PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MEMORANDUM
TO:
Beatrice Holloway, Responsible Partner, Calderwood & Harkness LLP Dr. Elena Marchetti, Co-Founder & Managing Partner, Cobalt Ventures LP Tariq Nassar, Co-Founder & Managing Partner, Cobalt Ventures LP
FROM:
Naomi Petersen, Lead Associate, Calderwood & Harkness LLP Ryan Kowalski, Working Associate, Calderwood & Harkness LLP
DATE: July 28, 2025
RE: Legal Due Diligence Summary — Proposed Series B Preferred Stock Investment by Cobalt Ventures LP in Heliograph Therapeutics, Inc.
Matter Number: 1004-00003
Internal Deal Code: CVF3-HTX-2025
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I. Executive Summary
The purpose of this memorandum is to summarize the principal findings of the legal due diligence conducted by Calderwood & Harkness LLP ("C&H") in connection with the proposed investment by Cobalt Ventures LP ("Cobalt" or the "Investor") of $20,000,000 in Heliograph Therapeutics, Inc. ("Heliograph" or the "Company"), a clinical-stage gene therapy company headquartered in Durham, North Carolina. The investment is structured as a purchase of 14,414,414 shares of Series B Preferred Stock at a price of $1.3875 per share. The transaction implies a pre-money valuation of approximately $88,000,000 and a post-money valuation of approximately $108,000,000. Upon closing, Cobalt is expected to hold approximately 18.62% of the Company's capital stock on a fully diluted basis.
Due diligence was conducted through a comprehensive review of documents and materials posted by the Company and its counsel, Breck Alderman & Yost LLP, to a Pemberton Technologies virtual data room that was opened on June 23, 2025. As of the date of this memorandum, the data room contains approximately 1,400 documents organized across 18 folders. Our review was supplemented by management interviews conducted on July 2, 2025 and July 11, 2025, as well as third-party reports and public searches. Intellectual property diligence was conducted by Langford Speir Patent Group LLP, which delivered its report on July 18, 2025. Audited financial statements for the fiscal year ended December 31, 2024, prepared by Whitmore & Kassidy LLP, were reviewed, as were unaudited interim financial statements for the three months ended March 31, 2025.
Based on the diligence completed to date, our overall assessment is that no issues have been identified that would preclude the transaction. However, certain items have been flagged that warrant attention in the negotiation and drafting of the transaction documentation, including representations and warranties in the Stock Purchase Agreement ("SPA"), indemnification provisions, protective provisions, and certain post-closing covenants. These items are discussed in detail in Section X below.
It should be noted that this memorandum does not address business, scientific, or clinical due diligence matters, which Cobalt is conducting independently through its internal team and its external scientific advisory consultants. This memorandum is confined to legal due diligence findings.
II. Corporate Organization and Good Standing
II.A. Formation and Jurisdiction
Heliograph Therapeutics, Inc. is a corporation organized under the laws of the State of Delaware. The Company was incorporated in March 2021 as a Delaware C-corporation. The Delaware Secretary of State file number assigned to the Company is 5923417. The Company's registered agent in the State of Delaware is Capitol Corporate Services, Inc., located at 1675 South Ashbury Asset Advisors, Suite B, Dover, Delaware 19901.
We obtained a certificate of good standing from the Delaware Secretary of State dated within ten days of the data room opening (June 23, 2025). The certificate confirms that the Company is in good standing under the laws of the State of Delaware and that all franchise taxes have been paid through the current period. We have no reason to believe that the Company's good standing status has changed since the date of that certificate.
II.B. Headquarters and Qualification
The Company's principal offices are located at 4800 Biopark Drive, Building C, Suite 200, Durham, North Carolina 27709. Heliograph is qualified to transact business as a foreign corporation in the State of North Carolina, as confirmed through a search of the North Carolina Secretary of State's records conducted on June 30, 2025.
No other foreign qualifications have been identified. Based on our review of the Company's operations, which are currently conducted from a single location in Durham, North Carolina, and our confirmation that the Company does not employ individuals in any other state, no additional foreign qualifications appear to be required at this time. Should the Company expand its operations or hire employees in other jurisdictions following the closing of the Series B financing, it may need to obtain additional foreign qualifications.
II.C. Founders
Heliograph was co-founded by Dr. Priya Anand and Dr. Marcus Ellington. Dr. Anand serves as the Company's Chief Executive Officer, and Dr. Ellington serves as the Company's Chief Scientific Officer. Both founders have been involved with the Company since its inception and are listed as co-inventors on the Company's core intellectual property.
Dr. Priya Anand holds a Ph.D. in Molecular Genetics and was formerly an Associate Professor at Meridian University School of Medicine, where she conducted research in the field of gene therapy for over twelve years. Dr. Anand is the co-inventor of the HT-201 platform technology that forms the foundation of the Company's lead product candidate. Her personal address, as reflected in the Company's records, is 119 Magnolia Lane, Chapel Hill, North Carolina 27514.
Dr. Marcus Ellington holds a Ph.D. in Virology and was formerly the head of vector engineering at Cascadia Gene Sciences, a biotechnology research organization. Dr. Ellington is likewise a co-inventor of the HT-201 platform. His personal address, as reflected in the Company's records, is 504 Ridgewood Court, Durham, North Carolina 27707.
II.D. Organizational Documents
We have reviewed the Company's Certificate of Incorporation, as amended to date, and its Bylaws. The current Certificate of Incorporation authorizes two classes of capital stock: Common Stock and Series A Preferred Stock. The terms of the Series A Preferred Stock, including its liquidation preference, anti-dilution protections, and protective provisions, are set forth in the Certificate of Incorporation as amended in connection with the Series A financing in September 2022.
The Company's Bylaws contain standard provisions for a Delaware corporation, including those governing meetings of stockholders and the board of directors, officer appointments, and indemnification of directors and officers. We note that the Bylaws do not contain any unusual supermajority voting requirements beyond those that are set forth in the Certificate of Incorporation.
As a condition to closing of the Series B financing, the Company will be required to file an Amended and Restated Certificate of Incorporation with the Delaware Secretary of State authorizing the Series B Preferred Stock and setting forth its rights, preferences, and privileges. A draft of the Amended and Restated Certificate of Incorporation is currently under negotiation between the parties.
II.E. Board of Directors (Pre-Closing)
The Company's board of directors currently consists of five members, with one vacancy. The composition of the board is as follows:
1. Dr. Priya Anand — CEO; Common Stock director designee
2. Dr. Marcus Ellington — CSO; Common Stock director designee
3. Joanna Whitfield — Partner at Pinnacle BioVentures Fund II LP; Series A director designee
4. Dr. Samuel Ogden — Independent director
5. Vacant — To be filled by Cobalt's Series B director designee (initial designee: Dr. Elena Marchetti) upon closing of the Series B financing
We have reviewed the minutes of all meetings of the board of directors from formation through the most recent meeting held prior to the date of this memorandum. The minutes appear to have been kept in the ordinary course and reflect proper notice and quorum for each meeting. No irregularities or significant departures from standard corporate governance practices were noted in our review of the minutes. Written consents in lieu of meetings were utilized on a number of occasions, and all such consents appear to have been properly executed by the requisite number of directors.
The board of directors approved the Series B financing at a meeting held on August 8, 2025. The board resolution authorizing the financing was reviewed and appears to be in proper form, authorizing the officers of the Company to negotiate and execute the definitive transaction agreements and to take all actions necessary or desirable to consummate the Series B financing.
II.F. EIN and Tax Status
The Company's Federal Employer Identification Number is 87-1654329. Heliograph is taxed as a C-corporation for federal income tax purposes. We have confirmed that no S-election under Section 1362 of the Internal Revenue Code, and no "check-the-box" election under Treasury Regulations Section 301.7701-3, has been filed with respect to the Company. The Company's C-corporation status is consistent with the expectations for a venture-backed life sciences company anticipating institutional investment.
III. Capitalization
III.A. Authorized and Outstanding Capital Stock
We have reviewed the Company's stock ledger, capitalization table, board resolutions authorizing the issuance of securities, stock certificates (to the extent issued), and related documentation. A summary of the Company's capitalization follows.
III.A.1. Common Stock
The Company has 40,000,000 shares of Common Stock issued and outstanding. The founders hold a significant majority of the outstanding Common Stock:
• Dr. Priya Anand holds 16,000,000 shares of Common Stock, representing approximately 25.3% of the Company's pre-closing fully diluted shares outstanding.
• Dr. Marcus Ellington holds 12,000,000 shares of Common Stock, representing approximately 19.0% of the Company's pre-closing fully diluted shares outstanding.
• The remaining 12,000,000 shares of Common Stock are held by other employees, advisors, and early angel investors. We reviewed a detailed breakdown of these holdings in the capitalization table provided by the Company.
All shares of Common Stock held by the founders were issued at or near the time of the Company's formation and were subject to vesting schedules that have since fully vested. The Common Stock issued to non-founder employees and advisors was issued pursuant to restricted stock purchase agreements or upon exercise of stock options under the Company's 2021 Equity Incentive Plan.
III.A.2. Series A Preferred Stock
The Company has 15,000,000 shares of Series A Preferred Stock issued and outstanding. The Series A Preferred Stock was issued in September 2022 at a price of $2.00 per share, representing an aggregate investment of $30,000,000. The Series A investors are:
• Pinnacle BioVentures Fund II LP — 10,000,000 shares (lead Series A investor). Pinnacle holds one board seat, currently occupied by Joanna Whitfield, a partner at Pinnacle BioVentures.
• Lakeshore Health Innovation Fund LP — 5,000,000 shares (Series A co-investor). Lakeshore holds information rights under the existing Investors' Rights Agreement but does not have board representation.
The key terms of the Series A Preferred Stock, as set forth in the Certificate of Incorporation and the Series A transaction documents, include:
• Liquidation Preference: 1x non-participating liquidation preference. In the event of a liquidation, dissolution, or deemed liquidation event, Series A holders are entitled to receive an amount equal to their original issue price of $2.00 per share plus any declared but unpaid dividends, prior to any distribution to the holders of Common Stock. The Series A Preferred Stock is non-participating, meaning that upon a liquidation event, holders must elect between receiving their liquidation preference or converting to Common Stock and receiving their pro rata share of remaining proceeds.
• Protective Provisions: Standard protective provisions requiring the consent of a majority of the outstanding Series A Preferred Stock for certain corporate actions, including amendments to the Certificate of Incorporation or Bylaws that adversely affect the Series A Preferred Stock, creation of any senior or pari passu class of securities, and certain other matters.
• Anti-Dilution: Broad-based weighted average anti-dilution protection.
We reviewed the Series A Preferred Stock Purchase Agreement and ancillary transaction documents (Investors' Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement) in connection with our diligence. These documents will be amended and restated in connection with the Series B closing to include Cobalt and the Series B Preferred Stock.
III.A.3. Stock Option Pool
The Company adopted the 2021 Equity Incentive Plan (the "Plan") in connection with its formation. The Plan reserves a total of 8,000,000 shares of Common Stock for issuance pursuant to equity awards. As of the date of our review:
• 5,200,000 options have been granted to employees and advisors at various exercise prices and subject to vesting schedules that we have reviewed.
• 2,800,000 options remain available for future grants.
We have reviewed the Plan document, the form of stock option agreement, and a schedule of all grants made to date. All options granted under the Plan vest over a four-year period with a one-year cliff, meaning that no options vest until the first anniversary of the grant date, at which point 25% of the options vest, with the remaining 75% vesting in equal monthly installments over the subsequent 36 months. The Plan and all option agreements contain "double trigger" acceleration provisions, meaning that accelerated vesting upon a change of control occurs only if the optionee's employment is terminated without cause or the optionee resigns for good reason within a specified period following the change of control. We note the absence of any "single trigger" acceleration provisions, which is favorable from the perspective of an incoming investor.
The Plan is administered by the Compensation Committee of the Board of Directors. Board resolutions approving all grants were reviewed and appear to be in proper form.
III.A.4. Fully Diluted Summary (Pre-Closing)
The following table summarizes the Company's capitalization on a fully diluted basis prior to the closing of the Series B financing:
III.A.5. Post-Closing (Pro Forma)
Following the issuance of 14,414,414 shares of Series B Preferred Stock to Cobalt at a price of $1.3875 per share, the Company's pro forma fully diluted capitalization will be as follows:
Cobalt's post-closing ownership on a fully diluted basis will be 14,414,414 ÷ 77,414,414 = approximately 18.62%.
III.B. Capitalization Issues and Observations
Based on our review of the stock ledger, board resolutions authorizing the issuance of capital stock, and related documentation, all outstanding shares of Common Stock and Series A Preferred Stock appear to have been duly authorized, validly issued, fully paid, and non-assessable. We reviewed certificates of issuance (or book-entry records, as applicable) for all outstanding shares.
We confirmed that both Dr. Anand and Dr. Ellington timely filed elections under Section 83(b) of the Internal Revenue Code with the Internal Revenue Service at the time of their respective founder stock grants. Copies of the filed 83(b) elections, together with evidence of timely filing, were located in the data room. This is significant because the timely filing of 83(b) elections ensured that the founders' stock was taxed at the time of grant (when the value was nominal) rather than upon vesting, which is the expected and appropriate treatment for founder stock.
We did not identify any outstanding warrants, convertible promissory notes, simple agreements for future equity (SAFEs), or any other securities or instruments that are convertible into or exercisable for shares of the Company's capital stock, other than the outstanding stock options granted under the 2021 Equity Incentive Plan as described above.
No preemptive rights exist with respect to any outstanding securities of the Company other than the pro rata participation rights that are expected to be granted to all major investors (including Cobalt, Pinnacle, and Lakeshore) under the Amended and Restated Investors' Rights Agreement to be executed at closing.
IV. Material Contracts
We have reviewed all material contracts of the Company. Set forth below is a summary of the contracts that we consider to be most significant to the Company's business and to the proposed Series B investment.
IV.A. Meridian University Exclusive License Agreement
The Company is party to an Exclusive License Agreement with Meridian University, a non-profit educational institution organized under the laws of North Carolina (the "Meridian License"). The Meridian License, dated March 15, 2021, grants Heliograph an exclusive, worldwide license under Meridian University's patent portfolio covering the AAV5 capsid engineering platform technology. This is the foundational intellectual property upon which the Company's lead product candidate, HT-201, is based.
The key terms of the Meridian License are as follows:
• Scope: Exclusive, worldwide license under specified Meridian patents and patent applications covering AAV5 capsid engineering technology, including the right to develop, manufacture, use, sell, offer for sale, and import products covered by the licensed patents.
• Term: Co-extensive with the last to expire of the licensed patents. The earliest expiration date of any licensed patent is not anticipated before 2041.
• Financial Terms:
• Upfront license fee of $500,000, paid at execution.
• Running royalty of 3.5% of net sales of licensed products.
• Sublicensing is permitted with the prior written consent of Meridian University (such consent not to be unreasonably withheld). Heliograph is required to share 25% of any sublicense income with Meridian.
• Diligence Milestones: The Meridian License contains development diligence milestones that Heliograph must satisfy to maintain the license. Specifically:
• Filing of an Investigational New Drug application (IND) within four years of the effective date (i.e., by March 15, 2025). This milestone has been satisfied. Heliograph filed IND 178452 with the FDA in October 2024.
• Initiation of a Phase III clinical trial within seven years of the effective date (i.e., by March 15, 2028). This milestone has not yet been satisfied and will depend on the progress of the Company's ongoing Phase I/II trial and subsequent clinical development activities.
• Termination: Meridian University may terminate the license for an uncured material breach by Heliograph, subject to a 60-day cure period, or upon the occurrence of an insolvency event affecting Heliograph. Heliograph may terminate the license upon 90 days' prior written notice to Meridian.
Observation: The Meridian License is foundational to HT-201 and to the Company's broader platform. Loss of this license — whether through termination by Meridian for failure to meet diligence milestones, material breach, or otherwise — would be materially adverse to the Company and its value. We strongly recommend that the SPA include robust representations and warranties from the Company regarding its compliance with the terms of the Meridian License, the absence of any notice of breach from Meridian, and the continued effectiveness of the license. The Meridian License should be expressly included within the definition of "Material Adverse Effect" in the SPA, such that any termination, amendment, or threatened termination of the license prior to closing would constitute grounds for Cobalt to decline to close.
IV.B. Contract Manufacturing Agreement — Prismline Biologics, Inc.
Heliograph is party to a Manufacturing Services Agreement with Prismline Biologics, Inc. ("Prismline"), a Delaware corporation, for the production of clinical-grade AAV5 vector for use in the Company's clinical trials. Prismline is the Company's sole contract manufacturing organization ("CMO") for this purpose.
The key terms of the Prismline agreement are as follows:
• Scope: Manufacturing of clinical-grade AAV5 vector product for use in Heliograph's clinical programs, including HT-201.
• Minimum Annual Commitment: $2,400,000.
• Term: Initial term of three years from the date of execution. The agreement automatically renews for successive one-year periods unless either party provides written notice of termination at least 180 days prior to the expiration of the then-current term.
• Quality Agreement: A quality agreement was executed concurrently with the Manufacturing Services Agreement. Manufacturing is conducted under current Good Manufacturing Practice (cGMP) conditions in accordance with applicable FDA regulations.
• intellectual Property: Heliograph retains ownership of all product-specific intellectual property and any manufacturing process improvements developed in connection with the performance of services under the agreement. Prismline retains ownership of its pre-existing background intellectual property and general manufacturing know-how.
Key Risk: Prismline is currently the Company's single-source manufacturer for clinical supply of AAV5 vector. Any disruption in Prismline's operations — whether arising from regulatory action (e.g., an FDA Form 483 observation or warning letter directed at Prismline's facility), operational issues, financial distress, or force majeure events — could materially delay the Company's Phase I/II clinical trial timeline and, by extension, its ability to satisfy the Phase III initiation milestone under the Meridian License.
Observation: We recommend that the SPA include a representation from the Company that, to its knowledge, Prismline is in compliance with all applicable cGMP and regulatory requirements. Additionally, Cobalt should consider whether to negotiate a post-closing covenant requiring Heliograph to develop and present a backup manufacturing strategy, including the identification and qualification of at least one alternative CMO, within a reasonable timeframe following closing.
IV.C. Venture Debt Facility — Ridgeline Capital Finance LLC
On April 12, 2024, Heliograph entered into a Loan and Security Agreement (the "Loan Agreement") with Ridgeline Capital Finance LLC ("Ridgeline"), a Delaware limited liability company, pursuant to which Ridgeline extended a term loan facility to the Company.
The key terms of the Ridgeline facility are as follows:
• Amount Drawn: $2,500,000.
• Term: 36 months from the date of execution. The maturity date is April 12, 2027.
• Interest Rate: 9.5% per annum, payable monthly.
• Security: First-priority security interest in substantially all assets of the Company, excluding intellectual property. With respect to intellectual property, the Loan Agreement contains a negative pledge provision under which Heliograph has agreed not to grant any liens or security interests on its intellectual property to any third party without Ridgeline's prior written consent.
• Financial Covenants: The Company is required to maintain a minimum cash balance of $3,000,000 at all times. The Company is also subject to reporting covenants requiring delivery of quarterly unaudited financial statements and annual audited financial statements to Ridgeline.
• Events of Default: The Loan Agreement contains customary events of default, including: (i) failure to make payments when due; (ii) breach of any financial or reporting covenant; (iii) cross-default to other material indebtedness; (iv) the occurrence of a material adverse effect; and (v) a change of control.
• Change of Control: We reviewed the definition of "change of control" in the Loan Agreement and confirmed that the issuance of Series B Preferred Stock to Cobalt does not constitute a change of control under the Ridgeline facility. However, a future acquisition, merger, or other transaction resulting in a change of control (as defined) could trigger mandatory prepayment obligations under the facility.
• Consent: Ridgeline's consent is not required for the issuance of Series B Preferred Stock. However, Ridgeline's consent may be required for certain future transactions, including the incurrence of additional indebtedness, the grant of liens on assets, and certain extraordinary corporate transactions.
Observation: The negative pledge on intellectual property and the first-priority lien on the Company's other assets should be fully disclosed in the SPA and specifically addressed in the representations and warranties. Cobalt should confirm that post-closing cash (expected to be approximately $29,800,000) will satisfy the minimum cash balance covenant of $3,000,000 with ample headroom. We note that the venture debt maturity date of April 12, 2027 falls within the projected cash runway period (see Section VII.C below), and the repayment obligation will need to be factored into the Company's forward-looking cash management.
IV.D. Other Contracts Reviewed
In addition to the foregoing material contracts, we reviewed the following agreements and arrangements:
• Employment Agreements: Employment agreements are in place for Dr. Priya Anand (CEO) and Dr. Marcus Ellington (CSO). Both agreements provide for at-will employment with severance provisions entitling each founder to 12 months of base salary upon a termination without cause or a resignation for good reason. The employment agreements contain standard assignment-of-inventions provisions (assigning all work-related inventions to the Company), non-competition covenants (extending for one year following termination of employment, enforceable under North Carolina law subject to applicable limitations), and non-solicitation of employees and customers provisions.
• Confidential Information and Inventions Assignment Agreements (CIIAs): We confirmed that all 47 employees of the Company have executed CIIA agreements. These agreements require employees to maintain the confidentiality of the Company's proprietary information and to assign all inventions and intellectual property created during the course of their employment to the Company.
• Office Lease: The Company leases its principal office space at 4800 Biopark Drive, Building C, Suite 200, Durham, North Carolina 27709. The lease has a five-year term commencing June 2021 at a monthly rental rate of approximately $18,000. The lease is scheduled to expire in June 2026. The lease contains one renewal option for an additional three-year term. No defaults or notices of default were identified under the lease.
• Directors' and Officers' Liability Insurance: The Company maintains a directors' and officers' liability insurance policy with an aggregate coverage limit of $5,000,000. The policy is underwritten by Northwatch Indemnity Group and is currently in effect. We reviewed the coverage terms, including exclusions and retention amounts. No pending claims or notices under the D&O policy were identified.
• Customer and Revenue Contracts: The Company is a pre-revenue, clinical-stage enterprise. No material customer or revenue contracts were identified.
V. Intellectual Property
V.A. Patent Portfolio
Heliograph maintains a patent portfolio consisting of seven patent families, all of which are prosecuted by Langford Speir Patent Group LLP, under the direction of Dr. Teresa Langford, lead partner, located at 1300 I Street NW, Suite 700, Washington, DC 20005.
The patent portfolio includes three issued U.S. patents and four pending U.S. patent applications, as follows:
Issued U.S. Patents:
Pending U.S. Patent Applications:
The four pending U.S. patent applications cover manufacturing processes, combination therapies, and next-generation capsid variants. Specific application numbers and filing details were reviewed in the data room. Due to the confidential nature of pending patent applications, we have not reproduced the application numbers in this memorandum but can provide them upon request.
International Filings: Patent Cooperation Treaty (PCT) applications have been filed in three of the seven patent families, with the European Patent Office (EP), Japan Patent Office (JP), and IP Australia (AU) designated as receiving offices. National phase entries are proceeding in accordance with applicable deadlines.
IP Diligence Report: Langford Speir Patent Group LLP delivered a comprehensive intellectual property diligence report on July 18, 2025. The report concludes that no material prosecution issues have been identified with respect to any of the seven patent families. All maintenance fees are current, and no interference proceedings, inter partes review proceedings, or other post-grant proceedings are pending with respect to any of the Company's issued patents or pending applications.
Inventorship: Dr. Priya Anand and Dr. Marcus Ellington are listed as co-inventors on all seven patent families. All inventions have been properly assigned to Heliograph pursuant to the founders' employment agreements and CIIA agreements, and assignments have been recorded with the United States Patent and Trademark Office.
V.B. Licensed intellectual Property
As discussed in Section IV.A above, the Company holds an exclusive, worldwide license from Meridian University covering the foundational AAV5 capsid engineering platform technology. The Meridian License grants exclusive rights under Meridian's patent portfolio covering the base AAV5 capsid technology. Heliograph's own patents, described in Section V.A above, cover improvements, modifications, and specific applications of the licensed technology. The Company's patent estate is therefore a combination of owned patents covering proprietary improvements and exclusively licensed patents covering the underlying platform.
V.C. Trade Secrets
In addition to its patent portfolio, the Company maintains proprietary trade secrets relating to its manufacturing processes for high-titer AAV5 vector production. These manufacturing processes are not fully disclosed in the Company's patent filings and are maintained as trade secrets.
Trade secret protections currently in place include:
• CIIA agreements executed by all 47 employees, containing confidentiality obligations that survive termination of employment.
• Restricted access to manufacturing data within the Company's internal systems, with role-based access controls.
• Visitor non-disclosure agreements in place at the Prismline Biologics facility, where manufacturing is conducted.
We did not identify any incidents of trade secret misappropriation or unauthorized disclosure during our diligence.
V.D. Trademarks
The Company holds the following trademark registrations and pending applications:
No oppositions, cancellation proceedings, or other adverse actions have been identified with respect to either the registered mark or the pending application.
V.E. IP Observations and Risks
Overall, the Company's intellectual property portfolio appears well-maintained and strategically positioned to support the development and potential commercialization of HT-201 and related product candidates. The Langford Speir IP diligence report did not raise any freedom-to-operate concerns, and no third-party infringement claims or challenges to the Company's patents have been identified.
However, we note the following observations and risks:
• The Company's dependence on the Meridian University License is a key intellectual property risk, as discussed extensively in Section IV.A above. Any loss or impairment of the licensed rights would directly affect the Company's ability to develop and commercialize products based on the AAV5 platform.
• Four of the Company's seven patent families remain pending. There is inherent uncertainty in the patent prosecution process, and failure to obtain issuance of one or more of these applications could narrow the Company's competitive moat and reduce the scope of its patent protection.
• The field of AAV-based gene therapy is highly active, with numerous competitors and academic institutions pursuing related technologies. There is a risk that third-party patents could emerge that may create freedom-to-operate concerns or require the Company to obtain additional licenses.
We recommend that the SPA include robust intellectual property representations covering ownership of all Company-owned IP, the absence of infringement claims by or against the Company, the validity and enforceability of issued patents, and full compliance with the Meridian License. No IP litigation or third-party infringement claims have been identified as of the date of this memorandum.
VI. Regulatory Matters
VI.A. FDA and Clinical Regulatory Status
Heliograph's lead product candidate is HT-201, an AAV5-based gene therapy for the treatment of Leber congenital amaurosis type 10 (LCA10), a rare inherited retinal dystrophy. HT-201 is currently in clinical development, and the Company's regulatory interactions and clinical activities are summarized below.
• IND Filing: The Company filed an Investigational New Drug application (IND) with the U.S. Food and Drug Administration (FDA) in October 2024. The IND was assigned number 178452.
• IND Status: The IND was accepted by the FDA, and no clinical hold has been imposed. The Company is authorized to proceed with clinical testing under the IND.
• Clinical Trial: The Company initiated a Phase I/II clinical trial for HT-201 in early 2025. The first patient was dosed in February 2025. The trial is currently ongoing, and enrollment is proceeding. We note that detailed clinical trial information and data are outside the scope of this legal due diligence review.
• Regulatory History: We did not identify any FDA warning letters, Form 483 inspectional observations, untitled letters, consent decrees, or enforcement actions directed at Heliograph or its facilities. The Company maintains an active correspondence file with the FDA, which we reviewed. No material regulatory issues were identified in the correspondence.
VI.B. HSR Act / Antitrust
The proposed Series B transaction does not require a filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The aggregate transaction value of $20,000,000 is well below the 2025 size-of-transaction threshold of $119.5 million, and no filing is required.
VI.C. Other Regulatory
No foreign regulatory filings or approvals are required in connection with the Series B financing itself. The Company does not currently hold any foreign regulatory approvals for HT-201, and no foreign clinical trials are underway.
With respect to state securities laws, the Company intends to rely on the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder, for the issuance of the Series B Preferred Stock. The Company should confirm compliance with applicable state "blue sky" laws, including the filing of any required notices or Form D filings.
VII. Financial Matters
VII.A. Audited Financial Statements (FY 2024)
The Company's financial statements for the fiscal year ended December 31, 2024 were audited by Whitmore & Kassidy LLP, a registered public accounting firm located at 421 Fayetteville Street, Suite 1500, Raleigh, North Carolina 27601. The engagement partner for the audit was Robert Yuen, CPA.
Whitmore & Kassidy LLP issued a clean (unqualified) audit opinion on the Company's financial statements. The auditors did not include a going concern qualification, although they noted in the audit report that the Company's ability to continue as a going concern is dependent upon its ability to obtain additional external financing to fund operations. This is a standard disclosure for a clinical-stage, pre-revenue biotechnology company and is not unusual or unexpected.
Key financial data from the audited FY 2024 financial statements:
• Revenue: $0 (the Company is pre-revenue and in the clinical stage of development)
• Net Loss: ($14,200,000)
The net loss is consistent with the Company's stage of development and reflects expenditures on research and development activities, clinical trial preparation and initiation costs, personnel costs, and general and administrative expenses.
VII.B. Unaudited Interim Financials (Q1 2025)
We reviewed the Company's unaudited balance sheet and income statement for the three months ended March 31, 2025. These interim financial statements were prepared by the Company's internal finance team and have not been audited or reviewed by an independent accounting firm.
Key data points from the unaudited Q1 2025 financials:
• Cash and Cash Equivalents (as of March 31, 2025): $9,800,000
• Average Monthly Cash Burn Rate (Q1 2025): Approximately $1,350,000 per month
The cash burn rate reflects the Company's ongoing expenditures on clinical development (including payments under the Prismline manufacturing agreement), personnel, facilities, and overhead.
VII.C. Cash Runway Analysis
Based on the unaudited financials as of March 31, 2025 and the anticipated Series B proceeds, the Company's projected post-closing cash position is as follows:
• Cash on hand (March 31, 2025): $9,800,000
• Series B proceeds: $20,000,000
• Projected post-closing cash: $29,800,000
At the current average monthly burn rate of approximately $1,350,000 per month, the Company's projected cash runway extends approximately 22.1 months from closing, or through approximately July 2027.
We note the following considerations relevant to this cash runway analysis:
• The venture debt facility with Ridgeline Capital Finance LLC matures on April 12, 2027, which falls within the projected runway period. The repayment obligation at maturity will include $2,500,000 in principal plus accrued interest, which will accelerate the consumption of cash reserves and effectively shorten the usable runway by several months.
• The Company's burn rate may increase as the Phase I/II clinical trial progresses, additional patients are enrolled, and the Company incurs additional clinical and regulatory costs.
• Even with the Series B proceeds, Heliograph will likely need to raise additional capital before completing the Phase I/II trial and commencing any pivotal (Phase III) study. This is consistent with the typical financing trajectory of a clinical-stage biotechnology company and should be factored into Cobalt's investment planning.
VII.D. Tax Matters
We reviewed the Company's federal and state income tax returns for fiscal years 2022, 2023, and 2024. No audits, examinations, or inquiries by the Internal Revenue Service or any state taxing authority are pending or, to the Company's knowledge, threatened. No tax liens or levies have been identified against the Company or its assets.
The Company has accumulated net operating loss ("NOL") carryforwards from its operations since inception. These NOL carryforwards may be available to offset future taxable income, subject to the limitations imposed by Section 382 of the Internal Revenue Code in the event of an "ownership change" (as defined in Section 382). We recommend that a Section 382 analysis be conducted if future ownership changes are contemplated, including in connection with any future financing round, to ensure that the availability of the Company's NOL carryforwards is properly assessed.
The Company claimed research and development tax credits under Section 41 of the Internal Revenue Code in fiscal years 2023 and 2024. No IRS inquiries or challenges to these credits have been received.
VIII. Employment and Benefits
VIII.A. Headcount and Structure
As of June 1, 2025, the Company employs 47 individuals. All employees are based at the Company's principal offices in Durham, North Carolina. The Company does not employ any remote workers in other states or jurisdictions, which is consistent with our conclusion in Section II.B above that no additional foreign qualifications are currently required.
The workforce is not unionized, and the Company is not party to any collective bargaining agreements. We did not identify any pending or threatened labor organizing activity or any unfair labor practice charges.
VIII.B. Key Employees
Formal employment agreements are in place for the Company's two key executives:
• Dr. Priya Anand (CEO): At-will employment agreement providing for severance of 12 months of base salary upon a termination without cause or a resignation for good reason (as defined in the agreement). The agreement contains standard assignment-of-inventions, non-competition (one year post-termination, enforceable under North Carolina law), and non-solicitation provisions.
• Dr. Marcus Ellington (CSO): At-will employment agreement with materially identical severance, assignment-of-inventions, non-competition, and non-solicitation terms.
As noted in Section IV.D above, all 47 employees have executed Confidential Information and Inventions Assignment (CIIA) agreements. We reviewed a sample of these agreements and confirmed that they contain appropriate provisions assigning all work-related inventions and intellectual property to the Company and imposing confidentiality obligations that survive termination of employment.
No employment-related litigation, arbitration, administrative proceedings, or Equal Employment Opportunity Commission (EEOC) charges have been identified in our diligence.