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Table of Contents

As filed with the Securities and Exchange Commission on October 14, 2022

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SESEN BIO, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

    

2834
(Primary Standard Industrial
Classification Code Number)

    

26-2025616
(I.R.S. Employer
Identification Number)

245 First Street, Suite 1800

Cambridge, MA 02142

(617) 444-8550

(Address including zip code, and telephone number, including
area code, of registrant’s principal executive offices)

Thomas R. Cannell, D.V.M.

President and Chief Executive Officer

Sesen Bio, Inc.

245 First Street, Suite 1800

Cambridge, MA 02142

(617) 444-8550

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Steven J. Abrams
Tiffany Posil
Jessica A. Bisignano
Hogan Lovells US LLP
1735 Market Street, 23rd Floor
Philadelphia, PA 19103
(267) 675-4600

    

Steven Kelly
President and Chief Executive Officer
CARISMA Therapeutics Inc.
3675 Market Street, Suite 200
Philadelphia, PA 19104
(267) 491-6422

    

Brian A. Johnson
Hal J. Leibowitz
Christopher D. Barnstable-Brown
Wilmer Cutler Pickering Hale and Dorr LLP
7 World Trade Center
250 Greenwich Street
New York, NY 10007
(212) 230-8800

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

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Subject to completion, dated October 14, 2022

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PROPOSED MERGER

YOUR VOTE IS VERY IMPORTANT

To the stockholders of Sesen Bio, Inc. and CARISMA Therapeutics Inc.:

Sesen Bio, Inc., a Delaware corporation, or Sesen Bio, and CARISMA Therapeutics Inc., a Delaware corporation, or Carisma, entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, on September 20, 2022, pursuant to which a wholly-owned subsidiary of Sesen Bio will merge with and into Carisma, with Carisma surviving as a wholly-owned subsidiary of Sesen Bio, which transaction is referred to herein as the merger. We refer to the surviving corporation following the merger as the combined company.

At the effective time of the merger, each outstanding share of Carisma capital stock (including shares of Carisma common stock issued in connection with the Carisma pre-closing financing described below) will be converted into the right to receive a number of shares of Sesen Bio common stock equal to the exchange ratio described in more detail in the section entitled “The Merger Agreement — Exchange Ratio” beginning on page 160 of the accompanying proxy statement/prospectus. Also at the effective time of the merger, each outstanding option to purchase shares of Carisma common stock will be assumed by Sesen Bio and will be converted into an option to purchase shares of Sesen Bio common stock, with necessary adjustments to reflect the exchange ratio. Based on Sesen Bio’s capitalization and Carisma’s capitalization as of September 20, 2022, the exchange ratio is estimated to be approximately 24.5844 shares of Sesen Bio common stock for each share of Carisma capital stock, which exchange ratio does not give effect to the proposed reverse stock split described in the accompanying proxy statement/prospectus. The final exchange ratio is subject to adjustment prior to the closing of the merger based on Sesen Bio’s net cash at the closing of the merger and the aggregate proceeds from the sale of Carisma common stock in the Carisma pre-closing financing and, as a result, Sesen Bio stockholders could own more, and Carisma stockholders (including, for this purpose, investors in the Carisma pre-closing financing) could own less, or vice versa, of the combined company.

Immediately prior to the consummation of the merger, certain investors have agreed to purchase shares of Carisma common stock, at a purchase price of $15.60 per share, for an aggregate purchase price of approximately $30.6 million. We refer to this transaction as the Carisma pre-closing financing. The closing of the Carisma pre-closing financing is conditioned upon the satisfaction or waiver of the conditions to the closing of the merger set forth in the Merger Agreement. The shares of Carisma common stock that are issued in the Carisma pre-closing financing will be converted into the right to receive a number of shares of Sesen Bio common stock equal to the exchange ratio described in more detail in the section entitled “The Merger Agreement — Exchange Ratio” beginning on page 161 of the accompanying proxy statement/prospectus.

Each share of Sesen Bio common stock, each option to purchase Sesen Bio common stock and each Sesen Bio restricted stock unit that is outstanding at the effective time of the merger will remain outstanding in accordance with its terms and such shares of common stock, options and restricted stock units, subject to the proposed reverse stock split, will be unaffected by the merger. Immediately after the merger, pre-merger Sesen Bio stockholders are expected to own approximately 41.7% of the outstanding shares of capital stock of the combined company and pre-merger Carisma stockholders, excluding shares of Carisma common stock purchased in connection with the Carisma pre-closing financing and the conversion of Carisma’s $35.0 million outstanding convertible note, are expected to own approximately 58.3% of the outstanding shares of capital stock of the combined company, subject to certain assumptions, including Sesen Bio’s net cash as of closing of the merger being at least $125.0 million.

Additionally, at or prior to the effective time of the merger, Sesen Bio will enter into a Contingent Value Rights Agreement and, as provided in the Merger Agreement, Sesen Bio intends to declare a dividend payable to Sesen Bio stockholders of record as of a date agreed to by Sesen Bio and Carisma prior to the effective time of the merger with respect to the receipt of one contingent value right, or a CVR, for each outstanding share of Sesen Bio common stock held by such stockholders on such date. Each CVR will represent the contractual right to receive contingent cash payments upon the receipt by Sesen Bio of certain proceeds payable by F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc., or collectively, Roche, if any, pursuant to the Asset Purchase Agreement by and among Sesen Bio and Roche, or the Roche Asset Purchase Agreement, upon the achievement by Roche of a specified milestone set forth in the Roche Asset Purchase Agreement, subject to certain customary deductions, including for expenses and taxes.

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In addition, prior to the closing of the merger, Sesen Bio may, in addition to the CVRs, declare a special cash dividend to Sesen Bio stockholders of record prior to the merger consisting of cash in an amount not to exceed an aggregate amount $25.0 million, subject to Sesen Bio having net cash as of closing of the merger greater than or equal to $100.0 million.

Sesen Bio common stock is currently listed on the Nasdaq Capital Market under the symbol “SESN.” Sesen Bio intends to file an initial listing application for the combined company with the Nasdaq Capital Market. After completion of the merger, Sesen Bio is expected to be renamed “CARISMA Therapeutics Inc.” and to trade under the symbol “CARM.” On October 13, 2022, the last trading day before the date of the accompanying proxy statement/prospectus, the closing sale price of Sesen Bio common stock was $0.5001 per share.

Sesen Bio stockholders are cordially invited to attend the special meeting of Sesen Bio stockholders, or the Sesen Bio special meeting, which is being held in order to obtain the stockholder approvals necessary to complete the merger and related matters. The Sesen Bio special meeting will be held at      , Eastern Time, on             ,           , 2022, unless postponed or adjourned to a later date, for the purpose of considering and voting upon the matters set forth in the Notice of Special Meeting of Stockholders and the accompanying proxy statement/prospectus. The Sesen Bio special meeting will be a virtual meeting held exclusively via live webcast. Sesen Bio stockholders will be able to attend the meeting online, vote during the meeting until polls are closed, and submit questions during the meeting by registering in advance at www.                            .

As described in the accompanying proxy statement/prospectus, certain Carisma stockholders (solely in their respective capacities as Carisma stockholders) holding approximately 97.83% of the outstanding shares of Carisma capital stock as of September 20, 2022 (subject to customary cutbacks in the event of certain triggering events) and certain Sesen Bio stockholders (solely in their respective capacities as Sesen Bio stockholders), are parties to support agreements with Carisma and Sesen Bio whereby such stockholders have agreed, subject to the effectiveness of the registration statement on Form S-4, to vote their shares in favor of the transactions contemplated therein, including, with respect to such Carisma stockholders, adoption of the Merger Agreement and approval of the merger and, with respect to such Sesen Bio stockholders, the issuance of Sesen Bio common stock in the merger pursuant to the Merger Agreement, subject to the terms of the support agreements. Following the effectiveness of the registration statement on Form S-4, of which the accompanying proxy statement/prospectus is a part, and pursuant to the Merger Agreement and the support agreements, Carisma stockholders holding a sufficient number of shares of Carisma capital stock to adopt the Merger Agreement and approve the merger and related transactions are expected to execute written consents providing for such adoption and approval, subject to the terms and limitations set forth in the support agreements.

After careful consideration, each of the Sesen Bio and Carisma boards of directors have approved the Merger Agreement and have determined that it is advisable to consummate the merger. The Sesen Bio board of directors has approved the proposals described in the accompanying proxy statement/prospectus and unanimously recommends that its stockholders vote “FOR” the proposals described in the accompanying proxy statement/prospectus.

More information about Sesen Bio, Carisma, the Merger Agreement and the transactions contemplated thereby and the proposals being considered at the Sesen Bio special meeting is contained in the accompanying proxy statement/prospectus. Sesen Bio urges you to read the accompanying proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER THE SECTION ENTITLED “RISK FACTORS” BEGINNING ON PAGE 26 OF THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.

Sesen Bio and Carisma are excited about the opportunities the proposed merger brings to both Sesen Bio’s and Carisma’s stockholders, and thank you for your consideration and continued support.

Thomas R. Cannell, D.V.M.

    

Steven Kelly

President and Chief Executive Officer

President and Chief Executive Officer

Sesen Bio, Inc.

CARISMA 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 the accompanying proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated         , 2022, and is first being mailed to Sesen Bio stockholders on or about        ,2022.

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SESEN BIO, INC.

245 First Street, Suite 1800

Cambridge, MA 02142

(617) 444-8550

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON             , 2022

Dear stockholders of Sesen Bio, Inc.:

On behalf of the board of directors of Sesen Bio, Inc., a Delaware corporation, or Sesen Bio, we are pleased to deliver this proxy statement/prospectus for a special meeting of stockholders of Sesen Bio, including any adjournment or postponement thereof, or the Sesen Bio special meeting, and for the proposed transactions between Sesen Bio and CARISMA Therapeutics Inc., a Delaware corporation, or Carisma, pursuant to which Seahawk Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Sesen Bio, or Merger Sub, will merge with and into Carisma, with Carisma surviving as a wholly-owned subsidiary of Sesen Bio, or the merger.

The Sesen Bio special meeting will be a virtual meeting held exclusively via live webcast on      , 2022 at       Eastern Time for the following purposes:

1.to consider and vote upon a proposal to approve, for purposes of Nasdaq Listing Rule 5635(a) and (b), the issuance of shares of Sesen Bio common stock, $0.001 par value per share, or Sesen Bio common stock, to stockholders of Carisma pursuant to the terms of the Agreement and Plan of Merger and Reorganization, dated as of September 20, 2022, by and among Sesen Bio, Merger Sub and Carisma, a copy of which is attached as Annex A to the accompanying proxy statement/prospectus, or the Merger Agreement, and the change of control of Sesen Bio resulting from the merger;
2.to consider and vote upon a proposal to approve an amendment to the restated certificate of incorporation of Sesen Bio, as amended, or the Sesen Bio Certificate of Incorporation, to (a) effect a reverse stock split of the issued and outstanding shares of Sesen Bio common stock, at a ratio in the range of 1-for-       to 1-for-      , with such ratio and implementation and timing of the reverse stock split to be determined in the discretion of the Sesen Bio board of directors and as agreed to by Carisma at or prior to the closing of the merger, or in the sole discretion of the Sesen Bio board of directors if Proposal No. 1 is not approved, and (b) if and when the reverse stock split is effected, implement a non-proportionate reduction in the number of authorized shares of Sesen Bio common stock, in the form attached as Annex G to the accompanying proxy statement/prospectus;
3.to consider and vote upon a proposal to approve an amendment and restatement of the Sesen Bio, Inc. 2014 Stock Incentive Plan, as amended, or the 2014 Incentive Plan, to, among other things, (a) increase the number of shares of Sesen Bio common stock reserved for issuance under the 2014 Incentive Plan and provide for annual replenishment of the number of shares of Sesen Bio common stock reserved for issuance under the 2014 Incentive Plan beginning with the fiscal year ending December 31, 2023, and (b) extend the term of the 2014 Incentive Plan to the tenth (10th) anniversary of the closing of the merger;
4.to consider and vote upon a proposal to approve an amendment to the Sesen Bio, Inc. 2014 Employee Stock Purchase Plan, as amended, or the 2014 ESPP, to increase the number of shares of Sesen Bio common stock reserved for issuance under the 2014 ESPP to        shares of Sesen Bio common stock;
5.to consider and vote upon a proposal to approve an adjournment of the Sesen Bio special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2; and

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6.to transact such other business as may properly come before the Sesen Bio special meeting or any adjournment or postponement thereof.

The Sesen Bio board of directors has fixed          , 2022 as the record date for the determination of Sesen Bio stockholders entitled to notice of, and to vote at, the Sesen Bio special meeting and any adjournment or postponement thereof, or the record date. Only holders of record of shares of Sesen Bio common stock at the close of business on the record date are entitled to notice of, and to vote at, the Sesen Bio special meeting. At the close of business on the record date, Sesen Bio had                shares of common stock outstanding and entitled to vote.

The Sesen Bio special meeting will be a virtual meeting held exclusively via live webcast. You may attend the Sesen Bio special meeting, vote your shares and submit questions electronically during the Sesen Bio special meeting. Whether or not you expect to attend the Sesen Bio special meeting, you are respectfully requested to promptly either (i) sign, date and return the enclosed proxy card or voting instruction form, or (ii) vote via telephone or the internet by following the instructions provided on the enclosed proxy card or voting instruction form.

In order to attend the Sesen Bio special meeting, you must register in advance at www.                                           . After completing your registration, you will receive further instructions via email, including a unique link that will allow you to access the Sesen Bio special meeting and to vote and submit questions during the Sesen Bio special meeting. As part of the registration process, you must enter the control number located on your proxy card or voting instruction form. If you are a beneficial owner of shares registered in the name of a broker, bank or other nominee, you will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process. Please be sure to follow the instructions found on your proxy card or voting instruction form.

Your vote is important. The affirmative vote of a majority in voting power of the votes cast by the holders of all shares of Sesen Bio common stock present or represented by proxy at the Sesen Bio special meeting and entitled to vote on the matter is required for approval of Proposal Nos. 1, 3, 4 and 5. The affirmative vote of the holders of a majority of the outstanding shares of Sesen Bio common stock on the record date for the Sesen Bio special meeting entitled to vote on the matter is required for approval of Proposal No. 2.

Proposal No. 1 is conditioned upon the approval of Proposal No. 2, and the merger cannot be consummated without the approval of Proposal Nos. 1 and 2. Proposal Nos. 3 and 4 are conditioned upon the approval of Proposal Nos. 1 and 2. Proposal No. 2 is not conditioned on the approval of any other proposal.

Even if you plan to attend the Sesen Bio special meeting, Sesen Bio requests that you sign and return the enclosed proxy card or voting instruction form to ensure that your shares will be represented at the Sesen Bio special meeting if you are unable to attend.

THE SESEN BIO BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, SESEN BIO AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. THE SESEN BIO BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SESEN BIO STOCKHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

By Order of the Sesen Bio Board of Directors,

Mark Sullivan

General Counsel and Corporate Secretary

Cambridge, Massachusetts

        , 2022

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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Sesen Bio that is not included in or delivered with this document. You may obtain this information without charge through the Securities and Exchange Commission, or the SEC, website (www.sec.gov) or upon your written or oral request by contacting the Corporate Secretary of Sesen Bio, Inc., 245 First Street, Suite 1800, Cambridge, MA 02142 or by calling (617) 444-8550.

To ensure timely delivery of these documents, any request should be made no later than       , 2022 to receive them before the Sesen Bio special meeting.

For additional details about where you can find information about Sesen Bio, see the section entitled “Where You Can Find More Information” on page 382 of this proxy statement/prospectus.

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Sesen Bio (File No. 333-       ), constitutes a prospectus of Sesen Bio under Section 5 of the Securities Act of 1933, as amended, or the Securities Act, with respect to the shares of Sesen Bio common stock to be issued pursuant to the Merger Agreement. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to the Sesen Bio special meeting at which Sesen Bio stockholders will be asked to consider and vote on, among other matters, a proposal to approve the issuance of shares of Sesen Bio common stock pursuant to the Merger Agreement.

No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated      , 2022. The information contained in this proxy statement/prospectus is accurate only as of that date or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

The information concerning Sesen Bio contained in this proxy statement/prospectus or incorporated by reference has been provided by Sesen Bio, and the information concerning Carisma contained in this proxy statement/prospectus has been provided by Carisma.

All references in this proxy statement/prospectus to “Sesen Bio” and “Carisma” refer to Sesen Bio, Inc. and CARISMA Therapeutics Inc., respectively. All references in this proxy statement/prospectus to “Merger Sub” refer to Seahawk Merger Sub, Inc., a newly formed, wholly-owned subsidiary of Sesen Bio. All references in this proxy statement/prospectus to the “combined company” refer to Sesen Bio and its wholly-owned subsidiary, Carisma, following completion of the merger. Except as otherwise noted, references to “we,” “us” or “our” refer to both Sesen Bio and Carisma. All references in this proxy statement/prospectus to “Sesen Bio common stock” refer to the common stock of Sesen Bio, $0.001 par value per share, and all references in this proxy statement/prospectus to “Carisma common stock” refer to the common stock of Carisma, $0.0001 par value per share.

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TABLE OF CONTENTS

Page

QUESTIONS AND ANSWERS ABOUT THE MERGER

1

PROSPECTUS SUMMARY

12

MARKET PRICE AND DIVIDEND INFORMATION

25

RISK FACTORS

26

Risks Related to the Merger

26

Risks Related to the Proposed Reverse Stock Split

31

Risks Related to Sesen Bio

32

Risks Related to Carisma

55

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

114

THE SPECIAL MEETING OF SESEN BIO STOCKHOLDERS

118

THE MERGER

122

Background of the Merger

122

Sesen Bio Reasons for the Merger

128

Carisma Reasons for the Merger

130

Opinion of Sesen Bio’s Financial Advisor

133

Certain Unaudited Financial Projections

137

Interests of Sesen Bio Directors and Executive Officers in the Merger

140

Interests of Carisma Directors and Executive Officers in the Merger

144

Form of the Merger

146

Effective Time of the Merger

146

Merger Consideration and Exchange Ratio

147

Sesen Bio’s Final Net Cash

148

Procedures for Exchanging Carisma Stock Certificates

149

Regulatory Approvals

150

Material U.S. Federal Income Tax Consequences of the Merger

150

Material U.S. Federal Income Tax Consequences of the Special Cash Dividend

153

Nasdaq Listing

156

Anticipated Accounting Treatment

156

Appraisal Rights and Dissenters’ Rights

156

THE MERGER AGREEMENT

160

AGREEMENTS RELATED TO THE MERGER

181

CVR Agreement

181

Support Agreements and Written Consents

186

Subscription Agreement

186

Lock-Up Agreements

188

MATTERS BEING SUBMITTED TO A VOTE OF SESEN BIO STOCKHOLDERS

189

Proposal No. 1: Approval, for purposes of Nasdaq Listing Rule 5635(a) and (b), the issuance of shares of Sesen Bio common stock to Carisma stockholders pursuant to the terms of the Merger Agreement and the change of control of Sesen Bio resulting from the merger

189

Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split and reduce the number of authorized shares of Sesen Bio common stock

191

Proposal No. 3: Approval of an amendment and restatement of the 2014 Incentive Plan

200

Proposal No. 4: Approval of an amendment to the 2014 ESPP

211

Proposal No. 5: Approval of possible adjournment of the Sesen Bio special meeting

216

SESEN BIO BUSINESS

217

Overview

217

Current Strategy

217

Sesen Bio’s Historical Pipeline Product Candidates

218

Competition

219

Sales and Marketing

220

Manufacturing

220

Intellectual Property

221

Sesen Bio’s OUS Business Development Partnering

222

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Page

Government Regulation

222

Employees

231

Corporate Information

232

Legal Proceedings

233

CARISMA BUSINESS

235

Overview

235

Carisma’s Team

238

Carisma’s Strategy

238

Background

239

Manufacturing and Delivery

273

Intellectual Property

274

Competition

278

Government Regulation

280

Employees and Human Capital Resources

294

Facilities

294

Legal Proceedings

294

SESEN BIO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

295

CARISMA MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

309

MANAGEMENT FOLLOWING THE MERGER

324

SESEN BIO EXECUTIVE COMPENSATION

330

CARISMA EXECUTIVE COMPENSATION

341

RELATED PARTY TRANSACTIONS OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED COMPANY

349

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

353

DESCRIPTION OF SESEN BIO CAPITAL STOCK

363

COMPARISON OF RIGHTS OF HOLDERS OF SESEN BIO STOCK AND CARISMA STOCK

366

PRINCIPAL STOCKHOLDERS OF SESEN BIO

373

PRINCIPAL STOCKHOLDERS OF CARISMA

375

PRINCIPAL STOCKHOLDERS OF THE COMBINED COMPANY

378

LEGAL MATTERS

381

EXPERTS

381

WHERE YOU CAN FIND MORE INFORMATION

382

TRADEMARK NOTICE

383

OTHER MATTERS

384

Index to Sesen Bio’s Consolidated Financial Statements

F-1

Index to Carisma’s Consolidated Financial Statements

F-67

Annex A – Agreement and Plan of Merger and Reorganization

A-i

Annex B – Opinion of SVB Securities LLC

B-1

Annex C – Form of Carisma Support Agreement

C-1

Annex D – Form of Sesen Bio Support Agreement

D-1

Annex E – Form of Lock-Up Agreement

E-1

Annex F – Form of Contingent Value Rights Agreement

F-1

Annex G – Certificate of Amendment for the Reverse Stock Split

G-1

Annex H – Appraisal Rights (Section 262 of the Delaware General Corporation Law)

H-1

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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 does not give effect to the proposed reverse stock split described in the section entitled “Matters Being Submitted to a Vote of Sesen Bio Stockholders — Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split” beginning on page 189 of this proxy statement/prospectus.

The following section provides answers to frequently asked questions about the merger. This section, however, provides only summary information. For a more complete response to each of these questions and for additional information, refer to the cross-referenced sections in this proxy statement/prospectus.

Q:

What is the merger?

A:

Sesen Bio, Inc., or Sesen Bio, Seahawk Merger Sub, Inc., or Merger Sub, and CARISMA Therapeutics Inc., or Carisma, entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, on September 20, 2022. The Merger Agreement contains the terms and conditions of the proposed business combination of Sesen Bio and Carisma. Under the Merger Agreement, Merger Sub will merge with and into Carisma, with Carisma surviving as a wholly-owned subsidiary of Sesen Bio, or the merger. After the completion of the merger, Sesen Bio will change its corporate name from “Sesen Bio, Inc.” to “CARISMA Therapeutics Inc.” as contemplated by the Merger Agreement.

At the effective time of the merger, or the effective time, each outstanding share of Carisma common stock and Carisma preferred stock, or collectively, Carisma capital stock, including shares of Carisma common stock issued in connection with the Carisma pre-closing financing as defined below, will be converted into the right to receive a number of shares of Sesen Bio common stock equal to an exchange ratio, or the exchange ratio, described in more detail in the section entitled “The Merger Agreement — Merger Consideration” beginning on page 160 of this proxy statement/prospectus.

Also at the effective time, each outstanding option to purchase shares of Carisma common stock, or a Carisma option, will be assumed by Sesen Bio and will be converted into an option to purchase shares of Sesen Bio common stock, with necessary adjustments to reflect the exchange ratio.

Each share of Sesen Bio common stock, each option to purchase Sesen Bio common stock, or a Sesen Bio option, and each Sesen Bio restricted stock unit convertible into Sesen Bio common stock (including both time-based restricted stock units and performance-based restricted stock units), or a Sesen Bio RSU, that is outstanding at the effective time will remain outstanding in accordance with its terms and such shares of Sesen Bio common stock, Sesen Bio options and Sesen Bio RSUs, subject to the proposed reverse stock split, will be unaffected by the merger. Immediately after the merger, pre-merger Sesen Bio stockholders are expected to own approximately 41.7% of the outstanding shares of capital stock of the combined company, and pre-merger Carisma stockholders, excluding shares of Carisma common stock purchased in connection with the Carisma pre-closing financing and the conversion of Carisma’s $35.0 million outstanding convertible note, or the Carisma convertible note, are expected to own approximately 58.3% of the outstanding shares of capital stock of the combined company, subject to certain assumptions, including Sesen Bio’s net cash as of closing of the merger being at least $125.0 million.

Q:

Why are the two companies proposing to merge?

A:

Sesen Bio and Carisma believe that the merger will provide Carisma with substantial capital resources, positioning it to become a pre-eminent clinical-stage biopharmaceutical company focused on advancement of Carisma’s proprietary cell therapy platform that utilizes engineered macrophages and monocytes to potentially transform the treatment of cancer and other serious disorders. For a discussion of Sesen Bio’s and Carisma’s reasons for the merger, see the sections entitled “The Merger — Sesen Bio Reasons for the Merger” and “The Merger — Carisma Reasons for the Merger” beginning on pages 128 and 130, respectively, of this proxy statement/prospectus.

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Q:

Why am I receiving this proxy statement/prospectus?

A:

You are receiving this proxy statement/prospectus because you have been identified as a Sesen Bio stockholder as of the record date and you are entitled to vote at the Sesen Bio special meeting to approve the matters set forth herein. This document serves as:

a proxy statement of Sesen Bio used to solicit proxies for the Sesen Bio special meeting to vote on the matters set forth herein; and
a prospectus of Sesen Bio used to offer shares of Sesen Bio common stock in exchange for shares of Carisma capital stock in the merger.

Q:

What is the Carisma pre-closing financing?

A:

On September 20, 2022, immediately prior to the execution and delivery of the Merger Agreement, Carisma entered into a subscription agreement with certain investors named therein, or the subscription agreement, pursuant to which such investors agreed to purchase shares of Carisma common stock at an aggregate purchase price of approximately $30.6 million, or the Carisma pre-closing financing. Immediately after the merger, the shares of Carisma common stock issued in the Carisma pre-closing financing are expected to represent approximately 7.4% of the outstanding shares of capital stock of the combined company. The closing of the Carisma pre-closing financing is conditioned upon the satisfaction or waiver of the conditions to the closing of the merger set forth in the Merger Agreement.

Q:

What will Sesen Bio stockholders receive in the merger?

A:

At the effective time, Sesen Bio stockholders will continue to own and hold their existing shares of Sesen Bio common stock.

All outstanding and unexercised Sesen Bio options granted (i) pursuant to the Sesen Bio, Inc. 2014 Stock Incentive Plan, as amended, or the 2014 Incentive Plan, or the Eleven Biotherapeutics, Inc. 2009 Stock Incentive Plan, as amended and restated, or the 2009 Incentive Plan, or (ii) as an inducement grant under Nasdaq Listing Rule 5635(c)(4) will remain in effect pursuant to their terms and will be unaffected by the merger. All outstanding and unvested Sesen Bio RSUs granted pursuant to the 2014 Incentive Plan or the 2009 Incentive Plan will remain in effect pursuant to their terms and will be unaffected by the merger. All outstanding and unexercised warrants to purchase Sesen Bio common stock, or Sesen Bio warrants, immediately prior to the effective time (other than certain Sesen Bio warrants that Sesen Bio may be required to repurchase at such warrant holder’s option as of a result of the merger) will remain in effect pursuant to their terms and will be unaffected by the merger.

Additionally, at or prior to the effective time, Sesen Bio will enter into a Contingent Value Rights Agreement, or the CVR Agreement, and, as provided in the Merger Agreement, Sesen Bio intends to declare a dividend payable to Sesen Bio stockholders of record as of a date agreed to by Sesen Bio and Carisma prior to the effective time with respect to the receipt of one contingent value right, or a CVR, for each outstanding share of Sesen Bio common stock held by such stockholders on such date. Each CVR will represent the contractual right to receive contingent cash payments upon the receipt by Sesen Bio of certain proceeds payable by F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc., or Roche, if any, pursuant to the Asset Purchase Agreement by and among Sesen Bio and Roche, or the Roche Asset Purchase Agreement, upon the achievement by Roche of a specified milestone set forth in the Roche Asset Purchase Agreement, subject to certain customary deductions, including for expenses and taxes. For a more detailed description of the CVRs and the CVR Agreement, see the section entitled “Agreements Related to the Merger — CVR Agreement” beginning on page 181 of this proxy statement/prospectus.

Further, prior to the closing of the merger, Sesen Bio may, in addition to the CVRs, declare a special cash dividend, or the special cash dividend, to Sesen Bio stockholders of record prior to the merger consisting of cash in an aggregate amount not to exceed $25.0 million, subject to Sesen Bio having net cash as of the closing of the merger greater than or equal to $100.0 million. The special cash dividend would be contingent upon the closing of the merger and subject to approval of the Sesen Bio board of directors.

Q:

What will Carisma stockholders and Carisma optionholders receive in the merger?

A:

Carisma stockholders will receive shares of Sesen Bio common stock, and Carisma optionholders will receive options to purchase Sesen Bio common stock. Applying the exchange ratio, immediately after the merger, pre-merger Sesen Bio stockholders are expected to own approximately 41.7% of the outstanding shares of capital stock of the combined company and pre-merger

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Carisma stockholders, excluding shares of Carisma common stock purchased in connection with the Carisma pre-closing financing and the conversion of the Carisma convertible note, are expected to own approximately 58.3% of the outstanding shares of capital stock of the combined company, subject to certain assumptions, including Sesen Bio’s net cash as of the closing of the merger being at least $125.0 million.

In connection with the merger, each outstanding and unexercised Carisma option will be assumed by Sesen Bio and converted into an option to purchase Sesen Bio common stock, with the number of shares and exercise price being appropriately adjusted to reflect the exchange ratio between Sesen Bio common stock and Carisma common stock determined in accordance with the Merger Agreement.

For a more complete description of what Carisma stockholders and optionholders will receive in the merger, see the sections entitled “The Merger Agreement — Merger Consideration” and “The Merger Agreement — Exchange Ratio” beginning on pages 160 and 161, respectively, of this proxy statement/prospectus. For a description of the effect of the Carisma pre-closing financing on current Sesen Bio and Carisma stockholders, see the section entitled “Agreements Related to the Merger — Subscription Agreement” beginning on page 186 of this proxy statement/prospectus.

Q:

What will happen to Sesen Bio if, for any reason, the merger does not close?

A:

If, for any reason, the merger does not close, the Sesen Bio board of directors may elect to, among other things, review and evaluate another strategic transaction like the merger, attempt to sell or otherwise dispose of the various assets of Sesen Bio, resume its research and development activities and continue to operate the business of Sesen Bio or dissolve and liquidate its assets. If Sesen Bio decides to dissolve and liquidate its assets, Sesen Bio would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims. There can be no assurances as to the amount or timing of available cash left, if any, to distribute to Sesen Bio stockholders after paying the debts and other obligations of Sesen Bio and setting aside funds for reserves.

Q:

What is required to consummate the merger?

A:

Pursuant to the terms of the Merger Agreement, in order for the merger to close, the following proposals must be approved by the requisite vote of Sesen Bio stockholders at the Sesen Bio special meeting:

Proposal No. 1: to consider and vote upon a proposal to approve, for purposes of Nasdaq Listing Rule 5635(a) and (b), the issuance of shares of Sesen Bio common stock to Carisma stockholders pursuant to the terms of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and the change of control of Sesen Bio resulting from the merger; and
Proposal No. 2: to consider and vote upon a proposal to approve an amendment to the Sesen Bio Certificate of Incorporation, to (a) effect a reverse stock split of the issued and outstanding shares of Sesen Bio common stock at a ratio in the range of 1-for-       to 1-for-      , with such ratio and implementation and timing of the reverse stock split to be determined in the discretion of the Sesen Bio board of directors and as agreed to by Carisma at or prior to the closing of the merger, or in the sole discretion of the Sesen Bio board of directors if Proposal No. 1 is not approved, and (b) if and when the reverse stock split is effected, implement a non-proportionate reduction in the number of authorized shares of Sesen Bio common stock, in the form attached as Annex G to this proxy statement/prospectus.

Carisma stockholders must adopt the Merger Agreement, thereby approving the merger and the related transactions. The adoption of the Merger Agreement and the approval of the merger and related transactions by the Carisma stockholders requires the affirmative vote (or written consent) of the holders of a majority of the Carisma capital stock, voting together as a single class, (ii) at least two-thirds of the Carisma Series A preferred stock, Carisma special voting preferred stock, Carisma Series B preferred stock and Carisma Series B special voting preferred stock, voting together as a single class, (iii) a majority of the Carisma Series A preferred stock and Carisma special voting preferred stock, voting together as a single class and (iv) at least two-thirds of the Carisma Series B preferred stock and Carisma Series B special voting preferred stock, voting together as a single class.

As of September 20, 2022, certain Carisma stockholders (solely in their respective capacities as Carisma stockholders) holding approximately 97.83% of the outstanding shares of Carisma capital stock (subject to customary cutbacks in the event of certain triggering events) are parties to support agreements with Sesen Bio and Carisma, whereby such stockholders have agreed, subject to the effectiveness of the registration statement on Form S-4, to vote their shares in favor of, among other things, the adoption or

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approval of the Merger Agreement and the transactions contemplated therein, subject to the terms of the support agreements. In addition, following the effectiveness of the registration statement on Form S-4, of which this proxy statement/prospectus is a part, and pursuant to the conditions of the Merger Agreement and the support agreements, Carisma stockholders who are party to the support agreements will each execute written consents approving the merger and related transactions, subject to the terms and limitations set forth in the support agreements. Therefore, holders of a sufficient number of shares of Carisma common stock required to adopt the Merger Agreement, thereby approving the merger, have agreed to adopt the Merger Agreement via written consent, subject to the terms and limitations set forth in the support agreements. Carisma stockholders, including those who are parties to support agreements, are being requested to execute written consents providing such approvals.

In addition to the requirement of obtaining the stockholder approvals described above, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived. For a more complete description of the closing conditions under the Merger Agreement, see the section entitled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 165 of this proxy statement/prospectus.

Q:

What stockholder votes are required to approve the proposals at the Sesen Bio special meeting?

A:Approval of Proposal Nos. 1, 3, 4 and 5 each requires the affirmative vote of a majority in voting power of the votes cast by the holders of all shares of Sesen Bio common stock present or represented by proxy at the Sesen Bio special meeting and entitled to vote thereon. Approval of Proposal No. 2 requires the affirmative vote of the holders of a majority of the outstanding shares of Sesen Bio common stock on the record date,, 2022, for the Sesen Bio special meeting, or the record date, entitled to vote on the matter.

Votes will be counted by the inspector of election appointed for the Sesen Bio special meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. Abstentions and broker non-votes will be treated as shares of Sesen Bio common stock present for the purpose of determining the presence of a quorum for the transaction of business at the Sesen Bio special meeting. Abstentions and broker non-votes will have the same effect as “AGAINST” votes for Proposal No. 2, but will have no effect on the outcome of Proposal Nos. 1, 3, 4 and 5. Proposal Nos. 2 and 5 are matters on which Sesen Bio expects brokers, banks or other nominees to have authority to vote uninstructed shares and, therefore, broker non-votes are not expected with respect to these proposals.

Q:

Who will be the directors of the combined company following the merger?

A:

Immediately following completion of the merger, the combined company’s board of directors is expected to be composed of seven directors, consisting of six directors designated by Carisma and one director designated by Sesen Bio. It is anticipated that Thomas R. Cannell will be the Sesen Bio designated director following the closing of the merger, and that all other current Sesen Bio directors will resign as of the closing of the merger. Carisma will appoint the remaining directors to the Sesen Bio board of directors to fill the resulting vacancies. It is anticipated that Sanford Zweifach, Regina Hodits, Briggs Morrison, Björn Odlander, Chidozie Ugwumba and Steven Kelly will be appointed to the board of directors of the combined company by Carisma. Sanford Zweifach is expected to be appointed as chair of the board of the directors of the combined company.

The staggered structure of the Sesen Bio board of directors will remain in place for the combined company following the completion of the merger.

Q:

Who will be the executive officers of the combined company immediately following the merger?

A:

Immediately following completion of the merger, the combined company’s executive management team is expected to consist of the members of Carisma’s executive management team prior to the merger, including:

Name

    

Title

Steven Kelly

President and Chief Executive Officer

Richard Morris

Chief Financial Officer

Michael Klichinsky, Pharm.D., Ph.D.

Chief Scientific Officer

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Q:

What are the material U.S. federal income tax consequences of the merger to Sesen Bio stockholders?

A:

Sesen Bio stockholders will not sell, exchange or dispose of any shares of Sesen Bio common stock as a result of the merger. Thus, there will be no material U.S. federal income tax consequences to Sesen Bio stockholders as a result of the merger.

Q:

What are the material U.S. federal income tax consequences of the merger to Carisma U.S. holders?

A:

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code. Assuming the merger constitutes a reorganization, subject to the qualifications and limitations set forth in the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger,” a Carisma U.S. holder (as defined on page 150) will not recognize gain or loss for U.S. federal income tax purposes upon the receipt of shares of Sesen Bio common stock in exchange for shares of Carisma capital stock in the merger, except to the extent such a Carisma U.S. holder receives cash in lieu of a fractional share of Sesen Bio common stock.

See the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 150 of this proxy statement/prospectus for a more complete description of the material U.S. federal income tax consequences of the merger to Carisma U.S. holders.

Q:

What are the material U.S. federal income tax consequences of the receipt of CVRs to Sesen Bio U.S. holders?

A:

The U.S. federal income tax treatment of Sesen Bio U.S. holders’ (as defined on page 183) receipt of the CVRs is unclear. Sesen Bio intends to report the issuance of the CVRs to Sesen Bio U.S. holders under the terms expressed in the form of the CVR Agreement included in Annex F to this proxy statement/prospectus as a distribution of property with respect to Sesen Bio common stock. In such case, each Sesen Bio U.S. holder will be treated as receiving a distribution in an amount equal to the fair market value of the CVRs issued to such Sesen Bio U.S. holder on the date of the issuance. This distribution should be treated first as a taxable dividend to the extent of the Sesen Bio U.S. holder’s pro rata share of Sesen Bio’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes and after taking into account the special cash dividend paid to Sesen Bio U.S. holders, if any, as described below), then as a non-taxable return of capital to the extent of the Sesen Bio U.S. holder’s basis in its Sesen Bio common stock, and finally as capital gain from the sale or exchange of Sesen Bio common stock with respect to any remaining value. Sesen Bio currently has negative accumulated earnings and profits and expects no or a small amount of current earnings and profits for the relevant taxable year. Thus, Sesen Bio expects most or all of this distribution to be treated as other than a dividend for U.S. federal income tax purposes. See the section entitled “Agreements Related to the Merger — CVR Agreement — Material U.S. Federal Income Tax Consequences of the Receipt of CVRs” beginning on page 181 of this proxy statement/prospectus for a more complete description of the material U.S. federal income tax consequences of the receipt of CVRs to Sesen Bio U.S. holders, including possible alternative treatments.

The tax consequences to you of the receipt of CVRs will depend on your particular facts and circumstances. You should consult your tax advisors as to the specific tax consequences to you.

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Q:

What are the material U.S. federal income tax consequences of the special cash dividend that Sesen Bio may declare and pay to Sesen Bio U.S. holders?

A:

In connection with the merger, the Sesen Bio board of directors may declare and pay a special cash dividend to Sesen Bio stockholders of record prior to the effective time consisting of cash in an aggregate amount not to exceed $25.0 million, subject to Sesen Bio having net cash as of the closing of the merger greater than or equal to $100.0 million. The U.S. federal income tax consequences of the Sesen Bio U.S. holders’ receipt of a special cash dividend generally should be treated first as a taxable dividend to the extent of the Sesen Bio U.S. holder’s pro rata share of Sesen Bio’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes), then as a non-taxable return of capital to the extent of the Sesen Bio U.S. holder’s basis in its Sesen Bio common stock, and finally as capital gain from the sale or exchange of Sesen Bio common stock with respect to any remaining amount. Sesen Bio currently has negative accumulated earnings and profits and expects no or a small amount of current earnings and profits for the relevant taxable year. Thus, Sesen Bio expects most or all of the special cash dividend to be treated as other than a dividend for U.S. federal income tax purposes.

See the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Special Cash Dividend” beginning on page 153 of this proxy statement/prospectus for a general description of the tax consequences of the special cash dividend that Sesen Bio may pay.

The tax consequences to you of the special cash dividend will depend on your particular facts and circumstances. You should consult your tax advisors as to the specific tax consequences to you.

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Q:

What are the material U.S. federal income tax consequences of the proposed reverse stock split to Sesen Bio U.S. holders?

A:

Sesen Bio intends to report the proposed reverse stock split as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code. In general, and subject to the qualifications and limitations set forth in the section entitled “Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 197 of this proxy statement/prospectus, if the proposed reverse stock split qualifies as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code, a Sesen Bio U.S. holder should not recognize gain or loss upon the proposed reverse stock split, except to the extent a Sesen Bio U.S. holder receives cash in lieu of a fractional share of Sesen Bio common stock. As discussed in more detail in the section entitled “Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” on page 197 of this proxy statement/prospectus, these consequences assume that distribution of the CVRs and any cash distributed pursuant to a special cash dividend will be treated for U.S. federal income tax purposes as separate and distinct from the proposed reverse stock split. See the section entitled “Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 197 of this proxy statement/prospectus for a more complete description of the material U.S. federal income tax consequences of the proposed reverse stock split to Sesen Bio U.S. holders.

The tax consequences to you of the proposed reverse stock split will depend on your particular facts and circumstances. You should consult your tax advisors as to the specific tax consequences to you.

Q:

As a Sesen Bio stockholder, how does the Sesen Bio board of directors recommend that I vote?

A:

After careful consideration, the Sesen Bio board of directors unanimously recommends that Sesen Bio stockholders vote “FOR” all of the proposals described in this proxy statement/prospectus.

Q:

What risks should I consider in deciding whether to vote in favor of the merger?

A:

You should carefully review the section entitled “Risk Factors” beginning on page 26 of this proxy statement/prospectus which sets forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which each of Sesen Bio and Carisma, as independent companies, are subject.

Q:

Who can vote at the Sesen Bio special meeting?

A:

Only Sesen Bio stockholders of record at the close of business on the record date will be entitled to vote at the Sesen Bio special meeting. The Sesen Bio board of directors has fixed                          , 2022 as the record date for the Sesen Bio special meeting. As of the record date, there were                             shares of Sesen Bio 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 Sesen Bio common stock were registered directly in your name with Sesen Bio’s transfer agent, Computershare Trust Company, Inc., then you are a Sesen Bio stockholder of record. As a Sesen Bio stockholder of record, you may vote virtually at the Sesen Bio special meeting or vote by proxy. Whether or not you plan to attend the Sesen Bio special 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 on the proxy card to ensure your vote is counted.

Sesen Bio stockholders are invited to attend the special meeting, which will be a virtual meeting held exclusively via live webcast. In order to attend the Sesen Bio special meeting, you must register in advance at                       . After completing your registration, you will receive further instructions via email, including a unique link that will allow you to access the Sesen Bio special meeting and to vote and submit questions during the Sesen Bio special meeting. As part of the registration process, you must enter the control number located on your proxy card.

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Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Similar Organization

If, at the close of business on the record date, your shares of Sesen Bio 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 Sesen Bio special 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 and vote at the Sesen Bio special meeting. After completing your registration in advance at          , you will receive further instructions via email, including a unique link to access the Sesen Bio special meeting. As part of the registration process, you must enter the control number located on your voting instruction form. You will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process. You may be instructed to obtain a legal proxy from your broker, bank or other nominee and to submit a copy in advance of the meeting. Further instructions will be provided to you as part of your registration process.

Q:

How many votes do I have?

A:

On each matter to be voted upon, you have one vote for each share of Sesen Bio common stock you own as of the record date.

Q:

What is the quorum requirement?

A:A quorum of Sesen Bio stockholders is necessary to hold a valid meeting. A quorum will be present if Sesen Bio stockholders holding at least a majority in voting power of the shares of Sesen Bio common stock outstanding and entitled to vote at the Sesen Bio special meeting are present or represented by proxy at the Sesen Bio special meeting. As of the record date, there wereshares of Sesen Bio common stock outstanding and entitled to vote. Your shares of Sesen Bio common stock will be counted toward the quorum at the Sesen Bio special meeting only if you attend the Sesen Bio special meeting or are represented by proxy at the Sesen Bio special meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.

Q:

What are “broker non-votes?”

A:

If you hold shares beneficially in “street name” and do not provide your broker, bank or other nominee with voting instructions, your shares may constitute “broker non-votes.” Broker non-votes occur on a matter when banks, brokers and other nominees are not permitted to vote on certain non-discretionary matters without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. Proposal Nos. 1, 3 and 4 are anticipated to be non-routine matters, and Proposal Nos. 2 and 5 are anticipated to be routine matters.

Q:

If my shares of Sesen Bio common stock are held in “street name,” will my broker, bank or other nominee vote my shares for me?

A:

Unless your broker, bank or other nominee has discretionary authority to vote on certain matters, your broker will not be able to vote your shares of Sesen Bio common stock on matters without instructions from you. If you do not give instructions to your broker, your broker can vote your shares of Sesen Bio common stock with respect to discretionary, routine items but not with respect to non-discretionary, non-routine items. Brokers are not expected to have discretionary authority to vote for any of the proposals other than Proposal Nos. 2 and 5. 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:

How can I view the list of Sesen Bio stockholders eligible to vote at the Sesen Bio special meeting?

A:

The list of Sesen Bio stockholders of record entitled to vote at the Sesen Bio special meeting will be made available for ten days prior to the Sesen Bio special meeting, at the Sesen Bio offices at 245 First Street, Suite 1800, Cambridge, MA 02142. Please contact Sesen Bio’s Corporate Secretary at (617) 444-8550 if you wish to inspect the list of stockholders eligible to vote at the Sesen Bio special meeting prior to the Sesen Bio special meeting.

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Q:

When do you expect the merger to be consummated?

A:

Sesen Bio and Carisma currently anticipate that the merger will close in approximately three to four months following the date of the Merger Agreement, but the companies cannot predict the exact timing. For more information, see the section entitled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 165 of this proxy statement/prospectus.

Q:

What do I need to do now?

A:

Sesen Bio urges you to read this proxy statement/prospectus carefully, including its annexes, and to consider how the merger affects you.

If you are a Sesen Bio stockholder of record, you may provide your proxy instructions in one of three ways prior to the Sesen Bio special meeting:

Over the internet. You may vote your shares over the internet by following the instructions in the enclosed proxy card.
By telephone. You may vote your shares by telephone by following the instructions in the enclosed proxy card.
By mail. You may vote your shares by completing, dating and signing the proxy card and promptly mailing it in the postage-paid envelope provided.

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 Sesen Bio special meeting.

Q:

When and where is the Sesen Bio special meeting and may I vote in person?

A:

The Sesen Bio special meeting will be a virtual meeting held exclusively via live webcast at      , Eastern Time, on         , 2022.

In order to attend the Sesen Bio special meeting, you must register in advance at www.                            . After completing your registration, you will receive further instructions via email, including a unique link that will allow you to access the Sesen Bio special meeting and to vote and submit questions during the Sesen Bio special meeting. As part of the registration process, you must enter the control number located on your proxy card.

If your shares are held in “street name” by a broker, bank or other nominee, you are also invited to attend and vote your shares at the Sesen Bio special meeting. After completing your registration in advance at www.                           , you will receive further instructions via email, including a unique link to access the Sesen Bio special meeting. As part of the registration process, you must enter the control number located on your voting instruction form. You will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process. You may be instructed to obtain a legal proxy from your broker, bank or other nominee and to submit a copy in advance of the meeting. Further instructions will be provided to you as part of your registration process.

Even if you plan to attend the Sesen Bio special meeting, Sesen Bio requests that you sign and return the enclosed proxy card or voting instruction form to ensure that your shares will be represented at the Sesen Bio special meeting if you become unable to attend. Please be sure to follow the instructions found on your proxy card or voting instruction form.

Q:

What if I have technical difficulties or trouble accessing the Sesen Bio special meeting?

A:

Technical assistance will be available one hour prior to and during the Sesen Bio special meeting. Information related to technical assistance will be provided in the email you receive with your unique link that will allow you to access the Sesen Bio special meeting. We recommend that you log in at least 15 minutes before the Sesen Bio special meeting to ensure you are logged in when the Sesen Bio special meeting starts.

Q:

What happens if I do not return a proxy card or otherwise provide proxy instructions, as applicable?

A:

If you are a Sesen Bio stockholder of record, the failure to return your proxy card or otherwise provide proxy instructions will have the same effect as voting “AGAINST” Proposal No. 2, and will have no effect with respect to Proposal Nos. 1, 3, 4, and 5. If

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your shares of Sesen Bio common stock are held in “street name,” and you do not provide voting instructions, your broker, bank or other nominee may still vote your shares of Sesen Bio common stock with respect to discretionary, routine items, but may not vote your shares of Sesen Bio common stock with respect to non-discretionary, non-routine items. Brokers are not expected to have discretionary authority to vote for any of the proposals other than Proposal Nos. 2 and 5. 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 or revoke my vote after I have submitted a proxy or provided proxy instructions?

A:

Sesen Bio stockholders of record may change or revoke their vote at any time before their proxy is voted at the Sesen Bio special meeting by doing any one of the following things:

submitting a new proxy via the internet or telephone by following the instructions on the enclosed proxy card;
signing another proxy card and arranging for delivery of that proxy card by mail by, Eastern Time, the day before the Sesen Bio special meeting;
giving Sesen Bio’s Corporate Secretary a written notice before the Sesen Bio special meeting that you want to revoke your proxy; or
voting during the Sesen Bio special meeting. Your attendance at the Sesen Bio special meeting alone will not revoke a previously submitted proxy.

If a Sesen Bio stockholder who owns shares of Sesen Bio common stock in “street name” has instructed a broker to vote its shares of Sesen Bio common stock, the stockholder must follow directions received from its broker to change those instructions.

Your vote will be counted in accordance with the last instruction received prior to the closing of the polls, whether your instruction is received by internet, telephone, mail or at the Sesen Bio special meeting.

Q:

Who is paying for this proxy solicitation?

A:

Sesen Bio and Carisma will share equally the cost of printing and filing this proxy statement/prospectus and the proxy card. Sesen Bio also may be required to reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for reasonable expenses incurred in forwarding proxy materials to beneficial owners of Sesen Bio common stock.

Sesen Bio has engaged MacKenzie Partners, Inc., or MacKenzie Partners, to assist in the solicitation of proxies and provide related advice and informational support. Sesen Bio will pay the fees of MacKenzie Partners, which Sesen Bio expects to be approximately $      , plus reimbursement of out-of-pocket expenses.

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Q:

Who can help answer my questions?

A:

If you would like to request documents from Sesen Bio or Carisma, please send a request in writing or by telephone to either Sesen Bio or Carisma at the following addresses:

Sesen Bio, Inc.
245 First Street, Suite 1800
Cambridge, Massachusetts 02142
Telephone: (617) 444-8550
Attn: Corporate Secretary
Email: ir@sesenbio.com

    

CARISMA Therapeutics Inc.

3675 Market Street, Suite 200

Philadelphia, PA 19104
Telephone: (267) 491-6422
Attn: Corporate Secretary

Email: info@carismatx.com

If you are a Sesen Bio stockholder and would like additional copies, without charge, of this proxy statement/prospectus or if you have questions about the merger, including the procedures for voting your shares, you should contact Sesen Bio’s proxy solicitor:

Graphic

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

(800) 322-2885

proxy@mackenziepartners.com

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PROSPECTUS SUMMARY

This summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you. To better understand the merger, the proposals being considered at the Sesen Bio special meeting, you should read this entire proxy statement/prospectus carefully, including the Merger Agreement, attached as Annex A, the opinion of SVB Securities LLC, or SVB Securities, attached as Annex B and the other annexes to which you are referred herein. For more information, see the section entitled “Where You Can Find More Information” on page 382 of this proxy statement/prospectus. Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus does not give effect to the proposed reverse stock split described in the section entitled “Matters Being Submitted to a Vote of Sesen Bio Stockholders — Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split beginning on page 197 of this proxy statement/prospectus.

The Companies

Sesen Bio, Inc.
245 First Street, Suite 1800
Cambridge, MA 02142
(617) 444-8550

Sesen Bio is a late-stage clinical company focused on targeted fusion protein therapeutics for the treatment of patients with cancer. Sesen Bio’s most advanced product candidate, Vicineum™, also known as VB4-845, is a locally-administered targeted fusion protein composed of an anti-epithelial cell adhesion molecule antibody fragment tethered to a truncated form of Pseudomonas exotoxin A for the treatment of non-muscle invasive bladder cancer, or NMIBC. On July 15, 2022, Sesen Bio made the strategic decision to voluntarily pause further development of Vicineum in the United States. The decision was based on a thorough reassessment of Vicineum, which included the incremental development timeline and associated costs for an additional Phase 3 clinical trial, following Sesen Bio’s discussions with the United States Food and Drug Administration, or FDA. Sesen Bio has turned its primary focus to consummating a strategic transaction with the goal of maximizing shareholder value. Additionally, Sesen Bio intends to seek a partner for the further development of Vicineum.

CARISMA Therapeutics Inc.
3675 Market Street, Suite 200
Philadelphia, Pennsylvania 19104
(267) 491-6422

Carisma is a biopharmaceutical company dedicated to developing a differentiated and proprietary cell therapy platform focused on engineered macrophages, cells that play a crucial role in both the innate and adaptive immune response. The first applications of the platform, developed in collaboration with the University of Pennsylvania, are autologous chimeric antigen receptor macrophages for the treatment of solid tumors.

Seahawk Merger Sub, Inc.

Merger Sub is a wholly-owned subsidiary of Sesen Bio, formed solely for the purposes of carrying out the merger.

The Merger (see page 122)

If the merger is completed, Merger Sub will merge with and into Carisma, with Carisma surviving as a wholly-owned subsidiary of Sesen Bio. After the completion of the merger, Sesen Bio will change its corporate name from “Sesen Bio, Inc.” to “CARISMA Therapeutics Inc.” as contemplated by the Merger Agreement.

At the effective time, each outstanding share of Carisma capital stock will be converted into the right to receive a number of shares of Sesen Bio common stock equal to the exchange ratio described in more detail in the section entitled “The Merger Agreement — Exchange Ratio” beginning on page 161 of this proxy statement/prospectus. Based on Sesen Bio’s capitalization and Carisma’s capitalization as of September 20, 2022, the date the Merger Agreement was executed, the exchange ratio is estimated to be approximately 24.5844 shares of Sesen Bio common stock for each share of Carisma capital stock, which exchange ratio does not give effect to the proposed reverse stock split. The final exchange ratio is subject to adjustment prior to the closing of the merger based on Sesen Bio’s net cash at the closing of the merger and the aggregate proceeds from the sale of Carisma common stock in the Carisma

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pre-closing financing and, as a result, Sesen Bio stockholders could own more, and Carisma stockholders (including, for this purpose, investors in the Carisma pre-closing financing) could own less, or vice versa, of the combined company.

Also at the effective time, each outstanding Carisma option will be assumed by Sesen Bio and will be converted into an option to purchase shares of Sesen Bio common stock, with the number of shares and exercise price being appropriately adjusted to reflect the exchange ratio between Sesen Bio common stock and Carisma common stock determined in accordance with the Merger Agreement.

Each share of Sesen Bio common stock, each Sesen Bio option and each Sesen Bio RSU that is outstanding at the effective time will remain outstanding in accordance with its terms and each such share of Sesen Bio common stock, Sesen Bio option and Sesen Bio RSU, subject to the proposed reverse stock split, will be unaffected by the merger. Immediately after the merger, pre-merger Sesen Bio stockholders are expected to own approximately 41.7% of the outstanding shares of capital stock of the combined company and pre-merger Carisma stockholders, excluding shares of Carisma common stock purchased in connection with the Carisma pre-closing financing and the conversion of the Carisma convertible note, are expected to own approximately 58.3% of the outstanding shares of capital stock of the combined company, subject to certain assumptions, including Sesen Bio’s net cash as of the closing of the merger being at least $125.0 million.

Reasons for the Merger (see page 128)

After consideration and consultation of its senior management, consultants and advisors, outside legal counsel and financial advisor, the Sesen Bio board of directors unanimously determined that the Merger Agreement, the merger and other transactions contemplated thereby are advisable and in the best interests of Sesen Bio and Sesen Bio stockholders. The Sesen Bio board of directors considered various reasons to reach its determination. For example:

the financial condition and prospects of Sesen Bio and the risks associated with continuing to operate Sesen Bio on a stand-alone basis, particularly in light of Sesen Bio’s July 2022 decision to voluntarily pause further development of Vicineum for the treatment of NMIBC and reduce its workforce, which was based on a thorough reassessment of Vicineum following FDA feedback on the requirements for an additional Phase 3 clinical trial, the evolving competitive landscape and the resulting financial analysis;
that the Sesen Bio board of directors and its financial advisor undertook a comprehensive and thorough process of reviewing and analyzing potential strategic alternatives and merger partner candidates and Sesen Bio board of directors’ view that no alternatives to the merger, including a liquidation and dissolution of Sesen Bio and the distribution of any available cash, were reasonably likely to create greater value to Sesen Bio stockholders;
the Sesen Bio board of directors’ conclusion that the merger would provide existing Sesen Bio stockholders a significant opportunity to participate in the potential growth of the combined company following the merger, while also potentially receiving certain cash payments following the closing of the merger on account of the CVR Agreement and the special cash dividend;
the Sesen Bio board of directors’ belief, after a thorough review of strategic alternatives and discussions with Sesen Bio’s senior management, outside legal counsel and financial advisor, that the merger is more favorable to Sesen Bio stockholders than the potential value that might have resulted from other strategic alternatives available to Sesen Bio, including a liquidation and dissolution of Sesen Bio and the distribution of any available cash;
the Sesen Bio board of directors’ belief, after thorough discussion with Sesen Bio management and Sesen Bio’s consultants and advisors, that a potential liquidation and dissolution was not reasonably likely to create greater value for Sesen Bio stockholders than a strategic alternative transaction based on, among other things, the need to hold back a meaningful amount of the Company’s current cash balance to cover current and potential future liabilities, including those triggered by a liquidation strategy;
the Sesen Bio board of directors’ belief that, as a result of arm’s length negotiations with Carisma, Sesen Bio and its representatives negotiated the highest exchange ratio to which Carisma was willing to agree, and that the other terms of the Merger Agreement include the most favorable terms to Sesen Bio in the aggregate to which Carisma was willing to agree; and

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the Sesen Bio board of directors’ positive view, based on the scientific, regulatory and technical due diligence conducted by Sesen Bio management and advisors, of the regulatory pathway for, and potential significant market opportunity of, Carisma’s product candidates.

After consideration and consultation with Carisma senior management, its financial advisors and legal counsel,and consideration of a wide variety of factors, the Carisma board of directors concluded that a merger with Sesen Bio, together with the additional financing committed from the Carisma pre-closing financing, was the best option to generate capital resources to support the advancement of Carisma’s pipeline and fund a combined organization. The Carisma board of directors considered various reasons to reach its determination. For example:

the merger will provide current Carisma stockholders with greater liquidity by owning publicly-traded stock, and expanding both the access to capital for Carisma and the range of investors potentially available as a public company, compared to the investors Carisma could otherwise gain access to if it continued to operate as a privately-held company;
the potential benefits from increased public market awareness of Carisma and its pipeline;
the historical and current information concerning Carisma’s business, including its financial performance and condition, operations, management and pre-clinical and clinical data;
the competitive nature of the industry in which Carisma operates;
the Carisma board of directors’ fiduciary duties to Carisma stockholders;
the Carisma board of directors’ belief that no alternatives to the merger were reasonably likely to create greater value for Carisma stockholders, after reviewing the various financing and other strategic alternatives that were considered by the Carisma board of directors; and
the projected financial position, operations, management structure, operating plans, and anticipated cash burn rate of the combined company, including the ability to support the combined company’s current and planned clinical trials and operations).

For additional information, see the sections entitled “The Merger — Sesen Bio Reasons for the Merger” and “The Merger — Carisma Reasons for the Merger” in this proxy statement/prospectus.

Opinion of Sesen Bio’s Financial Advisor (see page 133)

Sesen Bio retained SVB Securities as its financial advisor in connection with the merger and the other transactions contemplated by the Merger Agreement. On September 20, 2022, SVB Securities rendered to the Sesen Bio board of directors its oral opinion, which was subsequently confirmed by delivery of a written opinion to the Sesen Bio board of directors dated September 20, 2022, that, as of such date and based upon and subject to the various assumptions made, and the qualifications and limitations upon the review undertaken by SVB Securities in preparing its opinion, the exchange ratio proposed to be paid by Sesen Bio pursuant to the terms of the Merger Agreement was fair, from a financial point of view, to Sesen Bio.

The full text of the written opinion of SVB Securities, dated September 20, 2022, which describes the assumptions made and the qualifications and limitations upon the review undertaken by SVB Securities in preparing its opinion, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. SVB Securities’ financial advisory services and opinion were provided for the information and assistance of Sesen Bio board of directors (in their capacity as directors and not in any other capacity) in connection with and for purposes of the Sesen Bio board of directors’ consideration of the merger and the opinion of SVB Securities addressed only the fairness, from a financial point of view, as of the date thereof, to Sesen Bio of the exchange ratio proposed to be paid by Sesen Bio pursuant to the terms of the Merger Agreement. The opinion of SVB Securities did not address any other term or aspect of the Merger Agreement or the merger and does not constitute a recommendation to any stockholder of Sesen Bio as to whether or how such holder should vote with respect to the merger or otherwise act with respect to the merger or any other matter.

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The full text of the written opinion of SVB Securities should be read carefully in its entirety for a description of the assumptions made and the qualifications and limitations upon the review undertaken by SVB Securities in preparing its opinion.

Overview of the Merger Agreement

Merger Consideration (see page 160)

At the effective time, each outstanding share of Carisma capital stock will be converted into the right to receive a number of shares of Sesen Bio common stock equal to the exchange ratio described in more detail in the section entitled “The Merger Agreement — Exchange Ratio” beginning on page 161 of this proxy statement/prospectus. Based on Sesen Bio’s capitalization and Carisma’s capitalization as of September 20, 2022, the date the Merger Agreement was executed, the exchange ratio is estimated to be approximately 24.5844 shares of Sesen Bio common stock for each share of Carisma capital stock, which exchange ratio does not give effect to the proposed reverse stock split. The final exchange ratio is subject to adjustment prior to the closing of the merger based on Sesen Bio’s net cash at the closing of the merger and the aggregate proceeds from the sale of Carisma common stock in the Carisma pre-closing financing and, as a result, Sesen Bio stockholders could own more, and Carisma stockholders (including, for this purpose, investors in the Carisma pre-closing financing) could own less, or vice versa, of the combined company.

Also at the effective time, each outstanding Carisma option will be assumed by Sesen Bio and will be converted into an option to purchase shares of Sesen Bio common stock, with the number of shares and exercise price being appropriately adjusted to reflect the exchange ratio between Sesen Bio common stock and Carisma common stock determined in accordance with the Merger Agreement.

Immediately after the merger, pre-merger Sesen Bio stockholders are expected to own approximately 41.7% of the outstanding shares of capital stock of the combined company and pre-merger Carisma stockholders, excluding shares of Carisma common stock purchased in the Carisma pre-closing financing and the conversion of Carisma’s $35.0 million outstanding convertible note, are expected to own approximately 58.3% of the outstanding shares of capital stock of the combined company, subject to certain assumptions, including Sesen Bio’s net cash as of the closing of the merger being at least $125.0 million.

For a more complete description of the merger consideration, see the sections entitled “The Merger Agreement — Merger Consideration” and “The Merger Agreement — Exchange Ratio” in this proxy statement/prospectus.

Treatment of Sesen Bio Equity Awards and Warrants (see page 163)

Sesen Bio Equity Awards

At the effective time, all outstanding and unexercised Sesen Bio options granted pursuant to the 2014 Incentive Plan or the 2009 Incentive Plan or as an inducement grant under Nasdaq Listing Rule 5635(c)(4) will remain in effect pursuant to their terms and will be unaffected by the merger. The number of shares of Sesen Bio common stock underlying the Sesen Bio options and the exercise prices for such Sesen Bio options will be appropriately adjusted to reflect the proposed reverse stock split, if approved and implemented.

At the effective time, all outstanding Sesen Bio RSUs granted pursuant to the 2014 Incentive Plan or the 2009 Incentive Plan will remain in effect pursuant to their terms and will be unaffected by the merger. The number of shares of Sesen Bio common stock underlying the Sesen Bio RSUs will be appropriately adjusted to reflect the proposed reverse stock split, if approved and implemented.

Sesen Bio Warrants

At the effective time, all Sesen Bio warrants (other than certain Sesen Bio warrants that Sesen Bio may be required to repurchase at such warrant holder’s option as of a result of the merger) will remain in effect pursuant to their terms and will be unaffected by the merger. The number of shares of Sesen Bio common stock underlying such Sesen Bio warrants and the exercise prices for such Sesen Bio warrants will be appropriately adjusted to reflect the proposed reverse stock split, if approved.

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Treatment of Carisma Options and Carisma Plan (see page 163)

At the effective time, Sesen Bio will assume the CARISMA Therapeutics Inc. 2017 Stock Incentive Plan, as amended, or the Carisma Plan, and each Carisma option in accordance with the terms of the Carisma Plan and the terms of the stock option agreement by which such Carisma option is evidenced but with such changes to such documents as Carisma and Sesen Bio mutually agree are appropriate to reflect the substitution of each Carisma option for a Sesen Bio option.

At the effective time, each Carisma option outstanding and unexercised immediately prior to the effective time, whether or not vested, will be converted into a Sesen Bio option. From and after the effective time, each Carisma option assumed by Sesen Bio may be exercised for such number of shares of Sesen Bio common stock as is determined by multiplying the number of shares of Carisma common stock subject to the Carisma option, as in effect immediately prior to the effective time, by the exchange ratio and rounding that result down to the nearest whole number of shares of Sesen Bio common stock. The per share exercise price of the converted Carisma option will be determined by dividing the per share exercise price of the Carisma option, as in effect prior to the effective time, by the exchange ratio and rounding that result up to the nearest whole cent.

Conditions to the Completion of the Merger (see page 165)

To complete the merger, Sesen Bio stockholders must approve Proposal Nos. 1 and 2 and Carisma stockholders must adopt the Merger Agreement and approve the merger and the related transactions. Additionally, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived (including Sesen Bio having net cash as of the closing of the merger greater than or equal to $100.0 million).

No Solicitation (see page 168)

Each of Sesen Bio and Carisma agreed that during the period commencing on the date of the Merger Agreement and continuing until the earlier to occur of the termination of the Merger Agreement and the effective time, or the pre-closing period, except as described below, Sesen Bio and Carisma will not, nor will either party 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” or “acquisition inquiry” (each as defined in the Merger Agreement) or take any action that could reasonably be expected to lead to an acquisition proposal or acquisition inquiry;
furnish any non-public information regarding the party and its subsidiaries 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;
execute or enter into any letter of intent or any contract contemplating or otherwise relating to any “acquisition transaction” as defined below (other than a confidentiality agreement permitted by the Merger Agreement); or
publicly propose to do any of the above.

Termination of the Merger Agreement (see page 177)

Either Sesen Bio or Carisma can terminate the Merger Agreement under certain circumstances, which would prevent the merger from being consummated.

Termination Fees (see page 179)

If the Merger Agreement is terminated under certain circumstances, Sesen Bio may be required to pay Carisma a termination fee of $7.6 million and/or reimburse Carisma’s expenses up to a maximum of $1.75 million, and Carisma may be required to pay Sesen Bio a termination fee of $5.49 million and/or reimburse Sesen Bio’s expenses up to a maximum of $1.75 million.

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CVR Agreement (see page 181)

Pursuant to the Merger Agreement and the CVR Agreement, Sesen Bio stockholders of record as of a date agreed to by Sesen Bio and Carisma prior to the effective time will receive one CVR for each share of Sesen Bio common stock held of record as of immediately prior to the effective time. Each CVR will represent the right to receive contingent cash payments upon the occurrence of a certain triggering event. In particular, CVR holders will be entitled to a pro rata portion of the $30.0 million milestone payment to be made by Roche to Sesen Bio upon Roche’s initiation of a Phase 3 clinical trial with legacy IL-6 antagonist antibody technology previously owned by Sesen Bio for a certain indication if initiated prior to December 31, 2026, pursuant to the Roche Asset Purchase Agreement, less certain permitted deductions.

The sole right of the holders of the CVRs is to receive cash from Sesen Bio, if any, through the rights agent in accordance with the CVR Agreement. The CVRs are not transferable, except in certain limited circumstances, will not be certificated or evidenced by any instrument and will not be registered with the SEC or listed for trading on any exchange. The CVRs will not have any voting or dividend rights, will not represent any equity or ownership interest in Sesen Bio or its subsidiaries, and interest will not accrue on any amounts payable on the CVRs. The CVR Agreement will be effective prior to the closing of the merger and will continue in effect until the earlier of March 31, 2027 or the payment of all amounts payable thereunder, unless and until earlier termination of the Merger Agreement.

Support Agreements and Written Consents (see page 186)

In order to induce Sesen Bio to enter into the Merger Agreement, certain stockholders of Carisma (solely in their respective capacities as Carisma stockholders) are parties to a support agreement with Sesen Bio and Carisma pursuant to which, among other things, each such stockholder has agreed (a) to vote all of his, her or its shares of Carisma capital stock (subject to customary cutbacks in the event of certain triggering events) in favor of (i) adoption and approval of the Merger Agreement and the transactions contemplated thereby; (ii) adoption and approval of an amendment to Carisma’s certificate of incorporation, or the Carisma Certificate of Incorporation, to increase the authorized shares of Carisma common stock; (iii) acknowledgement that the approval given thereby is irrevocable and that the stockholder is aware of the stockholder’s rights to demand appraisal for its shares pursuant to Section 262 of the Delaware General Corporation Law, or the DGCL; and (iv) acknowledgement that by the stockholder’s approval of the merger, the stockholder is (a) waiving its appraisal rights under the DGCL with respect to its shares, and (b) waiving any notice that may have been or may be required relating to the merger or any other transactions contemplated thereby. Additionally, each such signatory has agreed, solely in his, her or its capacity as a Carisma stockholder, to vote against (subject to customary cutbacks in the event of certain triggering events) any such competing acquisition proposal and any action in furtherance of any competing acquisition proposal. These signatories have also granted an irrevocable proxy to Carisma and its designee to vote their respective shares of Carisma common stock in accordance with the support agreements.

In addition, in order to induce Carisma to enter into the Merger Agreement, certain stockholders of Sesen Bio (solely in their respective capacities as Carisma stockholders) are parties to a support agreement with Sesen Bio and Carisma pursuant to which, among other things, each such stockholder has agreed, to vote all of his, her or its shares of Sesen Bio common stock in favor of (i) adoption and approval of the Merger Agreement and the transactions contemplated thereby; (ii) the issuance of shares of Sesen Bio common stock to Carisma stockholders in connection with the Merger Agreement and the transactions contemplated thereby; (iii) the change of control of Sesen Bio resulting from the Merger pursuant to Nasdaq rules; (iv) the approval of the equity plan amendment proposals; and (v) a waiver of any notice that may have been or may be required relating to the Merger or any other transactions contemplated thereby. Additionally, each such signatory has agreed, solely in his, her or its capacity as a Sesen Bio stockholder, to vote against any competing acquisition proposal and any action in furtherance of any such competing acquisition proposal. These signatories have also granted an irrevocable proxy to Sesen Bio and its designee to vote their respective shares of Sesen Bio common stock in accordance with the support agreements.

Lock-Up Agreements (see page 188)

As a condition to the closing of the merger, certain stockholders of each of Sesen Bio and Carisma and their affiliates have entered into lock-up agreements, pursuant to which such parties have agreed not to, except in limited circumstances, and among other restrictions, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, make any short sale or otherwise transfer or dispose of or lend, directly or indirectly, any shares of Sesen Bio common stock or any securities convertible into, exercisable or exchangeable for or that represent the right to receive Sesen Bio common stock (including, Sesen Bio common stock or such other securities which may be deemed to be beneficially owned by the signatory in accordance with the rules and regulations of the SEC and securities of Sesen Bio which may be

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issued upon exercise of a Sesen Bio option, Sesen Bio RSU or Sesen Bio warrant) during the period commencing at the effective time and continuing until the date that is 180 days after the effective time.

Certain directors and executive officers of both Sesen Bio and Carisma are party to a lock-up agreement. Carisma stockholders who have executed lock-up agreements, as of September 20, 2022, beneficially owned in the aggregate approximately 97.83% of the outstanding shares of Carisma capital stock on an as converted to Carisma common stock basis.

Subscription Agreement (see page 186)

On September 20, 2022, immediately prior to the execution and delivery of the Merger Agreement, Carisma entered into a subscription agreement with certain investors named therein, pursuant to which such investors have agreed to purchase shares of Carisma common stock at an aggregate purchase price of approximately $30.6 million. The subscription agreement contains customary representations and warranties of Carisma and also contains customary representations and warranties of the purchasers party thereto.

The subscription agreement may not be changed, waived, amended or modified, except by an instrument in writing executed by Carisma and the purchasers then committed to purchase a majority of the shares to be sold in the Carisma pre-closing financing. The subscription agreement will terminate upon the earlier to occur of (i) such date and time that the Merger Agreement is terminated in accordance with its terms, (ii) upon the mutual written agreement of Carisma and the purchasers then committed to purchase a majority of the shares to be sold in the Carisma pre-closing financing (provided that Carisma and a purchaser may terminate the commitment of the applicable purchaser without the consent of any other party), and (iii) if the closing of the merger has not occurred on or before January 31, 2023 (as such date may be extended in the event that a request for additional information is made by any governmental body or in the event that the SEC has not declared the registration statement on Form S-4, of which this proxy statement/prospectus is a part, effective under the Securities Act by the date which is 60 days prior to the end date), other than as a result of a willful breach of a purchaser’s obligations under the subscription agreement.

Nasdaq Stock Market Listing (see page 156)

Sesen Bio intends to file an initial listing application for the combined company with Nasdaq. If such application is accepted, Sesen Bio anticipates that the combined company’s common stock will be listed on the Nasdaq Capital Market following the closing of the merger under the trading symbol “CARM.”

Management Following the Merger (see page 324)

The following table lists the names, ages as of September 20, 2022 and positions of the individuals who are expected to serve as executive officers and directors of the combined company following completion of the merger.

Name

    

Age

    

Position

Executive Officers

Steven Kelly

57

President and Chief Executive Officer

Richard Morris

49

Chief Financial Officer

Michael Klichinsky, Pharm.D., Ph.D.

32

Chief Scientific Officer

Non-Employee Directors

Sanford Zweifach

66

Director, Chair of the Board

Thomas R. Cannell, D.V.M.

61

Director

Regina Hodits, Ph.D.

52

Director

Briggs Morrison, M.D.

63

Director

Björn Odlander, M.D., Ph.D.

64

Director

Chidozie Ugwumba

40

Director

Interests of Sesen Bio Directors and Executive Officers in the Merger (see page 140)

In considering the recommendation of the Sesen Bio board of directors with respect to issuing shares of Sesen Bio common stock as contemplated by the Merger Agreement and the other matters to be acted upon by Sesen Bio stockholders at the Sesen Bio special meeting, Sesen Bio stockholders should be aware that certain members of the Sesen Bio board of directors and certain Sesen Bio executive officers have interests in the merger that may be different from, or in addition to, the interests of Sesen Bio stockholders,

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including, among others, severance benefits, the acceleration of equity vesting, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined company in accordance with Rule 144 under the Securities Act. As of September 20, 2022, Sesen Bio’s directors, executive officers and affiliates of Sesen Bio’s directors and executive officers, owned, in the aggregate, less than 1% of the shares of Sesen Bio common stock, which for purposes of this subsection excludes any Sesen Bio common stock issuable upon exercise of Sesen Bio options or vesting of Sesen Bio RSUs held by such individual. As of September 20, 2022, Sesen Bio’s directors and current executive officers owned, in the aggregate, (i) unvested Sesen Bio options covering 4,432,406 shares of Sesen Bio common stock and vested Sesen Bio options covering 7,282,057 shares of Sesen Bio common stock and (ii) unvested Sesen Bio RSUs covering 1,997,500 shares of Sesen Bio common stock. Each of Sesen Bio’s executive officers and directors have also entered into a support agreement in connection with the merger, whereby such executive officers and directors have agreed to vote their shares in favor of the proposals described in this proxy statement/prospectus.

Further, Thomas R. Cannell, D.V.M., Sesen Bio’s President and Chief Executive Officer and a member of the Sesen Bio board of directors, is expected to continue as a member of the combined company’s board of directors following the merger. The compensation arrangements with Sesen Bio’s directors and executive officers are discussed in greater detail in the sections entitled “The Merger — Interests of Sesen Bio Directors and Executive Officers in the Merger” and “Sesen Bio Executive Compensation” in this proxy statement/prospectus.

Interests of Carisma Directors and Executive Officers in the Merger (see page 140)

In considering the recommendation of the Carisma board of directors with respect to approving the merger and related transactions, Carisma stockholders should be aware that certain members of the Carisma board of directors and certain Carisma executive officers have interests in the merger that may be different from, or in addition to, the interests of Carisma stockholders. As of September 20, 2022, Carisma’s current directors and executive officers owned, in the aggregate, approximately 2.37% of the outstanding shares of Carisma capital stock, excluding, for this purpose any Carisma shares issuable upon exercise or settlement of Carisma stock options held by such individuals. Each of Carisma’s executive officers and the majority of Carisma’s directors have also entered into a support agreement in connection with the merger, whereby such executive officers and directors have agreed to vote their shares in favor of adoption of the Merger Agreement and approval of the merger.

Further, certain Carisma directors and executive officers are expected to become directors and executive officers of the combined company following the merger. The compensation arrangements with Carisma’s directors and executive officers are discussed in greater detail in the sections entitled “The Merger — Interests of Carisma Directors and Executive Officers in the Merger” and “Carisma Executive Compensation” in this proxy statement/prospectus.

Material U.S. Federal Income Tax Consequences of the Merger (see page 150)

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the merger constitutes a reorganization, subject to the qualifications and limitations set forth in the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger,” a Carisma U.S. holder will not recognize gain or loss for U.S. federal income tax purposes upon the receipt of shares of Sesen Bio common stock in exchange for shares of Carisma capital stock in the merger, except to the extent such a Carisma U.S. holder receives cash in lieu of a fractional share of Sesen Bio common stock.

If the merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, then each Carisma U.S. holder would recognize gain or loss upon the exchange of shares of Carisma capital stock for Sesen Bio common stock in the merger equal to the difference between the fair market value of the shares of Sesen Bio common stock received in exchange for the shares of Carisma capital stock (plus any cash received in lieu of a fractional share) and such Carisma U.S. holder’s adjusted tax basis in the shares of Carisma capital stock surrendered.

Since the Sesen Bio stockholders will not sell, exchange or dispose of any shares of Sesen Bio common stock as a result of the merger, there will be no material U.S. federal income tax consequences to Sesen Bio stockholders as a result of the merger.

See the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” for a more complete description of the material U.S. federal income tax consequences of the merger to U.S. holders of Carisma capital stock.

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Material U.S. Federal Income Tax Consequences of Receipt of CVRs (see pages 181)

The U.S. federal income tax treatment of the Sesen Bio U.S. holders’ receipt of the CVRs is unclear. Sesen Bio intends to report the issuance of the CVRs to Sesen Bio U.S. holders under the terms expressed in the form of the CVR Agreement included in Annex F to this proxy statement/prospectus as a distribution of property with respect to Sesen Bio common stock. In such case, each Sesen Bio U.S. holder will be treated as receiving a distribution in an amount equal to the fair market value of the CVRs issued to such Sesen Bio U.S. holder on the date of the issuance. This distribution should be treated first as a taxable dividend to the extent of the Sesen Bio U.S. holder’s pro rata share of Sesen Bio’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes after taking into account the special cash dividend as described below), then as a non-taxable return of capital to the extent of the Sesen Bio U.S. holder’s basis in its Sesen Bio common stock, and finally as capital gain from the sale or exchange of Sesen Bio common stock with respect to any remaining value. Sesen Bio currently has negative accumulated earnings and profits and expects no or a small amount of current earnings and profits for the relevant taxable year. Thus, Sesen Bio expects most or all of this distribution to be treated as other than a dividend for U.S. federal income tax purposes. See the section entitled “Agreements Related to the Merger — CVR Agreement — Material U.S. Federal Income Tax Consequences of the Receipt of CVRs” beginning on page 181 of this proxy statement/prospectus for a more complete description of the material U.S. federal income tax consequences of the receipt of CVRs to Sesen Bio U.S. holders, including possible alternative treatments.

The tax consequences to you of the receipt of CVRs will depend on your particular facts and circumstances. You should consult your tax advisors as to the specific tax consequences to you.

Material U.S. Federal Income Tax Consequences of Receipt of the Special Cash Dividend (see pages 153)

In connection with the merger, the Sesen Bio board of directors may declare and pay a special cash dividend to Sesen Bio stockholders of record prior to the effective time consisting of cash in an aggregate amount not to exceed $25.0 million, subject to Sesen Bio having net cash as of closing of the merger greater than or equal to $100.0 million. The U.S. federal income tax consequences of the Sesen Bio U.S. holders’ receipt of such special cash dividend generally should be treated first as a taxable dividend to the extent of the Sesen Bio U.S. holder’s pro rata share of Sesen Bio’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes), then as a non-taxable return of capital to the extent of the Sesen Bio U.S. holder’s basis in its Sesen Bio common stock, and finally as capital gain from the sale or exchange of Sesen Bio common stock with respect to any remaining amount. Sesen Bio currently has negative accumulated earnings and profits and expects no or a small amount of current earnings and profits for the relevant taxable year. Thus, Sesen Bio expects most or all of the special cash dividend to be treated as other than a dividend for U.S. federal income tax purposes.

See the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Special Cash Dividend” beginning on page 153 of this proxy statement/prospectus for a general description of the tax consequences of the special cash dividend that Sesen Bio may pay in connection with the merger.

The tax consequences to you of the special cash dividend will depend on your particular facts and circumstances. You should consult your tax advisors as to the specific tax consequences to you.

Material U.S. Federal Income Tax Consequences of the Reverse Stock Split (see pages 197)

Sesen Bio intends to report the proposed reverse stock split as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code. In general, and subject to the qualifications and limitations set forth in the section entitled “Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 197 of this proxy statement/prospectus, if the proposed reverse stock split qualifies as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code, a Sesen Bio U.S. holder should not recognize gain or loss upon the proposed reverse stock split, except to the extent a Sesen Bio U.S. holder receives cash in lieu of a fractional share of Sesen Bio common stock. As discussed in more detail in the section entitled “Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” on page 197 of this proxy statement/prospectus, these consequences assume that distribution of the CVRs and any cash distributed pursuant to a special cash dividend will be treated for U.S. federal income tax purposes as separate and distinct from the proposed reverse stock split. See the section entitled “Proposal No. 2: Approval of an amendment to the Sesen Bio Certificate of Incorporation to effect the reverse stock split — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 197 of this proxy statement/prospectus for a more complete description of the material U.S. federal income tax consequences of the proposed reverse stock split to Sesen Bio U.S. holders.

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The tax consequences to you of the proposed reverse stock split will depend on your particular facts and circumstances. You should consult your tax advisors as to the specific tax consequences to you.

Risk Factors (see page 26)

Both Sesen Bio and Carisma 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:

Risks Related to the Merger

The exchange ratio will not change or otherwise be adjusted based on the market price of Sesen Bio common stock as the exchange ratio depends on the Sesen Bio net cash at the closing of the merger and not the market price of Sesen Bio common stock, so the merger consideration at the closing of the merger may have a greater or lesser value than at the time the Merger Agreement was signed.
Sesen Bio stockholders and Carisma stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger and the Carisma pre-closing financing and the conversion of the Carisma convertible note.
Failure to complete the merger may result in either Sesen Bio or Carisma paying a termination fee to the other party and could significantly harm the market price of Sesen Bio common stock and negatively affect the future business and operations of each company.
The issuance of Sesen Bio common stock to Carisma stockholders pursuant to the Merger Agreement and the resulting change in control from the merger must be approved by Sesen Bio stockholders, and the Merger Agreement and transactions contemplated thereby must be approved by the Carisma stockholders. Failure to obtain these approvals would prevent the closing of the merger.
Some Sesen Bio and Carisma executive officers and directors have interests in the merger that are different from the Sesen Bio stockholders and Carisma stockholders and that may influence them to support or approve the merger without regard to the interests of the Sesen Bio stockholders and Carisma stockholders.
If the conditions to the merger are not satisfied or waived, the merger will not occur.

Risks Related to Sesen Bio

If the merger is not completed, the Sesen Bio board of directors may decide to pursue a liquidation and dissolution of Sesen Bio. In such an event, there can be no assurances as to the amount or timing of available cash left, if any, to distribute to Sesen Bio stockholders after paying its debts and other obligations and setting aside funds for reserves.
Sesen Bio stockholders may not receive any payment on the CVRs and the CVRs may otherwise expire valueless.
Sesen Bio is substantially dependent on its remaining employees to facilitate the consummation of the merger.
Sesen Bio has incurred significant losses since its inception and anticipates that it will continue to incur losses for the foreseeable future if the merger is not completed.
With the exception of specified regulatory, development and commercial milestones under the Roche Asset Purchase Agreement, Sesen Bio currently has no potential source of revenue and may never become profitable.
If the merger is not completed and Sesen Bio resumes clinical development of Vicineum, Sesen Bio will need substantial additional funding. If Sesen Bio is unable to raise capital when needed, Sesen Bio could be forced to delay, reduce or eliminate its product development programs or commercialization efforts.

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If Sesen Bio is unable to regain compliance with the listing requirements of the Nasdaq Capital Market, Sesen Bio common stock may be delisted from the Nasdaq Capital Market which could have a material adverse effect on Sesen Bio’s business and could make it more difficult for Sesen Bio stockholders to sell their shares of Sesen Bio common stock.

Risks Related to Carisma

Carisma has incurred significant losses since its inception. Carisma expects to continue to incur significant expenses and operating losses for the foreseeable future and may never achieve or maintain profitability.
Carisma has never generated revenue from product sales and may never achieve or maintain profitability.
Carisma is heavily dependent on the success of its lead product candidate, CT-0508, which will require significant clinical testing before it can seek marketing approval and potentially launch commercial sales. If CT-0508 does not receive marketing approval or is not successfully commercialized, or if there is significant delay in doing so, Carisma’s business will be harmed.
Carisma will need substantial additional funding for its continuing operations. If Carisma is unable to raise capital when needed or on acceptable terms, it could be forced to delay, reduce or eliminate its discovery or product development programs or commercialization efforts.
Cell therapy is a rapidly evolving area of science, and the approach Carisma is taking to discover and develop product candidates by utilizing genetically modified macrophages is novel and may never lead to approved or marketable products.
Even if any of Carisma’s product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, and the market opportunity for any of its product candidates, if approved, may be smaller than it estimates.
Carisma relies, and expects to continue to rely, on third parties to conduct its clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, which may prevent or delay Carisma’s ability to seek or obtain marketing approval for or commercialize its product candidates or otherwise harm its business. If Carisma is not able to maintain these third-party relationships or if these arrangements are terminated, it may have to alter its development and commercialization plans and its business could be adversely affected.
If Carisma is unable to obtain, maintain and enforce patent protection for its technology and product candidates or if the scope of the patent protection obtained is not sufficiently broad, its competitors could develop and commercialize technology and products similar or identical to Carisma’s, and its ability to successfully develop and commercialize its technology and product candidates may be adversely affected and Carisma may not be able to compete effectively in its market.

Risks Related to the Ownership of the Common Stock of the Combined Company

The market price of the combined company’s common stock is expected to be volatile, and the market price of the combined company’s common stock may drop following the merger.
The combined company will incur additional costs and increased demands upon management as a result of complying with the laws and regulations affecting public companies.
Once the combined company is no longer a “smaller reporting company” or otherwise no longer qualifies for applicable exemptions, the combined company will be subject to additional laws and regulations affecting public companies that will increase the combined company’s costs and the demands on management and could harm the combined company’s operating results.
Provisions that will be in the combined company’s certificate of incorporation and bylaws and provisions under Delaware law could make an acquisition of the combined company, which may be beneficial to its stockholders, more difficult and may prevent attempts by its stockholders to replace or remove its management.

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An active trading market for the combined company’s common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all.

These risks and other risks are discussed in greater detail under the section entitled “Risk Factors” in this proxy statement/prospectus. Sesen Bio and Carisma both encourage you to read and consider all of these risks carefully.

Regulatory Approvals (see page 150)

In the U.S., Sesen Bio must comply with applicable federal and state securities laws and the rules and regulations of Nasdaq in connection with the issuance of shares of Sesen Bio common stock and the filing of this proxy statement/prospectus with the SEC. Sesen Bio does not intend to seek any regulatory approval from antitrust authorities to consummate the transactions.

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Anticipated Accounting Treatment (see page 156)

The merger is expected to be accounted for as a reverse recapitalization under U.S. generally accepted accounting principles, or U.S. GAAP, because the primary assets of Sesen Bio are cash, cash equivalents and marketable securities. For financial reporting purposes, Carisma has been determined to be the accounting acquirer based upon the terms of the merger including: (i) Carisma stockholders and holders of securities convertible into Carisma common stock are expected to own approximately 66% of the combined company (based on estimates made at the time of signing the Merger Agreement), (ii) Carisma will hold the majority (six of seven) of board seats of the combined company and (iii) Carisma management will hold all key positions in the management of the combined company. Accordingly, the merger is expected to be treated as the equivalent of Carisma issuing stock to acquire the net assets of Sesen Bio. As a result of the merger, the net assets of Sesen Bio will be recorded at their acquisition-date fair value in the consolidated financial statements of Carisma and the reported operating results prior to the merger will be those of Carisma. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” in this proxy statement/prospectus for additional information.

Appraisal Rights and Dissenters’ Rights (see page 156)

Holders of Sesen Bio common stock are not entitled to appraisal rights in connection with the merger under Delaware law. Holders of Carisma capital stock 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 DGCL attached as Annex H and the section entitled “The Merger — Appraisal Rights and Dissenters’ Rights” in this proxy statement/prospectus.

Comparison of Stockholder Rights (see page 366)

Both Sesen Bio and Carisma 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, Carisma stockholders will become stockholders of Sesen Bio, and their rights will be governed by the DGCL, Sesen Bio’s amended and restated bylaws, or the Sesen Bio Bylaws, and the Sesen Bio Certificate of Incorporation, as may be further amended by Proposal No. 2 if approved by the Sesen Bio stockholders at the Sesen Bio special meeting. The rights of Sesen Bio stockholders contained in the Sesen Bio Certificate of Incorporation and Sesen Bio Bylaws differ from the rights of Carisma stockholders under the Carisma Certificate of Incorporation, and Carisma’s bylaws, or the Carisma Bylaws, as more fully described under the section entitled “Comparison of Rights of Holders of Sesen Bio Stock and Carisma Stock” in this proxy statement/prospectus.

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MARKET PRICE AND DIVIDEND INFORMATION

Sesen Bio common stock is listed on the Nasdaq Capital Market under the symbol “SESN.” Carisma is a private company and shares of Carisma common stock are not publicly traded. The closing price of Sesen Bio common stock on September 20, 2022, the last trading day prior to the public announcement of the merger, was $0.6692 per share, and the closing price of Sesen Bio common stock on October 13, 2022, the last practicable trading day prior to the date of this proxy statement/prospectus, was $0.5001 per share, each as reported on the Nasdaq Capital Market. Because the market price of Sesen Bio common stock is subject to fluctuation, the market value of the shares of Sesen Bio common stock that Carisma stockholders will be entitled to receive in the merger may increase or decrease.

Assuming stockholder approval of Proposal Nos. 1 and 2 and successful application for initial listing on the Nasdaq Capital Market, following the consummation of the merger, the Sesen Bio common stock will trade on the Nasdaq Capital Market under the new name, “CARISMA Therapeutics Inc.,” and new trading symbol “CARM.”

As of        , 2022, the record date for the Sesen Bio special meeting, there were approximately           holders of record of Sesen Bio common stock. As of          , 2022, there were         holders of record of Carisma capital stock. This number does not include stockholders for whom shares were held in “street name.” For detailed information regarding the beneficial ownership of certain Sesen Bio stockholders upon consummation of the merger, see the section entitled “Principal Stockholders of the Combined Company” beginning on page 378 of this proxy statement/prospectus.

Dividends

Sesen Bio has never declared or paid any cash dividends on the Sesen Bio common stock and does not anticipate paying cash dividends on the Sesen Bio common stock for the foreseeable future, other than the special cash dividend that Sesen Bio may pay to Sesen Bio stockholders in connection with the consummation of the merger. Carisma has never declared or paid any cash dividends on the Carisma common stock and does not anticipate paying cash dividends on the Carisma common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the merger will be at the discretion of the combined company’s then-current board of directors and will depend upon a number of factors, including the combined company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.

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RISK FACTORS

The combined company 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, you should carefully consider the material risks described below and those described in the section entitled “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 114 of this proxy statement/prospectus before deciding how to vote your shares of Sesen Bio common stock.

Risks Related to the Merger

The exchange ratio will not change or otherwise be adjusted based on the market price of Sesen Bio common stock as the exchange ratio depends on the Sesen Bio net cash at the closing of the merger and not the market price of Sesen Bio common stock, so the merger consideration at the closing of the merger may have a greater or lesser value than at the time the Merger Agreement was signed.

The Merger Agreement has set the calculation of the exchange ratio for the Carisma capital stock, and the exchange ratio is based on the fully-diluted capitalization of Carisma and Sesen Bio, in each case immediately prior to the closing of the merger (after giving effect to the Carisma pre-closing financing) as described in the section entitled “The Merger Agreement — Exchange Ratio” beginning on page 147 of this proxy statement/prospectus.

The Merger Agreement does not include a price-based termination right. Therefore, if before the completion of the merger the market price of Sesen Bio common stock declines from the market price on the date of the Merger Agreement, then Carisma stockholders could receive merger consideration with substantially lower value than the value of such merger consideration on the date of the Merger Agreement. Similarly, if before the completion of the merger the market price of Sesen Bio common stock increases from the market price of Sesen Bio common stock on the date of the Merger Agreement, then Carisma stockholders could receive merger consideration with substantially greater value than the value of such merger consideration on the date of the Merger Agreement. Because the exchange ratio does not adjust as a direct result of changes in the market price of Sesen Bio common stock, changes in the market price of Sesen Bio common stock will change the value of the total merger consideration payable to Carisma stockholders pursuant to the Merger Agreement.

Stock price changes may result from a variety of factors, including changes in Sesen Bio’s or Carisma’s respective businesses, operations and prospects, reductions or changes in U.S. government spending or budgetary policies, market assessments of the likelihood that the merger will be completed, interest rates, federal, state and local legislation, governmental regulation, legal developments in the industry segments in which Sesen Bio or Carisma operate, the timing of the merger, and general market, industry and economic conditions, including pandemics and other public health emergencies. Recent events surrounding the global economy, geopolitics and the COVID-19 pandemic continue to evolve and have introduced unusually high levels of volatility into financial and stock markets, and may affect the value of Sesen Bio common stock.

Sesen Bio stockholders and Carisma stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger and the Carisma pre-closing financing and the conversion of the Carisma convertible note.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the merger, Sesen Bio stockholders and Carisma stockholders will have experienced substantial dilution of their ownership interests in their respective companies, including as a result of the Carisma pre-closing financing and the conversion of Carisma’s $35.0 million outstanding convertible note, without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the merger and the Carisma pre-closing financing.

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Failure to complete the merger may result in either Sesen Bio or Carisma paying a termination fee to the other party and could significantly harm the market price of Sesen Bio common stock and negatively affect the future business and operations of each company.

If the merger is not completed and the Merger Agreement is terminated under certain circumstances, Sesen Bio may be required to pay Carisma a termination fee of $7.6 million and/or reimburse Carisma’s expenses up to a maximum of $1.75 million, and Carisma may be required to pay Sesen Bio a termination fee of $5.49 million and/or reimburse Sesen Bio’s expenses up to a maximum of $1.75 million. Even if a termination fee or reimbursement of expenses of the other party are not payable in connection with a termination of the Merger Agreement, each of Sesen Bio and Carisma will have incurred significant fees and expenses, which must be paid whether or not the merger is completed.

In addition, if the Merger Agreement is terminated and the Sesen Bio board of directors or Carisma board of directors determines to seek another business combination, there can be no assurance that either Sesen Bio or Carisma will be able to find a partner and close an alternative transaction on terms that are as favorable or more favorable than the terms set forth in the Merger Agreement.

The issuance of Sesen Bio common stock to Carisma stockholders pursuant to the Merger Agreement and the resulting change in control from the merger must be approved by Sesen Bio stockholders, and the Merger Agreement and transactions contemplated thereby must be approved by the Carisma stockholders. Failure to obtain these approvals would prevent the closing of the merger.

Before the merger can be completed, the Sesen Bio stockholders must approve, among other things, the issuance of Sesen Bio common stock to Carisma stockholders pursuant to the Merger Agreement and the resulting change in control from the merger, and Carisma stockholders must adopt the Merger Agreement and approve the merger and the related transactions. Failure to obtain the required stockholder approvals may result in a material delay in, or the abandonment of, the merger. Any delay in completing the merger may materially adversely affect the timing and benefits that are expected to be achieved from the merger.

The merger may be completed even though certain events occur prior to the closing of the merger that materially and adversely affect Sesen Bio or Carisma.

The Merger Agreement provides that either Sesen Bio or Carisma can refuse to complete the merger if there is a material adverse change affecting the other party between September 20, 2022, the date of the Merger Agreement, and the closing of the merger. 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 Sesen Bio or Carisma, including:

general business, economic or political conditions or conditions generally affecting the industries in which Sesen Bio or Carisma, as applicable, operates;
any natural disaster, epidemic, pandemic (including COVID-19), certain COVID-19 measures or responses, any acts of war, armed hostilities or terrorism;
with respect to Sesen Bio, any change in the trading price or trading volume of Sesen Bio common stock, excluding any underlying effect that may have caused such change, unless such effect is otherwise exempt from causing a material adverse effect under the Merger Agreement;
any change in, or any compliance with or action taken for the purpose of complying with, applicable laws or U.S. GAAP, or interpretations thereof;
with respect to any product or product candidate of Sesen Bio or its subsidiaries or Carisma or its subsidiaries, as applicable, the request of the FDA to refile, amend, or temporarily delay making any regulatory application or filing related to such product or product candidate or the protocol for any clinical trial relating to such product or product candidate, unless in the event of repeated or continued adverse decisions with respect to the applicable party’s product or product candidates by the FDA; and

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the taking of any action or failure to take action by Sesen Bio or Carisma, as applicable, expressly required to comply with the terms of the Merger Agreement.

If adverse changes occur and Sesen Bio and Carisma still complete the merger, the market price of the combined company’s common stock may suffer. This in turn may reduce the value of the merger to the Sesen Bio stockholders, Carisma stockholders or both.

Some Sesen Bio and Carisma executive officers and directors have interests in the merger that are different from the Sesen Bio stockholders and Carisma stockholders and that may influence them to support or approve the merger without regard to the interests of the Sesen Bio stockholders and Carisma stockholders.

Certain executive officers and directors of Sesen Bio and Carisma participate in arrangements that provide them with interests in the merger that are different from the interests of the Sesen Bio stockholders and Carisma stockholders, including, among others, severance benefits, the acceleration of equity vesting, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined company in accordance with Rule 144 under the Securities Act. Further, Thomas R. Cannell, D.V.M., Sesen Bio’s President and Chief Executive Officer and a current member of the Sesen Bio board of directors, is expected to continue as a member of the combined company’s board of directors following the merger. The compensation arrangements with Sesen Bio’s executive officers and directors are discussed in greater detail in the sections entitled “The Merger — Interests of Sesen Bio Directors and Executive Officers in the Merger” and “Sesen Bio Executive Compensation — Director Compensation” beginning on pages 140 and 338, respectively, of this proxy statement/prospectus.

These interests, among others, may influence the executive officers and directors of Sesen Bio and Carisma to support or approve the merger. For more information concerning the interests of Sesen Bio’s and Carisma’s respective executive officers and directors, see the sections entitled “The Merger — Interests of Sesen Bio Directors and Executive Officers in the Merger” and “The Merger — Interests of Carisma Directors and Executive Officers in the Merger” beginning on pages 140 and 144, respectively, of this proxy statement/prospectus.

The market price of the combined company’s common stock following the merger may decline as a result of the merger.

The market price of the combined company’s common stock may decline as a result of the merger for a number of reasons, including if:

investors react negatively to the prospects of the combined company’s product candidates, business and financial condition following the merger;
the effect of the merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or
the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts.

Sesen Bio stockholders and Carisma stockholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the closing of the merger as compared to their current ownership and voting interest in the respective companies.

If the merger is completed, the current Sesen Bio stockholders and Carisma stockholders will own a smaller percentage of the combined company than their ownership in their respective companies prior to the merger. Immediately after the merger, pre-merger Sesen Bio stockholders are expected to own approximately 41.7% of the outstanding shares of capital stock of the combined company and pre-merger Carisma stockholders, excluding shares of Carisma common stock purchased in connection with the Carisma pre-closing financing and the conversion of Carisma’s $35.0 million outstanding convertible note, are expected to own approximately 58.3% of the outstanding shares of capital stock of the combined company, subject to certain assumptions, including Sesen Bio’s net cash as of closing being $125.0 million.

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Raising additional capital may cause dilution to the combined company’s stockholders, restrict its operations or require it to relinquish rights to its technologies or product candidates.

Until such time, if ever, as the combined company, operating as Carisma, can generate substantial revenues from product sales, Carisma expects to finance its cash needs through a combination of public and private equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. Although Carisma may receive future payments under its collaboration with Moderna Inc., or Moderna, Carisma does not currently have any other committed external source of funds. The terms of any financing may adversely affect the holdings or the rights of the combined company’s stockholders and the issuance of additional securities, whether equity or debt, by the combined company, or the possibility of such issuance, may cause the market price of the combined company’s shares of common stock to decline. To the extent that the combined company raises additional capital through the sale of equity or convertible debt securities, the ownership interest of the combined company’s stockholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect the rights of such stockholders. Debt financing and preferred equity financing, if available, would increase the combined company’s fixed payment obligations and may involve agreements that include covenants limiting or restricting the combined company’s operations and ability to take specific actions, such as incurring additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions, selling or licensing the combined company’s assets, making capital expenditures, redeeming its stock, making certain investments, declaring dividends or other operating restrictions that could adversely impact the combined company’s ability to conduct its business. The combined company could also be required to meet certain milestones in connection with debt financing and the failure to achieve such milestones by certain dates may force the combined company to relinquish rights to some of its technologies or product candidates or otherwise agree to terms unfavorable to the combined company which could have a material adverse effect on the combined company’s business, operating results and prospects. The combined company also could be required to seek funds through arrangements with collaborators or otherwise at an earlier stage than otherwise would be desirable. If the combined company raises funds through additional collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, the combined company may have to relinquish valuable rights to its intellectual property, future revenue streams, discovery programs or product candidates, grant licenses on terms that may not be favorable to the combined company or grant rights to develop and market product candidates that the combined company would otherwise prefer to develop and market itself, any of which may have a material adverse effect on the combined company’s business, operating results and prospects.

During the pendency of the merger, Sesen Bio and Carisma may not be able to enter into a business combination with another party on more favorable terms because of restrictions in the Merger Agreement, which could adversely affect their respective business prospects.

Covenants in the Merger Agreement impede the ability of Sesen Bio and Carisma to make acquisitions during the pendency of the merger, subject to specified exceptions. 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 or knowingly encouraging, inducing or facilitating any inquiries, indications of interest, proposals or offers that constitute or may reasonably be expected to lead to certain transactions involving a third party, including a merger, sale of assets or other business combination, subject to specified exceptions. Any such transactions could be favorable to such party’s stockholders, but the parties may be unable to pursue them. For more information, see the section entitled “The Merger Agreement — No Solicitation” beginning on page 168 of this proxy statement/prospectus.

Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the transactions contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of Sesen Bio and Carisma from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when the Sesen Bio board of directors or the Carisma board of directors, as applicable, determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to result in a superior takeover proposal and that failure to cooperate with the proponent of the proposal is reasonably likely to be inconsistent with the applicable board’s fiduciary duties. Any such transactions could be favorable to Sesen Bio stockholders or Carisma stockholders, as applicable. In addition, if Sesen Bio terminates the Merger Agreement under certain circumstances, including terminating because of a decision of Sesen Bio to enter into a definitive agreement with respect to a superior offer, Sesen Bio would be required to pay a termination fee of $7.6 million to Carisma and/or reimburse Carisma’s expenses up to a maximum of $1.75 million. This termination fee described above may discourage third parties from submitting alternative takeover

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proposals to Sesen Bio stockholders, and may cause the Sesen Bio board of directors to be less inclined to recommend an alternative takeover proposal.

Because the lack of a public market for Carisma common stock makes it difficult to evaluate the value of Carisma common stock, the Carisma stockholders may receive shares of Sesen Bio common stock in the merger that have a value that is less than, or greater than, the fair market value of Carisma common stock.

The outstanding common stock of Carisma 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 Carisma. Because the percentage of Sesen Bio common stock to be issued to Carisma stockholders was determined based on negotiations between the parties, it is possible the value of Sesen Bio common stock to be received by Carisma stockholders will be less than the fair market value of Carisma, or the value of Sesen Bio’s common stock to be received by Carisma stockholders may be more than the aggregate fair market value for Carisma.

If the conditions to the merger are not satisfied or waived, the merger will not occur.

Even if the transactions contemplated by the Merger Agreement are approved by Sesen Bio stockholders and Carisma stockholders, certain other specified conditions set forth in the Merger Agreement must be satisfied, to the extent permitted by applicable law, or waived to complete the merger, including approval from Nasdaq to maintain the listing of the Sesen Bio common stock on the Nasdaq Capital Market following the merger and the listing of the shares of Sesen Bio common stock being issued in the merger and the conversion of the Carisma convertible note. These conditions are set forth in the Merger Agreement and each material condition to the completion of the merger is described in the section entitled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 165 of this proxy statement/prospectus. Sesen Bio and Carisma 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 Sesen Bio and Carisma 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 Carisma stockholders in respect of their Carisma capital stock.

Sesen Bio and Carisma 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” beginning on page 150 of this proxy statement/prospectus. In the event that the merger does not qualify as a “reorganization,” the merger would result in taxable gain or loss for each Carisma stockholder, with the amount of such gain or loss determined by the amount that each Carisma stockholder’s adjusted tax basis in the Carisma capital stock surrendered is less or more than the fair market value of the Sesen Bio common stock and any cash in lieu of a fractional share received in exchange therefor. Each Carisma stockholder is urged to consult with his, her or its own tax advisor with respect to the tax consequences of the merger.

Future sales of shares by existing stockholders could cause the combined company’s stock price to decline.

If existing Sesen Bio stockholders and Carisma stockholders sell, or indicate an intention to sell, substantial amounts of the combined company’s common stock in the public market after the merger, the trading price of the common stock of the combined company could decline. Based on shares outstanding as of September 20, 2022 and taking into account the consummation of the Carisma pre-closing financing (including the conversion of the Carisma convertible note) and an assumed exchange ratio of 24.5844, the combined company is expected to have outstanding a total of approximately 656,865,489 shares of common stock (prior to giving effect to the proposed reverse stock split) immediately following the completion of the merger. Not all shares of Sesen Bio common stock will be freely tradable, without restriction, in the public market. For example, an aggregate of 265,069,468 shares of the combined company’s common stock will be subject to the lock-up agreements required under the Merger Agreement as of the closing of the merger.

The historical unaudited pro forma condensed combined financial information may not be representative of the combined company’s results after the merger.

The historical unaudited pro forma condensed combined financial information included elsewhere in this proxy statement/prospectus has been presented for informational purposes only and is not necessarily indicative of the financial position or

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results of operations that actually would have occurred had the merger been completed as of the date indicated, nor is it indicative of future operating results or financial position.

Lawsuits may be filed against Sesen Bio, the members of the Sesen Bio board of directors, Carisma and/or the members of the Carisma board of directors arising out of the merger, which may delay or prevent the merger.

Putative stockholder complaints, including stockholder class action complaints, and other complaints may be filed against Sesen Bio, the Sesen Bio board of directors, Carisma, and/or the Carisma board of directors in connection with the transactions contemplated by the merger agreement. The outcome of litigation is uncertain, and Sesen Bio and Carisma may not be successful in defending against any such future claims. Lawsuits that may be filed against Sesen Bio, the Sesen Bio board of directors, Carisma, and the Carisma board of directors could delay or prevent the merger, divert the attention of the management teams and employees of Sesen Bio and Carisma from day-to-day business and otherwise adversely affect the business and financial condition of Sesen Bio, Carisma or the combined company.

Risks Related to the Proposed Reverse Stock Split

The proposed reverse stock split may not increase the combined company’s stock price over the long-term.

One of the purposes of the proposed reverse stock split is to increase the per-share market price of the Sesen Bio 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 Sesen Bio common stock will proportionally increase the per-share market price of Sesen Bio common stock, it cannot be assured that the proposed reverse stock split will increase the per-share market price of Sesen Bio common stock by a multiple of the proposed reverse stock split ratio, or result in any permanent or sustained increase in the per-share market price of Sesen Bio common stock, which is dependent upon many factors, including the combined company’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of the combined company 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 company’s common stock.

Although the Sesen Bio board of directors believes that the anticipated increase in the per-share market price of the combined company’s common stock as a result of the proposed reverse stock split could encourage interest in the combined company’s common stock and possibly promote greater liquidity for stockholders of the combined company, 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 the combined company’s common stock.

Should the market price of the combined company’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. The proposed reverse stock split may be viewed negatively by the market and, consequently, may lead to a decrease in the combined company’s overall market capitalization. If the per-share market price does not increase in proportion to the exact ratio of the proposed reverse stock split, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share market 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 the combined company’s 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 price of the combined company’s common stock due to the reduced number of outstanding shares after the proposed reverse stock split.

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Risks Related to Sesen Bio

If the merger is not completed, the Sesen Bio board of directors may decide to pursue a liquidation and dissolution of Sesen Bio. In such an event, there can be no assurances as to the amount or timing of available cash left, if any, to distribute to Sesen Bio stockholders after paying its debts and other obligations and setting aside funds for reserves.

While Sesen Bio has entered into the Merger Agreement with Carisma, the closing of the merger may be delayed or may not occur at all and there can be no assurance that the merger will deliver the anticipated benefits Sesen Bio expects or enhance stockholder value. If the merger is not completed and the Merger Agreement is terminated under certain circumstances, Sesen Bio may be required to pay Carisma a termination fee of $7.6 million and/or reimburse Carisma’s expenses up to a maximum of $1.75 million. Even if a termination fee is not payable in connection with a termination of the Merger Agreement, Sesen Bio will have incurred significant fees and expenses, which must be paid whether or not the merger is completed.

If, for any reason, the merger does not close, the Sesen Bio board of directors may elect to, among other things, attempt to complete another strategic transaction like the merger, attempt to sell or otherwise dispose of the various assets of Sesen Bio, resume its research and development activities and continue to operate the business of Sesen Bio. Any of these alternatives would be costly and time-consuming and would require that Sesen Bio obtain additional funding. Sesen Bio expects that it would be difficult to secure financing in a timely manner, on favorable terms or at all. Sesen Bio can make no assurances that it would be able to obtain additional financing or find a partner and close an alternative transaction on terms that are as favorable or more favorable than the terms set forth in the Merger Agreement or that any such alternatives are possible or would be successful, if pursued. To the extent that Sesen Bio seeks and is able to raise additional capital through the sale of equity or convertible debt securities, Sesen Bio stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect their rights as a common stockholder. Debt financing or preferred equity financing, if available, may involve agreements that include covenants limiting or restricting Sesen Bio’s ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If Sesen Bio raises funds through strategic transactions or marketing, distribution, or licensing arrangements with third parties, Sesen Bio may have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to it. Even if Sesen Bio is able to pursue such alternatives, the failure to complete the merger may result in negative publicity and/or a negative impression of Sesen Bio in the investment community, could significantly harm the market price of Sesen Bio common stock and may affect Sesen Bio’s relationship with employees and other partners in the business community.

If the merger is not completed, the Sesen Bio board of directors may decide that it is in the best interests of the Sesen Bio stockholders to dissolve the company and liquidate its assets. In that event, the amount of cash available for distribution to the Sesen Bio stockholders would depend heavily on the timing of such decision and, ultimately, such liquidation since the amount of cash available for distribution continues to decrease as Sesen Bio funds its operations and incurs fees and expenses related to the merger. In addition, if the Sesen Bio board of directors were to approve and recommend, and the Sesen Bio stockholders were to approve, a dissolution of Sesen Bio, it would be required under the DGCL to pay its outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to the Sesen Bio stockholders. As a result of this requirement, a portion of Sesen Bio’s assets may need to be reserved pending the resolution of such obligations. In addition, Sesen Bio may be subject to litigation or other claims related to a liquidation and dissolution of the company. If a liquidation and dissolution were pursued, the Sesen Bio board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, the Sesen Bio stockholders could lose all or a significant portion of their investment in the event of a liquidation and dissolution of Sesen Bio.

Sesen Bio stockholders may not receive any payment on the CVRs and the CVRs may otherwise expire valueless.

The right of Sesen Bio stockholders to receive any future payment on or derive any value from the CVRs will be contingent solely upon the occurrence of a certain triggering event. In particular, CVR holders will be entitled to a pro rata portion of the $30.0 million milestone payment to be made by Roche to Sesen Bio upon Roche’s initiation of a Phase 3 clinical trial with legacy IL-6 antagonist antibody technology previously owned by Sesen Bio for a certain indication if initiated prior to December 31, 2026, pursuant to the Roche Asset Purchase Agreement, less certain permitted deductions. Sesen Bio may not receive any future payment pursuant to the Roche Asset Purchase Agreement after the closing of the merger. If this milestone is not achieved for any reason within the time period specified in the CVR Agreement or the consideration received is not greater than the amounts permitted to be retained or deducted by Sesen Bio, no payments will be made under the CVRs, and the CVRs will expire valueless.

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Furthermore, the CVRs will be unsecured obligations of the combined company and all payments under the CVRs, all other obligations under the CVR Agreement and the CVRs and any rights or claims relating thereto will be subordinated in right of payment to the prior payment in full of all current or future senior obligations of the combined company. For more information about the CVR Agreement, see the section entitled “Agreements Related to the Merger — CVR Agreement” beginning on page 181 of this proxy statement/prospectus.

The U.S. federal income tax treatment of the CVRs is unclear and there can be no assurance that the Internal Revenue Service would not assert, or that a court would not sustain, a position that could result in adverse U.S. federal income tax consequences to holders of the CVRs.

The U.S. federal income tax treatment of the CVRs is unclear. There is no legal authority directly addressing the U.S. federal income tax treatment of the receipt of, and payments on, the CVRs, and there can be no assurance that the Internal Revenue Service, or the IRS, would not assert, or that a court would not sustain, a position that could result in adverse U.S. federal income tax consequences to holders of the CVRs.

As discussed in the section entitled “Agreements Related to the Merger — CVR Agreement — Material U.S. Federal Income Tax Consequences of the Receipt of CVRs,” Sesen Bio intends to treat the issuance of the CVRs as a distribution of property with respect to its stock. However, there is no authority directly addressing whether contingent value rights with characteristics similar to the CVRs should be treated as a distribution of property with respect to the corporation’s stock, a distribution of equity, a “debt instrument” or an “open transaction” for U.S. federal income tax purposes. Although Sesen Bio will estimate the value of the CVRs for purposes of reporting on Form 1099 to Sesen Bio stockholders, the value of the CVRs is uncertain and the IRS or a court could determine that the value of the CVRs at the time of issuance was higher. In such case, the Sesen Bio stockholders could be treated as having additional income or gain upon receipt of the CVRs as described further in the section entitled “Agreements Related to the Merger — CVR Agreement — Material U.S. Federal Income Tax Consequences of the Receipt of CVRs” beginning on page 181 of this proxy statement/prospectus. Further, notwithstanding Sesen Bio’s position that the receipt of CVRs, the receipt of any cash distributed pursuant to a special cash dividend and the proposed reverse stock split are appropriately treated as separate transactions, it is possible that the IRS or a court could determine that the Sesen Bio stockholders’ receipt of the CVRs, the receipt of any cash distributed pursuant to a special cash dividend and the proposed reverse stock split constitute a single “recapitalization” for U.S. federal income tax purposes. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to Sesen Bio’s position, which could result in adverse U.S. federal income tax consequences to holders of the CVRs. The tax consequences of such alternative treatments are described below under the section entitled “Agreements Related to the Merger — CVR Agreement — Material U.S. Federal Income Tax Consequences of the Receipt of CVRs,” beginning on page 181 of this proxy statement/prospectus.

Sesen Bio is substantially dependent on its remaining employees to facilitate the consummation of the merger.

As of September 20, 2022, Sesen Bio had 17 full-time employees. Sesen Bio’s ability to successfully complete the merger depends in large part on its ability to retain certain remaining personnel. Despite Sesen Bio’s efforts to retain these employees, one or more may terminate their employment with Sesen Bio on short notice. The loss of the services of certain employees could potentially harm Sesen Bio’s ability to consummate the merger, to run its day-to-day business operations, as well as to fulfill its reporting obligations as a public company.

Sesen Bio has never paid and, other than in connection with the merger, does not intend to pay any cash dividends in the foreseeable future.

Sesen Bio has never paid cash dividends on any of its capital stock. Pursuant to the terms of the Merger Agreement, Sesen Bio may, in addition to the CVRs, declare and pay a special cash dividend to its stockholders of record prior to the merger consisting of cash in an amount not to exceed $25.0 million, subject to Sesen Bio having net cash as of the closing of the merger greater than or equal to $100.0 million. The amount of such special cash dividend is currently uncertain, pending the determination of Sesen Bio’s outstanding obligations and net cash position as of the closing of the merger. Other than such potential special cash dividend in connection with the closing of the merger, Sesen Bio does not currently anticipate declaring or paying cash dividends on its capital stock in the foreseeable future.

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Risks Related to Sesen Bio’s Financial Position and Need for Additional Capital if the Merger is Not Completed

Sesen Bio has incurred significant losses since its inception and anticipates that it will continue to incur losses for the foreseeable future if the merger is not completed.

Sesen Bio is a specialty pharmaceutical company with a limited operating history. Over the past few years, Sesen Bio has focused primarily on developing its lead product candidate, Vicineum for the treatment of NMIBC. On July 15, 2022, Sesen Bio made the strategic decision to voluntarily pause further development of Vicineum in the U.S. to conserve cash while considering strategic alternatives. Since its inception, Sesen Bio has received no revenues from sales of its products, has incurred significant operating losses and expects to continue to incur operating losses for the foreseeable future. Sesen Bio had net losses of $0.3 million, $22.4 million and $107.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. Sesen Bio incurred negative cash flows from operating activities of $68.9 million, $30.8 million and $37.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of June 30, 2022, Sesen Bio had cash, cash equivalents and marketable securities of $161.2 million, net working capital (current assets less current liabilities) of $124.4 million and an accumulated deficit of $349.0 million. Sesen Bio has financed its operations to date primarily through private placements of its common stock, preferred stock, common stock warrants and convertible bridge notes, venture debt borrowings, its initial public offering, its follow-on public offerings, sales effected in at-the-market, or ATM offerings, and its out-licensing and outside the U.S., or OUS, business development partnership agreements. The majority of Sesen Bio’s revenue to date has been from milestone payments received under its out-licensing and OUS business development partnership agreements. If the merger is not completed and Sesen Bio does not pursue a liquidation and dissolution or alternative strategic transaction and despite the 2022 restructuring plan, as defined below, Sesen Bio expects to continue to incur significant expenses and operating losses for the foreseeable future.

Sesen Bio expects to incur losses for the foreseeable future, and Sesen Bio expects these losses to continue as it:

addresses its ongoing securities litigation and derivative litigation;
maintains, expands and protects its intellectual property portfolio;
reduces its personnel and incurs related severance and employee-related costs in connection with the restructuring plan announced following the decision to pause further development of Vicineum in the U.S., or the 2022 restructuring plan;
winds down and disposes of the equipment and physical infrastructure that had been used to support its research and development activities and exploring and evaluating a strategic partner for Vicineum;
winds down activities with its contract manufacturing organizations, or CMOs; and
explores, evaluates and pursues a liquidation and dissolution or alternative strategic transaction if the merger is not completed.

With the exception of specified regulatory, development and commercial milestones under the Roche Asset Purchase Agreement, Sesen Bio currently has no potential source of revenue and may never become profitable.

Sesen Bio is a late-stage clinical company with a limited operating history. Sesen Bio’s ability to become and remain profitable depends on its ability to generate revenue. Although Sesen Bio may be entitled to certain payments under the Roche Asset Purchase Agreement, Sesen Bio has not commercialized any of its product candidates. On July 15, 2022, Sesen Bio made the strategic decision to voluntarily pause further development in the U.S. of Vicineum. This decision enables Sesen Bio to conserve cash while it prepares to consummate the merger. There can be no guarantee that the merger will be completed within the anticipated timing or at all. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, it does not expect to generate significant revenue unless and until Sesen Bio or one of its business development partners, if any, obtains marketing approval for, and commercializes, Vicineum for the treatment of NMIBC. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio’s ability to generate revenue from Vicineum will depend on a number of factors, including:

Sesen Bio’s ability to obtain regulatory approval for, and successfully commercialize, Vicineum for the treatment of NMIBC;

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Sesen Bio’s ability to complete and submit applications to, and obtaining regulatory approval from, non-U.S. regulatory authorities;
the size of the markets in the territories for which Sesen Bio or its business development partners, if any, gain regulatory approval;
Sesen Bio’s ability to find a suitable contract sales organization, or CSO, to help it market and promote Vicineum, if approved;
Sesen Bio’s ability to develop and maintain effective medical affairs, sales, marketing and distribution to market and sell Vicineum, if approved;
Sesen Bio’s ability to enter into and maintain commercially reasonable agreements with wholesalers, distributors and other third parties in its supply chain;
Sesen Bio’s success in establishing a commercially viable price for Vicineum, if approved;
Sesen Bio’s success in defending against potential competition and other developments in its market generally;
Sesen Bio’s ability to manufacture commercial quantities of Vicineum at acceptable cost levels;
Sesen Bio’s ability to obtain coverage and adequate reimbursement from third-party payors, including government payors; and
Sesen Bio’s or any business development partners’ ability to successfully complete development activities, including necessary clinical trials, for Vicineum for the treatment of NMIBC.

Even if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and Vicineum is approved for commercial sale, Vicineum may not gain market acceptance or achieve commercial success. If Sesen Bio’s addressable market is not as significant as Sesen Bio estimates, the indication approved by regulatory authorities is narrower than Sesen Bio expects or the treatment population is narrowed by competition, physician choice or clinical practice guidelines, Sesen Bio may not generate significant revenue from sales of Vicineum. In addition, if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio would anticipate incurring significant costs associated with commercializing Vicineum, if approved. Sesen Bio may not achieve profitability soon after generating product sales from Vicineum, if ever. If Sesen Bio is unable to generate product revenues from Vicineum, Sesen Bio may not become profitable and may be unable to continue operations without continued funding.

Even if Sesen Bio achieves profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Its failure to become and remain profitable would depress the value of Sesen Bio and could impair its ability to raise capital, expand its business, maintain its development efforts, obtain drug approvals, diversify its offerings or continue its operations. A decline in the value of Sesen Bio could also cause you to lose all or part of your investment.

If the merger is not completed and Sesen Bio resumes clinical development of Vicineum, Sesen Bio will need substantial additional funding. If Sesen Bio is unable to raise capital when needed, Sesen Bio could be forced to delay, reduce or eliminate its product development programs or commercialization efforts.

Sesen Bio has devoted substantial financial resources to clinical trial for Vicineum for the treatment of NMIBC and functions associated with operating as a public company. If the merger is not completed, Sesen Bio expects to continue to spend substantial amounts if it were to continue the clinical development of Vicineum for the treatment of NMIBC, and, if approved, commercialize Vicineum. Accordingly, Sesen Bio would need to obtain substantial additional funding in connection with its continuing operations if the merger is not completed. If Sesen Bio is unable to raise capital when needed or on attractive terms, Sesen Bio could be forced to delay, reduce or eliminate its research and development programs or any future commercialization efforts.

Sesen Bio’s future capital requirements will depend on many factors, including:

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the costs and timing of continuing the clinical development of Vicineum for the treatment of NMIBC;
the success of its commercialization of Vicineum for the treatment of NMIBC, if approved;
the outcome, timing and cost of the regulatory approval process for Vicineum for the treatment of NMIBC by the FDA and comparable non-U.S. regulatory authorities, including the potential for the FDA to require that Sesen Bio perform more studies and clinical trials than those Sesen Bio currently expects;
the costs and timing of the implementation of commercial-scale manufacturing activities;
Sesen Bio’s ability to establish and maintain commercial arrangements on favorable terms, if at all, particularly manufacturing, marketing and distribution arrangements for Vicineum for the treatment of NMIBC;
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing Sesen Bio’s intellectual property rights and defending any intellectual property-related claims;
Sesen Bio’s obligation to make milestone, royalty and other payments to third-party licensors under its in-licensing agreements;
the extent to which Sesen Bio in-license or acquire rights to other products, product candidates or technologies; and
the effect of competing technological and market developments.

Sesen Bio cannot be certain that additional funding will be available when needed on acceptable terms, or at all. If Sesen Bio is unable to raise additional capital in sufficient amounts, when required or on acceptable terms, Sesen Bio also could be required to:

seek out-licensing or commercialization partners to assist in the clinical development or commercialization of Vicineum for the treatment of NMIBC in the U.S. and other markets;
delay, limit, reduce or terminate the clinical development of Vicineum for the treatment of NMIBC; or
significantly curtail Sesen Bio’s operations.

Risks Related to Clinical Development and Regulatory Approval of Vicineum if the Merger is Not Completed

Sesen Bio has been dependent on its lead product candidate, Vicineum for the treatment of NMIBC. If Sesen Bio resumes clinical development of Vicineum and is unable to obtain marketing approval for or successfully commercialize its lead product candidate, either alone or through an out-license or OUS business development partnership, or experiences significant delays in doing so, its business could be materially harmed.

Sesen Bio currently has no products approved for sale and has invested a significant portion of its efforts and financial resources in the development of Vicineum. On July 15, 2022, Sesen Bio made the strategic decision to voluntarily pause further development of Vicineum in the U.S. The decision was based on a thorough reassessment of Vicineum, which included the incremental development timeline and associated costs for an additional Phase 3 clinical trial, following Sesen Bio’s discussions with the FDA. As a result of this decision, Sesen Bio no longer plans to pursue regulatory approval of Vicineum for NMIBC in the European Union, or the E.U.

If the merger is not completed and even if Sesen Bio resumes clinical development of Vicineum for NMIBC, Sesen Bio may be unable to address the issues identified in the complete response letter, or CRL, from the FDA or resubmit a biologics license application, or BLA, for Vicineum, or address the concerns identified in the European Medicines Agency, or EMA, Withdrawal Assessment Report or resubmit its marketing authorization application, or MAA, for Vysyneum, including because of a lack of capital or otherwise.

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Even if the issues identified in the CRL or the concerns identified in the EMA Withdrawal Assessment Report are resolved to the satisfaction of the FDA or the EMA, respectively, the FDA and the European Commission retain the right not to approve a BLA or MAA, respectively, or to require additional information, or to raise additional issues with regard to regulatory approval, which could further delay or prevent its approval or limit product labelling claims.

If the merger is not completed and Sesen Bio resumes clinical development, Sesen Bio’s prospects would be substantially dependent on its ability to obtain marketing approval for and commercialize Vicineum for the treatment of NMIBC. In addition, either the substance of the issues identified by the FDA in the CRL, or the CRL itself, or the concerns identified in the EMA Withdrawal Assessment Report could have an adverse impact on future efforts to obtain marketing authorization for Vicineum from other non-U.S. regulatory authorities, or on Sesen Bio’s future efforts to commercialize Vicineum and gain acceptance of Vicineum from third-party payors. The success of Vicineum would depend on several factors, including the following:

successfully completing the clinical development of Vicineum for the treatment of NMIBC;
addressing the issues identified in the CRL that Sesen Bio received from the FDA and the concerns identified in the EMA Withdrawal Assessment Report;
receiving marketing approvals from the FDA, the European Commission or comparable non-U.S. regulatory authorities, including Sesen Bio’s ability to address the issues identified by the FDA in the CRL or the EMA Withdrawal Assessment Report;
developing and maintaining the commercial manufacturing supply and distribution chain for Vicineum;
performance of future out-licensing or OUS business development partners (if any);
the extent of any required post-marketing approval commitments to applicable regulatory authorities;
obtaining and maintaining patent, trade secret protection and regulatory exclusivity, both in the U.S. and internationally;
protecting Sesen Bio’s rights in its intellectual property portfolio;
launching commercial sales, if and when marketing approval is received;
demonstrating an acceptable safety profile prior to and following any marketing approval;
obtaining marketplace acceptance, if approved, by patients, the medical community and third-party payors;
establishing and maintaining pricing sufficient to realize a meaningful return on Sesen Bio’s investment; and
competition with other therapies.

If Sesen Bio is unable to develop, receive marketing approval for, or successfully commercialize Vicineum or experience delays as a result of any of these factors or otherwise, its business could be materially harmed.

If additional clinical trials of Vicineum for the treatment of NMIBC fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other non-U.S. regulatory authorities or do not otherwise produce favorable results, Sesen Bio will be unable to complete the development and potential commercialization of Vicineum for the treatment of NMIBC.

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If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and additional clinical trials of Vicineum fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other non-U.S. regulatory authorities or do not otherwise produce favorable results, Sesen Bio will be unable to complete the development and potential commercialization of Vicineum for the treatment of NMIBC.

Before obtaining marketing approval from regulatory authorities for the sale of Vicineum for the treatment of NMIBC, Sesen Bio must complete pre-clinical development and conduct extensive clinical trials to demonstrate the safety and efficacy of Vicineum in humans. In order to address the issues identified in the CRL that Sesen Bio received from the FDA for the BLA for Vicineum and the concerns identified in the EMA Withdrawal Assessment Report, Sesen Bio would need to complete one or more additional clinical trials. Such trials would require Sesen Bio to incur substantial additional costs and would delay the potential commercialization of Vicineum for the treatment of NMIBC. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. Further, the outcome of pre-clinical studies and early clinical trials may not be predictive of the success of later clinical trials, and preliminary results of a clinical trial do not necessarily predict final results.

Even if such clinical trials are successfully completed as planned, the results may not support approval of Vicineum for the treatment of NMIBC under the laws and regulations of the FDA, the European Commission or comparable non-U.S. regulatory authorities. Even if Sesen Bio resumes clinical development of Vicineum, Sesen Bio cannot be certain that additional clinical data will demonstrate Vicineum is both safe and effective for its intended uses to the satisfaction of the FDA, the EMA or comparable non-U.S. regulatory authorities. Pre-clinical and clinical data and analyses are often able to be interpreted in different ways. Even if Sesen Bio views its results favorably, it may be unable to demonstrate safety and efficacy of Vicineum for the treatment of NMIBC to the satisfaction of the FDA, the EMA or other non-U.S. regulatory authorities. If a regulatory authority has a different view, Sesen Bio may still fail to obtain regulatory approval of Vicineum. This, in turn, would prevent Sesen Bio from commercializing Vicineum and its ability to generate revenues in the future would be materially impaired.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and Sesen Bio experiences delays or difficulties in the enrollment of patients in clinical trials, its receipt of necessary regulatory approvals could be delayed or prevented.

Even if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio may not be able to initiate or continue clinical trials for Vicineum if Sesen Bio is unable to locate and enroll a sufficient number of patients to participate in these trials as required by the FDA or similar non-U.S. regulatory authorities. Sesen Bio has previously experienced difficulties with clinical trial enrollment and retention, which led to the early termination of its Phase 3 trial of Vicineum for the treatment of squamous cell carcinoma of the head and neck, or SCCHN, in 2008, and Sesen Bio may experience difficulties in patient enrollment in its clinical trials in the future for a variety of reasons.

Subject enrollment is affected by a number of factors, including:

the severity of the disease under investigation;
the eligibility criteria for the clinical trial in question;
the size of the patient population for the disease;
the size of the patient population required for statistically significant analysis of the clinical trial’s primary endpoints;
the design of the clinical trial;
the clinicians’ and patients’ perceived risks and benefits of the product candidate under study, including relative to alternative treatments;
the efforts to facilitate timely enrollment in clinical trials;

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the patient referral practices of physicians;
any ongoing clinical trials conducted by competitors for the same indication;
the risk that patients enrolled in clinical trials will drop out of the clinical trials before completion;
the ability to monitor patients adequately during and after treatment; and
the proximity and availability of clinical trial sites for prospective patients.

Further, Sesen Bio’s ability to successfully initiate, enroll and complete a clinical trial in any country outside of the U.S., should Sesen Bio decide to do so, is subject to numerous risks unique to conducting business in such countries, including:

difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians;
different or additional standards for the conduct of clinical trials;
absence in some countries of established groups with sufficient regulatory expertise for review of the protocols associated with Vicineum;
ensuring that clinical trial quality is sufficient to meet the standards of the FDA or other regulatory authorities;
Sesen Bio’s inability to locate qualified local consultants, physicians and partners; and
the potential burden of complying with a variety of non-U.S. laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments.

In addition, Sesen Bio’s clinical trials would compete with other clinical trials for other product candidates that are in the same therapeutic areas as Vicineum, and this competition will reduce the number and types of patients available to Sesen Bio, because some patients who might have opted to enroll in Sesen Bio’s trials may instead opt to enroll in a trial being conducted by one of its competitors. Since the number of qualified clinical investigators is limited, Sesen Bio expects to conduct some of its clinical trials at the same clinical trial sites that some of its competitors use, which will reduce the number of patients who are available for Sesen Bio’s clinical trials in such clinical trial site. Moreover, because Vicineum represents a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy, rather than enroll patients in any of Sesen Bio’s clinical trials.

Sesen Bio’s inability to enroll a sufficient number of patients for its clinical trials would result in significant delays, could require Sesen Bio to abandon one or more clinical trials altogether and could delay or prevent its receipt of necessary regulatory approvals. Enrollment delays in its clinical trials may result in increased development costs for its product candidates, which would cause the value of the company to decline and limit its ability to obtain additional financing.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Vicineum for the treatment of NMIBC may cause undesirable side effects, serious adverse events or have other properties that could delay or halt clinical trials, delay or prevent its regulatory approval, limit the commercial profile of its labeling, if approved, or result in significant negative consequences following any marketing approval.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, undesirable side effects or serious adverse events caused by Vicineum for the treatment of NMIBC could cause Sesen Bio or regulatory authorities to interrupt, delay or halt respective clinical trials and could result in a restrictive label or the delay or denial of regulatory approval by the FDA or other comparable non-U.S. regulatory authorities.

There were no Grade 4 or Grade 5 serious adverse events that were considered by the clinical investigators to be related to Vicineum during the Phase 1 and Phase 2 clinical trials of Vicineum for the treatment of bacillus Calmette-Guérin, or BCG,

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unresponsive NMIBC. There was one Grade 5 serious adverse event, or death, which was determined by the clinical investigator to be unrelated to Vicineum. The most common reported treatment-related adverse events were an abnormally frequent passage of small amounts of urine, blood in the urine and painful urination, the majority of which were considered to be mild or moderate in severity. No patients discontinued treatment due to a Vicineum-related adverse event during the Phase 1 and Phase 2 clinical trials.

As of the May 29, 2019 data cutoff date, in patients across all cohorts (n=133) of Sesen Bio’s Phase 3 VISTA Trial of Vicineum for the treatment of BCG-unresponsive NMIBC, 88% experienced at least one adverse event, with 95% of adverse events being Grade 1 or 2. The most commonly reported treatment-related adverse events were dysuria (14%), hematuria (13%) and urinary tract infection (12%)  —  all of which are consistent with the profile of bladder cancer patients and the use of catheterization for treatment delivery. These adverse events were determined by the clinical investigators to be manageable and reversible, and only four patients (3%) discontinued treatment due to an adverse event. Serious adverse events, regardless of treatment attribution, were reported in 14% of patients. There were four treatment-related serious adverse events reported in three patients including acute kidney injury (Grade 3), pyrexia (Grade 2), cholestatic hepatitis (Grade 4) and renal failure (Grade 5 or death). There were no age-related increases in adverse events observed in the VISTA Trial.

In addition, side effects and serious adverse events or further safety or toxicity issues that Sesen Bio may experience in its clinical trials or in post-marketing experience, if approved, could lead to the FDA’s or other comparable non-U.S. regulatory authority’s imposition of a risk evaluation and mitigation strategy, or REMS, or other post-marketing obligations, which could hinder Sesen Bio from generating revenues or achieving profitability. Results of Sesen Bio’s clinical trials could reveal an unacceptably high severity and prevalence of side effects or serious adverse events. As a result, Sesen Bio’s clinical trials could be suspended or terminated, and the FDA or comparable non-U.S. regulatory authorities could order Sesen Bio to cease further development or deny approval of Vicineum for the treatment of NMIBC. The related drug-side effects or serious adverse events in Sesen Bio’s clinical trials could affect clinical trial patient recruitment or the ability of enrolled patients to complete the clinical trial or result in potential product liability claims.

Additionally, even if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and receives marketing approval, and Sesen Bio or others later identify undesirable side effects or serious adverse events caused by Vicineum, a number of potentially significant negative consequences could result, including:

Sesen Bio may suspend or be forced to suspend marketing of Vicineum for the treatment of NMIBC;
Sesen Bio may be obliged to conduct a product recall or product withdrawal;
regulatory authorities may suspend, vary, or withdraw their approvals of Vicineum for the treatment of NMIBC;
regulatory authorities may order the seizure or recall of Vicineum;
regulatory authorities may require additional warnings on the label or a REMS or other post-marketing obligations that could diminish the usage or otherwise limit the commercial success of Vicineum for the treatment of NMIBC;
Sesen Bio may be required to conduct post-marketing studies;
Sesen Bio could be sued and held liable for harm caused to patients;
Sesen Bio could be required to pay fines and face other administrative, civil and criminal penalties; and
Sesen Bio’s reputation may suffer.

Any of these events could prevent Sesen Bio from achieving or maintaining market acceptance of Vicineum for the treatment of NMIBC, if approved.

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The marketing approval process is expensive, time-consuming and uncertain. As a result, even if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, it cannot predict when or if it, or any licensees or partners, if any, will obtain marketing approval to commercialize Vicineum for the treatment of NMIBC.

Securing marketing approval requires the submission of extensive pre-clinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s quality, safety, and efficacy. The process of obtaining marketing approvals, both in the U.S. and abroad, is expensive and may take many years, especially if additional clinical trials are required, if approval is obtained at all. On July 15, 2022, Sesen Bio made the strategic decision to voluntarily pause further development of Vicineum in the U.S. The decision was based on a thorough reassessment of Vicineum, which included the incremental development timeline and associated costs for an additional Phase 3 clinical trial, following its discussions with the FDA. As a result of this decision, Sesen Bio no longer plans to pursue regulatory approval of Vysyneum for the treatment of NMIBC in the E.U.

Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, the FDA or other comparable non-U.S. regulatory authorities may determine that Vicineum is not safe, effective or of appropriate quality, is only moderately effective or has undesirable or unintended side effects, toxicities or other characteristics that preclude Sesen Bio obtaining marketing approval or prevent or limit commercial use. Any marketing approval Sesen Bio ultimately obtains may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

The different requirements and expectations of the non-U.S. regulatory authorities compared with the FDA may lengthen the regulatory review process, require Sesen Bio to conduct additional studies or clinical trials, 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. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and experiences delays in obtaining regulatory approvals, the commercial prospects for its product candidates may be harmed and its ability to generate revenues will be materially impaired.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, failure to obtain marketing approval in non-U.S. jurisdictions would prevent Vicineum for the treatment of NMIBC from being marketed abroad, and any approval Sesen Bio may be granted for Vicineum for the treatment of NMIBC in the U.S. would not assure approval of product candidates in non-U.S. jurisdictions.

In order to market and sell any product candidate that Sesen Bio may develop outside of the U.S., Sesen Bio or its third-party licensees or commercialization partners, if any, must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the U.S. generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the U.S. it is required that the product be approved for reimbursement before the product can be sold in that country. Sesen Bio or these third parties may not obtain approvals from regulatory authorities outside the U.S. on a timely basis, if at all. For example, on March 5, 2021, Sesen Bio submitted its MAA to the EMA for Vicineum for the treatment of BCG-unresponsive NMIBC under the EMA’s centralized procedure. On August 20, 2021, Sesen Bio withdrew its MAA to the EMA for Vysyneum for the treatment of BCG-unresponsive NMIBC. Additionally, on October 20, 2021, the EMA issued its Withdrawal Assessment Report relating to Sesen Bio’s MAA for Vysyneum, as is consistent with the EMA’s standard practice when an MAA is withdrawn. The Assessment Report reflects the initial assessment and corresponding questions from the EMA and identifies major objections in the areas of quality, good clinical practice, efficacy and safety. On July 15, 2022, Sesen Bio made the strategic decision to voluntarily pause further development of Vicineum in the U.S. The decision was based on a thorough reassessment of Vicineum, which included the incremental development timeline and associated costs for an additional Phase 3 clinical trial, following its discussions with the FDA. As a result of this decision, Sesen Bio no longer plans to pursue regulatory approval of Vysyneum for the treatment NMIBC in the E.U.

Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the U.S. does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio may not be able to file for marketing approvals and may not receive necessary approvals to commercialize its products in any market. If Sesen Bio is unable to

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obtain approval of its product candidates by regulatory authorities in other jurisdictions, the commercial prospects of its product candidates may be significantly diminished, and its business prospects could decline.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio would face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than Sesen Bio does.

The development and commercialization of new biologics products is highly competitive. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio would face competition from both large and small pharmaceutical, biopharmaceutical and biotechnology companies, academic institutions and other research organizations. There are a number of large pharmaceutical, biopharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of NMIBC. For instance, in January 2020, the FDA approved Merck & Co., Inc.’s Keytruda (pembrolizumab) as a systemic monotherapy to treat patients with BCG-unresponsive NMIBC with non-muscle invasive carcinoma in situ, or CIS, with or without papillary tumors who are ineligible for or have elected not to undergo cystectomy. In addition, FerGene Inc. is developing Adstiladrin (nadofaragene firadenovec (rAd-IFN/Syn3) for BCG-unresponsive NMIBC for the U.S. market. On May 17, 2020, the FDA issued a CRL that indicated outstanding questions regarding chemistry, manufacturing and controls, or CMC, issues of Adstiladrin. In September 2020, CG Oncology (CG0070, a recombinant adenovirus type 5, same type as Adstiladrin) initiated a Phase 3 study for the treatment of BCG-unresponsive patients with expected primary and study completion dates of December 2022 and December 2024, respectively. A combination trial with CG0070 and pembrolizumab was initiated in December 2020 (active not recruiting) with a primary completion date of June 2023. In December 2020, ImmunityBio (Anktiva/N-803 in combination with BCG) released preliminary Phase 2 data for the CIS cohort and filed its BLA with the FDA in May 2022. However, the Phase 2 trial did not include a BCG only control arm. The BLA for Anktiva was accepted by the FDA in July 2022 and a PDUFA date of May 23, 2023 has been set. In May 2020, the preliminary results of the Phase 2 study of Tecentriq for the treatment of BCG-unresponsive CIS patients were presented at American Society of Clinical Oncology, or ASCO, by the National Cancer Institute, or the NCI, which sponsored the trial. The data showed that the trial did not meet its primary endpoint and further development of Tecentriq remains uncertain. Finally, another route of administration for checkpoint inhibitors is currently being evaluated by Pfizer with the subcutaneous administration of Sasanlimab (PF-06801591) for the treatment of BCG-unresponsive NMIBC patients. There is intense and rapidly evolving competition in the biotechnology, biopharmaceutical and antibody fragment and immuno-oncology therapeutics fields. Some of these competitive products and therapies are based on scientific approaches that are similar to Sesen Bio’s approach, and others are based on entirely different approaches, including the emerging use of generic intravesical chemotherapy agents, such as mytomycin-C, Gemcytabine and Gemcytobine + Docetaxel.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, its commercial opportunity could be reduced or eliminated if its competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than product candidates that Sesen Bio may develop. Sesen Bio’s competitors also may obtain FDA or other regulatory approval for their products more rapidly than Sesen Bio may obtain approval for Vicineum, which could result in its competitors establishing a strong market position before Sesen Bio is able to enter the market.

In addition, Sesen Bio’s ability to compete may be affected in many cases by insurers or other third-party payors, particularly Medicare, seeking to encourage the use of generic drug products. Generic products are currently being used as part of the standard of care for the indications that Sesen Bio has been pursuing, and additional products are expected to become available on a generic basis over the coming years. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and Vicineum achieves marketing approval, Sesen Bio expects that it will be priced at a significant premium over competitive generic products.

More established companies may have a competitive advantage over Sesen Bio due to their greater size, cash resources and institutional experience. Compared to Sesen Bio, many of its competitors may have significantly greater financial, technical and human resources. As a result of these factors, its competitors may obtain regulatory approval of their product candidates before Sesen Bio is able to, which may limit its ability to develop or commercialize its product candidates. Sesen Bio’s competitors may also develop drugs that are safer, more effective, more widely used and less expensive than Sesen Bio’s and may also be more successful than Sesen Bio in manufacturing and marketing their products. These appreciable advantages could render Vicineum obsolete or non-competitive before Sesen Bio can recover the expenses of development and commercialization.

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Risks Related to Sesen Bio’s Dependence on Third Parties if the Merger is Not Completed

Sesen Bio will depend on Qilu Pharmaceutical Co., Ltd., or Qilu, for the development and commercialization of Vicineum in Greater China.

On July 30, 2020, Sesen Bio entered into a license agreement, with Qilu, or the Qilu License Agreement. Under the terms of the Qilu License Agreement, Qilu has an exclusive license to manufacture, develop and commercialize Vicineum in Greater China, including mainland China, Hong Kong, Macau and Taiwan. The timing and amount of any milestone and royalty payments Sesen Bio may receive under the Qilu License Agreement will depend in part on Qilu’s efforts. Sesen Bio will also depend on Qilu to comply with all applicable laws relative to the manufacturing, development and commercialization of Vicineum in Greater China. Sesen Bio does not control the individual efforts of Qilu, and any failure by Qilu to devote sufficient time and effort to the manufacture, development and commercialization of Vicineum could have a material adverse impact on Sesen Bio’s financial results and operations, such as by a failure of Qilu to meet its obligations to Sesen Bio, including future milestone and royalty payments. In addition, if Qilu were to violate, or was alleged to have violated, any laws or regulations during the performance of its obligations for Sesen Bio, it is possible that Sesen Bio could suffer financial and reputational harm or other negative outcomes, including possible legal consequences.

Any termination, breach or expiration of the Qilu License Agreement could have a material adverse effect on Sesen Bio’s financial position by reducing or eliminating the potential for Sesen Bio to receive milestones and royalties. In such an event, Sesen Bio may be required to devote additional efforts and to incur additional costs associated with pursuing the manufacture, development and commercialization of Vicineum in Greater China. If Sesen Bio breaches its obligations under the Qilu License Agreement and is unable to cure such breach, Qilu may terminate the Qilu License Agreement and retain all rights to manufacture, develop and commercialize Vicineum in Greater China with no obligation to make any additional milestone or royalty payments. Qilu has the right to receive a refund of all amounts paid to Sesen Bio in the event the Qilu License Agreement is terminated under certain circumstances. In addition, the royalty rate is subject to reduction under certain circumstances, including when there is no valid claim of a licensed patent for Vicineum in a particular region or no data or regulatory exclusivity for Vicineum in a particular region.

Sesen Bio has historically relied on third parties to conduct its pre-clinical studies and clinical trials. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and if these third parties do not successfully carry out their contractual duties or meet expected deadlines, Sesen Bio may not be able to obtain regulatory approval for or commercialize Vicineum for the treatment of NMIBC.

Sesen Bio relies on domestic and international third-party CROs to monitor and manage data for its pre-clinical and clinical programs. Sesen Bio relies on these parties for execution of its pre-clinical studies and clinical trials, and Sesen Bio controls only some aspects of their activities. Nevertheless, Sesen Bio is responsible for ensuring that each of its pre-clinical studies and clinical trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and its reliance on the CROs does not relieve Sesen Bio of its regulatory responsibilities. Sesen Bio also relies on third parties to assist in conducting its pre-clinical studies in accordance with the FDA’s current Good Laboratory Practice, or GLP, and the Animal Welfare Act requirements. Sesen Bio and its CROs are required to comply with U.S. federal regulations and current Good Clinical Practices, or GCP, which are international standards meant to protect the rights and health of patients and assure the credibility of clinical trial data that are enforced by the FDA and comparable non-U.S. regulatory authorities for all of its product candidates in clinical development. Regulatory authorities enforce GCP through periodic inspections of trial sponsors, principal investigators and trial sites. If Sesen Bio or any of its CROs fail to comply with applicable GCP, the clinical data generated in its clinical trials may be deemed unreliable and the FDA or comparable non-U.S. regulatory authorities may require Sesen Bio to perform additional clinical trials before approving its marketing applications.

On October 27, 2021, the FDA published a Warning Letter, or the FDA Warning Letter, issued to a former clinical investigator in Sesen Bio’s VISTA trial for Vicineum arising from a 2021 FDA inspection related to the review of Sesen Bio’s BLA for Vicineum for the treatment of BCG-unresponsive NMIBC. Sesen Bio discontinued use of the clinical site and the clinical investigator over four years ago when it learned of professional misconduct by the clinical investigator that was unrelated to the VISTA trial. The FDA Warning Letter indicated that the clinical investigator did not comply with applicable statutory requirements and applicable regulations regarding conduct of clinical investigations. The clinical investigator’s medical license was temporarily suspended on May 29, 2017, due to inaccurate recordkeeping, which was unassociated with Sesen Bio and the patients in the VISTA trial. Sesen Bio notified the FDA of the misconduct at that time. There was no evidence found that patients were harmed by the clinical investigator’s

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actions. Sesen Bio included the corresponding patient data from the clinical site in the BLA submission to the FDA, which were thoroughly analyzed and discussed during the BLA review.

Sesen Bio cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of its clinical trials comply with GCP requirements. In addition, its clinical trials must be conducted with product produced under current good manufacturing process, or cGMP, requirements. Failure to comply with these regulations may require Sesen Bio to repeat pre-clinical studies and clinical trials, which would delay the regulatory approval process.

Sesen Bio’s CROs are not its employees, and except for remedies available to Sesen Bio under its agreements with such CROs, Sesen Bio cannot control whether or not they devote sufficient time and resources to its ongoing clinical, non-clinical and pre-clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to its protocols, regulatory requirements or for other reasons, its pre-clinical studies and clinical trials may be extended, delayed or terminated and Sesen Bio may not be able to obtain regulatory approval for or successfully commercialize its product candidates. As a result, its results of operations and the commercial prospects for its product candidates would be harmed, its costs could increase and its ability to generate revenues could be delayed.

Because Sesen Bio relied, and will continue to rely, on third parties, its internal capacity to perform these functions is limited. Outsourcing these functions involves risk that third parties may not perform to its standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third-party service providers requires Sesen Bio to disclose its proprietary information to these parties, which could increase the risk that this information will be misappropriated. Sesen Bio currently has a small number of employees, which limits the internal resources Sesen Bio has available to identify and monitor its third-party providers. To the extent Sesen Bio is unable to identify and successfully manage the performance of third-party service providers in the future, its business may be adversely affected. Though Sesen Bio carefully manages its relationships with its CROs, there can be no assurance that Sesen Bio will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on its business, financial condition and prospects.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio would likely be dependent on third-party manufacturers, as well as third parties for Sesen Bio’s supply chain, which would expose Sesen Bio to a number of risks that may delay development, regulatory approval and commercialization or result in higher product costs.

In connection with Sesen Bio’s decision to voluntarily pause further development of Vicineum, Sesen Bio terminated its agreements with its CMOs and requested that such manufacturers cease all work under the respective agreements and refrain from incurring any additional costs or expenses.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio would likely be dependent on third-party manufacturers, as well as third parties for Sesen Bio’s supply chain. Sesen Bio’s reliance on third-party manufacturers would expose it to certain risks that it would not be subject to if Sesen Bio manufactured Vicineum itself, including:

It may be difficult or impossible for Sesen Bio to find replacement manufacturers on acceptable terms quickly, or at all. Identifying alternate manufacturers may be difficult because the number of potential manufacturers that have the necessary expertise to produce biologics is limited. Additionally, the FDA must approve any alternative manufacturer before Sesen Bio may use the alternative manufacturer to produce clinical supply of Vicineum.
The development of manufacturing capabilities to produce clinical supply of Vicineum may require Sesen Bio’s third-party manufacturers to invest substantial additional funds and to hire and retain technical personnel who have the necessary manufacturing experience. Sesen Bio’s third-party manufacturers may fail to devote sufficient time and resources to develop the capabilities to manufacture Vicineum.
Because of the complex nature of Vicineum, Sesen Bio’s third-party manufacturers, or other third parties it relies on, may encounter difficulties in achieving the volume of production needed to satisfy its clinical supply demands, may not be able to achieve such volume at an acceptable cost, may experience technical issues that impact comparability, quality, or compliance with applicable regulations governing the manufacture of biological products, and may experience shortages of qualified personnel to adequately staff production operations.

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Sesen Bio’s third-party manufacturers could default on their agreements with Sesen Bio to meet its requirements for supply of Vicineum, or they may terminate or decide not to renew their agreements with Sesen Bio, based on their own business priorities, at a time that is costly or damaging to Sesen Bio. If Sesen Bio’s third-party manufacturers were to terminate its arrangements or fail to meet its manufacturing demands, Sesen Bio may be delayed in its ability to obtain and maintain regulatory approval of Vicineum for the treatment of NMIBC.
If any third-party manufacturer makes improvements in the manufacturing process for Vicineum, Sesen Bio may not own, or may have to share, the intellectual property rights to such improvements.
A third-party manufacturer may gain knowledge from working with Sesen Bio that could be used to supply one of its competitors with a product that competes with Sesen Bio’s.

Sesen Bio’s reliance on third-party manufacturers reduces its control over production and supply of Vicineum but does not relieve Sesen Bio of its responsibility to ensure compliance with applicable legal and regulatory standards. The FDA and other non-U.S. regulatory authorities require that Sesen Bio’s product candidates and any products that it may eventually commercialize be manufactured according to cGMP and similar non-U.S. standards. Methods of manufacture as well as validation of manufacturing procedures and quality control systems are reviewed by regulatory authorities, such as the FDA and other comparable non-U.S. regulatory authorities, to determine their effect on the quality, purity and potency of product candidates. All such manufacturing procedures, validation programs and quality assessment activities must be properly documented in accordance with regulatory requirements. Any failure by Sesen Bio’s third-party manufacturers to comply with cGMP or similar non-U.S. standards, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in or failure to obtain regulatory approval of Vicineum for the treatment of NMIBC if Sesen Bio resumes clinical development of Vicineum. For example, Sesen Bio may be unable to resolve the issues raised in the CRL pertaining to a recent pre-approval inspection and product quality.

In addition, a failure by Sesen Bio’s third-party manufactures to comply with cGMP or similar non-U.S. standards could be the basis for the FDA or any other non-U.S. regulatory authorities to issue a warning or untitled letter, withdraw approvals for product candidates previously granted to Sesen Bio or take other regulatory or legal action, including recall or seizure, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, detention of product, refusal to permit the import or export of products, injunction, imposing administrative or civil penalties or pursuing criminal prosecution.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and if Sesen Bio or its third-party manufacturers fail to comply with environmental, health and safety laws and regulations, Sesen Bio could become subject to fines or penalties or incur significant costs.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMBIC and engages third-party manufacturers, such manufacturers would be subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Any such operations may involve the use of hazardous and flammable materials, including chemicals and biological materials, and may produce hazardous waste products. Historically, Sesen Bio has generally contracted with third parties for the disposal of these materials and wastes. Sesen Bio cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from its use of hazardous materials, Sesen Bio could be held liable for any resulting damages and any liability could exceed its resources. Sesen Bio also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.

Although Sesen Bio maintains workers’ compensation insurance to cover it for costs and expenses it may incur due to injuries to its employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. Sesen Bio does not maintain insurance for environmental liability or toxic tort claims that may be asserted against it in connection with its storage or disposal of biological, hazardous or radioactive materials.

In addition, if Sesen Bio resumes clinical development of Vicineum, Sesen Bio may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair its research, development or production efforts. Sesen Bio’s failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

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Further, with respect to the operations of third-party contract manufacturers, if any, it is possible that if they fail to operate in compliance with applicable environmental, health and safety laws and regulations or properly dispose of wastes associated with its products, Sesen Bio could be held liable for any resulting damages, suffer reputational harm or experience a disruption in the manufacture and supply of its product candidates or products.

Risks Related to Sesen Bio’s Intellectual Property if the Merger is Not Completed

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC and is unable to obtain and maintain patent protection for its technology or products, or if its licensors are unable to obtain and maintain patent protection for the technology or products that Sesen Bio licenses from them, or if the scope of the patent protection obtained is not sufficiently broad, Sesen Bio’s competitors could develop and commercialize technology and products similar or identical to theirs, and its ability to successfully commercialize it technology and products may be impaired.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio’s success depends in large part on the ability of both it and its licensors’ to obtain and maintain patent protection in the U.S. and other countries with respect to Vicineum and its other proprietary technology and product candidates. Sesen Bio and its licensors have sought to protect Sesen Bio’s proprietary position by filing patent applications in the U.S. and abroad related to its novel technologies and product candidates. The patent prosecution process is expensive and time-consuming, and Sesen Bio may not be able to file and prosecute all necessary or desirable patent applications in jurisdictions of interest at a reasonable cost or in a timely manner. It is also possible that Sesen Bio will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, Sesen Bio does not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that it licenses from third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of Sesen Bio’s business. If such licensors fail to maintain such patents, or lose rights to those patents, the rights Sesen Bio has licensed may be reduced or eliminated.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of Sesen Bio’s and its licensors’ patent rights are highly uncertain. Sesen Bio’s and its licensors’ pending and future patent applications may not result in patents being issued which protect its technology or products or which effectively prevent others from commercializing competitive technologies and products. In addition, the laws of non-U.S. countries may not protect Sesen Bio’s rights to the same extent as the laws of the U.S. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, Sesen Bio cannot know with certainty whether it or its licensors were the first to make the inventions claimed in its owned or licensed patents or pending patent applications, or that Sesen Bio or its licensors were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of Sesen Bio’s owned or licensed patent rights are highly uncertain. Sesen Bio’s pending and future patent applications may not result in patents being issued which protect its technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. In particular, during prosecution of any patent application, the issuance of any patents based on the application may depend upon Sesen Bio’s ability to generate additional pre-clinical or clinical data that support the patentability of its proposed claims. Sesen Bio may not be able to generate sufficient additional data on a timely basis, or at all. Moreover, changes in either the patent laws or interpretation of the patent laws in the U.S. and other countries may diminish the value of Sesen Bio’s patents or narrow the scope of Sesen Bio’s patent protection.

Moreover, Sesen Bio may be subject to a third-party preissuance submission of prior art to the U.S. Patent and Trademark Office, or the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging its patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, Sesen Bio’s patent rights, allow third parties to commercialize its technology or products and compete directly with Sesen Bio, without payment to it, or result in Sesen Bio’s inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by Sesen Bio’s patents and patent applications is threatened, it could dissuade companies from collaborating with Sesen Bio to license, develop or commercialize current or future product candidates. In addition, invalidation of Sesen Bio’s patent rights by third parties could jeopardize the anticipated revenue streams from current licensees.

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Even if Sesen Bio’s owned and licensed patent applications issue as patents, they may not issue in a form that will provide Sesen Bio with any meaningful protection, prevent competitors from competing with Sesen Bio or otherwise provide Sesen Bio with any competitive advantage. Sesen Bio’s competitors may be able to circumvent Sesen Bio’s owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and Sesen Bio’s owned and licensed patents may be challenged in the courts or patent offices in the U.S. and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit Sesen Bio’s ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of its technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, Sesen Bio’s owned and licensed patent portfolio may not provide it with sufficient rights to exclude others from commercializing products similar or identical to Sesen Bio’s.

Sesen Bio may not be able to protect its intellectual property rights throughout the world.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, filing, prosecuting and defending patents on Vicineum and Sesen Bio’s other product candidates and technologies throughout the world would be prohibitively expensive, and Sesen Bio’s or its licensors’ intellectual property rights in some countries outside the U.S. can be less extensive than those in the U.S. In addition, the laws and practices of countries outside the U.S. do not protect intellectual property rights to the same extent as federal and state laws in the U.S. Moreover, the intellectual property laws of the U.S. change over time. For example, several United States Supreme Court cases have redefined what is considered to be patentable subject matter. Consequently, if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, Sesen Bio and its licensors may not be able to prevent third parties from practicing Sesen Bio’s and its licensors’ inventions in all countries inside or outside the U.S., or from selling or importing products made using Sesen Bio’s and its licensors’ inventions in and into the U.S. or other jurisdictions. Competitors may use Sesen Bio’s technologies in jurisdictions where it has not obtained patent protection to develop their own products and may export infringing products to territories where Sesen Bio or its licensors have patent protection, but where enforcement is not as strong as in the U.S. These products may compete with Sesen Bio’s products in jurisdictions where it does not have any issued patents and Sesen Bio’s patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in non-U.S. jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for Sesen Bio to stop the infringement of Sesen Bio’s or its licensor’s patents or marketing of competing products in violation of Sesen Bio’s proprietary rights generally in those countries. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, proceedings to enforce Sesen Bio’s patent rights in non-U.S. jurisdictions could result in substantial cost and divert its efforts and attention from other aspects of its business, could put Sesen Bio’s and its licensors’ patents at risk of being invalidated or being interpreted narrowly and put Sesen Bio’s and its licensors’ patent applications at risk of not issuing and could provoke third parties to assert claims against Sesen Bio or its licensors. Sesen Bio or its licensors may not prevail in any lawsuits that Sesen Bio or its licensors initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.

The laws of certain countries outside of the U.S. may not protect Sesen Bio’s rights to the same extent as the laws of the U.S., and such laws may also be subject to change. For example, methods of treatment and manufacturing processes may not be patentable in certain jurisdictions, and the requirements for patentability may differ in certain countries, particularly developing countries. Furthermore, generic and/or biosimilar product manufacturers or other competitors may challenge the scope, validity or enforceability of Sesen Bio’s or its licensors’ patents, requiring Sesen Bio or its licensors to engage in complex, lengthy and costly litigation or other proceedings.

Generic or biosimilar product manufacturers may develop, seek approval for, and generic versions or biosimilar versions, respectively, of Sesen Bio’s products. The FDA has published several guidance documents on biosimilar product development. If a biosimilar product is also found to be interchangeable with a reference product, it may be substituted for the reference product. Complexities associated with the larger, and often more complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation, which are still being worked out by the FDA. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, and if Vicineum is approved by the FDA, the approval of

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a biologic product biosimilar to or interchangeable with Vicineum could have a material impact on Sesen Bio’s business. In particular, a biosimilar could be significantly less costly to bring to market and priced significantly lower than Sesen Bio’s products, if approved by the FDA.

Many countries, including E.U. countries, have compulsory licensing laws under which a patent owner may be compelled under certain circumstances to grant licenses to third parties. In those countries, Sesen Bio and its licensors may have limited remedies if patents are infringed or if Sesen Bio or its licensors are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit Sesen Bio’s potential revenue opportunities. Accordingly, Sesen Bio’s and its licensors’ efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Sesen Bio owns or licenses.

Sesen Bio has been dependent on its license agreements with the University of Zurich, or Zurich, Micromet AG, or Micromet, and XOMA Ireland Limited, or XOMA, and if Sesen Bio cannot meet the requirements under the agreements, it could lose important rights to Vicineum, which could have material adverse effect on Sesen Bio’s business if it resumes clinical development of Vicineum for the treatment of NMIBC.

Sesen Bio has an exclusive license agreement with Zurich, or the Zurich License Agreement. Pursuant to the Zurich License Agreement, Sesen Bio was granted an exclusive license, with the right to sublicense, under certain patents primarily relating, in part, to Sesen Bio’s targeting agents, EpCAM chimera and immunoconjugates (including aspects of Vicineum for the treatment of NMIBC and Vicineum for the treatment of SCCHN) and methods of use, to make, use, sell and import products that would otherwise infringe such patents in the field of the treatment, stasis and palliation of disease in humans. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, and if Sesen Bio fails to meet its obligations under the Zurich License Agreement, Zurich may have the right to terminate Sesen Bio’s license, and upon the effective date of such termination, Sesen Bio’s right to use the licensed Zurich patent rights would end. To the extent such licensed technology or patent rights relate to Sesen Bio’s product candidates, Sesen Bio would expect to exercise all rights and remedies available to it, including attempting to cure any breach by Sesen Bio, and otherwise seek to preserve its rights under the patent rights licensed to Sesen Bio, but it may not be able to do so in a timely manner, at an acceptable cost to Sesen Bio or at all. Any uncured, material breach under the Zurich License Agreement could result in Sesen Bio’s loss of rights to practice the patent rights licensed to it under the Zurich License Agreement, and to the extent such patent rights and other technology relate to its product candidates or other of its compounds, it could have a material adverse effect on Sesen Bio’s ability to complete a sale of its Vicineum asset to a potential partner or the ability of Qilu to commercialize Vicineum in Greater China.

Sesen Bio also has a license agreement with Micromet, or the Micromet License Agreement, which grants it non-exclusive rights, with certain sublicense rights, for know-how and patents allowing exploitation of certain single chain antibody products. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, and if Sesen Bio fails to meet its obligations under the Micromet License Agreement, Micromet may have the right to terminate Sesen Bio’s license, and upon the effective date of such termination, Sesen Bio’s right to use the licensed Micromet patent rights would end. To the extent such licensed technology or patent rights relate to Sesen Bio’s product candidates, Sesen Bio would expect to exercise all rights and remedies available to it, including attempting to cure any breach by Sesen Bio, and otherwise seek to preserve its rights under the patent rights licensed to it, but Sesen Bio may not be able to do so in a timely manner, at an acceptable cost to Sesen Bio or at all. Any uncured, material breach under the Micromet License Agreement could result in Sesen Bio’s loss of rights to practice the patent rights licensed to it under the Micromet License Agreement, and to the extent such patent rights and other technology relate to its product candidates or other of its compounds, it could have a material adverse effect on Sesen Bio’s ability to complete a sale of its Vicineum asset to a potential partner or the ability of Qilu to commercialize Vicineum in Greater China.

Sesen Bio also has a license agreement with XOMA, or the XOMA License Agreement, which grants Sesen Bio non-exclusive rights, with certain sublicense rights, to certain XOMA patent rights and know-how related to certain expression technology, including plasmids, expression strains, plasmid maps and production systems. If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, and if Sesen Bio’s fails to meet its obligations under the XOMA License Agreement, XOMA may have the right to terminate Sesen Bio’s license, and upon the effective date of such termination, Sesen Bio’s right to use the licensed XOMA patent rights and related know-how would end. To the extent such licensed technology or patent rights relate to Sesen Bio’s product candidates, Sesen Bio would expect to exercise all rights and remedies available to it, including attempting to cure any breach by Sesen Bio, and otherwise seek to preserve its rights under the patent rights licensed to it, but Sesen Bio may not be able to do so in a timely manner, at an acceptable cost to Sesen Bio or at all. Any uncured, material breach under the XOMA License Agreement could

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result in Sesen Bio’s loss of rights to practice the patent rights licensed to it under the XOMA License Agreement, and to the extent such patent rights and other technology relate to Sesen Bio’s product candidates or other of its compounds, it could have a material adverse effect on Sesen Bio’s ability to complete a sale of its Vicineum asset to a potential partner or the ability of Qilu to commercialize Vicineum in Greater China.

Sesen Bio may become involved in lawsuits to protect or enforce its patents or other intellectual property, which could be expensive, time consuming and unsuccessful.

If the merger is not completed and Sesen Bio does not pursue a liquidation and dissolution or alternative strategic transaction, competitors may infringe Sesen Bio’s issued patents or other intellectual property. To counter infringement or unauthorized use, Sesen Bio may be required to file infringement claims, which can be expensive and time consuming. Any claims Sesen Bio asserts against perceived infringers could provoke these parties to assert counterclaims against it alleging that Sesen Bio infringes their patents, trademarks or other intellectual property. In addition, in a patent infringement proceeding, a court may decide that a patent of Sesen Bio’s is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that Sesen Bio’s patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of Sesen Bio’s patents at risk of being invalidated or interpreted narrowly. In a trademark infringement proceeding, Sesen Bio could be enjoined from continued use of a trademark deemed to be infringing and forced to rebrand product packaging, product inserts, market and advertising materials, resulting in a loss of sales and established goodwill in that name or mark. In addition, Sesen Bio could be found liable for monetary damages, including treble damages and attorneys’ fees if it is found to have willfully infringed a trademark.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Sesen Bio’s confidential information could be compromised by disclosure during this type of litigation. Even if resolved in Sesen Bio’s favor, litigation or other legal proceedings relating to intellectual property claims may cause Sesen Bio to incur significant expenses and could distract its technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of Sesen Bio’s common stock.

Third parties may initiate legal proceedings alleging that Sesen Bio is infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of Sesen Bio’s business.

Sesen Bio’s only prospective revenue streams currently depends upon the ability of Roche and Qilu to develop, manufacture, market and/or sell certain of Sesen Bio’s legacy technology and Vicineum, respectively, without infringing the proprietary rights of third parties. There is considerable intellectual property litigation in the biotechnology and pharmaceutical industries. Sesen Bio, Roche or Qilu may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to Sesen Bio’s current or former products and technology, including interference or derivation proceedings before the USPTO. The risks of being involved in such litigation and proceedings may increase as Sesen Bio gains the greater visibility associated with seeking strategic alternatives. Third parties may assert infringement claims against Sesen Bio, Roche or Qilu based on existing patents or patents that may be granted in the future. Sesen Bio may not be aware of all such intellectual property rights potentially relating to its former product candidates and their uses. Thus, Sesen Bio does not know with certainty that any product candidate, or commercialization thereof, does not and will not infringe or otherwise violate any third party’s intellectual property.

If Sesen Bio, Roche or Qilu are found to infringe a third party’s intellectual property rights, Sesen Bio could be required to obtain a license from such third party to continue developing and marketing Sesen Bio’s products and technology. However, Sesen Bio may not be able to obtain any required license on commercially reasonable terms or at all. Even if Sesen Bio were able to obtain a license, it could be non-exclusive, thereby giving its competitors access to the same technologies licensed to Sesen Bio. Sesen Bio, Roche or Qilu could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, Sesen Bio, Roche or Qilu could be found liable for monetary damages, including treble damages and attorneys’ fees if Sesen Bio, Roche or Qilu is found to have willfully infringed a patent. A finding of infringement could prevent Roche or Qilu from commercializing Sesen Bio’s former product candidates. Claims that Sesen Bio has misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on Sesen Bio’s ability to profit from the Roche Asset Purchase Agreement or the Qilu License Agreement.

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Risks Related to Regulatory Compliance if the Merger is Not Completed

Sesen Bio’s failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against Sesen Bio, and adversely impact its operating results.

The regulatory environment surrounding information security, data collection, and privacy is increasingly demanding. In the U.S., Sesen Bio is subject to a number of data protection laws and regulations (i.e., laws and regulations that address privacy and data security) at both the federal and state levels. The legislative and regulatory landscape for data protection continues to evolve, and in recent years there has been an increasing focus on privacy and data security issues. Numerous federal and state laws, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, such as Section 5 of the Federal Trade Commission Act, govern the collection, use, and disclosure of health-related and other personal information.

In addition, Sesen Bio may obtain health information from third parties that are subject to privacy and security requirements in the U.S. under the Health Insurance Portability and Accountability Act, or HIPAA. Although Sesen Bio is not directly subject to HIPAA — other than potentially with respect to providing certain employee benefits — Sesen Bio could be subject to criminal penalties if Sesen Bio knowingly obtains, uses or discloses individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA. Finally, a data breach affecting sensitive personal information, including health information, could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on Sesen Bio’s business.

In addition to U.S. data protection laws and regulations, Sesen Bio also may be subject to European and other international data protection requirements, such as the E.U. General Data Protection Regulation. Sesen Bio failures to comply with data privacy and security laws and regulations, or changes in the way in which these laws are implemented, could lead to unfavorable outcomes, including increased compliance costs, delays or impediments in the development of new products, increased operating costs, diversion of management time and attention, regulatory liability as a result of government enforcement actions and significant penalties against Sesen Bio, civil liability as a result of claims initiated by data subjects (including claims initiated as class actions) contracting parties or other third parties as a result of non-compliance with data protection laws and/or contractual obligations, and adverse publicity that could negatively affect Sesen Bio’s operating results, financial condition and Sesen Bio’s overall and business. Federal regulators, state attorneys general, and plaintiffs’ attorneys, including class action attorneys, have been and will likely continue to be active in this space. Such liabilities could adversely impact Sesen Bio’s results of operations, financial condition and its overall business.

If Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, laws and regulations governing any international operations Sesen Bio may have in the future may preclude Sesen Bio from developing, manufacturing and selling certain products outside of the U.S. and require Sesen Bio to develop and implement costly compliance programs.

If the merger is not consummated and Sesen Bio does not decide to pursue a liquidation and dissolution or alternative strategic transaction, Sesen Bio must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which Sesen Bio operates. The Foreign Corrupt Practices Act, or the FCPA, prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of value, directly or indirectly, to any non-U.S. official, political party or candidate for the purpose of influencing any act or decision of the non-U.S. entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the U.S. to comply with certain accounting provisions requiring Sesen Bio to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered non-U.S. officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

Various laws, regulations and executive orders also restrict the use and dissemination outside of the U.S., or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If the merger is not consummated and Sesen Bio does not decide to pursue a liquidation and dissolution or alternative strategic transaction, and if Sesen Bio expands its presence outside of the U.S., it will require Sesen Bio to dedicate

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additional resources to comply with these laws, and these laws may preclude Sesen Bio from developing, manufacturing, or selling certain products and product candidates outside of the U.S., which could limit Sesen Bio’s growth potential and increase its development costs.

The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions.

If the merger is not consummated and Sesen Bio does not decide to pursue a liquidation and dissolution or alternative strategic transaction, Sesen Bio’s employees may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for Sesen Bio and harm its reputation.

If the merger is not consummated and Sesen Bio does not decide to pursue a liquidation and dissolution or alternative strategic transaction, Sesen Bio could be exposed to the risk of employee fraud or other misconduct, including intentional failure to comply with FDA regulations or similar regulations of comparable non-U.S. regulatory authorities, failure to provide accurate information to the FDA or comparable non-U.S. regulatory authorities, including the competent authorities of the E.U. member states, failure to comply with manufacturing standards Sesen Bio has established, if any, failure to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-U.S. regulatory authorities, and failure to report financial information or data accurately or disclose unauthorized activities to Sesen Bio. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to Sesen Bio’s reputation. It is not always possible to identify and deter employee misconduct, and the precautions Sesen Bio takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Sesen Bio from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations. If any such actions are instituted against Sesen Bio, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business and results of operations, including the imposition of significant fines or other sanctions.

Risks Related to Sesen Bio’s Business if the Merger is Not Completed

Sesen Bio relies significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could materially adversely affect its business.

In the ordinary course of business, Sesen Bio relies on information technology networks and systems, some of which are provided, hosted or managed by third parties, to collect, store, process and transmit electronic data. In addition, Sesen Bio handles certain data, including proprietary business information and personal information that is subject to data protection laws and regulations. Despite the implementation of security measures, Sesen Bio’s internal computer systems and those of third parties with which it contracts are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. System failures, accidents or security breaches could cause interruptions in Sesen Bio’s operations and could result in a material disruption of its clinical and commercialization activities, if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. The loss of clinical trial data could result in delays in Sesen Bio’s regulatory approval efforts, if Sesen Bio resumes clinical development of Vicineum for the treatment of NMIBC, and significantly increase its costs to recover or reproduce the data.

Although Sesen Bio has implemented processes, procedures, and controls to help mitigate the risks associated with a cyber security incident, there can be no assurance that these measures will be sufficient for all possible situations. Even security measures that are appropriate, reasonable, and/or in accordance with applicable legal requirements may not be able to protect the networks, systems and information that Sesen Bio maintains and those of third parties with which Sesen Bio contracts. Unauthorized parties, whether within or outside Sesen Bio, may disrupt or gain access to its systems, or those of third parties with whom Sesen Bio does business, through human error, misfeasance, fraud, trickery or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing, ransomware, computer viruses or other malicious codes, and similar means of unauthorized and destructive tampering. Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted cyber security incidents evolve and generally are not recognized until launched against a target. Accordingly, Sesen Bio may be unable to anticipate these techniques or to implement adequate security barriers or other

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preventative measures, making it impossible for Sesen Bio to entirely mitigate this risk. While Sesen Bio has experienced, and expects to continue to experience, threats and disruptions to its information technology infrastructure, none of them to date has had a material impact on its business or operations. To the extent that any disruption or security breach were to result in a loss of, or damage to, its data or applications, or inappropriate disclosure of confidential or proprietary information, its clinical development of Vicineum for the treatment of NMIBC could be delayed if Sesen Bio resumes such clinical development, or Sesen Bio could be subject to regulatory and other government investigations, enforcement actions, or incur liability, substantial fines or costs, any of which could materially adversely affect its business, its reputation, results of operations and financial condition. Although Sesen Bio maintains insurance coverage for various cyber security risks, there can be no guarantee that all costs or losses incurred will be fully insured.

Sesen Bio and certain of its officers have been named as defendants in three pending securities class action lawsuits and three related shareholder derivative lawsuits have been filed. These lawsuits, and potential similar or related lawsuits, could result in substantial damages, divert Sesen Bio management’s time and attention from Sesen Bio’s business, and have a material adverse effect on Sesen Bio’s results of operations. These lawsuits, and any other lawsuits to which Sesen Bio is subject, will be costly to defend and are uncertain in their outcome.

On August 19, 2021, August 31, 2021, and October 7, 2021, three substantially identical securities class action lawsuits captioned Bibb v. Sesen Bio, Inc., et. al., Case No. 1:21-cv-07025, Cizek v. Sesen Bio, Inc., et. al., Case No. 1:21-cv-07309 and Markman v. Sesen Bio, Inc. et al., Case No. 1:21-cv-08308 were filed against Sesen Bio and certain of its officers in the U.S. District Court for the Southern District of New York. The three complaints alleged violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder based on statements made by Sesen Bio concerning its BLA for Vicineum for the treatment of BCG-unresponsive NMIBC. The three complaints sought compensatory damages and costs and expenses, including attorneys’ fees. On October 29, 2021, the court consolidated the three cases under the caption In re Sesen Bio, Inc. Securities Litigation, Master File No. 1:21-cv-07025-AKH, or the Securities Litigation, and appointed Ryan Bibb, Rodney Samaan, Lionel Dreshaj and Benjamin Dreshaj as the lead plaintiffs, or collectively, the Lead Plaintiffs, under the Private Securities Litigation Reform Act. On November 1, 2021, two stockholders filed motions to reconsider asking the court to appoint a different lead plaintiff. On November 24, 2021, defendants filed a motion to transfer venue to the U.S. District Court for the District of Massachusetts. That motion was fully briefed as of December 13, 2021, but the court has not ruled on that motion. On December 6, 2021, the Lead Plaintiffs filed an amended class action complaint, or the Amended Complaint. The Amended Complaint alleges the same violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder on the same theory as the prior complaints. The defendants moved to dismiss the Amended Complaint on March 7, 2022, and that motion was fully briefed on May 6, 2022. On June 3, 2022, before the court ruled on the motion to dismiss, the parties requested that the court hold any decision on the motion to dismiss in abeyance to provide the parties with an opportunity to engage in mediation. On June 30, 2022 and July 6, 2022, Sesen Bio and the plaintiffs engaged in mediation sessions in an attempt to resolve the Securities Litigation and continued to discuss a potential settlement over the following weeks. On July 19, 2022, the parties reached an agreement in principle to settle the Securities Litigation. Pursuant to that agreement, Sesen Bio and the individual defendants will pay or cause to be paid to members of the class who submit timely and valid proofs of claims. In exchange, the Lead Plaintiffs will dismiss the action and all class members who do not timely and validly opt-out of the settlement will provide broad customary releases to Sesen Bio and the individual defendants. On August 3, 2022, the parties entered into a Stipulation and Agreement of Settlement to settle the Securities Litigation, which was filed with the court on August 17, 2022. The Stipulation and Agreement of Settlement related to the Securities Litigation provides for a settlement payment of $21.0 million to the class and the dismissal of all claims against Sesen Bio and the other defendants. The settlement payment is being funded by Sesen Bio and its insurance carriers. On September 1, 2022, the U.S. District Court for the Southern District of New York issued an order denying the motions to appoint a different lead plaintiff. On September 28, 2022, the court issued an order granting preliminary approval of the proposed settlement of the Securities Litigation. The court has set a final settlement approval hearing for January 23, 2023 at 10:00 a.m. local time.

On September 20, 2021 and September 24, 2021, two substantially similar derivative lawsuits captioned Myers v. Sesen Bio, Inc., et. al., Case No. 1:21-cv-11538 and D’Arcy v. Sesen Bio, Inc., et. al., Case No. 1:21-cv-11577 were filed against the Sesen Bio board of directors and certain of its officers in the U.S. District Court for the District of Massachusetts, with Sesen Bio, Inc. named as nominal defendant. On January 12, 2022, a third derivative complaint captioned Tang v. Sesen Bio, Inc., et al., was filed in Superior Court in Massachusetts against the Sesen Bio board of directors and certain of its officers, or the State Derivative Litigation. The three derivative complaints allege breach of fiduciary duties, waste of corporate assets, and violations of federal securities laws based on statements made by Sesen Bio concerning its BLA for Vicineum for the treatment of BCG-unresponsive NMIBC. The D’Arcy complaint further alleges unjust enrichment, abuse of control, gross mismanagement and aiding and abetting thereof. The three derivative complaints seek unspecified damages, restitution and disgorgement of profits, benefits and compensation obtained by the

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defendants and costs and expenses, including attorneys’ fees. On October 18, 2021, the court consolidated the two federal court cases under the caption In re Sesen Bio, Inc. Derivative Litigation, Lead Case No. 1:21-cv-11538, or the Federal Derivative Litigation. On December 22, 2021, the court entered a joint stipulation among the parties to stay the Federal Derivative Litigation until after a ruling on any motion to dismiss filed by defendants in the Securities Litigation. On May 1, 2022, the plaintiffs filed a verified consolidated shareholder derivative complaint in the Federal Derivative Litigation. On May 18, 2022, the court entered a joint stipulation among the parties to stay the State Derivative Litigation until after a ruling on any motion to dismiss filed by defendants in the Securities Litigation. On July 6, 2022, Sesen Bio and the plaintiffs to the Federal Derivative Litigation and the State Derivative Litigation engaged in mediation in an attempt to resolve the litigation, with settlement discussions continuing over the following days. On July 19, 2002, the parties reached an agreement in principle to settle the Federal Derivative Litigation, the State Derivative Litigation and other potential related derivative claims, or collectively, the Derivative Litigation. Pursuant to that agreement, the individual defendants will cause Sesen Bio to adopt certain enhancements to its corporate governance policies and procedures. In exchange, plaintiffs will dismiss the Derivative Litigation and, on behalf of Sesen Bio, provide broad customary releases to the individual defendants. On August 22, 2002, the parties entered into a Stipulation of Settlement to settle the Derivative Litigation, which was filed with the court on August 30, 2022. The Stipulation of Settlement related to the Derivative Litigation confirms that Sesen Bio previously adopted certain corporate governance enhancements in response to, among other things, the filing of the Derivative Litigation, and that, subject to final court approval, Sesen Bio will adopt additional corporate governance enhancements. The Stipulation of Settlement also provides for a $630,000 payment for plaintiffs’ attorneys fees due to the benefits the corporate governance enhancements are intended to provide to Sesen Bio. The payment of plaintiffs’ attorneys fees is being funded by Sesen Bio and its insurance carriers. On September 2, 2022, the court issued an order granting preliminary approval of the Stipulation of Settlement related to the Derivative Litigation. The court has set a final settlement approval hearing for November 8, 2022 at 2:00 p.m. local time.

Sesen Bio, the Sesen Bio board of directors and the individual defendants continue to deny all allegations of any wrongdoing, but are seeking to settle the Securities Litigation, the State Derivative Litigation and the Federal Derivative Litigation to avoid the uncertainty, risk, expense and distraction of protracted litigation.

Sesen Bio may be the target of similar litigation in the future. The market price of its common stock has experienced and may continue to experience volatility, and in the past, companies that have experienced volatility in the market price of their stock have been subject to securities litigation. Any future litigation could result in substantial costs and divert Sesen Bio management’s attention from other business concerns, which could seriously harm its business. Sesen Bio maintains liability insurance; however, if any costs or expenses associated with the pending lawsuits or any other litigation exceed Sesen Bio’s insurance coverage, Sesen Bio may be forced to bear some or all costs and expenses directly, which could adversely affect its business, financial condition, results of operations or stock price.

Risks Related to Ownership of Sesen Bio Common Stock if the Merger is Not Completed

If Sesen Bio is unable to regain compliance with the listing requirements of the Nasdaq Capital Market, Sesen Bio common stock may be delisted from the Nasdaq Capital Market which could have a material adverse effect on Sesen Bio’s business and could make it more difficult for Sesen Bio stockholders to sell their shares of Sesen Bio common stock.

Sesen Bio common stock is listed on the Nasdaq Capital Market, and Sesen Bio is therefore subject to Nasdaq’s continued listing requirements, including requirements with respect to the market value of publicly-held shares, market value of listed shares, minimum bid price per share, and minimum stockholders’ equity, among others, and requirements relating to board and committee independence. If Sesen Bio fails to satisfy one or more of the requirements, it may be delisted from the Nasdaq Capital Market.

On January 24, 2022, Sesen Bio received notice from Nasdaq that it was not currently in compliance with the $1.00 minimum bid price requirement for continued listing on the Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(a)(1). The Nasdaq notice indicated that, consistent with Nasdaq Listing Rule 5810(c)(3)(A), Sesen Bio had 180 calendar days, or until July 25, 2022, to regain compliance with the minimum bid price requirement by having the closing bid price of Sesen Bio common stock meet or exceed $1.00 per share for at least ten consecutive business days. On July 26, 2022, Sesen Bio received approval to transfer the listing of Sesen Bio common stock from the Nasdaq Global Market to the Nasdaq Capital Market. As a result, Sesen Bio was granted a second 180-day grace period, or until January 23, 2023, to regain compliance with the minimum bid price requirement.

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If Sesen Bio does not regain compliance by January 23, 2023, it will receive notification from Nasdaq that Sesen Bio common stock is subject to delisting. At that time, Sesen Bio may then appeal the delisting determination to a Nasdaq hearings panel. Such notification will have no immediate effect on Sesen Bio’s listing on the Nasdaq Capital Market, nor will it have an immediate effect on the trading of Sesen Bio common stock pending such hearing. However, there can be no assurance that Sesen Bio will be able to regain compliance with Nasdaq’s minimum bid price requirement. If Sesen Bio regains compliance with Nasdaq’s minimum bid price requirement, there can be no assurance that Sesen Bio will be able to maintain compliance with the continued listing requirements for the Nasdaq Capital Market or that Sesen Bio common stock will not be delisted from the Nasdaq Capital Market in the future. In addition, Sesen Bio may be unable to meet other applicable listing requirements of the Nasdaq Capital Market, including maintaining minimum levels of stockholders’ equity or market values of Sesen Bio common stock in which case, Sesen Bio common stock could be delisted notwithstanding Sesen Bio’s ability to demonstrate compliance with the minimum bid price requirement.

Delisting from the Nasdaq Capital Market would adversely affect Sesen Bio’s ability to consummate the merger and may adversely affect Sesen Bio’s ability to raise additional financing through the public or private sale of equity securities, significantly affect the ability of investors to trade Sesen Bio common stock, or negatively affect the value and liquidity of Sesen Bio common stock. Delisting also could have other negative results, including the potential loss of employee confidence, the loss of institutional investors or interest in business development opportunities.

If Sesen Bio is delisted from Nasdaq and Sesen Bio is not able to list Sesen Bio common stock on another exchange, Sesen Bio common stock could be quoted on the OTC Bulletin Board or in the “pink sheets.” As a result, Sesen Bio could face significant adverse consequences including, among others:

a limited availability of market quotations for Sesen Bio common stock;
a determination that Sesen Bio common stock is a “penny stock” which will require brokers trading in Sesen Bio common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Sesen Bio’s securities;
a limited amount of news and little or no analyst coverage for Sesen Bio;
Sesen Bio would no longer qualify for exemptions from state securities registration requirements, which may require Sesen Bio to comply with applicable state securities laws; and
a decreased ability to issue additional securities (including pursuant to short-form Registration Statements on Form S-3) or obtain additional financing in the future.

If Sesen Bio common stock becomes subject to the penny stock rules, it would become more difficult to trade shares of Sesen Bio common stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If Sesen Bio does not retain its listing on Nasdaq and if the price of Sesen Bio common stock is less than $5.00, Sesen Bio common stock may be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive: (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for Sesen Bio common stock, and therefore stockholders may have difficulty selling their shares of Sesen Bio common stock.

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Provisions in the Sesen Bio Certificate of Incorporation and the Sesen Bio Bylaws and under Delaware law could make an acquisition of Sesen Bio, which may be beneficial to Sesen Bio stockholders, more difficult and may prevent attempts by Sesen Bio stockholders to replace or remove Sesen Bio’s current management.

Provisions in the Sesen Bio Certificate of Incorporation and the Sesen Bio Bylaws may discourage, delay or prevent a merger, acquisition or other change in control of Sesen Bio that Sesen Bio stockholders may consider favorable, including transactions in which Sesen Bio stockholders might otherwise receive a premium for their shares of Sesen Bio common stock. These provisions could also limit the price that investors might be willing to pay in the future for shares of Sesen Bio common stock, thereby depressing the market price of Sesen Bio common stock. In addition, because the Sesen Bio board of directors is responsible for appointing the members of Sesen Bio’s management team, these provisions may frustrate or prevent any attempts by Sesen Bio stockholders to replace or remove Sesen Bio’s current management by making it more difficult for Sesen Bio stockholders to replace members of the Sesen Bio board of directors. Among other things, these provisions:

establish a classified board of directors such that only one of three classes of directors is elected each year;
allow the authorized number of directors to be changed only by resolution of the Sesen Bio board of directors;
limit the manner in which stockholders can remove directors from the Sesen Bio board of directors;
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to the Sesen Bio board of directors;
require that Sesen Bio stockholder actions must be affected at a duly called stockholder meeting and prohibit actions by Sesen Bio stockholders by written consent;
limit who may call stockholder meetings;
authorize the Sesen Bio board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the Sesen Bio board of directors; and
require the approval of the holders of at least 75% of the votes that all Sesen Bio stockholders would be entitled to cast to amend or repeal specified provisions of the Sesen Bio Certificate of Incorporation or Sesen Bio Bylaws.

Moreover, because Sesen Bio is incorporated in Delaware, Sesen Bio is governed by the provisions of Section 203 of the DGCL, which prohibits a person who owns in excess of 15% of Sesen Bio’s outstanding voting stock from merging or combining with Sesen Bio for a period of three years after the date of the transaction in which the person acquired in excess of 15% of Sesen Bio’s outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Risks Related to Carisma

Risks Related to Carisma’s Financial Position and Need for Additional Capital

Carisma has incurred significant losses since its inception. Carisma expects to continue to incur significant expenses and operating losses for the foreseeable future and may never achieve or maintain profitability.

Since inception, Carisma has incurred significant operating losses. Carisma’s net losses were $40.8 million for the year ended December 31, 2021 and $28.3 million for the year ended December 31, 2020. As of June 30, 2022, Carisma had $81.6 million in cash, cash equivalents and marketable securities and an accumulated deficit of $123.2 million. To date, Carisma has not yet commercialized any products or generated any revenue from product sales and has financed its operations primarily with proceeds from sales of Carisma’s preferred stock, proceeds from Carisma’s collaboration with Moderna, research tax credits and convertible debt financing. Carisma has devoted substantially all of its financial resources and efforts to pursuing discovery, research and development of its

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product candidates. Carisma is still in the early stages of development of its lead product candidate, CT-0508, and initiated its first clinical trial in 2021.

Carisma expects to continue to incur significant expenses and operating losses for the foreseeable future. Upon the closing of the merger, Carisma will also incur additional costs associated with operating as a public company. Carisma anticipates that its expenses will increase substantially if and as it:

enhances the capabilities of its CAR-M platform;
conducts its ongoing Phase 1 clinical trial of CT-0508;
prepares for, initiates and conducts a planned clinical trial utilizing CT-0508 in combination with pembrolizumab;
develops other CT-0508 combination studies;
advances CT-0508 for additional indications or any other product candidate into clinical development;
prepares for, initiates and conducts a planned clinical trial of CT-1119 for advanced mesothelin-positive solid tumors;
prepares for, initiates and conducts a planned clinical trial of CT-0729 for PSMA positive castrate resistant prostate cancer;
conducts discovery and pre-clinical testing of the development of in vivo CAR-M therapeutics for up to twelve oncology targets, as well as multiple other targets and indications;
conducts discovery and pre-clinical testing of its autologous cell therapy pipeline to gather information to apply to the development of off-the-shelf engineered macrophage therapeutics;
develops iPSC-derived iCAR-M, or iCAR-M, and other macrophage therapies;
develops in vivo reprogrammed LNP/mRNA CAR-M therapies for cancer;
develops viral vectors to effectively engineer human monocytes and macrophages, including the Vpx lentiviral vector and Carisma’s Ad5f35 vector;
conducts discovery and pre-clinical testing of other product candidates;
seeks marketing approval for CT-0508 or any other product candidate if it successfully completes clinical trials;
scales up its external manufacturing capabilities and capabilities to support clinical trials of CT-0508 or any other product candidates and for commercialization of any product candidate for which it may obtain marketing approval;
establishes a sales, marketing and distribution infrastructure to commercialize any product candidate for which it may obtain marketing approval;
in-licenses or acquires additional technologies or product candidates;
makes any payments under its existing or future strategic collaboration agreements, global exclusive rights licensing agreements or sponsored research agreements, including with Moderna, University of Pennsylvania and New York University;
maintains, expands, enforces and protects its intellectual property portfolio;

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hires additional clinical, regulatory, manufacturing, quality control, development and scientific personnel; and
adds operational, financial and management information systems and personnel, including personnel to support its discovery, product development and planned future commercialization efforts and its operations as a public company.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, Carisma is unable to accurately predict the timing or amount of increased expenses or when, or if, it will be able to achieve or maintain profitability. Carisma’s expenses could increase beyond its expectations if, among other things:

Carisma is required by regulatory authorities in the United States, Europe or other jurisdictions to perform trials or studies in addition to, or different than, those that it currently expects;
there are any delays in establishing appropriate manufacturing arrangements for or completing the development of any of Carisma’s product candidates; or
there are any third-party challenges to Carisma’s intellectual property or Carisma needs to defend against any intellectual property-related claim.

Even if Carisma obtains marketing approval for and is successful in commercializing one or more of its product candidates, Carisma expects to incur substantial additional discovery and product development and other expenditures to develop and market additional product candidates or to expand the approved indications of any marketed product. Carisma may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. The size of Carisma’s future net losses will depend, in part, on the rate of future growth of its expenses and Carisma’s ability to generate revenue.

Carisma has never generated revenue from product sales and may never achieve or maintain profitability.

Carisma only recently initiated clinical development of its lead product candidate, CT-0508, and is in the pre-clinical testing stages for its other product candidates. Carisma expects that it will be a number of years, if ever, before it has a product candidate ready for commercialization. To become and remain profitable, Carisma must succeed in completing development of, obtaining marketing approval for and eventually commercializing, one or more products that generate significant revenue. The ability to achieve this success will require Carisma to be effective in a range of challenging activities, including completing clinical development of CT-0508, completing discovery, pre-clinical testing and clinical development of CT-0508 in the combination setting and for additional indications, timely filing and receiving acceptance of its Investigational New Drug applications, or INDs, in order to commence its planned or future clinical trials, including for CT-1119 and CT-0729, successfully enrolling subjects in, and completing, its ongoing and planned clinical trials, scaling up its manufacturing processes and capabilities to support clinical trials of CT-0508 or of other product candidates, obtaining marketing approval for CT-0508 or any other product candidates, manufacturing, marketing and selling any products for which Carisma may obtain marketing approval and maintaining a continued acceptable safety profile of its products following approval. Carisma may never succeed in these activities and, even if it does, may never generate revenues that are significant enough to achieve profitability.

Even if Carisma does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Carisma’s failure to become and remain profitable would depress the value of its company and could impair its ability to raise capital, expand its business, maintain its discovery and product development efforts, diversify its pipeline of product candidates or even continue its operations.

Carisma is heavily dependent on the success of its lead product candidate, CT-0508, which will require significant clinical testing before it can seek marketing approval and potentially launch commercial sales. If CT-0508 does not receive marketing approval or is not successfully commercialized, or if there is significant delay in doing so, Carisma’s business will be harmed.

Carisma only recently initiated its first clinical trial, has no products that are approved for commercial sale and may never be able to develop marketable products. Carisma expects that a substantial portion of its efforts and expenditures for the foreseeable future will be devoted to CT-0508 and related combination sub-studies of the synergistic potential and utility of CT-0508. Carisma’s business currently depends heavily on the successful development, marketing approval and commercialization of CT-0508 and the

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success of related combination sub-studies. Carisma cannot be certain that CT-0508 or any combination therapy will achieve success in ongoing or future clinical trials, receive marketing approval or be successfully commercialized.

If Carisma were required to discontinue development of CT-0508, or if CT-0508 does not receive marketing approval for one or more of the indications Carisma pursues, fails to achieve significant market acceptance, or fails to receive adequate reimbursement, Carisma may be delayed by many years in its ability to achieve profitability, if ever, and may not be able to generate sufficient revenue to continue its business.

Carisma will need substantial additional funding for its continuing operations. If Carisma is unable to raise capital when needed or on acceptable terms, it could be forced to delay, reduce or eliminate its discovery or product development programs or commercialization efforts.

Carisma expects to devote substantial financial resources to its ongoing and planned activities, particularly as it conducts its ongoing clinical trial of CT-0508 and pursues related combination strategies, prepares for, initiates and conducts its planned clinical trials of CT-1119 and CT-0729 and advances its discovery programs and continues its product development efforts. Carisma expects its expenses to increase substantially in connection with its ongoing activities, particularly as it advances its pre-clinical activities and clinical trials. In addition, if Carisma obtains marketing approval for CT-0508 or any other product candidate it is developing or develops in the future, it expects to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution. Furthermore, upon the closing of the merger, it expects to incur additional costs associated with operating as a public company. Accordingly, Carisma will need to obtain substantial additional funding in connection with its continuing operations. If Carisma is unable to raise capital or obtain adequate funds when needed or on acceptable terms, it may be required to delay, limit, reduce or terminate its discovery and product development programs or any future commercialization efforts or grant rights to develop and market product candidates that it would otherwise prefer to develop and market itself. In addition, attempting to secure additional financing may divert the time and attention of Carisma management from day-to-day activities and distract from its discovery and product development efforts.

Carisma’s future capital requirements will depend on many factors, including:

the progress, costs and results of its ongoing clinical trial of CT-0508 and other planned and future clinical trials;
the scope, progress, costs and results pre-clinical testing and clinical trials of CT-0508 for additional combinations, targets and indications;
the number of and development requirements for additional indications for CT-0508 or for any other product candidates;
the success of its collaborations with Moderna or others;
its ability to scale up its manufacturing processes and capabilities to support clinical trials of CT-0508 and other product candidates it is developing and develops in the future;
the costs, timing and outcome of regulatory review of CT-0508 and other product candidates it is developing and may develop in the future;
potential changes in the regulatory environment and enforcement rules;
its ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;
the payment of license fees and other costs of its technology license arrangements;
the costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for CT-0508 and other product candidates it is developing and may develop in the future for which it may receive marketing approval;

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its ability to obtain and maintain acceptance of any approved products by patients, the medical community and third-party payors;
the amount and timing of revenue, if any, received from commercial sales of CT-0508 and any other product candidates it is developing or develops in the future for which it receives marketing approval;
potential changes in pharmaceutical pricing and reimbursement infrastructure;
the availability of raw materials for use in production of its product candidates;
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing its intellectual property and proprietary rights and defending any intellectual property-related claims; and
the extent to which it in-licenses or acquires additional technologies or product candidates.

Carisma management has concluded that there is substantial doubt about Carisma’s ability to continue as a going concern. As a result, Carisma management has included disclosures in Note 2 of the consolidated financial statements and Carisma’s independent auditor included an explanatory paragraph in its report on Carisma’s consolidated financial statements as of and for the year ended December 31, 2021 with respect to this uncertainty.

As of June 30, 2022, Carisma had cash, cash equivalents and marketable securities of $81.6 million. Immediately prior to the consummation of the merger, certain investors have agreed to purchase shares of Carisma common stock for an aggregate purchase price of approximately $30.6 million. Carisma believes that following consummation of the pre-closing financing and the merger, it will have cash, cash equivalents and marketable securities sufficient to sustain its operating expenses and capital expenditure requirements at least through the end of 2024. However, Carisma has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to Carisma. In addition, changing circumstances could cause Carisma to consume capital significantly faster than it currently anticipates, and Carisma may need to spend more than currently expected because of circumstances beyond its control. As a result, Carisma could deplete its capital resources sooner than it currently expects. In addition, because the successful development of CT-0508, CT-1119, CT-0729 and any combination studies or other product candidates that it pursues is highly uncertain, at this time Carisma cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the development of any product candidate.

Identifying potential product candidates and conducting pre-clinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and Carisma may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, Carisma’s product candidates, if approved, may not achieve commercial success. Carisma will not generate commercial revenues unless and until it can achieve sales of products, which it does not anticipate for a number of years, if at all. Accordingly, Carisma will need to obtain substantial additional financing to achieve its business objectives. Adequate additional financing may not be available to Carisma on acceptable terms, or at all, and may be impacted by the economic climate and market conditions. For example, market volatility resulting from the COVID-19 pandemic, any other future infectious diseases, epidemics or pandemics or general U.S. or global economic or market conditions could also adversely impact Carisma’s ability to access capital as and when needed. Alternatively, Carisma may seek additional capital due to favorable market conditions or strategic considerations, even if it believes it has sufficient funds for its current or future operating plans.

Carisma’s limited operating history may make it difficult for you to evaluate the success of Carisma’s business to date and to assess the combined company’s future viability.

Carisma was formed as Carma Therapeutics LLC, a Pennsylvania limited liability company, in April 2016 and converted to a Delaware corporation in May 2017. Carisma is a clinical-stage cell therapy company with a limited operating history. Cell therapy product development is a highly speculative undertaking and involves a substantial degree of risk. Carisma’s operations to date have been limited to organizing and staffing its company, business planning, capital raising, establishing and maintaining its intellectual property portfolio, building its pipeline of product candidates, conducting drug discovery activities, undertaking pre-clinical studies, manufacturing process development studies, conducting early-stage clinical trials, and providing general and administrative support for these operations. Carisma’s prospects must be considered in light of the uncertainties, risks, expenses and difficulties frequently

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encountered by companies in their early stages of operations. Carisma has not yet demonstrated its ability to successfully develop any product candidate, obtain marketing approvals, manufacture a commercial scale product or arrange for a third party to do so on its behalf, or conduct sales, marketing and distribution activities necessary for successful product commercialization. Consequently, any predictions you make about the combined company’s future success or viability may not be as accurate as they could be if Carisma had a longer operating history or a history of successfully developing, obtaining marketing approval for and commercializing products.

In addition, as Carisma’s business grows, Carisma may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown obstacles. Carisma will need to transition at some point from a company with a discovery and pre-clinical and clinical focus to a company capable of supporting commercial activities. Carisma may not be successful in such a transition.

As Carisma continues to build its business, Carisma expects its financial condition and operating results to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond Carisma’s control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

The COVID-19 pandemic may affect Carisma’s pre-clinical studies and clinical trials, disrupt regulatory activities, disrupt Carisma’s manufacturing and supply chain or have other adverse effects on Carisma’s business and operations.

The COVID-19 pandemic has caused many governments to implement measures to slow the spread of the virus through quarantines, travel restrictions, heightened border scrutiny and other measures. The pandemic and government measures taken in response have also had a significant impact, both directly and indirectly, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. The future progression of the pandemic and its effects on Carisma’s business and operations are uncertain.

Carisma and the third-party manufacturers and clinical research organizations that it engages may face disruptions that could affect Carisma’s ability to initiate and complete pre-clinical studies or clinical trials, including disruptions in procuring items that are essential for Carisma’s discovery and product development activities, such as, for example, raw materials used in the manufacturing of its product candidates, laboratory supplies for its ongoing and planned pre-clinical studies and clinical trials, or animals that are used for pre-clinical testing, in each case, for which there may be shortages because of ongoing efforts to address the pandemic, or disruptions in Carisma’s ability to obtain necessary site approvals or other delays at clinical trial sites.

As a result of the COVID-19 pandemic, Carisma may experience further disruptions that could severely impact Carisma’s business, including:

disruptions related to Carisma’s ongoing and planned clinical trials or future clinical trials arising from delays in completing pre-clinical studies required to begin clinical development;
manufacturing disruptions;
the inability to obtain necessary site approvals or other delays at clinical trial sites;
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as Carisma’s clinical trial sites and hospital staff supporting the conduct of Carisma’s clinical trials;
interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by foreign, federal or state governments, employers and others;
interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;
interruption or delays in the operations of the FDA, or other regulatory authorities, which may impact review and approval timelines;

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limitations on employee resources that would otherwise be focused on the conduct of Carisma’s pre-clinical studies and clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;
difficulties recruiting or retaining patients for Carisma’s clinical trials if patients are affected by the virus or are fearful of visiting or traveling to clinical trial sites because of the virus; and
risk that participants enrolled in its clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events and refusal of the FDA, to accept data from clinical trials in these affected geographies.

The response to the COVID-19 pandemic may redirect resources with respect to regulatory and intellectual property matters in a way that would adversely impact its ability to pursue marketing approvals and protect its intellectual property. In addition, Carisma may face impediments to regulatory meetings and potential approvals due to measures intended to limit in-person interactions.

Furthermore, third parties, including manufacturers, medical institutions, clinical investigators, contract research organizations and consultants with whom Carisma conducts business, are similarly adjusting their operations and assessing their capacity in light of the COVID-19 pandemic. If these third parties continue to experience shutdowns or business disruptions, Carisma’s ability to conduct its business in the manner and on the timelines presently planned could be materially and negatively impacted.

The COVID-19 pandemic continues to evolve and has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact Carisma’s ability to raise additional funds through public offerings and may also impact the volatility of Carisma’s stock price and trading in its stock. Moreover, it is possible the pandemic will further significantly impact economies worldwide, which could result in adverse effects on Carisma’s business and operations. Carisma cannot be certain what the overall impact of the COVID-19 pandemic will be on its business, and it has the potential to materially and adversely affect Carisma’s business, financial condition, results of operations and prospects. To the extent the COVID-19 pandemic adversely affects Carisma’s business, financial condition and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described in this “Risk Factors” section.

Changes in tax law may adversely affect Carisma or its investors.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect Carisma or holders of Carisma’s common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in Carisma’s or its stockholders’ tax liability or require changes in the manner in which Carisma operates in order to minimize or mitigate any adverse effects of changes in tax law. Prospective investors should consult their tax advisors regarding the potential consequences of changes in tax law on Carisma’s business and on the ownership and disposition of Carisma common stock.

Carisma’s ability to use its net operating loss carryforwards, or NOLs, and research and development tax credit carryforwards to offset future taxable income may be subject to certain limitations.

Carisma has a history of cumulative losses and anticipates that it will continue to incur significant losses in the foreseeable future. As a result, Carisma does not know whether or when it will generate taxable income necessary to utilize its NOLs or research and development tax credit carryforwards. As of December 31, 2021, Carisma had federal, state and local NOLs of $76.4 million, $76.4 million and $71.2 million, respectively, and federal research and development tax credit carryforwards totaling $3.9 million.

In general, under Section 382 of the Code and corresponding provisions of state law, a corporation that undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three year period, is subject to limitations on its ability to utilize its pre-change NOLs and research and development tax credit carryforwards to offset future taxable income. Carisma has not conducted a study to assess whether any such ownership changes have occurred. Carisma may have experienced such ownership changes in the past and may experience such ownership changes in the

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future (which may be outside its control). As a result, if and to the extent Carisma earns net taxable income, its ability to use its pre-change NOLs and research and development tax credit carryforwards to offset such taxable income may be subject to limitations.

Risks Related to Carisma’s Discovery Programs and Research and Development of Carisma’s Product Candidates

Cell therapy is a rapidly evolving area of science, and the approach Carisma is taking to discover and develop product candidates by utilizing genetically modified macrophages is novel and may never lead to approved or marketable products.

Cell therapy has yet to be broadly applied to solid tumors, inflammatory disease, fibrotic disease or neurodegeneration. The discovery, research and development of engineered macrophages to treat disease is an emerging field and Carisma’s CAR-M platform, which is the first CAR-M to be evaluated in a human clinical trial, is a relatively new technology. Carisma’s future success depends on the successful development of this novel therapeutic approach. The scientific evidence to support the feasibility of developing product candidates based on these discoveries is both preliminary and limited. Carisma has only preliminary results from its Phase 1 clinical trial of CT-0508 and expects clinical updates in the next 18 months. As such, there may be adverse effects or limited favorable results from treatment with any of Carisma’s current or future product candidates that it cannot predict at this time.

Carisma’s success also depends on its successful application of its proprietary macrophage engineering platform in the combination setting and to other indications by reprogramming the target specificity of its CAR-M cell product and developing product candidates against a plethora of tumor associated antigens, including in therapeutic areas beyond oncology. However, Carisma’s macrophage engineering platform may not allow it to rapidly generate new INDs to expand its pipeline as anticipated in a cost-efficient manner or at all, which could cause the potential value of Carisma’s business to decline and materially harm Carisma’s business prospects.

As a result of these factors, it is more difficult for Carisma to predict the time and cost of product candidate development, and Carisma cannot predict whether the application of macrophage engineering platform will result in the development and marketing approval of any products. Any development problems Carisma experiences in the future related to its macrophage engineering platform or any of its discovery programs may cause significant delays or unanticipated costs or may prevent the development of a commercially viable product. Any of these factors may prevent Carisma from completing its clinical trials or pre-clinical studies or commercializing any product candidates it may develop on a timely or profitable basis, if at all.

Carisma is early in its development efforts. If Carisma is unable to commercialize its product candidates or experiences significant delays in doing so, its business will be materially harmed.

Carisma is early in its development efforts. Carisma initiated its first Phase 1 clinical trial of CT-0508 in 2021 and expects to evaluate a combination of CT-0508 with pembrolizumab in an upcoming Phase 1 clinical trial. Carisma expects to submit INDs for the first anti-HER2 CAR-Mono product in the second half of 2023 and for CT-1119 in 2024. CT-0729 is still in the discovery stage.

Carisma’s ability to generate revenues from product sales, which it does not expect will occur for a number of years, if ever, will depend heavily on the successful development, marketing approval and eventual commercialization of CT-0508, including in the combination setting, or one or more of its other product candidates, which may never occur. The success of CT-0508 and Carisma’s other product candidates will depend on several factors, including the following:

successfully completing pre-clinical studies;
successfully initiating future clinical trials;
successfully enrolling patients in and completing clinical trials;
scaling up manufacturing processes and capabilities to support clinical trials of CT-0508 and any other product candidate;
applying for and receiving marketing approvals from applicable regulatory authorities;

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obtaining and maintaining intellectual property protection and regulatory exclusivity for CT-0508 and any other product candidates it is developing or may develop in the future;
making arrangements with third-party manufacturers, or establishing commercial manufacturing capabilities, for both clinical and commercial supplies of its product candidates;
establishing sales, marketing and distribution capabilities and launching commercial sales of its products, if and when approved, whether alone or in collaboration with others;
acceptance of CT-0508 and any other product candidates, if and when approved, by patients, the medical community and third-party payors;
effectively competing with other therapies;
obtaining and maintaining coverage, adequate pricing and adequate reimbursement from third-party payors, including government payors;
maintaining, enforcing, defending and protecting its rights in its intellectual property portfolio;
not infringing, misappropriating or otherwise violating others’ intellectual property or proprietary rights; and
maintaining a continued acceptable safety profile of its products following receipt of any marketing approvals.

If Carisma does not achieve one or more of these factors in a timely manner or at all, it could experience significant delays or an inability to successfully develop and commercialize its product candidates, which would materially harm Carisma’s business. As a company, Carisma has limited experience in clinical development, having only recently advanced CT-0508 into an early-stage clinical trial. Any predictions about the future success or viability of CT-0508 or any product candidates Carisma is developing or may develop in the future may not be as accurate as they could be if Carisma had a history of conducting clinical trials.

Drug development involves a lengthy and expensive process, with an uncertain outcome. The results of pre-clinical studies and early clinical trials may not be predictive of future results. Carisma may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of CT-0508 or its other product candidates.

Carisma only recently initiated its first clinical trial of CT-0508 and its other product candidates are in pre-clinical development. The risk of failure for CT-0508 and Carisma’s other product candidates is high. It is impossible to predict when or if CT-0508 or any of Carisma’s other product candidates will prove effective or safe in humans or will receive marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of a product candidate, Carisma must complete pre-clinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of such product candidate in humans. Clinical trials may fail to demonstrate that CT-0508 or any of Carisma’s other product candidates are safe for humans and effective for indicated uses. Even if the clinical trials are successful, changes in marketing approval policies during the development period, changes in or the enactment or promulgation of additional statutes, regulations or guidance or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application.

Before Carisma can commence clinical trials for a product candidate, it must complete extensive pre-clinical testing and studies, manufacturing process development studies, and analytical development studies that support its planned INDs and other applications to regulatory authorities in the United States or similar applications in other jurisdictions. Carisma cannot be certain of the timely completion or outcome of its pre-clinical testing and studies and cannot predict if the outcome of its pre-clinical testing and studies will ultimately support the further development of its current or future product candidates or whether regulatory authorities will accept its proposed clinical programs. As a result, Carisma may not be able to submit applications to initiate clinical development of product candidates on the timelines Carisma expects, if at all, and the submission of these applications may not result in regulatory authorities allowing clinical trials to begin. Furthermore, product candidates are subject to continued pre-clinical safety studies, which may be conducted concurrently with Carisma’s clinical testing. The outcomes of these safety studies may delay the launch of or enrollment in future clinical trials and could impact Carisma’s ability to continue to conduct its clinical trials.

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Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to the outcome. Carisma cannot guarantee that any of its clinical trials will be conducted as planned or completed on schedule, or at all. A failure of one or more clinical trials can occur at any stage of testing, which may result from a multitude of factors, including, among other things, flaws in study design, dose selection issues, placebo effects, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits.

Moreover, pre-clinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in pre-clinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. Furthermore, the failure of any of Carisma’s product candidates to demonstrate safety and efficacy in any clinical trial could negatively impact the perception of its other product candidates or cause regulatory authorities to require additional testing before approving any of its product candidates.

Carisma may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent its ability to receive marketing approval or commercialize any product candidates, including:

regulators or institutional review boards, or IRBs, may not authorize Carisma or its investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or at all;
Carisma may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
regulators may determine that the planned design of Carisma’s clinical trials is flawed or inadequate;
clinical trials of Carisma’s product candidates may produce negative or inconclusive results, and Carisma may decide, or regulators may require Carisma, to conduct additional clinical trials or abandon product development programs;
Carisma may be unable to establish clinical endpoints that applicable regulatory authorities consider clinically meaningful, or, if Carisma seeks accelerated approval, biomarker efficacy endpoints that applicable regulatory authorities consider likely to predict clinical benefit;
pre-clinical testing may produce results based on which Carisma may decide, or regulators may require Carisma, to conduct additional pre-clinical studies before it proceeds with certain clinical trials, limits the scope of its clinical trials, halt ongoing clinical trials or abandon product development programs;
the number of patients required for clinical trials of Carisma’s product candidates may be larger than it anticipates, enrollment in these clinical trials may be slower than Carisma anticipates or participants may drop out of these clinical trials at a higher rate than Carisma anticipates;
third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to Carisma in a timely manner, or at all;
Carisma may decide, or regulators or IRBs may require Carisma, to suspend or terminate clinical trials of its product candidates for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
regulators or IRBs may require Carisma to perform additional or unanticipated clinical trials to obtain approval or Carisma may be subject to additional post-marketing testing requirements to maintain marketing approval;
regulators may revise the requirements for approving Carisma’s product candidates, or such requirements may not be as it anticipates;
the cost of clinical trials of Carisma’s product candidates may be greater than it anticipates;

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the supply or quality of Carisma’s product candidates or other materials necessary to conduct clinical trials of its product candidates may be insufficient or inadequate;
Carisma’s product candidates may have undesirable side effects or other unexpected characteristics, causing Carisma or its clinical investigators, regulators or IRBs to suspend or terminate the trials;
regulators may withdraw their approval of a product or impose restrictions on its distribution; and
business interruptions resulting from the COVID-19 pandemic may result in adverse effects on Carisma’s business and operations.

If Carisma is required to conduct additional clinical trials or other testing of its product candidates beyond those that it currently contemplates, if Carisma is unable to successfully complete clinical trials of its product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, if there are safety concerns or if Carisma determines that the observed safety or efficacy profile would not be competitive in the marketplace, it may:

incur unplanned costs;
be delayed in obtaining marketing approval for its product candidates;
not obtain marketing approval at all;
obtain marketing approval in some countries and not in others;
obtain approval for indications or patient populations that are not as broad as intended or desired;
obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;
be subject to additional post-marketing testing requirements; or
have the product removed from the market after obtaining marketing approval.

Carisma’s product development costs will also increase if it experiences delays in pre-clinical studies or clinical trials or in obtaining marketing approvals. Carisma does not know whether any of its pre-clinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Carisma may also determine to change the design or protocol of one or more of its clinical trials, including to add additional patients or arms, which could result in increased costs and expenses or delays. Significant pre-clinical study or clinical trial delays also could shorten any periods during which Carisma may have the exclusive right to commercialize its product candidates or allow its competitors to bring products to market before Carisma does and impair Carisma’s ability to successfully commercialize its product candidates and may harm Carisma’s business and results of operations.

Further, cancer therapies are sometimes characterized as first-line, second-line, or third-line, and the FDA often approves new therapies initially only for second-line or third-line use. When cancer is detected early enough, first-line therapy, usually hormone therapy, surgery, radiation therapy or a combination of these, is sometimes adequate to cure the cancer or prolong life without a cure. Second- and third-line therapies are administered to patients when prior therapy is not effective. For any of Carisma’s products that prove to be sufficiently beneficial, Carisma would expect to seek approval potentially as a first-line therapy, but any product candidates Carisma develops, even if approved, may not be approved for first-line therapy, and, prior to any such approvals, Carisma may have to conduct additional clinical trials.

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The results of early-stage clinical trials and pre-clinical studies may not be predictive of future results. Initial success in clinical trials may not be indicative of results obtained when these trials are completed or in later stage trials.

The outcome of pre-clinical testing and early clinical trials may not be predictive of the success of later clinical trials, and preliminary or interim results of a clinical trial do not necessarily predict final results. In addition, initial success in clinical trials may not be indicative of results obtained when such trials are completed. In particular, the small number of patients in Carisma’s ongoing early clinical trials may make the results of these trials less predictive of the outcome of later clinical trials. For example, even if successful, the results of Carisma’s Phase 1 clinical trial of CT-0508 may not be predictive of the results of further clinical trials of CT-0508 or any of Carisma’s other product candidates. Carisma’s product candidates may also fail to show the desired safety and efficacy in clinical development despite positive results in pre-clinical studies or having successfully advanced through initial clinical trials.

Moreover, pre-clinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in pre-clinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. Carisma’s current or future clinical trials may not ultimately be successful or support further clinical development of any of its product candidates and Carisma cannot assure you that any clinical trials that it may conduct will demonstrate consistent or adequate efficacy and safety to support marketing approval. There is a high failure rate for product candidates proceeding through clinical trials. Many companies in the biopharmaceutical industry have suffered significant setbacks in late-stage clinical trials even after achieving promising results in pre-clinical testing and earlier-stage clinical trials, and Carisma cannot be certain that it will not face similar setbacks. Any such setbacks in Carisma’s clinical development could materially harm Carisma’s business and results of operations.

Interim and preliminary results from Carisma’s clinical trials that it announces or publishes from time to time may change as more participant data become available and are subject to audit and verification procedures, which could result in material changes in the final data.

From time to time, Carisma may announce or publish interim or preliminary results from its clinical trials, including its Phase 1 clinical trial of CT-0508. Interim results from clinical trials that Carisma may complete are subject to the risk that one or more of the clinical outcomes may materially change as participant enrollment continues and more participant data become available. Carisma also makes assumptions, estimations, calculations, and conclusions as part of its analyses of data, and Carisma may not have received or had the opportunity to fully evaluate all data. Preliminary or interim results also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data Carisma previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could be material and could significantly harm Carisma’s reputation and business prospects and may cause the trading price of Carisma common stock to fluctuate significantly.

If Carisma experiences delays or difficulties in the enrollment of patients in its clinical trials for CT-0508 or any of its other product candidates, its receipt of necessary marketing approvals could be delayed or prevented.

Identifying and qualifying patients to participate in clinical trials for CT-0508 and any other product candidates in the future is critical to Carisma’s success. Successful and timely completion of clinical trials will require that Carisma enroll a sufficient number of patients who remain in the trial until its conclusion. Carisma may not be able to initiate or continue clinical trials for its product candidates if it is unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside of the United States. In particular, group 2 for Carisma’s Phase 1 clinical trial of CT-0508 is currently open for enrollment with an additional nine patients to be dosed in the study and Carisma is preparing to advance other products into clinical development. In addition, some of Carisma’s competitors have ongoing clinical trials for product candidates that treat the same indications as Carisma’s product candidates, and patients who would otherwise be eligible for Carisma’s clinical trials may instead enroll in clinical trials of Carisma’s competitors’ product candidates. Carisma cannot predict how successful it will be at enrolling subjects in future clinical trials. Patient enrollment is affected by a variety of other factors, including:

the prevalence and severity of the disease under investigation;
the eligibility criteria for the trial in question;

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the perceived risks and benefits of the product candidate under trial;
the requirements of the trial protocols;
the availability of existing treatments for the indications for which Carisma is conducting clinical trials;
the ability to recruit clinical trial investigators with the appropriate competencies and experience;
the efforts to facilitate timely enrollment in clinical trials;
the ability to identify specific patient populations based on specific genetic mutations or other factors;
the patient referral practices of physicians;
the ability to monitor patients adequately during and after treatment;
Carisma’s ability to obtain and maintain patient consents;
the proximity and availability of clinical trial sites for prospective patients;
the conduct of clinical trials by competitors for product candidates that treat the same indications or address the same patient populations as Carisma’s product candidates;
the cost to, or lack of adequate compensation for, prospective patients; and
the impact of the ongoing COVID-19 pandemic.

Carisma’s inability to locate and enroll a sufficient number of patients for its clinical trials would result in significant delays, could require it to abandon one or more clinical trials altogether and could delay or prevent its receipt of necessary marketing approvals. Enrollment delays in Carisma’s clinical trials may result in increased development costs for its product candidates, which could cause the value of Carisma’s business to decline and limit its ability to obtain additional financing.

If serious adverse events, undesirable side effects or unexpected characteristics are identified during the development of CT-0508 or any of Carisma’s other product candidates, Carisma may need to abandon or limit its further clinical development of those product candidates.

Enrollment in group 1 of Carisma’s first in human Phase 1 clinical trial of CT-0508 has been completed with nine patients successfully dosed and group 2 is currently open for enrollment with nine additional patients to be dosed in the trial. If CT-0508 or any other product candidate is associated with serious adverse events or undesirable side effects in clinical trials or have characteristics that are unexpected in clinical trials or pre-clinical testing, Carisma may need to abandon development of such product candidate or limit development to more narrow uses or subpopulations in which the serious adverse events, undesirable side effects or unexpected characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. In pharmaceutical development, many compounds that initially show promise in early-stage or clinical testing are later found to cause side effects that delay or prevent further development of the compound. For example, while Carisma’s preliminary clinical results from its Phase 1 clinical trial of CT-0508 demonstrated a favorable safety profile, such results may not be predictive or indicative of the successful development, marketing approval and eventual commercialization of CT-0508.

Additionally, if results of Carisma’s clinical trials reveal undesirable side effects, Carisma, regulatory authorities or the IRBs at the institutions in which Carisma’s studies are conducted could suspend or terminate its clinical trials, regulatory authorities could order Carisma to cease clinical trials or deny approval of its product candidates for any or all targeted indications or Carisma could be forced to materially modify the design of its clinical trials. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete any of Carisma’s clinical trials or result in potential liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff.

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If Carisma elects or is forced to suspend or terminate any clinical trial of its product candidates, the commercial prospects of such product candidate will be harmed, and Carisma’s ability to generate revenues from sales of such product candidate will be delayed or eliminated. Any of these occurrences could materially harm Carisma’s business.

If any of Carisma’s product candidates receives marketing approval and Carisma, or others, later discover that the drug is less effective than previously believed or causes undesirable side effects that were not previously identified, Carisma’s ability to market the drug could be compromised.

Carisma only recently initiated clinical development of its lead product candidate, CT-0508, and is in the pre-clinical testing stages for its other product candidates. Clinical trials will be conducted in carefully defined subsets of patients who have agreed to enter into clinical trials. Consequently, it is possible that Carisma’s clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If one or more of Carisma’s product candidates receives marketing approval, and Carisma, or others, later discover that they are less effective than previously believed, or cause undesirable side effects, a number of potentially significant negative consequences could result, including:

withdrawal or limitation by regulatory authorities of approvals of such product;
seizure of the product by regulatory authorities;
recall of the product;
restrictions on the marketing of the product or the manufacturing process for any component thereof;
requirement by regulatory authorities of additional warnings on the label;
requirement that Carisma implement a risk evaluation and mitigation strategy or create a medication guide outlining the risks of such side effects for distribution to patients;
commitment to expensive post-marketing studies as a prerequisite of approval by regulatory authorities of such product;
the product may become less competitive;
initiation of regulatory investigations and government enforcement actions;
initiation of legal action against Carisma to hold it liable for harm caused to patients; and
harm to Carisma’s reputation and resulting harm to physician or patient acceptance of its products.

Any of these events could prevent Carisma from achieving or maintaining market acceptance of a particular product candidate, if approved, and could significantly harm Carisma’s business, financial condition, and results of operations.

Carisma may expend its limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because Carisma has limited financial and managerial resources, it focuses on discovery programs and product candidates that it identifies for specific indications. As a result, Carisma may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Carisma’s resource allocation decisions may cause it to fail to capitalize on viable commercial products or profitable market opportunities. Carisma’s spending on current and future discovery and product development programs and product candidates for specific indications may not yield any commercially viable products. If Carisma does not accurately evaluate the commercial potential or target market for a particular product candidate, it may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have

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been more advantageous for Carisma to retain sole development and commercialization rights to such product candidate. Failure to allocate resources or capitalize on strategies in a successful manner will have an adverse impact on Carisma’s business.

Carisma may develop CT-0508 in combination with other drugs. If the FDA or similar regulatory authorities outside of the United States do not approve these other drugs, revoke their approval of such drugs, or if safety, efficacy, manufacturing or supply issues arise with the drugs Carisma chooses to evaluate in combination with CT-0508, Carisma may be unable to obtain approval of CT-0508 or market CT-0508.

In September 2022, Carisma submitted a clinical protocol amendment to the CT-0508 IND for a CAR-M / anti-PD-1 (CT-0508 and pembrolizumab) combination strategy.

Carisma did not develop or obtain marketing approval for, nor has Carisma manufactured or sold, any of the currently approved drugs that it may study in combination with CT-0508. If the FDA or similar regulatory authorities outside of the United States revoke their approval of any drug or drugs in combination with which Carisma determines to develop CT-0508, Carisma will not be able to market CT-0508 in combination with such revoked drugs.

If safety or efficacy issues arise with any of these drugs, Carisma could experience significant regulatory delays, and the FDA or similar regulatory authorities outside of the United States may require Carisma to redesign or terminate the applicable clinical trials. If the drugs Carisma uses are replaced as the standard of care for the indications it chooses for CT-0508, the FDA or similar regulatory authorities outside of the United States may require Carisma to conduct additional clinical trials. In addition, if manufacturing or other issues result in a shortage of supply of the drugs with which Carisma determines to combine with CT-0508, it may not be able to complete clinical development of CT-0508 on its current timeline or at all.

Even if CT-0508 were to receive marketing approval or be commercialized for use in combination with other existing drugs, Carisma would continue to be subject to the risks that the FDA or similar regulatory authorities outside of the United States could revoke approval of the drug used in combination with CT-0508 or that safety, efficacy, manufacturing or supply issues could arise with these existing drugs. Combination therapies are commonly used for the treatment of cancer, and Carisma would be subject to similar risks if it develops any of its other product candidates for use in combination with other drugs or for indications other than cancer. This could result in Carisma’s own products being removed from the market or being less successful commercially.

Carisma may not be successful in its efforts to identify or discover additional potential product candidates.

A key element of Carisma’s strategy is to apply its macrophage engineering platform to address a broad array of indications and targets to generate next-generation therapeutics, including three programs for indications outside of oncology. The discovery efforts that Carisma is conducting may not be successful in identifying product candidates that are useful in treating cancer or other diseases. Carisma’s discovery engine may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:

potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be drugs that will receive marketing approval or achieve market acceptance; or
potential product candidates may not be effective in treating their targeted diseases.

Discovery programs to identify new product candidates require substantial technical, financial and human resources. Carisma may choose to focus its efforts and resources on a potential product candidate that ultimately proves to be unsuccessful. If Carisma is unable to identify additional suitable product candidates for pre-clinical and clinical development, it will limit its potential to obtain revenues from sale of products in future periods, which likely would result in significant harm to Carisma’s financial position and adversely impact its stock price.

Adverse public perception of genetic medicine, and gene therapy in particular, may negatively impact regulatory approval of, or demand for, Carisma’s potential products.

The clinical and commercial success of Carisma’s potential products will depend in part on public acceptance of the use of gene therapy for the prevention or treatment of human diseases. Public attitudes may be influenced by claims that gene therapy is unsafe,

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unethical, or immoral, and, consequently, Carisma’s products may not gain the acceptance of the public or the medical community. Adverse public attitudes may adversely impact Carisma’s ability to enroll clinical trials. Moreover, Carisma’s success will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of product candidates that Carisma may develop in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available.

Risks Related to the Commercialization of Carisma’s Product Candidates

Even if any of Carisma’s product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, and the market opportunity for any of its product candidates, if approved, may be smaller than it estimates.

If any of Carisma’s product candidates receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current cancer treatments, such as chemotherapy and radiation therapy, are well established in the medical community and doctors may continue to rely on these and similar treatments. Efforts to educate the medical community and third-party payors on the benefits of Carisma’s product candidates may require significant resources and may not be successful. If Carisma’s product candidates do not achieve an adequate level of acceptance, Carisma may not generate significant revenues from product sales and it may not become profitable. The degree of market acceptance of Carisma’s product candidates, if approved for commercial sale, will depend on a number of factors, including:

the efficacy and potential advantages of Carisma’s product candidates compared to the advantages and relative risks of alternative treatments;
the effectiveness of sales and marketing efforts;
Carisma’s ability to offer its products, if approved, for sale at competitive prices;
the clinical indications for which the product is approved;
the cost of treatment in relation to alternative treatments;
the convenience and ease of administration compared to alternative treatments;
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
the strength of marketing and distribution support;
the timing of market introduction of competitive products;
the availability of third-party coverage and adequate reimbursement, and patients’ willingness to pay out of pocket for required co-payments or in the absence of third-party coverage or adequate reimbursement;
product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling;
the prevalence and severity of any side effects;
support from patient advocacy groups; and
any restrictions on the use of Carisma’s products, if approved, together with other medications.

Carisma’s assessment of the potential market opportunity for its product candidates is based on industry and market data that it obtained from industry publications, research, surveys and studies conducted by third parties and Carisma’s analysis of these data,

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research, surveys and studies. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While Carisma believes these industry publications and third-party research, surveys and studies are reliable, it has not independently verified such data. Carisma’s estimates of the potential market opportunities for its product candidates include a number of key assumptions based on its industry knowledge, industry publications and third-party research, surveys and studies, which may be based on a small sample size and fail to accurately reflect market opportunities. While Carisma believes that its internal assumptions are reasonable, no independent source has verified such assumptions. If any of Carisma’s assumptions or estimates, or these publications, research, surveys or studies prove to be inaccurate, then the actual market for any of its product candidates may be smaller than it expects, and as a result Carisma’s revenues from product sales may be limited and it may be more difficult for Carisma to achieve or maintain profitability.

If Carisma is unable to establish sales, marketing and distribution capabilities or enter into sales, marketing and distribution agreements with third parties, it may not be successful in commercializing its product candidates if and when they are approved.

Carisma does not have a sales or marketing infrastructure and has no experience as a company in the sale, marketing or distribution of biopharmaceutical products. To achieve commercial success for any product for which Carisma may obtain marketing approval, it will need to establish a sales, marketing and distribution organization, either itself or through collaborations or other arrangements with third parties.

Carisma currently expects that it would build its own focused, specialized sales and marketing organization to support the commercialization in the United States of product candidates for which it receives marketing approval and that can be commercialized with such capabilities. There are risks involved with Carisma establishing its own sales, marketing and distribution capabilities. For example, recruiting and training a sales force is expensive and time-consuming and could delay any product launch. If the commercial launch of a product candidate for which Carisma recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, Carisma would have prematurely or unnecessarily incurred these commercialization expenses. These efforts may be costly, and Carisma’s investment would be lost if it cannot retain or reposition its sales and marketing personnel. In general, the cost of establishing and maintaining a sales and marketing organization may exceed the cost-effectiveness of doing so.

Factors that may inhibit Carisma’s efforts to commercialize its products on its own include:

its inability to recruit, train and retain adequate numbers of effective sales, marketing, coverage or reimbursement, customer service, medical affairs and other support personnel;
its inability to equip sales personnel with effective materials;
its inability to effectively manage a geographically dispersed sales and marketing team;
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future products;
the inability of reimbursement professionals to negotiate arrangements for formulary access, reimbursement and other acceptance by payors;
the inability to price its products at a sufficient price point to ensure an adequate and attractive level of profitability;
restricted or closed distribution channels that make it difficult to distribute its products to segments of the patient population;
the lack of complementary products to be offered by sales personnel, which may put Carisma at a competitive disadvantage relative to companies with more extensive product lines; and
unforeseen costs and expenses associated with creating an independent sales and marketing organization.

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If Carisma is unable to establish its own sales, marketing and distribution capabilities and it enters into arrangements with third parties to perform these services, Carisma’s revenues from product sales and its profitability, if any, are likely to be lower than if it were to market, sell and distribute any products that it develops itself. In addition, Carisma may not be successful in entering into arrangements with third parties to sell, market and distribute its product candidates or may be unable to do so on terms that are acceptable to Carisma. Carisma likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market its products effectively. If Carisma does not establish sales, marketing and distribution capabilities successfully, either on its own or in collaboration with third parties, it will not be successful in commercializing its product candidates.

Carisma faces substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than it does, thus rendering Carisma’s products non-competitive, obsolete or reducing the size of its market.

The biopharmaceutical industry, and in particular the cell therapy field, is characterized by intense investment and competition aimed at rapidly advancing new technologies. Carisma’s platform and therapeutic product candidates are expected to face substantial competition from multiple technologies, marketed products and numerous other therapies being developed by third parties that use protein degradation, antibody therapy, inhibitory nucleic acid, gene editing or gene therapy development platforms and from companies focused on more traditional therapeutic modalities, such as small molecule inhibitors. The competition is likely to come from multiple sources, including biopharmaceutical companies, academic research institutions, governmental agencies and private research institutions that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization. The competition is likely to come from multiple sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, government agencies and public and private research institutions.

Carisma is aware of a number of companies generally pursuing the development of myeloid cell therapies, including, among others Myeloid Therapeutics, Shoreline Biosciences, Inceptor Bio, Thunder Bio, Resolution Therapeutics, CellOrigin, Sirpant Therapeutics, and others. Carisma is also facing competition from companies pursuing autologous T-cell therapies, allogenic T-cell therapies, NK and other cell therapies, direct in vivo reprogrammed cell therapies and other macrophage-targeted oncology therapeutics.

Many of the companies against which Carisma is competing or against which it may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining marketing approvals and marketing approved products than Carisma does. These competitors also compete with Carisma in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, its development programs. Carisma’s commercial opportunity could be reduced or eliminated if its competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that Carisma may develop. Carisma’s competitors also may obtain FDA or other marketing approval for their products more rapidly than Carisma may obtain approval for its products, which could result in Carisma’s competitors establishing a strong market position before Carisma is able to enter the market. In addition, Carisma’s ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. There are generic products currently on the market for certain of the indications that Carisma is pursuing, and additional products are expected to become available on a generic basis over the coming years. If Carisma’s product candidates are approved, it expects that they will be priced at a significant premium over competitive generic products.

Technology in the biopharmaceutical industry has undergone rapid and significant change, and Carisma expects that it will continue to do so. Any products or processes that Carisma develops may become obsolete or uneconomical before it recovers any expenses incurred in connection with their development.

Mergers and acquisitions in the biopharmaceutical industry may result in even more resources being concentrated among a smaller number of Carisma’s competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with Carisma in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, Carisma’s programs.

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Carisma has pursued and may in the future pursue the in-license or acquisition of rights to complementary technologies and product candidates on an opportunistic basis. However, Carisma may be unable to in-license or acquire any additional technologies or product candidates from third parties. The acquisition and licensing of technologies and product candidates is a competitive area, and a number of more established companies also have similar strategies to in-license or acquire technologies and product candidates that Carisma may consider attractive. These established companies may have a competitive advantage over Carisma due to their size, cash resources and greater development and commercialization capabilities. In addition, companies that perceive Carisma to be a competitor may be unwilling to assign or license rights to Carisma. Carisma also may be unable to in-license or acquire the relevant technology or product candidate on terms that would allow Carisma to make an appropriate return on its investment.

Even if Carisma is able to commercialize any product candidates, the products may become subject to unfavorable pricing regulations, third-party coverage or reimbursement practices or healthcare reform initiatives, which could harm its business.

The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. To obtain reimbursement or pricing approval in some countries, Carisma may be required to conduct a clinical trial that compares the cost effectiveness of its product candidate to other available therapies. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, Carisma might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay its commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues, if any, Carisma is able to generate from the sale of the product in that country. Adverse pricing limitations may hinder Carisma’s ability to recoup its investment in one or more product candidates, even if its product candidates obtain marketing approval.

Carisma’s ability to commercialize any product candidates successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. The availability of coverage and adequacy of reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford medical services and pharmaceutical products, including Carisma’s product candidates. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, government authorities and third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage and reimbursement may not be available for any product that Carisma commercializes and, even if these are available, the level of reimbursement may not be satisfactory. Reimbursement may affect the demand for, or the price of, any product candidate for which it obtains marketing approval. Obtaining and maintaining adequate reimbursement for Carisma’s products may be difficult. Carisma may be required to conduct expensive pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage and adequate reimbursement are not available or reimbursement is available only to limited levels, Carisma may not be able to successfully commercialize any product candidate for which it obtains marketing approval.

There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or similar regulatory authorities outside of the United States. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers its costs, including research, development, intellectual property, manufacture, sale and distribution expenses. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover Carisma’s costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Carisma’s inability to promptly obtain coverage and adequate reimbursement rates from both government-

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funded and private payors for any approved products that it develops could have a material adverse effect on its operating results, its ability to raise capital needed to commercialize products and its overall financial condition.

No uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require Carisma to provide scientific and clinical support for the use of its product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases on short notice, and Carisma believes that changes in these rules and regulations are likely.

There can be no assurance that Carisma’s product candidates, even if they are approved for sale in the United States, in the European Union or in other countries, will be considered medically reasonable and necessary for a specific indication or cost-effective by third-party payors, or that coverage and an adequate level of reimbursement will be available or that third-party payors’