and omissions, directors and officers, workers’ compensation and other insurance at levels it believes to be appropriate to its business activities. If, however, Caladrius were subject to a
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claim in excess of this coverage or to a claim not covered by its insurance and the claim succeeded, it would be required to pay the claim from its own limited resources, which could have a material adverse effect on its financial condition, results of operations and business. Additionally, liability or alleged liability could harm Caladrius’ business by diverting the attention and resources of its management and damaging its reputation.
Caladrius may be unable to retain key officers or employees or hire new key officers or employees needed to implement its business strategy and develop its products and businesses.
Given the specialized nature of cell therapy and that it is a relatively new field, there is an inherent scarcity of experienced personnel in the field. Caladrius is substantially dependent on the skills and efforts of current senior management for their management and operations, as well as for the implementation of its business strategy. In addition, Caladrius’ future success depends upon its ability to attract and retain additional qualified personnel (including medical, scientific, technical, commercial, business and administrative personnel) necessary to support its anticipated growth, develop its business, perform its contractual obligations to third parties and maintain appropriate licensure. There can be no assurance that Caladrius will be successful in attracting or retaining personnel required by it to continue to grow its operations. The loss of a key employee, the failure of a key employee to perform in his or her current position or its inability to attract and/or retain skilled employees, as needed, could result in its inability to continue to grow its business or to implement its business strategy, or may have a material adverse effect on Caladrius’ business, financial condition and operating results.
Caladrius’ internal computer systems, or those used by its clinical investigators, clinical research organizations or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of development programs for its product candidates.
Caladrius relies on information technology systems to keep financial records, maintain laboratory and corporate records, communicate with staff and external parties and operate other critical functions. Any significant insufficiency degradation or failure of these computer systems could cause Caladrius to inaccurately calculate or lose its data. Despite the implementation of security measures, these internal computer systems and those used by Caladrius’ clinical investigators, clinical research organizations, and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. The techniques that could be used by criminal elements or foreign governments to attack these computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world. Furthermore, there is an increased risk of cybersecurity attacks by state actors due to the current conflict between Russia and Ukraine. Recently, Russian ransomware gangs have threatened to increase hacking activity against critical infrastructure of any nation or organization that retaliates against Russia for its invasion of Ukraine. Any such increase in such attacks on Caladrius’ third-party provider or other systems could adversely affect its network systems or other operations. While Caladrius has not experienced any such system failure, theft of information, accident or security breach to date, if such an event were to occur and cause interruptions in its operations, it could result in a material disruption of its clinical development activities. For example, the loss of clinical trial data from historical or future clinical trials could result in delays in regulatory approval efforts and significantly increase costs to recover or reproduce the data. To the extent that any disruption, theft of information, or security breach were to result in a loss of or damage to data or applications, or inappropriate disclosure of confidential or proprietary information, Caladrius could incur liability and the clinical development, and the future development of its product candidates could be delayed.
The increasing use of social media platforms presents new risks and challenges.
Social media is increasingly being used to communicate information about its product candidates and the diseases that Caladrius’ therapies are designed to treat. Social media practices in its industry continue to evolve and regulations related to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to its business. For example, patients and others may use social media channels to comment on the effectiveness of a product candidate or to report an alleged adverse event. When such disclosures occur, Caladrius may fail to monitor and comply with applicable adverse event reporting obligations or it may not be able to defend against political and market pressures generated by social media due to restrictions on what it may say about its product candidates. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate comments about Caladrius on any social networking website. If any of these events were to occur or Caladrius otherwise fails to comply with applicable regulations, it could incur liability, face overly restrictive regulatory actions or incur other harm to its business.
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Risks Related to Manufacturing Caladrius’ Development Product Candidates
Caladrius has no internal capacity to manufacture its development product candidates and has no assurance that it will continue to have access to manufacturers in its industry that can effectively make its development products or make them at an affordable, salable or otherwise commercially reasonable price or quantity.
Contract development and manufacturing organizations have a finite cell manufacturing capacity, which could inhibit the long-term growth prospects of our business.
Caladrius currently has minimal manufacturing contracts to produce materials for its clinical trials in the United States. It is possible that the demand for Caladrius’ products could exceed existing manufacturing capacity. Caladrius expects that, as its own cell therapy development programs progress and demand for cell therapy services in the industry expand, it may become necessary or desirable for it to expand its manufacturing vendors for cell therapy services and products in the future, which may require it to invest significant amounts of capital and to obtain regulatory approvals. If manufacturers are unable to meet Caladrius’ rising demand for products and services on a timely basis or unable to maintain cGMP/cGTP compliance standards, then it is likely that the progress of its own programs will be impaired which could materially and adversely affect the overall success of its development programs.
Components of therapeutic products approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMPs and manufacturers of cell-based product candidates must comply with cGTPs. In addition, manufacturers of therapeutic products may be required to modify their manufacturing processes from time to time in response to regulatory requests. The manufacture of live cellular-based products is complex and imposes significant regulatory burdens that may change over time. Caladrius may encounter difficulties in the production of its product candidates due to its limited manufacturing experience.
Caladrius will need to improve manufacturing efficiency at its contract manufacturers in order to establish cost of goods levels that will permit approved products to succeed commercially.
CMOs cannot provide assurances that they will be able to develop process enhancements that are acceptable to regulators or other comparable regulatory authorities, on a timely basis, on commercially reasonable terms, or at all, or that any expected improvement in profitability will be realized. If they are unsuccessful in their efforts to develop necessary improvements, Caladrius may be unable to develop commercially viable products, which would impair its ability to continue its operations.
Lack of access to safe, reliable, and effective transportation options could adversely affect Caladrius’ ability to meet its needs.
To effectively and efficiently deliver its cell therapy product, Caladrius also needs to establish and maintain cost-effective relationships with reliable and experienced transportation carriers. Most existing transportation carriers are not optimally designed for the transportation of cell therapy products. For example, these carriers generally lack a true point-to-point chain of control, may have non-controlled X-ray and inspection, do not guarantee package orientation, handling or storage conditions and, in many cases, lack a standard, documented and tracked operating procedures. While reliable ground carriers with experience in the transport of blood products exist in major U.S. metropolitan areas, air carriers meeting such needs are limited. If carriers we currently use should cease medical shipping operations or otherwise become unable to properly meet our transportation needs or comply with applicable customs and import regulations, the lack of access to safe, reliable and effective transportation options could adversely affect our ability to meet our needs.
Risks Related to Government Regulation
The development and commercialization of Caladrius’ product candidates are subject to extensive regulation by the FDA and other regulatory agencies in the United States and abroad, and the failure to receive regulatory approvals for our cell therapy product candidates would likely have a material and adverse effect on its business and prospects.
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, manufacture, including any manufacturing changes, packaging, storage, recordkeeping, labeling, advertising and promotion, distribution, marketing, import and export of pharmaceutical and biological products, such as HONEDRA®, XOWNA® and
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CLBS201. The process of obtaining required regulatory approvals and the subsequent compliance with appropriate statutes and regulations requires the expenditure of substantial time and money, and there is no guarantee that Caladrius will successfully complete the steps needed to obtain regulatory approval of HONEDRA®, XOWNA® and CLBS201 or any future product candidates. There also are extensive and ongoing post-marketing compliance obligations to which Caladrius would be subject following FDA approval of any of our product candidates. In addition, these federal regulations may change, and Caladrius’ product candidates may be subject to new laws or regulations due to the rapid advancement of the regenerative medicine field and legislators’/regulators’ interest in it.
To date, Caladrius has not received regulatory approval to market any of its product candidates in any jurisdiction. If Caladrius seeks approval of any of its cell therapy product candidates, it will be required to submit to FDA, Japan’s PMDA, and potentially other regulatory authorities, extensive preclinical and clinical data supporting the safety and efficacy of such product candidates, as well as information about the manufacturing process and to undergo inspection of manufacturing facilities, among other things. The process of obtaining FDA and other regulatory approvals is expensive, typically takes many years and is subject to numerous risks and uncertainties, particularly with complex and/or novel product candidates such as our cell-based product candidates. Changes in regulatory approval policies during the clinical research and development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application or may make it easier for Caladrius’ competitors to gain regulatory approval to enter the marketplace. Ultimately, the FDA and other regulatory agencies have substantial discretion in the approval/licensure process and may refuse to accept any application or may decide that our product candidate data are insufficient for approval without the submission of additional preclinical, clinical or other time-consuming studies. In addition, varying agency interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent regulatory approval of a product candidate. Any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.
Any of the following factors, among others, could cause regulatory approval for our product candidates to be delayed, limited or denied:
the product candidates require significant clinical testing to demonstrate safety and effectiveness before applications for marketing approval can be submitted to the FDA and other regulatory authorities;
data obtained from animal testing and other nonclinical testing and clinical trials can be interpreted in different ways, and regulatory authorities may not agree with our respective interpretations or may require Caladrius to conduct additional testing;
negative or inconclusive results or the occurrence of serious or unexpected adverse events during a clinical trial could cause Caladrius to delay and/or terminate development efforts for a product candidate; and/or
the FDA and other regulatory authorities may require expansion of the size and scope of the clinical trials.
Any difficulties or failures that we encounter in securing regulatory approval for our product candidates would likely have a substantial adverse impact on Caladrius’ ability to generate product sales and could make any search for a collaborative partner more difficult.
Caladrius may be unsuccessful in its efforts to comply with applicable federal, state and international laws and regulations, which could result in loss of licensure, certification or accreditation or other government enforcement actions or impact its ability to secure regulatory approval of its product candidates.
Although Caladrius seeks to conduct its business in compliance with applicable laws and regulations, these laws and regulations are exceedingly complex and often subject to varying interpretations. The cell therapy industry is the topic of significant government interest, and thus the laws and regulations applicable to Caladrius’ business are subject to frequent change and/or reinterpretation. As such, there can be no assurance that Caladrius will be able, or will have the resources, to maintain compliance with all applicable biopharmaceutical and health care laws and regulations. Failure to comply with such biopharmaceutical and health care laws and regulations could
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result in significant enforcement actions, civil or criminal penalties, which along with the costs associated with such compliance or with enforcement of such biopharmaceutical and health care laws and regulations, may have a material adverse effect on Caladrius’ operations or may require restructuring of its operations or impair its ability to operate profitably.
Facilities engaged in the recovery, processing, storage, labeling, packaging or distribution of any human cells, tissues or cellular- and tissue-based products, or the screening or testing of a donor, are required to register with the applicable regulatory agencies. Any third party retained by Caladrius to process its samples must be similarly registered with regulators and comply with applicable regulations as well as applicable cGTP regulations and any failure to comply with these requirements could adversely affect its business.
In addition to cGTPs, cGMP regulations govern the manufacture, processing, packaging and holding of cell therapy products that are regulated as drugs. Any third-party manufacturers that prepare Caladrius’ products must comply with cGMP requirements including quality control, quality assurance and the maintenance of records and documentation for certain products. They may be unable to comply with these cGMP requirements and with other national regulators and state and local regulatory requirements. These requirements may change over time and Caladrius or third-party manufacturers may be unable to comply with the revised requirements.
If Caladrius is unable to conduct clinical trials in accordance with regulations and accepted standards, it may be delayed in receiving, or may never receive, regulatory approvals of our product candidates from the FDA and other regulatory authorities.
To obtain marketing approvals for Caladrius’ product candidates in the United States and abroad, it must, among other requirements, complete adequate and well-controlled clinical trials sufficient to demonstrate to the FDA and other regulatory bodies that the product candidate is safe and effective for each indication for which approval is sought. If the FDA finds that patients enrolled in the trial are or would be exposed to an unreasonable and significant risk of illness or injury due to, among other things, occurrence of one or more serious adverse events in an ongoing clinical trial, the FDA can place one or more of Caladrius’ clinical trials on partial or full clinical hold. If safety concerns develop, we may, or the FDA, a foreign regulatory authority, or an IRB may require Caladrius to pause or stop the affected trials before completion.
The completion of Caladrius’ clinical trials also may be delayed or terminated for a number of other reasons, including if:
third-party clinical investigators do not perform the clinical trials on the anticipated schedule or consistent with the clinical trial protocol, GCPs required by the FDA and other regulatory requirements, or other third parties do not perform data collection and analysis in a timely or accurate manner;
inspections of clinical trial sites by the FDA or by IRBs of research institutions participating in the clinical trials, reveal regulatory violations that require the sponsor of the trial to undertake corrective action, suspend or terminate one or more sites, or prohibit use of some or all of the data in support of marketing applications; or
the FDA or one or more IRBs suspends or terminates the trial at an investigational site or precludes enrollment of additional subjects.
Caladrius’ development costs will increase if there are material delays in its clinical trials, or if it is required to modify, suspend, terminate, or repeat a clinical trial. If Caladrius is unable to conduct its clinical trials properly, it may never receive regulatory approval to market its product candidates.
Caladrius may be subject to numerous and varying privacy and security laws, and its failure to comply could result in penalties and reputational damage.
Caladrius is subject to laws and regulations covering data privacy and the protection of personal information including health information. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues which may affect Caladrius’ business. In the United States, Caladrius may be subject to state security breach notification laws, state health information privacy laws and federal and state consumer protections laws which impose requirements for the collection, use, disclosure and transmission of personal information. Each of these laws are subject to varying interpretations by courts and government agencies, creating complex compliance issues for us. If Caladrius fails
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to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties if Caladrius knowingly obtains individually identifiable health information from a covered entity in a manner that is not authorized or permitted by the federal Health Insurance Portability and Accountability Act of 1996 “HIPAA”) or for aiding and abetting the violation of HIPAA.
Numerous other countries have, or are developing, laws governing the collection, use and transmission of personal information as well. EU member states and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations. In May 2016, the European Union formally adopted the General Data Protection Regulation (“GDPR”), which applies to all EU member states from May 25, 2018 and replaced the EU Data Protection Directive. The regulation introduces stringent new data protection requirements in the European Union and substantial fines for breaches of the data protection rules. It has increased Caladrius’ responsibility and liability in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the new EU data protection rules. The GDPR is a complex law and the regulatory guidance is still evolving, including with respect to how the GDPR should be applied in the context of clinical studies. Furthermore, many of the countries within the European Union are still in the process of drafting supplementary data protection legislation in key fields where the GDPR allows for national variation, including the fields of clinical study and other health-related information. These variations in the law may raise Caladrius’ costs of compliance and result in greater legal risks.
Caladrius will continue to be subject to extensive regulation following any product approvals, and if it fails to comply with these regulations, it may suffer a significant setback in its business.
Even if Caladrius is successful in obtaining regulatory approval of our product candidates, it will continue to be subject to the requirements of and review by, the FDA and comparable regulatory authorities in the areas of manufacturing processes, quality assurance, post-approval clinical data, adverse event reporting, labeling, advertising and promotional activities, among other things. In addition, any marketing approval Caladrius receives may be limited in terms of the approved product indication or require costly post-marketing testing and surveillance. Discovery after approval of previously unknown problems with a product, manufacturer or manufacturing process, or a failure to comply with regulatory requirements, may result in actions such as:
warning letters or untitled letters or other actions requiring changes in product manufacturing processes or restrictions on product marketing or distribution;
product recalls or seizures or the temporary or permanent withdrawal of a product from the market; and
fines, restitution, or disgorgement of profits or revenue, the imposition of civil penalties or criminal prosecution.
The occurrence of any of these actions would likely cause a material adverse effect on Caladrius’ business, financial condition and results of operations.
Additionally, if Caladrius or others identify undesirable side effects, or other previously unknown problems, caused by Caladrius’ product candidates after obtaining U.S. or foreign regulatory approval or other products with the same or related active ingredients, a number of potential consequences could result, including:
regulatory authorities may withdraw their approval of the product;
regulatory authorities may require a recall of the product or Caladrius may voluntarily recall a product;
regulatory authorities may require the addition of warnings or contradictions in the product labeling, narrowing of the indication in the product label or issuance of field alerts to physicians and pharmacies;
Caladrius may be required to create a medication guide outlining the risks of such side effects for distribution to patients or institute a risk evaluation and mitigation strategy (“REMS”);
Caladrius may be subject to limitation as to how we promote the product;
Caladrius may be required to change the way the product is administered or modify the product in some other way;
the FDA or applicable foreign regulatory authority may require additional clinical trials or costly post-marketing testing and surveillance to monitor the safety or efficacy of the product;
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sales of the product may decrease significantly;
Caladrius could be sued and held liable for harm caused to patients; and
Caladrius brand and reputation may suffer.
Health care companies have been the subject of federal and state investigations, and Caladrius could become subject to investigations in the future.
Both federal and state government agencies have heightened civil and criminal enforcement efforts. There are numerous ongoing investigations of health care companies, including drug, biologic and medical device companies, as well as their executives and managers. In addition, amendments to the Federal False Claims Act, including under health care reform, have made it easier for private parties to bring “qui tam” (whistleblower) lawsuits against companies under which the whistleblower may be entitled to receive a percentage of any money paid to the government. The Federal False Claims Act provides, in part, that an action can be brought against any person or entity that has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved. The government has taken the position that claims presented in violation of the federal anti-kickback law, Stark Law or other health care-related laws, including laws enforced by the FDA, may be considered a violation of the Federal False Claims Act. Penalties include substantial fines for each false claim, plus three times the amount of damages that the federal government sustained because of the act of that person or entity and/or exclusion from the Medicare program. In addition, a majority of states have adopted similar state whistleblower and false claims provisions.
Caladrius is not aware of any government investigations involving any of its facilities or management. While Caladrius believes that it is in material compliance with applicable governmental health care laws and regulations, any future investigations of our business or executives could cause it to incur substantial costs, and result in significant liabilities or penalties, as well as damage to its reputation.
It is uncertain to what extent government, private health insurers and third-party payors will approve coverage or provide reimbursement for the therapies and products to which Caladrius’ research and development relate. Availability for such reimbursement may be further limited by an increasing uninsured population and reductions in Medicare and Medicaid funding in the United States.
To the extent that health care providers cannot obtain coverage or reimbursement for our therapies and products, they may elect not to provide such therapies and products to their patients and, thus, may not need our services. Further, as cost containment pressures are increasing in the health care industry, government and private payors may adopt strategies designed to limit the amount of reimbursement paid to health care providers.
Similarly, the trend toward managed health care and bundled pricing for health care services in the United States, could significantly influence the purchase of health care services and products, resulting in lower prices and reduced demand for our therapeutic products under development.
Caladrius may receive a portion of its revenues from services rendered to patients enrolled in federal health care programs, such as Medicare, and it may also directly or indirectly receive revenues from federal health care programs. Federal health care programs are subject to changes in coverage and reimbursement rules and procedures, including retroactive rate adjustments. These contingencies could materially decrease the range of services covered by such programs or the reimbursement rates paid directly or indirectly for our products and services. To the extent that any health care reform favors the reimbursement of other therapies over our therapeutic products under development, such reform could affect our ability to sell our services, which may have a material adverse effect on our revenues.
The limitation on reimbursement available from private and government payors may reduce the demand for, or the price of, our services, which could have a material adverse effect on our revenues. Additional legislation or regulation relating to the health care industry or third-party coverage and reimbursement may be enacted in the future which could adversely affect the revenues generated from the sale of Caladrius’ products and services.
Furthermore, there has been a trend in recent years towards reductions in overall funding for Medicare and Medicaid. There has also been an increase in the number of people who do not have any form of health care coverage in recent years and who are not eligible for or enrolled in Medicare, Medicaid or other governmental
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programs. The extent to which the reforms brought about under health care reform may be successful in reducing the number of such uninsured is unclear, and the reduced funding of governmental programs and increase in uninsured populations could have a negative impact on the demand for Caladrius’ services to the extent they relate to products and services which are reimbursed by government and private payors.
Unintended consequences of health care reform legislation in the United States may adversely affect Caladrius’ business.
The health care industry is undergoing fundamental changes resulting from political, economic and regulatory influences. In the United States, comprehensive programs are under consideration that seek to, among other things, increase access to health care for the uninsured and control the escalation of health care expenditures within the economy. In March 2010, the Patient Protection and Affordable Care Act (“PPACA”), as amended by the Health Care and Education Reconciliation Act, or the Affordable Care Act, was passed, which substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. While Caladrius does not believe this legislation will have a direct impact on its business, the legislation requires the adoption of implementing regulations, which may have unintended consequences or indirectly impact its business. For instance, the scope and implications of the amendments pursuant to the Fraud Enforcement and Recovery Act of 2009, have yet to be fully determined or adjudicated and as a result it is difficult to predict how future enforcement initiatives may impact Caladrius’ business. Also, in some instances our clients may be health insurers that will be subject to limitations on their administrative expenses and federal review of “unreasonable” rate increases that could impact the prices they pay for Caladrius’ services. If the legislation causes such unintended consequences or indirect impact, it could have a material adverse effect on Caladrius’ business, financial condition and results of operations.
In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, creates the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. This included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Strong, partisan disagreement in Congress has prevented implementation of various PPACA provisions, and the Trump Administration had made the repeal of the PPACA a priority. One of the first executive orders of the Trump administration granted federal agencies broad powers to unwind regulations under the PPACA. On January 11, 2017, the Senate voted to approve a “budget blueprint” allowing Republicans to repeal parts of the law while avoiding Democrat filibuster. The “Obamacare Repeal Resolution” passed 51-48. Certain legislators are continuing their efforts to repeal the PPACA, although there is little clarity on how such a repeal would be implemented and what a PPACA replacement might look like. For the immediate future, there is significant uncertainty regarding the health care, health care coverage and health care insurance markets.
The U.S. government has in the past considered, is currently considering and may in the future consider health care policies and proposals intended to curb rising health care costs, including those that could significantly affect both private and public reimbursement for health care services. State and local governments, as well as a number of foreign governments, are also considering or have adopted similar types of policies. Future significant changes in the health care systems in the United States or elsewhere, and current uncertainty about whether and how changes may be implemented, could have a negative impact on the demand for our products. Caladrius is unable to predict whether other health care policies, including policies stemming from legislation or regulations affecting its business, may be proposed or enacted in the future; what effect such policies would have on its business; or the effect ongoing uncertainty about these matters will have on the purchasing decisions of its customers.
Caladrius expects that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services, which could result in reduced demand for its products or additional pricing pressures.
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Governments outside the United States tend to impose strict price controls, which may adversely affect Caladrius’ revenues, if any.
In some countries, particularly the member states of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries where we may seek to market our product candidates in the future, we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidate to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on prices or reimbursement levels within the country of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, Caladrius’ business could be adversely affected.
Inadequate funding for the FDA, the SEC and other government agencies could hinder Caladrius’ ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of Caladrius’ business may rely, which could negatively impact its business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on Caladrius’ business.
Competitor companies or hospitals may be able to take advantage of EU rules permitting sales of unlicensed medicines for individual patients to sell competing products without a marketing authorization.
The EU medicines rules allow individual member states to permit the supply of a medicinal product without a marketing authorization to fulfill special needs, where the product is supplied in response to a bona fide unsolicited order, formulated in accordance with the specifications of a health care professional and for use by an individual patient under his direct personal responsibility. This may in certain countries also apply to products manufactured in a country outside the EU and imported to treat specific patients or small groups of patients. In addition, designated advanced therapy medicinal products do not need a marketing authorization if they are prepared on a non-routine basis and are used within the same EU member state in a hospital in accordance with a medical prescription for an individual patient.
These exemptions could allow Caladrius’ competitors to make sales in the EU without having obtained a marketing authorization and without undergoing the expense of clinical trials, especially if those competitors have cell processing facilities in the relevant EU member state. Similarly, certain hospitals may be able to compete with Caladrius on the basis of these rules. Because any such sales would be made without a marketing authorization, there would be no need for the competitor company or hospital to refer to the clinical data in our marketing authorization dossiers, and so any data exclusivity protection that we may obtain for Caladrius’ products would not prevent such competing sales.
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A variety of risks associated with operating Caladrius’ business internationally could materially adversely affect its business.
Caladrius plans to seek regulatory approval of our product candidates outside of the United States and, accordingly, we expect that we, and any potential collaborators in those jurisdictions, will be subject to additional risks related to operating in foreign countries, including:
differing regulatory requirements in foreign countries;
differing coverage and reimbursement requirements in foreign countries;
unexpected changes in tariffs, trade barriers, price and exchange controls, and other regulatory requirements;
economic weakness, including inflation, or political instability in particular foreign economies and markets;
compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad;
foreign taxes, including withholding of payroll taxes;
foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;
difficulties staffing and managing foreign operations;
workforce uncertainty in countries where labor unrest is more common than in the United States;
potential liability under the Foreign Corrupt Practices Act of 1977 or comparable foreign laws, such as the U.K. Anti-Bribery Act;
challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;
the continued threat of terrorism and the impact of military and other action, including military actions involving Russia and Ukraine;
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad, including as a result of COVID-19 or the recent military actions involving Russia and Ukraine; and
business interruptions resulting from geo-political actions, including war and terrorism.
These and other risks associated with Caladrius’ planned international operations may materially adversely affect our ability to attain or maintain profitable operations.
Risks Related to Caladrius’ Intellectual Property
Caladrius may be unable to obtain or maintain patent protection for its products and product candidates, which could have a material adverse effect on its business.
Caladrius’ commercial success will depend, in part, on obtaining and maintaining patent protection for new technologies, product candidates, products and processes and successfully defending such patents against third-party challenges. To that end, Caladrius files patent applications, and have been issued patents, that are intended to cover certain methods and uses of human cells as well as compositions and methods relating to hematopoietic stem cells. These patent applications may never result in the issuance of patents.
The patent positions of biotechnology companies can be highly uncertain and involve complex legal, scientific and factual questions and recent court decisions have introduced significant uncertainty regarding the strength of patents in the industry. Moreover, the legal systems of some foreign countries do not favor the aggressive enforcement of patents and may not protect our intellectual property rights to the same extent as the laws of the United States. Any of the issued patents Caladrius owns or licenses may be challenged by third parties and held to be invalid, unenforceable or with a narrower or different scope of coverage than what we currently believe, effectively reducing or eliminating protection Caladrius believed it had against competitors with similar products
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or technologies. If Caladrius ultimately engages in and loses any such patent disputes, it could be subject to competition and/or significant liabilities, it could be required to enter into third-party licenses or it could be required to cease using the disputed technology or product. In addition, even if such licenses are available, the terms of any license requested by a third party could be unacceptable or unaffordable to Caladrius.
Product development and approval timelines in the biotechnology industry are very lengthy. As such, it is possible that any patents that may cover an approved product may have expired at the time of commercialization or only have a short remaining period of exclusivity, thereby reducing the commercial advantages of the patent. In such case, Caladrius would then rely solely on other forms of exclusivity, such as regulatory exclusivity provided by the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), which may provide less protection to its competitive position.
Litigation relating to intellectual property is expensive, time-consuming and uncertain, and Caladrius may be unsuccessful in its efforts to protect against infringement by third parties or defend itself against claims of infringement.
To protect its intellectual property, Caladrius may initiate litigation or other proceedings. In general, intellectual property litigation is costly, time-consuming, diverts the attention of management and technical personnel and could result in substantial uncertainty regarding our future viability, even if Caladrius ultimately prevails. Some of Caladrius’ competitors may be able to sustain the costs of such litigation or other proceedings more effectively than can Caladrius because of their substantially greater financial resources. The loss or narrowing of our intellectual property protection, the inability to secure or enforce our intellectual property rights or a finding that Caladrius has infringed the intellectual property rights of a third party could limit Caladrius’ ability to develop or market its products and services in the future or adversely affect its revenues. Furthermore, any public announcements related to such litigation or regulatory proceedings could adversely affect the price of Caladrius Common Stock.
Third parties may allege that the research, development and commercialization activities Caladrius conducts infringe patents or other proprietary rights owned by such parties. While Caladrius does not believe any of its current activities infringe the rights of others, it has not conducted an exhaustive search or analysis of third-party patent rights to determine whether its pre-clinical or clinical research and development or activities may infringe or be alleged to infringe any third-party patent rights. If Caladrius is found to have infringed the patents of a third party, it may be required to pay substantial damages; it also may be required to seek from such party a license, which may not be available on acceptable terms, if at all, to continue its activities. A judicial finding or infringement or the failure to obtain necessary licenses could prevent Caladrius from commercializing its products, which would have a material adverse effect on its business, operating results and financial condition.
If Caladrius is unable to maintain its licenses, patents or other intellectual property, it could lose important protections that are material to continuing its operations and its future prospects.
To obtain and maintain patent protection and licensing rights under certain of our license agreement, Caladrius must, among other things, ensure the timely payment of all applicable filing and maintenance fees. Any failure to do so could result in the loss of some or all of Caladrius’ rights to proprietary technology or the inability to secure or enforce intellectual property protection.
Additionally, Caladrius’ license agreements require it to meet certain diligence obligations in the development of the licensed products. Caladrius’ failure to meet these diligence obligations could result in the loss of some or all of its rights, which could materially and adversely affect its business and future prospects.
If Caladrius is unable to protect the confidentiality of trade secrets, its competitive position could be impaired.
A significant amount of Caladrius’ technology, especially regarding manufacturing processes, is unpatented and is maintained as trade secrets and/or know-how. Caladrius expends significant energy, resources and know-how in an effort to protect these trade secrets and know-how, including through the use of confidentiality agreements. Even so, improper use or disclosure of Caladrius’ confidential information could occur, and in such case, adequate remedies may not exist. The disclosure of trade secrets and know-how could impair Caladrius’ competitive position.
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In certain countries, patent holders may be required to grant compulsory licenses, which would likely have a significant and detrimental effect on any future revenues in such country.
Many countries, including some countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, most countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may be limited to monetary relief and may be unable to enjoin infringement, which could materially diminish the value of the patent. Compulsory licensing of life-saving products is also becoming increasingly common in developing countries, either through direct legislation or international initiatives. Such compulsory licenses could be extended to Caladrius’ product candidates, which may limit its potential revenue opportunities, including with respect to any future revenues that may result from its product candidates.
Changes to U.S. patent law may have a material adverse effect on Caladrius’ intellectual property rights.
As is the case with other biopharmaceutical companies, Caladrius’ success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs, and may diminish Caladrius’ ability to protect its inventions, obtain, maintain, and enforce its intellectual property rights and, more generally, could affect the value of its intellectual property or narrow the scope of our owned and any licensed patents. Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act (the Leahy-Smith Act), signed into law on September 16, 2011, could increase those uncertainties and costs surrounding the prosecution of Caladrius’ patent applications and the enforcement or defense of its issued patents. In addition, the patent positions of companies in the development and commercialization of pharmaceuticals are particularly uncertain. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Depending on future actions by the U.S. Congress, the U.S. courts, the U.S. Patent and Trade Office (the “USPTO”) and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken Caladrius’ ability to obtain new patents or to enforce Caladrius’ existing patents and patents that it might obtain in the future.
Third-party claims of intellectual property infringement may prevent or delay Caladrius’ development and commercialization efforts.
Caladrius’ commercial success depends in part on its avoiding infringement of the patents, trademarks and proprietary rights of third parties. There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the USPTO and corresponding foreign patent offices and trademark violations. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing products and services. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that Caladrius’ products and services may be subject to claims of infringement of the patent rights of third parties.
Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to devices, materials, formulations, methods of manufacture, or methods for treatment related to the use or manufacture of Caladrius’ products and services. Caladrius has conducted freedom to operate analyses with respect to only certain of its products and services, and therefore it does not know whether there are any third-party patents that would impair its ability to commercialize these products and services. Caladrius also cannot guarantee that any of its analyses are complete and thorough, nor can it be sure that it has identified each and every patent and pending application in the United States and abroad that is relevant or necessary to the commercialization of our products and services. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that Caladrius’ products or services may infringe upon.
In addition, third parties may obtain patents in the future and claim that use of Caladrius’ technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover aspects of
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Caladrius’ products or services, the holders of any such patents may be able to block our ability to commercialize such products or services unless Caladrius obtained a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable. Such a license may not be available on commercially reasonable terms or at all.
Parties making claims against Caladrius may obtain injunctive or other equitable relief, which could effectively block Caladrius’ ability to further develop and commercialize one or more of our products or services. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from Caladrius’ business. In the event of a successful claim of infringement against Caladrius, Caladrius may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
Risks Related to Caladrius’ Capital Stock
Caladrius’ stock price has been, and will likely continue to be, highly volatile.
The market price of Caladrius Common Stock has been, and in the future may continue to be, highly volatile. For example, from January 1, 2021 through June 13, 2022, Caladrius Common Stock traded as low as $0.40 per share and as high as $4.89 per share.
The market price for Caladrius Common Stock is highly dependent on, among other things, stock market conditions in general, Caladrius’ clinical development efforts and the growth of Caladrius’ business in general, the amount of Caladrius’ available cash and investments and Caladrius’ level of cash utilization. Future events could increase the volatility seen in Caladrius Common Stock and ultimately cause a significant decline in the price of Caladrius Common Stock and ultimately impact its ability to raise additional capital in the future. These events could include the following, among others:
low levels of trading volume for Caladrius’ shares;
capital-raising or other transactions that are, or may in the future be, dilutive to existing stockholders or that involve the issuance of debt securities;
delays in our clinical trials, negative clinical trial results or adverse regulatory decisions relating to Caladrius’ product candidates;
adverse fluctuations in Caladrius’ revenues or operating results or financial results that otherwise fall below the market’s expectations;
disappointing developments concerning Caladrius’ cell therapy product candidates;
positive developments concerning Caladrius’ cell therapy product candidates that lead to the need for additional capital to complete the development process; and
legal challenges, disputes and/or other adverse developments impacting Caladrius’ patents or other proprietary rights that protect its products.
In addition, broader external events, such as news concerning economic or market conditions in the general economy or within Caladrius’ industry, the activities of our competitors, changes (or the threat of changes) in U.S. or foreign government regulations impacting the life sciences industry or the movement of capital into or out of our industry, are likely to affect the price of Caladrius Common Stock. Geopolitical events, including the continued threat of terrorism and the impact of military and other action, including military actions involving Russia and Ukraine, could impact Caladrius’ stock price as well. There can be no assurance that the market price of Caladrius Common Stock will not continue to fluctuate or decline significantly in the future.
Caladrius may fail to comply with the continued listing requirements of The Nasdaq Capital Market, such that the Caladrius Common Stock may be delisted and the price of the Caladrius Common Stock and our ability to access the capital markets could be negatively impacted.
Caladrius Common Stock is listed for trading on The Nasdaq Capital Market. Caladrius must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days (the “Minimum Bid Price Requirement”). If a company trades
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for 30 consecutive business days below the $1.00 minimum closing bid price requirement, Nasdaq will send a deficiency notice to the company advising that it has been afforded a “compliance period” of 180 calendar days to regain compliance with the applicable requirements. Caladrius received such notice on February 18, 2022 and thus risks delisting unless it is able to regain compliance in a timely fashion.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), Caladrius has a grace period of 180 calendar days, or until August 17, 2022, to regain compliance with the Minimum Bid Price Requirement. Compliance can be achieved automatically and without further action if the closing bid price of our stock is at or above $1.00 for a minimum of 10 consecutive business days at any time during the 180-day compliance period, in which case Nasdaq will notify Caladrius of its compliance and the matter will be closed. If, however, Caladrius does not achieve compliance with the Minimum Bid Price Requirement by August 17, 2022, it may be eligible for additional time to comply. In order to be eligible for such additional time, Caladrius will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and must notify Nasdaq in writing of its intention to cure the deficiency during the second compliance period. There can be no assurance that Caladrius will regain compliance with the Minimum Bid Price Requirement, that it will maintain compliant with other Nasdaq listing requirements or that it will be granted a second compliance period.
A delisting of Caladrius Common Stock from Nasdaq could materially reduce the liquidity of Caladrius Common Stock and result in a corresponding material reduction in the price of Caladrius Common Stock. In addition, delisting could harm Caladrius’ ability to raise capital through alternative financing sources on terms acceptable to it, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities.
The Caladrius Board of Directors has approved the Reverse Stock Split, to be implemented prior to the consummation of the Merger as discussed in this proxy statement/prospectus/information statement, and further adjusted based on the Exchange Ratio, but there can be no assurance that the Caladrius Stockholders will approve such Reverse Stock Split, that such Reverse Stock Split will be implemented or that such Reverse Stock Split, if implemented, will bring Caladrius into compliance with the Minimum Bid Price Requirement.
In addition to potential dilution associated with potential future fundraising and strategic transactions, Caladrius currently has significant numbers of securities outstanding that are exercisable for Caladrius Common Stock, which could result in significant additional dilution and downward pressure on its stock price.
As of June 13, 2022, there were 60,518,478 shares of Caladrius Common Stock outstanding. In addition, there were outstanding stock options, restricted stock units and warrants representing the potential issuance of an additional 25,433,68 shares of Caladrius Common Stock. The issuance of these shares in the future would result in significant dilution to Caladrius’ current stockholders and could adversely affect the price of Caladrius Common Stock and the terms on which Caladrius could raise additional capital. In addition, the issuance and subsequent trading of shares could cause the supply of Caladrius Common Stock available for purchase in the market to exceed the purchase demand for Caladrius Common Stock. Such supply in excess of demand could cause the market price of Caladrius Common Stock to decline.
Provisions in Caladrius’ amended and restated certificate of incorporation and by-laws and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for Caladrius Common Stock and could entrench management.
Caladrius’ amended and restated certificate of incorporation and by-laws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. The Caladrius Board of Directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. As a result, at a given annual meeting only a minority of the Caladrius Board of Directors may be considered for election. Since Caladrius’ staggered board of directors may prevent our stockholders from replacing a majority of the Caladrius Board of Directors at any given annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover, the Caladrius Board of Directors has the ability to designate the terms of and issue new series of preferred stock without stockholder approval.
Caladrius is also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for Caladrius’ securities.
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Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on Caladrius’ business and stock price.
During the course of testing Caladrius’ disclosure controls and procedures and internal control over financial reporting, Caladrius may identify and disclose material weaknesses or significant deficiencies in internal control over financial reporting that will have to be remedied. Implementing any appropriate changes to Caladrius’ internal control may require specific compliance training of its directors, officers and employees, entail substantial costs to modify our existing accounting systems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal control over financial reporting, and any failure to maintain that adequacy or inability to produce accurate financial statements on a timely basis could result in Caladrius’ financial statements being unreliable, increase its operating costs and materially impair its ability to operate its business.
Failure to achieve and maintain effective internal control over financial reporting could result in a loss of investor confidence in Caladrius’ financial reports and could have a material adverse effect on its stock price. Additionally, failure to maintain effective internal control over Caladrius’ financial reporting could result in government investigation or sanctions by regulatory authorities.
Risks Related to Cend
Risks Related to Cend’s Business
Cend has incurred net losses for all but one year since inception and anticipates that it will continue to incur losses for the foreseeable future and may never achieve or maintain profitability.
Cend is a development-stage drug discovery and development company with a limited operating history, and, with the exception of the year ended December 31, 2021 in which Cend did have net income as a result of a one-time license payment, Cend has not yet generated consistent revenues from the sales or licensing of its product candidates. Investment in drug discovery and development companies is highly speculative because it entails substantial upfront capital expenditures and significant risk that the product candidate(s) will fail to obtain regulatory approval or become commercially viable. Cend has not advanced product candidates to obtain marketing approvals, manufacture a commercial-scale product or conduct sales and marketing activities necessary for successful commercialization. Cend anticipates incurring significant expenses related to research and development, and other operations leading to partnering and commercialization of its product candidates.
Cend expects that it could be several years, if ever, before it has a commercialized product candidate. Cend expects to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses it incurs may fluctuate significantly from quarter to quarter. Cend anticipates that its expenses will increase substantially if, and as, it:
licenses foundational intellectual property, or IP, and continues development of CEND-1, including conducting additional clinical trials for pancreatic and other cancers;
initiates preclinical studies for additional product candidates;
continues its process research and development activities, as well as establishes its research-grade, clinical- and commercial-scale manufacturing capabilities (should it choose to do so directly);
seeks collaboration agreements (geographic licensing agreements, or co-development and -commercialization agreements) involving CEND-1 and other product candidates;
completes additional clinical trials for CEND-1, following acceptance by the FDA;
identifies additional diseases for treatment with CEND-1 and other product candidates;
seeks partnering agreements (sub-licensing or asset divestitures) for continued clinical development and/or commercialization and market support;
maintains, expands and protects its intellectual property portfolio; and
identifies, acquires or in-licenses other product candidates and/or enabling technologies.
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TABLE OF CONTENTS

To become and remain profitable, Cend must develop and eventually realize, either through its own efforts or those of its collaboration partners, commercialized product candidates with significant market potential, which will require it to be successful in a range of challenging activities.
These activities can include completing formulation and delivery approaches to meet target product profiles, completing preclinical studies, conducting early stage clinical tria