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

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.

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 multiple sclerosis (“MS Program”), including the timing of clinical development, the potential application of the regenerative medicine platform to other diseases, the ability of our regenerative medicine platform to provide patient benefit, Mr. Lucchino’s return to his role as chief executive officer, and the sufficiency of the Company’s capital resources.

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 ongoing and 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-Q filed with the Securities and Exchange Commission (SEC) on November 8, 2022, 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.

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