Tolerizing Antigen Carriers (TACs) Shown Preclinically to Combat Autoimmunity Through Deletion of Autoreactive T Cells, Anergy and Induction of Regulatory T Cells that Facilitate Potent Bystander Suppression

Demonstrated Durable Protection Against Hyperglycemia in a Type 1 Diabetes Model

TAC IND Submission for Celiac Disease Anticipated in First Half of 2023; Production of Clinical Trial Batches Planned on Point-of-Care Manufacturing System

SQZ Biotechnologies (NYSE: SQZ), focused on unlocking the full potential of cell therapies for multiple therapeutic areas, today announced the publication of comprehensive preclinical research on the SQZ^® Tolerizing Antigen Carrier (TAC) platform. The data, published in Frontiers in Immunology, demonstrated that TACs can induce multiple key mechanisms of antigen-specific tolerance in various model systems, including deletion of autoreactive T cells, anergy, and expansion of regulatory T cells (Tregs) capable of bystander suppression. In an in vivo model of type 1 diabetes (T1D), the TAC treatment was able to combat active autoimmune responses and prevent hyperglycemia.

The research findings are part of the body of work that will support the company’s anticipated TAC IND submission for celiac disease, the first autoimmune disease indication for the SQZ TAC platform, in the first half of 2023. Similar to type 1 diabetes, the evidence of a causal disease antigen- and T cell-driven pathology, along with the substantial unmet need for a tolerizing treatment option, provide a compelling opportunity to treat patients with celiac disease. In parallel, the company continues to develop and test its point-of-care manufacturing system to produce the cell therapy candidate for a potential phase 1 clinical trial.

“We are excited to publish this comprehensive data set that demonstrates how in preclinical models SQZ TACs can induce multiple mechanisms of antigen-specific tolerance with long-lasting effects,” said Howard Bernstein, M.D., Ph.D., Chief Scientific Officer at SQZ Biotechnologies. “Preclinically, our TAC program has shown the ability to significantly delay the onset of disease, reduce the frequency of disease-driving T cells, increase regulatory T cells, and induce bystander suppression. Taken together, this supports our belief that SQZ TACs may enable the development of differentiated therapies for a variety of complex autoimmune diseases, including type 1 diabetes and celiac disease.”

“We have been proud supporters of this important work to develop a new therapeutic platform to address a range of autoimmune diseases,” said Katie Ellias, Managing Director at the JDRF T1D Fund. “We look forward to the company’s initiation of their TAC celiac disease clinical trial and believe the findings, if successful, could enable future clinical studies towards a disease-modifying therapy for type 1 diabetes.”

Current therapies for autoimmune diseases are focused on broad immunosuppression, which can limit efficacy and increase the risk of infection and cancer. Antigen-specific therapies that precisely target autoreactive T cells while sparing non-disease-causing immune cells could potentially be transformative for the treatment of autoimmune diseases.

SQZ TACs are a red blood cell (RBC)-derived engineered cell therapy candidate designed to leverage the naturally tolerogenic process of RBC clearance by professional antigen presenting cells (APCs). They are generated by engineering RBCs with disease-specific antigen using the Cell Squeeze^® technology, and once engulfed by APCs are intended to induce tolerization of immune responses against the specific target.

The major findings in this publication include:

• Disease Suppression
  • TACs significantly delayed onset of disease to a median of 65 days compared to 8 days in controls in a T1D model driven by pathogenic CD4 T cells
  • TACs prevented onset of T1D for all animals in a separate T1D model where disease was driven by pathogenic CD8 T cells

• Reduction of Disease-Driving T Cells
  • TACs reduced the frequency of disease-driving CD4 T cells in the pancreas 8-fold and decreased the secretion of proinflammatory cytokine interferon gamma – a major driver of disease in this model – by 126-fold
  • The TACs also reduced disease-driving CD8 T cells in the pancreas by 54-fold and decreased secretion of proinflammatory cytokine interferon gamma by 375-fold
  • In addition, there was a nearly 3-fold increase in antigen-specific apoptotic CD8 T cells in the pancreas

• Increase in Regulatory T Cells
  • In the T1D model driven by pathogenic CD4 T cells, antigen-specific Tregs in the pancreas increased by approximately 5-fold and the suppressor cytokine IL-10 by about 6-fold

• Bystander Suppression
  • In a model where both pathogenic CD4 and CD8 T cells were present, treatment with TACs that only contained the CD4 epitope demonstrated robust induction of Tregs and a 7-fold decrease in CD8 T cells of a different antigen specificity through bystander suppression
  • In a second model, treatment with TACs encapsulating CD4 antigen alone induced antigen-specific Tregs that were able to confer complete protection against diabetes when the mice were challenged with polyclonal CD8 T cells from diabetic mice

About Celiac Disease

Celiac disease is a chronic autoimmune disorder that occurs in genetically predisposed people.^{i ii} The disease is triggered by eating foods containing gluten, which is found in wheat, barley, and rye. Disease symptoms can include abdominal pain, diarrhea, nausea, vomiting, and other common signs. When gluten is ingested the body mounts an immune response that attacks and damages the villi that line the small intestine, which can impact nutrient absorption.ⁱⁱⁱ Many people who have celiac disease have not been diagnosed,^iv however population-based studies indicate that the disease affects about 2 million people in the United States and approximately 1% of the population worldwide, with regional differences.^{v vi} There is currently no approved drug treatment and patients are advised to maintain a gluten-free diet, which involves strict, lifelong avoidance of exposure to gluten proteins. Long-term complications of celiac disease may include malnutrition, accelerated osteoporosis, nervous system problems and issues related to reproduction. Rare complications can include cancer of the small intestine, cirrhosis, and non-Hodgkin lymphoma.

About Type 1 Diabetes

Nearly 1.6 million Americans are living with type 1 diabetes (T1D), including about 1.4 million adults and 200,000 children and adolescents (<20 years). Five million people in the U.S. are expected to have T1D by 2050. A separate CDC study of T1D cases in youth showed that 60 percent of diagnoses occur between the ages of 5 and 14. Worldwide incidence is 15 patients diagnosed per every 100,000 people. There is currently no cure for T1D, and it requires chronic disease management through exogenous insulin therapy, insulin analogs, and adjunctive treatments for glycemic control. The life expectancy for T1D patients is 10–15 years less than the healthy population due to hypoglycemia events and long-term risks of cardiovascular complications, neuropathy, kidney damage, and retinopathy. There remains significant unmet need for disease-modifying therapeutics that address the immune-mediated attack of beta cells as a driving factor of disease pathogenesis.

About SQZ TACs

SQZ^® TACs are a red blood cell-derived engineered cell therapy candidate being developed as an antigen-specific immune tolerance platform. The platform is designed to leverage the natural process of RBC clearance by professional antigen presenting cells (APCs) in the lymphoid organs, where they engulf aged RBCs and present their components to CD4 and CD8 T cells. This physiological mechanism is tolerogenic by default, instructing the immune system to not mount an attack. SQZ TACs are generated by engineering RBCs with disease-specific antigen using the Cell Squeeze^® technology and are made to appear aged. SQZ TACs are designed to be rapidly engulfed in vivo by the patient’s professional APCs and to act as a “Trojan horse” to drive high quantities of antigen through the tolerogenic RBC clearance process, which may ultimately induce tolerization of the patient’s T cell and antibody responses against the specific target.

About SQZ Biotechnologies

SQZ Biotechnologies Company is a clinical-stage biotechnology company focused on unlocking the full potential of cell therapies for patients around the world and has active programs in oncology, autoimmune and infectious diseases, as well as additional exploratory initiatives to support future pipeline growth. The company’s proprietary Cell Squeeze^® technology offers the unique ability to deliver multiple biological materials into many cell types to engineer what we believe can be a broad range of potential therapeutics. With demonstrated production timelines under 24 hours and the opportunity to eliminate preconditioning and lengthy hospital stays, our approach could significantly broaden the therapeutic range and accessibility of cell therapies. The company’s first therapeutic applications seek to generate target-specific immune responses, both in activation for the treatment of solid tumors and infectious diseases, and in immune tolerance for the treatment of autoimmune diseases. For more information, please visit www.sqzbiotech.com.

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 that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation, presentations and publications, our platform development, our product candidates, project funding, preclinical and clinical activities, outcomes and progress, development plans and execution, clinical safety and efficacy, regulatory submissions, therapeutic impact, anticipated data readouts, market opportunities and disease prevalence. These forward-looking statements are based on management’s current expectations. Actual results could differ from those projected in any forward-looking statements due to several risk factors. Such factors include, among others, risks and uncertainties related to our limited operating history; our significant losses incurred since inception and expectation to incur significant additional losses for the foreseeable future; the development of our initial product candidates, upon which our business is highly dependent; the impact of the COVID-19 pandemic on our operations and clinical activities; our need for additional funding and our cash runway; the lengthy, expensive, and uncertain process of clinical drug development, including uncertain outcomes of clinical trials and potential delays in regulatory approval; our ability to maintain our relationships with our third party vendors; and protection of our proprietary technology, intellectual property portfolio and the confidentiality of our trade secrets. These and other important factors discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K and other filings with the U.S. Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements. Any forward-looking statements represent management's estimates as of this date and SQZ undertakes no duty to update these forward-looking statements, whether as a result of new information, the occurrence of current events, or otherwise, unless required by law.

Certain information contained in this press release relates to or is based on studies, publications, surveys and other data obtained from third-party sources and our own internal estimates and research. While we believe these third-party sources to be reliable as of the date of this press release, we have not independently verified, and we make no representation as to the adequacy, fairness, accuracy or completeness of any information obtained from third-party sources.

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