FX-345

LEXINGTON, Mass.--(BUSINESS WIRE)-- Frequency Therapeutics, Inc. (Nasdaq: FREQ), a regenerative medicine company focused on developing therapeutics to activate a person’s innate potential to restore function, today announced business updates and financial results for the fourth quarter and full year ended December 31, 2022. “The Frequency team continues to make important progress with our novel therapeutic program designed to induce remyelination for individuals living with multiple sclerosis and remains on track to initiate clinical development for a potentially first-in-class therapy for this debilitating disease in the first half of 2024. Our current cash position takes us into Q1 2025, which enables us to advance development of this program through an initial clinical study,” said David L. Lucchino, Frequency’s Chief Executive Officer. “We believe our remyelination program has the potential to produce a restorative effect by stimulating oligodendrocyte precursor cells to myelinate axons, and we are excited that our compounds have shown in in vivo models significantly greater remyelinating effect than prior published approaches.” Recent Program and Business Updates In February, Frequency announced that the FX-322-208 study, a Phase 2b study for acquired Sensorineural Hearing Loss (SNHL), did not achieve its primary endpoint of speech perception. Based on this outcome, Frequency has discontinued both the FX-322 program and its second development program for hearing restoration, FX-345, which was enrolling a Phase 1b study for acquired SNHL. The Company also announced it will now focus discovery efforts on its program to induce remyelination for individuals living with multiple sclerosis (MS), an area where there currently are no restorative options for patients. MS in characterized by demyelination, stripping axons of the myelin sheaths that support neuronal signal conduction and axonal survival. Previously, Frequency reported it had identified a novel target relevant for remyelination and that modulation of this target induced robust oligodendrocyte differentiation and expression of myelin proteins in vitro. The Company has identified multiple new chemical entities that induce robust remyelination following demyelination in an adult in vivo animal model and these novel agents substantially outperform other clinically studied remyelination agents in head-to-head in vivo studies. The MS program is independent of the Frequency’s hearing efforts, with a distinct molecular target, mechanism, progenitor cell population, and small molecule drug candidates. Further, a well-defined clinical path with objective biomarkers such as visual evoked potential (VEP) and magnetic resonance imaging (MRI) exist for studying the performance of remyelination therapies in MS patients. Given the outcome of the FX-322-208 study, the Company has undertaken actions to reduce expenses and headcount as part of an overall restructuring, downsizing personnel by approximately 55 percent. These cuts will be completed by the end of April 2023. The Company will remain at its current headquarters in Lexington where it maintains both laboratory and office space. CEO and President David L. Lucchino, who had been on medical leave as of February 7, 2023, returned to the Company on March 1, 2023, and has assumed all prior duties. Fourth Quarter and Full Year 2022 Financial Results Cash Position: As of December 31, 2022, Frequency had cash, cash equivalents and marketable securities of $83.1 million (excluding restricted cash), or $68.9 million net of debt. Frequency believes that the restructuring activities will generate sufficient cost savings to extend its runway into 2025 and enable it to complete a first clinical trial of its MS Program in 2H 2024. Research and Development Expenses: Research and development expenses were $10.6 million for the three months ended December 31, 2022, as compared to $12.8 million for the comparable period of 2021. Research and development expenses were $49.4 million for the full year ended December 31, 2022, as compared to $60.9 million for the comparable period of 2021. Excluding stock-based compensation expense of $1.7 million for the three months ended December 31, 2022, and $7.7 million for the full year ended December 31, 2022, research and development expenses for the three months and full year ended December 31, 2022, were $8.9 million and $41.7 million, respectively. General and Administrative Expenses: General and administrative expenses were $7.5 million for the three months ended December 31, 2022, as compared to $8.6 million for the comparable period of 2021. General and administrative expenses were $33.6 million for the full year ended December 31, 2022, as compared to $37.2 million for the comparable period of 2021. Excluding stock-based compensation expense of $2.7 million for the three months ended December 31, 2022, and $12.1 million for the full year ended December 31, 2022, general and administrative expenses for the three months and full year ended December 31, 2022, were $4.8 million and $21.5 million, respectively. Net Loss: Net loss was $17.4 million for the three months ended December 31, 2022, as compared to $21.5 million for the comparable period of 2021. Net loss was $81.6 million for the full year ended December 31, 2022, as compared to $84.7 million for the comparable period of 2021. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the treatment potential and timing of Frequency Therapeutics’ (the Company) remyelination program in MS (MS Program), including the timing of clinical development, the existence of a well-defined clinical path for the MS Program, potential application of the regenerative medicine platform to other diseases, the ability of our regenerative medicine platform to provide patient benefit, and the sufficiency of the Company’s capital resources, including having sufficient resources to complete a first clinical trial in its MS Program. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: the impact of COVID-19 on the Company’s planned clinical trials, research and development and manufacturing activities, the Company’s business and financial markets; the Company has incurred and will continue to incur significant losses and is not and may never be profitable; the Company’s need for additional funding to complete development and commercialization of any product candidate; the unproven approach of the PCA platform and the inability to identify additional potential product candidates; the lengthy, expensive and uncertain process of clinical drug development and regulatory approval; the Company’s limited experience successfully obtaining marketing approval for and commercializing product candidates; the results of pre-clinical studies not being indicative of the results from clinical trials; adverse events or undesirable side effects; disruptions at the FDA and other regulatory agencies; failure to identify additional product candidates; new or changed legislation; costly and damaging litigation, including related to product liability or intellectual property or brought by stockholders; misconduct by employees or independent contractors; reliance on third parties, including to conduct clinical trials and manufacture product candidates; compliance with changing laws and regulations, including healthcare and environmental, health, data privacy and safety laws and regulations; failure to obtain, maintain and enforce protection of patents and other intellectual property rights covering product candidates; security breaches or failure to protect private personal information; attracting and retaining key personnel; and the Company’s ability to manage growth. These and other important factors discussed under the caption “Risk factors” in the Company’s Form 10-K filed with the Securities and Exchange Commission (SEC) on March 10, 2023, and its other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While the Company may elect to update such forward-looking statements at some point in the future, it disclaims any obligation to do so, even if subsequent events cause its views to change. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release. About Frequency Therapeutics Headquartered in Lexington, Mass., Frequency Therapeutics is pioneering a new category in regenerative medicine that aims to restore human function by developing therapeutics that activate a person’s innate regenerative potential within the body through the activation of progenitor cells. The Company’s lead preclinical program is designed to activate oligodendrocyte precursor cells with the goal of driving remyelination and potential functional recovery for individuals living with multiple sclerosis. For more information, visit and follow Frequency on Twitter @Frequencytx. Frequency Therapeutics, Inc. Consolidated Statements of Operations (in thousands, except share and per share amounts) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Revenue $ — $ — $ — $ 14,068 Operating expenses: Research and development 10,649 12,754 49,418 60,923 General and administrative 7,547 8,605 33,584 37,176 Total operating expenses 18,196 21,359 83,002 98,099 Loss from operations (18,196 ) (21,359 ) (83,002 ) (84,031 ) Interest income 456 82 1,327 397 Interest expense (312 ) (182 ) (961 ) (764 ) Realized gain (loss) on investments — — 3 (23 ) Foreign exchange gain (loss) 2 — (5 ) 16 Other income (expense), net 695 (39 ) 1,056 (266 ) Loss before income taxes $ (17,355 ) $ (21,498 ) $ (81,582 ) $ (84,671 ) Tax (provision) benefit (7 ) (2 ) 2 (15 ) Net loss $ (17,362 ) $ (21,500 ) $ (81,580 ) (84,686 ) Net loss per share attributable to common stockholders- basic and diluted $ (0.49 ) $ (0.62 ) $ (2.33 ) $ (2.47 ) Weighted-average shares of common stock outstanding- basic and diluted 35,262,083 34,596,227 35,075,924 34,351,274 Frequency Therapeutics, Inc. Consolidated Balance Sheet Data (in thousands) December 31, 2022 December 31, 2021 Cash, cash equivalents and marketable securities $ 83,097 $ 142,426 Working capital 66,467 123,319 Total assets 121,238 185,358 Total liabilities 52,043 54,534 Accumulated deficit (261,665 ) (180,085 ) Total stockholders' equity 69,195 130,824

FX-322-208 Study Fails to Meet Primary Endpoint, Showing No Significant Separation in Speech Perception Between FX-322 and Placebo Company Will Now Focus on Advancing its Program in Remyelination for Multiple Sclerosis (MS) Announces Corporate Restructuring and Will Also Explore Strategic Financing Alternatives; Net of Debt, has Cash and Marketable Securities of $68.9mm as of December 31, 2022 LEXINGTON, MA, USA I February 13, 2023 I Frequency Therapeutics, Inc. (Nasdaq: FREQ), a regenerative medicine company focused on developing therapeutics to activate a person’s innate potential to restore function, today announced clinical results from the placebo-controlled Phase 2b study of FX-322 in individuals with acquired Sensorineural Hearing Loss (SNHL). The study, which enrolled 142 people with either sudden or noise-induced sensorineural hearing loss, failed to achieve its primary efficacy endpoint of an improvement in speech perception. Data showed no statistically meaningful difference at day 90 between those administered FX-322 versus those receiving placebo in the proportion of individuals that demonstrated an improvement in speech perception. There were also no measurable improvements observed in any of the study’s secondary endpoints. Prior FX-322 studies had been designed to best understand patient etiologies and severities where a hearing signal could be observed. FX-322-208 was statistically powered with a balanced placebo and active group. The safety profile associated with FX-322 was favorable and no study participants experienced a serious adverse event that was associated with treatment. The Company will now discontinue the FX-322 development program. In addition, while dosing of FX-345, a second program to treat SNHL, has been completed in the initial safety cohort of an ongoing Phase 1b trial, that development program will also be discontinued. The Company will now focus its resources to advance its remyelination in MS program into the clinic. “This was a rigorous and well-designed study that provided us a clear outcome, though not the outcome we wanted. Given these disappointing results, we will cease further development of the Company's drug candidates for hearing loss. We are thankful to the patients, clinicians and their staffs, and the experts from our clinical advisory board who helped us to design and run a conclusive study in SNHL. We hope the learnings from our studies will benefit the field and ultimately support the successful development of future treatments for hearing loss,” said Chris Loose, Ph.D., Frequency’s chief scientific officer. Frequency’s efforts now will focus on continuing to develop novel therapeutics to induce remyelination for individuals living with MS. The Company previously reported that it had identified a novel target relevant to myelination. Modulation of this target drives robust oligodendrocyte differentiation and expression of myelin proteins in vitro . The Company has identified multiple novel chemical entities that induce robust remyelination following demyelination in an adult in vivo animal model. The MS program is independent of the hearing program, with a distinct molecular target, mechanism, progenitor cell population, and small molecule drug candidates. Further, a well-defined clinical path with objective biomarkers such as visual evoked potential (VEP) and magnetic resonance imaging (MRI) exist for studying the performance of remyelination therapies in MS patients. Frequency’s agents substantially outperform other clinically studied remyelination agents in head-to-head in vivo studies. Frequency plans to begin its clinical program for remyelination in 1H 2024. The Company will immediately reduce headcount as part of an overall restructuring, downsizing personnel by approximately 55 percent. The Company believes that the restructuring will generate sufficient cost savings to extend its runway into 2025 and enable it to complete a first clinical trial of its MS program in 2H 2024. As of December 31, 2022, Frequency had cash, cash equivalents and marketable securities of $83.1 million (excluding restricted cash). Business Updates The Company shared today that Chief Executive Officer David Lucchino is on temporary medical leave after having been hospitalized with bacterial meningitis. Mr. Lucchino is expected to make a full recovery and return to his role in the coming weeks. Its Board of Directors has appointed Chris Loose, CSO, as Interim CEO until Mr. Lucchino returns. About Frequency Therapeutics Headquartered in Lexington, Mass., Frequency Therapeutics is pioneering a new category in regenerative medicine that aims to restore human function by developing therapeutics that activate a person’s innate regenerative potential within the body through the activation of progenitor cells. The Company’s lead preclinical program is designed to activate oligodendrocyte precursor cells with the goal of driving remyelination and potential functional recovery for individuals living with multiple sclerosis. For more information, visit www.frequencytx.com and follow Frequency on Twitter @Frequencytx. SOURCE: Frequency Therapeutics