As filed with the Securities and Exchange Commission on July 19, 2023

No. 333-          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

TALARIS THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

93 Worcester St.

Wellesley, MA 02481

(502) 398-9250

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

Mary Kay Fenton

Chief Financial Officer, Interim Chief Executive Officer and President

Talaris Therapeutics, Inc.

93 Worcester St.

Wellesley, MA 02481

(502) 398-9250

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

Copies of all communications, including communications sent to agent for service, should be sent to:

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date 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 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.

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 preliminary 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 preliminary proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 19, 2023

PROPOSED MERGER

YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Talaris Therapeutics, Inc. and Tourmaline Bio, Inc.,

Talaris Therapeutics, Inc., a Delaware corporation (“Talaris”), and Tourmaline Bio, Inc., a Delaware corporation (“Tourmaline”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) on June 22, 2023, pursuant to which, among other matters, Terrain Merger Sub, Inc., a direct, wholly owned subsidiary of Talaris (“Merger Sub”), will merge with and into Tourmaline, with Tourmaline surviving as a wholly owned subsidiary of Talaris (such transaction, the “Merger”). The surviving corporation following the Merger is referred to herein as the “combined company.”

At the effective time of the Merger (the “effective time”), each share of common stock of Tourmaline, par value $0.0001 per share (“Tourmaline common stock”) (after giving effect to the conversion of each share of preferred stock of Tourmaline, par value $0.0001 per share (“Tourmaline preferred stock”), into Tourmaline common stock and including all such shares that are converted into Tourmaline common stock) will be converted into the right to receive a number of shares of common stock of Talaris, par value 0.0001 per share (“Talaris common stock”). The final Exchange Ratio (as defined and described in more detail in the section titled “The Merger Agreement—Exchange Ratio” beginning on page 201 of the accompanying proxy statement/prospectus) is subject to adjustment prior to closing of the Merger at the effective time (the “closing”) based upon Talaris’ net cash at the closing and the aggregate proceeds from the sale of Tourmaline common stock in the Tourmaline pre-closing financing (as defined below) and as a result, Talaris stockholders could own more, and Tourmaline securityholders (including, for this purpose, the investors in the Tourmaline pre-closing financing) could own less, or vice versa, of the combined company. Based on Talaris’ and Tourmaline’s capitalization as of July 7, 2023, the Exchange Ratio was estimated to be equal to 0.7592 shares of Talaris common stock for each share of Tourmaline common stock, which estimated Exchange Ratio did not give effect to the proposed reverse stock split described elsewhere in this proxy statement/prospectus.

The following table illustrates a range of Exchange Ratios (including a high and a low range) at various figures of Talaris net cash, which estimated Exchange Ratios (x) give effect to Talaris’ sale of certain clinical data and intellectual property related to its product candidate, FCR001, to ImmunoFree, Inc. (“ImmunoFree”) effective July 1, 2023, for Talaris Legacy Proceeds (as defined and described in more detail in the section titled “The Merger Agreement—Merger Consideration and Exchange Ratio” beginning on page 200 of the accompanying proxy statement/prospectus) of approximately $2.1 million, (y) give effect to the special cash dividend to Talaris stockholders of record prior to the closing (as described below) and (z) do not give effect to the proposed reverse stock split or any other Talaris Legacy Proceeds:

In connection with the Merger, each outstanding and unexercised option to purchase shares of Tourmaline common stock that, following assumption by Talaris at the effective time, will be eligible to be registered on a registration statement on Form S-8, will be converted into an option to purchase shares of Talaris common stock, with the number of shares and exercise price being appropriately adjusted to reflect the Exchange Ratio between Talaris common stock and Tourmaline common stock or preferred stock, as the case may be, determined in accordance with the Merger Agreement.

Under the terms of the Merger Agreement, each share of Talaris common stock issued and outstanding at the time of the Merger will remain issued and outstanding, and, subject to the proposed reverse stock split and any acceleration of equity awards provided for in connection with the Merger, will be unaffected by the Merger. In addition, each unvested option to purchase shares of Talaris common stock (“Talaris option”) and Talaris stock appreciation right (“Talaris SAR”) will be accelerated in full effective immediately prior to the effective time, and each fully vested Talaris option or Talaris SAR that is outstanding immediately prior to the effective time will be cancelled and extinguished as of the effective time in exchange for the right to receive (i) a number of shares of Talaris common stock equal to the quotient of (x) the Option/SAR Value (as defined below) multiplied by 55% divided by (y) the Terrain In-the-Money Price (as defined and described in more detail in the section titled “The Merger Agreement—Merger Consideration and Exchange Ratio” beginning on page 200 of the accompanying proxy statement/prospectus) (rounded down to the nearest whole share) (the “Option/SAR Stock Amount”) and (ii) an amount in cash equal to the product obtained by multiplying (x) the Option/SAR Stock Amount by (y) 45% (rounded up so that such amount, when added to the value of the Option/SAR Stock Amount, equals the Option/SAR Value) (the “Option/SAR Cash Amount,” and together with the Option/SAR Stock Amount, the “Talaris Option/SAR Consideration”); where the “Option/SAR Value” is equal to the product of (A) the aggregate number of shares of Talaris common stock subject to or underlying such Talaris option or Talaris SAR, as applicable, multiplied by (B) (i) the Terrain In-the-Money Price, minus (ii) the exercise or strike price of the Talaris option or Talaris SAR, as applicable. All Talaris options and Talaris SARs with a per share exercise price or strike price that is equal to or greater than the Terrain In-the-Money Price will be cancelled for no consideration. The number of shares of Talaris common stock underlying such Talaris options and Talaris SARs and the exercise prices for such Talaris options and Talaris SARs will be appropriately adjusted to reflect the proposed reverse stock split (to the extent such reverse stock split is effective prior to the effective time). In addition, each Talaris restricted stock unit (“Talaris RSU”) that is outstanding immediately prior to the effective time will be accelerated in full and be cancelled and extinguished as of immediately prior to the effective time in exchange for the right to receive (i) a number of shares of Talaris common stock (rounded down to the nearest whole share) equal to the aggregate number of shares of Talaris common stock issuable pursuant to such Talaris RSU (the “RSU Stock Amount”) multiplied by 55% and (ii) an amount in cash equal to the product obtained by multiplying (x) the Terrain In-the-Money Price by (y) the RSU Stock Amount by (z) 45% (rounded up so that such amount, when added to the value of the RSU Stock Amount, equals the value of such Talaris RSU) (the “RSU Cash Amount” and together with the RSU Stock Amount, the “RSU Consideration”).

Further, prior to the closing of the Merger, Talaris will declare and set aside the aggregate cash amount to be paid in accordance with a special cash dividend (the “special cash dividend”) to Talaris stockholders of record prior to the closing of the Merger, which may be contingent upon the closing. The aggregate amount of the special cash dividend will not exceed an amount equal to (a) $67.5 million, minus (y) the Aggregate Cash Amount (as defined in “—The Merger Agreement—Treatment of Equity Awards—Treatment of Talaris Securities” below).

In addition, on June 22, 2023, Tourmaline entered into a securities purchase agreement with certain investors, pursuant to which Tourmaline has agreed to sell, and such investors have agreed to purchase, shares of Tourmaline common stock for an aggregate purchase price of approximately $75 million (collectively referred to as the “Tourmaline pre-closing financing”) immediately prior to the effective time. The closing of the Tourmaline pre-closing financing is conditioned upon the satisfaction or waiver of the conditions to the closing of the Merger as well as certain other conditions. The shares of Tourmaline common stock to be issued in the Tourmaline pre-closing financing will be converted into the right to receive a number of shares of Talaris common stock calculated based on the Exchange Ratio. The Tourmaline pre-closing financing is more fully described in the section titled “The Merger Agreement—Securities Purchase Agreement” beginning on page 222 of the accompanying proxy statement/prospectus.

Immediately after the Merger, Talaris stockholders as of immediately prior to the Merger are expected to own approximately 21.7% of the combined company on a fully diluted basis, former Tourmaline stockholders (excluding the investors in the Tourmaline pre-closing financing) are expected to own approximately 59.0% of the combined company on a fully diluted basis and the investors issued shares of Tourmaline common stock in the pre-closing financing are expected to own approximately 19.3% of the combined company on a fully diluted basis, each calculated using treasury stock method. The Exchange Ratio, and the aforementioned pro forma

ownerships, will be adjusted (i) to account for the effect of the proposed reverse stock split, (ii) to the extent that Talaris’ net cash immediately prior to the closing is less than $62,437,500 or greater than $72,562,500 (and as a result, Talaris stockholders could own more or less of the combined company) and (iii) for the amount, if any, of Talaris Legacy Proceeds.

Shares of Talaris common stock are currently listed on The Nasdaq Global Market (“Nasdaq”) under the symbol “TALS.” Talaris intends to file an initial listing application for the combined company with Nasdaq. After completion of the Merger, Talaris will be renamed “Tourmaline Bio, Inc.” and it is expected that the common stock of the combined company will trade on Nasdaq under the symbol “TRML.” On                 , 2023, the last trading day before the date of the accompanying proxy statement/prospectus, the closing sale price of Talaris common stock was $                 per share.

Talaris stockholders are cordially invited to attend the special meeting of Talaris stockholders (the “Talaris special meeting”). The special meeting is being held on                 , 2023, at                 Eastern Time, unless postponed or adjourned to a later date, in order to obtain the stockholder approvals necessary to complete the Merger and related matters. The Talaris special meeting will be held entirely online. Talaris stockholders will be able to attend and participate in the Talaris special meeting online by registering at www.proxydocs.com/TALS, where they will be able to listen to the meeting live, submit questions and vote. At the Talaris special meeting, Talaris will ask its stockholders to:

As described in the accompanying proxy statement/prospectus, certain Talaris stockholders who in the aggregate owned approximately 41.6% of the outstanding shares of Talaris capital stock as of June 22, 2023, and certain Tourmaline stockholders who in the aggregate owned approximately 88.0% of the outstanding shares of Tourmaline capital stock as of June 22, 2023, are parties to stockholder support agreements with Talaris and Tourmaline, respectively, whereby such stockholders have agreed to vote in favor of the Nasdaq Stock Issuance Proposal and the Reverse Stock Split Proposal, 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, Tourmaline stockholders holding a sufficient number of shares of Tourmaline capital stock to adopt the Merger Agreement and approve the Merger and related transactions will be asked to execute written consents providing for such adoption and approval.

After careful consideration, each of Talaris’ board of directors (the “Talaris board”) and Tourmaline’s board of directors (the “Tourmaline board”) have approved the Merger Agreement and have determined that it is advisable to consummate the Merger. The Talaris board 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 Talaris, Tourmaline, the Merger Agreement and transactions contemplated thereby and the foregoing proposals is contained in the accompanying proxy statement/prospectus. Talaris urges you to read the accompanying proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE 25 OF THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.

Talaris and Tourmaline are excited about the opportunities the Merger brings to Talaris’ and Tourmaline’s stockholders and thank you for your consideration and continued support.

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                 , 2023, and is first being mailed to Talaris’ stockholders on or about                 , 2023.

TALARIS THERAPEUTICS, INC.

93 Worcester St.

Wellesley, MA 02481

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the stockholders of Talaris Therapeutics, Inc.:

On behalf of the board of directors of Talaris, we are pleased to deliver this proxy statement/prospectus for the proposed Merger between Talaris and Tourmaline, pursuant to which, among other matters, Merger Sub, will merge with and into Tourmaline, with Tourmaline surviving as a wholly owned subsidiary of Talaris.

The Talaris special meeting will be held on              , 2023 at             Eastern Time, unless postponed or adjourned to a later date. The Talaris special meeting will be held entirely online. You will be able to attend and participate in the Talaris special meeting online by registering at www.proxydocs.com/TALS. Upon entry of your control number and other required information, you will receive further instructions via email, that provides you access to the special meeting and to vote and submit questions during the special meeting. The Talaris special meeting will be held for the following purposes:

These proposals are collectively referred to as the “Proposals.”

The Talaris board has fixed                  , 2023 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Talaris special meeting and any adjournment or postponement thereof. Only holders of record of shares of Talaris common stock at the close of business on the record date are entitled to notice of, and to vote at, the Talaris special meeting. At the close of business on the record date, Talaris had                 shares of common stock outstanding and entitled to vote.

Your vote is important. The affirmative vote of a majority of the votes properly cast for and against by the holders of Talaris common stock at the Talaris special meeting, assuming a quorum is present, is required for approval of Proposal Nos. 1, 4, 5 and 6. The affirmative vote of the holders of a majority in voting power of the outstanding shares of Talaris common stock entitled to vote on Proposal Nos. 2 and 3

at the Talaris special meeting is required for approval of Proposal No. 2 and 3. No Proposal is conditioned upon any other Proposal. However, approval of each of Proposal No. 1 and Proposal No. 2 is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1 and 2.

Even if you plan to virtually attend the Talaris special meeting, Talaris requests that you sign and return the enclosed proxy or vote by mail or online to ensure that your shares will be represented at the Talaris special meeting if you are unable to virtually attend. You may change or revoke your proxy at any time before it is voted at the Talaris special meeting.

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

Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting

to Be Held on                  , 2023 at                 Eastern Time via the internet

The proxy statement/prospectus and annual report to stockholders are available at

www.proxydocs.com/TALS

By Order of the Talaris Board of Directors,

Mary Kay Fenton

Chief Financial Officer and Interim Chief Executive Officer and President

            , 2023

REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Talaris Therapeutics, Inc. that is not included in or delivered with this document. You may obtain this information without charge through the Securities and Exchange Commission (“SEC”) website (www.sec.gov) or upon your written or oral request by contacting the Corporate Secretary of Talaris by calling (502) 398-9250 or via email to investors@talaristx.com.

To ensure timely delivery of these documents, any request should be made no later than                  , 2023 to receive them before the Talaris special meeting.

For additional details about where you can find information about Talaris, please see the section titled “Where You Can Find More Information” beginning on page 403 of this proxy statement/prospectus.

TABLE OF CONTENTS

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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 Proposal No. 2 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 these questions and for additional information, please refer to the cross-referenced sections.

At the effective time, each share of Tourmaline common stock (after giving effect to the conversion of each share of Tourmaline’s preferred stock into Tourmaline common stock and including all such shares that are converted into Tourmaline common stock) will be converted into the right to receive a number of shares of Talaris common stock equal to the Exchange Ratio described in more detail in the section titled “The Merger Agreement—Exchange Ratio” beginning on page 201 of the accompanying proxy statement/prospectus.

In connection with the Merger, each outstanding and unexercised option to purchase shares of Tourmaline common stock will be converted into an option to purchase shares of Talaris’ common stock, with appropriate adjustments to reflect the Exchange Ratio, as determined in accordance with the Merger Agreement.

Under the terms of the Merger Agreement, each share of Talaris common stock issued and outstanding at the time of the Merger will remain issued and outstanding, and, subject to the proposed reverse stock split and any acceleration provided for in connection with the Merger, will be unaffected by the Merger. In addition, each then outstanding unvested Talaris option and Talaris SAR will be accelerated in full effective immediately prior to the effective time, and each fully vested Talaris option or Talaris SAR that is outstanding immediately prior to the effective time (assuming the per share value of the Talaris common stock is equal to the Terrain In-the-Money Price) will be cancelled and extinguished as of the effective time in exchange for the right to receive the Talaris Option/SAR Consideration. All other Talaris options and Talaris SARs will be cancelled for no consideration. The number of shares of Talaris common stock underlying such Talaris options and Talaris SARs and the exercise prices for such Talaris options and Talaris SARs will be appropriately adjusted to reflect the proposed reverse stock split (to the extent such reverse stock split is effective prior to the effective time). In addition, each Talaris RSU that is outstanding will be cancelled and extinguished as of the effective time in exchange for the right to receive the RSU Consideration.

Immediately after the Merger, Talaris stockholders as of immediately prior to the Merger are expected to own approximately 21.7% of the combined company on a fully diluted basis using treasury stock method, former Tourmaline stockholders (excluding the investors in the Tourmaline pre-closing financing) are expected to own approximately 59.0% of the combined company and the investors issued shares of Tourmaline common stock in the pre-closing financing are expected to own approximately 19.3% of the combined company on a fully diluted basis using treasury stock method. The Exchange Ratio, and related

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pro forma ownership, will be adjusted (i) to account for the effect of the proposed reverse stock split, (ii) to the extent that Talaris’ net cash immediately prior to the closing is less than $62,437,500 or greater than $72,562,500 (and as a result, Talaris stockholders could own more or less of the combined company) and (iii) for the amount, if any, of Talaris Legacy Proceeds (as defined below).

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Each of Proposal Nos. 1 and 2 is a condition to the completion of the Merger. The issuance of Talaris common stock in connection with the Merger and the change of control of Talaris resulting from the Merger will not take place unless Proposal No. 1 is approved by the Required Terrain Stockholders and the Merger is consummated. The amendment to Talaris’ charter to effect a reverse stock split of Talaris’ issued and outstanding common stock will not take place unless Proposal No. 2 is approved by the Required Terrain Stockholders. The Talaris board may determine to effect the reverse stock split, if it is approved by the Required Terrain Stockholders, even if the other proposals to be acted upon at the meeting are not approved, including Proposal No. 1.

In addition to the requirement of obtaining the approval of the Required Terrain Stockholders of Proposal Nos. 1 and 2, the closing of the Merger is subject to the satisfaction or waiver of each of the other closing conditions set forth in the Merger Agreement. For a more complete description of the closing conditions under the Merger Agreement, please see the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 206 of this proxy statement/prospectus.

The presence, by accessing online or being represented by proxy, at the Talaris special meeting of the holders of a majority of the shares of Talaris common stock outstanding and entitled to vote at the Talaris special meeting is necessary to constitute a quorum at the meeting for the Proposals.

The approval of Proposals No. 3, 4, 5 and 6 are not conditions to the Merger. Talaris does not expect that any matter other than the Proposals will be brought before the Talaris special meeting.

The presence, by accessing online or being represented by proxy, at the Talaris special meeting of the holders of a majority of the shares of Talaris common stock outstanding and entitled to vote at the Talaris special meeting is necessary to constitute a quorum at the meeting for the purpose of approving the Proposals.

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Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes, as applicable to each proposal. Abstentions and broker non-votes will also be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the special meeting. For Proposal Nos. 1, 4, 5 and 6, abstentions and broker non-votes are not counted as votes cast and will have no effect on the outcome of the vote. For Proposal Nos. 2 and 3, abstentions and broker non-votes will have the same effect as a vote “AGAINST” Proposal Nos. 2 and 3.

Additionally, prior to the closing, Talaris will declare, and set aside the aggregate cash amount to be paid in accordance with a special cash dividend to Talaris stockholders of record prior to the closing, which may be contingent upon the closing.

For a more complete description of the treatment of Talaris securities (as defined below) in the Merger, please see the sections titled “The Merger Agreement—Merger Consideration and Exchange Ratio” and “Market Price and Dividend Information” beginning on pages 200 and 24, respectively, of this proxy statement/prospectus. For a description of the effect of the Tourmaline pre-closing financing on Talaris’ current stockholders, please see the section titled “Agreements Related to the Merger—Securities Purchase Agreement” beginning on page 222 of this proxy statement/prospectus.

For a more complete description of the treatment of Tourmaline common stock and Tourmaline options in the Merger, please see the sections titled “The Merger Agreement—Merger Consideration” and “The

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Merger Agreement—Exchange Ratio” beginning on pages 200 and 201, respectively, of this proxy statement/prospectus. For a description of the effect of the Tourmaline pre-closing financing on Tourmaline’s current securityholders, please see the section titled “Agreements Related to the Merger—Securities Purchase Agreement” beginning on page 222 of this proxy statement/prospectus.

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If you are a Talaris stockholder of record, you may provide your proxy instructions in one of four different ways:

If you hold your shares in “street name” (as described below), you may provide your proxy instructions via telephone or the internet by following the instructions on your vote instruction form provided by your broker. 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 Talaris special meeting.

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Each of Proposal Nos. 1, 2 and 3 is considered to be “non-routine” matters, and thus a Talaris stockholder’s broker, bank or other agent may not vote your shares on those proposals in the absence of such holders’ voting instructions. If a Talaris stockholder does not instruct their broker how to vote with respect to these proposals, those votes will be counted as broker “non-votes.” Proposal Nos. 4, 5 and 6 are considered to be “routine” matters, and thus if a Talaris stockholder does not return voting instructions to their broker, such holder’s shares may be voted by your broker in its discretion. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.

Broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Talaris special meeting. Broker non-votes will not be counted as “votes cast” and will therefore have no effect on Proposal Nos. 1, 4, 5 and 6, but will be counted as “votes outstanding” and will therefore have the same effect of a vote “AGAINST” Proposal Nos. 2 and 3.

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

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Talaris Therapeutics, Inc.

93 Worcester St.

Wellesley, MA 02481

Telephone: (502) 398-9250

Attention: Corporate Secretary

Email: investors@talaristx.com

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MARKET PRICE AND DIVIDEND INFORMATION

The Talaris common stock is currently listed on The Nasdaq Global Market under the symbol “TALS.”

The closing price of the Talaris common stock on June 21, 2023, the last day of trading prior to the announcement of the Merger, as reported on The Nasdaq Global Market, was $2.20 per share.

Because the market price of the Talaris common stock is subject to fluctuation, the market value of the shares of the Talaris common stock that the Tourmaline stockholders will be entitled to receive in the Merger may increase or decrease.

Assuming approval of Proposal Nos. 1 and 2 and successful application for initial listing with The Nasdaq Global Market, following the consummation of the Merger, the Talaris common stock will trade on The Nasdaq Global Market under Talaris’ new name, “Tourmaline Bio, Inc.” and new trading symbol “TRML.”

As of                 , 2023, the record date for the Talaris special meeting, there were approximately                  registered holders of record of the Talaris common stock. As of                 , 2023, Tourmaline had                  holders of record of Tourmaline common stock and                  holders of record of Tourmaline preferred stock. For detailed information regarding the beneficial ownership of certain Talaris and Tourmaline stockholders, see the sections of this proxy statement/prospectus titled “Principal Stockholders of Talaris” and “Principal Stockholders of Tourmaline.”

Dividends

Talaris has never declared or paid any cash dividends on the Talaris common stock and does not anticipate paying cash dividends on the Talaris common stock for the foreseeable future, except the cash dividend that Talaris will declare and pay to the holders of Talaris common stock in connection with the Merger. The aggregate amount of the special cash dividend will not exceed an amount equal to (a) $67.5 million minus (y) the Aggregate Cash Amount. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the Merger will be at the discretion of the combined organization’s then-current board of directors and will depend upon a number of factors, including the combined organization’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.

Tourmaline has never paid or declared any cash dividends on the Tourmaline capital stock. If the Merger does not occur, Tourmaline does not anticipate paying any cash dividends on the Tourmaline capital stock in the foreseeable future, and Tourmaline intends to retain all available funds and any future earnings to fund the development and expansion of its business. Any future determination to pay dividends will be at the discretion of the Tourmaline board and will depend upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, and restrictions imposed by applicable laws and other factors the Tourmaline board 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 or incorporated by reference in this proxy statement/prospectus, you should carefully consider the material risks described below before deciding how to vote your shares of Talaris common stock. You should also read and consider the other information in this proxy statement/prospectus. Please see the section titled “Where You Can Find More Information” beginning on page 403 of this proxy statement/prospectus for further information.

Risks Related to the Merger

The Exchange Ratio will not change or otherwise be adjusted based on the market price of Talaris common stock as the Exchange Ratio depends on the Talaris net cash at the closing and, to a lesser extent, the value of certain Talaris assets sold prior to closing and not the market price of Talaris common stock, so the Merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

At the effective time of, outstanding shares of Tourmaline common stock will be converted into shares of Talaris common stock. Applying the Exchange Ratio, the former Tourmaline securityholders immediately before the Merger are expected to own approximately 59.0% of the combined company on a fully diluted basis using treasury stock method, the investors who are issued shares of Tourmaline common stock in the Tourmaline pre-closing financing are expected to own approximately 19.3% of the combined company and Talaris stockholders immediately before the Merger are expected to own approximately 21.7% of the aggregate number of shares of Talaris common stock. The Exchange Ratio, and related pro forma ownership, will be adjusted (i) to account for the effect of the proposed reverse stock split, (ii) to the extent that Talaris’ net cash immediately prior to the closing is less than $62,437,500 or greater than $72,562,500 (and as a result, Talaris stockholders could own more or less of the combined company) and (iii) for the amount, if any, of Talaris Legacy Proceeds (as defined below). In the event Talaris’ net cash is below $62,437,500, the Exchange Ratio will be adjusted such that the number of shares issued to Tourmaline’s pre-closing securityholders will be increased, and Talaris stockholders will own a smaller percentage of the combined company following the Merger. In the event Talaris’ net cash is greater than $72,562,500, the Exchange Ratio will be adjusted such that the number of shares issued to Tourmaline’s pre-closing securityholders will be decreased, and Talaris stockholders will own a larger percentage of the combined company following the Merger.

Any changes in the market price of Talaris stock before the completion of the Merger will not affect the number of shares Tourmaline stockholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger, the market price of Talaris common stock increases from the market price on the date of the Merger Agreement, then Tourmaline stockholders could receive merger consideration with substantially more value for their shares of Tourmaline common stock than the parties had negotiated when they established the Exchange Ratio. Similarly, if before the completion of the Merger the market price of Talaris common stock declines from the market price on the date of the Merger Agreement, then Tourmaline stockholders could receive merger consideration with substantially lower value. The Merger Agreement does not include a price-based termination right.

If the conditions to the Merger are not satisfied or waived, the Merger may not occur.

Even if the Merger is approved by the Tourmaline stockholders and Proposal Nos. 1 and 2 as described in this proxy statement/prospectus are approved by the Talaris stockholders, specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the Merger. These conditions are set forth in the Merger Agreement and each material condition to the completion of the Merger is described in the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 206 of this proxy statement/prospectus. Talaris and Tourmaline cannot assure you that all of the conditions to the consummation of the Merger will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or the closing may be delayed.

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The Merger may be completed even though a material adverse effect may result from the announcement of the Merger, industry-wide changes or other causes.

In general, neither Talaris nor Tourmaline is obligated to complete the Merger if there is a material adverse effect affecting the other party between June 22, 2023, the date of the Merger Agreement, and the closing of the Merger. However, certain types of causes are excluded from the concept of a “material adverse effect.” Such exclusions include but are not limited to changes in general economic or political conditions, industry wide changes, changes resulting from the announcement of the Merger, natural disasters, pandemics, other public health events and changes in the GAAP. Therefore, if any of these events were to occur and adversely affect Talaris or Tourmaline, the other party would still be obliged to consummate the closing of the Merger notwithstanding such material adverse effect. If any such adverse effects occur and Talaris and Tourmaline consummate the closing of the Merger, the stock price of the combined company may suffer. This in turn may reduce the value of the Merger to the stockholders of Talaris, Tourmaline or both. For a more complete discussion of what constitutes a material adverse effect on Talaris or Tourmaline, see the section titled “The Merger Agreement—Representations and Warranties” beginning on page 208 of this proxy statement/prospectus.

If Talaris and Tourmaline complete the Merger, the combined company will need to raise additional capital by issuing equity securities or additional debt or through licensing arrangements, which may cause significant dilution to the combined company’s stockholders or restrict the combined company’s operations.

On June 22, 2023, Tourmaline entered into a securities purchase agreement with certain investors, pursuant to which Tourmaline has agreed to sell shares of Tourmaline common stock for an aggregate purchase price of approximately $75.0 million (collectively referred to as the “Tourmaline pre-closing financing”) immediately prior to the effective time. The closing of the Tourmaline pre-closing financing is conditioned upon the satisfaction or waiver of the conditions to the closing of the Merger as well as certain other conditions. The shares of Tourmaline common stock that are issued in the Tourmaline pre-closing financing will be converted into the right to receive a number of shares of Talaris common stock equal to the Exchange Ratio. The shares of Tourmaline common stock issued in the Tourmaline pre-closing financing will result in dilution to all securityholders of the combined company (i.e., both the pre-merger Talaris stockholders and former Tourmaline securityholders). The Tourmaline pre-closing financing is more fully described under the section titled “Agreements Related to the Merger—Securities Purchase Agreement” beginning on page 222 of this proxy statement/prospectus.

Additional financing may not be available to the combined company when it is needed or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity securities, such financing will cause additional dilution to all securityholders of the combined company, including Talaris’ pre-merger securityholders and Tourmaline’s former securityholders. It is also possible that the terms of any new equity securities may have preferences over the combined company’s common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the combined company.

Some Talaris and Tourmaline directors and executive officers have interests in the Merger that are different from yours and that may influence them to support or approve the Merger without regard to your interests.

Directors and executive officers of Talaris and Tourmaline may have interests in the Merger that are different from, or in addition to, the interests of other Talaris stockholders generally. These interests with respect to Talaris’ directors and executive officers may include, among others, acceleration of stock option or restricted stock unit vesting, retention bonus payments, extension of exercisability periods of previously issued stock option grants, severance payments if employment is terminated in a qualifying termination in connection with the

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Merger and rights to continued indemnification, expense advancement and insurance coverage. Two members of the Talaris board will continue as directors of the combined company after the effective time, and, following the closing of the Merger, will be eligible to be compensated as non-employee directors of the combined company. These interests with respect to Tourmaline’s directors and executive officers may include, among others, certain of Tourmaline’s directors and executive officers have options, subject to vesting, to purchase shares of Tourmaline common stock which, after the effective time, will be converted into and become options to purchase shares of the common stock of the combined company; Tourmaline’s executive officers are expected to continue as executive officers of the combined company after the effective time; and all of Tourmaline’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement.

In addition, certain of Tourmaline’s directors are affiliated with investment funds which are participating in the Tourmaline pre-closing financing. See “Certain Relationships and Related Party Transactions of the Combined Company—Tourmaline Transactions—Tourmaline Pre-Closing Financing” for more information. Further, certain current members of the Talaris will continue as directors of the combined company after the effective time, and, following the closing of the Merger, will be eligible to be compensated as non-employee directors of the combined company pursuant to the Talaris non-employee director compensation policy that is expected to remain in place following the effective time. The directors and executive officers own options and/or, with respect to Talaris, RSUs, to purchase the shares of their respective companies.

The Talaris and Tourmaline boards were aware of and considered those interests, among other matters, in reaching their decisions to approve and adopt the Merger Agreement, approve the Merger, and recommend the approval of the Merger Agreement to Talaris and Tourmaline stockholders. These interests, among other factors, may have influenced the directors and executive officers of Talaris and Tourmaline to support or approve the Merger.

For more information regarding the interests of Talaris and Tourmaline directors and executive officers in the Merger, please see the sections titled “The Merger—Interests of Talaris’ Directors and Executive Officers in the Merger” beginning on page 180 and “The Merger—Interests of Tourmaline’s Directors and Executive Officers in the Merger” beginning on page 187 of this proxy statement/prospectus.

Talaris stockholders and Tourmaline stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger, including the issuance of shares of Tourmaline common stock in the Tourmaline pre-closing financing.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Merger, Talaris stockholders and Tourmaline stockholders will have experienced substantial dilution of their ownership interests 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.

If the Merger is not completed, Talaris’ stock price may decline significantly.

The market price of Talaris common stock is subject to significant fluctuations. During the 12-month period ended June 30, 2023, the closing sales price of Talaris’ common stock on Nasdaq ranged from a high of $5.04 on August 4, 2022 to a low of $0.94 on December 28, 2022. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of Talaris common stock will likely be volatile based on whether stockholders and other investors believe that Talaris can complete the Merger or otherwise raise additional capital to support Talaris’ operations if the Merger is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. The volatility of the market price of Talaris common stock is

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exacerbated by low trading volume. Additional factors that may cause the market price of Talaris common stock to fluctuate include:

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of Talaris common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.

Talaris and Tourmaline securityholders will generally have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the Merger as compared to their current ownership and voting interests in the respective companies.

After the completion of the Merger, the current securityholders of Talaris and Tourmaline will generally own a smaller percentage of the combined company than their ownership of their respective companies prior to the Merger. Immediately after the Merger, Talaris stockholders as of immediately prior to the Merger are expected to own approximately 21.7% of the combined company, former Tourmaline securityholders are expected to own approximately 59.0% of the outstanding shares of the combined company and the investors who are issued shares of Tourmaline common stock in the Tourmaline pre-closing financing are expected to own approximately 19.3% of the outstanding shares of the combined company, subject to adjustments (i) to account for the effect of the proposed reverse stock split, (ii) to the extent that Talaris’ net cash immediately prior to the closing is less than $62,437,500 or greater than $72,562,500 (and as a result, Talaris stockholders could own more or less of the combined company) and (iii) for the amount, if any, of Talaris Legacy Proceeds (as defined below).

Talaris cannot be sure if or when the Merger will be completed.

The consummation of the Merger is subject to the satisfaction or waiver of various conditions, including the authorization of the Merger by Talaris’ stockholders and Tourmaline’s stockholders. Talaris cannot guarantee that the closing conditions set forth in the Merger Agreement will be satisfied. If Talaris is unable to satisfy certain closing conditions or if other mutual closing conditions are not satisfied, Tourmaline will not be obligated to complete the Merger. Under certain circumstances, Talaris would be required to pay Tourmaline a termination fee of $5 million, plus expense reimbursement of Tourmaline of up to $500,000.

If the Merger is not completed, the Talaris board, in discharging its fiduciary obligations to Talaris’ stockholders, would evaluate other strategic alternatives or financing options that may be available, which alternatives may not be as favorable to Talaris’ stockholders as the Merger, including a liquidation and dissolution. Any future sale or merger, financing or other transaction, including a liquidation or dissolution, may be subject to further stockholder approval. Talaris may also be unable to find, evaluate or complete other strategic alternatives, which may have a materially adverse effect on Talaris’ business.

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Until the Merger is completed, the Merger Agreement restricts Tourmaline and Talaris from taking specified actions without the consent of the other party, and requires Talaris to operate in the ordinary course of business consistent with past practice. These restrictions may prevent Tourmaline and Talaris from making appropriate changes to Talaris respective businesses or pursuing attractive business opportunities that may arise prior to the completion of the Merger. Further, if Talaris’ net cash at closing is lower than anticipated, either because expenses exceed current estimates or due to delays prior to closing, then the pre-closing stockholders of Talaris will own less of the combined company pursuant to the Exchange Ratio adjustment set forth in the Merger Agreement.

Any delay in completing the proposed Merger may materially and adversely affect the timing and benefits that are expected to be achieved from the proposed Merger.

Lawsuits may be filed against Talaris and the members of the Talaris board arising out of the proposed Merger, which may delay or prevent the proposed Merger.

Putative stockholder complaints, including stockholder class action complaints, and other complaints may be filed against Talaris, the Talaris board, Tourmaline, the Tourmaline board and others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and Talaris may not be successful in defending against any such future claims. Lawsuits that may be filed against Talaris, the Talaris board, Tourmaline, or the Tourmaline board could delay or prevent the Merger, divert the attention of Talaris’ management and employees from Talaris’ day-to-day business and otherwise adversely affect Talaris’ financial condition.

Talaris’ stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

If the combined company is unable to realize the strategic and financial benefits currently anticipated from the proposed Merger, Talaris’ stockholders will have experienced substantial dilution of their ownership interests in Talaris without receiving the expected commensurate benefit, or only receive part of the commensurate benefit to the extent the combined company is able to realize only part of the expected strategic and financial benefits currently anticipated from the proposed Merger.

The Financial Projections for Tourmaline included in this proxy statement/prospectus under “The Merger—Certain Unaudited Prospective Financial Information,” which were considered by the Talaris board in evaluating the Merger and used by Talaris’ financial advisor in rendering its fairness opinion and performing its related financial analyses, reflect numerous variables, estimates and assumptions and are inherently uncertain. If any of these variables, estimates and assumptions prove to be wrong, such as the assumptions relating to the approval of TOUR006, the actual results for the combined company’s business may be materially different than the results reflected in the Financial Projections.

As further described below in the section entitled “The Merger—Certain Unaudited Prospective Financial Information,” in connection with the Talaris board’s evaluation of the Merger, preliminary internal Financial Projections for Tourmaline were prepared by the management of Talaris, solely for use by Talaris’ financial advisor, Leerink Partners, in connection with the rendering of its fairness opinion and performing its related financial analyses, as described below under “The Merger—Opinion of Talaris’ Financial Advisor.” Although presented with numerical specificity, these Financial Projections reflect numerous variables, estimates, and assumptions made by Talaris’ management at the time the initial Financial Projections were prepared by Talaris. If any of these variables, estimates and assumptions prove to be wrong, the actual results for the combined company’s business may differ materially from the results reflected in the Financial Projections. These assumptions include assumptions as to the timing and likelihood of TOUR006 receiving marketing authorization and are subject to the risk that the Tourmaline product candidate does not receive marketing authorization on the timeline assumed in the projections or at all, generate the revenue anticipated or any revenue, reflected in the

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Financial Projections. If TOUR006 or any potential future product candidate of Tourmaline does not receive marketing authorization when anticipated, for the indications anticipated, or at all, or the other assumptions reflected in the estimates as to probability of success prove untrue, the actual results of the combined company’s business will differ materially from the results reflected in the Financial Projections.

In addition, the Financial Projections cover a significant period of time, specifically 2023 through 2043. This extended period was used in light of the anticipated timing for regulatory approval and the initiation of commercial sales of the Tourmaline product candidate and the anticipated period of patent exclusivity for each product candidate. However, the risks and uncertainties regarding the Financial Projections, including the potential for adverse developments such as delays in obtaining or failure to obtain regulatory approvals or additional competition or changes in the competitive or regulatory landscape, increase with each successive year and the likelihood that the actual results will differ materially from the projected results increase with each successive year. The Financial Projections also do not reflect general business, economic, market and financial conditions and any changes in any of these conditions over the period of the projections could result in the actual results differing materially from the results reflected in the Financial Projections.

During the pendency of the Merger, Talaris and Tourmaline 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 Talaris and Tourmaline 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 that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, seeking, initiating or knowingly encouraging, inducing or facilitating the communication, making, submission or announcement of any acquisition proposal or acquisition inquiry or taking any action that could 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 titled “The Merger Agreement—No Solicitation” beginning on page 209 of this proxy statement/prospectus.

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

The terms of the Merger Agreement prohibit each of Talaris and Tourmaline from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances as described in further detail in the section titled “The Merger Agreement—No Solicitation” beginning on page 209 of this proxy statement/prospectus. In addition, if Talaris terminates the Merger Agreement under specified circumstances, Talaris could be required to pay Tourmaline a termination fee of $5.0 million, or Tourmaline could be required to pay Talaris a termination fee of $7.1 million, plus, in each case, up to $500,000 in expense reimbursements. This termination fee may discourage third parties from submitting competing proposals to Talaris, Tourmaline or their respective stockholders, and may cause the Talaris board or Tourmaline board to be less inclined to recommend a competing proposal.

Because the lack of a public market for Tourmaline’s capital stock makes it difficult to evaluate the fair market value of Tourmaline’s capital stock, the value of the Talaris common stock to be issued to Tourmaline stockholders may be more or less than the fair market value of Tourmaline’s capital stock.

The outstanding capital stock of Tourmaline is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of Tourmaline’s common stock. Because the percentage of Talaris equity to be issued to Tourmaline stockholders was determined based on

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negotiations between the parties, it is possible that the value of the Talaris common stock to be issued to Tourmaline stockholders will be more or less than the fair market value of Tourmaline’s common stock.

If the Merger does not qualify as a reorganization under the Code, U.S. holders of Talaris common stock may be taxed on the full amount of the consideration received in the Merger.

As discussed more fully under the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger,” each of Talaris and Tourmaline intend that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the Merger so qualifies, no gain will be recognized by U.S. holders of Tourmaline capital stock will not recognize gain or loss for U.S. federal income tax purposes upon the receipt of shares of Talaris common stock in exchange for Tourmaline capital stock in the Merger. It is not, however, a condition to the parties’ obligation to complete the transactions that the Merger so qualifies. None of the parties to the Merger Agreement have sought or intend to seek any ruling from the IRS regarding the qualification of the Merger as a reorganization within the meaning of Section 368(a) of the Code. If the Merger does not qualify for the U.S. federal income tax treatment described herein, U.S. holders of Tourmaline capital stock may be taxed on any gain realized up to the full fair market value of any Talaris common stock received in the Merger.

Risks Related to the Reverse Stock Split

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

The principal purposes of the reverse stock split are to (i) increase the per-share market price of Talaris’ common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of Talaris and the shares of Talaris common stock being issued in the Merger on Nasdaq will be approved and (ii) increase the number of authorized and unissued shares available for future issuance in connection with the Merger. It cannot be assured, however, that the reverse stock split will accomplish these objectives for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of Talaris’ common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio mutually agreed by Talaris and Tourmaline, or result in any permanent or sustained increase in the market price of Talaris’ common stock, which is dependent upon many factors, including Talaris’ business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of Talaris might meet the listing requirements for Nasdaq initially, it cannot be assured that it will continue to do so.

The reverse stock split may decrease the liquidity of the combined company’s common stock.

Although the Talaris board believes that the anticipated increase in the market price of the combined company’s common stock resulting from the proposed reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the 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. In addition, the reverse stock split may not result in an increase in the combined company’s stock price necessary to satisfy Nasdaq’s initial listing requirements for the combined company.

The reverse stock split may lead to a decrease in the combined company’s overall market capitalization.

Should the market price of the combined company’s common stock decline after the 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 reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can 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 reverse stock split ratio, then the value of the combined company, as

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measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company’s common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on the combined company’s stock price due to the reduced number of shares outstanding after the reverse stock split.

Risks Related to Talaris

Risks Related to Talaris’ Strategic Alternative Process

Failure to complete, or delays in completing, the proposed Merger with Tourmaline could materially and adversely affect Talaris’ results of operations, business, financial results and/or stock price.

In February 2023, Talaris announced that it intended to conduct a comprehensive review of strategic alternatives for the company and its assets. After a comprehensive review of strategic alternatives, including identifying and reviewing potential candidates for the Merger, on June 22, 2023, Talaris entered into an agreement and plan of merger and reorganization with Tourmaline and Merger Sub, pursuant to which, subject to the satisfaction or waiver of the conditions therein, Merger Sub will merge with and into Tourmaline, with Tourmaline surviving as a wholly owned subsidiary of Talaris. The closing of the Merger is subject to approval by the stockholders of Talaris and Tourmaline as well as other customary closing conditions. If the Merger is completed, the business of Tourmaline will continue as the business of the combined company. Any failure to satisfy a required condition to closing may prevent, delay or otherwise materially and adversely affect the completion of the Merger, which could materially and adversely affect Talaris’ results of operations, business, financial results and/or stock price. Talaris cannot predict with certainty whether or when any of the required closing conditions will be satisfied or if another uncertainty may arise and cannot assure you that the proposed Merger will be successfully consummated or that Talaris will be able to successfully consummate the proposed Merger as currently contemplated under the Merger Agreement or at all.

Risks related to the failure to consummate, or delay in consummating, the proposed Merger with Tourmaline include, but are not limited to, the following:

The occurrence of any of these events individually or in combination could materially and adversely affect Talaris’ results of operations, business, and Talaris’ stock price.

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If Talaris does not successfully consummate the Merger or another strategic transaction, the Talaris board may decide to pursue a dissolution and liquidation of Talaris. In such an event, the amount of cash available for distribution to Talaris’ stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities, as to which Talaris can give you no assurance.

There can be no assurance that the Merger will be completed. If the Merger is not completed, the Talaris board may decide to pursue a dissolution and liquidation of Talaris. In such an event, the amount of cash available for distribution to Talaris’ stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of cash available for distribution continues to decrease as Talaris funds its operations while pursuing the Merger. In addition, if the Talaris board were to approve and recommend, and Talaris’ stockholders were to approve, a dissolution and liquidation of the company, Talaris would be required under Delaware corporate law to pay Talaris’ outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to stockholders. Talaris’ commitments and contingent liabilities may include obligations under Talaris’ employment and related agreements or policies with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of the company, litigation against Talaris, and other various claims and legal actions arising in the ordinary course of business, and other unexpected and/or contingent liabilities. As a result of this requirement, a portion of Talaris’ assets would need to be reserved pending the resolution of such obligations.

In addition, Talaris may be subject to litigation or other claims related to a dissolution and liquidation of Talaris. If a dissolution and liquidation were to be pursued, the Talaris board, in consultation with Talaris’ advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of Talaris’ common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of the company. A liquidation would be a lengthy and uncertain process with no assurance of any value ever being returned to Talaris’ stockholders.

Talaris is substantially dependent on Talaris’ remaining employees to facilitate the consummation of the Merger.

Talaris’ ability to consummate a strategic transaction depends upon its ability to retain its remaining employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. In February and April 2023, Talaris undertook organizational restructurings that significantly reduced its workforce in order to conserve its capital resources. As of June 30, 2023, Talaris had only four full-time employees. Talaris’ ability to successfully complete the Merger depends in large part on Talaris’ ability to retain these remaining personnel. Despite Talaris’ efforts to retain these employees, one or more may terminate their employment with Talaris on short notice. Talaris’ cash conservation activities may yield other unintended consequences, such as reduced employee morale, which may cause remaining employees to seek alternative employment. The loss of the services of certain employees could potentially harm Talaris’ ability to consummate the Merger, to run Talaris’ day-to-day business operations, as well as to fulfill Talaris’ reporting obligations as a public company.

Even if Talaris is successful in completing a strategic transaction, Talaris may be exposed to other operational and financial risks.

Although there can be no assurance that a strategic transaction will result from the process Talaris has undertaken to identify and evaluate strategic alternatives, the negotiation and consummation of any such transaction will require significant time on the part of Talaris’ management, and the diversion of management’s attention may disrupt Talaris’ business.

The negotiation and consummation of any such transaction may also require more time or greater cash resources than Talaris anticipates and exposes Talaris to other operational and financial risks, including:

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Any of the foregoing risks could have a material adverse effect on Talaris’ business, financial condition and prospects.

If Talaris does not complete the Merger, Talaris may face substantial competition for attractive counterparties for any proposed strategic transactions.

There can be no assurance that the Merger will be completed. If the Merger is not completed, the Talaris board may decide to pursue an alternative strategic transaction. Talaris may face substantial competition for attractive counterparties for any proposed strategic transactions. For example, there may be many other biotech and pharmaceutical companies that halt development of their programs and instead choose to pursue strategic transactions like the ones Talaris has been exploring in connection with its strategic review process. These companies may possess greater financial and managerial resources than Talaris does, and they may have more attractive product candidates, intellectual property or other assets. As a result, these other companies may prove to be more attractive than Talaris to counterparties pursuing strategic transactions. There can be no assurance that its strategic review process will result in Talaris pursuing a transaction, or that any transaction, if pursued, will be completed on terms favorable to Talaris and its stockholders.

Talaris has never paid and, other than in connection with the Merger, does not intend to pay any cash dividends in the foreseeable future, so any returns will be limited to the value of Talaris’ capital stock.

Talaris has never paid cash dividends on any of its capital stock. Talaris currently anticipates that it will retain future earnings and does not anticipate declaring or paying any cash dividends for the foreseeable future, other than the special cash dividend contemplated in connection with the Merger. In addition, Talaris may enter into agreements that prohibit it from paying cash dividends without prior written consent from Talaris’ contracting parties, or with other terms prohibiting or limiting the amount of dividends that may be declared or paid on Talaris common stock. Any return to stockholders will therefore be limited to the appreciation of their stock, which may never occur.

Talaris may become involved in litigation, including securities class action litigation, which could divert management’s attention and harm Talaris’ business, and insurance coverage may not be sufficient to cover all costs and damages.

In the past, litigation, including securities class action litigation, has often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, or the announcement of negative events, such as negative results from clinical trials. These events may also result in investigations by the SEC. Talaris may be exposed to such litigation even if no wrongdoing occurred. Litigation is usually expensive and diverts management’s attention and resources, which could adversely affect Talaris’ business and cash resources and Talaris’ ability to consummate a potential strategic transaction or the ultimate value its stockholders receive in any such transaction.

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Risks Related to Talaris’ Business and Product Candidates

Risks Related to Clinical Development

Should Talaris resume the development of biopharmaceutical product candidates, its business would substantially depend upon the successful development and regulatory approval of a biopharmaceutical product candidate. If Talaris is unable to obtain regulatory approval for any such candidate, its business may be materially harmed.

Talaris currently has no products approved for sale and has historically invested substantially all of its efforts and financial resources in the development of its Facilitated Allo-HSCT Therapy, specifically in FCR001. Should Talaris resume development of biopharmaceutical candidates, successful development and ultimate regulatory approval of a product candidate for any potential indications would be critical to the future success of its business. Talaris would need to raise sufficient funds for, and successfully enroll and complete, clinical development for a product candidate.

There is no guarantee that any of product candidate Talaris may choose to develop will proceed in clinical development or achieve regulatory approval. The process for obtaining marketing approval for any product candidate is very long and risky and there will be significant challenges for Talaris to address in order to obtain marketing approval as planned or, if at all. The potential regulatory approval of any product candidate Talaris may develop is subject to a number of risks, including the following:

In addition, because Talaris has limited financial and personnel resources and is currently placing significant focus on pursuing strategic alternatives, Talaris may forgo or delay pursuit of opportunities with other future product candidates and indications that later prove to have greater commercial potential. Talaris’ resource allocation decisions may cause it to fail to capitalize on viable commercial products or profitable market opportunities. In addition, the resources spent on current and future initiatives may not yield successful outcomes.

Many of these risks are beyond the control of Talaris, including the risks related to clinical development and the regulatory submission process. If Talaris is unable to develop and receive regulatory approval for any product candidate it chooses to pursue for the indications Talaris are developing it for, or if Talaris experiences delays as a result of any of these risks or otherwise, its business could be materially harmed.

Clinical drug development involves a lengthy and expensive process with an uncertain outcome. Should Talaris resume the development of biopharmaceutical product candidates, the inability to successfully and timely conduct clinical trials and obtain regulatory approval for Talaris’ product candidates would substantially harm Talaris’ business.

Talaris cannot commercialize product candidates in the United States without first obtaining regulatory approval from the FDA; similarly, Talaris cannot commercialize product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of any product candidate for a target indication, Talaris must demonstrate with substantial evidence gathered in preclinical studies and clinical trials, that the product candidate is safe and effective for Talaris for that target indication and that the manufacturing facilities, processes and controls are adequate with respect to such product candidate to assure safety, purity and potency.

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Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and clinical trials.

The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the study designs and substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. Talaris has not obtained regulatory approval for any product candidate and it is possible that none of Talaris’ existing product candidates or any future product candidates will ever obtain regulatory approval.

Should Talaris resume the development of biopharmaceutical product candidates, Talaris’ product candidates could fail to receive regulatory approval from the FDA or a comparable foreign regulatory authority for many reasons, including:

This lengthy approval process, as well as the unpredictability of future clinical trial results, may result in Talaris’ failing to obtain regulatory approval to market Talaris’ product candidates, which would significantly harm Talaris’ business, results of operations and prospects. The FDA or a comparable foreign regulatory authority may require more information, including additional preclinical or clinical data to support approval, which may delay or prevent approval and Talaris’ commercialization plans, or Talaris may decide to abandon the development program. If Talaris was to obtain approval, regulatory authorities may approve any of Talaris’ product candidates for fewer or more limited indications than Talaris requests (including failing to approve the most commercially promising indications), may grant approval contingent on the performance of costly post-marketing clinical studies, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

Should Talaris resume the development of biopharmaceutical product candidates, delays or difficulties in the enrollment of patients in clinical trials would have a material adverse effect on Talaris’ business.

In February 2023, Talaris announced the termination of Talaris’ FREEDOM-1 and FREEDOM-2 clinical trials evaluating FCR001 in LDKT. This decision was primarily attributable to the pace of enrollment and the associated timeline to critical milestones. In addition, in March 2023, pending the outcome of its review of strategic alternatives, Talaris voluntarily paused enrollment in its FREEDOM-3 clinical trial in severe

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scleroderma. Talaris may experience similar outcomes for any future product candidate it chooses to pursue. In particular, Talaris may not be able to initiate or continue clinical trials for any product candidates if Talaris or a potential future sponsor are unable to locate and enroll a sufficient number of eligible patients to participate in these continuing trials as required by the FDA or comparable foreign regulatory authorities. Patient enrollment is a significant factor in the timing of clinical trials. In particular, if Talaris’ clinical trials are focused on indications with relatively small patient populations, Talaris’ ability to enroll eligible patients may be limited or may result in slower enrollment than Talaris anticipates.

Patient enrollment may be affected if Talaris’ competitors have ongoing clinical trials for product candidates that are under development for the same indications as Talaris’ product candidates, and patients who would otherwise be eligible for Talaris’ clinical trials instead enroll in clinical trials of Talaris’ competitors’ product candidates.

Furthermore, because Talaris has historically investigated the treatment of complex indications that require specialized medical care by means of an HSCT procedure, which is itself a complex procedure performed by specialized physicians and treatment centers, Talaris has faced inherent challenges in recruiting clinical trial sites to participate in Talaris’ trials and to complete Talaris’ trials on a timely basis. For example, in LDKT, each site that participated in Talaris’ trials needed to identify a lead clinician from each of the solid organ transplant and HSCT departments, who are willing and able to coordinate closely on the care and follow-up of Talaris’ patients. Talaris has historically relied on Talaris’ relationships with transplant centers of excellence to assist in identifying eligible patients and carrying out Talaris’ clinical trials, and any inability to secure or deterioration of those or similar relationships could impede Talaris’ ability to successfully enroll patients in a timely manner, if at all.

Patient enrollment may also be affected by other factors, including:

Even if Talaris is able to enroll a sufficient number of patients in Talaris’ clinical trials, if the pace of enrollment is slower than Talaris expects, the development costs for Talaris’ product candidates may increase

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and the completion of Talaris’ trials may be delayed or Talaris’ trials could become too expensive to complete. Any delays in completing Talaris’ clinical trials will increase Talaris’ costs, delay or prevent Talaris’ product candidate development and approval process and jeopardize Talaris’ ability to commence product sales and generate revenue. Any delays in completing Talaris’ clinical studies for Talaris’ product candidates may also decrease the period of commercial exclusivity. Any of these occurrences may significantly harm Talaris’ business, financial condition and prospects.

Should Talaris pursue and initiate the development of biopharmaceutical product candidates, it will face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than Talaris does.

Should Talaris pursue and initiate the development of product candidates, it will face competition from numerous pharmaceutical and biotechnology enterprises, as well as from academic institutions, government agencies and private and public research institutions. Talaris’ commercial opportunities will be significantly impacted if Talaris’ competitors develop and commercialize products that are safer, more effective, have fewer side effects, are less expensive or obtain more significant acceptance in the market than any product candidates that Talaris develops. Additionally, Talaris’ commercial opportunities will be significantly impacted if novel upstream products or changes in treatment protocols reduce the overall incidence or prevalence of diseases in Talaris’ current or future target population. Competition could result in reduced sales and pricing pressure on Talaris’ product candidates, if approved by applicable regulatory authorities. In addition, significant delays in the development of Talaris’ product candidates could allow Talaris’ competitors to bring products to market before Talaris and impair any ability to commercialize Talaris’ product candidates.

For example, while there are currently no FDA or European Medicines Agency (“EMA”) approved cell-based therapies for the indications Talaris had focused on targeting, other approved or commonly used drugs and therapies for Talaris’ prior target diseases, such as nintedanib to slow the rate of decline in lung function in patients with scleroderma-associated interstitial lung disease, are more well established and are accepted by physicians, patients and third-party payors. Some of these drugs are branded and subject to patent protection, and other drugs are available on a generic basis. Insurers and other third-party payors may encourage the use of generic products or specific branded products. In addition, a number of companies, academic institutions and government agencies are seeking to address limitations of existing therapies that Talaris also sought to address. For example, a number of third parties, such as Jasper Therapeutics, Inc. and bluebird bio, Inc., are seeking to develop conditioning regimens for HSCT that have lower toxicities, morbidities and mortalities than the current standard of care. Similarly, Johns Hopkins University and the Fred Hutchinson Cancer Center have previously administered non-myeloablative conditioning treatments. If competitive endeavors such as these prove to be successful, the anticipated advantages of any product candidates Talaris develops in such indications in comparison to the then existing standard of care would be eliminated and the demand for Talaris’ product candidates would be materially impacted.

Talaris expects that, if any product candidates it may develop are approved, they will be priced in a manner that will reflect its long-term clinical, economic, and humanistic value. Such a pricing model may entail a single upfront cost or multiple installments contingent upon demonstration of continued benefit that will likely be more expensive than the upfront cost or initial annual costs of competitive generic products that must be taken chronically. Absent differentiated and compelling clinical evidence, pricing premiums may impede the adoption of Talaris’ products over currently approved or commonly used therapies, which may adversely impact Talaris’ business. In addition, many companies are developing new therapeutics, and Talaris cannot predict what the standard of care will become as Talaris’ product candidates continue in clinical development. Many of Talaris’ competitors or potential competitors have significantly greater market presence, financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than Talaris does, and as a result may have a competitive advantage over Talaris. Smaller or early-stage companies may also prove to be significant competitors, including through collaborative arrangements or mergers with large and established companies. These third parties may also

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compete with Talaris in recruiting and retaining qualified scientific, commercial and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies and technology licenses complementary to Talaris’ programs or advantageous to Talaris’ business.

As a result of these factors, these competitors may obtain regulatory approval of their products before Talaris is able to, which will limit Talaris’ ability to develop or commercialize any product candidates. Talaris’ competitors may also develop products that are safer, more effective, more widely used and cheaper than Talaris’, and may also be more successful than Talaris in manufacturing and marketing their products. These appreciable advantages could render Talaris’ product candidates obsolete or noncompetitive before Talaris can recover the expenses of development and commercialization.

Should Talaris resume the development of biopharmaceutical product candidates, delays in the clinical development or delays in or Talaris’ ability to achieve regulatory approval, if at all, and commercialization of Talaris’ product candidates, if approved, would have a material adverse effect on Talaris’ business.

Talaris may experience delays in Talaris’ future clinical trials and Talaris does not know whether clinical trials will begin or enroll subjects on time, will need to be redesigned or will be completed on schedule, if at all. Should Talaris resume the development of biopharmaceutical product candidates, clinical trials may be delayed, suspended or prematurely terminated for a variety of reasons, such as:

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Furthermore, clinical trials may be delayed, suspended or prematurely terminated for a variety of reasons, including as a result of clinical sites, investigators or other third parties deviating from the trial protocol, failing to conduct the trial in accordance with regulatory and contractual requirements, and/or dropping out of a trial.

Talaris could also encounter delays if a clinical trial is suspended or terminated by Talaris, by the IRBs of the institutions in which such trials are being conducted, by a data safety monitoring board or committee (“DSMB”) for such trial or by the FDA or comparable foreign regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or Talaris’ clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, including a suspected unexpected serious adverse reaction, such as the death of a patient in Talaris’ FREEDOM-1 trial, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and Talaris may need to amend clinical trial protocols to comply with these changes. Amendments may require Talaris to resubmit Talaris’ clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Risks Related to the Results of Preclinical Studies and/or Clinical Trials

The results of preclinical studies or earlier clinical trials are not necessarily predictive of future results. Any product candidate Talaris advances into clinical trials may not have favorable results or receive regulatory approval.

Success in preclinical studies and earlier clinical trials does not ensure that later clinical trials will generate findings consistent with Talaris’ earlier clinical trials, including adequate data to demonstrate the efficacy and safety. Likewise, a number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience than Talaris, have suffered significant setbacks in clinical trials, even after seeing promising results in earlier preclinical studies or clinical trials. Despite the results reported in earlier preclinical studies or clinical trials for Talaris’ product candidates, to date, results may not be replicated in subsequent trials, and Talaris does not know whether the clinical trials Talaris may conduct will demonstrate adequate efficacy and safety to result in regulatory approval of any product candidates Talaris develops. Inaccuracies in Talaris’ earlier clinical data and deviations from Talaris’ clinical trial protocols can impact the integrity of those data, including safety data, and could impact the ability of those data to support regulatory approval. Additionally, certain of Talaris’ clinical trial endpoints also may not be adequately powered in a particular subpopulation of Talaris’ trial population. For example, Talaris’ Phase 2 trial of FCR001 was a “single arm” trial for which there was no comparator arm to permit a comparison of Talaris’ investigational therapy against standard of care treatment. Furthermore, all of Talaris’ clinical trials conducted to date have been open-label trials. This means that both the patient and investigator know whether the patient is receiving an investigational therapy or standard of care therapy. Open-label clinical trials can be subject to various limitations that may exaggerate any therapeutic effect, as patients in open-label clinical trials are aware when they are receiving treatment. Open-label clinical trials may be subject to a “patient bias.” Moreover, patients selected for early clinical studies often include the most severe sufferers and their symptoms may have been bound to

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improve notwithstanding the new treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge. While Talaris believes its trials utilized objective assessment measures for measuring primary endpoints and therefore were unlikely to be influenced in any manner by patient or investigator bias, such trials may utilize secondary endpoint patient reported outcome measures, and it is unknown whether the open-label design will be predictive of future clinical trial results with this or other product candidates for which Talaris may conduct an open-label clinical trial when studied in a controlled environment or with only objective endpoints. In addition, clinical data obtained from a clinical trial with an allogeneic product candidate such as FCR001 may not yield the same or better results on certain relevant outcome measures as compared to an autologous product candidate. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, which risk may be heightened in open-label trials where outcomes are subject to patient and investigator bias, and many companies that believed their product candidates performed satisfactorily in such trials nonetheless failed to obtain FDA, EMA or other necessary regulatory agency approval.

Even if Talaris believes that it has adequate data to support an application for regulatory approval to market any of Talaris’ product candidates, the FDA or other regulatory authorities may not agree with Talaris’ interpretation and may require that Talaris conduct additional clinical trials to support the regulatory approval of Talaris’ product candidates. If Talaris fails to obtain results in Talaris’ planned and future preclinical and clinical activities and studies sufficient to meet the requirements of the relevant regulatory agencies, the development timeline and regulatory approval and commercialization prospects for any potential product candidate, and, correspondingly, Talaris’ business and financial prospects, would be materially adversely affected.

Interim, “top line” or preliminary data from Talaris’ clinical trials that Talaris may announce or share with regulatory authorities from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

Talaris may announce clinical updates or share with regulatory authorities interim “top line” or preliminary data from Talaris’ clinical trials, from time to time, which is based on a preliminary analysis of then-available data. The outcome of preclinical development testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. In particular, additional data from subsequent patients may not be comparable or positive with respect to efficacy, safety or target engagement. For example, in June 2022, Talaris announced interim results from Talaris’ FREEDOM-1 Phase 3 clinical trial, including limited efficacy and safety data for the first seven patients dosed. Subsequently, in October 2022, Talaris reported that one of the first seven patients, who had experienced graft versus host disease (“GvHD”) symptoms that were treatment responsive and resolved in June 2022, had been hospitalized with grade IV GvHD that was complicated by serious infections leading to respiratory and renal failure, and ultimately death.

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their product candidates. These data and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular trial. Talaris also makes assumptions, estimations, calculations and conclusions as part of Talaris’ analyses of interim, “top line” or preliminary data, and Talaris may not have received or had the opportunity to fully and carefully evaluate all data.

As a result, the top-line or preliminary results that Talaris reports may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Interim data from clinical trials that Talaris may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient

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data become available. Talaris also makes assumptions, estimations, calculations and conclusions as part of Talaris’ analyses of data, and Talaris may not have received or had the opportunity to fully and carefully evaluate all data. Preliminary or “top line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data Talaris previously announced. As a result, interim, “top-line,” and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary, “top-line,” or interim data and final data could impact the regulatory approval of, and significantly harm the prospects for any product candidate that is impacted by the applicable data.

Further, others, including regulatory agencies, may not accept or agree with Talaris’ assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and Talaris’ business in general. In addition, the information Talaris chooses to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and others may not agree with what Talaris determines is the material or otherwise appropriate information to include in Talaris’ disclosure, and any information Talaris determines not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or Talaris’ business. If the clinical updates, or the interim, “top-line,” or preliminary data that Talaris reports differs from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, Talaris’ ability to obtain approval for and commercialize Talaris’ product candidates, Talaris’ business, operating results, prospects or financial condition may be harmed.

Risks Related to Potential Side Effects and the Safety and Efficacy Profile of Product Candidates

Biopharmaceutical product candidates, or associated conditioning regimens or treatment protocols, may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following any regulatory approval.

Undesirable side effects caused or risks exacerbated by biopharmaceutical product candidates or associated conditioning regimens or treatment protocols could cause Talaris or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authority. As a result of safety or toxicity issues that Talaris may experience in Talaris’ clinical trials, Talaris may not receive approval to market any product candidates, which could prevent Talaris from ever generating revenues or achieving profitability. Results of Talaris’ trials could reveal an unacceptably high severity and incidence of side effects, or side effects outweighing the benefits of Talaris’ product candidates. In such an event, Talaris’ trials could be delayed, suspended or terminated and the FDA or comparable foreign regulatory authorities could order Talaris to cease further development of or deny approval of Talaris’ product candidates for any or all targeted indications. Additionally, during the course of Talaris’ product development programs, FDA or comparable foreign regulatory authority review teams may change and new agency personnel may view the risk-benefit profile of any product candidates Talaris may develop differently than prior agency review teams. Any negative views as to the risk-benefit profile of any product candidates Talaris may develop in the future could lead FDA or comparable foreign regulatory authorities to require that Talaris conduct additional clinical trials or could require more onerous clinical trial designs for any ongoing or future clinical trials. The drug-related side effects could affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. In addition, while Talaris notes the summary of safety findings Talaris has gathered to date, certain populations of patients receiving Talaris’ product candidates may experience side effects in greater frequency or severity than others who may receive Talaris’ product candidates and additional clinical research is planned to more fully understand the safety profile of Talaris’ product candidates in Talaris’ patient populations and indications of focus. Furthermore, Talaris or others may later identify undesirable side effects caused by Talaris’ products, including during any long-term follow-up observation period, such as that involved in Talaris’ previous trials of FCR001.

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For example, LDKT and HSCT involve certain known potential post-procedure complications that may manifest several weeks or months after a transplant and which may be more common in certain patient populations. For example, up to 20% of patients with inherited metabolic diseases treated with HSCT experience primary engraftment failure, resulting in severe complications, including death. GvHD also accounts for approximately 10% of deaths following allogeneic HSCT. In June 2022, Talaris reported three cases of low-grade acute GvHD (“aGvHD”) in Talaris’ FREEDOM-1 clinical trial. One of the three aGvHD patients was subsequently diagnosed with moderate chronic GvHD and was also responding to treatment at the time of the June 2022 update. In October 2022, Talaris reported that the patient who had been diagnosed with chronic GvHD had died. The patient had been hospitalized with grade IV GvHD that was complicated by serious infections leading to respiratory and renal failure, and ultimately death. This event triggered a pre-specified, temporary stopping requirement and review by the FREEDOM-1 Data Monitoring Committee (“DMC”). After their review of this case, the DMC determined that trial enrollment and dosing could continue. Talaris also reported the event and the DMC’s recommendation to the FDA.

Should Talaris resume the development of biopharmaceutical product candidates, if these or other serious adverse events, undesirable side effects, or unexpected characteristics are identified during the development of any of Talaris’ product candidates, it may be difficult to determine whether these complications were or were not related to Talaris’ investigational therapy, and Talaris may need to limit, delay or abandon Talaris’ further clinical development of those product candidates, even if such events, effects or characteristics were potentially the result of related procedures generally, and not directly or specifically caused or exacerbated by Talaris’ product candidates. All serious adverse events or unexpected side effects will be continually monitored per the clinical trial’s approved protocol. If serious adverse events are determined to be directly or specifically caused or exacerbated by Talaris’ product candidates, Talaris would follow the trial protocol’s requirements, which include certain pre-specified stopping requirements, and which call for Talaris’ DSMB to review all available clinical data in making a recommendation regarding the trial’s continuation. However, there may be a failure by trial sites to effectively execute Talaris’ clinical trial protocols, including during any long-term follow-up period for Talaris’ clinical trials during the conduct of future clinical trials or following any product approval Talaris may receive. For example, HSCT is associated with an increased risk of cancer. Among the likely causes of this increased risk is the total body irradiation and high-dose chemotherapy used in myeloablative conditioning regimens. Patients who received Facilitated Allo-HSCT Therapy in clinical trials after non-myeloablative conditioning have developed cancer after transplant. For example, a patient, a lifelong smoker, in Talaris’ Phase 2 clinical trial developed non-small cell carcinoma of the lung approximately four years after HSCT.

Additionally, if any of Talaris’ product candidates receives regulatory approval, and Talaris or others later identify undesirable side effects caused or risks exacerbated by such product, a number of potentially significant negative consequences could result. For example, the FDA could require Talaris to adopt a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure that the benefits of treatment with such product candidate outweigh the risks for each potential patient, which may include, among other things, a communication plan to health care practitioners, patient education, extensive patient monitoring or distribution systems and processes that are highly controlled, restrictive and more costly than what is typical for the industry. Talaris or its collaborators may also be required to adopt a REMS or engage in similar actions, such as patient education, certification of health care professionals or specific monitoring, if Talaris or others later identify undesirable side effects caused by any product that Talaris develops alone or with collaborators. Other potentially significant negative consequences include that:

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Any of these events could diminish the usage or otherwise limit the commercial success of Talaris’ product candidates and prevent Talaris from achieving or maintaining market acceptance of the affected product candidate, if development is resumed and they are approved by applicable regulatory authorities.

If Talaris pursues the development of product candidates and its clinical trials fail to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States or otherwise produce negative results, Talaris may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates.

Before obtaining regulatory approval for the sale of Talaris’ product candidates, Talaris must conduct extensive clinical trials to demonstrate the safety and efficacy of such product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and the outcome is uncertain. Despite preclinical and early clinical trial data, any product candidate can unexpectedly fail at any stage of further development. The historical failure rate for product candidates is high. The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Even if Talaris’ clinical trials are completed as planned, Talaris cannot be certain that their results will support Talaris’ proposed indications. In addition, if Talaris’ clinical results are not successful, Talaris may terminate clinical trials for a product candidate and abandon any further research or studies of the product candidate. Any delay in, or termination of, Talaris’ clinical trials will delay and possibly preclude the filing of any BLAs with the FDA and, ultimately, Talaris’ ability to commercialize Talaris’ product candidates and generate product revenues.

Risks Related to Combination Therapies

Should Talaris resume the development of biopharmaceutical product candidates, Talaris may develop product candidates in multiple indications and in combination with other therapies, which exposes Talaris to additional risks. Combination therapies and multiple indications involve additional complexity and risk that could delay or cause Talaris’ programs to stall or fail; development of such programs may be more costly, may take longer to achieve regulatory approval and may be associated with unanticipated adverse events.

Clinical development and commercialization of combination therapies involve additional complexity and risk, including without limitation, those involving drug-drug interactions, dose selection, unanticipated adverse events, clinical design and approvals of regulatory bodies and therapeutic development networks of patient advocacy groups. Even if any product candidate Talaris develops were to receive marketing approval or be commercialized for Talaris in combination with other existing therapies, Talaris would continue to bear the risks that the FDA or similar foreign regulatory authorities could revoke approval of the therapy used in combination with Talaris’ product candidate or that safety, efficacy, manufacturing or supply issues could arise with these existing therapies. If Talaris is unable to manage the additional complexities and risks of the development and commercialization of combination therapies, the development of any product candidate could be delayed, halted or otherwise fail to receive or maintain approval and may be less successful commercially.

Should Talaris resume the development of biopharmaceutical product candidates, Talaris may develop product candidates for a number of different indications. Depending on the indication, patients may manifest a variety of differing co-morbidities, and may be more or less susceptible to certain severe adverse events or

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complications in the near or longer term. If any of these conditions or complications were to affect a patient who is participating in one of Talaris’ clinical trials, it may be difficult or impossible to determine whether these adverse events or complications are related to the original or underlying condition or to Talaris’ product candidate. If Talaris’ trials enroll a relatively small number of patients, even a small number of severe adverse events or serious complications could result in the delay or halt of development of Talaris’ product candidates in one or more of Talaris’ targeted indications.

Risks Related to Regulatory Matters and Approvals

Talaris’ product candidates may represent a novel therapeutic approach that could result in heightened regulatory scrutiny. The regulatory landscape that applies to novel therapies is rigorous, complex, uncertain and subject to change.

The clinical trial requirements of the FDA, the EMA, and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty, and intended use and market of the potential products. The regulatory approval process for novel product candidates can be more expensive and take longer than for other, better known, or more extensively studied pharmaceutical or other product candidates. If Talaris develops novel potential treatments for conditions in which there is little clinical experience with new endpoints and methodologies, there is heightened risk that the FDA, the EMA or other regulatory bodies may not consider the clinical trial endpoints to provide clinically meaningful results, and the resulting clinical data and results may be more difficult to analyze. Regulatory agencies administering existing or future regulations or legislation may not allow production and marketing of products utilizing cell therapies in a timely manner or under technically or commercially feasible conditions. In addition, regulatory action or private litigation could result in expenses, delays, or other impediments to Talaris’ research programs or the commercialization of resulting products.

For example, Talaris’ single-dose cell therapy represented a novel combination of nonmyeloablative conditioning, FCR001, and stem cell transplant-oriented treatment protocols, developing and commercializing FCR001 subjected Talaris to a number of challenges, including obtaining regulatory approval from the FDA and other regulatory authorities, which have limited experience with regulating the development and commercialization of stem cell therapies. Regulatory requirements governing the development of cell therapy products have changed frequently and may continue to change in the future. In 2016, the FDA established the Office of Tissues and Advanced Therapies (“OTAT”) within the Center for Biologics Evaluation and Research (“CBER”), to consolidate the review of cell therapy, and related products, and to advise the CBER on its review. In September 2022, the FDA announced retitling of OTAT to the Office of Therapeutic Products (“OTP”) and elevation of OTP to a “Super Office” to meet its growing cell and gene therapy workload. Moreover, serious adverse events or developments in clinical trials of cell therapy product candidates conducted by others may cause the FDA or other regulatory bodies to initiate a clinical hold on Talaris’ clinical trials or otherwise change the requirements for approval of any of Talaris’ product candidates. Although the FDA decides whether individual cell therapy protocols may proceed, the review process and determinations of other reviewing bodies can impede or delay the initiation of a clinical trial, even if the FDA has reviewed the trial and approved its initiation. Adverse developments in preclinical studies or clinical trials conducted by others in the field of cell therapy may cause the FDA, the EMA, and other regulatory bodies to amend the requirements for approval of any product candidates Talaris may develop or limit the use of products utilizing cell therapies, either of which could harm Talaris’ business.

Talaris may not be able to obtain orphan drug designation for any product candidates, or to obtain and maintain the benefits associated with orphan drug designation.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs or therapies for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States. In the European

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Union (the “EU”), the prevalence of the condition must not be more than five in 10,000. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.

If a product that has orphan drug designation from the FDA subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same biologic for the same indication, for seven years, except in limited circumstances such as a showing of clinical superiority to the product with orphan product exclusivity or if FDA finds that the holder of the orphan exclusivity has not shown that it can ensure the availability of sufficient quantities of the orphan product to meet the needs of patients with the disease or condition for which the product was designated. Even if Talaris or Talaris’ collaborators obtain orphan designation to a product candidate, Talaris may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products. The scope of exclusivity is limited to the scope of any approved indication, even if the scope of the orphan designation is broader than the approved indication. Additionally, exclusive marketing rights may be limited if Talaris or Talaris’ collaborators seek approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Further, even if a product obtains orphan drug exclusivity, that exclusivity may not effectively protect the product from competition because different drugs with different active moieties can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve a product with the same active moiety for the same condition if the FDA concludes that the later product is safer, more effective, or makes a major contribution to patient care. Furthermore, the FDA can waive orphan exclusivity if Talaris or Talaris’ collaborators are unable to manufacture sufficient supply of the product. The FDA may further reevaluate the Orphan Drug Act and its regulations and policies. Talaris does not know if, when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect Talaris’ business. Depending on what changes the FDA may make to its orphan drug regulations and policies, Talaris’ business could be adversely impacted.

Similarly, in Europe, a medicinal product may receive orphan designation under Article 3 of Regulation (EC) 141/2000. This applies to products that are intended for a life-threatening or chronically debilitating condition and either (1) such condition affects no more than five in 10,000 persons in the E.U. when the application is made, or (2) the product, without the benefits derived from orphan status, would be unlikely to generate sufficient returns in the E.U. to justify the necessary investment. Moreover, in order to obtain orphan designation in the E.U. it is necessary to demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the E.U. or, if such a method exists, the product will be of significant benefit to those affected by the condition. In the E.U., orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and applicants can benefit from specific regulatory assistance and scientific advice. Products receiving orphan designation in the E.U. can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market. An orphan product can also obtain an additional two years of market exclusivity in the E.U. for pediatric studies. However, the ten-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation-for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:

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If Talaris does not receive or maintain orphan drug designation to product candidates for which Talaris seeks such designation, it could limit Talaris’ ability to realize revenues from such product candidates.

The incidence and prevalence of the target patient population for any product candidate Talaris develops will be based on estimates and third-party sources. If the market opportunity for Talaris’ product candidates is smaller than Talaris estimates or if any approval that Talaris obtains is based on a narrower definition of the patient population, Talaris’ revenue and ability to achieve profitability might be materially and adversely affected.

Talaris has made and may in the future make estimates regarding the incidence and prevalence of target patient populations based on various third-party sources and internally generated analysis. These estimates may be inaccurate or based on imprecise data. For example, the total addressable market opportunity for a product candidate in any given indication will depend on, among other things, acceptance of such product candidate by the medical community and patient access, drug pricing and reimbursement. The number of patients in the addressable markets may turn out to be lower than expected, patients may not be otherwise amenable to treatment with such product candidate, or new patients may become increasingly difficult to identify or gain access to, all of which may significantly harm Talaris’ business, financial condition, results of operations and prospects.

Talaris may never obtain FDA approval for any product candidates in the United States, and even if Talaris does, Talaris may never obtain approval for or commercialize any product candidates in any other jurisdiction, which would limit Talaris’ ability to realize their full market potential.

In addition to regulations in the United States, to market and sell product candidates in the EU, many Asian countries and other jurisdictions, Talaris must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements, both from a clinical and manufacturing perspective. The approval procedure varies among countries and can involve additional testing and validation and additional administrative review periods. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. Clinical trials accepted in one country may not be accepted by regulatory authorities in other countries. In addition, many countries outside the United States require that a product be approved for reimbursement before it can be approved for sale in that country. A product candidate that has been approved for sale in a particular country may not receive reimbursement approval in that country. Talaris may not be able to obtain approvals from regulatory authorities or payor authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory or payor authorities in other countries or jurisdictions, and approval by one regulatory or payor authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. Talaris may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize Talaris’ products in any market. If Talaris is unable to obtain approval of any product candidates by regulatory or payor authorities in the EU, Asia or elsewhere, the commercial prospects of that product candidate may be significantly diminished. Talaris does not have any product candidates approved for sale in any jurisdiction, including international markets, and Talaris does not have experience in obtaining regulatory approval in international markets. If Talaris fails to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, Talaris’ target market will be reduced and Talaris’ ability to realize the full market potential of Talaris’ products will be unrealized.

Even if Talaris pursues the development of any product candidates and receives regulatory approval, Talaris will still face extensive ongoing regulatory requirements and continued regulatory review, which may result in significant additional expense, and Talaris’ products may still face future development and regulatory difficulties.

Even if Talaris obtains regulatory approval for a product candidate, it would be subject to ongoing requirements by the FDA and comparable foreign regulatory authorities governing the manufacture, quality

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control, further development, labeling, packaging, storage, distribution, adverse event reporting, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-marketing information. These requirements include submissions of safety and other post-marketing information and reports, establishment registration and product listing, as well as continued compliance by Talaris and/or any future CDMOs and CROs for any post-approval clinical trials that Talaris conducts. The safety profile of any product will continue to be closely monitored by the FDA and comparable foreign regulatory authorities after approval. If the FDA or comparable foreign regulatory authorities become aware of new safety information after approval of any of Talaris’ product candidates, they may require labeling changes or establishment of a REMS, impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.

In addition, manufacturers of cell therapies and their facilities are subject to initial and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices (“cGMP”), good clinical practices (“GCP”), current good tissue practices (“cGTP”), and other regulations. For certain commercial prescription and biologic products, manufacturers and other parties involved in the supply chain must also meet chain of distribution requirements and build electronic, interoperable systems for product tracking and tracing and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products or other products that are otherwise unfit for distribution in the United States. If Talaris or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or Talaris, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If Talaris, Talaris’ product candidates or the manufacturing facilities for Talaris’ product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

Should Talaris resume the development of biopharmaceutical product candidates, the occurrence of any event or penalty described above may inhibit Talaris’ ability to successfully commercialize Talaris’ products.

Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by the FDA, the U.S. Federal Trade Commission (“FTC”), the U.S. Department of Justice (“DOJ”), the Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services (“HHS”), state attorneys general, members of the U.S. Congress and the public. Additionally, advertising and promotion of any product candidate that obtains approval outside of the United States will be heavily scrutinized by comparable foreign entities and stakeholders. Violations, including actual or alleged promotion of Talaris’ products for unapproved or off-label uses, are subject to enforcement letters, inquiries and investigations, and civil and

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criminal sanctions by the FDA or comparable foreign bodies. Any actual or alleged failure to comply with labeling and promotion requirements may result in fines, warning letters, mandates to corrective information to healthcare practitioners, injunctions, or civil or criminal penalties.

The FDA and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of any current or future product candidate. Talaris cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If Talaris is slow or unable to adapt to changes in existing requirements or to the adoption of new requirements or policies, or if Talaris is not able to maintain regulatory compliance, Talaris may lose any marketing approval that Talaris may have obtained. Non-compliance by Talaris or any future collaborator with regulatory requirements, including safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population can also result in significant financial penalties.

Risks Related to Healthcare Legislation and Reform

Talaris’ relationships with customers, third-party payors, physicians and healthcare providers will be subject to applicable anti-kickback, fraud and abuse, and other laws and regulations, which could expose Talaris to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which Talaris obtains regulatory approval. Physicians, hospitals and third-party payors are often slow to adopt new products, technologies and treatment practices that require additional upfront costs and training. Additionally, third-party payors may not cover, or provide adequate reimbursement for, long-term follow-up evaluations required following the use of Talaris’ products. Patients are unlikely to use Talaris’ product candidates unless insurance coverage is provided, and reimbursement is adequate, to cover a significant portion of the cost of Talaris’ product candidates because patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. There is also significant uncertainty related to the insurance coverage and reimbursement of newly approved products and coverage may be more limited than the purposes for which the medicine is approved by the FDA or comparable foreign regulatory authorities. In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services (“CMS”), an agency within the HHS. CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree. Factors payors consider in determining reimbursement are based on whether the product is (i) a covered benefit under the payor’s health plan; (ii) safe, effective and medically necessary; (iii) appropriate for the specific patient; (iv) cost-effective; and (v) neither experimental nor investigational.

If Talaris’ product candidates have a higher cost of goods than conventional therapies, and require long-term follow-up evaluations, the risk that coverage and reimbursement rates may be inadequate for Talaris to achieve profitability may be greater. Based on these and other factors, hospitals, physicians and payors may decide that the benefits of this new therapy do not or will not outweigh its costs. Talaris’ arrangements with third parties may expose Talaris to broadly applicable federal and varied state fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which Talaris conducts research as well as markets, sells and distributes its products. As a pharmaceutical company, even though Talaris does not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are, and will be, applicable to Talaris’ business. Restrictions under applicable federal and state healthcare laws and regulations that may affect Talaris’ ability to operate include, but are not limited to, the following:

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Efforts to ensure that Talaris’ business arrangements with third parties, and Talaris’ business generally, continue to comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that Talaris’ business practices do not comply with any such laws and regulations. If Talaris’ operations, including Talaris’ arrangements with physicians and other healthcare providers, are found to be in violation of any such laws or any other governmental regulations that may apply to Talaris, Talaris may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, reputational harm, exclusion from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, additional reporting requirements, and/or the curtailment or restructuring of Talaris’ operations, as well as additional reporting obligations oversight if Talaris becomes subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. If any physicians or other healthcare providers or entities with whom Talaris expects to do business are found to not be in compliance with applicable laws, they may be subject to similar penalties.

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Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on Talaris’ business and results of operations.

In the United States, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay regulatory approval of product candidates, restrict or regulate post-approval activities and affect Talaris’ ability to profitably sell any product candidates for which Talaris obtains regulatory approval. Talaris expects that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price that Talaris, or any collaborators, may receive for any approved products.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent Talaris from being able to generate revenue, attain profitability, or commercialize Talaris’ product candidates. Such reforms could have an adverse effect on anticipated revenue from product candidates that Talaris may successfully develop and for which Talaris may obtain regulatory approval and may affect Talaris’ overall financial condition and ability to develop product candidates.

For example, in March 2010, the ACA was enacted in the United States. The ACA includes measures that have significantly changed, and are expected to continue to significantly change, the way healthcare is financed by both governmental and private insurers. Among the provisions of the ACA of greatest importance to the pharmaceutical industry are that the ACA: made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum basic Medicaid rebate on average manufacturer price (“AMP”) on most branded prescription drugs and adding a new rebate calculation for “line extensions” (i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP; imposed a requirement on manufacturers of branded drugs to provide a 50% point-of-sale discount (increased to 70% pursuant to the Bipartisan Budget Act of 2018, effective as of January 1, 2019) off the negotiated price of branded drugs dispensed to Medicare Part D beneficiaries in the coverage gap (i.e., “donut hole”) as a condition for a manufacturer’s outpatient drugs being covered under Medicare Part D;

Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and Talaris expects that there will be additional challenges and amendments to the ACA in the future. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the

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ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact Talaris’ business. In addition, other legislative and regulatory changes have been proposed and adopted in the United States since the ACA was enacted:

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at containing or lowering the cost of healthcare. Should Talaris resume the development of biopharmaceutical product candidates, the implementation of cost containment measures or other healthcare reforms may prevent Talaris from being able to generate revenue, attain profitability, or commercialize Talaris’ product. Such reforms could have an adverse effect on anticipated revenue from product candidates that Talaris may successfully develop and for which Talaris may obtain regulatory approval and may affect Talaris’ overall financial condition and ability to develop product candidates.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices. Specifically, there has been heightened governmental scrutiny over the manner in

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which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and review the relationship between pricing and manufacturer patient programs.

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Talaris cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect Talaris’ future profitability. Talaris expects that additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S. Federal Government will pay for healthcare drugs and services, which could result in reduced demand for Talaris’ drug candidates or additional pricing pressures.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain drug access and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm Talaris’ business, financial condition, results of operations and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for Talaris’ drugs or put pressure on Talaris’ drug pricing, which could negatively affect Talaris’ business, financial condition, results of operations and prospects.

Risks Related to Privacy and Data Security Laws

Talaris is subject to stringent and changing privacy and data security laws, contractual obligations, self-regulatory schemes, government regulation, and standards related to data privacy and security. The actual or perceived failure by Talaris, Talaris’ collaborators, vendors or other relevant third parties to comply with such obligations could harm Talaris’ reputation, subject Talaris to significant fines and liability, or otherwise adversely affect Talaris’ business, operations and financial performance.

Talaris collects, receives, stores, processes, uses, generates, transfers, discloses, makes accessible, protects and shares personal information and other information, including information Talaris collects about patients and healthcare providers in connection with clinical trials.

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There are numerous federal, state, local and international laws, regulations and guidance regarding privacy, information security and processing, the number and scope of which is changing, subject to differing applications and interpretations, and which may be inconsistent among jurisdictions, or in conflict with other rules, laws or data protection obligations. Data protection laws and data protection worldwide is, and is likely to remain, uncertain for the foreseeable future, and Talaris’ failure or perceived failure to address or comply with these laws could: increase Talaris’ compliance and operational costs; expose Talaris to regulatory scrutiny, actions, fines and penalties; result in reputational harm; lead to a loss of customers; reduce the use of Talaris’ products; result in litigation and liability; and otherwise result in other material harm to Talaris’ business.

For example, in the United States, HIPAA, as amended by HITECH, imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon “covered entities” (health plans, health care clearinghouses and certain health care providers), and their respective business associates, individuals or entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity, as well as their covered subcontractors. HIPAA mandates the reporting of certain breaches of health information to HHS, affected individuals and, if the breach is large enough, the media. Entities that are found to be in violation of HIPAA as the result of a breach of unsecured protected health information, a complaint about privacy practices or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance. Even when HIPAA does not apply, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards. The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA security regulations.

Additionally, U.S. States have begun introducing privacy legislation. For example, California recently enacted the California Consumer Privacy Act (“CCPA”), which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA, which went into effect on January 1, 2020, requires covered companies to provide certain disclosures to consumers about its data collection, use and sharing practices, and to provide affected California residents with ways to opt-out of certain sales or transfers of personal information. The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that may increase Talaris’ risk to data breach class action litigation. The CCPA will be expanded substantially on January 1, 2023, when the California Privacy Rights Act of 2020 (“CPRA”) becomes fully operative. The CPRA will, among other things, give California residents the ability to limit use of certain sensitive personal information, establish restrictions on the retention of personal information, expand the types of data breaches subject to the CCPA’s private right of action, and establish a new California Privacy Protection Agency to implement and enforce the new law. The CCPA and the CPRA could substantially impact Talaris’ business.

Additionally, some observers have noted that the CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase Talaris’ potential liability and adversely affect Talaris’ business. Already, in the United States, Talaris has witnessed significant developments at the state level. For example, in 2021, Virginia and Colorado enacted state legislation that becomes effective January 1, 2023. In 2022, Utah and Connecticut also enacted privacy legislation. With bills proposed in many other jurisdictions, it remains quite possible that other states will follow suit. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The

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existence of comprehensive privacy laws in different states in the country will make Talaris’ compliance obligations more complex and costly and may increase the likelihood that Talaris may be subject to enforcement actions or otherwise incur liability for noncompliance.

The increasing number and complexity of regional, country and U.S. state data protection laws, and other changes in laws or regulations across the globe, especially those associated with the enhanced protection of certain types of sensitive data could lead to government enforcement actions and significant penalties against Talaris and could have a material adverse effect on Talaris’ business, financial condition or results of operations.

Talaris may also be subject to additional privacy restrictions in various foreign jurisdictions around the world in which Talaris may operate or process personal information. The collection, use, storage, disclosure, transfer, or other processing of personal information regarding individuals in the European Economic Area (“EEA”), including personal health data, is subject to the General Data Protection Regulation 2016/679 (“GDPR”). The GDPR is wide-ranging and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the GDPR is a rigorous and time-intensive process that may increase Talaris’ cost of doing business or require Talaris to change its business practices, and despite those efforts, there is a risk that Talaris may be subject to fines and penalties, litigation, and reputational harm in connection with any European activities.

In addition, further to the UK’s exit from the EU on January 31, 2020, the GDPR ceased to apply in the UK at the end of the transition period on December 31, 2020. However, as of January 1, 2021, the UK’s European Union (Withdrawal) Act 2018 incorporated the GDPR (as it existed on December 31, 2020 but subject to certain UK specific amendments) into UK law, referred to as the UK GDPR. The UK GDPR and the UK Data Protection Act 2018 set out the UK’s data protection regime, which is independent from but aligned to the EU’s data protection regime. Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher. Complying with these laws, if enacted, would require significant resources and leave Talaris vulnerable to possible fines and penalties if Talaris is unable to comply.

In addition, GDPR prohibits the transfer of personal data from the EU to the U.S. and other countries in respect of which the European Commission or other relevant regulatory body has not issued a so-called “adequacy decision” (known as “third countries”), unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data. One of the primary safeguards used for transfers of personal data to the U.S. was the EU-U.S. Privacy Shield framework administered by the U.S. Department of Commerce. However, certain recent EU court decisions cast doubt on the ability to utilize one of the primary alternatives to the EU-U.S. Privacy Shield, namely the European Commission’s Standard Contractual Clauses, to lawfully transfer personal data to the U.S. and other third countries. In addition, the European Commission has recently published new versions of the Standard Contractual Clauses, which must be used for all new transfers of personal data from the EEA to third countries (including the United States) as of September 2021, and all existing transfers of personal data from the EU to third countries relying on the existing versions of the Standard Contractual Clauses must be replaced by December 2022. The implementation of the new Standard Contractual Clauses may necessitate significant contractual overhaul of Talaris’ data transfer arrangements with third parties. Use of both the existing and the new Standard Contractual Clauses must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance

laws and rights of individuals, and additional supplementary technical, organizational and/or contractual measures and/or contractual provisions may need to be put in place.

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At present, there are few if any viable alternatives to the Standard Contractual Clauses, and there remains some uncertainty with respect to the nature and efficacy of such supplementary measures in ensuring an adequate level of protection of personal data. As supervisory authorities issue further guidance on personal data export mechanisms (including circumstances where the Standard Contractual Clauses can and cannot be used) and/or start taking enforcement action, Talaris could suffer additional costs, complaints and/or regulatory investigations or fines. In addition, if Talaris is unable to transfer personal data between and among countries and regions in which Talaris operates and/or engages providers and/or otherwise transfers personal data, this could affect the manner in which Talaris receives and/or provides Talaris’ services, the geographical location or segregation of Talaris’ relevant systems and operations, and could adversely affect Talaris’ financial results and generally increase compliance risk as a result. Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of operating Talaris’ business.

Furthermore, following Brexit, the relationship between the U.K. and the EEA in relation to certain aspects of data protection law remains somewhat uncertain. In June 2021, the European Commission issued an adequacy decision under the GDPR which allows transfers (other than those carried out for the purposes of U.K. immigration control) of personal data from the EEA to the U.K. to continue without restriction for a period of four years. After that period, the adequacy decision may be renewed only if the U.K. continues to ensure an adequate level of data protection. During these four years, the European Commission will continue to monitor the legal situation in the U.K. and could intervene at any point if the U.K. deviates from the level of data protection in place at the time of issuance of the adequacy decision. If the adequacy decision is withdrawn or not renewed, transfers of personal data from the EEA to the U.K. will require a valid “transfer mechanism” and Talaris may be required to implement new processes and put new agreements in place, such as Standard Contractual Clauses, to enable transfers of personal data from the EEA to the U.K. to continue, which could disrupt Talaris’ operations.

In addition, while the U.K. data protection regime currently permits data transfers from the U.K. to the EEA and other third countries covered by a European Commission adequacy decision, and currently includes a framework to permit the continued use of the existing version of the Standard Contractual Clauses for personal data transfers from the U.K. to third countries, this is subject to change in the future, and any such changes could have implications for Talaris’ transfers of personal data from the U.K. to the EEA and other third countries. In particular, the U.K. Information Commissioner’s Office has stated that it is working on its own bespoke version of the Standard Contractual Clauses and it is not clear whether the new Standard Contractual Clauses published by the European Commission will be accepted as a valid mechanism to permit the transfer of personal data from the U.K. to third countries and/or whether any U.K. version of the Standard Contractual Clauses will supersede the existing and/or new EU version of the Standard Contractual Clauses. This could necessitate the implementation of both U.K. and EU versions of Standard Contractual Clauses, which would require significant resources and result in significant cost to implement and manage.

Talaris is also subject to the terms of external and internal privacy and security policies, representations, certifications, standards, publications and frameworks, and contractual obligations to third parties related to privacy, information security and processing.

With applicable data protection laws, privacy policies and data protection obligations imposing complex and burdensome obligations, and with substantial uncertainty over the interpretation and application of these requirements, Talaris has faced and may face additional challenges in addressing and complying with them, and making necessary changes to Talaris’ privacy policies and practices, and may incur material costs and expenses in an effort to do so, any of which could materially adversely affect Talaris’ business operations and financial results, and may reduce the overall demand for Talaris’ products.

Talaris strives to comply with applicable data protection laws, privacy policies and data protection obligations to the extent possible, but Talaris may at times fail to do so, or may be perceived to have failed to do so. Moreover, despite Talaris’ efforts, Talaris may not be successful in achieving compliance if Talaris’

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personnel, collaborators or vendors do not comply with applicable data protection laws, privacy policies and data protection obligations. Any failure or perceived failure by Talaris or Talaris’ collaborators, service providers and contractors to comply with federal or foreign laws or regulation, Talaris’ internal policies and procedures, representations or Talaris’ contracts governing the processing of personal data could result in negative publicity, disruptions or interruptions in Talaris’ operations, fines, penalties, lawsuits, liability, inability to process personal data, diversion of time and effort, proceedings against Talaris by governmental entities, or other adverse effects to Talaris’ business.

Risks Related to Dependence on Third Parties

Talaris has historically been, and may in the future be, dependent on a limited number of suppliers and, in some cases sole suppliers, for some of Talaris’ components and materials used in Talaris’ product candidates.

The manufacturing process for FCR001, like that of a number of other cell therapy companies, was characterized by limited numbers of suppliers, and in some cases sole source suppliers, with the manufacturing capabilities and know-how to create or source the reagents, materials and equipment necessary for the production of Talaris’ product candidates. For example, like many other cell therapy companies, Talaris’ manufacturing process for FCR001 depended on certain cell manipulation equipment and related reagents, all of which were available from Miltenyi Biotec (“Miltenyi”) as the sole supplier.

Talaris cannot be sure that its suppliers will remain in business, or that they will not be purchased by one of Talaris’ competitors or another company that decides not to continue producing these materials for Talaris. Additionally, during a public health emergency, there is a potential for certain manufacturing facilities and materials to be commandeered under the Defense Production Act of 1950, or equivalent foreign legislation, which may make it more difficult to obtain materials or reagents for Talaris’ product candidates for Talaris’ clinical trials or for commercial production, if approved, which could lead to delays in these trials or issues with Talaris’ commercial supply. Talaris’ use of a sole or a limited number of suppliers of raw materials, components and finished goods exposes Talaris to several risks, including disruptions in supply, price increases, late deliveries and an inability to meet customer demand. While Talaris tries to mitigate these risks by purchasing excess supplies, some of these components, such as reagents, typically expire after approximately four to six months. This short expiration period means that stocking the reagents in large quantities for future needs would not be an effective strategy to mitigate against the risk of shortage due to disruption of the supply chain or termination of Talaris’ business relationship. Talaris has pursued multiple sources for the critical components of Talaris’ manufacturing process, but there are, in general, relatively few alternative sources of supply for certain components and Talaris may not be successful in securing additional sources at all or on a timely basis. These vendors may be unable or unwilling to meet Talaris’ future demands for Talaris’ clinical trials or commercial sale. If Talaris is able to find a replacement supplier, the replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay. For example, the FDA or EMA could require additional supplemental data, manufacturing data and comparability data up to and including clinical trial data if Talaris relies upon a new supplier. Any disruption in supply from any supplier or manufacturing location, could lead to supply delays or interruptions which would damage Talaris’ business, financial condition, results of operations and prospects. If Talaris is required to switch to a replacement supplier, the manufacture and delivery of product candidates could be interrupted for an extended period, adversely affecting Talaris’ business. Establishing additional or replacement suppliers may not be accomplished quickly. While Talaris seeks to maintain adequate inventory of the components and materials that it expects to use, any interruption or delay in the supply of components or materials, or Talaris’ inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair Talaris’ ability to conduct Talaris’ clinical trials and, if Talaris’ product candidates are approved, to meet the demand of Talaris’ customers and cause them to cancel orders.

In addition, as part of the FDA’s approval of Talaris’ product candidates, the FDA must review and approve the individual components of Talaris’ production process, which includes raw materials, the manufacturing

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processes and facilities of Talaris’ suppliers and CDMOs. Some of Talaris’ prior suppliers may not have undergone this process, and may not have had any components included in any product approved by the FDA.

Talaris’ historical reliance on external suppliers subjected and may in the future subject Talaris to a number of risks that could harm Talaris’ reputation, business, and financial condition, including, among other things:

If any of these risks materialize, costs could significantly increase and Talaris’ ability to conduct Talaris’ clinical trials and, if Talaris’ product candidates are approved, to meet demand for Talaris’ products could be impacted. Some of these events could be the basis for FDA or other regulatory authority action, including injunction, recall, seizure, or total or partial suspension of production of Talaris’ product candidates.

Talaris has historically relied, and may in the future rely, on third parties to conduct Talaris’ clinical trials and perform some of Talaris’ research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties or fail to meet expected deadlines, Talaris’ development programs may be delayed or subject to increased costs, each of which may have an adverse effect on Talaris’ business and prospects.

Talaris does not have the ability to conduct all aspects of clinical trials itself. As a result, Talaris has historically been, and may in the future be, dependent on third parties to conduct future clinical trials of Talaris’ product candidates, including but not limited to governmental agencies and university laboratories, CDMOs, CROs, distribution and supply (logistics) services organizations, contract testing organizations (“CTOs”), consultants or consultant organization with specialized knowledge-based expertise. The timing of the initiation and completion of these trials will therefore be partially controlled by such third parties and may result in delays to Talaris’ development programs. Specifically, Talaris expects CROs, clinical investigators, and consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, Talaris will not be able to control all aspects of their activities. Nevertheless, Talaris is responsible for ensuring that each of Talaris’ trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and Talaris’ reliance on the CROs, CTOs, and other third parties does not relieve Talaris of its regulatory responsibilities. For example, Talaris relied on a single third-party investigator to provide ongoing data from Talaris’ Phase 2 clinical trial. Talaris, Talaris’ CROs and clinical sites are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the EEA and comparable foreign regulatory authorities for all of Talaris’ current product candidates and any future product candidates in clinical development. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, clinical trial investigators and clinical trial sites. If any of Talaris’ third-party investigators or other third parties fail to adhere to Talaris’ clinical trial protocols or to comply with applicable GCP requirements, the data generated in such clinical trials may be deemed unreliable,

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and the FDA or comparable foreign regulatory authorities may require Talaris to perform additional clinical trials before approving Talaris’ marketing applications. In addition, Talaris’ clinical trials must be conducted with product produced under cGMP regulations. Talaris’ failure to comply with these regulations may require Talaris to stop and/or repeat clinical trials, which would delay the marketing approval process. Moreover, principal investigators for Talaris’ clinical trials may serve as scientific advisors or consultants to Talaris from time to time and receive compensation in connection with such services. Under certain circumstances, Talaris may be required to report some of these relationships to the FDA or comparable foreign regulatory authorities. The FDA or comparable foreign regulatory authority may conclude that a financial relationship between Talaris and a principal investigator has created a conflict of interest or otherwise affected interpretation of the trial. The FDA or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of Talaris’ marketing applications by the FDA or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of Talaris’ product candidates.

There is no guarantee that any such CROs, clinical trial investigators or other third parties on which Talaris relies will devote adequate time and resources to Talaris’ development activities or perform as contractually required. Further, the performance of Talaris’ CROs has been, and may again in the future be interrupted by the COVID-19 pandemic, including due to travel or quarantine policies, heightened exposure of CRO staff who are healthcare providers to COVID-19 or prioritization of resources toward the pandemic. If any of these third parties fail to meet expected deadlines, adhere to Talaris’ clinical protocols or meet regulatory requirements, otherwise performs in a substandard manner, or terminates its engagement with Talaris, the timelines for Talaris’ development programs may be extended or delayed or Talaris’ development activities may be suspended or terminated.

If any of Talaris’ clinical trial sites terminates for any reason, Talaris may experience the loss of follow-up information on subjects enrolled in such clinical trials unless Talaris is able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA or comparable foreign regulatory authorities concludes that the financial relationship may have affected the interpretation of the trial, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any marketing application Talaris submits by the FDA or any comparable foreign regulatory authority. Any such delay or rejection could prevent Talaris from commercializing Talaris’ current product candidates and any future product candidates.

Risks Related to Manufacturing

Risks Related to Talaris’ Manufacturing Facility

Talaris may fail to successfully operate its manufacturing facility, which could adversely affect its clinical trials and the commercial viability of its product candidates.

In connection with the development of FCR001, Talaris operated its own dedicated cGMP cell processing facility, located on the campus of the University of Louisville, where Talaris manufactured FCR001 for its clinical trials. Although Talaris operated its own manufacturing facility, Talaris’ operations remained subject to review and oversight by the FDA, and the FDA could object to Talaris’ use of its manufacturing facility or the processes used therein.

Talaris had begun to scale-up its manufacturing and processing approaches to appropriately address its anticipated commercial needs for FCR001 for LDKT. While those scale-up efforts have been deferred, in order to scale-up Talaris’ manufacturing capabilities to support Talaris’ potential commercial needs, Talaris will require substantial additional funds and will need to hire and retain significant additional personnel and comply with extensive cGMP regulations applicable to a commercial facility. If Talaris fails to complete any construction

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in an efficient manner, recruit the required personnel and generally manage its growth effectively, the development and production of Talaris’ product candidates could be curtailed or delayed. Talaris’ manufacturing facility would also need to be licensed for the production of product candidates by the FDA. Even if its manufacturing facility is approved by the FDA, Talaris would be subject to ongoing periodic unannounced inspection by the FDA, corresponding state agencies and potentially third-party collaborators to ensure strict compliance with cGMPs and other government regulations.

Talaris may encounter difficulties if it determines to scale its manufacturing processes. Significant scale-up of manufacturing may result in unanticipated technical challenges and may require additional FDA approvals. Talaris may encounter difficulties in scaling out production, including problems involving raw material suppliers, production yields, technical difficulties, scaled-up product characteristics, quality control and assurance, shortage of qualified personnel, capacity constraints, compliance with FDA and foreign regulations, environmental compliance, production costs and development of advanced manufacturing techniques and process controls. The actual cost to manufacture and process Talaris’ product candidates could also be greater than Talaris expects and could materially and adversely affect the commercial viability of Talaris’ product candidates. Any of these difficulties, if they occur and are not overcome to the satisfaction of the FDA or other regulatory agency, could lead to significant delays and possibly the termination of the development program for such product candidate. These risks become more acute if Talaris scales up for commercial quantities, where a reliable source of product becomes critical to commercial success. The commercial viability of any of product candidates, if approved, will depend on Talaris’ ability to produce Talaris’ product candidates at a large scale. Failure to achieve this level of supply could jeopardize the successful commercialization of Talaris’ product candidates.

The manufacture of a cell therapy is complex and requires significant expertise, including the development of advanced manufacturing techniques and process controls. Manufacturers of cell therapy products often encounter difficulties in production, particularly in scaling out and validating initial production and ensuring the absence of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, shortages of raw materials, as well as compliance with strictly enforced federal, state and foreign regulations. For example, in late 2021, Talaris was required to undertake an additional apheresis of a donor when quality testing revealed that the product prepared from that donor’s stem cells was contaminated. While there can be no assurance at what point the donor blood product was contaminated, whether at the point of apheresis or during the manufacturing process, Talaris nonetheless has reviewed and enhanced its quality control procedures and believes the risk of future contamination to be low. Furthermore, if contaminants are discovered in Talaris’ cell therapy or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. Talaris cannot ensure that any stability or other issues relating to the manufacture of Talaris’ product candidates will not occur in the future.

Talaris may fail to manage the logistics of collecting and shipping raw material to the manufacturing site and shipping the product candidate to the patient. Logistical and shipment delays and problems caused by Talaris, Talaris’ vendors or other factors not in Talaris’ control, such as weather, could cause breakage or contamination of Talaris’ products and prevent or delay the delivery of product candidates to patients. Additionally, Talaris has to maintain a complex chain of identity and chain of custody with respect to donor material as it moves to the manufacturing facility, through the manufacturing process, and to the recipient. Failure to maintain chain of identity and chain of custody could result in patient death, loss of product or regulatory action.

Talaris’ manufacturing capabilities could be affected by cost-overruns, resource constraints, unexpected delays, equipment failures, labor shortages or disputes, natural disasters, power failures and numerous other factors that could prevent Talaris from realizing the intended benefits of Talaris’ manufacturing strategy, jeopardize Talaris’ ability to provide Talaris’ product candidates to patients, and have a material adverse effect on Talaris’ business, financial condition, results of operations and prospects.

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Talaris’ manufacturing process needs to comply with regulations relating to the quality and reliability of such processes. Should Talaris resume the development of biopharmaceutical product candidates, any failure to comply with relevant regulations could result in delays in or termination of Talaris’ clinical programs and suspension or withdrawal of any regulatory approvals. Further, if Talaris’ preclinical and clinical programs and the manufacture of Talaris’ product candidates are dependent on human donor material, Talaris could be subject to additional regulations and requirements.

The FDA, EMA and comparable foreign regulatory authorities require that any products that Talaris may eventually commercialize be manufactured according to cGMP, cGTP and similar jurisdictional standards. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. The FDA and comparable foreign regulatory agencies may also implement new standards at any time, or change their interpretations and enforcement of existing standards, including for the manufacture, packaging or testing of biological products.

Talaris may encounter difficulties in achieving quality control and quality assurance or meeting regulatory expectations. Talaris’ facilities are subject to inspections by the FDA and comparable foreign regulatory authorities to confirm compliance with applicable regulatory requirements. Any failure to follow cGMP, cGTP or other regulatory requirements or delay, interruption or other issues that arise in the manufacture, packaging, or storage of Talaris’ product candidates as a result of Talaris’ failure to comply with regulatory requirements or pass any regulatory authority inspection could significantly impair Talaris’ ability to develop and commercialize Talaris’ product candidates, including leading to significant delays in the availability of Talaris’ product candidates for Talaris’ clinical trials or the termination of or suspension of a clinical trial, or the delay or prevention of a filing or approval of marketing applications for Talaris’ product candidates. Significant non-compliance could also result in the imposition of sanctions, including warning or untitled letters, fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approvals, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could damage Talaris’ reputation and Talaris’ business.

In addition, Talaris’ clinical programs and the manufacture of FCR001 have been dependent on human donor material. Procurement of certain human organs for transplantation is subject to the National Organ Transplant Act of 1984 (“NOTA”), which prohibits the acquisition, receipt, or transfer of any human organ for valuable consideration for Talaris in human transplantation. Talaris depends on third parties who arrange for LDKT to comply with applicable NOTA requirements and Talaris does not know whether any failure by such third parties to comply with NOTA requirements could impact the integrity or usability of data in Talaris’ clinical trials.

If Talaris fails to comply with environmental, health and safety laws and regulations, Talaris could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of Talaris’ business.

Talaris is 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. Talaris’ operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Talaris’ operations also produce hazardous waste products. Talaris generally contracts with third parties for the disposal of these materials and wastes. Talaris cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from Talaris’ use of hazardous materials, Talaris could be held liable for any resulting damages, and any liability could exceed Talaris’ resources. Talaris also could incur significant costs associated with civil or criminal fines and penalties.

Although Talaris maintains workers’ compensation insurance to cover Talaris for costs and expenses, Talaris may incur due to injuries to Talaris’ employees resulting from the use of hazardous materials with a policy limit that Talaris believes is customary for similarly situated companies and adequate to provide Talaris with insurance coverage for foreseeable risks, this insurance may not provide adequate coverage against potential

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liabilities. Talaris does not maintain insurance for environmental liability or toxic tort claims that may be asserted against Talaris in connection with Talaris’ storage or disposal of biological or hazardous materials.

In addition, Talaris 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 Talaris’ research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions, which could adversely affect Talaris’ business, financial condition, results of operations and prospects.

Risks Related to the Manufacturing of Talaris’ Product Candidates

Should Talaris resume the development of cell therapy product candidates, Talaris may encounter difficulties in production, particularly with respect to scaling Talaris’ manufacturing capabilities.

Optimizing manufacturing processes is a difficult and uncertain task and there are risks associated with scaling to the level required for advanced clinical trials or commercialization, including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, lot consistency and timely availability of reagents or raw materials. If Talaris is unable to adequately validate or scale-up Talaris’ manufacturing processes, Talaris may encounter lengthy delays in commercializing any product candidates that Talaris may be developing. Talaris may continue to manufacture product itself or it may ultimately decide to outsource its manufacturing to a third party CDMO. Talaris may not be successful in transferring its production system to such manufacturer, or the manufacturer(s) on whom Talaris relies may not have the necessary capabilities to complete the implementation and development process. If Talaris is able to adequately validate and scale-up the manufacturing processes for any product candidates with a contract manufacturer, Talaris will still need to negotiate an agreement for commercial supply with that contract manufacturer and it is not certain Talaris will be able to come to agreement on terms acceptable to Talaris. As a result, Talaris may ultimately be unable to reduce the cost of goods for any product candidates to levels that will allow for an attractive return on investment if and when those product candidates are approved and commercialized.

The manufacturing process for any products that Talaris may develop is subject to the FDA and foreign regulatory authority approval processes and, if Talaris chooses to outsource Talaris’ commercial production, Talaris will need to contract with manufacturers who Talaris believes can meet applicable FDA and foreign regulatory authority requirements on an ongoing basis. If Talaris is unable to reliably produce any product candidate to specifications acceptable to the FDA or other regulatory authorities, Talaris may not obtain or maintain the approvals Talaris needs to commercialize Talaris’ products. Even if Talaris obtains regulatory approval for any of Talaris’ product candidates, there is no assurance that either Talaris or any CDMOs Talaris may contract with in the future will be able to manufacture the approved product to specifications and under cGMPs acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product, or to meet potential future demand. Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of Talaris’ product candidates, impair commercialization efforts, increase Talaris’ cost of goods and have an adverse effect on Talaris’ business, financial condition, results of operations and growth prospects.

Should Talaris resume the development of any cell therapy product candidates, Talaris’ future success will depend on Talaris’ ability to manufacture Talaris’ products on a timely basis with acceptable manufacturing costs, while at the same time maintaining good quality control and complying with applicable regulatory requirements. Talaris’ inability to do so could have a material adverse effect on Talaris’ business, financial condition, prospects and results of operations. In addition, Talaris could incur higher manufacturing costs if manufacturing processes or standards change and Talaris could need to replace, modify, design or build and install equipment, all of which would require additional capital expenditures.

There is a risk of manufacturing issues associated with the differences in donor starting materials, interruptions in the manufacturing process, contamination, equipment or reagent failure, improper installation or

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operation of equipment, vendor or operator error, and variability in product characteristics. Even minor deviations from Talaris’ normal manufacturing processes could result in reduced production yields, lot failures, product defects, product delays, product recalls, product liability claims and other supply disruptions. If for any reason Talaris loses a donor’s starting material or one of Talaris’ custom-manufactured products at any point in the process, the manufacturing process for that recipient will need to be restarted and the resulting delay may adversely affect that recipient’s outcome. If Talaris’ product candidates are manufactured for each particular patient, like FCR001 was, Talaris will be required to maintain a chain of identity with respect to materials as they move from the donor to the manufacturing facility, through the manufacturing process and on to the patient. Further, as Talaris’ product candidate is developed through preclinical to later-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are altered in an effort to optimize processes and results. If Talaris makes these types of changes, Talaris may not achieve Talaris’ intended objectives and any of these changes could cause Talaris’ product candidates to perform differently than Talaris expects, potentially affecting the results of clinical trials.

In addition, the FDA, the EMA and other foreign regulatory authorities may require Talaris to submit samples of any personalized product lot, together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA, the EMA or other foreign regulatory authorities may require that Talaris not distribute a specific product lot until the relevant agency authorizes its release. Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Lot failures or product recalls could cause Talaris to delay product launches or clinical trials, which could be costly to Talaris and otherwise harm Talaris’ business, financial condition, results of operations and prospects. Problems in Talaris’ manufacturing process could restrict Talaris’ ability to meet market demand for Talaris’ products.

Any problems in Talaris’ manufacturing process or facilities could make Talaris a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit Talaris’ access to additional attractive development programs.

Should Talaris resume the development of cell therapy product candidates, they may require specific shipping, storage, handling and administration at the clinical sites, including cold-chain logistics, which could subject Talaris’ product candidates to risk of loss or damage.

Cell therapy product candidates may be sensitive to temperature, storage and handling conditions. They must be stored at very low temperatures in specialized freezers or specialized shipping containers. For example, for administration of FCR001, the cryopreserved product container was required to be carefully removed from storage, and rapidly thawed under controlled temperature conditions in an area proximal to the patient’s bedside and administered into the patient. The handling, thawing and administration of the cryopreserved therapy product was required to be performed according to specific instructions, typically using specific disposables, specific bags and in some steps within specific time periods. Failure to correctly handle cell therapy product candidates and/or failure to administer such product candidates within the specified period post-thaw could negatively impact the efficacy and or safety of those product candidates, or cause a loss of such product candidates.

For example, FCR001 was required to be cryopreserved/frozen using specialized equipment and following specific procedures in order to be stored without damage in a cost-efficient manner and without degradation. In the future, Talaris could encounter difficulties in further optimization of freezing and thawing methodologies, and also in obtaining the necessary regulatory approvals for using such methodologies in treatment. If Talaris cannot adequately demonstrate similarity of Talaris’ frozen product to the unfrozen or thawed form to the satisfaction of the FDA, Talaris could face substantial delays in Talaris’ regulatory approvals. If Talaris is unable to freeze any cell-based therapies Talaris may develop for storage and shipping purposes, Talaris’ ability to promote adoption and standardization of Talaris’ products, as well as achieve economies of scale by centralizing production facilities, will be limited.

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Even if Talaris is able to successfully freeze and thaw any cell-based therapies without damage in a cost-efficient manner and without degradation to the satisfaction of the FDA to support regulatory approval, Talaris will still need to scale-up a cost-effective and reliable cold-chain distribution and logistics network, which Talaris may be unable to accomplish. Failure to effectively scale-up Talaris’ cold-chain supply logistics, by Talaris or third parties, could in the future lead to additional manufacturing costs and delays in Talaris’ ability to supply required quantities for commercial supply. For these and other reasons, Talaris may not be able to manufacture any other cell-based therapies Talaris may develop at commercial scale or in a cost-effective manner.

The process of manufacturing cell therapies is inherently susceptible to contamination. If microbial, viral or other contaminations are discovered in any product candidate or in Talaris’ manufacturing facility, Talaris’ manufacturing facility may need to be closed for an extended period of time to allow Talaris to investigate and remedy the contamination. Because Talaris’ cell therapy product candidates are manufactured from the cells of third-party donors, the process of manufacturing is susceptible to the availability of the third-party donor material. The process of developing products that can be commercialized may be particularly challenging, even if they otherwise prove to be safe and effective. The manufacture of these product candidates involves complex processes. Some of these processes require specialized equipment and highly skilled and trained personnel. The process of manufacturing these product candidates will be susceptible to additional risks, given the need to maintain aseptic conditions throughout the manufacturing process. Contamination with viruses or other pathogens in either the donor material or materials utilized in the manufacturing process or ingress of microbiological material at any point in the process may result in contaminated or unusable product. These types of contaminations could result in manufacturing delays which could result in delays in the development of Talaris’ product candidates. These contaminations could also increase the risk of adverse side effects.

Risks Related to Talaris’ Intellectual Property

As Talaris does not have in-house research capabilities, Talaris will depend on intellectual property licensed from third parties for development of biopharmaceutical product candidates and termination of any of such licenses could result in the loss of significant rights, which would harm Talaris’ business.

In connection with the potential development of product candidates, Talaris may need to enter license intellectual property from third parties. License agreements to intellectual property may require Talaris to use diligent efforts or meet development thresholds, to maintain the license, including establishing a set timeline for developing and commercializing products. If Talaris fails to comply with any of the obligations under such license agreements, including payment terms and diligence terms, licensors may have the right to terminate its agreements, in which case Talaris may lose important intellectual property rights and it may not be able to develop, manufacture, market or sell the products covered by its agreements or it may face other penalties under such agreements. In addition, such a termination could result in the licensor reacquiring the intellectual property rights and subsequently enabling a competitor to access the technology. Any such occurrence could materially adversely affect the value of the product candidate being developed under any such agreement. Termination of license agreements or reduction or elimination of its rights under them may result in its having to negotiate a new or reinstated agreement, which may not be available to Talaris on equally favorable terms, or at all, which may mean Talaris is unable to develop or commercialize the affected product candidate or cause Talaris to lose its rights under the agreement.

Further, the agreements under which Talaris may license intellectual property or technology from third parties may be are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. Accordingly, material disputes may arise between Talaris and its licensor, or its licensor and its licensors, regarding intellectual property subject to a license agreement, including those relating to:

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The resolution of any contract interpretation disagreement that may arise could narrow what Talaris believes to be the scope of its rights to the relevant intellectual property or technology, increase what Talaris believes to be its financial or other obligations under the relevant agreement, or decrease the financial or other benefits Talaris might otherwise receive under the relevant agreement. If material disputes over intellectual property that Talaris has licensed prevent or impair its ability to maintain licensing arrangements on acceptable terms, or are insufficient to provide Talaris the necessary rights to use the intellectual property, Talaris may be unable to successfully develop and commercialize the affected product candidates. If Talaris or any such licensors fail to adequately protect this intellectual property, its ability to commercialize any product candidates could suffer. Any material disputes with licensors or any termination of the licenses on which Talaris depends could have a material adverse effect on its business, financial condition, results of operations and prospects.

Talaris may rely on third parties from whom Talaris licenses proprietary technology to file and prosecute patent applications and maintain patents and otherwise protect the intellectual property Talaris licenses from them. Talaris may have limited control over these activities or any other intellectual property that may be related to Talaris’ in-licensed intellectual property. For example, Talaris cannot be certain that such activities by these licensors will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights. Talaris may have limited control over the manner in which Talaris’ licensors initiate an infringement proceeding against a third-party infringer of the intellectual property rights, or defend certain of the intellectual property that may be licensed to Talaris. It is possible that the licensors’ infringement proceeding or defense activities may be less vigorous than if Talaris conducts them itself.

Talaris is generally also subject to all of the same risks with respect to protection of intellectual property that Talaris licenses, as Talaris is for intellectual property that Talaris owns, which are described below. If Talaris or Talaris’ licensors fail to adequately protect such licensed intellectual property, Talaris’ ability to commercialize products could suffer.

If Talaris is unable to obtain and maintain sufficient intellectual property protection for Talaris’ product candidates and manufacturing process, or if the scope of the intellectual property protection is not sufficiently broad, Talaris’ ability to commercialize Talaris’ product candidates successfully and to compete effectively may be adversely affected.

Talaris has relied upon a combination of patents, trademarks, trade secrets and confidentiality agreements that it owns or possesses or that are owned or possessed by Talaris’ collaborators that were in-licensed to Talaris under licenses, including the amended and restated exclusive license agreement (“ULRF License Agreement”) with University of Louisville Research Foundation, Inc. (“ULRF”) (which terminated in connection with the transaction with ImmunoFree, conditioned upon the license of Talaris’ rights under the ULRF License Agreement to ImmunoFree), to protect the intellectual property related to Talaris’ technology and product candidates. When Talaris refers to “Talaris’” technologies, inventions, patents, patent applications or other

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intellectual property rights, Talaris is referring to both the rights that it owns or possesses as well as those that it in-licenses, many of which have been critical to Talaris’ intellectual property protection and Talaris’ historical business. For example, Talaris’ historical product candidates and Facilitating Allo-HSCT Therapy are protected by patents or patent applications of ULRF that Talaris had licensed and as confidential know-how and trade secrets. Additionally, Talaris’ earlier stage product candidates are not yet protected by any patents or patent applications. If the intellectual property that Talaris relies on is not adequately protected, competitors may be able to access Talaris’ technologies and erode or negate any competitive advantage Talaris may have.

The patentability of inventions and the validity, enforceability and scope of patents in the biotechnology field is highly uncertain because it involves complex legal, scientific and factual considerations, and it has in recent years been the subject of significant litigation. Moreover, the standards applied by the U.S. Patent and Trademark Office (“USPTO”) and non-U.S. patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology patents.

There is no assurance that all potentially relevant prior art relating to Talaris’ patents and patent applications is known to Talaris or has been found in the instances where searching was done. Further, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Thus, Talaris may be unaware of prior art that could be used to invalidate an issued patent or prevent a pending patent application from issuing as a patent. There also may be prior art of which Talaris is aware, but which Talaris does not believe affects the validity or enforceability of a claim of one of Talaris’ patents or patent applications, which may, nonetheless, ultimately be found to affect the validity or enforceability of such claim. As a consequence of these and other factors, Talaris’ patent applications may fail to result in issued patents with claims that cover Talaris’ product candidates in the United States or in other countries.

Even if patents have issued or do successfully issue from patent applications, and even if these patents cover Talaris’ product candidates, third parties may challenge the validity, ownership, enforceability or scope thereof, which may result in these patents being narrowed, invalidated, circumvented, or held to be unenforceable. No assurance can be given that if challenged, Talaris’ patents would be declared by a court to be valid or enforceable.

Even if unchallenged, Talaris’ patents and patent applications or other intellectual property rights may not adequately protect Talaris’ intellectual property, provide exclusivity for Talaris’ product candidates, or prevent others from designing around Talaris’ claims. The possibility exists that others will develop products on an independent basis which have the same or similar effects as Talaris’ product candidates and which do not infringe Talaris’ patents or other intellectual property rights, or that others will design around the claims of patents that Talaris has had issued that cover Talaris’ product candidates. If the breadth or strength of protection provided by Talaris’ patents and patent applications with respect to Talaris’ product candidates is threatened, it could jeopardize Talaris’ ability to commercialize Talaris’ product candidates and dissuade companies from collaborating with Talaris.

Talaris may also desire to seek a license from a third party who owns intellectual property that may be necessary or useful for providing exclusivity for Talaris’ product candidates, or for providing the ability to develop and commercialize a product candidate in an unrestricted manner. There is no guarantee that Talaris will be able to obtain a license from such a third party on commercially reasonable terms, or at all.

Obtaining and enforcing biopharmaceutical patents is costly, time consuming and complex, and Talaris may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that Talaris will fail to identify patentable aspects of Talaris’ research and development output before it is too late to obtain patent protection. Talaris may not have the right to control the preparation, filing and

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prosecution of patent applications, or to maintain patents licensed from third parties. Talaris may have limited control over the manner in which Talaris’ licensors initiate an infringement proceeding against a third-party infringer of the intellectual property rights, or defend certain of the intellectual property that may be licensed to Talaris. It is possible that the licensors’ infringement proceeding or defense activities may be less vigorous than if Talaris conducts them itself. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of Talaris’ business.

Talaris and Talaris’ collaborators have filed a number of patent applications covering FCR001 or methods of using or making FCR001. Talaris cannot offer any assurances about which, if any, patents will be issued with respect to these pending patent applications, the breadth of any such patents that are ultimately issued or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Because patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, Talaris cannot be certain that Talaris or Talaris’ collaborators were the first to file any patent application related to a product candidate. Talaris or Talaris’ collaborators may also become involved in proceedings regarding Talaris’ patents, including patent infringement lawsuits, interference or derivation proceedings, oppositions, reexaminations, and inter partes and post-grant review proceedings before the USPTO, the European Patent Office and other non-U.S. patent offices.

Even if granted, patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent generally occurs 20 years after the earliest U.S. non-provisional application is filed. Although various extensions may be available if certain conditions are met, the life of a patent and the protection it affords is limited. If Talaris encounters delays in Talaris’ clinical trials or in obtaining regulatory approvals, the period of time during which Talaris could exclusively market any of Talaris’ product candidates under patent protection, if approved, could be reduced. 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. Even if patents covering Talaris’ product candidates are obtained, once the patent life has expired for a product, Talaris may be vulnerable to competition from biosimilar products, as Talaris may be unable to prevent competitors from entering the market with a product that is similar or identical to Talaris’ product candidates.

In the United States, a patent that covers an FDA-approved drug or biologic may be eligible for a term extension designed to restore the period of the patent term that is lost during the premarket regulatory review process conducted by the FDA. Depending upon the timing, duration and conditions of FDA marketing approval of Talaris’ product candidates, one or more of Talaris’ U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch-Waxman Act”), which permits a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, and only claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended. In the EU, Talaris’ product candidates may be eligible for term extensions based on similar legislation. In either jurisdiction, however, Talaris may not receive an extension if Talaris fails to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fails to satisfy applicable requirements. Even if Talaris is granted such extension, the duration of such extension may be less than Talaris’ request. If Talaris is unable to obtain a patent term extension, or if the term of any such extension is less than Talaris’ request, the period during which Talaris can enforce Talaris’ patent rights for that product will be in effect shortened and Talaris’ competitors may obtain approval to market competing products sooner. The resulting reduction of years of revenue from applicable products could be substantial.

In addition, the United States federal government retains certain rights in inventions produced with its financial assistance under the Bayh-Dole Act. The federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit. The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or

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successors in title to the patent to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself. Some of Talaris’ licensed patents are subject to the provisions of the Bayh-Dole Act.

Should Talaris pursue development of clinical product candidates, Talaris may not be able to protect its intellectual property rights throughout the world.

Filing, prosecuting, enforcing and defending patents on all of Talaris’ potential product candidates in all countries throughout the world would be prohibitively expensive. Talaris’ intellectual property rights in certain countries outside the United States may be less extensive than those in the United States. In addition, the laws of certain foreign countries do not protect intellectual property rights to the same extent as laws in the United States. Consequently, Talaris and Talaris’ future collaborators may not be able to prevent third parties from practicing Talaris’ inventions in countries outside the United States, or from selling or importing infringing products made using Talaris’ inventions in and into the United States or other jurisdictions. Competitors may use Talaris’ technologies in jurisdictions where Talaris has not obtained patent protection or where Talaris does not have exclusive rights under the relevant patents to develop their own products and, further, may export otherwise-infringing products to territories where Talaris and Talaris’ collaborators have patent protection but where enforcement is not as strong as that in the United States. These infringing products may compete with Talaris’ product candidates in jurisdictions where Talaris or Talaris’ future collaborators have no issued patents or where Talaris does not have exclusive rights under the relevant patents, or Talaris’ patent claims and 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 foreign 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 Talaris and Talaris’ collaborators to stop the infringement of Talaris’ patents or marketing of competing products in violation of Talaris’ intellectual property rights generally. Proceedings to enforce Talaris’ patent rights in foreign jurisdictions could result in substantial costs and divert Talaris’ attention from other aspects of Talaris’ business, could put Talaris’ patents at risk of being invalidated or interpreted narrowly, could put Talaris’ patent applications at risk of not issuing, and could provoke third parties to assert claims against Talaris or Talaris’ future collaborators. Talaris or Talaris’ future collaborators may not prevail in any lawsuits that Talaris or Talaris’ collaborators initiate, and even if Talaris or Talaris’ collaborators are successful, the damages or other remedies awarded, if any, may not be commercially meaningful.

In some jurisdictions, including EU countries, compulsory licensing laws compel patent owners to grant licenses to third parties. In addition, some countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If Talaris or any of Talaris’ future collaborators are forced to grant a license to third parties under patents relevant to Talaris’ business, or if Talaris or Talaris’ future collaborators are prevented from enforcing patent rights against third parties, Talaris’ competitive position may be substantially impaired in such jurisdictions.

Should Talaris resume the development of biopharmaceutical product candidates, obtaining and maintaining Talaris’ patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Talaris’ patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. Talaris has systems in place to remind itself to pay these fees, and Talaris employs an outside firm and relies on its outside counsel to pay these fees due

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to non-U.S. patent agencies. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. Talaris employs reputable law firms and other professionals to help it comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, Talaris’ competitors might be able to enter the market and this circumstance would have a material adverse effect on Talaris’ business.

If Talaris is unable to protect the confidentiality of Talaris’ trade secrets and other proprietary information, the value of Talaris’ technology could be materially adversely affected and Talaris’ business could be harmed.

In addition to seeking the protection afforded by patents, Talaris relies on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that Talaris elects not to patent, processes for which patents are difficult to enforce, and other elements of Talaris’ technology, discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. Any disclosure to or misappropriation by third parties of Talaris’ confidential proprietary information could enable competitors to quickly duplicate or surpass Talaris’ technological achievements, including by enabling them to develop and commercialize products substantially similar to or competitive with Talaris’ product candidates, thus eroding Talaris’ competitive position in the market.

Trade secrets can be difficult to protect. Talaris seeks to protect Talaris’ proprietary technology and processes, in part, by entering into confidentiality agreements and invention assignment agreements with Talaris’ employees, consultants, and outside scientific advisors, contractors and collaborators. These agreements are designed to protect Talaris’ proprietary information. Although Talaris uses reasonable efforts to protect Talaris’ trade secrets, Talaris’ employees, consultants, contractors, collaborators, or outside scientific advisors might intentionally or inadvertently disclose Talaris’ trade secrets or confidential, proprietary information to Talaris’ competitors. In addition, Talaris’ competitors may otherwise gain access to Talaris’ trade secrets or independently develop substantially equivalent information and techniques. If any of Talaris’ confidential proprietary information were to be lawfully obtained or independently developed by a competitor, Talaris would have no right to prevent such competitor from using that technology or information to compete with Talaris, which could harm Talaris’ competitive position.

Enforcing a claim that a third party illegally obtained and is using any of Talaris’ trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, the laws of certain foreign countries do not protect proprietary rights such as trade secrets to the same extent or in the same manner as the laws of the United States. Misappropriation or unauthorized disclosure of Talaris’ trade secrets to third parties could impair Talaris’ competitive advantage in the market and could materially adversely affect Talaris’ business, results of operations and financial condition.

If Talaris’ trademarks and trade names are not adequately protected, then Talaris may not be able to build name recognition in Talaris’ markets of interest and Talaris’ business may be adversely affected.

If Talaris’ trademarks and trade names are not adequately protected, then Talaris may not be able to build name recognition in Talaris’ markets of interest and Talaris’ business may be adversely affected. Talaris may not be able to protect Talaris’ rights to these trademarks and trade names, which Talaris needs to build name recognition among potential collaborators or customers in Talaris’ markets of interest. At times, competitors may adopt trade names or trademarks similar to Talaris’, thereby impeding Talaris’ ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of Talaris’ unregistered trademarks or trade names. Over the long term, if Talaris is unable to successfully register Talaris’ trademarks and trade names and establish name recognition based on Talaris’ trademarks and trade names, then

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Talaris may not be able to compete effectively and Talaris’ business may be adversely affected. Talaris’ efforts to enforce or protect Talaris’ proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact Talaris’ financial condition or results of operations.

Risks Related to Potential Third Party Claims

If Talaris is sued for infringing the intellectual property rights of third parties, the resulting litigation could be costly and time-consuming and could prevent or delay Talaris’ development and commercialization efforts.

Talaris’ commercial success depends, in part, on it and its future collaborators not infringing the patents and proprietary rights of third parties. However, Talaris’ research, development and commercialization activities may be subject to claims that Talaris infringes or otherwise violates patents or other intellectual property rights owned or controlled by third parties. There is a substantial amount of litigation and other adversarial proceedings, both within and outside the United States, involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interference or derivation proceedings, oppositions, reexaminations, and inter partes and post-grant review proceedings before the USPTO and non-U.S. patent offices. Numerous U.S. and non-U.S. issued patents and pending patent applications owned by third parties exist in the fields in which Talaris is developing and may develop Talaris’ product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that Talaris’ product candidates may be subject to claims of infringement of third parties’ patent rights, as it may not always be clear to industry participants, including Talaris, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform or predictable. For example, Talaris is aware of certain issued patents that may cover some of Talaris’ product candidates, and while Talaris believes these patent claims are not valid and would not establish a basis for Talaris’ operations to be enjoined, Talaris may be subject to litigation and be obligated to pay reasonable royalties to the patent owners. In addition, many companies in intellectual property-dependent industries, including the biotechnology and pharmaceutical industries, have employed intellectual property litigation as a means to gain an advantage over their competitors. Some claimants may have substantially greater resources than Talaris does and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than Talaris could. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target Talaris.

Third parties may assert infringement claims against Talaris based on existing or future intellectual property rights, alleging that Talaris is employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacturing of Talaris’ product candidates that Talaris failed to identify. For example, patent applications covering Talaris’ product candidates could have been filed by others without Talaris’ knowledge, since these applications generally remain confidential for some period of time after their filing date. Even pending patent applications that have been published, including some of which Talaris is aware, could be later amended in a manner that could cover Talaris’ product candidates or their use or manufacture. After issuance, the scope of patent claims remains subject to construction as determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. In addition, Talaris may have analyzed patents or patent applications of third parties that Talaris believes are relevant to Talaris’ activities and believe that Talaris is free to operate in relation to any of Talaris’ product candidates, but Talaris’ competitors may obtain issued claims, including in patents Talaris considers to be unrelated, which may block Talaris’ efforts or potentially result in any of Talaris’ product candidates or Talaris’ activities infringing their claims.

If Talaris or Talaris’ future collaborators are sued for patent infringement, Talaris would need to demonstrate that Talaris’ product candidates, products and methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, and Talaris may not be able to do this. Proving that a patent is invalid or unenforceable is difficult and even if Talaris is successful in the relevant proceedings, Talaris may incur substantial costs and the time and attention of Talaris’ management and scientific

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personnel could be diverted from other activities. If any issued third-party patents were held by a court of competent jurisdiction to be valid and enforceable and cover aspects of Talaris’ materials, formulations, methods of manufacture or methods for treatment, Talaris could be forced, including by court order, to cease developing, manufacturing or commercializing the relevant product candidate until the relevant patent expires. Alternatively, Talaris may desire or be required to obtain a license from such third party in order to Talaris the infringing technology and to continue developing, manufacturing or marketing the infringing product candidate. However, Talaris may not be able to obtain any required license on commercially reasonably terms, or at all. Even if Talaris were able to obtain a license, the rights may be nonexclusive, which could result in Talaris’ competitors gaining access to the same intellectual property licensed to Talaris. Additionally, in the event of a successful intellectual property claim against Talaris, Talaris may have to pay substantial damages, including treble damages and attorneys’ fees if Talaris is found to have willfully infringed a patent, or to redesign Talaris’ infringing product candidates, which may be impossible or technically infeasible, or require substantial time and monetary expenditure. In addition to paying monetary damages, Talaris may lose valuable intellectual property rights or personnel and the parties making claims against Talaris may obtain injunctive or other equitable relief, which could impose limitations on the conduct of Talaris’ business.

Talaris may be subject to claims that Talaris’ employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that Talaris’ employees have wrongfully used or disclosed alleged trade secrets of their former employers.

As is common in the biotechnology and pharmaceutical industry, Talaris has employed individuals who are or were previously employed at universities or other biotechnology or pharmaceutical companies, including Talaris’ competitors or potential competitors. In particular, Talaris’ founder and former Senior Scientific Advisor, Suzanne T. Ildstad, MD, is the Jewish Hospital Distinguished Professor of Transplantation Research, Director of the Institute for Cellular Therapeutics, and a Professor in the Department of Surgery with associate appointments in the Departments of Physiology & Biophysics and Microbiology & Immunology at the University of Louisville School of Medicine. Talaris’ former Chief Technology Officer, Michael Zdanowski, and certain other employees or consultants were previously employed at Medeor Therapeutics, Inc., which is developing a cell therapy similar to Talaris’. Although Talaris tries to ensure that its employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for Talaris, Talaris may be subject to claims that it or its employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of Talaris’ employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If Talaris fails in defending any such claims, in addition to paying monetary damages, Talaris may lose valuable intellectual property rights or personnel, which could adversely impact Talaris’ business. Even if Talaris is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Talaris may face claims that it misappropriated, or otherwise acted unjustly or in bad faith with respect to, the confidential information or trade secrets of third parties, including collaborators or former collaborators. If Talaris is found to have misappropriated a third party’s trade secrets, or otherwise to have acted unjustly or in bad faith with respect to such trade secrets, Talaris may be prevented from further using these trade secrets, which could limit Talaris’ ability to develop Talaris’ product candidates, or may be otherwise subject to monetary damages.

Talaris may face claims that it misappropriated, or otherwise acted unjustly or in bad faith with respect to, the confidential information or trade secrets of third parties, including collaborators or former collaborators. Defending against intellectual property claims could be costly and time consuming, regardless of the outcome. Thus, even if Talaris were to ultimately prevail, or to settle before a final judgment, any litigation could burden Talaris with substantial unanticipated costs. Parties making claims against Talaris may be able to sustain the costs of litigation more effectively than Talaris can because they have substantially greater resources. In addition, litigation or threatened litigation could result in significant demands on the time and attention of Talaris’

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management team, distracting them from the pursuit of other company business. During the course of any intellectual property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation and these announcements may have negative impact on the perceived value of Talaris’ product candidates, programs or intellectual property. Any uncertainties resulting from the initiation and continuation of any litigation could have material adverse effect on Talaris’ ability to raise additional funds or otherwise have a material adverse effect on Talaris’ business, results of operations, financial condition and prospects. As a result of all of the foregoing, any actual or threatened intellectual property claim, including claims that Talaris acted unjustly or in bad faith with respect to the intellectual property of others, could prevent Talaris from developing or commercializing a product candidate, subject Talaris to monetary damages, or force Talaris to cease some aspect of Talaris’ business operations.

Talaris cannot ensure that additional patent rights relating to inventions described and claimed in Talaris’ pending patent applications will issue or that patents based on Talaris’ patent applications will not be challenged and rendered invalid and/or unenforceable.

Talaris has issued and pending U.S. and foreign patent applications in Talaris’ portfolio, however, Talaris cannot predict:

Talaris cannot be certain that the claims in Talaris’ pending patent applications directed to Talaris’ product candidates and/or technologies will be considered patentable by the USPTO or by patent offices in foreign countries. One aspect of the determination of patentability of Talaris’ inventions depends on the scope and content of the “prior art,” information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention. There may be prior art of which Talaris is not aware that may affect the patentability of Talaris’ patent claims or, if issued, affect the validity or enforceability of a patent claim. The examination process may require Talaris to narrow Talaris’ claims, which may limit the scope of patent protection that Talaris may obtain. Even if the patents are issued based on Talaris’ patent applications, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. Furthermore, even if they are unchallenged, patents in Talaris’ portfolio may not adequately exclude third parties from practicing relevant technology or prevent others from designing around Talaris’ claims. If the breadth or strength of Talaris’ intellectual property position with respect to Talaris’ product candidates is threatened, it could dissuade companies from collaborating with Talaris to develop and threaten Talaris’ ability to commercialize Talaris’ product candidates. In the event of litigation or administrative proceedings, Talaris cannot be certain that the claims in any of Talaris’ issued patents will be considered valid by courts in the United States or foreign countries.

Talaris may become involved in lawsuits to protect or enforce Talaris’ intellectual property, which could be expensive, time-consuming and unsuccessful and have a material adverse effect on the success of Talaris’ business.

Third parties may infringe Talaris’ patents or misappropriate or otherwise violate Talaris’ intellectual property rights. Talaris’ patent applications cannot be enforced against third parties practicing the technology

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claimed in these applications unless and until a patent issues from the applications, and then only to the extent the issued claims cover the technology. In the future, Talaris or Talaris’ collaborators may elect to initiate legal proceedings to enforce or defend Talaris’ or Talaris’ collaborators’ intellectual property rights, to protect Talaris’ or Talaris’ collaborators’ trade secrets or to determine the validity, ownership, enforceability or scope of Talaris’ intellectual property rights. Any claims that Talaris or Talaris’ collaborators assert against perceived infringers could also provoke these parties to assert counterclaims against Talaris or Talaris’ collaborators alleging that Talaris or Talaris’ collaborators infringe their intellectual property rights or that Talaris’ intellectual property rights are invalid or unenforceable.

Interference or derivation proceedings provoked by third parties, brought by Talaris or Talaris’ collaborators, or declared by the USPTO may be necessary to determine the priority of inventions or matters of inventorship with respect to Talaris’ patents or patent applications. Talaris or Talaris’ collaborators may also become involved in other proceedings, such as reexamination or opposition proceedings, inter partes review, post-grant review or other pre-issuance or post-grant proceedings before the USPTO or in non-U.S. jurisdictions relating to Talaris’ intellectual property or the intellectual property of others. An unfavorable outcome in any of these proceedings could result in Talaris losing Talaris’ valuable intellectual property rights, require Talaris or Talaris’ collaborators to cease using the related technology and commercializing Talaris’ product candidates, or require Talaris to license rights to it from the prevailing party. Talaris’ business could be harmed if the prevailing party does not offer Talaris or Talaris’ collaborators a license on commercially reasonable terms if any license is offered at all. Even if Talaris or Talaris’ licensors obtain a license, it may be non-exclusive, thereby giving Talaris’ competitors access to the same technologies licensed to Talaris or Talaris’ collaborators. In addition, if the breadth or strength of protection provided by Talaris’ patents and patent applications is threatened, it could dissuade companies from collaborating with Talaris to license, develop or commercialize current or future product candidates.

Any intellectual property proceedings can be expensive and time-consuming. Talaris’ or Talaris’ collaborators’ adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than Talaris or Talaris’ collaborators can. Accordingly, despite Talaris’ or Talaris’ collaborators’ efforts, Talaris or Talaris’ collaborators may not be able to prevent third parties from infringing upon or misappropriating Talaris’ intellectual property rights, particularly in countries where the laws may not protect Talaris’ rights as fully as in the United States. Even if Talaris is successful in the relevant proceedings, Talaris may incur substantial costs and the time and attention of Talaris’ management and scientific personnel could be diverted from other activities. In addition, in an infringement proceeding, a court may decide that one or more of Talaris’ patents is invalid or unenforceable, in whole or in part, or may refuse to stop the other party from using the technology at issue on the grounds that Talaris’ patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of Talaris’ patents at risk of being invalidated, held unenforceable or interpreted narrowly.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Talaris’ confidential information could be compromised by disclosure during this type of litigation. 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 view these announcements in a negative light, the price of Talaris common stock could be adversely affected.

Risks Related to Intellectual Property Laws and Regulations

Some of Talaris’ intellectual property has been discovered through government-funded programs and thus may be subject to federal regulations such as certain reporting requirements, a preference for U.S.-based companies, and the possibility of “march-in” rights. Compliance with such regulations or the inability to obtain a waiver for meeting such requirements may limit Talaris’ ability to contract with non-U.S. manufacturers, or, in the unlikely event of the government exercising their “march-in” rights, may limit Talaris’ exclusive rights.

Some of Talaris’ intellectual property rights were generated through the use of U.S. government funding and are therefore subject to certain federal regulations. As a result, the U.S. government may have certain rights to

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intellectual property embodied in certain of Talaris’ current or future product candidates pursuant to the Bayh-Dole Act. These U.S. government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to Talaris inventions for any governmental purpose. In addition, the U.S. government has the right, under certain limited circumstances, to require Talaris to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). To Talaris’ knowledge, however, the U.S. government has, to date, not exercised any march-in rights on any patented technology that was generated using U.S. government funds. The U.S. government also has the right to take title to these inventions if Talaris or the applicable grantee fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require Talaris to expend substantial resources. In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. manufacturers may limit Talaris’ ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. To the extent any of Talaris’ current or future intellectual property is generated through the use of U.S. government funding, the provisions of the Bayh-Dole Act may similarly apply.

Changes in U.S. or foreign patent laws could diminish the value of patents in general, thereby impairing Talaris’ ability to protect Talaris’ products.

Changes in either the patent laws or interpretation of the patent laws in the United States or non-U.S. jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act (the “America Invents Act”), enacted in September 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. A third party that files a patent application in the USPTO after March 2013, but before Talaris, could therefore be awarded a patent covering an invention of Talaris’ even if Talaris had made the invention before it was made by such third party. This will require Talaris to be cognizant of the time from invention to filing of a patent application and be diligent in filing patent applications, but circumstances could prevent Talaris from promptly filing patent applications on Talaris’ inventions. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, Talaris cannot be certain that Talaris or Talaris’ licensors were the first to either (i) file any patent application related to Talaris’ product candidates or (ii) invent any of the inventions claimed in Talaris’ or Talaris’ licensor’s patents or patent applications.

The America Invents Act also included a number of significant changes that affect the way patent applications are prosecuted and also affects patent litigation. These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by Talaris PTO administered post-grant proceedings, including post-grant review and, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

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Accordingly, a third party may attempt to Talaris the USPTO procedures to invalidate Talaris’ patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of Talaris’ owned or in-licensed patent applications and the enforcement or defense of Talaris’ owned or in-licensed issued patents, all of which could have a material adverse effect on Talaris’ business, financial condition, results of operations, and prospects.

In addition, the patent positions of companies in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on Talaris’ existing patent portfolio and Talaris’ ability to protect and enforce Talaris’ intellectual property in the future.

Risks Related to Talaris’ Financial Condition and Capital Needs

Talaris is a biotechnology company and Talaris has incurred net losses since its inception. Talaris anticipates that it will continue to incur significant net losses for the foreseeable future, and may never achieve or maintain profitability.

Talaris is a biotechnology company with a limited operating history. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. Talaris has no products approved for commercial sale and have not generated any revenue to date. As a result, Talaris is not profitable and has incurred net losses in each period since its inception. Since Talaris’ inception, Talaris has devoted substantially all of Talaris’ resources to developing Talaris’ product candidate, FCR001, building Talaris’ intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations. Talaris’ financial condition and operating results, including net losses, may fluctuate significantly from quarter to quarter and year to year. Accordingly, one should not rely upon the results of any quarterly or annual periods as indications of future operating performance. Additionally, net losses and negative cash flows have had, and will continue to have, an adverse effect on Talaris’ stockholders’ equity and working capital. Talaris’ net loss was $22.5 million and $18.3 million for the three months ended March 30, 2023 and 2022, respectively, and $73.9 million and $47.8 million for the years ended December 31, 2022 and 2021, respectively. Talaris had an accumulated deficit of $187.2 million and $164.7 million as of March 30, 2023 and December 31, 2022, respectively. Talaris expects to continue to incur net losses for the foreseeable future, including costs associated with its review of strategic alternatives. These expenses could increase or change depending on the outcome of such review.

Talaris anticipates that its expenses will increase substantially if and as it pursues the development of any product candidates, including if it:

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Talaris’ expenses could increase beyond Talaris’ expectations if Talaris is required by the FDA or other regulatory authorities to perform clinical trials in addition to those that Talaris currently expects, if there are any delays in establishing appropriate manufacturing arrangements for Talaris’ product candidates, or if Talaris experiences delays in the initiation or completion of Talaris’ clinical trials or the development of any of Talaris’ product candidates for any reason.

Raising capital may cause dilution to Talaris’ existing stockholders, restrict Talaris’ operations or require Talaris to relinquish rights to its product candidates on terms that are unfavorable to Talaris.

Talaris may seek additional capital through a variety of means, including through private and public equity offerings and debt financings. To the extent that Talaris raises additional capital through the sale of equity or convertible debt securities, the ownership interest of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting Talaris’ ability to take certain actions, including incurring additional debt, making capital expenditures, entering into licensing arrangements or declaring dividends. If Talaris raises additional funds from third parties, Talaris may have to relinquish valuable rights to Talaris’ technologies or product candidates or grant licenses on terms that are not favorable to Talaris. Market volatility may further adversely impact Talaris’ ability to access capital as and when needed. If Talaris is unable to raise additional funds through equity or debt financing when needed, Talaris may be required to delay, limit, reduce or terminate Talaris’ product development or commercialization efforts for Talaris’ product candidates, grant to others the rights to develop and market product candidates that Talaris would otherwise prefer to develop and market itself or take other actions that are adverse to Talaris’ business.

Risks Related to Talaris’ Business, Growth and Industry

Risks Related to Employees

Talaris’ recent reductions in force may negatively impact employee morale and productivity.

In connection with the evaluation of strategic alternatives and in order to conserve its capital resources, in February 2023 and April 2023, Talaris undertook organizational restructurings that significantly reduced its workforce by approximately 33% and 95%, respectively. In order to retain remaining employees to evaluate and assist with the evaluation of strategic alternatives, Talaris offered assurance of severance arrangements and retention benefits to each of its remaining four employees. There can be no assurance that these programs will allow Talaris to retain the personnel necessary to implement its strategic assessment plans.

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Talaris’ employees, principal investigators, consultants and collaborators may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for Talaris and harm Talaris’ reputation.

Talaris is exposed to the risk of employee and third party fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards Talaris has established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to Talaris. Misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions, litigation and serious harm to Talaris’ reputation. It is not always possible to identify and deter employee and third-party misconduct, and the precautions Talaris takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Talaris from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against Talaris, and Talaris is not successful in defending itself or asserting Talaris’ rights, those actions could have a significant impact on Talaris’ business and results of operations, including the imposition of significant fines or other sanctions, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting requirements and oversight if Talaris becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of Talaris’ operations, any of which could adversely affect Talaris’ ability to operate Talaris’ business, financial condition and results of operations.

Risks Related to Business Disruptions

If Talaris’ security measures are compromised now, or in the future, or the security, confidentiality or integrity or availability of Talaris’ information technology, software, services, communications or data is compromised, limited, or fails, this could result in a materially adverse impact, including without limitation, damage to Talaris’ reputation, significant financial and legal exposure, breach or triggering of data protection laws, privacy policies and data protection obligations, disruption to Talaris’ clinical trial or administrative activities, or loss of customers or collaborators.

Talaris relies on information technology systems that Talaris or Talaris’ third-party providers operate to process, transmit and store electronic information in Talaris’ day-to-day operations. In connection with Talaris’ business, Talaris may collect and use a variety of personal data, such as name, mailing address, email addresses, phone number and clinical trial information, as well as intellectual property, trade secrets, and proprietary business information owned or controlled by itself or other parties.

Despite the implementation of security measures, Talaris’ internal computer systems and those of any CROs and other contractors, consultants and relevant third parties are vulnerable to several threats, including without limitation damage from computer viruses, unauthorized access, terrorism, war, natural disasters, and telecommunication and electrical failures. Talaris exercises little or no control over these third parties, which increases Talaris’ vulnerability to problems with their systems. A successful cyberattack could result in the theft or destruction of intellectual property, data, or other misappropriation of assets, or otherwise compromise Talaris’ confidential or proprietary information and disrupt Talaris’ operations. Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, phishing attacks, denial-of-service, social engineering fraud or other means to threaten data security, confidentiality, integrity and availability. Although Talaris has not, to Talaris’ knowledge, experienced a material security incident, Talaris realizes that cyberattacks are a threat, and there can be no assurance that Talaris’ efforts will prevent information security breaches.

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Talaris may be required to expend significant resources, fundamentally change Talaris’ business activities and practices, or modify Talaris’ services, software, operations or information technology in an effort to protect against security breaches and to mitigate, detect, and remediate actual and potential vulnerabilities. Applicable data protection laws, privacy policies and other data protection obligations may require Talaris to implement specific security measures or use industry-standard or reasonable measures to protect against security breaches.

If Talaris, Talaris’ service providers, collaborators, or other relevant third parties have experienced or in the future experience, any security incident(s) that result in any data loss, deletion or destruction, unauthorized access to, loss of, unauthorized acquisition or disclosure of, or inadvertent disclosure of sensitive information or compromise related to the security, confidentiality, integrity or availability of Talaris’ (or their) information technology, software, services, communications or data, it may result in a material adverse impact, including without limitation, legal liability, government investigations an inability to conduct Talaris’ clinical trials, regulatory investigations, enforcement actions, indemnity obligations, the disruption of Talaris’ operations, delays to the development and commercialization of Talaris’ product candidates, negative publicity and financial loss. A failure by Talaris or relevant third parties to detect, anticipate, measure or detect such security incidents could result in similar material adverse impacts.

Additionally, applicable data protection laws, privacy policies and data protection obligations may require Talaris to notify relevant stakeholders of security breaches, including affected individuals, customer and regulators. Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to material adverse impacts, including without limitation, negative publicity, a loss of customer confidence in Talaris’ products or security measures or a breach of contract claim. There can be no assurances that the limitations of liability in Talaris’ contract would be enforceable or adequate or would otherwise protect Talaris from liabilities or damages.

Failures or significant downtime of Talaris’ information technology or telecommunication systems or those used by Talaris’ third-party service providers could cause significant interruptions in Talaris’ operations and adversely impact the confidentiality, integrity and availability of sensitive or confidential information. While Talaris has not experienced any such material system failure or security breach to date, if such an event were to occur and cause interruptions in Talaris’ operations, it could result in a material disruption of Talaris’ development programs and Talaris’ business operations. For example, the loss of data from completed or future preclinical studies and clinical trials could result in delays in Talaris’ regulatory approval efforts and significantly increase Talaris’ costs to recover or reproduce the data.

While Talaris maintains general liability insurance coverage and coverage for errors or omissions, Talaris cannot assure that such coverage will be adequate or otherwise protect Talaris from or adequately mitigate liabilities or damages with respect to claims, costs, expenses, litigation, fines, penalties, business loss, data loss, regulatory actions or other material adverse impacts arising out of Talaris’ privacy and security actions Talaris may experience, or that such coverage will continue to be available on acceptable terms or at all. The successful assertion of one or more large claims against Talaris that exceeds its available insurance coverage, or that results in changes to its insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on Talaris’ business. In addition, Talaris cannot be sure that its existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that Talaris’ insurers will not deny coverage as to any future claim.

Business disruptions could seriously harm Talaris’ financial condition and increase Talaris’ costs and expenses.

Talaris could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions, for which Talaris is predominantly self-insured. The occurrence of any of these business disruptions could seriously harm Talaris’ operations and financial condition and increase Talaris’ costs and expenses.

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Market and economic conditions may have serious adverse consequences on Talaris’ business, financial condition and stock price.

Market conditions such as inflation, volatile energy costs, geopolitical issues, unstable global credit markets and financial conditions could lead to periods of significant economic instability, diminished liquidity and credit availability, diminished expectations for the global economy and expectations of slower global economic growth going forward. Talaris’ business and operations may be adversely affected by such instability, including any such inflationary fluctuations, economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Talaris’ general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive.

Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on Talaris’ growth strategy, financial performance and stock. In addition, there is a risk that one or more of Talaris’ current service providers, manufacturers and other collaborators may not survive these difficult economic times, which could directly affect Talaris’ ability to attain Talaris’ operating goals on schedule and on budget.

Furthermore, Talaris’ stock price may decline due in part to the volatility of the stock market and general economic downturn.

Global economic uncertainty and weakening product demand caused by political instability, changes in trade agreements and conflicts, such as the conflict between Russia and Ukraine, could adversely affect Talaris’ business and financial performance.

Economic uncertainty in various global markets caused by political instability and conflict has resulted, and may continue to result, in difficulty in forecasting Talaris’ financial results. Political developments impacting government spending and international trade, including current or potential government-imposed sanctions, potential government shutdowns and trade disputes and tariffs, may negatively impact markets and cause weaker macro-economic conditions. The continuing effect of any or all of these events could harm Talaris’ operations and weaken Talaris’ financial results.

Risks Related to Laws and Regulations that May Affect Talaris’ Business

Legislation or other changes in U.S. tax law could adversely affect Talaris’ business and financial condition.

The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect Talaris or holders of Talaris common stock. In recent years, many changes have been made to applicable tax laws 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, new tax laws may be enacted, or regulations and rulings may be enacted, promulgated or issued under existing or new tax laws, which could result in an increase in Talaris’ or Talaris’ shareholders’ tax liability or require changes in the manner in which Talaris operates in order to minimize or mitigate any adverse effects of changes in tax law or in the interpretation thereof.

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Talaris’ ability to use Talaris’ U.S. net operating loss carryforwards and certain other U.S. tax attributes may be limited.

As of December 31, 2022, Talaris had U.S. federal net operating loss carryforwards of approximately $96.9 million. Under current law, unused U.S. federal net operating losses generated for tax years beginning after December 31, 2017 are not subject to expiration and may be carried forward indefinitely. Such U.S. federal net operating losses generally may not be carried back to prior taxable years, except that, net operating losses generated in 2018, 2019 and 2020 may be carried back to each of the five tax years preceding the tax years of such losses. Additionally, the amount of net operating loss carryforwards generated in taxable years beginning after December 31, 2017 that Talaris is permitted to deduct in a taxable year beginning after December 31, 2020, is limited to 80% of taxable income in each such taxable year to which the net operating loss carryforwards are applied. In addition, Talaris’ U.S. federal net operating losses and tax credits may be subject to limitations under Sections 382 and 383 of the Code, if Talaris has undergone or 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 rolling three-year period. Talaris may have experienced such ownership changes in the past, may experience ownership changes in the future as a result of shifts in its stock ownership, some of which are outside its control, and will likely experience an ownership change as a result of the Merger. Talaris’ net operating losses and tax credits may also be impaired or restricted under state law. Talaris’ ability to utilize its net operating loss carryforwards could be limited by an “ownership change” as described above, which could result in increased tax liability to Talaris.

Talaris is subject to U.S. anti-corruption laws and regulations and can face serious consequences for violations.

Talaris is subject to anti-corruption laws, including the U.S. domestic bribery statute contained in 18 U.S.C. 201, the U.S. Travel Act, and the U.S. Foreign Corrupt Practices Act of 1977, as amended. These anti-corruption laws generally prohibit companies and their employees, agents, and intermediaries from authorizing, promising, offering, or providing, directly or indirectly, corrupt or improper payments or anything else of value to recipients in the public or private sector. Talaris can be held liable for the corrupt or illegal activities of Talaris’ agents and intermediaries, even if Talaris does not explicitly authorize or have actual knowledge of such activities. Violations of anti-corruption laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. Likewise, any investigation of potential violations of anti-corruption laws could also have an adverse impact on Talaris’ reputation, Talaris’ business, results of operations and financial condition.

If product liability lawsuits are brought against, Talaris may incur substantial liabilities and may be required to limit commercialization of any products that Talaris may develop.

Talaris faces an inherent risk of product liability exposure related to the testing of biopharmaceutical product candidates in human clinical trials and will face an even greater risk if Talaris commercially sells any products that it may develop. Product liability claims may be brought against Talaris by subjects enrolled in Talaris’ clinical trials, patients, healthcare providers or others using, administering or selling Talaris’ products. If Talaris cannot successfully defend itself against claims that Talaris’ product candidates or products caused injuries, Talaris could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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Talaris currently holds product liability insurance coverage at a level that Talaris believes is customary for similarly situated companies and adequate to provide Talaris with insurance coverage for foreseeable risks, but which may not be adequate to cover all liabilities that Talaris may incur. Talaris may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. Talaris intends to expand Talaris’ insurance coverage for products to include the sale of commercial products if Talaris obtains regulatory approval for Talaris’ product candidate in development, but Talaris may be unable to obtain commercially reasonable product liability insurance for any products that receive regulatory approval. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against Talaris, particularly if judgments exceed Talaris’ insurance coverage, could decrease Talaris’ cash and adversely affect Talaris’ business.

Risks Related to Ownership of Talaris Common Stock

Risks Related to Talaris Common Stock

The price of Talaris’ stock may be volatile, and one could lose all or part of their investment.

The trading price of Talaris common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond Talaris’ control, including limited trading volume. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this proxy statement/prospectus, these factors include:

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In addition, the stock market in general, and the market for biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of Talaris common stock, regardless of Talaris’ actual operating performance. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm Talaris’ business, financial condition, results of operation and future prospects.

Talaris’ principal stockholders and management own a significant percentage of Talaris’ stock and will be able to exert significant influence over matters subject to stockholder approval.

Talaris’ executive officers, directors, and 5% stockholders beneficially owned approximately 67.5% of Talaris’ outstanding voting common stock as of June 30, 2023. Therefore, these stockholders will have the ability to influence Talaris through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of Talaris’ organizational documents, or approval of any merger, sale of assets, or other major corporate transaction, including the proposals in this proxy statement/prospectus. This may prevent or discourage unsolicited acquisition proposals or offers for Talaris common stock that one may feel are in their best interest as one of Talaris’ stockholders.

Talaris’ business is affected by macroeconomic conditions, including rising inflation, interest rates and supply chain constraints.

Various macroeconomic factors could adversely affect Talaris’ business and the results of Talaris’ operations and financial condition, including changes in inflation, interest rates and overall economic conditions and uncertainties such as those resulting from the current and future conditions in the global financial markets. For instance, rising interest rates have impacted Talaris’ net income. Recent supply chain constraints have led to higher inflation, which if sustained could have a negative impact on Talaris’ product development and operations. If inflation or other factors were to significantly increase Talaris’ business costs, Talaris’ ability to develop Talaris’ current pipeline and new therapeutic products may be negatively affected. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of Talaris’ business and Talaris’ ability to raise capital on favorable terms, or at all, in order to fund Talaris’ operations. Similarly, these macroeconomic factors could affect the ability of Talaris’ third-party suppliers and manufacturers to manufacture clinical trial materials for Talaris’ product candidates.

Risks Related to Talaris’ Filer Status

Talaris is an emerging growth company and a smaller reporting company, and Talaris cannot be certain if the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies will make Talaris common stock less attractive to investors.

Talaris is an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), enacted in April 2012. For as long as Talaris continues to be an emerging growth company, Talaris may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in this proxy statement/prospectus and Talaris’ periodic reports and proxy statements, and

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exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Talaris could be an emerging growth company for up to five years following the completion of Talaris’ offering in May 2021, although circumstances could cause Talaris to lose that status earlier. Talaris will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of Talaris’ initial public offering (“IPO”), (b) in which Talaris has total annual gross revenue of at least $1.235 billion or (c) in which Talaris is deemed to be a large accelerated filer, which requires the market value of Talaris common stock and non-voting common stock that are held by non-affiliates to exceed $700 million as of the prior June 30^th, and (2) the date on which Talaris has issued more than $1 billion in non-convertible debt during the prior three-year period.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. Talaris has elected to not “opt out” of this exemption from complying with new or revised accounting standards and, therefore, Talaris will adopt new or revised accounting standards at the time private companies adopt the new or revised accounting standard and will do so until such time that Talaris either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

Even after Talaris no longer qualifies as an emerging growth company, it may still qualify as a “smaller reporting company,” which would allow it to continue to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in Talaris’ periodic reports and proxy statements.

Talaris cannot predict if investors will find Talaris common stock less attractive because it may rely on these exemptions applicable to emerging growth companies and smaller reporting companies. If some investors find Talaris common stock less attractive as a result, there may be a less active trading market for Talaris common stock and Talaris’ stock price may be more volatile.

Risks Related to Talaris’ Charter and Bylaws

Anti-takeover provisions under Talaris’ charter and bylaws and Delaware law could delay or prevent a change of control, which could limit the market price of Talaris common stock and may prevent or frustrate attempts by Talaris’ stockholders to replace or remove Talaris’ current management.

Talaris’ charter and bylaws contain provisions that could delay or prevent a change of control of Talaris’ company or changes in the Talaris board that Talaris’ stockholders might consider favorable. Some of these provisions include:

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In addition, because Talaris is incorporated in Delaware, Talaris is governed by the provisions of Section 203 of the DGCL, which may prohibit certain business combinations with stockholders owning 15% or more of Talaris’ outstanding voting stock. These anti-takeover provisions and other provisions in Talaris’ charter and restated bylaws could make it more difficult for stockholders or potential acquirers to obtain control of the Talaris board or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer, or proxy contest and other stockholders to elect directors of one’s choosing or cause Talaris to take other corporate actions one desires. Any delay or prevention of a change of control transaction or changes in the Talaris board could cause the market price of Talaris common stock to decline.

Talaris’ bylaws designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Talaris’ stockholders, which could limit Talaris’ stockholders’ ability to obtain a favorable judicial forum for disputes with Talaris or Talaris’ directors, officers, or employees.

Talaris’ bylaws provide that, unless Talaris consents in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claims for (i) any derivative action or proceeding brought on its behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of its directors, officers, and employees to it or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, Talaris’ charter or bylaws or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein (the “Delaware Forum Provision”). The Delaware Forum Provision will not apply to any causes of action arising under the Securities Act or the Exchange Act. Talaris’ bylaws further provide that, unless it consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the sole and exclusive forum for resolving any complaint asserting a cause or causes of action arising under the Securities Act (the “Federal Forum Provision”). In addition, Talaris’ bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of Talaris common stock is deemed to have notice of and consented to the foregoing provisions; provided, however, that stockholders cannot and will not be deemed to have waived Talaris’ compliance with the federal securities laws and the rules and regulations thereunder.

The Delaware Forum Provision and the Federal Forum Provision in Talaris’ bylaws may impose additional litigation costs on stockholders in pursuing any such claims. Additionally, the forum selection clauses in Talaris’ bylaws may limit Talaris’ stockholders’ ability to bring a claim in a forum that they find favorable for disputes with Talaris or Talaris’ directors, officers or employees, which may discourage such lawsuits against Talaris and Talaris’ directors, officers and employees even though an action, if successful, might benefit Talaris’ stockholders. In addition, while the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court were “facially valid” under Delaware law, there is uncertainty as to whether other courts will enforce Talaris’ Federal Forum Provision. If the Federal Forum Provision is found to be unenforceable, Talaris may incur additional costs associated with resolving such matters. The Federal Forum Provision may also impose additional litigation costs on stockholders who assert that the provision is not enforceable or invalid. The Court of Chancery of the State of Delaware and the federal district courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to Talaris than Talaris’ stockholders.

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General Risk Factors

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect Talaris’ current and projected business operations and its financial condition and results of operations.

Adverse developments involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“Silicon Valley Bank”), was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”), as receiver. The Department of the Treasury, the Federal Reserve and the FDIC indicated that all depositors of Silicon Valley Bank would have access to all of their money, including funds held in uninsured deposit accounts, after only one business day of closure. Similarly, on May 1, 2023, First Republic Bank (“FRB”) was closed by the California Department of Financial Protection and Innovation and the FDIC was appointed as receiver. JPMorgan Chase Bank, National Association (N.A.) acquired all of FRB’s deposit accounts and substantially all of its assets. The U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program. There is no guarantee, however, that the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.

Talaris does not hold cash deposits or securities at Silicon Valley Bank or FRB and have not experienced any adverse impact to Talaris’ liquidity or to Talaris’ current and projected business operations, financial condition or results of operations. However, uncertainty remains over liquidity concerns in the broader financial services industry, and Talaris’ business, Talaris’ business partners, or industry as a whole may be adversely impacted in ways that Talaris cannot predict at this time.

Although Talaris assesses its banking and customer relationships as it believes necessary or appropriate, Talaris’ access to funding sources and other credit arrangements in amounts adequate to finance or capitalize Talaris’ current and projected future business operations could be significantly impaired by factors that affect Talaris, the financial institutions with which Talaris has credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which Talaris has financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on Talaris’ current and projected business operations and Talaris’ financial condition and results of operations. These could include, but may not be limited to delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets and termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.

In addition, widespread investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and

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operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for Talaris to acquire financing on acceptable terms or at all. Any decline in available funding or access to Talaris’ cash and liquidity resources could, among other risks, adversely impact Talaris’ ability to meet Talaris’ operating expenses, financial obligations or fulfill Talaris’ other obligations, result in breaches of Talaris’ financial and/or contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on Talaris’ liquidity and Talaris’ current and/or projected business operations and financial condition and results of operations.

In addition, a critical vendor, CDMO, or business partner could be adversely affected by any of the liquidity or other risks that are described above as factors, which in turn, could have a material adverse effect on Talaris’ current and/or projected business operations and results of operations and financial condition. Any CDMO, business partner, or supplier bankruptcy or insolvency, or any breach or default by a CDMO, business partner, or supplier, or the loss of any significant supplier relationships, could result in material adverse impacts on Talaris’ current and/or projected business operations and financial condition.

Unfavorable global economic conditions could adversely affect Talaris’ business, financial condition or results of operations.

Talaris’ results of operations could be adversely affected by economic and political changes in the location in which Talaris, or Talaris’ suppliers and vendors, maintain operations. For example, out business may be generally exposed to the impact of political or civil unrest or military action, including the current conflict between Russia and Ukraine and, while Talaris does not have direct exposure to Ukraine, Talaris does have interests in securing regulatory approval in Europe. The approval process may be impacted based upon the events taking place there. Any of the foregoing could harm Talaris’ business and Talaris cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact Talaris’ business.

Talaris incurs significant increased costs as a result of operating as a public company, and Talaris’ management is required to devote substantial time to compliance initiatives.

As a public company, Talaris incurs significant legal, accounting, and other expenses that it did not incur as a private company. Talaris is subject to the reporting requirements of the Exchange Act, which will require, among other things, that Talaris files with the SEC, annual, quarterly, and current reports with respect to Talaris’ business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and The Nasdaq Global Market to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas, such as “say on pay” and proxy access. Recent legislation permits emerging growth companies to implement many of these requirements over a longer period and up to five years from the pricing of the IPO. Talaris intends to take advantage of this new legislation but cannot guarantee that Talaris will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. Stockholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which Talaris operates its business in ways it cannot currently anticipate.

Talaris expects the rules and regulations applicable to public companies to substantially increase Talaris’ legal and financial compliance costs and to make some activities more time-consuming and costly. If these requirements divert the attention of Talaris’ management and personnel from other business concerns, they could

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have a material adverse effect on Talaris’ business, financial condition, and results of operations. The increased costs will decrease Talaris’ net income or increase Talaris’ net loss and may require Talaris to reduce costs in other areas of Talaris’ business or increase the prices of Talaris’ products or services. For example, Talaris expects these rules and regulations to make it more difficult and more expensive for Talaris to obtain director and officer liability insurance and Talaris may be required to incur substantial costs to maintain the same or similar coverage. Talaris cannot predict or estimate the amount or timing of additional costs Talaris may incur to respond to these requirements. The impact of these requirements could also make it more difficult for Talaris to attract and retain qualified persons to serve on the Talaris board, the Talaris board committees, or as executive officers.

Actions of activist stockholders could cause Talaris to incur substantial costs, divert management’s attention and resources, and have an adverse effect on Talaris’ business.

Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. From time to time, Talaris may be subject to proxy solicitations or proposals by activist stockholders urging Talaris to take certain corporate actions, or otherwise effect changes or assert influence on the Talaris board and management. For example, volatility in the price of Talaris common stock or other reasons may in the future cause Talaris to become the target of stockholder activism. If activist stockholder activities ensue, Talaris’ business could be adversely affected because responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disrupt Talaris’ operations and divert the attention of management and Talaris’ employees. For example, Talaris may be required to retain the services of various professionals to advise Talaris on activist stockholder matters, including legal, financial and communications advisors, the costs of which may negatively impact Talaris’ future financial results. In addition, perceived uncertainties as to Talaris’ future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm Talaris’ ability to enter into strategic transactions, harm Talaris’ ability to attract new investors, customers, employees and joint venture partners and cause Talaris’ stock price to experience periods of volatility or stagnation.

If Talaris fails to establish and maintain proper and effective internal control over financial reporting, Talaris’ operating results and Talaris’ ability to operate Talaris’ business could be harmed.

Ensuring that Talaris has adequate internal financial and accounting controls and procedures in place so that Talaris can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Talaris’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Talaris has begun the process of documenting, reviewing, and improving Talaris’ internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act, which will require annual management assessment of the effectiveness of Talaris’ internal control over financial reporting. Talaris has begun recruiting additional finance and accounting personnel with certain skill sets that Talaris will need as a public company.

Implementing any appropriate changes to Talaris’ internal controls may distract Talaris’ officers and employees, entail substantial costs to modify Talaris’ existing processes, and take significant time to complete. These changes may not, however, be effective in maintaining the adequacy of Talaris’ internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase Talaris’ operating costs and harm Talaris’ business. In addition, investors’ perceptions that Talaris’ internal controls are inadequate or that Talaris is unable to produce accurate financial statements on a timely basis may harm Talaris’ stock price and make it more difficult for Talaris to effectively market and sell Talaris’ service to new and existing customers.

Talaris may be at an increased risk of securities class action litigation.

Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for Talaris because biotechnology and

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pharmaceutical companies have experienced significant stock price volatility in recent years. If Talaris were to be sued, it could result in substantial costs and a diversion of management’s attention and resources, which could harm Talaris’ business.

Risks Related to Tourmaline

Risks Related to Tourmaline’s Financial Condition and Capital Needs

Tourmaline has incurred net losses every year since its inception and has no source of product revenue. Tourmaline expects to continue to incur significant operating losses and may never become profitable.

Tourmaline has no products approved for commercial sale and has not generated any revenue from product sales to date. As a result, Tourmaline is not profitable and has incurred losses in each year since commencing operations. Tourmaline’s net losses were $19.7 million, and $0.2 million for the years ended December 31, 2022 and the period from September 17, 2021 (inception) to December 31, 2021, respectively. As of December 31, 2022, Tourmaline had an accumulated deficit of $19.9 million.

Tourmaline expects to continue to incur significant research and development (“R&D”) costs and other expenses related to its ongoing operations for the foreseeable future, particularly to fund R&D of, and seek regulatory approvals for, TOUR006 and any potential future product candidates. Tourmaline incurred substantial net operating losses in 2022 and expects to continue to incur significant operating losses in 2023 and over the next several years as its research, development, manufacturing, preclinical study, clinical trial and related activities grow. Tourmaline expects its accumulated deficit will also increase in future periods. The size of its future net losses will depend, in part, on the amount of its expenses and its ability to generate revenue. Tourmaline’s prior losses and expected future losses have had, and will continue to have, an adverse effect on its stockholders’ equity and working capital.

In addition, Tourmaline will not be able to generate product revenue unless and until TOUR006 or any potential future product candidates successfully completes clinical trials, receives regulatory approval and is successfully commercialized or generates revenues through business development activities. Tourmaline does not expect to receive product revenue from its product candidates for a number of years, if ever.

Tourmaline’s ability to generate any product revenue from TOUR006 and any potential future product candidates also depends on a number of additional factors, including its ability, or the ability of any potential future third-party partner, to successfully:

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Because of the numerous risks and uncertainties associated with pharmaceutical product development, including that TOUR006 and any potential future product candidates may not advance through development or be approved for commercial sale, Tourmaline is unable to predict if or when it will generate product revenue or achieve or maintain profitability.

Even if Tourmaline successfully completes development and obtains health authority approval for commercialization for any product candidates that Tourmaline takes forward, Tourmaline anticipates incurring significant costs associated with launching and commercializing any products. If Tourmaline fails to become profitable or does not sustain profitability on a continuing basis, it may be unable to continue its operations at planned levels and be forced to reduce or cease its operations.

Tourmaline’s business is highly dependent on the success of TOUR006 as well as any other potential future product candidate. If Tourmaline is unable to successfully complete clinical development of, obtain regulatory approval for, or commercialize, TOUR006 or any other potential future product candidate, or if Tourmaline experiences delays in doing so, its business will be materially harmed.

Tourmaline’s future success and ability to generate revenue from TOUR006 or any potential future product candidate, which Tourmaline does not expect will occur for several years, if ever, is dependent on Tourmaline’s ability to successfully develop, obtain regulatory approval for and commercialize one or more product candidates. Tourmaline has submitted its IND in the U.S. to support initiation of its Phase 2b trial of TOUR006 in first-line TED and expects to initiate this study in the third quarter of 2023. In addition, Tourmaline plans to initiate an open-label basket study in additional TED patient cohorts to further inform the utility of TOUR006 for the treatment of additional TED subpopulations. If TOUR006 encounters undesirable safety signals, insufficient efficacy results, development delays, regulatory issues or other problems, Tourmaline’s development plans and business would be significantly harmed.

TOUR006 for ASCVD is in an earlier stage of development and will require substantial additional investment for clinical development, regulatory review and approval in one or more jurisdictions.

Tourmaline will need significant additional capital to proceed with development and commercialization of TOUR006 and any potential future product candidates and its other operations. Tourmaline may not be able to access sufficient capital on acceptable terms, if at all, and, as a result, it may be required to delay, scale back or discontinue development of such product candidates or other operations.

Tourmaline’s operations have consumed substantial amounts of cash since inception, and it will require substantial additional capital to finance its operations and pursue its product development strategy both in the short and the long term, and the amount of funding it will need depends on many factors, including:

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Tourmaline believes that its working capital will be sufficient to fund its operating expenses and capital expenditure requirements for more than twelve months from the date of issuance of this proxy statement/prospectus. Moreover, based on Tourmaline’s current development plans and related assumptions, it believes its cash position upon completion of the Merger and the Tourmaline pre-closing financing is sufficient to fund its key programs through 2026. Tourmaline has based these estimates on plans and assumptions that may prove to be insufficient or inaccurate (for example, with respect to anticipated costs, timing or success of certain activities), and it could utilize its available capital resources sooner than it currently expects. In addition, Tourmaline’s forecast of the period of time through which its financial resources will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially as a result of a number of factors, including the factors discussed elsewhere in the section titled “Risk Factors—Risks Related to Tourmaline.”

Tourmaline plans to finance its future cash needs through public or private equity or debt offerings, business development arrangements (“BD Arrangements”) or a combination of these potential financing sources. For example, Tourmaline may seek BD Arrangements in the future to facilitate clinical development that requires significantly more capital and resources that may otherwise not be available to Tourmaline on acceptable terms or at all, such as large cardiovascular outcome trials of TOUR006 in patients with ASCVD. Additional capital may not be available in sufficient amounts, on reasonable terms or when Tourmaline needs it, if at all. In addition, Tourmaline’s ability to obtain financing may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from geopolitical tensions, such as the ongoing war in Ukraine, global pandemics, inflation, rising interest rates, and liquidity concerns at, and failures of, banks and other financial institutions. The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in economic growth, increases in inflation rates, higher interest rates and uncertainty about economic stability. If the financial market disruptions and economic slowdown deepen or persist, Tourmaline may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect its financial condition and its ability to pursue its business strategy.

If adequate funds are not available from public or private equity or debt offerings, or BD Arrangements on acceptable terms when needed, in order to continue the development of TOUR006 or any of Tourmaline’s potential future product candidates Tourmaline may need to:

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Tourmaline may not be able to raise adequate additional capital on a timely basis, on acceptable terms or at all. If Tourmaline is unable to do so, it may need to significantly delay, scale back or discontinue development of or abandon TOUR006 or any potential future product candidates, which could have a material adverse effect on its business, financial condition, results of operations and prospects, or it may be required to cease operations altogether.

Tourmaline has a limited operating history and no history of commercializing products, which may make it difficult for an investor to evaluate the success of its business to date and to assess its future viability.

Tourmaline is a clinical-stage biopharmaceutical company with a limited operating history and a single product candidate in development to date. Tourmaline was formed in 2021 and commenced operations in 2022. Tourmaline’s operations to date have been largely focused on organizing and staffing its company, business planning, raising capital and developing and manufacturing TOUR006 To date, Tourmaline has not yet demonstrated its ability to successfully complete pivotal clinical trials, obtain regulatory approvals, manufacture a product on a commercial scale or arrange for a third-party to do so on its behalf, or conduct sales and marketing activities necessary for successful commercialization, and it may not be successful in doing so in the future. Consequently, any predictions about Tourmaline’s future success or viability may not be as accurate as they could be if it had a longer operating history or a history of successfully developing and commercializing products.

In addition, as a business with a limited operating history, Tourmaline may encounter unforeseen expenses, technical or regulatory challenges, or unanticipated delays in development timelines. Tourmaline will eventually need to transition from a company with a clinical development focus to a company, if TOUR006 or any potential future product candidates are approved, capable of supporting commercial activities. Tourmaline may not be successful in such a transition.

Risks Related to Tourmaline’s Dependence on Third Parties

Tourmaline may not be able to obtain and maintain the relationships with third parties that are necessary to develop, commercialize and manufacture TOUR006 and any potential future product candidates.

Tourmaline expects to depend on third parties, including CROs, clinical data management organizations, clinical investigators, and CDMOs and other third-party partners and service providers to support its development efforts, to conduct its clinical trials and certain aspects of its research and preclinical studies, to manufacture clinical and commercial-scale quantities of its drug substances and drug products under cGMP and to market, sell and distribute any products it successfully develops and for which it obtains regulatory approval. Any problems Tourmaline experiences with any of these third parties could delay the development, manufacturing or commercialization of TOUR006 or any potential future product candidates, which could harm its results of operations.

Tourmaline cannot guarantee that it or, as applicable, any of its partners will be able to successfully negotiate agreements for, and maintain relationships with, third-party partners and service providers on favorable terms, if at all. If Tourmaline or any of its partners are unable to obtain and maintain these agreements, Tourmaline may not be able to clinically develop, manufacture, obtain regulatory approvals for or commercialize TOUR006 or any potential future product candidates, which will, in turn, adversely affect its business. If Tourmaline or any of its partners need to enter into alternative arrangements, it could delay its product development and, if applicable, commercialization activities and such alternative arrangements may not be available on terms acceptable to Tourmaline.

Tourmaline expects to continue to expend substantial time and effort to enter into relationships with third parties and, if it successfully enters into such relationships, to manage these relationships. In addition, Tourmaline’s reliance on these third parties for development activities reduces its control over these activities but

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does not relieve it of its responsibilities. For example, Tourmaline remains responsible for ensuring that its clinical trials are conducted in accordance with the general investigational plan and protocols for the trial and it remains responsible for ensuring that manufacturing activities are conducted under cGMP. However, Tourmaline cannot control the amount or timing of resources its partners will devote to its programs, TOUR006 or potential future product candidates, and it cannot guarantee that these parties will fulfill their obligations to Tourmaline under these arrangements in a timely fashion, if at all. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct their clinical trials or other R&D activities in accordance with regulatory requirements, Tourmaline will not be able to obtain, or may be delayed in obtaining, marketing approvals for TOUR006 or any potential future product candidates and will not be able to, or may be delayed in its efforts to, successfully commercialize any approved products. In addition, Tourmaline bases its expense accruals related to clinical trials on its estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on its behalf and, if their estimates are not accurate, it could negatively affect the accuracy of Tourmaline’s financial statements.

Any agreements Tourmaline has or may enter into with third-party partners and service providers may give rise to disputes regarding the rights and obligations of the parties. Disagreements could develop over contract interpretation, rights to ownership or use of intellectual property, the scope and direction of Tourmaline’s programs, the approach for regulatory approvals or commercialization strategy. Any disputes or commercial conflicts could lead to the termination of Tourmaline’s agreements, delay progress of its product development programs, compromise its ability to renew agreements or obtain future agreements, lead to the loss of intellectual property rights, result in increased financial obligations for Tourmaline or result in costly and time-consuming arbitration or litigation.

Tourmaline relies completely on CDMOs for the manufacture and testing of TOUR006 and any potential future product candidates under cGMP, and it is subject to many manufacturing risks, any of which could substantially increase its costs and limit supply of any potential product candidates and any future products.

Tourmaline requires the services of third-party CDMOs to provide process development, analytical method development, formulation development, and manufacturing. Tourmaline does not have, and does not currently plan to acquire or develop, the facilities or capabilities to manufacture and test bulk drug substance or filled drug product for use in clinical trials or commercialization. As a result, Tourmaline relies completely on CDMOs, which entails risks to which it would not be subject if it manufactured TOUR006 or any potential future product candidates or products itself, including risks related to reliance on third parties for availability of drug product to use in its clinical trials and for regulatory compliance and quality assurance with respect to such drug product, the possibility of breach of the manufacturing agreement by third parties because of factors beyond its control (including a failure to manufacture TOUR006 and any potential future product candidates or any products it may eventually commercialize in accordance with its specifications) and the possibility of termination or nonrenewal of agreements by third parties, based on their own business priorities, at a time that is costly or damaging to Tourmaline.

TOUR006 is a biologic, and the manufacture and testing of biologic products is complex, highly regulated and requires significant expertise and capital investment, including the development of advanced manufacturing techniques, process controls, and advanced analytical testing capability. As a result, the manufacture and testing of Tourmaline’s product candidate is subject to many risks, including the following, some of which may experience:

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Tourmaline cannot ensure that issues relating to the manufacture or testing of its product candidates, such as those described above, will not occur or continue to occur in the future. If it or its CDMOs experience any such issues there could be a shortage of drug substance or drug product for use in its clinical trials, which could delay clinical and regulatory timelines significantly and have an adverse effect on its business.

In addition, to date, TOUR006 has been manufactured and tested by its drug substance and drug product CDMOs solely for clinical trials. Tourmaline intends to continue to use CDMOs for these purposes, and also for the supply of larger quantities that may be required to conduct accelerated or expanded early clinical trials or larger, later clinical trials and for commercialization if it advances any of its product candidates through regulatory approval and to commercialization. These manufacturers may not have sufficient manufacturing capacity and may not be able to scale up the production of drug substance or drug product in the quantities Tourmaline needs and at the level of quality required in a timely or effective manner, or at all. In particular, there is increased competition in the biotechnology industry for CDMO manufacturing slots and other capabilities generally, which has had, and may continue to have, a negative impact on the availability of manufacturing capacity and therefore Tourmaline’s ability to supply clinical trial materials for planned, ongoing or expanded clinical trials or commercialization.

The scale up and validation of the manufacturing processes in the CDMOs’ facilities to manufacture larger quantities or different formats such as a pre-filled syringe involve complex activities and coordination. Scale up and process validation activities entail risks such as process reproducibility and robustness, stability of in-process intermediates, product quality consistency and other technical challenges. Tourmaline may be unable to scale up or validate its manufacturing processes, which can be expensive and time-consuming and could delay the initiation or completion of Tourmaline’s clinical trials.

Similarly, Tourmaline or its CDMOs may make changes to its manufacturing processes at various points in product development for many reasons, including changing manufacturing facilities, scaling up, facility fit, raw material or component availability, improving process robustness and reproducibility, decreasing processing times, changing the storage container, or others. In some circumstances, Tourmaline may fail to demonstrate that

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the product from the new process is comparable to product from the prior process and it may be required to perform additional bridging studies, animal or human studies to demonstrate that the product used in earlier clinical trials are comparable to the product it intends to use in later trials or later stages of an ongoing trial. These efforts are expensive and there is no assurance that they will be successful, which could impact Tourmaline’s ability to continue or initiate clinical trials in a timely manner, or at all, and could require the conduct of additional clinical trials.

Any future adverse developments affecting manufacturing operations or the scale up or validation of manufacturing processes for TOUR006 or any of Tourmaline’s future product candidates may result in shipment delays, lot failures, clinical trial delays or discontinuations, or, if it is commercializing products, inventory shortages, product withdrawals or recalls or other interruptions in supply. Tourmaline may also have to record inventory write-offs and incur other charges and expenses for drug substance or drug product that fails to meet specifications or cannot be used before its expiration date. In addition, for out of specification materials, Tourmaline may need to undertake costly remediation efforts or manufacture new batches at considerable cost and time delays or, in the longer run, seek more expensive manufacturing alternatives.

Tourmaline currently has a single source of supply for its drug substance and for its drug product. Single sourcing minimizes Tourmaline’s leverage with its CDMOs, who may take advantage of its reliance on them to increase the pricing of their manufacturing services or require Tourmaline to change its intended manufacturing plans based on their strategies and priorities. Single sourcing also imposes a risk of interruption or delays in supply in the event of manufacturing, quality or compliance difficulties and/or other difficulties in timely supplying Tourmaline with materials. Tourmaline does not currently have arrangements in place for redundant supply for drug substance or drug product. If one of Tourmaline’s suppliers fails or refuses to supply it for any reason or Tourmaline otherwise chooses to engage a new supplier for TOUR006 or any of its future product candidates, including a second source supplier to mitigate the risks of single-source supply, it may take a significant amount of time and cost to implement and execute the necessary technology transfer to, and qualification of, a new supplier. The FDA or comparable foreign health authority must approve manufacturers of commercial drug substance and drug product. If there are any delays in qualifying new suppliers or facilities or a new supplier is unable to meet the requirements of the FDA or comparable foreign health authority for approval of production of Tourmaline’s commercial supply, there could be a shortage of drug substance or drug product with respect to the affected product candidates.

If Tourmaline’s CDMOs are unable to source certain raw materials and components from their supplier and if they must obtain such materials from a different supplier, additional testing, and regulatory approvals, may be required, which may negatively impact manufacturing timelines. Any significant delay in the acquisition or decrease in the availability of these materials, components or other items, or failure to successfully qualify alternative materials or components, could considerably delay the manufacture of its product candidates, which could adversely impact the timing or completion of any ongoing and planned trials or the timing of regulatory approvals, if any, of its product candidates.

In addition, Tourmaline’s CDMOs’ facilities and operations may be adversely affected by labor, raw material and component shortages, high turnover of staff and difficulties in hiring trained and qualified replacement staff and the operations of its CDMOs may be requisitioned, diverted or allocated by U.S. or foreign government orders such as under emergency, disaster and civil defense declarations. Changes in economic conditions, supply chain constraints, labor, raw material and component shortages and steps taken by governments and central banks could also lead to higher inflation than previously experienced or expected, which could, in turn, lead to an increase in costs.

If any CDMO with whom Tourmaline contracts fails to perform its obligations, Tourmaline may be forced to manufacture the materials itself, for which it may not have the capabilities or resources, or enter into an agreement with a different CDMO, which it may not be able to do on reasonable terms, if at all. In either scenario, Tourmaline’s clinical trials supply could be delayed significantly as it establishes alternative supply

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sources. In some cases, the technical skills required to manufacture Tourmaline’s products or product candidates may be unique or proprietary to the original CDMO and Tourmaline may have difficulty, or there may be contractual restrictions prohibiting it from, transferring such skills to a back-up or alternate supplier, or it may be unable to transfer such skills at all. In addition, if Tourmaline is required to change CDMOs for any reason, it will be required to verify that the new CDMO maintains facilities and procedures that comply with quality standards and with all applicable regulations. Tourmaline would also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will produce its product candidate according to the specifications previously submitted to the FDA or another regulatory authority. The delays associated with the verification of a new CDMO could negatively affect Tourmaline’s ability to develop product candidates or commercialize its products in a timely manner or within budget. Furthermore, a CDMO may possess technology related to the manufacture of Tourmaline’s product candidate that such CDMO owns independently. This would increase Tourmaline’s reliance on such CDMO or require it to obtain a license from such CDMO in order to have another CDMO manufacture its product candidates.

Tourmaline’s manufacturing and testing of bulk drug substance for TOUR006 currently takes place in China through a global CDMO with facilities in China and around the world. A significant disruption in the operation of the manufacturing facility in China, a trade war or political unrest could materially adversely affect its business, financial condition and results of operations.

Tourmaline currently contracts manufacturing operations to third parties. TOUR006 bulk drug substance is manufactured by a third party facility in China. TOUR006 drug product is manufactured in Austria and packaged in Germany. Any disruption in production or inability of Tourmaline’s manufacturers in those countries to produce adequate quantities to meet its needs, whether as a result of a natural disaster or other causes, could impair its ability to operate its business on a day-to-day basis and to continue its development of its product candidates. Furthermore, since bulk drug substance is produced in China, Tourmaline is exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies of the U.S. or Chinese governments, political unrest or unstable economic conditions in China. Any of these matters could materially and adversely affect its business and results of operations. In addition, manufacturing interruptions or failure to comply with regulatory requirements by any of these manufacturers could significantly delay clinical development of potential products and reduce third-party or clinical researcher interest and support of proposed trials. Furthermore, any recall of the manufacturing lots or similar action regarding Tourmaline’s product candidates used in clinical trials could delay the trials or detract from the integrity of the trial data and its potential use in future regulatory filings. These interruptions or failures could also impede commercialization of Tourmaline’s product candidates and impair its competitive position. Further, Tourmaline may be exposed to fluctuations in the value of the local currencies. Future appreciation of the local currencies could increase Tourmaline’s costs. In addition, Tourmaline’s labor costs could continue to rise as wage rates increase due to increased demand for skilled laborers and the availability of skilled labor declines in such countries.

Tourmaline may seek to establish BD Arrangements, and, if Tourmaline is not able to establish them on commercially reasonable terms, or at all, Tourmaline may have to alter its development and commercialization plans.

Tourmaline’s product development programs and the potential commercialization of TOUR006 or any of Tourmaline’s future product candidates will require substantial additional cash to fund expenses. For TOUR006 or any of Tourmaline’s future product candidates, Tourmaline may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates.

Tourmaline faces significant competition in seeking appropriate collaborators. Whether Tourmaline reaches a definitive agreement for a BD Arrangement will depend, among other things, upon its assessment of the

collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s own evaluation of a potential collaboration. Such factors a potential collaborator will use to

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evaluate a BD Arrangement may include the design or results of clinical trials, the likelihood of approval by the FDA or comparable foreign regulatory authorities, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to Tourmaline’s ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a BD Arrangement could be more attractive than one with Tourmaline for its product candidate. The terms of any additional BD Arrangements or other arrangements that Tourmaline may establish may not be favorable to it.

Tourmaline may in the future be restricted under its current BD Arrangements from entering into potential future BD Arrangements on certain terms with potential collaborators. BD Arrangements are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

Tourmaline may not be able to negotiate BD Arrangements on a timely basis, on acceptable terms, or at all. If Tourmaline is unable to do so, it may have to curtail the development of the product candidate for which it is seeking to collaborate, reduce or delay its development program or one or more of its other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase its expenditures and undertake development or commercialization activities at its own expense. If Tourmaline elects to increase its expenditures to fund development or commercialization activities on its own, Tourmaline may need to obtain additional capital, which may not be available to it on acceptable terms or at all. If Tourmaline does not have sufficient funds, it may not be able to further develop its product candidates or bring them to market and generate product revenue.

In addition, any future BD Arrangements that Tourmaline enters into may not be successful. The success of Tourmaline’s BD Arrangements will depend heavily on the efforts and activities of its collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Disagreements between parties to a BD Arrangement regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the BD Arrangement. These disagreements can be difficult to resolve if neither of the parties has final decision-making authority. BD Arrangements with pharmaceutical or biotechnology companies and other third parties often are terminated or allowed to expire by the other party. Any such termination or expiration would adversely affect Tourmaline financially and could harm its business reputation.

Tourmaline has no experience in sales, marketing and distribution and may have to enter into agreements with third parties to perform these functions, which could prevent it from successfully commercializing TOUR006 or any potential future product candidates.

Tourmaline currently has no sales, marketing or distribution capabilities. To commercialize TOUR006 or any potential future product candidate Tourmaline must either develop its own sales, marketing and distribution capabilities or make arrangements with third parties to perform these services for it. If Tourmaline decides to market or distribute any of its products on its own, it will have to commit significant resources to developing a marketing and sales force and supporting distribution capabilities. If Tourmaline decides to enter into arrangements with third parties for performance of these services, it may find that they are not available on terms acceptable to it, or at all. If Tourmaline is not able to establish and maintain successful arrangements with third parties or build its own sales and marketing infrastructure, it may not be able to commercialize its product candidates, which would adversely affect its business, financial condition, results of operations and prospects.

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Risks Related to Tourmaline’s Business and Industry

TOUR006 and any other of Tourmaline’s future product candidates must undergo rigorous clinical trials before seeking regulatory approvals, and clinical trials may be delayed, suspended or terminated at any time for many reasons, any of which could delay or prevent regulatory approval and, if approval is granted, commercialization of its product candidates.

TOUR006 and any other product candidates Tourmaline might develop are subject to rigorous and extensive clinical trials before it can seek regulatory approval from the FDA and comparable foreign health authorities such as the European Medicines Authority. Clinical trials may be delayed, altered, suspended or terminated at any time for reasons including but not limited to:

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Tourmaline cannot guarantee that it will be able to successfully obtain FDA or other global health authority clearance to proceed with any planned clinical investigations of TOUR006 or any potential future product candidates or to accomplish required regulatory and/or manufacturing activities or all of the other activities necessary to initiate and complete clinical trials in a timely fashion, if at all. As a result, Tourmaline’s preclinical studies and clinical trials may be extended, delayed or terminated, and it may be unable to obtain regulatory approvals or successfully commercialize its products. In addition, Tourmaline has only limited experience in conducting late-stage clinical trials required to obtain regulatory approval. In any event, Tourmaline does not know whether any of its clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all.

Tourmaline’s product development costs will increase if it experiences delays in clinical testing. Significant clinical trial delays could also shorten any periods during which it may have the exclusive right to commercialize its product candidates or allow its competitors to bring products to market before Tourmaline does, which would impair its ability to successfully commercialize its product candidates and may harm its business, financial condition, results of operations and prospects. Tourmaline or its partners’ inability to timely complete clinical development could result in additional costs to it or impair its ability to generate product revenue or development, regulatory, commercialization and sales milestone payments and royalties on product sales.

If clinical trials of TOUR006 or any potential future product candidates fail to initiate, complete, or produce positive results or to demonstrate safety and efficacy to the satisfaction of the FDA or comparable health authorities or sufficient to demonstrate differentiation from other approved therapies or therapies in development, Tourmaline may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of its product candidates.

Before obtaining marketing approval from health authorities for the sale of TOUR006 or any potential future product candidates, Tourmaline or its partners must conduct extensive preclinical studies and clinical trials to demonstrate its safety and efficacy in humans. Preclinical studies and clinical trials are expensive, take several years to complete and may not yield results that support further clinical development or product approvals. The design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. There is a high failure rate for drugs and biologic products proceeding through clinical trials and failure can occur at any stage of testing. Because Tourmaline has limited experience designing clinical trials, it may be unable to design and execute a clinical trial to support regulatory approval.

Tourmaline may also not be successful in generating clinical data sufficient to differentiate TOUR006 from other products in the same therapeutic area. If its competitors’ products are, or are perceived to be, more effective, more convenient, less costly or safer than TOUR006, or Tourmaline is unable to demonstrate differentiation in any of those factors, it may not be able to achieve a competitive position in the market.

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In addition, data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In any event, it is impossible to predict when or if any of Tourmaline’s product candidates will prove safe and effective in humans or will receive regulatory approval. If Tourmaline is unable to successfully discover, develop or enable its partners to develop drugs that regulatory authorities deem effective and safe in humans, it will not have a viable business.

Tourmaline may not be able to file INDs, IND amendments, or CTAs to commence clinical trials on the timelines it expects, and even if it is able to, the FDA or comparable health authorities may not permit it to proceed.

Tourmaline may not be able to file INDs or CTAs for TOUR006 or any future product candidates on the timelines it expects, if at all. For example, Tourmaline may experience, or its partners may experience, manufacturing delays or other delays with IND-enabling studies. Moreover, Tourmaline cannot be sure that submission of an IND or CTA will result in the FDA or comparable health authority allowing initial or later-stage clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate clinical trials. Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or CTA, Tourmaline cannot guarantee that such regulatory authorities will not change their requirements in the future. These considerations also apply to new clinical trials Tourmaline may submit as amendments to existing INDs or to a new IND or CTAs. Any failure to file INDs and CTAs on the timelines Tourmaline expects or to obtain regulatory approvals for its trials may prevent it from completing its clinical trials or commercializing its products on a timely basis, if at all.

If Tourmaline experiences delays or difficulties in the enrollment of patients in clinical trials, development of TOUR006, or any potential future product candidates, may be delayed or prevented, which would have a material adverse effect on its business.

Tourmaline may not be able to initiate or continue clinical trials for its product candidate if it, or a potential future sponsor, are unable to locate and enroll a sufficient number of eligible patients to participate in these continuing trials as required by the FDA or comparable foreign regulatory authorities. Patient enrollment is a significant factor in the timing of clinical trials.

Patient enrollment may be affected if Tourmaline’s competitors have ongoing clinical trials for product candidates that are under development for the same indications as Tourmaline’s product candidates, at clinical trial sites participating in Tourmaline clinical trials, or at clinical trial sites not participating in Tourmaline clinical trials and patients who would otherwise be eligible for Tourmaline’s clinical trials instead enroll in clinical trials of Tourmaline’s competitors’ product candidates.

Patient enrollment may also be affected by other factors, including:

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Even if Tourmaline is able to enroll a sufficient number of patients in its clinical trials, if the pace of enrollment is slower than expected, the development costs for its product candidates may increase and the completion of its trials may be delayed or its trials could become too expensive to complete. Any delays in completing its clinical trials will increase costs, delay or prevent product candidate development and approval process and jeopardize Tourmaline’s ability to commence product sales and generate revenue. Any delays in completing its clinical studies for its product candidates may also decrease the period of commercial exclusivity. Any of these occurrences may significantly harm Tourmaline’s business, financial condition, results of operations, and prospects.

Success in preclinical studies or earlier-stage clinical trials for TOUR006, or evidence from published observations, clinical studies, or other literature for other anti-IL-6 or anti-IL-6 receptor agents, may not be indicative of such results in future or ongoing clinical trials for TOUR006.

To date, the data supporting Tourmaline’s drug discovery and development programs are derived in part from laboratory and preclinical studies and earlier-stage clinical trials conducted by Pfizer. Owing in part to the complexity of biological pathways, when used to treat human patients, as well as differences in the design or conduct of clinical trials, TOUR006 might not demonstrate the biochemical and pharmacological properties Tourmaline anticipates based on laboratory studies or earlier-stage clinical trials, and it may interact with human biological systems or other drugs in unforeseen, ineffective or harmful ways. Success in preclinical studies and earlier-stage clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate or positive data to demonstrate the effectiveness and safety of Tourmaline’s current and potential future product candidates. In this regard, the data supporting Tourmaline’s drug discovery and development programs are derived from laboratory and preclinical studies, and future clinical trials in humans may show that one or more of its product candidates are not safe and effective, in which event Tourmaline may need to abandon development of such product candidates. In fact, many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical studies and earlier-stage clinical trials. Similarly, preliminary data and interim results from clinical trials may not be predictive of final results. As a general matter, there is also a substantial risk that Phase 3 trials with larger numbers of patients and/or longer durations of therapy will fail to replicate efficacy and safety results observed in earlier clinical trials. The impact of such differences may lead to a clinical trial(s) of TOUR006 failing to reproduce any positive efficacy, safety, or other findings from laboratory and preclinical studies and earlier-stage clinical trials for TOUR006.

In addition, the rationale supporting Tourmaline’s drug discovery and development programs is also based upon published articles describing positive results from clinical trial(s) and/or the clinical experience of physicians using tocilizumab (and other inhibitors of IL-6 or IL-6 receptor) in various diseases. For example, part of the rationale supporting the development and investigation for TOUR006 in TED is from published articles describing the off-label use of tocilizumab in TED, which report observations of positive efficacy and safety results.

Results from Tourmaline’s future or ongoing clinical trials of TOUR006 may differ significantly from those from published articles in the literature of other molecules in the anti-IL-6 or anti-IL-6R class. For example,

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differences in clinical results may arise from differences between drug targets or between molecules that inhibit the same drug target. In addition, there may be substantial differences, even if the same disease or indication, between clinical trial(s) of TOUR006 and published literature (e.g., case series or reports, clinical trials, etc.) for other molecules in the anti-IL-6 or anti-IL-6R class based upon factors such as the clinical use setting, patient population being treated or investigated, assessments (e.g., efficacy, safety, pharmacodynamics, etc.), data collection and handling, analysis, study conduct, or other factors. Bias may have also been introduced in the published clinical reports that led to an incorrect determination or overestimate of the efficacy and safety results for TOUR006 because of the open-label nature and lack of controls or other robustness measures in these case series and uncontrolled clinical studies. There also can be publication bias, if only examples of successful cases of the clinical use of an anti-IL-6 or anti-IL-6R molecule (e.g., tocilizumab, satralizumab, sarilumab, siltuximab, ziltivekimab, etc.) may have been published, while treatment experiences for such molecules that were unsuccessful and/or associated with adverse safety outcomes were not published.

The impact of such differences may lead to a clinical trial(s) of TOUR006 failing to reproduce any positive efficacy, safety, or other findings in relation to inhibition of IL-6 or the IL-6 receptor that were reported in publications of other molecules. If such an event was to occur, there is a risk that the TOUR006 development program in a particular indication(s) or all indications is terminated, longer or more expensive development programs (including larger, longer, and/or costlier clinical trials) may be required to investigate TOUR006, TOUR006 is not approved by the FDA or other regulatory authorities, TOUR006 is not reimbursed by payors or other similar bodies, or there is limited or no success achieved in the commercialization of TOUR006.

Preliminary, initial, or interim results from clinical trials that Tourmaline announces, presents, or publishes from time to time may change as more data and information become available (or are updated based upon audit, validation and verification procedures of the data/information commonly performed for clinical trials) that could result in material changes in the final trial results.

From time to time, Tourmaline may announce, present or publish preliminary, initial, or interim data or other information from its clinical trials. Any such data and other results from Tourmaline’s clinical trials may materially change as more patient data and information become available. Such data and information may also undergo significant change following subsequent auditing, validation and/or verification procedures that are commonly conducted in clinical trials. Thus, any preliminary, initial, or interim data or other information may not be predictive of final results from the clinical trial and should be viewed with caution until the final data are available. Tourmaline may also arrive at different conclusions, or other determinations that may qualify such results, once it has received and fully evaluated the additional data. Differences between preliminary, initial or interim results and final results could lead to significantly different interpretations or conclusions of the trial outcomes.

Further, others, including regulatory authorities and collaboration or regional partners, may not accept or agree with Tourmaline’s assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of TOUR006, the approvability or commercialization of TOUR006 or any future product candidates, and Tourmaline in general. In addition, the information Tourmaline chooses to publicly disclose regarding a particular clinical trial is based on what is typically extensive information, and you or others may not agree with what Tourmaline determines is material or otherwise appropriate information to include in its disclosure.

If the preliminary, initial or interim data that Tourmaline reports differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, Tourmaline’s ability to obtain approval for, and commercialize, TOUR006 may be harmed, which could significantly harm Tourmaline’s business, financial condition, results of operations and prospects.

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TOUR006 may cause undesirable side effects or adverse events or have other properties or safety risks, which could terminate further development of this product candidate, result in a lack of product approval by the FDA or other regulatory authorities, delay the timing (and/or increase the cost) of a product approval by the FDA or other regulatory authorities, lead to a restrictive product label that significantly limits prescribing of an approved product, delay or preclude reimbursement by payors, or significantly limit or preclude the commercialization of TOUR006.

A concerning safety signal (such as that involving serious adverse events, life-threatening adverse events, or deaths, or a nonserious adverse event that may occur at a high or concerning frequency and/or severity or if rare, leads to a significant safety concern), tolerability concern (e.g., undesirable side effects that cannot be tolerated by patients, require suboptimal dosing alterations require additional monitoring and/or lead to patients missing or delaying doses) or other safety issue caused by TOUR006 may be observed in any future or ongoing clinical trial of TOUR006. For example, dosing in the 200 mg arm of the prior Phase 2 trial of TOUR006 in systemic lupus erythematosus was stopped for safety concerns based on an unblinded data review and recommendation from the internal review committee for that study. Prior safety (clinical and nonclinical) data for TOUR006, safety data and observations for other molecules in the anti-IL-6 and anti-IL-6R classes, and published safety data and observations for other molecules in the anti-IL-6 and anti-IL-6R classes used in the same disease or indication as that being investigated in TOUR006 clinical trial(s) may not be indicative of similar safety and tolerability results or profile for TOUR006 in future or ongoing clinical trials. For example, some potential therapeutics developed in the biopharmaceutical industry that initially showed therapeutic promise in early-stage trials have later been found to have a problematic safety or tolerability profile that prevented their further development.

In addition, TOUR006 is a recombinant protein. Recombinant proteins can sometimes induce host immune responses that can cause the production of anti-drug antibodies (“ADAs”). ADAs may neutralize the effectiveness of the product candidate, can require that higher doses be used to obtain a therapeutic effect or can cross react with substances naturally occurring in a subject’s body, which can cause unintended effects, including potential impacts on efficacy and adverse events. For example, the ADAs may prevent the drug from offering a therapeutic benefit or lead to a less efficacious effect. ADAs may also cause hypersensitivity reactions (including anaphylaxis) that may require patients to stop taking that drug or can, in some cases, be serious, life-threatening, or fatal. If Tourmaline determines that ADAs are causing safety or efficacy concerns for TOUR006, Tourmaline may need to delay, halt, or terminate its clinical trials and the affected product candidates. TOUR006 may never obtain regulatory approval by the FDA or other regulatory authorities. Tourmaline cannot provide assurance that the detection of ADAs will not occur at a higher rate than what it has observed historically or that ADA will not lead to meaningful impacts upon efficacy or safety, or that the detection of ADAs will not otherwise result in TOUR006 not being approved by the FDA or other regulatory authorities.

If a safety signal, tolerability concern, ADA concern, or other safety issue emerges from any future or ongoing clinical trial for TOUR006, or any other IL-6 inhibitor product candidate, this could result in:

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Any of these occurrences could materially and adversely affect Tourmaline’s business, financial condition, results of operations and prospects.

TOUR006 is a product candidate within the IL-6 inhibitor and IL-6R inhibitor class and may be adversely impacted by results for other members in the class, which could delay, terminate or increase the cost of development of TOUR006, delay or prevent approval by the FDA or other regulatory authorities, lead to a restrictive product label that significantly limits prescribing, delay or preclude reimbursement by payors, or significantly limit or preclude the commercialization of TOUR006.

TOUR006 is a member of the IL-6 inhibitor and IL-6R inhibitor class. There are other products and product candidates within this class that are being developed or commercialized by third parties over which Tourmaline has no control and for which Tourmaline does not have any information beyond what is publicly available. It is possible that negative data or information may emerge from one or more of these other products or product candidates related to a limitation or failure of efficacy, safety concern, negative publicity or other issue. Such an occurrence may adversely impact TOUR006 or its perceived product profile and could terminate further development of TOUR006, result in a lack of product approval by the FDA or other regulatory authorities, delay the timing (and/or increase the cost) of a product approval, lead to a restrictive product label that significantly limits prescribing, delay or preclude reimbursement by payors, or significantly limit or preclude the commercialization of TOUR006.

Tourmaline faces significant competition from other biotechnology and pharmaceutical companies targeting autoimmune and cardiovascular disease indications. Tourmaline’s operating results will suffer if it fails to compete effectively.

The markets for autoimmune disease therapies are competitive and are characterized by significant technological development and new product introduction. For example, there are several large and small

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pharmaceutical companies focused on delivering therapeutics for TED or ASCVD. Tourmaline anticipates that, if it obtains regulatory approval of TOUR006, it will face significant competition from other approved therapies or drugs that become available in the future for the treatment of Tourmaline’s target indications. If approved, TOUR006 may also compete with unregulated, unapproved and off-label treatments. Even if an approved biosimilar product is less effective than TOUR006, a less effective biosimilar may be more quickly adopted by physicians and patients than its competing product candidate based upon cost. TOUR006 will have to compete with existing therapies, some of which are widely known and accepted by physicians and patients. To compete successfully in this market, Tourmaline will have to demonstrate that the relative cost, safety and efficacy of its product, if approved, provides an attractive alternative to existing and other new therapies to gain a share of some patients’ discretionary budgets and to gain physicians’ attention within their clinical practices. Some of the companies that may offer competing products also have a broad range of other product offerings, large direct sales forces and long-term customer relationships with Tourmaline’s target physicians, which could inhibit Tourmaline’s market penetration efforts. Such competition could lead to reduced market share for Tourmaline’s product candidate and contribute to downward pressure on the pricing of its product candidate, which could harm its business, financial condition, results of operations and prospects.

Tourmaline expects to face competition from agents with different mechanisms of action in both TED and ASCVD. For example, in January 2020, the FDA approved Horizon Therapeutics’ Public Limited Company’s Tepezza (teprotumumab), an anti-IGF-1R antibody, for the treatment of TED. In addition, there are multiple other agents in various stages of development for the treatment of TED. The first line of treatment for patients with TED is generally immunosuppressive therapy, including high doses of corticosteroids. For ASCVD, several classes of therapies are routinely used, including statins, beta-blockers, ACE inhibitors, ARBs, aspirin, and other anti-platelet agents. Additionally, Tourmaline is aware of two IL-6 blockers currently being developed for the treatment of ASCVD.

Many of Tourmaline’s existing or potential competitors have substantially greater financial, technical and human resources than it does and significantly greater experience in the discovery and development of product candidates, as well as in obtaining regulatory approvals of those product candidates in the U.S. and in foreign countries. Many of Tourmaline’s current and potential future competitors also have significantly more experience commercializing drugs that have been approved for marketing. Mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a smaller number of Tourmaline’s competitors. Competition may reduce the number and types of patients available to Tourmaline to participate in clinical trials because some patients who might have opted to enroll in its trials may instead opt to enroll in a trial being conducted by one of its competitors.

Due to varying regulatory requirements in certain foreign countries, there are many more products and procedures available for use to treat autoimmune diseases in some international markets than are approved for use in the U.S. In certain international markets, there are also fewer limitations on the claims that Tourmaline’s competitors can make about the effectiveness of their products and the manner in which they can market their products.

Tourmaline’s ability to compete successfully will depend largely on its ability to:

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The availability of Tourmaline’s competitors’ products could limit the demand and the price it is able to charge for any product candidate it develops. The inability to compete with existing or subsequently introduced treatments would have an adverse impact on Tourmaline’s business, financial condition, results of operations and prospects.

If the market opportunities for TOUR006 and any potential future product candidates are smaller than Tourmaline estimates or if any approval that it obtains is based on a narrower definition of the patient population, then its revenue potential and ability to achieve profitability will be adversely affected.

The total addressable market opportunity for TOUR006 and any other potential future product candidates Tourmaline may develop will ultimately depend upon, among other things, the proportion of patients identified as sensitive to its treatments, acceptance by the medical community, patient access, drug and any related companion diagnostic pricing and their reimbursement.

Tourmaline intends to initially seek regulatory approval of TOUR006 as therapies for patients with TED and ASCVD. The number of patients in Tourmaline’s targeted commercial markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with its drugs or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect its results of operations and its business. In addition, Tourmaline may not be successful in its efforts to identify additional product candidates. Due to its limited resources and access to capital, Tourmaline must prioritize development of certain product candidates, which may prove to be the wrong choice and may adversely affect its business, financial condition, results of operations and prospects.

Tourmaline may not successfully identify new product candidates to expand its development pipeline.

The success of Tourmaline’s business over the longer term depends upon its ability to identify and validate new potential therapeutics. Efforts to identify new product candidates require substantial technical, financial and human resources, and Tourmaline’s methodology may not successfully identify medically relevant potential therapeutics to be developed as product candidates. Moreover, Tourmaline’s research and business development efforts may identify molecules that initially show promise yet fail to yield product candidates for clinical development for multiple reasons. For example, potential product candidates may, on further study, be shown to have inadequate efficacy, harmful side effects, suboptimal drug profiles, suboptimal manufacturability or stability, or other characteristics suggesting that they are unlikely to be commercially viable products. Tourmaline’s inability to successfully identify additional new product candidates to advance into clinical trials could have a material adverse effect on its business, financial condition, results of operations and prospects.

Tourmaline must attract and retain highly skilled employees in order to succeed. If Tourmaline is not able to retain its current senior management team or to continue to attract and retain qualified scientific, technical and business personnel, its business may suffer.

To succeed, Tourmaline must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel and it faces significant competition for experienced personnel. If Tourmaline does

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not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect its ability to execute its business plan and harm its operating results. An important element of Tourmaline’s strategy is to take advantage of the R&D and other expertise of its current management. The loss of any one of Tourmaline’s executive officers, other senior members of the leadership team, or other key personnel could result in a significant loss in the knowledge and experience that it, as an organization, possesses and could cause significant delays, or outright failure, in the development and further commercialization of TOUR006 and any potential future product candidates.

There is intense competition for qualified personnel, including management, in the technical fields in which Tourmaline operates and it may not be able to attract and retain qualified personnel necessary for the successful research, development and future commercialization, if any, of TOUR006 and any potential future product candidates.

Even if any of Tourmaline’s current or future product candidates receive marketing approval, they 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.

If TOUR006 or any of Tourmaline’s potential future product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If Tourmaline’s product candidates do not achieve an adequate level of acceptance, it may not generate significant product revenues and it may not become profitable. The degree of market acceptance of Tourmaline’s current or potential future candidates, if approved for commercial sale, will depend on a number of factors, including:

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Even if Tourmaline obtains approval to market TOUR006 or other potential future product candidates, these products may become subject to unfavorable pricing regulations, reimbursement practices from third-party payors or healthcare reform initiatives in the United States and abroad, which could harm its business.

The regulations that govern marketing approvals, pricing 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. In many regions, including the EU, Japan and Canada, the pricing of prescription drugs is controlled by the government and 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 regulatory approval for the product is granted. Regulatory agencies in those countries could determine that the pricing for Tourmaline’s products should be based on prices of other commercially available drugs for the same disease, rather than allowing it to market its products at a premium as new drugs. As a result, Tourmaline might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay or limit its commercial launch of the product, possibly for lengthy time periods, which could negatively impact the revenue it generates from the sale of the product in that particular country. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. Adverse pricing limitations may hinder Tourmaline’s ability to recoup its investment in one or more product candidates, even if Tourmaline’s product candidates obtain marketing approval.

Tourmaline’s commercial success also depends on coverage and adequate reimbursement of its product candidates by third-party payors, including government payors, private health insurers, health maintenance organizations and other organizations, which may be difficult or time-consuming to obtain, may be limited in scope and may not be obtained in all jurisdictions in which it may seek to market its products. In the United States and markets in other countries, governments and private insurers closely examine medical products to determine whether they should be covered by reimbursement and, if so, the level of reimbursement that will apply. In the United States, the principal decisions about reimbursement for new medicines are typically made by the CMS an agency within the HHS. CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular drugs. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for drug products. Tourmaline cannot be sure that coverage and reimbursement will be available for any product that it or its partners commercialize and, if reimbursement is available, what the level of reimbursement will be. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which Tourmaline or its partners obtain regulatory approval. If coverage and reimbursement are not available or reimbursement is available only to limited levels, it and its partners may not be able to successfully commercialize any product candidate for which marketing approval is obtained.

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 comparable foreign health authorities. 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 Tourmaline’s costs, including costs of research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover Tourmaline’s costs and may only be temporary. 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. In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price and best price. Penalties may apply

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in some cases when such metrics are not submitted accurately and timely. Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs. Tourmaline’s inability to promptly obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved products that it develops could have a material adverse effect on its operating results, ability to raise capital needed to commercialize products and overall financial condition.

Tourmaline expects to expand its clinical development, manufacturing and regulatory capabilities and potentially implement sales, marketing and distribution capabilities, and as a result, it may encounter difficulties in managing its growth, which could disrupt its operations.

As of June 30, 2023, Tourmaline had 19 full-time employees, including 13 who are engaged in research and development activities, and no part-time employees. As Tourmaline’s development progresses, it expects to experience significant growth in the number of its employees and the scope of its operations, particularly in the areas of clinical product development, regulatory affairs and, if TOUR006 or any potential future product candidates receives marketing approval, sales, marketing and distribution. To manage Tourmaline’s anticipated future growth, it must continue to implement and improve its managerial, operational and financial systems, expand its facilities and continue to recruit and train additional qualified personnel. Due to Tourmaline’s limited financial resources and the limited experience of its management team in managing a company with such anticipated growth, it may not be able to effectively manage the expansion of its operations or recruit and train additional qualified personnel. Tourmaline’s choice to focus on multiple therapeutic areas may negatively affect its ability to develop adequately the specialized capability and expertise necessary for operations. The expansion of Tourmaline’s operations may lead to significant costs and may divert its management and business development resources. Any inability to manage growth could delay the execution of Tourmaline’s business plans or disrupt its operations.

Healthcare reform may negatively impact Tourmaline’s ability to profitably sell TOUR006 and any potential future product candidates, if approved.

Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could prevent or delay marketing approval of TOUR006 or any potential future product candidates, restrict or regulate post-approval activities and affect Tourmaline’s ability to profitably sell any product for which it obtains marketing approval.

For example, on July 9, 2021, President Biden issued an executive order directing the FDA to, among other things, continue to clarify and improve the approval framework for generic drugs and biosimilars, including the standards for interchangeability of biological products, facilitate the development and approval of biosimilar and interchangeable products, clarify existing requirements and procedures related to the review and submission of BLAs, and identify and address any efforts to impede generic drug and biosimilar competition.

Additionally, on August 16, 2022, President Biden signed the IRA, into law, which among other things, (1) directs the HHS, to negotiate the price of certain single-source drugs and biologics covered under Medicare and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. The IRA includes certain exemptions to the price negotiation program, including a limited exemption for products with orphan drug designation. This exemption applies only to products with one orphan drug designation that is (i) for a rare disease or condition and (ii) is approved for indication(s) for such rare disease or condition. By limiting price negotiation exemption to products with only one orphan drug designation, the IRA may decrease Tourmaline’s interest in pursuing orphan drug designation for its product candidates in multiple indications. The IRA also, among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025 and eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly

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lowering the beneficiary maximum out-of-pocket cost through a newly established manufacturer discount program. These provisions will take effect progressively starting in fiscal year 2023, although the Medicare drug pricing negotiation program is currently subject to legal challenges. The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented. It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry. Further, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively referred to as the ACA, was enacted, which includes measures that have significantly changed the way health care is financed by both governmental and private insurers. There have been executive, judicial and congressional challenges to certain aspects of the ACA. While Congress has not passed comprehensive legislation repealing the ACA, such legislation may be reintroduced. Members of Congress have introduced legislation to modify or replace certain provisions of the ACA. It is unclear how these efforts to repeal and/or replace the ACA will impact the ACA and Tourmaline’s business. For example, the Tax Cuts and Jobs Act (the “2017 Tax Act”), repealed the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage that is commonly referred to as the “individual mandate.” On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Prior to the United States Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is possible that the ACA and IRA may be subject to judicial or Congressional challenges in the future. It is unclear how any additional healthcare reform measures may impact the ACA or IRA, increase the pressure on drug pricing or limit the availability of coverage and adequate reimbursement for TOUR006 and any potential future product candidates, which would adversely affect Tourmaline’s business.

There has also been increasing executive, legislative and enforcement interest in the United States with respect to drug pricing practices. There have been U.S. congressional inquiries, presidential executive orders and proposed and enacted legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drugs. For example, in an executive order, the administration of President Biden expressed its intent to pursue certain policy initiatives to reduce drug prices and, in response, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue to lower drug prices. Further, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMS, Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve the quality of care. It is unclear whether the models will be utilized in any health reform measures in the future. Tourmaline expects that the healthcare reform measures that have been adopted and may be adopted in the future may result in more rigorous coverage criteria and additional downward pressure on the price that it receives for any approved product and could seriously harm its future revenues. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent Tourmaline from being able to generate revenue, attain profitability or commercialize its products.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. Such reforms could have an adverse effect on anticipated revenue from TOUR006 and any potential future product candidates that Tourmaline may successfully develop and for which it may obtain regulatory approval and may affect its overall financial condition and ability to develop product candidates.

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In many countries outside the United States, government-sponsored healthcare systems are the primary payors for drugs. With increasing budgetary constraints and/or difficulty in understanding the value of medicines, governments and payors in many countries are applying a variety of measures to exert downward price pressure and Tourmaline expects that legislators, policy makers and healthcare insurance funds in the EU Member States will continue to propose and implement cost cutting measures. These measures include mandatory price controls, price referencing, therapeutic-reference pricing, increases in mandates, incentives for generic substitution and biosimilar usage, government-mandated price cuts, limitations on coverage of target population and introduction of volume caps.

Many countries implement health technology assessment (“HTA”), procedures that use formal economic metrics such as cost-effectiveness to determine prices, coverage and reimbursement of new therapies. These assessments are increasingly implemented in established and emerging markets. In the EU, Regulation (EU) 2021/2282 on Health Technology Assessment, which will become effective on January 12, 2025, will allow EU member states to use common HTA tools, methodologies and procedures to conduct joint clinical assessments and joint scientific consultations whereby HTA authorities may provide advice to health technology developers. Each EU member state will, however, remain exclusively competent for assessing the relative effectiveness of health technologies and making pricing and reimbursement decisions. Given that the extent to which pricing and reimbursement decisions are influenced by the HTA process currently varies between EU member states, it is possible that Tourmaline’s products may be subject to favorable pricing and reimbursement status only in certain EU countries. If Tourmaline is unable to maintain favorable pricing and reimbursement status in EU member states that represent significant markets, including following periodic review, its anticipated revenue from and growth prospects for its products in the EU could be negatively affected. Moreover, in order to obtain reimbursement for its products in some EU member states, Tourmaline may be required to compile additional data comparing the cost-effectiveness of its products to other available therapies. Efforts to generate additional data for the HTA process will involve additional expenses which may substantially increase the cost of commercializing and marketing Tourmaline’s products in certain EU member states.

Tourmaline cannot predict the likelihood, nature or extent of healthcare reform initiatives that may arise from future legislation or administrative action. However, it is possible that countries will continue taking aggressive actions to seek to reduce expenditures on drugs. Similarly, fiscal constraints may also affect the extent to which countries are willing to approve new and innovative therapies and/or allow access to new technologies.

If Tourmaline or any third parties it may engage are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Tourmaline or such third parties are not able to maintain regulatory compliance, its product candidates may lose any regulatory approval that may have been obtained and it may not achieve or sustain profitability.

Tourmaline’s international operations may expose it to business, regulatory, political, operational, financial, pricing and reimbursement risks associated with doing business outside of the United States.

Tourmaline’s business is subject to risks associated with conducting business internationally. Some of its manufacturing and clinical trial sites are located outside of the United States. Furthermore, if Tourmaline or any future partner succeeds in developing TOUR006 or any of its potential future product candidates, Tourmaline intends to market them in the EU and other jurisdictions in addition to the United States. If approved, Tourmaline or any future partner may hire sales representatives and conduct physician and patient association outreach activities outside of the United States. Doing business internationally involves a number of challenges and risks, including but not limited to:

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Any of these factors could harm Tourmaline’s ongoing international clinical operations and supply chain, as well as any future international expansion and operations and, consequently, its business, financial condition, prospects and results of operations.

Product liability lawsuits against Tourmaline could cause it to incur substantial liabilities and to limit commercialization of any products that it may develop.

Tourmaline faces an inherent risk of product liability exposure related to the testing of its product candidates in human clinical trials and will face an even greater risk if it or its partner commercializes any resulting products. Product liability claims may be brought against Tourmaline by subjects enrolled in its clinical trials, patients, healthcare providers or others using, administering or selling its products. If Tourmaline cannot successfully defend itself against claims that its product candidates or products that it may develop caused injuries, it could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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Tourmaline’s clinical trial liability insurance coverage may not adequately cover all liabilities that it may incur. Tourmaline may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. Tourmaline’s inability to obtain product liability insurance at an acceptable cost or to otherwise protect against potential product liability claims could prevent or delay the commercialization of any products or product candidates that it develops. Tourmaline intends to expand its insurance coverage for products to include the sale of commercial products if it obtains marketing approval for TOUR006 or any potential future product candidates, but it may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. If Tourmaline is sued for any injury caused by its products, product candidates or processes, Tourmaline’s liability could exceed its product liability insurance coverage and its total assets. Claims against Tourmaline, regardless of their merit or potential outcome, may also generate negative publicity or hurt its ability to obtain physician endorsement of its products or expand its business.

Tourmaline’s relationships with healthcare providers, customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which, if violated, could expose it to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

Healthcare providers, including physicians, and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which Tourmaline or its partner obtains marketing approval. Tourmaline’s arrangements with healthcare providers, third-party payors and customers may expose it to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which it researches, markets, sells and distributes its products for which Tourmaline or its partner obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations, include the following:

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Efforts to ensure that Tourmaline’s business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that Tourmaline’s business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If Tourmaline’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to it, Tourmaline may be subject to significant civil, criminal and administrative penalties, damages, fines, additional regulatory oversight, litigation, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of its operations. If any of the physicians or other healthcare providers or entities with whom Tourmaline expects to do business is found not to be in compliance with applicable laws, that person or entity may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Outside the United States, interactions between pharmaceutical companies and health care professionals are also governed by strict laws, such as national anti-bribery laws of EU member states, national sunshine rules,

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regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

Tourmaline’s business could be materially and adversely affected in the future by the effects of disease outbreaks, epidemics and pandemics.

Disease outbreaks, epidemics and pandemics in regions where Tourmaline may have clinical trial sites or other business operations could adversely affect its business, including by causing significant disruptions in its operations and/or in the operations of third-party manufacturers and CROs upon whom it relies. Disease outbreaks, epidemics and pandemics have negative impacts on its ability to initiate new clinical trial sites, to enroll new patients and to maintain existing patients who are participating in its clinical trials, which may include increased clinical trial costs, longer timelines and delay in Tourmaline’s ability to obtain regulatory approvals of TOUR006 and any potential future product candidates, if at all. Disease outbreaks, epidemics and pandemics also could adversely impact clinical trial results for TOUR006 or other future potential product candidates, such as by diminishing or eliminating their efficacy or by producing a safety concern, either through direct biological effects or through confounding of the data collection and analysis. This adverse impact could terminate further development of TOUR006, result in a lack of product approval by the FDA or other regulatory authorities, delay the timing (and/or increase the cost) of a product approval by the FDA or other regulatory authorities, lead to a restrictive product label that significantly limits prescribing of an approved product, delay or preclude reimbursement by payors, or significantly limit or preclude the commercialization of TOUR006.

General supply chain issues may be exacerbated during disease outbreaks, epidemics and pandemics and may also impact the ability of Tourmaline’s clinical trial sites to obtain basic medical supplies used in its trials in a timely fashion, if at all. If Tourmaline’s CDMOs are required to obtain an alternative source of certain raw materials and components, for example, additional testing, validation activities and regulatory approvals may be required which can also have a negative impact on timelines. Any associated delays in the manufacturing and supply of drug substance and drug product for its clinical trials could adversely affect its ability to conduct ongoing and future clinical trials of TOUR006 on Tourmaline’s anticipated development timelines. Likewise, the operations of Tourmaline’s third-party manufacturers may be requisitioned, diverted or allocated by U.S. or foreign government orders. If any of Tourmaline’s CDMOs or raw materials or components suppliers become subject to acts or orders of U.S. or foreign government entities to allocate or prioritize manufacturing capacity, raw materials or components to the manufacture or distribution of vaccines or medical supplies needed to test or treat patients in a disease outbreak, epidemic or pandemic, this could delay Tourmaline’s clinical trials, perhaps substantially, which could materially and adversely affect its business.

Risks Related to Regulatory Approvals

The regulatory approval processes of the FDA and comparable foreign health authorities are lengthy and inherently unpredictable. Tourmaline’s inability to obtain regulatory approval for TOUR006 would substantially harm its business.

Currently, Tourmaline has no product candidate that has received regulatory approval and does not expect TOUR006 or any potential future product candidates to be commercially available for several years, if at all. The time required to obtain approval from the FDA and comparable foreign health authorities is unpredictable but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the health authorities. In addition, approval policies, regulations or the type and amount of preclinical and clinical data necessary to gain approval may change during the course of a product candidate’s development and may vary among jurisdictions. It is possible that none of Tourmaline’s existing or future product candidates will ever obtain regulatory approval.

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TOUR006 or any of Tourmaline’s future product candidates could fail to receive regulatory approval from the FDA or a comparable foreign health authority for many reasons, including:

The FDA or a comparable foreign health authority may require more information, including additional preclinical or clinical data, to support approval, which may delay or prevent approval and commercialization, or Tourmaline may decide to abandon the development program for other reasons. If Tourmaline obtains approval, regulatory authorities may approve TOUR006 or any potential future product candidates for fewer or more limited indications than it requests, may grant accelerated approval or conditional marketing authorization based on a surrogate endpoint and contingent on the successful outcome of costly and time-consuming post-marketing confirmatory clinical trials or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

Tourmaline may seek fast track and/or breakthrough therapy designations or priority review for one or more of its product candidates, but Tourmaline might not receive such designation or priority review, and even if Tourmaline does, such designation or priority review may not lead to a faster development or regulatory review or approval process, and does not assure FDA approval of its product candidates. Even if a product qualifies for such designation or priority review, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Tourmaline may seek fast track and/or breakthrough therapy designations for one or more of its product candidates.

The FDA may issue a fast track designation to a product candidate if it is intended, whether alone or in combination with one or more other products, for the treatment of a serious or life-threatening disease or condition, and it demonstrates the potential to address unmet medical needs for such a disease or condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new biologic may request that the FDA designate the biologic as a fast track product at any time during the clinical development of the product. For fast track products, sponsors may have greater interactions with the FDA during product development. A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA. However, the FDA’s PDUFA goal for reviewing a BLA fast track application under the Prescription Drug User Fee Act (“PDUFA”) does not begin until the last section of the application is submitted. Fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

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A breakthrough therapy is defined as a product candidate that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product candidate may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Product candidates designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the BLA.

Fast track designation and breakthrough therapy designation are within the discretion of the FDA. Accordingly, even if Tourmaline believes that one of its product candidates meets the criteria for any such designation, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of such designation may expedite the development or approval process, but does not change the standards for approval. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the BLA is eligible only for standard review.

In the EU, innovative products that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development and review programs, such as the Priority Medicines (“PRIME”), scheme, which provides incentives similar to the breakthrough therapy designation in the United States.

Sponsors that benefit from PRIME designation are potentially eligible for accelerated assessment of their marketing authorization applications, although this is not guaranteed. If a product for which PRIME designation was granted is the subject of an accelerated assessment, the product may be placed on the market in the EU before Tourmaline’s product candidate with a similar therapeutic indication.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shutdowns, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of Tourmaline’s business may rely, which could negatively impact its business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which Tourmaline’s operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect Tourmaline’s business. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process Tourmaline’s regulatory submissions, which could have a material adverse effect on its business. Further, future government shutdowns could impact Tourmaline’s ability to access the public markets and obtain necessary capital in order to properly capitalize and continue its operation.

Tourmaline’s failure to obtain health authority approval in foreign jurisdictions would prevent it from marketing TOUR006 or any potential future product candidates outside the United States.

If Tourmaline or its partners succeed in developing any products, Tourmaline intends to market them in the EU and other foreign jurisdictions in addition to the United States. In order to market and sell its products in

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other jurisdictions, Tourmaline 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 United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, Tourmaline must secure product pricing and reimbursement approvals before health authorities will approve the product for sale in that country. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for Tourmaline and could delay or prevent the introduction of its products in certain countries. Further, clinical trials conducted in one country may not be accepted by health authorities in other countries and regulatory approval in one country does not ensure approval in any other country, while a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others. If Tourmaline fails to obtain approval of TOUR006 or any potential future product candidates by health authorities in another country, it will be unable to commercialize its product in that country, and the commercial prospects of that product candidate and its business prospects could decline. In addition, failure to obtain regulatory approval in one country or region could adversely affect future regulatory approvals in other countries.

Even if TOUR006 and any potential future product candidates receive regulatory approval, they will still face extensive ongoing regulatory requirements, which may result in significant expenses, and may still face future development and regulatory difficulties.

Even if Tourmaline obtains regulatory approval for a product candidate, it would be subject to ongoing requirements by the FDA and comparable foreign health authorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-market information. Tourmaline will be subject to ongoing requirements, including submissions of safety and other post-marketing information, reports, establishment registration and product listing requirements, requirements relating to current cGMP, applicable product tracking and tracing requirements, quality control, quality assurance and corresponding maintenance of records and documents, and recordkeeping. Tourmaline will also need to ensure continued compliance by it and/or any future CMOs and CROs for any post-approval clinical trials that Tourmaline conducts. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. Additionally, under the Food and Drug Omnibus Reform Act of 2022, sponsors of approved drugs and biologics must provide 6 months’ notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing the product on a list of discontinued products, which would revoke the product’s ability to be marketed.

Even after approval, the FDA and comparable foreign health authorities will continue to closely monitor the safety profile of any product even after approval. If the FDA or comparable foreign health authorities become aware of new safety information after approval of TOUR006 and any potential future product candidates, they may require labeling changes or establishment of a REMS, or similar strategy, impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. Failure to comply with any related obligations may result in the suspension or withdrawal of an obtained approval and in civil and/or criminal penalties. Receipt of approval for narrower indications than sought, restrictions on marketing through a REMS or similar strategy imposed by the FDA or in an EU member state or other foreign country, or significant labeling restrictions or requirements in an approved label such as a boxed warning, could have a negative impact on Tourmaline’s ability to recoup its R&D costs and to successfully commercialize that product, any of which could materially and adversely affect its business, financial condition, results of operations and growth prospects. In any event, if Tourmaline is unable to comply with its post-marketing obligations imposed as part of the marketing approvals in the United States, the EU, or

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other countries, its approval may be varied, suspended or revoked, product supply may be delayed and its sales of its products could be materially adversely affected.

In addition, manufacturers of drug substance and drug product and their facilities are subject to continual review and periodic inspections by the FDA and comparable foreign health authorities for compliance with cGMP, regulations. If Tourmaline or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or Tourmaline, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. Manufacturers and other parties involved in the drug supply chain for prescription drug products must also comply with product tracking and tracing requirements and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products or products that are otherwise unfit for distribution in the United States. If Tourmaline or the manufacturing facilities for TOUR006 or any potential future product candidates fail to comply with applicable regulatory requirements, or if TOUR006 or any potential future product candidates are found to cause undesirable or unacceptable side effects, a regulatory agency may:

The occurrence of any event or penalty described above may inhibit Tourmaline’s ability to commercialize its products and generate revenue.

Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by the FDA, DOJ, HHS, OIG, state attorneys general, members of Congress and the public. Violations, including promotion of Tourmaline’s products for unapproved (or off-label) uses, are subject to enforcement letters, inquiries and investigations and civil and criminal sanctions by the government. Any actual or alleged failure to comply with labeling and promotion requirements may result in fines, warning letters, mandates to corrective information to healthcare practitioners, injunctions, or civil or criminal penalties. Additionally, comparable foreign health authorities, public prosecutors, industry associations, healthcare professionals and other members of the public will heavily scrutinize advertising and promotion of any product candidate outside of the United States.

In the United States, engaging in the impermissible promotion of Tourmaline’s products for off-label uses can subject it to false claims litigation under federal and state statutes, which can lead to civil and criminal

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penalties and fines and agreements that materially restrict the manner in which a company promotes or distributes drug products. These false claims statutes include the federal FCA, which allows any individual to bring a lawsuit against a pharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims, or causing to present such false or fraudulent claims, for payment by a federal program such as Medicare or Medicaid. If the government prevails in the lawsuit, the individual will share in any fines or settlement funds. Since 2004, these FCA lawsuits against pharmaceutical companies have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements regarding certain sales practices promoting off-label drug uses involving fines in excess of $1 billion. This growth in litigation has increased the risk that a pharmaceutical company will have to defend a false claim action, pay settlement fines or restitution, agree to comply with burdensome reporting and compliance obligations and be excluded from Medicare, Medicaid and other federal and state healthcare programs. If Tourmaline does not lawfully promote its approved products, it may become subject to such litigation and, if it does not successfully defend against such actions, those actions may have a material adverse effect on its business, financial condition and results of operations.

The FDA’s policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of TOUR006 or any potential future product candidates. If Tourmaline is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if it is not able to maintain regulatory compliance, Tourmaline may lose any marketing approval that it may have obtained, which would adversely affect its business, prospects and ability to achieve or sustain profitability.

In the EU, the advertising and promotion of medicinal products are subject to both EU and EU member state laws governing promotion of medicinal products, interactions with physicians and other healthcare professionals, misleading and comparative advertising and unfair commercial practices. Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each member state and can differ from one country to another. For example, applicable laws require that promotional materials and advertising in relation to medicinal products comply with the product’s Summary of Product Characteristics (“SmPC”), as approved by the competent authorities in connection with a marketing authorization. The SmPC is the document that provides information to physicians concerning the safe and effective use of the product. Promotional activity that does not comply with the SmPC is considered off-label and is prohibited in the EU. Direct-to-consumer advertising of prescription medicinal products is also prohibited in the EU.

Failure to comply with EU, EU member state, and other country laws that apply to the conduct of clinical trials, manufacturing approval, marketing authorization of medicinal products and marketing of such products, both before and after grant of a marketing authorization, or with other applicable regulatory requirements, may result in administrative, civil or criminal penalties. These penalties could include delays or refusal to authorize the conduct of clinical trials, or to grant marketing authorization, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the marketing authorization, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties. In addition, directives adopted at the EU level may be implemented differently by individual member states. These directives, and their differing implementations in member states, increase Tourmaline’s legal and financial compliance costs and may make some activities more time-consuming and expensive.

Even if Tourmaline is able to obtain regulatory approval for TOUR006 or any of its future product candidates, it may receive an undesirable label, including, but not limited to, a boxed warning, which could impede its ability to successfully commercialize TOUR006 or any of its future product candidates or compete successfully.

Even if Tourmaline receives regulatory approval for any of its product candidates, the FDA may determine that labels for its product candidates may require safety restrictions such as a boxed warning, warnings and

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precautions, limitations of use, and/or narrowed and limited indication that may significantly limit the prescribing and usage of TOUR006. Safety restrictions such as a boxed warning may impede Tourmaline’s ability to successfully market and commercialize its product candidates and its ability to compete successfully against its competitors.

Two approved therapies in the IL-6 class, tocilizumab (Actemra^®) and sarilumab (Kevzara^®) have received boxed warnings for risks of serious infections. Two approved therapies in the IL-6 class, satralizumab (Enspryng^®) and siltuximab (Sylvant^®) have not. Tourmaline cannot guarantee or ensure that TOUR006 will not get a boxed warning or significant safety restrictions on its product labels, if approved.

Risks Related to Tourmaline’s Intellectual Property

Tourmaline’s success depends in significant part upon its ability to obtain and maintain intellectual property protection for its products and technologies.

Tourmaline’s success depends in significant part on its ability and the ability of its current or future licensors, licensees, partners and collaborators to establish and maintain adequate intellectual property rights covering the product candidates, products and technologies that it plans to develop. In addition to taking other steps designed to protect Tourmaline’s intellectual property, Tourmaline has applied for, and intends to continue applying for, patents with claims covering its technologies, processes and product candidates when and where it deems it appropriate to do so. However, the patent prosecution process is expensive and time-consuming, and Tourmaline and its current or future licensors, licensees, partners or collaborators may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that Tourmaline or its current or future licensors, licensees, partners or collaborators will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection for them. Pending and future patent applications filed by Tourmaline or its current or future licensors’, licensees’, partners’ or collaborators’ may not result in patents being issued that protect its technology or product candidates, or products resulting therefrom, in whole or in part, or that effectively prevent others from commercializing competitive technologies and products.

Tourmaline has filed five provisional patent applications in the United States to obtain patent rights to its inventions, with claims directed to methods of use, combination therapy and other technologies relating to its product candidates. There can be no assurance that any of these patent applications will issue as patents or, for those applications that do mature into patents, whether the claims of the patents will exclude others from making, using or selling Tourmaline’s product or product candidates, or products or product candidates that are substantially similar to Tourmaline’s for the same or similar uses. In countries where Tourmaline has not and does not seek patent protection, third parties may be able to manufacture and sell products that are substantially similar or identical to its products or product candidates without its permission, and Tourmaline may not be able to stop them from doing so.

Similar to other biotechnology companies, Tourmaline’s patent position is highly uncertain and involves complex legal and factual questions. In this regard, Tourmaline cannot be certain that it or its current or future licensors, licensees, partners or collaborators were the first to make an invention, or the first inventors to file a patent application claiming an invention in its owned or licensed patents or pending patent applications. In addition, even if patents are issued, given the amount of time required for the development, testing and regulatory review of Tourmaline’s product candidates, any patents protecting such candidates might expire before or shortly after the resulting products are commercialized. Moreover, the laws and regulations governing patents could change in unpredictable ways that could weaken the ability of Tourmaline and its current or future licensors, licensees, partners or collaborators to obtain new patents or to enforce existing patents and patents Tourmaline may obtain in the future. In any event, Tourmaline’s patent rights and those of its current or future licensors, licensees, partners or collaborators may not effectively prevent others from commercializing competitive technologies and products.

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In some circumstances, Tourmaline may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain or enforce the patents, covering technology that it licenses from or licenses to third parties and may be reliant on its current or future licensors, licensees, partners or collaborators to perform these activities, which means that these patent applications may not be prosecuted or maintained, and these patents may not be enforced, in a manner consistent with the best interests of Tourmaline’s business. If Tourmaline’s current or future licensors, licensees, partners or collaborators fail to establish, maintain, protect or enforce such patents and other intellectual property rights, such rights may be reduced or eliminated. If Tourmaline’s current or future licensors, licensees, partners or collaborators are not fully cooperative or disagree with it as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.

In addition, the legal protection afforded to inventors and owners of intellectual property in countries outside of the United States may not be as broad or effective as that in the United States and Tourmaline may be unable to acquire and enforce intellectual property rights outside the United States to the same extent as in the United States, if at all. Accordingly, Tourmaline’s efforts, and those of its licensors, licensees, partners and collaborators, to enforce intellectual property rights around the world may be inadequate to obtain a commercial advantage from the intellectual property that it owns or licenses.

Tourmaline does not currently own or have a license to any issued patents that cover TOUR006, although this product candidate is disclosed and its use claimed in Tourmaline’s pending U.S. non-provisional applications. The patent landscape surrounding TOUR006 is crowded, and there can be no assurance that Tourmaline will be able to secure patent protection that would adequately cover the use of such product candidate, that it will obtain sufficiently broad claims to be able to prevent others from selling competing products for the same or similar uses, or that Tourmaline will be able to protect and maintain any patent protection that it initially secures.

Any changes Tourmaline makes to TOUR006 to cause it to have what Tourmaline views as more advantageous properties may not be covered by its existing patent applications, and it may be required to file new patent applications and/or seek other forms of protection for any such altered product candidate.

Tourmaline is dependent on patents, know-how and technology, both its own and licensed from others. In particular, Tourmaline is dependent on its license agreements with Pfizer and Lonza. Any termination, or reduction or narrowing, of these licenses could result in the loss of significant rights and could harm Tourmaline’s ability to commercialize TOUR006 and any potential future product candidates. See the section titled “Tourmaline’s Business—License Agreement with Pfizer” and “Tourmaline’s Business—License Agreement with Lonza” for additional information.

Disputes may also arise between Tourmaline and its current licensor and future licensors regarding intellectual property subject to a license agreement, including:

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Additionally, with regard to the Pfizer License Agreement, if Tourmaline fails to cure a material breach Pfizer has customary rights to terminate the Pfizer License Agreement. With regard to the Lonza License Agreement, Lonza has the right to terminate the Lonza License Agreement in the event of a change of control of Tourmaline or if Tourmaline contests the secret or substantial nature of the licensed know-how.

If disputes over intellectual property that Tourmaline has licensed prevent or impair its ability to maintain its current or future licensing arrangements on acceptable terms, or if Pfizer or Lonza terminates their respective license agreement, Tourmaline may be unable to successfully develop and commercialize the affected product candidates and technologies.

Tourmaline is generally also subject to all of the same risks with respect to protection of intellectual property that it licenses, as it is for intellectual property that it owns, which are described herein. If Tourmaline, Pfizer, Lonza or any other current or future licensors fail to adequately protect any licensed intellectual property, Tourmaline’s ability to commercialize products could suffer.

Tourmaline may be unable to obtain intellectual property rights or technologies necessary to develop and commercialize TOUR006 or any potential future product candidates.

Several third parties are actively researching and seeking and obtaining patent protection in the fields of TED and Cardiovascular Disease, and there are issued third-party patents and published third-party patent applications in these fields. The patent landscape around Tourmaline’s product candidate is complex, and Tourmaline is aware of several third-party patents and patent applications containing claims directed to compositions-of-matter, methods of use and related subject matter, some of which pertain, at least in part, to subject matter that might be relevant to its product candidate. However, Tourmaline may not be aware of all third-party intellectual property rights potentially relating to its product candidate and technologies, since patent applications are not published until eighteen months after their initial filing date. Therefore, Tourmaline cannot know whether certain unpublished patent applications, if ultimately issued, may recover relevant uses of TOUR006 or other products of Tourmaline.

Depending on what patent claims ultimately issue and how courts construe the issued patent claims, as well as the ultimate formulation and methods of use of its product candidate, Tourmaline may need to obtain a license to practice the technology claimed in such patents. There can be no assurance that such licenses will be available on commercially reasonable terms, or at all. If Tourmaline is unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing rights to third-party intellectual property rights it has, it might be unable to develop and commercialize TOUR006 or any potential future product candidates, which could have a material adverse effect on its business, financial condition, results of operations and prospects.

Tourmaline could lose the ability to continue the development, manufacture and commercialization of TOUR006 or any potential future product candidates if it breaches any license agreement with service providers and vendors related to those product candidates.