Caladrus Biosciences
Annual Report 2018

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KCaladrius Biosciences, Inc. - CLBSFiled: March 14, 2019 (period: December 31, 2018)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K(Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________________ to _________________________ Commission File Number 001-33650 CALADRIUS BIOSCIENCES, INC.(Exact name of registrant as specified in its charter)DELAWARE22-2343568(State or other jurisdiction of(I.R.S. Employerincorporation or organization)Identification No.) 110 Allen Road, 2nd Floor, Basking Ridge, New Jersey07920(Address of principal executive offices)(zip code) Registrant’s telephone number, including area code: 908-842-0100 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange On Which RegisteredCommon Stock, par value $0.001 per share The Nasdaq Capital MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o NoxIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No oIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and postsuch files).Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this Chapter) is not contained herein, andwill not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. Yes x No oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" inRule 12b-2 of the Exchange Act. (Check one):Large accelerated filer oAccelerated filer oNon-accelerated filer o Smaller reporting company x Emerging growth company oIf 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 orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No xThe aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2018 (the last businessSource: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.day of the most recently completed second fiscal quarter) was approximately $54 million, computed by reference to the last sale price of $6.47 for thecommon stock on the Nasdaq Capital Market reported for such date. Shares held by executive officers, directors and persons owning directly or indirectlymore than 10% of the outstanding common stock have been excluded from the preceding number because such persons may be deemed to be affiliates of theregistrant. This determination of affiliate status is not necessarily a conclusive determicnation for other purposes.On March 8, 2019, 9,950,482 shares of the registrant's common stock, par value 0.001 per share, were outstanding.DOCUMENTS INCORPORATED BY REFERENCEThe following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10-K: Certain information required in PartIII of this Annual Report on Form 10-K is incorporated from the Registrant's Proxy Statement for the Annual Meeting of Stockholders.Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexAll references in this Annual Report on Form 10-K to “we,” “us,” the “Company” and “CALADRIUS” mean CALADRIUS, Inc., including subsidiariesand predecessors, except where it is clear that the term refers only to CALADRIUS, Inc. This Annual Report on Form 10-K contains forward-lookingstatements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as aresult of certain factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” and elsewherein this Annual Report on Form 10-K.TABLE OF CONTENTSCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS PART I ITEM 1. BUSINESS4 ITEM 1A. RISK FACTORS18 ITEM 1B. UNRESOLVED STAFF COMMENTS49 ITEM 2. PROPERTIES49 ITEM 3. LEGAL PROCEEDINGS49 ITEM 4. MINE SAFETY DISCLOSURES49 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES51 ITEM 6. SELECTED FINANCIAL DATA52 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS53 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK60 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA61 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE88 ITEM 9A. CONTROLS AND PROCEDURES88 ITEM 9B. OTHER INFORMATION89 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE90 ITEM 11. EXECUTIVE COMPENSATION90 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS90 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE90 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES90 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES90 ITEM 16. FORM 10-K SUMMARY942Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThis annual report (this "Annual Report") contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of1995, as well as historical information. When used in this Annual Report, statements that are not statements of current or historical fact may be deemed to beforward-looking statements, including, without limitation, all statements related to any expectations of revenues, expenses, cash flows, earnings or lossesfrom operations, cash required to maintain current and planned operations, capital or other financial items; any statements of the plans, strategies andobjectives of management for future operations; any plans or expectations with respect to product research, development and commercialization, includingregulatory approvals; any other statements of expectations, plans, intentions or beliefs; and any statements of assumptions underlying any of the foregoing.Without limiting the foregoing, the words “plan,” “project,” “forecast,” “outlook,” “intend,” “may,” “will,” “expect,” “likely,” “believe,” “could,”“anticipate,” “estimate,” “continue” or similar expressions or other variations or comparable terminology are intended to identify such forward-lookingstatements, although some forward-looking statements are expressed differently. We remind readers that forward-looking statements are merely predictionsand therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance,levels of activity or our achievements or industry results, to be materially different from any future results, performance, levels of activity or our achievementsor industry results expressed or implied by such forward-looking statements. Factors that could cause our actual results to differ materially from anticipatedresults expressed or implied by forward-looking statements include, among others:•our ability to obtain sufficient capital or strategic business arrangements to fund our operations and expansion plans, including meeting ourfinancial obligations under various licensing and other strategic arrangements, the funding of our clinical trials for product candidates, and thecommercialization of the relevant technology;•our ability to build and maintain the management and human resources infrastructure necessary to support the growth of our business;•whether a market is established for our cell-based products and services and our ability to capture a meaningful share of this market;•scientific, regulatory and medical developments beyond our control;•our ability to obtain and maintain, as applicable, appropriate governmental licenses, accreditations or certifications or comply with health care lawsand regulations or any other adverse effect or limitations caused by government regulation of our business;•whether any of our current or future patent applications result in issued patents, the scope of those patents and our ability to obtain and maintainother rights to technology required or desirable for the conduct of our business; and our ability to commercialize products without infringing on theclaims of third-party patents;•whether any potential strategic or financial benefits of various licensing agreements will be realized;•the results of our development activities; and•our ability to complete our other planned clinical trials (or initiate other trials) in accordance with our estimated timelines due to delays associatedwith enrolling patients due to the novelty of the treatment, the size of the patient population and the need of patients to meet the inclusion criteria ofthe trial or otherwise.The factors discussed herein, including those risks described in "Item 1A. Risk Factors" and in the Company's other periodic filings with the SEC, which areavailable for review at www.sec.gov under “Search for Company Filings,” could cause actual results and developments to be materially different from thoseexpressed or implied by such statements. All forward-looking statements attributable to us are expressly qualified in their entirety by these and other factors.Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. Except as requiredby law, the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.3Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexPART IITEM 1. BUSINESS.OVERVIEWCaladrius Biosciences, Inc. (“we,” “us,” "our," “Caladrius” or the “Company”) is a late-stage therapeutics development biopharmaceutical companycommitted to the development of innovative products that have the potential to restore the health of people with chronic illnesses. Our leadership teamcollectively has decades of biopharmaceutical development experience and world-recognized scientific achievement in the fields of cardiovascular medicineand cell therapy, among other areas. Our goal is to build a broad portfolio of novel and versatile products that address important unmet medical needs. Ourcurrent product candidates include three developmental treatments for cardiovascular diseases based on our CD34+ cell therapy platform: CLBS12, in Phase2 and eligible for early conditional approval in Japan for the treatment of critical limb ischemia ("CLI"); CLBS14-CMD, in Phase 2 in the U.S. for thetreatment of coronary microvascular dysfunction ("CMD"); CLBS14-NORDA (previously known as CLBS14-RfA), for which we are in discussions with theU.S. Food and Drug Administration (the "FDA") to finalize the Phase 3 trial protocol for no-option refractory disabling angina ("NORDA"); and oneautoimmune product candidate, CLBS03, an ex vivo expanded polyclonal T regulatory cell therapy for the treatment of recent-onset Type 1 diabetes ("T1D")for which we completed the analysis of the one-year follow-up data for the primary endpoint of a Phase 2a study and publicly reported on February 13, 2019that the study did not meet its primary endpoint.Ischemic Repair (CD34 Cell Technology)Our CD34+ cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused byischemia. Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted. Through the administration of CD34+ cells, we seek topromote the development and formation of new microvasculature and thereby increase blood flow to the impacted area. We believe that a number ofconditions caused by underlying ischemic injury can be improved through our CD34+ cell technology, including, but not limited to, CLI, CMD andNORDA.Regarding CLBS12, our product candidate for CLI, after detailed discussion and agreement with the Japanese Pharmaceutical and Medical DeviceAgency ("PMDA"), we opened a Phase 2 trial for enrollment in December 2017 and announced in March 2018 treatment of the first patient. Based on ourdiscussions with the PMDA, we expect that a successful outcome of this trial, if achieved, will make CLBS12 eligible for early conditional approval in Japan,thereby effectively making our Phase 2 trial a potential registration trial in that strategic market. The initial responses observed in the small number ofsubjects who have reached an endpoint in this open label study are consistent with a positive therapeutic effect and safety profile as reported by previouslypublished clinical trials in Japan and the U.S. While these early signs are encouraging, it is clear that the final outcome of the trial will be dependent on alldata from all subjects.In October 2017 we announced the award of a $1.9 million grant from the National Institutes of Health to support a clinical study of CD34+ cells inpatients with CMD. This led to the initiation of development of CLBS14-CMD and enrollment of patients in our ESCaPE-CMD Phase 2 proof-of-conceptstudy at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center, Los Angeles, CA. The early results observed in this open label trial from thesmall number of subjects who have reached the 6-month (primary endpoint) follow-up visit support our expectations for CLBS14-CMD and its positivetherapeutic effect and acceptable safety profile in this indication. While the final outcome of the trial will be dependent on the 6-month data from allsubjects, these early observations of increased coronary flow reserve and decreased angina symptoms in treated patients are encouraging.To support a development program of CD34+ cells in the indication of NORDA, we acquired the rights to data and regulatory filings for a CD34+ celltherapy program for refractory angina that had been advanced to Phase 3 under the previous investigational new drug application (“IND”) holder. We havedesignated this program CLBS14-NORDA and reactivated the IND with the FDA with Caladrius as the sponsor. We are presently working with the FDA tofinalize the design of a single registration trial for the registration of CLBS14-NORDA and are targeting the initiation of that trial in fall of 2019.Immunomodulation (Treg Technology)We have been developing for the last several years an innovative therapy for T1D (identified as CLBS03) that is based on a proprietary T regulatory cellplatform technology for immunomodulation. CLBS03 was granted Fast Track and Orphan drug designations from the FDA for this proposed indication andwas granted Advanced Therapeutic Medicinal Product ("ATMP") classification from the European Medicines Agency ("EMA"). This program is based on theuse of Tregs (T-regulatory cells) to treat diseases caused by imbalances in an individual's immune system. This novel approach seeks to restore4Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indeximmune balance by enhancing Treg number and function. Tregs are a natural part of the human immune system and regulate the activity of effector T cells,the cells that are responsible for protecting the body from pathogens and foreign antigens. When Tregs function properly, only harmful foreign materials areattacked by effector T cells. In autoimmune disease, however, it is thought that deficient Treg activity and numbers permit the effector T cells to attack thebody's own beneficial cells. In the case of T1D, the beta cells in the pancreas are attacked, thereby reducing and/or eliminating over time the patient's abilityto produce insulin.In 2016, we commenced patient enrollment in the first of two cohorts in The Sanford Project: T-Rex Study, a Phase 2a prospective, randomized, placebo-controlled, double-blind clinical trial to evaluate the safety and efficacy of CLBS03 in adolescents with recent onset T1D (the "T-Rex Study"). On February13, 2019, we announced top line results indicating that the therapy was well-tolerated but that the study's primary endpoint of preservation of C-peptide hadnot been achieved. We further indicated that we and our advisors would conduct, over time, a comprehensive analysis of all data from the trial (including any2-year follow-up data to come) and would take decisions regarding further development of CLBS03 based on the results of those analyses.Additional Out-licensing OpportunitiesOur broad intellectual property portfolio of cell therapy assets includes notable programs available for out-licensing in order to continue their clinicaldevelopment. These include additional indications for both our Treg product and our CD34+ cell technology.Our current long-term strategy focuses on advancing our therapies through development with the aim of eventually obtaining market authorizations andentering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions. Webelieve that we are positioned to realize potentially meaningful value increases within our own proprietary pipeline if we are successful in advancing ourproduct candidates to their next significant development milestones.Corporate InformationWe incorporated in 1980 as a Delaware corporation and our principal executive offices are located at 110 Allen Road, Second Floor, Basking Ridge, NJ07920. Our telephone number is (908) 842-0100 and our corporate website address is www.caladrius.com. We include our website address in this AnnualReport on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our website. The information on our website is notincorporated by reference into this Annual Report on Form 10-K.Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports, as well as otherdocuments we file with the U.S. Securities and Exchange Commission ("SEC"), are available free of charge through the Investors section of our website assoon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The public can obtain documents that we file with theSEC at www.sec.gov.This Annual Report on Form 10-K includes the following trademark owned by us: Caladrius®. This trademark is the property of Caladrius and itsaffiliates. This Annual Report on Form 10-K also includes other trademarks, service marks and trade names owned by us or other companies. All trademarks,service marks and traded names included herein are the property of their respective owners.OVERVIEW OF THE CELL THERAPY FIELDRegenerative medicine is defined as the process of replacing or regenerating human cells, tissues or organs to restore normal function. Among thecategories of therapeutic technology platforms within this field are cell therapy, tissue engineering, tools, device diagnostics and aesthetic medicine. InJanuary 2019, the Alliance for Regenerative Medicine recognized over 906 regenerative medicine companies worldwide, including gene and cell therapydevelopers and over 1,028 clinical trials.All living complex organisms start as a single cell that replicates and then individual groups of cells differentiate (mature into complex cell types),thereby yielding the diversity of organs and organ systems in an adult organism. Cell therapy is a process that uses cells to prevent, treat or cure disease, or toregenerate damaged or aged tissue. To date, the most common type of cell therapy has been the replacement of mature, functioning cells through blood andplatelet transfusions. Since the 1970s, marrow and blood and umbilical cord-derived stem cells have been used to restore bone marrow, as well as blood andimmune system cells damaged by the chemotherapy and radiation historically used to treat many cancers. Today, these types of cell therapies are standardpractice world-wide and their associated costs are often reimbursed by insurance. 5Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexThere are two general classes of cell therapies: autologous and allogeneic. When cells are collected from a person (donor) and transplanted or used todevelop a treatment solely for that same person (recipient or patient) with or without modification, the treatment paradigm is known as “autologous” celltherapy. Autologous cells offer a low likelihood of rejection by the patient. When the donor and the recipient are not the same individual, the procedures arereferred to as “allogeneic” cell therapy.Various cell therapies are in clinical development for an array of human diseases, including autoimmune, oncologic, cardiovascular, neurologic andorthopedic diseases, among other indications. While no assurances can be given regarding future medical developments, we believe that the field of celltherapy holds the promise to better the human experience and minimize or ameliorate the pain and suffering from many common and often life-threateningdiseases. The FDA has been investing significant resources into policies and organizational changes to advance the cell and gene therapy fields in recentyears through what the agency has labeled its “comprehensive regenerative medicine policy framework,” as first announced in late 2017 and incrementallydeveloped since that time through various agency actions. Most recently, the FDA stated in January 2019 that it would be adding another 50 clinicalreviewers to the group charged with overseeing the clinical investigation, development and review of cell therapy and gene therapy products.CELL THERAPY PRODUCT DEVELOPMENTIschemic Repair (CD34+ Cell Technology)Our CD34+ cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused byischemia. Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted. Through the administration of CD34+ cells, we seek topromote the development and formation of new microvasculature and thereby increase blood flow to the impacted area. We believe that a number ofconditions caused by underlying ischemic injury can be improved through our CD34+ cell technology, including but not limited to CLI, CMD and NORDA.Regarding CLBS12, our product candidate for CLI, after detailed discussion and agreement with the Japanese PMDA, we opened a Phase 2 trial forenrollment in December 2017 and announced in March 2018 treatment of the first patient. Based on our discussions with the PMDA, we expect that asuccessful outcome of this trial, if achieved, will make CLBS12 eligible for early conditional approval in Japan, thereby effectively making our Phase 2 triala potential registration trial in that strategic market. Japan's Ministry of Health, Labour and Welfare ("MHLW") awarded CLBS12 "SAKIGAKE" designation(a Japanese regulatory status that is similar in certain respects to "breakthrough therapy" designation granted by the FDA to eligible investigationaltreatments) reflecting its expectation of "prominent effectiveness" based on data from non-clinical and early phase clinical trials. The SAKIGAKE designationsystem promotes research and development in Japan, driving early practical application for innovative pharmaceutical products, medical devices andregenerative medicines. As a SAKIGAKE-designated therapy, CLBS12 is expected to have the benefits of prioritized consultation, a dedicated review systemto support the development and review process, as well as reduced review time from the normal 12 months down to 6 months. In anticipation of a potentialsuccessful trial outcome and the possibility of conditional approval, we continue to seek a local partner for CLBS12 in Japan. Conditional marketingapproval of CLBS12 in Japan may also include some form of post-marketing requirement to be defined at the time of approval. The initial responses observedin the small number of subjects who have reached an endpoint in this open label study are consistent with a positive therapeutic effect and safety profile asreported by previously published clinical trials in Japan and the U.S. While these early signs are encouraging, it is clear that the final outcome of the trial willbe dependent on all data from all subjects.In October 2017 we announced the award of a $1.9 million grant from the National Institutes of Health to support a clinical study of CD34+ cells inpatients with CMD. This led to the initiation of development of CLBS14-CMD and enrollment of patients in our ESCaPE-CMD Phase 2 proof-of-conceptstudy at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center, Los Angeles, CA. The early results observed in this open label trial from thesmall number of subjects who have reached the 6-month (primary endpoint) follow-up visit support our expectations for CLBS14-CMD and its positivetherapeutic effect and acceptable safety profile in this indication. While the final outcome of the trial will be dependent on the 6-month data from allsubjects, these early observations of increased coronary flow reserve and decreased angina symptoms in treated patients are encouraging.To support a development program of CD34+ cells in the indication of NORDA, we acquired the rights to data and regulatory filings for a CD34+ celltherapy program for refractory angina that had been advanced to Phase 3 under the previous IND holder. We have designated this program CLBS14-NORDAand reactivated the IND with the FDA with Caladrius as the sponsor. On June 19, 2018, we announced receipt of Regenerative Medicine Advanced Therapy(“RMAT”) designation from the FDA for CLBS14-NORDA for the treatment of no option refractory disabling angina. This designation affords us theopportunity to work with the FDA to advance more rapidly and efficiently the development of this therapeutic candidate6Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexin an indication that currently has high morbidity and no effective treatment options. We are presently working with the FDA to finalize the design of asingle registration trial for the registration of CLBS14-NORDA and are targeting the initiation of that trial in the fall of 2019.Immuno Modulation (T Regulatory Cell Program)Many immune-mediated diseases are the result of an imbalance between immune effector and regulatory mechanisms whereby pro-inflammatory cellsand cytokines eventually go unchecked and mistakenly attack beneficial cells in the body. Our T regulatory cell therapy platform, derived in part fromintellectual property created from research performed at the University of California, San Francisco ("UCSF"), represents a novel experimental approach torestoring immune balance by enhancing Treg number and function to control pathologic immune responses. Tregs are a natural part of the human immunesystem and regulate the activity of effector T cells, the cells that are responsible for protecting the body from pathogens and foreign antigens. When Tregsfunction properly only harmful foreign materials are attacked by effector T cells. In autoimmune disease, however, it is thought that deficient Treg activityand numbers play a role in the immune system’s attack on the body's own cells. In the case of T1D, the beta cells in the pancreas are attacked, therebyreducing and/or eliminating over time the patient's ability to produce insulin. Insulin is necessary to regulate sugar metabolism and maintain proper sugarlevels in the blood. Inconsistent or unnatural insulin levels can lead to many complications, including blindness, vascular disease and, if no insulinsupplement is provided, even death. There are currently no curative treatments for T1D, only lifelong insulin therapy, which often does not prevent seriousco-morbidities in patients.We established a collaboration with UCSF through patent and data licenses and through collaboration with the laboratories of Drs. Jeffrey Bluestone andQizhi Tang, experts in the field of Tregs and immune tolerance, to develop CLBS03, an autologous ex vivo expanded polyclonal Treg product, for thetreatment of T1D. Building on prior independent published human clinical human clinical data and findings cited in Science Translational Medicine andCell Metabolism, we initiated in the first quarter of 2016 the T-Rex Study, a Phase 2a prospective, randomized, placebo-controlled, double-blind clinical trialto evaluate the safety and efficacy of CLBS03 in adolescents with recent onset T1D. Clinical data collection of the one-year follow-up data was completed inJanuary 2019, and on February 13, 2019 we announced that the therapy was well-tolerated but that the study's primary endpoint of preservation of C-peptidehad not been achieved. We further indicated that we and our advisors would conduct, over time, a comprehensive analysis of all data from the trial (includingany two-year follow-up data to come) and would make decisions regarding further development of CLBS03 based on the results of those analyses.TECHNOLOGY OUT-LICENSING OPPORTUNITIESIschemic Repair (CD34+ Cell Technology)As is the case with our T Regulatory Cell Technology, our CD34+ Cell Technology is a platform technology with potential application to a broad array ofischemic conditions and we will seek to out-license our technology in geographies or indications that we do not intend ourselves to pursue.Ischemic Repair (CD34+ Cell) Intellectual Property PlatformOur developed and owned ischemic repair patent portfolio comprises the following:•Nine U.S. patents, two EU patents (each filed in 5 individual countries) and 7 other patents in geographies outside the U.S. (Japan, Canada, Russia,Hong Kong);•Claims cover, inter alia, a pharmaceutical composition that contains a therapeutic concentration of non-expanded CD34+ stem cells that move inresponse to SDF-1 or VEGF, together with a stabilizing amount of serum, that can be delivered to repair an injury caused by vascular insufficiency;•Issued and pending claims can be applied to a broad range of conditions caused by underlying ischemia, including: acute myocardial infarction,chronic myocardial ischemia post-AMI; chronic heart failure; critical limb ischemia; and ischemic brain injury;•Three pending patent applications outside the United States.Market Opportunity and Competition for CLIIn Japan, there are roughly 300,000 patients with CLI, of whom roughly 51,000 are not candidates for revascularization, making them the addressablepopulation for CLBS12. The addressable population is roughly 560,000 patients in the EU and 300,000 in the U.S., respectively.The field of cardiovascular cell therapy development is competitive. There are a number of companies that are developing stem cell-based therapies forcardiovascular diseases, including, but not limited to, Celyad, Capricor, Inc., Mesoblast Limited,7Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexAthersys, Inc., Pluristem Therapeutics Inc. and Vericel Corporation. These companies are utilizing a number of different therapeutic approaches in theirdevelopment efforts. There are both autologous and allogeneic based competitive therapies that derive cells principally from four sources: fat, peripheralblood, cord blood, and bone marrow. CLBS12 is an autologous therapy that derives its cells from peripheral blood via apheresis. Stempeutics Research Pvt.Ltd., including the joint venture between Pluristem Therapeutics Inc. and Sosei CVC, are examples of companies working in Japan with allogeneic celltherapy product candidates for CLI.Market Opportunity and Competition for CMDIn the United States, there are roughly 8,300,000 patients with CMD, while the addressable population is roughly 6,000,000 in the EU and 1,000,000 inJapan, respectively.We have not identified any additional companies developing stem cell-based therapies for CMD.Market Opportunity and Competition for NORDAIn the United States, we have identified fewer than 100,000 patients with refractory angina as candidates for CLBS14-NORDA.From a competitive standpoint, though not within cell therapy but more broadly in the regenerative medicine field, Angionetics is currently developingan angiogenic gene therapy product candidate designed for medical revascularization for the potential treatment of patients with myocardial ischemia andrefractory angina due to advanced coronary artery disease.Immune Modulation (T Regulatory Cell Technology)Our Treg technology platform is potentially applicable to multiple autoimmune and allergic diseases beyond our target indication of T1D. For example,certain evidence suggests that a failure of Tregs may be important in the development of systemic lupus erythematosus ("SLE") and that Treg therapy maytherefore be helpful in treatment of SLE. Additionally, Tregs have been evaluated in early phase human clinical trials and have indicated clinical benefit forgraft-versus-host disease ("GVHD"). Allogeneic hematopoietic cell transplantation, multiple sclerosis, rheumatoid arthritis, chronic obstructive pulmonarydisease and inflammatory bowel disease are other indications for which we believe Tregs may have a meaningful therapeutic effect. Trials sponsored by thirdparties are currently underway for active cutaneous lupus and immune tolerance following kidney transplantation.Immune Modulation Intellectual Property PlatformWe have assembled a patent portfolio through licenses to IP from leaders in the field of Tregs (UCSF/Jeffrey Bluestone et al, Centenary Institute)comprising:•Sixteen patents and three pending patent applications;•Claims covering many facets of Tregs, including:•Methods of Treg isolation, expansion and activation/stimulation as sourced from peripheral blood and cord blood; and•Methods of treating or preventing Type 1 diabetes using Tregs.•Patents and applications covering international geographies (United States, EU, Japan, China, Australia and Canada); and•An option on patent licenses to critical reagents employed in Treg therapeutic development.GOVERNMENT REGULATIONThe health care industry is one of the most highly regulated industries in the United States and abroad. Various governmental regulatory authorities, aswell as private accreditation organizations, oversee and monitor the activities of individuals and businesses engaged in the development, manufacture anddelivery of health care products and services. The following is a general description of certain current laws and regulations that are relevant to our business.Premarket Review and Approval of Pharmaceutical and Biological Products in the United StatesIn the United States, pharmaceutical and biological products, including cellular therapies, are subject to extensive pre- and post- market regulation bythe FDA. The Federal Food, Drug, and Cosmetic Act (“FD&C Act”) and other federal and state statutes and regulations, govern, among other things, theresearch, development, testing, manufacture, storage,8Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexrecordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export ofpharmaceutical products, including biological products, intended for therapeutic uses. Biological products are approved for marketing under provisions ofthe Public Health Service Act ("PHS Act"). However, biological products that also meet the definition of “drugs” under the FD&C Act are also subject toregulation under FD&C Act provisions and to applicable provisions from two sets of FDA implementing regulations, those for biological products and thosefor drugs. Another distinction between pharmaceuticals and cellular therapies is that the PHS Act requires the submission of a biologics license application("BLA"), rather than a New Drug Application ("NDA"), for market authorization of a cellular therapy candidate like ours. Generally, the application processand requirements for product approval under BLA is similar to those for an NDA, and the review process for biological products is associated with similarapproval risks and application costs as for chemical entity drug products.Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as the FDA refusalto approve pending NDAs or BLAs, withdrawal of an approval, issuance of warning letters and other types of enforcement letters, product recalls, productseizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, orcivil or criminal investigations and penalties brought by the FDA and the Department of Justice, or DOJ, or other governmental entities. Under certaincircumstances, individual members of company management may also be subject to civil or criminal penalties related to company violations of applicablelegal requirements.An applicant seeking approval to market and distribute a new pharmaceutical or biological product in the United States typically must undertake thefollowing:•completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA's good laboratory practice or GLPregulations;•submission to the FDA of an IND, which includes the detailed clinical protocol and which must take effect before human clinical trials cancommence;•approval of the clinical trial protocol and the sponsor's safeguards for human subjects by one or more institutional review boards, or "IRBs,"depending on the numbers of clinical sites and other features of the study design, before each clinical trial may be initiated;•performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or "GCPs," to establish the safety andefficacy of the proposed drug or biological product for each proposed indication for which FDA approval is sought;•satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;•preparation and submission to the FDA of an NDA or BLA, as appropriate;•review of the product by an FDA advisory committee, where appropriate or if applicable, as determined by the FDA at its discretion;•satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, areproduced to assess compliance with the regulations establishing current Good Manufacturing Practices, or “cGMPs,” and current Good Tissue Practices or“cGTPs” (if applicable), and to assure that the facilities, methods and controls used for the manufacture, processing and packing of the drug or biologicalproduct are adequate to preserve the product’s identity, strength, quality and purity; and•payment of applicable user fees and securing FDA approval of the NDA or BLA.Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type,complexity and novelty of the product or disease.Moreover, submission of an IND may not result in FDA authorization to initiate a clinical trial if the FDA raises concerns or questions about the designof the clinical trial or the preclinical or manufacturing information supporting it, including concerns that human research subjects will be exposed tounreasonable health risks. A separate submission to an existing IND must also be made for each successive clinical trial conducted during productdevelopment. After a trial is initiated,9Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexthe FDA may order the temporary or permanent discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial isnot being conducted in accordance with FDA requirements, or presents an unacceptable risk to the clinical trial patients.Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualifiedinvestigator. Clinical trials must be conducted in compliance with federal regulations and GCPs, which are meant to protect the rights and health of patientsand to define the roles of clinical trial sponsors, administrators, and monitors clinical protocol is updated or revised after the original IND submission andinitiation of protocol amendment must be submitted to the FDA as part of the IND. In addition, sponsors of most clinical trials involving FDA regulatedproducts, including drugs and biologics, are required to register and disclose certain clinical trial information on a public registry and results databasemanaged by the NIH and called ClinicalTrials.gov. Registration information that must be submitted includes information related to the product, patientpopulation, phase of investigation, study sites and investigators, and other aspects of the clinical trial. Sponsors are also obligated to disclose the results oftheir clinical trials after completion. Competitors may use this publicly available information to gain knowledge regarding the progress of developmentprograms. Failure to comply with applicable clinical trial registration or results reporting obligations can result in civil monetary penalties or thewithholding of grant funds from a federally funded grantee.Clinical trials to support NDAs or BLAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap or maybe combined. Under certain circumstances, a fourth post-approval phase may be required.•Phase 1: Trials in this phase are initially conducted in a limited population of healthy volunteers to test the product candidate for safety, dosetolerance, absorption, metabolism, distribution and excretion in healthy humans or, on occasion, in patients, such as cancer patients, when the drugor biologic is too toxic to be ethically given to healthy individuals.•Phase 2: These clinical trials are generally conducted in a limited patient population to determine the presence and approximate magnitude oftherapeutic effect of the product for specific targeted indications and to identify appropriate therapeutic dose and dose frequency as well as anycorresponding additional possible adverse effects and safety risks. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtaininformation prior to beginning larger and more expensive Phase 3 clinical trials.•Phase 3: These are commonly referred to as pivotal or registration studies. When Phase 2 evaluations demonstrate that a dose range of the product iseffective and has an acceptable safety profile, Phase 3 clinical trials are typically undertaken in a larger patient population to further evaluatedosage, to provide substantial evidence of clinical efficacy and to further test for safety in an expanded and diverse patient population at multipleand geographically-dispersed clinical trial sites. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials todemonstrate the efficacy of the drug as a requirement marketing approval licensure.•Phase 4: In some cases, the FDA may condition approval of an NDA or BLA for a product candidate on the sponsor's agreement to conductadditional clinical trials after NDA or BLA approval. In other cases, a sponsor may voluntarily carry out additional trials post approval to gain moreinformation about the drug or biologic. Submission of an NDA or BLA to the FDA Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, together with detailedinformation relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of anNDA or BLA seeking approval to market the drug product for one or more indications. FDA approval of the NDA or BLA is required before marketing of theproduct may begin in the United States. The cost of preparing and submitting an NDA or BLA is substantial. Under federal law, most NDA or BLAsubmissions are additionally subject to a substantial application user fee. The current fee for FY2019 is $2,588,478 and an annual program fee, currently$309,915, must also be paid for approved drugs or biologics. These fees are typically adjusted annually.The FDA has 60 days from its receipt of an NDA or BLA to determine whether the application will be accepted for filing based on the Agency'sthreshold determination that the application is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDAbegins an in-depth review. If the application is not sufficiently complete, the FDA may issue a Refusal to File, or RTF, letter, although the FDA may permitan applicant to correct certain easily correctable deficiencies in the NDA/BLA before filing without taking an official RTF action. Under certain NDA andBLA review performance goals to which the FDA has agreed, most applications for standard review of drug or biological10Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexproducts are reviewed within ten to twelve months, and most applications for priority review drugs or biologics are reviewed within six to eight months. If asponsor submits a major amendment to a filed NDA or BLA at any time during the review cycle, the FDA may extend these reviews by three monthsalthough only one such extension is permitted during a review cycle. Priority review can be applied to drugs or biologics that, in the FDA's determination,offer major advances in treatment or provide a treatment for a disease or condition for which no adequate therapy exists. For biologics, priority review isfurther limited to products intended to treat a serious or life-threatening disease relative to currently approved products. Priority review requests must besubmitted in conjunction with the original NDA/BLA for which the sponsor is seeking the designation, and the FDA decision will be made in conjunctionwith its official action to file the application and begin the substantive review process.Under the FDA’s accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that provides meaningfultherapeutic benefit to patients beyond existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on aclinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidityor mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternativetreatments.Before approving an NDA or BLA, the FDA will typically inspect one or more clinical trial sites to ensure compliance with GCPs. Additionally, theFDA will inspect the facility or the facilities at which the drug is manufactured. These pre-approval inspections cover all facilities associated with an NDA orBLA submission, including drug component manufacturing (such as active pharmaceutical ingredients), finished drug product manufacturing, and controltesting laboratories. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance withapplicable cGMP and cGTP requirements and are adequate to assure consistent production of the drug or biological product within required specificationsand the NDA or BLA contains data that provide substantial evidence that the drug or biologic is safe and effective for the proposed indication.The FDA may refer applications for novel drug or biological products, or drug or biological products that present difficult questions of safety orefficacy, to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whetherthe application should be approved. The FDA is not bound by the recommendation of an advisory committee, but the FDA will carefully consider them.After the FDA fully evaluates the NDA or BLA and the relevant manufacturing facilities, the FDA will issue either an approval/licensure letter or acomplete response letter (“CRL”). A CRL generally outlines the deficiencies in the submission and may require substantial additional testing or informationin order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA's satisfaction in a resubmitted NDA orBLA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions within two or six months, depending on the type ofinformation being provided to address the deficiencies in the CRL. Even with the submission of this additional information, however, the FDA ultimatelymay decide that the application does not satisfy the regulatory criteria for approval.If the FDA approves a drug or biological product for marketing in the U.S., it may limit the approved indications for use for the product; require thatcontraindications, warnings or precautions be included in the product labeling; require that post-approval studies, including Phase 4 clinical trials, beconducted to further assess the drug’s safety after approval; require testing and surveillance programs to monitor the product after commercialization; orimpose other conditions, including distribution restrictions or other risk management mechanisms, such as a risk evaluation and mitigation strategy or“REMS,” which can materially affect the potential market and profitability of the product. The FDA also may prevent or limit further marketing of a productbased on the results of post-market studies or surveillance programs. After approval, many types of changes to the approved product, such as adding newindications or patient populations, making certain types of manufacturing changes or seeking to make additional labeling claims, are subject to furthertesting requirements and FDA review and approval.One potential condition of approval is that the FDA may require an applicant to develop a REMS to ensure that the benefits of the drug outweigh itsrisks. To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease,expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events, and whether the product is a newmolecular entity. REMS requirements are tailored to the specific risk/benefit profile of a drug and can include requirements such as medication guides forpatients, detailed communication plans for health care professionals, and elements to assure safe use, or “ETASU.” ETASU may include, but are not limitedto, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, restricted distribution,and the use of patient registries. The FDA may require a REMS as a condition of approval or may add such a requirement at any point post-approval if itbecomes aware11Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexof a serious risk associated with use of the product. The requirement for a REMS and the specific components that are involved can materially affect thepotential market and profitability of a product.Expedited Review Programs (Fast Track, Breakthrough, RMAT) and Accelerated Approval PathwaysThe FDA is authorized to facilitate the development and expedite the review of certain drugs or biologics that are intended for the treatment of a seriousor life-threatening disease or condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for thecondition. Under the Fast Track Program, the sponsor of an IND for a drug candidate may request that the FDA designate the drug candidate for a specificindication as a Fast Track drug concurrent with, or after, the submission of the IND for the drug candidate. The FDA must determine if the drug candidatequalifies for Fast Track designation within 60 days of receipt of the sponsor’s request. In addition to other benefits such as the ability to engage in morefrequent interactions with the FDA, The FDA may initiate review of sections of a Fast Track drug’s NDA or BLA before the application is complete. This"rolling review' is available if the applicant provides, and the FDA approves, a schedule for the submission of the remaining information and the applicantpays applicable user fees. The FDA’s time period goal for reviewing an application, however, does not begin until the last section of the NDA/BLA issubmitted. Additionally, the Fast Track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by dataemerging in the clinical trial process.Separately, under the FDA’s accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that providesmeaningful therapeutic benefit to patients beyond existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, oron a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversiblemorbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack ofalternative treatments.In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurementof how a patient feels, functions or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A drugcandidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approvalclinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw approval of the drug such that accelerated approval also referred to as U.S. "conditional" approval.Products granted accelerated approval also are subject to additional requirements for the pre-dissemination review by the FDA of proposed promotionalmaterials both during the NDA review process and for 120 days after marketing approval.Another available program for expediting development and review of drugs or biological products, the FDA may designate an investigational productas a Breakthrough Therapy or as a Regenerative Medicine Advanced Therapy ("RMAT"), depending on the type of product and its ability to meetapplicable eligibility criteria. Breakthrough Therapy designation is a process designed to expedite the development and review of drugs that are intended totreat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on aclinically significant endpoint(s). The RMAT designation requires similar eligibility criteria to be met, but it is available only to cell therapies, tissuetherapies, and other products that meet the statutory definition of a “regenerative medicine therapy.” Specifically, a biological product is eligible for RMATdesignation if: (a) the product candidate is a regenerative medicine therapy, which is defined in the FD&C Act as a cell therapy, therapeutic tissueengineering product, human cell and tissue product, or any combination product using such therapies or products, except for those regulated solely underthe PHS Act (that is, excluding those biological products that are not also regulated as “drugs” under the FD&C Act); (b) the product candidate is intendedto treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (c) preliminary clinical evidence indicates that the product candidatehas the potential to address unmet medical needs for such disease or condition. Both Breakthrough Therapy and RMAT designations are intended to helpaccelerate product development by allowing more frequent interactions with the FDA and receiving intensive FDA guidance on efficient drug development.Pediatric InformationUnder the Pediatric Research Equity Act ("PREA"), NDAs or BLAs or supplements to NDAs or BLAs must contain data that are adequate to assess thesafety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for eachpediatric subpopulation for which the drug is safe and effective. Sponsors must also submit pediatric trial plans prior to the assessment data, and those plansmust contain an outline of the proposed pediatric trial or trials the applicant plans to conduct, including trial objectives and design, any12Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexdeferral or waiver requests and other information required by regulation. The applicant, the FDA, and the FDA’s internal review committee must then reviewthe information submitted, consult with each other, and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at anytime. The FDA may grant full or partial waivers or deferrals for submission of data. Unless otherwise required by regulation, the pediatric data requirementsdo not apply to products with orphan designation, although the FDA has recently taken steps to limit what it considers abuse of this statutory exemption inPREA by announcing that it does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of what is otherwise acommon disease.The Best Pharmaceuticals for Children Act ("BPCA") provides approved NDA and BLA holders a six-month extension of any exclusivity that attachesto the end of all existing marketing exclusivities and patents for the drug. Conditions for exclusivity include the FDA’s determination that informationrelating to the use of a new drug in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatricstudies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe. Applications under the BPCA aretreated as priority applications, with all of the benefits that designation confers.Orphan DrugsUnder the Orphan Drug Act, the FDA may designate a candidate as an orphan drug if it is intended to treat a rare disease or condition (generallymeaning that it affects fewer than 200,000 individuals in the U.S.) Orphan drug designation must be requested by an applicant before submitting an NDA orBLA for the relevant drug candidate. If the FDA grants orphan drug designation, the FDA will publicly disclose the generic identity of the drug candidateand its potential orphan use. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approvalprocess.If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation, the product generally willreceive orphan drug exclusivity. Orphan drug exclusivity means that the FDA may not approve any other applications for the same product for the sameindication for seven years, except in certain limited circumstances comprising different ways that a second sponsor can demonstrate clinical superiority ofits drug in comparison to the first approved orphan drug. Competitors may receive approval of different products for the indication for which the orphanproduct has exclusivity and may obtain approval for the same product but for a different indication. If a designated orphan drug ultimately receivesmarketing approval for an indication broader than what was described in its orphan drug designation request, it may not be entitled to exclusivity under theOrphan Drug Act. Among the other benefits of orphan drug designation, the sponsor receives a waiver of the NDA or BLA application user fee and is eligiblefor tax credits for certain research (although the amount of this potential tax credit was decreased from 50% to 25% of qualified clinical testing expenseswith the 2017 overhaul of the U.S. Tax Code, effective in 2018).Post-Approval RequirementsDrugs and biological products manufactured, marketed or distributed pursuant to FDA approval decisions are subject to pervasive and continuingregulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution,advertising and promotion, and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as addingnew indications or other labeling claims, are subject to FDA review and approval before they can be implemented. There also are continuing, annual user feerequirements for any marketed products and related manufacturing facilities, as well as new application fees for supplemental applications.In addition, drug manufacturers and other entities involved in the manufacture of approved drugs are required to register their facilities with the FDAand state agencies and are subject to periodic unannounced inspections by the FDA for compliance with cGMP/cGTP requirements. Prescription drugdistribution facilities are also subject to state licensure, including inspections, by the relevant local regulatory authority. Changes to the manufacturingprocess, specifications or container closure system for an approved drug or biologic are strictly regulated and often require prior FDA approval before beingimplemented. FDA regulations also require investigation and correction of any deviations from cGMP or cGTP and impose reporting and documentationrequirements upon the sponsor and others involved in the product’s manufacturing process. Accordingly, manufacturers must continue to expend time,money and effort in the area of production and quality control to maintain cGMP/cGTP compliance and ensure ongoing compliance with other statutoryrequirements the FD&C Act, such as the requirements for making manufacturing changes to an approved NDA or BLA.Thus, even after a new drug approval is granted, the FDA may withdraw that approval if compliance with regulatory requirements and standards is notmaintained or if problems occur after the product reaches the market. If a previously unknown problem, including adverse events of unanticipated severity orfrequency, or with manufacturing processes, is discovered or the manufacturer fails to comply with regulatory requirements, the FDA may require revisions tothe approved labeling to13Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexadd new safety information; may impose additional post-market studies or clinical trials to assess new safety risks; or may impose distribution or otherrestrictions under a REMS program. Other potential consequences of regulatory non-compliance include, among other things:•restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;•fines, warning letters or holds on post-approval clinical trials;•refusal of the FDA to approve pending NDAs/BLAs or supplements to approved NDAs/BLAs, or suspension or revocation of product licenseapprovals;•product seizure or detention, or refusal to permit the import or export of products; or•injunctions or the imposition of civil or criminal penalties.The FDA strictly regulates marketing, labeling, advertising and promotion of prescription drug and biological products that are placed on the market.Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies activelyenforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may besubject to significant penalties. In addition, the distribution of prescription pharmaceutical products is subject to a variety of federal and state laws, the mostrecent of which is still in the process of being phased in to the U.S. supply chain and regulatory framework.Other Health Care RegulationsIf our product candidates are approved in the United States, we will have to comply with various U.S. federal and state laws, rules and regulationspertaining to health care fraud and abuse, including anti-kickback laws and physician self-referral laws, rules and regulations. Violations of the fraud andabuse laws are punishable by criminal and civil sanctions, including, in some instances, exclusion from participation in federal and state health careprograms, including Medicare and Medicaid. Other federal and state laws and regulations that could directly or indirectly affect our ability to operate thebusiness and/or financial performance include:•state and local licensure, applicable to the processing and storage of human cells and tissues;•laws and regulations administered by the United States Department of Health and Human Services, including the Office for Human ResearchProtections and the Office of Inspector General;•state laws and regulations governing human subject research;•federal and state coverage and reimbursement laws and regulations, including laws and regulations administered by the Centers for Medicare &Medicaid Services and state Medicaid agencies;•the federal Medicare and Medicaid Anti-Kickback Law and similar state laws and regulations;•the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), as amended by the Health Information Technology forEconomic and Clinical Health Act and similar state laws and regulations;•the federal physician self-referral prohibition commonly known as the Stark Law, and state equivalents of the Stark Law;•the federal transparency requirements under the Physician Payments Sunshine Act that require manufacturers of FDA-approved drugs, devices,biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the Department of Health and Human Servicesinformation related to payments and other transfers of value to certain persons and entities;•Occupational Safety and Health Administration requirements;•state and local laws and regulations dealing with the handling and disposal of medical waste; and•the Intermediate Sanctions rules of the IRS providing for potential financial sanctions with respect to “Excess Benefit Transactions” with tax-exempt organizations.14Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexSome state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines, or the relevantcompliance guidance promulgated by the federal government, in addition to requiring drug manufacturers to report information related to payments tophysicians and other health care providers or marketing expenditures to the extent that those laws impose requirements that are more stringent than thePhysician Payments Sunshine Act. State and foreign laws also govern the privacy and security of health information in some circumstances, many of whichdiffer from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.Japan's Pharmaceutical and Medical Device Authority Regulation of Regenerative MedicinePrior to 2014, there was no specific regulatory oversight of regenerative medicine products in Japan. However, in November 2013, the Japaneseauthorities revised the Pharmaceutical Affairs Law and renamed it the Pharmaceuticals, Medical Devices, and Other Therapeutic Products Act (the "PMDAct"). The new legislation became effective on November 25, 2014 and provides for a timely introduction of innovative regenerative medicine products. Thenew legislation formalizes a legal basis for development of regenerative medicine therapies. The new legislation defines regenerative medicine products asprocessed human cells that are intended to be used for either (1) the reconstructive repair, or formation of structures or functions of the human body; (2) thetreatment or prevention of human diseases; or (3) gene therapy.The legislation allows the PMDA/Ministry of Health, Labour and Welfare ("MHLW") to award conditional approval to a regenerative medicine therapy ifthere is evidence of adequate safety and results which predict likely efficacy. The evidence for efficacy may be based on surrogate endpoints and may comefrom an exploratory study. This conditional approval is time-limited, and there must be an agreement with PMDA/MHLW as to follow-up collection ofinformation which confirms efficacy and safety, similar to a post-marketing commitment in the United States.Under the PMD Act, products under consideration may also be given a SAKIGAKE designation (similar to an FDA "Breakthrough" or "RMAT"designation in certain respects) and/or may be granted a priority review status. Additionally, there is a commitment that the PMDA will facilitate research anddevelopment by giving scientific and regulatory advice to sponsors from the early stage of development.According to the new legislation, the sponsor prepares a marketing authorization application which is submitted for review to the PMDA. The PMDAreviews the application and prepares a review report and recommendation which is submitted to the MHLW. The MHLW reviews the recommendation andmakes a decision regarding approval of the product. This procedure is followed for both a conditional approval and subsequently for a full approval after thepost-marketing commitments have been fulfilled.EMPLOYEESAs of December 31, 2018, we had 25 full-time employees. Our senior management and professional employees have had prior experience inpharmaceutical or biotechnology companies. None of our employees are covered by collective bargaining agreements. We believe that our relations with ouremployees are good.15Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexITEM 1A. RISK FACTORS.Our business, financial condition, operating results and cash flows can be affected by a number of factors, including, but not limited to, those setforth below, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. The risks describedbelow are not the only ones we face, but those we currently consider to be material. There may be other risks which we now consider immaterial, or which areunknown or unpredictable, with respect to our business, our competition, the regulatory environment or otherwise that could have a material adverse effecton our business, financial condition and results of operations.RISKS RELATED TO OUR FINANCIAL CONDITION AND CAPITAL REQUIREMENTSWe have incurred substantial losses and negative cash flow from operations in the past and expect to continue to incur losses and negative cash flow forthe foreseeable future.We have a limited operating history, limited capital, and limited sources of revenue. Since our inception in 1980 through December 31, 2018, we haveincurred aggregate net losses of approximately $398.0 million. Our net losses from continuing operations attributable to common stockholders for the yearsended December 31, 2018 and December 31, 2017 were approximately $16.2 million and $16.0 million, respectively. As of December 31, 2018, our cash andcash equivalents and marketable securities were $43.1 million. Our current business has not generated revenues in the past and for the foreseeable future wedo not expect it to generate revenue to be sufficient to cover costs attributable to that business or to our operations as a whole, including our developmentactivities associated with our product candidates. Ultimately, we may never generate sufficient revenue from our business to reach profitability, generatepositive cash flow or sustain, on an ongoing basis, our current or projected levels of product development and other operations.We anticipate that we will need substantial additional financing to continue our operations; if we are unable to raise additional capital, we may be forcedto delay, reduce or eliminate one or more of our product development programs, and our business will be harmed.Our current operating plan will require significant levels of additional capital to fund the continued development of our cell therapy product candidatesand our clinical development activities.Our clinical activities are expected to continue to grow as our programs are advanced and they will require significant investment over a period ofseveral years before they could potentially be approved by the FDA and commercialized by us, if ever. Even if data from our current clinical trials for ourproduct candidates were deemed positive, we may be required to conduct additional clinical trials of the product candidates, including larger and moreexpensive pivotal Phase 3 trials, to pursue commercialization of the candidates. To do so, we will need to raise additional capital, enter into collaborationagreements with third parties or undertake any combination thereof. If we are unsuccessful in our efforts to raise capital or find collaborative partners, we willlikely need to otherwise delay or abandon the trials.The amount and timing of our future capital requirements also will likely depend on many other factors, including:•the scope, progress, results, costs, timing and outcomes of our cell therapy research and development programs and product candidates;•our ability to enter into any collaboration agreements with third parties for our product candidates and the timing and terms of any such agreements;•the costs associated with the consummation of one or more strategic transactions;•the timing of and the costs involved in obtaining regulatory approvals for our product candidates, a process which could be particularly lengthy, orcomplex given the FDA's limited experience with marketing approval for cell therapy products;•the costs of maintaining, expanding and protecting our intellectual property portfolio, including potential litigation costs and liabilities relatingthereto;•the cost of expansion of our development operations and personnel; and•the availability of, or our access to, state or federal government awards.To both fund our clinical trials and support our future operations, we would likely seek to raise capital through a variety of different public and/orprivate financings vehicles. This could include, but not be limited to, utilization of our at-the-market ("ATM") sales agreement with H.C. Wainwright & Co.,potential issuances of other debt or equity securities in public or private financings and/or sale or licensing of assets. If we raise capital through the sale ofequity, or securities convertible into16Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexequity, it will result in dilution to our then-existing stockholders. Servicing the interest and principal repayment obligations under debt we incur, or whetherany such debt is called, would divert funds that might otherwise be available to support research and development, clinical or commercialization activities.In addition, debt financing involves covenants that restrict our ability to operate our business. In certain cases, we also may seek funding throughcollaborative arrangements that would likely require us to relinquish certain rights to our technology or product candidates and diminish our share in thefuture revenues associated with the partnered product.Ultimately, we may be unable to raise capital or enter into collaborative relationships on terms that are acceptable to us, if at all. Our inability to obtainnecessary capital or financing to fund our future operating needs could adversely affect our business, results of operations and financial condition.We have never generated any revenue from product sales and our ability to generate revenue from product sales and become profitable dependssignificantly on our success in a number of factors.We have no products approved for commercial sale, have not generated any revenue from product sales, and do not anticipate generating any revenuefrom product sales until sometime after we have received regulatory approval for the commercial sale of a product candidate, which may never occur. Ourability to generate revenue from product sales and achieve profitability depends significantly on our success in many factors, including:•completing research regarding, and nonclinical and clinical development of, our product candidates;•obtaining regulatory approvals and marketing authorizations for product candidates for which we complete clinical trials;•developing a sustainable and scalable manufacturing process for our product candidates;•identifying and contracting with contract manufacturers that have the ability and capacity to manufacture our development products and make themat an acceptable cost;•launching and commercializing product candidates for which we obtain regulatory approvals and marketing authorizations, either directly or with acollaborator or distributor;•obtaining market acceptance of our product candidates as viable treatment options;•ensuring ongoing regulatory compliance post-approval and with respect to sales and marketing of future products;•addressing any competing technological and market developments;•identifying, assessing, acquiring and/or developing new product candidates;•negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter;•maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade secrets, and know-how; and•attracting, hiring, and retaining qualified personnel.Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated withcommercializing any approved product candidate. Our expenses could increase beyond expectations if we are required by the FDA, or other regulatoryagencies, domestic or foreign, to change our manufacturing processes or assays, or to perform clinical, nonclinical, or other types of studies in addition tothose that we currently anticipate. If we are successful in obtaining regulatory approvals to market one or more of our product candidates, our revenue willdepend, in part, upon the size of the markets in the territories for which we obtain regulatory approval, the accepted price for the product, the ability toreceive reimbursement at any price, and whether we own the commercial rights for that territory. If the number of our addressable disease patients is not assignificant as we estimate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably accepted population for treatmentis narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of such products, even if approved.If we are not able to generate revenue from the sale of any approved products, we may never become profitable.If our status as a smaller reporting company changes, Section 404(b) of the Sarbanes-Oxley Act of 2002 may require an independent registered publicaccounting firm to report on the effectiveness of our internal control over financial reporting. Any delays or difficulty in satisfying these requirementscould adversely affect our future results of operations and our stock price.Section 404(b) of the Sarbanes-Oxley Act of 2002 requires an independent registered public accounting firm to test the internal control over financialreporting of public companies, and to report on the effectiveness of such controls, for each fiscal year ending after June 15, 2010. Under the Dodd Frank WallStreet Reform and Consumer Protection Act of 2010, we17Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexare exempt from Section 404(b) as long as we remain a smaller reporting company or a non-accelerated filer. If our status as a smaller reporting companychanges, we may be required to comply with this auditor attestation requirement.In addition, we may in the future discover areas of our internal controls that need improvement, particularly with respect to businesses that we mayacquire. If so, we cannot be certain that any remedial measure we take will ensure that we have adequate internal controls over our financial processes andreporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could harm ouroperating results or cause us to fail to meet our reporting obligations. If we are unable to conclude that we have effective internal controls over financialreporting, or if it becomes necessary for our independent registered public accounting firm to provide us with an unqualified report regarding theeffectiveness of our internal control over financial reporting and it is unable to do so, investors could lose confidence in the reliability of our financialstatements. This could result in a decrease in the value of our common stock.RISKS RELATED TO OUR CELL THERAPY PRODUCT DEVELOPMENT EFFORTSOur future success may be dependent on the timely and successful continued development and commercialization of CLBS03, our T1D product candidatefor which we announced the failure of the Phase 2a trial to meet its primary endpoint, and if we encounter delays or further difficulties in the developmentof this product candidate, as well as CLBS12, our experimental product candidate for CLI that is in clinical development in Japan, or CLBS14 for CMDand NORDA, our business prospects would be significantly harmed.We are dependent upon the successful development, approval and commercialization of our product candidates. Before we are able to seek regulatoryapproval of our product candidates, we must conduct and complete extensive clinical trials to demonstrate their safety and efficacy in humans. We havenever taken a product through the regulatory approval process or successfully to U.S. or international commercialization.In early 2016 we initiated a Phase 2a clinical trial for CLBS03, a Treg based therapeutic being developed for T1D and for which we released top line dataon February 13, 2019, announcing that the therapy appeared safe as administered, that the study's primary endpoint of preservation of C-peptide had not beenachieved and that we and our advisors would continue to analyze the data in the coming months, which analysis would inform next steps of development, ifany.In late 2017, we initiated a clinical trial in Japan for CLBS12 for use in CLI taking advantage of the paradigm of potential conditional approval forregenerative medicine products established by new regulations in Japan for products that show sufficient safety evidence and some evidence of efficacy. Weare also enrolling patients in a clinical trial using CD34+ cells to treat CMD (CLBS14-CMD). Additionally, we assumed sponsorship of, and reactivated anIND for, treating refractory angina with CD34+ cells and are in discussions with the FDA about further development of a product under that IND, of which weare now the sponsor. We also received a grant from the NIH to support a clinical study of CLBS14 in patients with CMD, which Phase 2 study is nowenrolling patients.Clinical testing is expensive, difficult to design and implement, and can take many years to complete. Importantly, a failure of one or more of these orany other clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, clinical trials that coulddelay or prevent our ability to complete our clinical trials, receive regulatory approval or commercialize our cell therapy product candidates, including thefollowing:•suspensions, delays or changes in the design, initiation, enrollment, implementation or completion of required clinical trials;•adverse changes in our financial position or significant and unexpected increases in the cost of our clinical development program;•changes or uncertainties in, or additions to, the regulatory approval process that require us to alter our current development strategy;•clinical trial results that are negative, inconclusive or even less than desired as to safety and/or efficacy, which could result in the need for additionalclinical trials or the termination of the product's development;•delays in our ability to manufacture the product in quantities or in a form that is suitable for any required clinical trials;•intellectual property constraints that prevent us from making, using, or commercializing any of our cell therapy product candidates;•the supply or quality of our product candidates or other materials necessary to conduct clinical trials of these product candidates may be insufficientor inadequate;•inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation of18Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexclinical trials;•delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, contract manufacturing organizationsor CMOs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs,CMOs and clinical trial sites;•delays in obtaining required IRB approval at each clinical trial site;•inability to file INDs with the FDA for our development candidates or comparable clinical trial applications with other regulatory authorities outsideof the U.S.;•imposition of a temporary or permanent clinical hold by the FDA or similar restrictions by other regulatory agencies for a number of reasons,including after review of an IND or amendment, or equivalent application or amendment; as a result of a new safety finding that presentsunreasonable risk to clinical trial participants; a negative finding from an inspection of our clinical trial operations or clinical trial sites;developments on trials conducted by competitors or approved products post-market for related technology that raises FDA concerns about risk topatients of the technology broadly; or if the FDA finds that the investigational protocol or plan is clearly deficient to meet its stated objectives;•difficulty collaborating with patient groups and investigators;•failure by our CROs, CMOs other third parties, or us to adhere to clinical trial requirements;•failure to perform in accordance with the FDA or international GCP requirements;•failure to reach agreement with the FDA on a satisfactory development path of our development candidates;•delays in having patients qualify for or complete participation in a trial or return for post-treatment follow-up;•patients dropping out of a clinical trial;•occurrence of adverse events associated with the product candidate;•changes in the standard of care on which a clinical development plan was based, which may require new or additional trials or abandoning existingtrials;•transfer of manufacturing processes from our academic collaborators to larger-scale facilities operated by either a contract manufacturingorganization, or CMO, or by us, and delays or failure by our CMOs or us to make any necessary changes to such manufacturing process;•delays in manufacturing, testing, releasing, validating, or importing/exporting sufficient stable quantities of our product candidates for use inclinical trials or the inability to do any of the foregoing; and•the FDA may not accept clinical data from trials that are conducted in countries where the standard of care is potentially different from the UnitedStates.Any inability to successfully complete nonclinical and clinical development could result in additional costs to us or impair our ability to generaterevenue. In addition, if we make manufacturing or formulation changes to our product candidates, we may be required to, or we may elect to, conductbridging studies to demonstrate the equivalence of our modified product candidates to earlier versions. Clinical trial delays could also shorten any periodsduring which our products have patent protection and may allow our competitors to bring products to market before we do, which could impair our ability tosuccessfully commercialize our product candidates and may harm our business and results of operations.Even if we are able to successfully complete our clinical development programs for our product candidates and receive regulatory approval to market oneor more of the products, if the commercial opportunities are smaller than we anticipate, our future revenues may be adversely affected, and our businessmay suffer.If the size of the commercial opportunities in any of our target indications is smaller than we anticipate, or if the FDA grants our candidates approval totreat only specific subpopulations or otherwise approves the products for more narrow indications for use than we are seeking, we may not be able to achieveprofitability and growth.Even if we are able to successfully complete our clinical development program for our product candidates, and ultimately receive regulatory approval tomarket one or more of the products, we may, among other things:•obtain approval for indications that are not as broad as the indications we sought;•have the product removed from the market after obtaining marketing approval;•encounter problems with respect to the manufacturing of commercial supplies;19Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index•be subject to additional post-marketing testing requirements; and/or•be subject to restrictions on how the product is distributed or used.We may experience delays in enrolling patients in our clinical trials, which could delay or prevent the receipt of necessary regulatory approvals.We may not be able to initiate or complete as planned any clinical trials if we are unable to identify and enroll a sufficient number of eligible patients toparticipate in the clinical trials required by the FDA or other regulatory authorities. We also may be unable to engage a sufficient number of clinical trial sitesto conduct our trials. Moreover, because HCATs, our principle contract manufacturer, does not currently have manufacturing facilities operating outside ofthe United States, our ability to conduct trials outside of the United States may be constrained by our ability to transport trial materials to foreign destinationswithin the expiry period of such materials unless and until we commence operation outside of the United States or find another source of supply.We may face challenges in enrolling patients to participate in our clinical trials due to the novelty of our cell-based therapies, the size of the patientpopulations and the eligibility criteria for enrollment in the trial. Moreover, changes to enrollment criteria may be prohibited by regulating agencies, mayhave no impact on enrollment rates and may change or harm the outcome of the study. In addition, some patients may have concerns or negative perceptionsregarding cell therapy that may affect their decision to enroll in the trials. Furthermore, patients suffering from diseases within target indications may enroll incompeting clinical trials, which could negatively affect our ability to complete enrollment of our trials. Enrollment challenges in clinical trials often result inincreased development costs for a product candidate, significant delays and potentially the abandonment of the clinical trial.Outside of the unique aspects of conducting a clinical trial for a cell therapy candidate, patient enrollment in general is affected by many factors,including:•size of the target patient population;•severity of the disease or disorder under investigation;•eligibility criteria for the clinical trial in question;•other clinical trials being conducted at the same time involving patients who have the disease or disorder under investigation;•perceived risks and benefits of the product candidate under study;•approval and availability of other therapies to treat the disease or disorder that is being investigated in the clinical trial;•willingness or unwillingness to participate in a placebo controlled clinical trial;•efforts to facilitate timely enrollment in clinical trials;•patient referral practices of physicians;•the ability to monitor patients adequately during and after treatment; and•proximity and availability of clinical trial sites for prospective patients.Our inability to enroll a sufficient number of patients in any of our planned clinical trials would result in significant delays or may require us to abandon oneor more clinical trials altogether.We may have other delays in completing our clinical trials and we may not complete them at all.We have not completed the clinical trials necessary to obtain FDA approval to market CLBS03, CLBS12, CLBS14-CMD, CLBS14-NORDA or any of ourother product candidates in development. Our management lacks significant experience in completing Phase 3 pivotal clinical trials and bringing a drug orbiological product through commercialization. Clinical trials for products in development may be delayed or terminated as a result of many factors,including the following:•patients failing to complete clinical trials due to dissatisfaction with the treatment, side effects or other reasons;20Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index•failure by regulators, IRBs, or independent ethics committees to authorize us or our investigators at individual sites to commence a clinical trial;•suspension or termination by regulators of clinical research for many reasons, including concerns about patient safety or failure of our contractmanufacturers to comply with applicable cGMP/cGTP requirements for the clinical supplies of the cell therapy candidate;•delays or failure to obtain clinical supply for our products necessary to conduct clinical trials from contract manufacturers, including commercialgrade clinical supply for our trials;•our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;•treatment candidates demonstrating a lack of efficacy during clinical trials;•inability to continue to fund clinical trials or to find a partner to fund the clinical trials;•competition with ongoing clinical trials and scheduling conflicts with participating clinicians; and•delays in completing data collection and analysis for clinical trials.Any delay or failure to complete clinical trials and obtain FDA approval for our product candidates could have a material adverse effect on our cost todevelop and commercialize, and our ability to generate revenue from, a particular product candidate.We may be unable to manage multiple late stage clinical trials for a variety of product candidates simultaneously.As our current clinical trials progress, we may need to manage multiple late stage clinical trials simultaneously in order to continue developing all of ourcurrent products. Our management team does not have significant experience in completing late stage clinical trials and the management of late stage clinicaltrials is more complex and time consuming than early stage trials. Typically, early stage trials involve several hundred patients in no more than 30 clinicalsites. Late stage (Phase 3) trials may involve up to several thousand patients in up to several hundred clinical sites and may require facilities in severalcountries. Therefore, the project management required to supervise and control such an extensive program is substantially larger than early stage programs.As the need for these resources is not known until some months before the trials begin, it is necessary to recruit large numbers of experienced and talentedindividuals very quickly. If the labor market does not allow this team to be recruited quickly, the sponsor is faced with a decision to delay the program or toinitiate it with inadequate management resources. This may result in recruitment of inappropriate patients, inadequate monitoring of clinical investigatorsand inappropriate handling of data or data analysis. Consequently, it is possible that conclusions of efficacy or safety may not be acceptable to permitsubmission of a BLA for any one of the above reasons or a combination of several.The development of our cell therapy product candidates are subject to uncertainty because autologous cell therapy is inherently variable.When manufacturing an autologous cell therapy, the number and the composition of the cell population varies from patient to patient. Such variabilityin the number and composition of these cells could adversely affect our ability to manufacture autologous cell therapies in a cost-effective or profitablemanner and meet acceptable product release specifications for use in a clinical trial or, if approved, for commercial sale. As a consequence, the developmentand regulatory approval process for autologous cell therapy products could be delayed or may never be completed. Our product development costs will alsoincrease if manufacturing processes and controls require unexpected investments, which could harm our business and results of operations.Any disruption to our access to the reagents we are using in the clinical development of our cell therapy product candidates could adversely affect ourability to perform clinical trials and seek future regulatory submissions.Reagents, including CD3 and CD28 antibody conjugated magnetic beads manufactured by Thermo Fisher Scientifics (which acquired LifeTechnologies), as well as devices, materials and systems that we are using in our clinical trials, that we intend to use in our planned clinical trials and that wemay need or use in commercial production, are provided by unaffiliated third parties. Any lack of continued availability of these reagents, devices, materialsand systems for any reason would have a material adverse effect on our ability to complete these studies and could adversely impact our ability to achievecommercial manufacture of our planned therapeutic products. Although other available sources for these reagents, devices, materials and systems may exist inthe marketplace, we have not evaluated their cost, effectiveness, or intellectual property foundation and therefore cannot guarantee the suitability oravailability of such other potential sources. The initiation of pivotal Phase 3 clinical trials for cell therapy product candidates requires the validation and establishment of manufacturing controlsthat may delay product development timelines.21Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexTo conduct pivotal Phase 3 clinical trials, we are required to have certain validated and established manufacturing controls with respect to the safety,purity and potency of our product when administered to patients. If we determine that the results of any Phase 2 clinical trial we may conduct supports Phase3 development, we expect to initiate and complete one or more pivotal Phase 3 clinical trials for such programs and would need to address any outstandingchemistry, manufacturing and control CMC issues raised by the FDA prior to initiating such trials. We may not be successful in our efforts to address anyCMC issues raised by the FDA. If we cannot initiate, or if we are delayed in initiating, a pivotal Phase 3 clinical program as a result of our failure to satisfy theFDA's CMC concerns or otherwise, the timing of regulatory submission for commercialization of our product candidates would be delayed, or we may beunable to seek regulatory approval to commercialize our products at all.Product candidates that appear promising in research and development may be delayed or may fail to reach later stages of clinical development.The successful development of pharmaceutical product candidates is highly uncertain. Product candidates that appear promising in research anddevelopment and early clinical trials may be delayed or fail to reach later stages of development. Decisions regarding the further development of productcandidates must be made with limited and incomplete data, which makes it difficult to ensure or even accurately predict whether the allocation of limitedresources and the expenditure of additional capital on specific product candidates will result in desired outcomes. Preclinical and clinical data can beinterpreted in different ways, and negative or inconclusive results or adverse events during a clinical trial could delay, limit or prevent the development of aproduct candidate.Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during theclinical trial process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stageclinical trials. Exploratory trends and results observed in earlier stage clinical trials, particularly trends and results observed for small subsets that were notpre-specified, may not be replicated in later stage clinical trials. Product candidates in Phase 3 clinical trials may fail to demonstrate sufficient efficacydespite having progressed through initial clinical trials, even if certain exploratory subset analyses of primary or secondary endpoints in those early trialsshowed trends toward efficacy or, in some analyses, nominal statistical significance. The results of clinical trials in one set of patients or line of treatment maynot be predictive of those obtained in another.If serious or unacceptable side effects are identified during the development of any of our product candidate, we may need to abandon or limit ourdevelopment of that product candidate.All of our product candidates are in clinical development and their risk of failure is high. It is impossible to predict when or if any of our productcandidates will prove effective or safe in humans or will receive marketing approval. If our product candidates are associated with undesirable side effects orhave other unexpected, unacceptable characteristics, we may need to abandon their development or limit development to certain uses or subpopulations inwhich the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Manyinvestigational products that initially showed promise in clinical or earlier stage testing have later been found to cause side effects or other safety issues thatprevented further development. Even if we receive regulatory approval for a candidate with a known safety risk, such an approved product may not achievemarket acceptance by physicians, patients, third-party payors or others in the medical community, which would materially and adversely affect our business.A Fast Track designation by the FDA and other similar regulatory designations may not lead to a faster development, regulatory review or approvalprocess.We were granted Fast Track designation from the FDA for CLBS03 for the treatment of T1D, SAKIGAKE designation in Japan for CLBS12 for thetreatment of CLI, and RMAT designation for CLBS14-NORDA for the treatment of refractory angina. However, Fast Track, SAKIGAKE and RMATdesignations do not ensure that we will experience a faster development, regulatory review or approval process compared to conventional FDA or JapanPMDA procedures. Additionally, the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from theclinical development program. Moreover, award of the designations does not imply a higher probability of success of a product in the approval process.Our clinical trials may fail to demonstrate adequately the safety and efficacy of our product candidates, which would prevent or delay regulatory approvaland commercialization.The clinical trials of our product candidates are, and the manufacturing and marketing of our products will be, subject to extensive and rigorous reviewand regulation by numerous government authorities in the United States and in other countries where we intend to test and market our product candidates.Before obtaining regulatory approvals for the commercial sale of any of our product candidates, we must demonstrate through lengthy, complex andexpensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication. In particular, becauseour cell therapy candidates are subject to regulation as biological drug products, we will need to demonstrate that they are safe, pure,22Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexand potent for use in their target indications. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patientpopulation and for its intended use. The risk/benefit profile required for product licensure will vary depending on these factors and may include adequateduration of response, a delay in the progression of the disease, and/or an improvement in survival. For example, response rates from the use of our productcandidates may not be sufficient to obtain regulatory approval unless we can also show an adequate duration of response.We expect there may be greater variability in results for products processed and administered on a patient-by-patient basis, as anticipated for our productcandidates, than for “off-the-shelf” products, like many other drugs. There is typically an extremely high rate of attrition from the failure of productcandidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profiledespite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have sufferedsignificant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Mostproduct candidates that begin clinical trials are never approved by regulatory authorities for commercialization.Data from earlier studies conducted by the third-party research institutions should not be relied upon as evidence that later or larger-scale clinical trialswill succeed. Some future trials may have different patient populations than current studies and will test our product candidates in different indications,among other differences. In addition, our proposed manufacturing processes for our product candidates include what we believe will be processimprovements that are not part of the production processes that were previously used in the earlier conducted clinical trials being conducted by the researchinstitutions. Accordingly, our results with our product candidates may not be consistent with the results of the clinical trials.In addition, even if such trials are successfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results asdo we, and more trials could be required before we submit our product candidates for approval. To the extent that the results of the trials are not satisfactory tothe FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not beavailable to us, to conduct additional trials in support of potential approval of our product candidates.We presently rely on contract manufacturing organizations to produce our product candidates at development and commercial scale quantities and havenot yet qualified an alternate manufacturing supply, which could negatively impact our ability to meet any future demand for the products.We currently rely on HCATS to provide the cell processing services necessary for clinical production for our various CD34+ cell therapy productcandidates. The Foundation for Biomedical Research and Innovation, a Japanese corporation with its principal place of business in Kobe, Japan ("FBRI") willprovide all cell processing services for the CLBS12 CLI trial in Japan. HCATS and FBRI also provide services and produce materials for clinical trials onbehalf of unaffiliated third parties. To date, neither has produced any products at commercial scale quantities. We expect that HCATS and FBRI would needto expand significantly their manufacturing capabilities to meet potential commercial demand for CLBS03, CLBS12, CLBS14-CMD and CLBS14-NORDAand any other of our product candidates, if approved, as well as any of our other product candidates that might attain regulatory approval. Such expansionwould require additional regulatory approvals. Even if they increase their manufacturing capabilities, it is possible that they may still lack sufficient capacityto meet demand. Ultimately, if we are unable to supply our products to meet commercial demand, whether because of processing constraints or otherdisruptions, delays or difficulties that we experience, sales of the products and their long-term commercial prospects could be significantly damaged.We do not presently have redundant suppliers for any of our product candidates. If the facilities where our product candidates are being manufacturedand/or the associated equipment were significantly damaged or destroyed, or if there were other disruptions, delays or difficulties affecting manufacturingcapacity, our planned and future clinical trials and commercial production for these product candidates would likely be significantly disrupted and delayed.It would be both time consuming and expensive to replace this capacity with third parties, particularly since any new facility would need to comply withregulatory requirements.Ultimately, if we are unable to supply our cell therapy product candidates to meet commercial demand, were commercial approval to be obtained,whether because of processing constraints or other disruptions, delays or difficulties that we experience, our production costs could increase dramatically,and sales of the product and its long-term commercial prospects could be significantly damaged.The commercial potential and profitability of our products are unknown and subject to significant risk and uncertainty.Even if we successfully develop and obtain regulatory approval for our cell therapy product candidates, the market may not understand or accept theproducts, which could adversely affect both the timing and level of future sales. Ultimately, the degree of market acceptance of our product candidates (orany of our future product candidates) will depend on a number of factors, including:23Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index•the efficacy and potential advantages compared to alternative treatments or competitive products;•the prevalence and severity of any side effects;•physician acceptance of our cell therapy approach to our target disease indications, include the ease or difficulty of administering the futureproducts;•restrictions on how the product is distributed or used;•the strength of our marketing and distribution support, including whether we receive support from any patient advocacy groups;•the adequacy of product supply in light of complex manufacturing and distribution processes;•our ability to distinguish our products (which involve adult cells) from any ethical and political controversies associated with stem cell productsderived from human embryonic or fetal tissue; and•the cost of the product, the reimbursement policies of government and third-party payors and our ability to obtain sufficient third-party coverage orreimbursement.Even if we are successful in achieving sales of our product candidates, it is not clear to what extent, if any, the products will be profitable. The costs ofgoods associated with production of cell therapy products are significant. While we are working to improve the speed and efficiency and lower the cost of ourmanufacturing processes, there can be no assurance that we will be successful in these efforts. In addition, some changes in manufacturing processes orprocedures generally require FDA or foreign regulatory authority review and approval prior to implementation. Thus, we may need to conduct additionalnonclinical studies and clinical trials to support approval of any such changes. Furthermore, this review process could be costly and time-consuming andcould delay or prevent the commercialization of product candidates.We may form or seek collaborations or strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefitsof such alliances or licensing arrangements.We may form or seek strategic alliances, create joint ventures or collaborations, or enter into additional licensing arrangements with third parties that webelieve are essential to product commercialization or will complement or augment our development and commercialization efforts with respect to ourproduct candidates and any future product candidates that we may develop. Any of these relationships may require us to incur non-recurring and othercharges, increase our near and long-term expenditures, issue securities that dilute the shares of our existing stockholders, or disrupt our management andbusiness. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates becausethey may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having therequisite potential to demonstrate safety and efficacy.Further, collaborations involving our product candidates, such as our collaborations with third-party research institutions, are subject to numerous risks,which may include the following:•collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration;•collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development orcommercialization programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products,availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities;•collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat orconduct new clinical trials, or require a new formulation of a product candidate for clinical testing;•collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or productcandidates;•a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing anddistribution;24Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index•collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information ina way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information orexpose us to potential liability;•disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of ourproduct candidates, or that result in costly litigation or arbitration that diverts management attention and resources;•collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercializationof the applicable product candidates; and•collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, wewould not have the exclusive right to commercialize such intellectual property.As a result, if we enter into collaboration agreements and strategic partnerships or license our products or businesses, we may not be able to realize thebenefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture, which could delay ourtimelines or otherwise adversely affect our business. We also cannot be certain that, following a strategic transaction or license, we will achieve the revenueor specific net income that justifies such transaction. Any delays in entering into new collaborations or strategic partnership agreements related to ourproduct candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, whichwould harm our business prospects, financial condition and results of operations.We have limited experience in the development and marketing of cell therapies and may be unsuccessful in our efforts to establish a profitable business.We have limited experience in the areas of cell therapy product development and marketing, and in the related regulatory issues and processes. Althoughwe have recruited a team that has experience with designing and conducting clinical trials, as a company we have limited experience in conducting clinicaltrials and no experience in conducting clinical trials through to regulatory approval of any product candidate. In part because of this lack of experience, wecannot be certain that ongoing or planned clinical trials will begin or be completed on time, if at all.Our cell therapy business is based on novel technologies that are inherently expensive, risky and may not be understood by or accepted in the marketplace,which could adversely affect our future value.The clinical development, commercialization and marketing of cell and tissue-based therapies are at an early stage, substantially research-oriented andfinancially speculative. To date, very few companies have been successful in their efforts to develop and commercialize a cell therapy product. In general,cell-based or tissue-based products may be susceptible to various risks, including undesirable and unintended side effects, unintended immune systemresponses, inadequate therapeutic efficacy, or other characteristics that may prevent or limit their approval or commercial use. Regulatory approval of novelproduct candidates such as CLBS03, CLBS12, CLBS14-CMD and CMBS14-NORDA, which are each manufactured using novel and proprietarymanufacturing processes, can be more complex and expensive and take longer than other, more well-known or extensively studied pharmaceutical orbiopharmaceutical products, due to the FDA’s lack of experience with them. To our knowledge, the FDA has only approved five autologous cell therapyproducts to date.This lack of experience may lengthen the regulatory review process, require us to conduct additional studies or clinical trials, which would increase ourdevelopment costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these product candidatesor lead to significant post-approval limitations or restrictions. Furthermore, the number of people who may use cell or tissue-based therapies is difficult toforecast with accuracy. Our future success is dependent on the establishment of a large global market for cell- and tissue-based therapies and our ability tocapture a share of this market with our product candidates.If competitors develop and market products that are more effective, safer, or less expensive than our product candidates or offer other advantages, ourcommercial prospects will be limited.Our cell therapy development programs now face, and will continue to face, intense competition from pharmaceutical, biopharmaceutical andbiotechnology companies, as well as numerous academic and research institutions and governmental agencies engaged in drug discovery activities orfunding, both in the United States and abroad. Some of these competitors are pursuing the development of drugs and other therapies that target the samediseases and conditions that we are targeting with our product candidates.As a general matter, we also face competition from many other companies that are researching and developing cell therapies. Many of these companieshave financial and other resources substantially greater than ours. In addition, many of these competitors have significantly greater experience in testingpharmaceutical and other therapeutic products, obtaining FDA and other regulatory approvals, and marketing and selling FDA-approved products in highlyregulated commercial health care markets. If we ultimately obtain regulatory approval for any of our product candidates, we also will be competing with25Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexrespect to manufacturing efficiency and marketing capabilities, areas in which we have limited or no commercial-scale experience. Mergers and acquisitionsin the pharmaceutical and biotechnology industries may result in resources being even more concentrated by our competitors. Competition may increasefurther as a result of advances made in the commercial applicability of our technologies and greater availability of capital for investment in these fields.Our cell therapy product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated pathway for licensure of so-called biosimilar andinterchangeable biological products, both of which have specific defined meanings under the law. The abbreviated regulatory pathway establishes legalauthority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on itssimilarity to an existing reference product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after theoriginal reference product is approved for marketing in the U.S. a stand-alone BLA. The law is complex and is still being interpreted and implemented by theFDA. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a materialadverse effect on the future commercial prospects for our biological products.There is a risk that the FDA will not consider any of our therapeutic candidates to be reference products for competing products, potentially creating theopportunity for generic competition sooner than anticipated. Additionally, this period of regulatory exclusivity does not apply to companies pursuingregulatory approval via their own traditional BLA, rather than via the abbreviated pathway. Moreover, the extent to which a biosimilar, once approved, willbe substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, andwill depend on a number of marketplace and regulatory factors that are still developing, as well as unique state laws and government/private policies.We may be subject to significant product liability claims and litigation, including potential exposure from the use of our product candidates in humansubjects, and our insurance may be inadequate to cover claims that may arise.Our business exposes us to potential product liability risks inherent in the testing, processing and marketing of cell therapy products. Such liabilityclaims may be expensive to defend and result in large judgments against us. We face an inherent risk of product liability exposure related to the testing of ourcurrent and any future product candidates in human clinical trials and will face an even greater risk with respect to any commercial sales of our productsshould they be approved. None of our product candidates have been widely used over an extended period of time, and therefore relevant safety data arelimited. Cell therapy companies also derive the raw materials for manufacturing of product candidates from human cell sources, and therefore themanufacturing process and handling requirements, including ensuring compliance with cGTPs, are extensive, which increases the risk of quality failures andsubsequent product liability claims. We presently have product liability insurance limited to $10 million per incident and $10 million in annual aggregate.We will need to increase our insurance coverage when we begin commercializing product candidates, if ever. At that time, we may not be able to obtainor maintain product liability insurance on acceptable terms with adequate coverage or at all, or if claims against us substantially exceed our coverage, thenour financial position could be significantly impaired.Whether or not we are ultimately successful in any product liability litigation that may arise, such litigation could consume substantial amounts of ourfinancial and managerial resources, decrease demand for our products and injure our reputation.We seek to maintain errors and omissions, directors and officers, workers' compensation and other insurance at levels we believe to be appropriate to ourbusiness activities. If, however, we were subject to a claim in excess of this coverage or to a claim not covered by our insurance and the claim succeeded, wewould be required to pay the claim from our own limited resources, which could have a material adverse effect on our financial condition, results ofoperations and business. Additionally, liability or alleged liability could harm our business by diverting the attention and resources of our management anddamaging our reputation.We may be unable to retain key officers or employees or hire new key officers or employees needed to implement our business strategy and develop ourproducts and businesses.Given the specialized nature of cell therapy and that it is a relatively new field, there is an inherent scarcity of experienced personnel in the field. We aresubstantially dependent on the skills and efforts of current senior management for their management and operations, as well as for the implementation of ourbusiness strategy. In addition, our future success depends upon our ability to attract and retain additional qualified personnel (including medical, scientific,technical, commercial, business and administrative personnel) necessary to support our anticipated growth, develop our business, perform our contractualobligations to third parties and maintain appropriate licensure. There can be no assurance that we will be successful in attracting or retaining personnelrequired by us to continue to grow our operations. The loss of a key employee, the failure of a key employee to perform in his or her current position or ourinability to attract and/or retain skilled employees, as needed,26Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexcould result in our inability to continue to grow our business or to implement our business strategy, or may have a material adverse effect on our business,financial condition and operating results.Our internal computer systems, or those used by our clinical investigators, clinical research organizations or other contractors or consultants, may fail orsuffer security breaches, which could result in a material disruption of development programs for our product candidates.We rely on information technology systems to keep financial records, maintain laboratory and corporate records, communicate with staff and externalparties and operate other critical functions. Any significant insufficiency degradation or failure of these computer systems could cause us to inaccuratelycalculate or lose our data. Despite the implementation of security measures, these internal computer systems and those used by our clinical investigators,clinical research organizations, and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters,terrorism, war, and telecommunication and electrical failures. The techniques that could be used by criminal elements or foreign governments to attack thesecomputer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world. While we have not experiencedany such system failure, theft of information, accident or security breach to date, if such an event were to occur and cause interruptions in its operations, itcould result in a material disruption of our clinical development activities. For example, the loss of clinical trial data from historical or future clinical trialscould result in delays in regulatory approval efforts and significantly increase costs to recover or reproduce the data. To the extent that any disruption, theftof information, or security breach were to result in a loss of or damage to data or applications, or inappropriate disclosure of confidential or proprietaryinformation, we could incur liability and the clinical development, and the future development of our product candidates could be delayed.RISKS RELATED TO MANUFACTURING OUR DEVELOPMENT PRODUCT CANDIDATESOn March 16, 2017, we entered into a purchase agreement (the "Purchase Agreement") to sell our remaining membership interest in PCT to Hitachi (the"Sale"). As a result of the Sale, we no longer have an ownership interest in PCT. Consequently, we have no internal capacity to manufacture our developmentproduct candidates and have no assurance that we will continue to have access to manufacturers in our industry that can effectively make our developmentproducts or make them at an affordable, saleable or otherwise commercially reasonable price or quantity.Cell manufacturers have a finite manufacturing capacity, which could inhibit the long-term growth prospects of our business.We currently have manufacturing contracts to produce materials for our clinical trials with HCATS at its existing manufacturing facilities in Allendale,New Jersey and Mountain View, California as well as with FBRI at its manufacturing facility in Kobe, Japan. These facilities are intended and have beendesigned to be compliant with FDA cGMP and cGTP requirements. While we believe these facilities provide us with sufficient capacity to meet our expectednear-term needs, it is possible that the demand for our products could exceed their existing manufacturing capacity. We expect that as our own cell therapydevelopment programs progress and demand for cell therapy services in the industry expand, it may become necessary or desirable for us to expand ourmanufacturing vendors for cell therapy services and products in the future, which may require us to invest significant amounts of capital and to obtainregulatory approvals. If HCATS and/or FBRI is/are unable to meet our rising demand for products and services on a timely basis or unable to maintaincGMP/cGTP compliance standards, then it is likely that we will seek to obtain the products and services from competitors, the availability of which wecannot guarantee, and the progress of our own programs will be impaired which could materially and adversely affect the overall success of our developmentprograms.Components of therapeutic products approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMPsand manufacturers of cell-based product candidates, in particular, such as CLBS03 also must comply with cGTPs. In addition, manufacturers of therapeuticproducts may be required to modify their manufacturing processes from time to time in response to FDA requests. The manufacture of live cellular-basedproducts is complex and imposes significant regulatory burdens that may change over time. We may encounter difficulties in the production of our productcandidates due to our limited manufacturing experience.We will need to improve manufacturing efficiency at our contract manufacturers in order to establish cost of goods levels that will permit approvedproducts to succeed commercially.HCATS is working to improve the efficiency of cell therapy product development through the development of engineering and innovation solutions thatgo beyond current practices to develop long-term solutions to the unique challenges of cell therapy manufacturing with the ultimate goal of improving scaleup, cost of goods quality control and robustness of the manufacturing process. They cannot provide assurances that they will be able to develop processenhancements that are acceptable to the FDA, or other comparable regulatory authorities, on a timely basis, on commercially reasonable terms, or at all, orthat any expected improvement in profitability will be realized. If they are unsuccessful in their efforts to develop27Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexthese improvements, we may be unable to develop commercially viable products, which would impair our ability to continue our operations.Lack of access to safe, reliable and effective transportation options could adversely affect our ability to meet our needs.To effectively and efficiently deliver our cell therapy product, we also need to establish and maintain cost-effective relationships with reliable andexperienced transportation carriers. Most existing transportation carriers are not optimally designed for the transportation of cell therapy products. Forexample, these carriers generally lack a true point-to-point chain of control, may have non-controlled X-ray and inspection, do not guarantee packageorientation, handling or storage conditions and, in many cases, lack a standard, documented and tracked operating procedures. While reliable ground carrierswith experience in the transport of blood products exist in major U.S. metropolitan areas, air carriers meeting such needs are limited. If carriers we currentlyuse should cease medical shipping operations or otherwise become unable to properly meet our transportation needs, the lack of access to safe, reliable andeffective transportation options could adversely affect our ability to meet our needs.RISKS RELATED TO THE SALEWe are obligated to indemnify Hitachi America for certain losses resulting from breaches of the representation and warranties and covenants in thePurchase Agreement as well as for certain litigation relating to the Sale.Under the terms of the Purchase Agreement, we are obligated to indemnify Hitachi America for certain losses resulting from breaches of therepresentations and warranties and covenants in the Purchase Agreement as well as certain litigation relating to the Sale. Any and all such liability wouldreduce the net proceeds from the Sale that are available for our use.We may be exposed to litigation related to the Sale from the holders of our stock.Transactions such as the Sale are often subject to lawsuits by stockholders. Because the holders of our stock did not receive any consideration from theSale, it is possible that they may sue us or our board of directors. Such lawsuits could result in substantial costs and divert our management’s attention fromother business concerns, which could seriously harm our business.RISKS RELATED TO GOVERNMENT REGULATIONThe development and commercialization of our product candidates is subject to extensive regulation by the FDA and other regulatory agencies in theUnited States and abroad, and the failure to receive regulatory approvals for our cell therapy product candidates would likely have a material and adverseeffect on our business and prospects.Government authorities in the United States, at the federal, state and local level, and in other countries, extensively regulate, among other things, theresearch, development, testing, manufacture, including any manufacturing changes, packaging, storage, recordkeeping, labeling, advertising and promotion,distribution, marketing, import and export of pharmaceutical and biological products, such as CLBS03, CLBS12 or CLBS14-CMD and CLBS14-NORDA.The process of obtaining required regulatory approvals and the subsequent compliance with appropriate statutes and regulations requires the expenditure ofsubstantial time and money, and there is no guarantee that we will successfully complete the steps needed to obtain regulatory approval of CLBS03,CLBS12, CLBS14-CMD or CLBS14-NORDA or any future product candidates. There also are extensive and ongoing post-marketing compliance obligationsto which we would be subject following FDA approval of any of our product candidates. In addition, these federal regulations may change, and our productcandidates may be subject to new laws or regulations due to the rapid advancement of the regenerative medicine field and legislators'/regulators' interest in it.To date, we have not received regulatory approval to market any of our product candidates in any jurisdiction. If we seek approval of any of our celltherapy product candidates, we will be required to submit to FDA and European and potentially other regulatory authorities extensive preclinical and clinicaldata supporting the safety and efficacy of such products, as well as information about the manufacturing process and to undergo inspection of manufacturingfacilities, among other things. The process of obtaining FDA and other regulatory approvals is expensive, typically takes many years and is subject tonumerous risks and uncertainties, particularly with complex and/or novel product candidates such as our cell-based product candidates. Changes inregulatory approval policies during the clinical research and development period, changes in or the enactment of additional statutes or regulations, orchanges in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application or may make it easier forour competitors to gain regulatory approval to enter the marketplace. Ultimately, the FDA and other regulatory agencies have substantial discretion in theapproval/licensure process and may refuse to accept any application or may decide that our product candidate data are insufficient for approval without thesubmission of additional preclinical, clinical or other time-consuming studies. In addition, varying agency interpretations of the data obtained frompreclinical and clinical testing could delay, limit or prevent regulatory28Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexapproval of a product candidate. Any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments thatrender the approved product not commercially viable.Any of the following factors, among others, could cause regulatory approval for our product candidates to be delayed, limited or denied:•the product candidates require significant clinical testing to demonstrate safety and effectiveness before applications for marketing approval can besubmitted to the FDA and other regulatory authorities;•data obtained from animal testing and other nonclinical testing and clinical trials can be interpreted in different ways, and regulatory authoritiesmay not agree with our respective interpretations or may require us to conduct additional testing;•negative or inconclusive results or the occurrence of serious or unexpected adverse events during a clinical trial could cause us to delay or terminatedevelopment efforts for a product candidate; and/or•the FDA and other regulatory authorities may require expansion of the size and scope of the clinical trials.Any difficulties or failures that we encounter in securing regulatory approval for our product candidates would likely have a substantial adverse impacton our ability to generate product sales and could make any search for a collaborative partner more difficult.We may be unsuccessful in our efforts to comply with applicable federal, state and international laws and regulations, which could result in loss oflicensure, certification or accreditation or other government enforcement actions or impact our ability to secure regulatory approval of our productcandidates.Although we seek to conduct our business in compliance with applicable laws and regulations, these laws and regulations are exceedingly complex andoften subject to varying interpretations. The cell therapy industry is the topic of significant government interest, and thus the laws and regulations applicableto our business are subject to frequent change and/or reinterpretation. As such, there can be no assurance that we will be able, or will have the resources, tomaintain compliance with all applicable biopharmaceutical and health care laws and regulations. Failure to comply with such biopharmaceutical and healthcare laws and regulations could result in significant enforcement actions, civil or criminal penalties, which along with the costs associated with suchcompliance or with enforcement of such biopharmaceutical and health care laws and regulations, may have a material adverse effect on our operations or mayrequire restructuring of our operations or impair our ability to operate profitably.Facilities engaged in the recovery, processing, storage, labeling, packaging or distribution of any human cells, tissues or cellular- and tissue-basedproducts, or the screening or testing of a donor, are required to register with the FDA. Any third party retained by us to process our samples must be similarlyregistered with the FDA and comply with applicable regulations as well as with FDA's cGTP regulations and any failure to comply with these requirementscould adversely affect our business.In addition to cGTPs, FDA's cGMP regulations govern the manufacture, processing, packaging and holding of cell therapy products that are regulated asdrugs. Any third-party manufacturers that prepare our products must comply with cGMP requirements including quality control, quality assurance and themaintenance of records and documentation for certain products. They may be unable to comply with these cGMP requirements and with other FDA, state andforeign regulatory requirements. These requirements may change over time and we or third-party manufacturers may be unable to comply with the revisedrequirements.If we are unable to conduct clinical trials in accordance with regulations and accepted standards, we may be delayed in receiving, or may never receive,regulatory approvals of our product candidates from the FDA and other regulatory authorities.To obtain marketing approvals for our product candidates in the United States and abroad, we must, among other requirements, complete adequate andwell-controlled clinical trials sufficient to demonstrate to the FDA and other regulatory bodies that the product candidate is safe and effective for eachindication for which approval is sought. If the FDA finds that patients enrolled in the trial are or would be exposed to an unreasonable and significant risk ofillness or injury, due to, among other things, occurrence of one or more serious adverse events in an ongoing clinical trial, the FDA can place one or more ofour clinical trials on partial or full clinical hold. If safety concerns develop, we may, or the FDA, a foreign regulatory authority, or an IRB may require us to,stop the affected trials before completion.The completion of our clinical trials also may be delayed or terminated for a number of other reasons, including if:•third-party clinical investigators do not perform the clinical trials on the anticipated schedule or consistent with the clinical trial protocol, GCPsrequired by the FDA and other regulatory requirements, or other third parties do not perform data collection and analysis in a timely or accuratemanner;29Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index•inspections of clinical trial sites by the FDA or by IRBs of research institutions participating in the clinical trials, reveal regulatory violations thatrequire the sponsor of the trial to undertake corrective action, suspend or terminate one or more sites, or prohibit use of some or all of the data insupport of marketing applications; or•the FDA or one or more IRBs suspends or terminates the trial at an investigational site or precludes enrollment of additional subjects.Our development costs will increase if there are material delays in our clinical trials, or if we are required to modify, suspend, terminate or repeat aclinical trial. If we are unable to conduct our clinical trials properly, we may never receive regulatory approval to market our product candidates.We will continue to be subject to extensive FDA regulation following any product approvals, and if we fail to comply with these regulations, we may suffera significant setback in our business.Even if we are successful in obtaining regulatory approval of our product candidates, we will continue to be subject to the requirements of and review by,the FDA and comparable regulatory authorities in the areas of manufacturing processes, quality assurance, post-approval clinical data, adverse eventreporting, labeling, advertising and promotional activities, among other things. In addition, any marketing approval we receive may be limited in terms of theapproved product indication or require costly post-marketing testing and surveillance. Discovery after approval of previously unknown problems with aproduct, manufacturer or manufacturing process, or a failure to comply with regulatory requirements, may result in actions such as:•warning letters or untitled letters or other actions requiring changes in product manufacturing processes or restrictions on product marketing ordistribution;•product recalls or seizures or the temporary or permanent withdrawal of a product from the market; and•fines, restitution or disgorgement of profits or revenue, the imposition of civil penalties or criminal prosecution.The occurrence of any of these actions would likely cause a material adverse effect on our business, financial condition and results of operations.Additionally, if we or others identify undesirable side effects, or other previously unknown problems, caused by our product candidates after obtainingU.S. or foreign regulatory approval or other products with the same or related active ingredients, a number of potential consequences could result, including:•regulatory authorities may withdraw their approval of the product;•regulatory authorities may require a recall of the product or we may voluntarily recall a product;•regulatory authorities may require the addition of warnings or contradictions in the product labeling, narrowing of the indication in the productlabel or issuance of field alerts to physicians and pharmacies;•we may be required to create a medication guide outlining the risks of such side effects for distribution to patients or institute a REMS;•we may be subject to limitation as to how we promote the product;•we may be required to change the way the product is administered or modify the product in some other way;•the FDA or applicable foreign regulatory authority may require additional clinical trials or costly post-marketing testing and surveillance to monitorthe safety or efficacy of the product;•sales of the product may decrease significantly;•we could be sued and held liable for harm caused to patients; and•our brand and reputation may suffer.Health care companies have been the subject of federal and state investigations, and we could become subject to investigations in the future.Both federal and state government agencies have heightened civil and criminal enforcement efforts. There are numerous ongoing investigations ofhealth care companies, including drug, biologic and medical device companies, as well as their executives and managers. In addition, amendments to theFederal False Claims Act, including under health care reform, have made it easier for private parties to bring “qui tam” (whistleblower) lawsuits againstcompanies under which the whistleblower may be entitled to receive a percentage of any money paid to the government. The Federal False Claims Actprovides, in part, that an action can be brought against any person or entity that has knowingly presented, or caused to be presented, a false or fraudulentrequest for payment from the federal government, or who has made a false statement or used a false record to get30Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexa claim approved. The government has taken the position that claims presented in violation of the federal anti-kickback law, Stark Law or other health care-related laws, including laws enforced by the FDA, may be considered a violation of the Federal False Claims Act. Penalties include substantial fines for eachfalse claim, plus three times the amount of damages that the federal government sustained because of the act of that person or entity and/or exclusion from theMedicare program. In addition, a majority of states have adopted similar state whistleblower and false claims provisions.We are not aware of any government investigations involving any of our facilities or management. While we believe that we are in material compliancewith applicable governmental health care laws and regulations, any future investigations of our business or executives could cause us to incur substantialcosts, and result in significant liabilities or penalties, as well as damage to our reputation.It is uncertain to what extent the government, private health insurers and third-party payors will approve coverage or provide reimbursement for thetherapies and products to which our services relate. Availability for such reimbursement may be further limited by an increasing uninsured population andreductions in Medicare and Medicaid funding in the United States.To the extent that U.S. health care providers cannot obtain coverage or reimbursement for our therapies and products, they may elect not to provide suchtherapies and products to their patients and, thus, may not need our services. Further, as cost containment pressures are increasing in the health care industry,government and private payors may adopt strategies designed to limit the amount of reimbursement paid to health care providers.Similarly, the trend toward managed health care and bundled pricing for health care services in the United States, could significantly influence thepurchase of health care services and products, resulting in lower prices and reduced demand for our therapeutic products under development.We may receive a portion of our revenues from services rendered to patients enrolled in federal health care programs, such as Medicare, and we may alsodirectly or indirectly receive revenues from federal health care programs. Federal health care programs are subject to changes in coverage and reimbursementrules and procedures, including retroactive rate adjustments. These contingencies could materially decrease the range of services covered by such programsor the reimbursement rates paid directly or indirectly for our products and services. To the extent that any health care reform favors the reimbursement ofother therapies over our therapeutic products under development, such reform could affect our ability to sell our services, which may have a material adverseeffect on our revenues.The limitation on reimbursement available from private and government payors may reduce the demand for, or the price of, our services, which couldhave a material adverse effect on our revenues. Additional legislation or regulation relating to the health care industry or third-party coverage andreimbursement may be enacted in the future which could adversely affect the revenues generated from the sale of our products and services.Furthermore, there has been a trend in recent years towards reductions in overall funding for Medicare and Medicaid. There has also been an increase inthe number of people who do not have any form of health care coverage in recent years and who are not eligible for or enrolled in Medicare, Medicaid orother governmental programs. The extent to which the reforms brought about under health care reform may be successful in reducing the number of suchuninsured is unclear, and the reduced funding of governmental programs and increase in uninsured populations could have a negative impact on the demandfor our services to the extent they relate to products and services which are reimbursed by government and private payors.Unintended consequences of health care reform legislation in the U.S. may adversely affect our business.The health care industry is undergoing fundamental changes resulting from political, economic and regulatory influences. In the U.S., comprehensiveprograms are under consideration that seek to, among other things, increase access to health care for the uninsured and control the escalation of health careexpenditures within the economy. In March 2010, the Patient Protection and Affordable Care Act (“PPACA”), as amended by the Health Care and EducationReconciliation Act, or the Affordable Care Act, was passed, which substantially changes the way health care is financed by both governmental and privateinsurers, and significantly impacts the U.S. pharmaceutical industry. While we do not believe this legislation will have a direct impact on our business, thelegislation requires the adoption of implementing regulations, which may have unintended consequences or indirectly impact our business. For instance, thescope and implications of the amendments pursuant to the Fraud Enforcement and Recovery Act of 2009 (“FERA”), have yet to be fully determined oradjudicated and as a result it is difficult to predict how future enforcement initiatives may impact our business. Also, in some instances our clients may behealth insurers that will be subject to limitations on their administrative expenses and federal review of “unreasonable” rate increases that could impact theprices they pay for our services. If the legislation causes such unintended consequences or indirect impact, it could have a material adverse effect on ourbusiness, financial condition and results of operations.In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. On August 2, 2011, the Budget Control Act of2011 was signed into law, which, among other things, creates the Joint Select Committee on Deficit31Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexReduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve a targeted deficit reduction of at least$1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. This included aggregatereductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013. On January 2, 2013, the AmericanTaxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals,and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Strong, partisandisagreement in Congress has prevented implementation of various PPACA provisions, and the Trump Administration has made repeal of the PPACA apriority. One of the first executive orders of the Trump administration granted federal agencies broad powers to unwind regulations under the PPACA. OnJanuary 11, 2017, the Senate voted to approve a “budget blueprint” allowing Republicans to repeal parts of the law while avoiding Democrat filibuster. The“Obamacare Repeal Resolution” passed 51-48. Certain legislators are continuing their efforts to repeal the PPACA, although there is little clarity on howsuch a repeal would be implemented and what a PPACA replacement might look like. For the immediate future, there is significant uncertainty regarding thehealth care, health care coverage and health care insurance markets.The U.S. government has in the past considered, is currently considering and may in the future consider health care policies and proposals intended tocurb rising health care costs, including those that could significantly affect both private and public reimbursement for health care services. State and localgovernments, as well as a number of foreign governments, are also considering or have adopted similar types of policies. Future significant changes in thehealth care systems in the United States or elsewhere, and current uncertainty about whether and how changes may be implemented, could have a negativeimpact on the demand for our products. We are unable to predict whether other health care policies, including policies stemming from legislation orregulations affecting our business, may be proposed or enacted in the future; what effect such policies would have on our business; or the effect ongoinguncertainty about these matters will have on the purchasing decisions of our customers.We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federaland state governments will pay for health care products and services, which could result in reduced demand for our products or additional pricing pressures.Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.In some countries, particularly the member states of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control.In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. Inaddition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of costcontainment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continueafter reimbursement has been obtained. Reference pricing used by various E.U. member states and parallel distribution, or arbitrage between low-priced andhigh-priced member states, can further reduce prices. In some countries where we may seek to market our product candidates in the future, we may be requiredto conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidate to other available therapies in order to obtain ormaintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on prices orreimbursement levels within the country of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, orif pricing is set at unsatisfactory levels, our business could be adversely affected.Inadequate funding for the FDA, the SEC and other government agencies 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 performingnormal business functions on which the operation of our business may rely, which could negatively impact our 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,ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at theagency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations mayrely, 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 drugs to be reviewed and/or approved by necessary governmentagencies, which would adversely affect our business. For example, over the last several years, including beginning on December 22, 2018, the U.S.government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and othergovernment employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely32Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexreview and process our regulatory submissions, which could have a material adverse effect on our business. Further, upon completion of this offering and inour operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in orderto properly capitalize and continue our operations.Competitor companies or hospitals may be able to take advantage of EU rules permitting sales of unlicensed medicines for individual patients to sellcompeting products without a marketing authorization.The EU medicines rules allow individual member states to permit the supply of a medicinal product without a marketing authorization to fulfill specialneeds, where the product is supplied in response to a bona fide unsolicited order, formulated in accordance with the specifications of a health careprofessional and for use by an individual patient under his direct personal responsibility. This may in certain countries also apply to products manufacturedin a country outside the EU and imported to treat specific patients or small groups of patients. In addition, designated advanced therapy medicinal productsdo not need a marketing authorization if they are prepared on a non-routine basis and are used within the same EU member state in a hospital in accordancewith a medical prescription for an individual patient.These exemptions could allow our competitors to make sales in the EU without having obtained a marketing authorization and without undergoing theexpense of clinical trials, especially if those competitors have cell processing facilities in the relevant EU member state. Similarly, certain hospitals may beable to compete with us on the basis of these rules. Because any such sales would be made without a marketing authorization, there would be no need for thecompetitor company or hospital to refer to the clinical data in our marketing authorization dossiers, and so any data exclusivity protection that we mayobtain for our products would not prevent such competing sales.A variety of risks associated with operating our business internationally could materially adversely affect our business.We plan to seek regulatory approval of our product candidates outside of the United States and, accordingly, we expect that we, and any potentialcollaborators in those jurisdictions, will be subject to additional risks related to operating in foreign countries, including:•differing regulatory requirements in foreign countries;•differing coverage and reimbursement requirements in foreign countries;•unexpected changes in tariffs, trade barriers, price and exchange controls, and other regulatory requirements;•economic weakness, including inflation, or political instability in particular foreign economies and markets;•compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad;•foreign taxes, including withholding of payroll taxes;•foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doingbusiness in another country;•difficulties staffing and managing foreign operations;•workforce uncertainty in countries where labor unrest is more common than in the United States;•potential liability under the Foreign Corrupt Practices Act of 1977 or comparable foreign laws, such as the U.K. Anti-Bribery Act;•challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protectintellectual property rights to the same extent as the United States;•production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and•business interruptions resulting from geo-political actions, including war and terrorism.These and other risks associated with our planned international operations may materially adversely affect our ability to attain or maintain profitableoperations.RISKS RELATED TO OUR INTELLECTUAL PROPERTYWe may be unable to obtain or maintain patent protection for our products and product candidates, which could have a material adverse effect on ourbusiness.Our commercial success will depend, in part, on obtaining and maintaining patent protection for new technologies, product candidates, products andprocesses and successfully defending such patents against third-party challenges. To that end, we33Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexfile patent applications, and have been issued patents, that are intended to cover certain methods and uses of stem cells as well as compositions and methodsrelating to T regulatory cells and hematopoietic stem cells. These patent applications may never result in the issuance of patents.The patent positions of biotechnology companies can be highly uncertain and involve complex legal, scientific and factual questions and recent courtdecisions have introduced significant uncertainty regarding the strength of patents in the industry. Moreover, the legal systems of some foreign countries donot favor the aggressive enforcement of patents and may not protect our intellectual property rights to the same extent as the laws of the United States. Any ofthe issued patents we own or license may be challenged by third parties and held to be invalid, unenforceable or with a narrower or different scope ofcoverage than what we currently believe, effectively reducing or eliminating protection we believed we had against competitors with similar products ortechnologies. If we ultimately engage in and lose any such patent disputes, we could be subject to competition and/or significant liabilities, we could berequired to enter into third-party licenses or we could be required to cease using the disputed technology or product. In addition, even if such licenses areavailable, the terms of any license requested by a third party could be unacceptable or unaffordable to us.Product development and approval timelines in the biotechnology industry are very lengthy. As such, it is possible that any patents that may cover anapproved product may have expired at the time of commercialization or only have a short remaining period of exclusivity, thereby reducing the commercialadvantages of the patent. In such case, we would then rely solely on other forms of exclusivity, such as regulatory exclusivity provided by the FDC Act,which may provide less protection to our competitive position.Litigation relating to intellectual property is expensive, time-consuming and uncertain, and we may be unsuccessful in our efforts to protect againstinfringement by third parties or defend ourselves against claims of infringement.To protect our intellectual property, we may initiate litigation or other proceedings. In general, intellectual property litigation is costly, time-consuming,diverts the attention of management and technical personnel and could result in substantial uncertainty regarding our future viability, even if we ultimatelyprevail. Some of our competitors may be able to sustain the costs of such litigation or other proceedings more effectively than can we because of theirsubstantially greater financial resources. The loss or narrowing of our intellectual property protection, the inability to secure or enforce our intellectualproperty rights or a finding that we have infringed the intellectual property rights of a third party could limit our ability to develop or market our productsand services in the future or adversely affect our revenues. Furthermore, any public announcements related to such litigation or regulatory proceedings couldadversely affect the price of our common stock.Third parties may allege that the research, development and commercialization activities we conduct infringe patents or other proprietary rights ownedby such parties. While we do not believe any of our current activities infringe the rights of others, we have not conducted an exhaustive search or analysis ofthird-party patent rights to determine whether our pre-clinical or clinical research and development or activities may infringe or be alleged to infringe anythird-party patent rights. If we are found to have infringed the patents of a third party, we may be required to pay substantial damages; we also may berequired to seek from such party a license, which may not be available on acceptable terms, if at all, to continue our activities. A judicial finding orinfringement or the failure to obtain necessary licenses could prevent us from commercializing our products, which would have a material adverse effect onour business, operating results and financial condition.If we are unable to maintain our licenses, patents or other intellectual property we could lose important protections that are material to continuing ouroperations and our future prospects.To obtain and maintain patent protection and licensing rights under certain of our license agreement, we must, among other things, ensure the timelypayment of all applicable filing and maintenance fees. Any failure to do so could result in the loss of some or all of our rights to proprietary technology or theinability to secure or enforce intellectual property protection.Additionally, our license agreements require us to meet certain diligence obligations in the development of the licensed products. Our failure to meetthese diligence obligations could result in the loss of some or all of our rights, which could materially and adversely affect our business and future prospects.If we are unable to protect the confidentiality of trade secrets, our competitive position could be impaired.A significant amount of our technology, especially regarding manufacturing processes, is unpatented and is maintained as trade secrets and /or know-how. We expend significant energy, resources and know-how in an effort to protect these trade secrets and know-how, including through the use ofconfidentiality agreements. Even so, improper use or disclosure of our confidential information could occur, and in such case, adequate remedies may notexist. The disclosure of trade secrets and know-how could impair our competitive position.In certain countries, patent holders may be required to grant compulsory licenses, which would likely have a significant and detrimental effect on anyfuture revenues in such country.34Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexMany countries, including some countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses tothird parties. In addition, most countries limit the enforceability of patents against government agencies or government contractors. In these countries, thepatent owner may be limited to monetary relief and may be unable to enjoin infringement, which could materially diminish the value of the patent.Compulsory licensing of life-saving products is also becoming increasingly common in developing countries, either through direct legislation orinternational initiatives. Such compulsory licenses could be extended to our product candidates, which may limit our potential revenue opportunities,including with respect to any future revenues that may result from our product candidates.Changes to U.S. patent law may have a material adverse effect on our intellectual property rights.The Leahy-Smith America Invents Act (AIA), which was signed into law on September 16, 2011, significantly changed United States patent law. It maytake some time to establish what the law means, since it is just being interpreted by the lower courts, and any lower court decisions have not been reviewedby either the Federal Circuit Court of Appeals or the Supreme Court, a process that will take years. The first major change is that AIA switches the U.S. patentsystem from a “first to invent” system to a “first to file” system. Now that the first to file system is in effect, there is a risk that another company mayindependently develop identical or similar patents at approximately the same time and be awarded the patents instead of us. Further, in the second majorchange, AIA abolished interference proceedings, and establishes derivation proceedings to replace interference proceedings in all cases in which the timeperiod for instituting an interference proceeding has not lapsed where an inventor named in an earlier application derived the claimed invention from anamed inventor. Now that the derivation proceedings are in effect, there is a risk that the inventorship of any pending patent application can be challengedfor reasons of derivation. The third major change is that AIA established post-grant opposition proceedings that will apply only to patent applications filedafter “first to file” became effective. Post-grant opposition will enable a person who is not the patent owner to initiate proceedings in the patent office within9 months after the grant of a patent that can result in cancellation of a patent as invalid. There is a risk, therefore, that any of our patents once granted after theeffective date of these provisions of the AIA (March 16, 2013) may be subject to post-grant opposition, which will increase uncertainty on the validity of anynewly granted patent or may ultimately result in cancellation of the patent.Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.Our commercial success depends in part on our avoiding infringement of the patents, trademarks and proprietary rights of third parties. There have beenmany lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, includingpatent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the U.S. Patent and Trade Office (the "USPTO") andcorresponding foreign patent offices and trademark violations. Numerous U.S. and foreign issued patents and pending patent applications, which are ownedby third parties, exist in the fields in which we are developing products and services. As the biotechnology and pharmaceutical industries expand and morepatents are issued, the risk increases that our products and services may be subject to claims of infringement of the patent rights of third parties.Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patentapplications with claims to devices, materials, formulations, methods of manufacture, or methods for treatment related to the use or manufacture of ourproducts and services. We have conducted freedom to operate analyses with respect to only certain of our products and services, and therefore we do notknow whether there are any third-party patents that would impair our ability to commercialize these products and services. We also cannot guarantee that anyof our analyses are complete and thorough, nor can we be sure that we have identified each and every patent and pending application in the United States andabroad that is relevant or necessary to the commercialization of our products and services. Because patent applications can take many years to issue, theremay be currently pending patent applications that may later result in issued patents that our products or services may infringe upon.In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patentswere held by a court of competent jurisdiction to cover aspects of our products or services, the holders of any such patents may be able to block our ability tocommercialize such products or services unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to beinvalid or unenforceable. Such a license may not be available on commercially reasonable terms or at all.Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop andcommercialize one or more of our products or services. Defense of these claims, regardless of their merit, would involve substantial litigation expense andwould be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to paysubstantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one ormore licenses from third parties, which may be impossible or require substantial time and monetary expenditure.35Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexRISKS RELATED TO OUR CAPITAL STOCKOur stock price has been, and will likely continue to be, highly volatile.The market price of our common stock has been, and in the future may continue to be, highly volatile. For example, from January 1, 2018 throughMarch 8, 2019 our common stock traded as low as $3.05 per share and as high as $11.65 per share.The market price for our common stock is highly dependent on, among other things, stock market conditions in general, our clinical development efforts,the profitability and growth of our cell therapy services business and the growth of our business in general, the amount of our available cash and investmentsand our level of cash utilization. Future events could increase the volatility seen in our common stock and ultimately cause a significant decline in the priceof our common stock and ultimately impact our ability to raise additional capital in the future. These events could include the following, among others:•low levels of trading volume for our shares;•capital-raising or other transactions that are, or may in the future be, dilutive to existing stockholders or that involve the issuance of debt securities;•delays in our clinical trials, negative clinical trial results or adverse regulatory decisions relating to our product candidates;•adverse fluctuations in our revenues or operating results or financial results that otherwise fall below the market's expectations;•disappointing developments concerning our cell therapy product candidates;•positive developments concerning our cell therapy product candidates that lead to the need for additional capital to complete the developmentprocess; and•legal challenges, disputes and/or other adverse developments impacting our patents or other proprietary rights that protect our products.In addition, broader external events, such as news concerning economic or market conditions in the general economy or within our industry, theactivities of our competitors, changes (or the threat of changes) in U.S. or foreign government regulations impacting the life sciences industry or themovement of capital into or out of our industry, are likely to affect the price of our common stock. There can be no assurance that the market price of ourcommon stock will not continue to fluctuate or decline significantly in the future.In addition to potential dilution associated with future fundraising transactions, we currently have significant numbers of securities outstanding that areexercisable for our common stock, which could result in significant additional dilution and downward pressure on our stock price.As of December 31, 2018, there were 9,865,735 shares of our common stock outstanding. In addition, there were outstanding stock options, restrictedstock units and warrants representing the potential issuance of an additional 1,048,530 shares of our common stock. The issuance of these shares in the futurewould result in significant dilution to our current stockholders and could adversely affect the price of our common stock and the terms on which we couldraise additional capital. In addition, the issuance and subsequent trading of shares could cause the supply of our common stock available for purchase in themarket to exceed the purchase demand for our common stock. Such supply in excess of demand could cause the market price of our common stock to decline.Sales of our common stock pursuant to our at-the-market sales agreement with H.C. Wainwright & Co. may cause substantial dilution to our existingstockholders and the sale of such shares of common stock could cause the price of our common stock to decline.We entered into a Common Stock Sales Agreement with H.C. Wainwright & Co. in February 2018, which was subsequently amended on August 2,2018, pursuant to which we may sell up to $25 million of shares of our common stock over the term of that agreement, subject to certain terms andconditions.Sales by us pursuant to the sales agreement may result in substantial dilution to the interests of other holders of our common stock. The sale of asubstantial number of shares of our common stock, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securitiesin the future at a time and at a price that we might otherwise wish to effect sales. However, we have the right to control the timing and amount of any sales ofour shares under the sales agreement and may be terminated by us at any time at our discretion without any cost to us.36Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexProvisions in our amended and restated certificate of incorporation and by-laws and Delaware law may inhibit a takeover of us, which could limit theprice investors might be willing to pay in the future for our common stock and could entrench management.Our amended and restated certificate of incorporation and by-laws contain provisions that may discourage unsolicited takeover proposals thatstockholders may consider to be in their best interests. Our board of directors is divided into three classes, each of which will generally serve for a term ofthree years with only one class of directors being elected in each year. As a result, at a given annual meeting only a minority of the board of directors may beconsidered for election. Since our staggered board of directors may prevent our stockholders from replacing a majority of our board of directors at any givenannual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover,our board of directors has the ability to designate the terms of and issue new series of preferred stock without stockholder approval.We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions maymake more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing marketprices for our securities.Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a materialadverse effect on our business and stock price.During the course of testing our disclosure controls and procedures and internal control over financial reporting, we may identify and disclose materialweaknesses or significant deficiencies in internal control over financial reporting that will have to be remedied. Implementing any appropriate changes to ourinternal control may require specific compliance training of our directors, officers and employees, entail substantial costs to modify our existing accountingsystems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controlover financial reporting, and any failure to maintain that adequacy or inability to produce accurate financial statements on a timely basis could result in ourfinancial statements being unreliable, increase our operating costs and materially impair our ability to operate our business.Failure to achieve and maintain effective internal control over financial reporting could result in a loss of investor confidence in our financial reports andcould have a material adverse effect on our stock price. Additionally, failure to maintain effective internal control over our financial reporting could result ingovernment investigation or sanctions by regulatory authorities.We may fail to comply with the continued listing requirements of the Nasdaq Capital Market, such that our common stock may be delisted and the price ofour common stock and our ability to access the capital markets could be negatively impacted.Our common stock is listed for trading on the Nasdaq Capital Market. We must satisfy Nasdaq’s continued listing requirements, including, among otherthings, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days. If a company trades for 30 consecutive business daysbelow the $1.00 minimum closing bid price requirement, Nasdaq will send a deficiency notice to the company, advising that it has been afforded a“compliance period” of 180 calendar days to regain compliance with the applicable requirements. Thereafter, if such a company does not regain compliancewith the bid price requirement, a second 180-day compliance period may be available. In February 2016, we received such a deficiency notice from theNasdaq informing us that our stock had traded under $1.00 for thirty (30) consecutive trading days, and that if it did not trade at or above $1.00 for ten (10)consecutive trading days during the next 180 days, our common stock would be delisted absent meeting other conditions for delaying delisting. On July 28,2016, the Company effected a one-for-ten reverse stock split of its issued and outstanding shares of common stock to increase the per share trading price ofour common stock to satisfy the $1.00 minimum bid price requirement. By letter dated August 11, 2016, The Nasdaq Capital Market, Listing QualificationDepartment confirmed that our common stock was in compliance with listing requirements.A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding materialreduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on termsacceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities.ITEM 1B. UNRESOLVED STAFF COMMENTS. None.ITEM 2. PROPERTIES.37Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexOur corporate headquarters are in Basking Ridge, New Jersey. The space is approximately 11,600 rentable square feet. The base monthly rent isapproximately $24,000 and the lease term ends May 31, 2022. In addition, there are two five-year renewal options. In February 2018, we executed a two-yearlease for approximately 3,400 rentable square feet in Rye Brook, New York. The new office lease replaced our 10,000 square foot lease in New York, NewYork, which expired on January 31, 2018. The base monthly rent is approximately $8,400 for our Rye Brook, New York office. In addition, we have theoption to renew the lease for a three-year term. We believe the total leased space is sufficient for the near future.ITEM 3. LEGAL PROCEEDINGS.We are party to certain legal proceedings in the ordinary course of business. We do not believe that any current legal proceedings are likely to have amaterial effect on our business, financial condition or results of operations.ITEM 4. MINE SAFETY DISCLOSURES.Not applicable.38Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexPART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES.Market for Our Common EquityOur common stock trades on The Nasdaq Capital Market under the symbol “CLBS.”HoldersAs of March 8, 2019, there were approximately 693 stockholders of record of our common stock. The number of record holders was determined from therecords of our transfer agent and does not include beneficial owners of our common stock whose shares are held in the names of various security brokers,dealers, and registered clearing agencies.Dividends and Dividend PolicyWe have not paid cash dividends on our common stock. The holders of our common stock are each entitled to receive dividends when and if declared bythe board of directors out of funds legally available therefor, subject to the terms of any outstanding series of preferred stock. We intend to retain any futureearnings to fund the development and growth of our business, and therefore we do not anticipate paying any cash dividends on our common stock in theforeseeable future.Equity Compensation Plan InformationThe following table provides information as of December 31, 2018 regarding shares of our common stock that may be issued under our existing equitycompensation plans, including our 2018 Equity Incentive Compensation Plan (the "2018 Plan"), our 2015 Equity Compensation Plan (the "2015 Plan"), our2009 Stock Option and Incentive Plan (the “2009 Plan”), our 2003 Stock Option and Incentive Plan (the “2003 Plan”), and our amended 2017 EmployeeStock Purchase Plan (the "Amended 2017 ESPP"). Equity Compensation Plan Information Number of securitiesto be issued uponexerciseof outstanding options(1)Weighted Averageexercise price ofoutstanding optionsand rightsNumber of securitiesremaining available forfuture issuance underequitycompensation plan(excluding securitiesreferenced in column(a)) Equity compensation plans approved by security holders (2)1,018,530$30.501,460,066(3)(1)Includes stock options only; does not include purchase rights accruing under the Amended 2017 ESPP Plan because the purchase price (andtherefore the number of shares to be purchased) will not be determined until the end of the purchase period.(2)Consists of the 2018 Plan, the 2015 Plan, the 2009 Plan, the 2003 Plan, and the Amended 2017 ESPP.(3)Includes shares available for future issuance under the 2018 Plan and the Amended 2017 ESPP.Recent Sales of Unregistered SecuritiesNone.ITEM 6. SELECTED FINANCIAL DATA. Not applicable.39Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements thatinvolve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of variousfactors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” herein.OVERVIEWCaladrius Biosciences, Inc. (“we,” “us,” "our," “Caladrius” or the “Company”) is a late-stage therapeutics development biopharmaceutical companycommitted to the development of innovative products that have the potential to restore the health of people with chronic illnesses. Our leadership teamcollectively has decades of biopharmaceutical development experience and world-recognized scientific achievement in the fields of cardiovascular medicineand cell therapy, among other areas. Our goal is to build a broad portfolio of novel and versatile products that address important unmet medical needs. Ourcurrent product candidates include three developmental treatments for cardiovascular diseases based on our CD34+ cell therapy platform: CLBS12, in Phase2 and eligible for early conditional approval in Japan for the treatment of critical limb ischemia ("CLI"); CLBS14-CMD, in Phase 2 in the U.S. for thetreatment of coronary microvascular dysfunction ("CMD"); CLBS14-NORDA (previously known as CLBS14-RfA), for which we are in discussions with theU.S. Food and Drug Administration (the "FDA") to finalize the Phase 3 trial protocol for no-option refractory disabling angina ("NORDA"); and oneautoimmune product candidate, CLBS03, an ex vivo expanded polyclonal T regulatory cell therapy for the treatment of recent-onset Type 1 diabetes ("T1D")for which we completed the analysis of the one-year follow-up data for the primary endpoint of a Phase 2a study and publicly reported on February 13, 2019that the study did not meet its primary endpoint.Ischemic Repair (CD34 Cell Technology)Our CD34+ cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused byischemia. Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted. Through the administration of CD34+ cells, we seek topromote the development and formation of new microvasculature and thereby increase blood flow to the impacted area. We believe that a number ofconditions caused by underlying ischemic injury can be improved through our CD34+ cell technology, including but not limited to CLI, CMD and NORDA.Regarding CLBS12, our product candidate for CLI, after detailed discussion and agreement with the Japanese Pharmaceutical and Medical DeviceAgency ("PMDA"), we opened a Phase 2 trial for enrollment in December 2017 and announced in March 2018 treatment of the first patient. Based on ourdiscussions with the PMDA, we expect that a successful outcome of this trial will make CLBS12 eligible for early conditional approval in Japan, therebyeffectively making our Phase 2 trial a potential registration trial in that strategic market. The initial responses observed in the small number of subjects whohave reached an endpoint in this open label study are consistent with a positive therapeutic effect and safety profile as reported by previously publishedclinical trials in Japan and the U.S. While these early signs are encouraging, it is clear that the final outcome of the trial will be dependent on all data from allsubjects.In October 2017, we announced the award of a $1.9 million grant from the National Institutes of Health to support a clinical study of CD34+ cells inpatients with CMD. This led to the initiation of development of CLBS14-CMD and enrollment of patients in our ESCaPE-CMD Phase 2 proof-of-conceptstudy at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center, Los Angeles, CA. The early results observed in this open label trial from thesmall number of subjects who have reached the 6-month (primary endpoint) follow-up visit support our expectations for CLBS14-CMD and its positivetherapeutic effect and acceptable safety profile in this indication. While the final outcome of the trial will be dependent on the 6-month data from allsubjects, these early observations of increased coronary flow reserve and decreased angina symptoms in treated patients are encouraging.To support a development program of CD34+ cells in the indication of NORDA, we acquired the rights to data and regulatory filings for a CD34+ celltherapy program for refractory angina that had been advanced to Phase 3 under the previous investigational new drug application (“IND”) holder. We havedesignated this program CLBS14-NORDA and reactivated the IND with the FDA with Caladrius as the sponsor. We are presently working with the FDA tofinalize the design of a single registration trial for the registration of CLBS14-NORDA and are targeting the initiation of that trial in fall of 2019.Immunomodulation (Treg Technology)We have been developing for the last several years an innovative therapy for T1D (identified as CLBS03) that is based on a proprietary T regulatory cellplatform technology for immunomodulation. CLBS03 was granted Fast Track and Orphan drug designations from the FDA for this proposed indication andwas granted Advanced Therapeutic Medicinal Product ("ATMP") classification from the European Medicines Agency ("EMA"). This program is based on theuse of Tregs (T-regulatory cells) to40Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indextreat diseases caused by imbalances in an individual's immune system. This novel approach seeks to restore immune balance by enhancing Treg number andfunction. Tregs are a natural part of the human immune system and regulate the activity of effector T cells, the cells that are responsible for protecting thebody from pathogens and foreign antigens. When Tregs function properly, only harmful foreign materials are attacked by effector T cells. In autoimmunedisease, however, it is thought that deficient Treg activity and numbers permit the effector T cells to attack the body's own beneficial cells. In the case of T1D,the beta cells in the pancreas are attacked, thereby reducing and/or eliminating over time the patient's ability to produce insulin.In 2016, we commenced patient enrollment in the first of two cohorts in The Sanford Project: T-Rex Study, a Phase 2a prospective, randomized, placebo-controlled, double-blind clinical trial to evaluate the safety and efficacy of CLBS03 in adolescents with recent onset T1D (the "T-Rex Study"). On February13, 2019, we announced top line results indicating that the therapy was well-tolerated but that the study's primary endpoint of preservation of C-peptide hadnot been achieved. We further indicated that we and our advisors would conduct, over time, a comprehensive analysis of all data from the trial (including any2-year follow-up data to come) and would make decisions regarding further development of CLBS03 based on the results of those analyses.Additional Out-licensing OpportunitiesOur broad intellectual property portfolio of cell therapy assets includes notable programs available for out-licensing in order to continue their clinicaldevelopment. These include additional indications for both our Treg product and our CD34+ cell technology.Our current long-term strategy focuses on advancing our therapies through development with the aim of eventually obtaining market authorizations andentering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions. Webelieve that we are positioned to realize potentially meaningful value increases within our own proprietary pipeline if we are successful in advancing ourproduct candidates to their next significant development milestones.Discontinued OperationsOn May 18, 2017, we completed the previously announced sale of our remaining 80.1% membership interest in PCT, LLC, a Caladrius company ("PCT")to Hitachi Chemical Co. America, Ltd. ("Hitachi"), pursuant to the Interest Purchase Agreement (the "Purchase Agreement") dated as of March 16, 2017, byand among us, PCT and Hitachi, for $75.0 million in cash plus an additional cash adjustment of $4.4 million based on PCT’s cash and outstandingindebtedness as of the closing date and a potential future milestone payment. The sale of PCT represented a strategic shift that has had a major effect on ouroperations, and therefore, all periods presented were adjusted to reflect PCT as discontinued operations. PCT is now known as Hitachi Chemical AdvancedTherapeutic Systems (HCATS).Results of OperationsYear Ended December 31, 2018 Compared to Year Ended December 31, 2017Net losses from continuing operations for the years ended December 31, 2018 and 2017 were each approximately $16.2 million. Overall net loss for theyear ended December 31, 2018 was approximately $16.2 million, compared with overall net income of $22.2 million for the year ended December 31, 2017.In May 2017, the Company sold its remaining 80.1% membership interest in PCT to Hitachi, and as a result, all operations of the PCT Segment, including thegain on sale of $51.7 million, was reported as discontinued operations during the year ended December 31, 2017.Operating ExpensesFor the year ended December 31, 2018, operating expenses totaled $17.0 million compared to $27.6 million for the year ended December 31, 2017,representing a decrease of $10.6 million or 38%. Operating expenses were comprised of the following:•Research and development expenses were approximately $7.6 million for the year ended December 31, 2018 compared to $15.8 million for the yearended December 31, 2017, representing a decrease of approximately $8.2 million, or 52%.◦Ischemic Repair - Ischemic repair expenses were $7.5 million for the year ended December 31, 2018, representing an increase of approximately$4.9 million compared to the year ended December 31, 2017. The increase is primarily related to (i) expenses associated with our Phase 2 studyof CLBS12 in critical limb ischemia development program in Japan, (ii) the initiation of our Phase 1b/2a study for CLBS14-CMD in coronarymicrovascular dysfunction, and (iii) expenses associated with the planning of our CLBS14-NORDA program in no option refractory disablingangina.41Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index◦Immune Modulation - Immune modulation expenses primarily related to expenses associated with our Phase 2 study of CLBS03 in T1D. Duringthe year ended December 31, 2018, we incurred approximately $2.6 million of expense related to the trial, which was entirely offset by therecognition of approximately $2.6 million of amortization of grants received from the California Institute of Regenerative Medicine (CIRM).During the year ended December 31, 2017, we incurred approximately $14.7 million of expense related to the trial, which was partially offset bythe recognition of approximately $1.3 million of amortization of grants received from CIRM. In December 2017, we completed enrollment inthe Phase 2 study, along with all manufacturing-related costs. Our 2018 expenses reflect significantly lower expenses, along with higher CIRMgrant recognition as we transition our activities into the follow-up phase of the clinical trial.•General and administrative expenses were approximately $9.4 million for the year ended December 31, 2018, compared to $11.8 million for the yearended December 31, 2017, representing a decrease of approximately $2.4 million, or 20%. The decrease was due to lower general and administrativeheadcount and corporate-related activities compared with the prior year period.Historically, to minimize our use of cash, we have used a variety of equity and equity-linked instruments as compensation to employees, consultants,directors and other service providers. The use of these instruments has resulted in charges to the results of operations, which has been significant in the past.Other Income (Expense)Total other income (expense) is primarily comprised of investment income on cash and marketable securities, offset by interest expense on notes andloans payables. In May 2017, we repaid all outstanding debt to Oxford Finance LLC, resulting in significantly lower interest expense subsequent to therepayment date.Benefit from Income TaxesThe benefit from income taxes was $11.5 million for the year ended December 31, 2017. We report both continuing and discontinued operations. ASC740-20-45-7 addresses the income tax accounting treatment when there is a loss from continuing operations and income from discontinuing operations. Wemust consider the gain from discontinued operations for purposes of allocating a tax benefit to the current year loss from continuing operations. There arethree acceptable methods on how a company can record its tax provision. We have adopted a method in which the income from discontinued operations arerecognized as a discrete item in the period in which it occurs and applies the concepts of the annual effective tax rate (AETR) during each period incomputing the income tax provision from continuing operations. This method results in tax expense for discontinued operations and an income tax benefitfor the loss generated from continuing operations.Discontinued OperationsIn May 2017, the Company sold its remaining 80.1% membership interest in PCT to Hitachi pursuant to the Purchase Agreement, dated March 16, 2017,by and among Caladrius PCT and Hitachi. The aggregate purchase price to the Company consisted of (i) $75.0 million in cash, (ii) $4.4 million, representingadditional consideration based on PCT’s cash and outstanding indebtedness as of the closing date, and (iii) a potential future milestone payment of $5.0million if PCT had achieved $125 million in cumulative revenue (excluding clinical service reimbursables) (the “Milestone”) for the period from January 1,2017 through December 31, 2018 (the “Milestone Period”). We had determined that the fair value of the milestone payment as of the closing date was zeroand has since confirmed as of December 31, 2018 that the Milestone was not achieved. Pursuant to the terms of the Purchase Agreement, Hitachi paid the Company $5.0 million in March 2017 as an advance payment pending shareholderapproval of the transaction and other closing conditions. On the closing date, the Company received $65.0 million, with an additional $5.0 million of thepurchase consideration (the "Escrow Amount") deposited into an escrow account to cover potential indemnification claims against Caladrius. In June 2018,the escrow agent disbursed to the Company the Escrow Amount in full. The Company also received the $4.4 million additional consideration payment inJuly 2017. The Company incurred approximately $6.9 million in transaction costs related to the 2017 Hitachi transaction, including $4.3 million in retentionpayments to PCT employees, of which 50% was paid in June 2017, and the other 50% was paid in May 2018 on the one-year anniversary of the closing date.The Company recognized the following gain on the date of sale of its 80.1% interest in PCT (in thousands):42Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexFair value of consideration received$79,425Transaction and retention costs(6,919)Carrying value of segment non-controlling interest3,687 $76,193Less carrying amount of assets and liabilities sold: Cash$6,727Accounts receivable3,702Deferred costs4,685Prepaid expenses and other current assets743Property, plant and equipment, net14,900Goodwill7,013Intangibles, net2,090Other assets215Accounts payable(2,278)Accrued liabilities(2,927)Due from Caladrius450Unearned revenues(10,529)Notes payable(342) $24,449 Gain on sale of PCT$51,744The operations and cash flows of the PCT Segment were eliminated from ongoing operations with the sale of the Company's PCT interest. The operatingresults of the PCT Segment for the year ended December 31, 2017 were as follows (in thousands): Year EndedDecember 31, 2017Revenue$16,039Cost of revenues(15,321)Research and development(257)Selling, general, and administrative(3,251)Other expense(14)Provision for income taxes(10,541)Gain on sale of segment51,744Income from discontinued operations$38,399Analysis of Liquidity and Capital ResourcesAt December 31, 2018, we had cash, cash equivalents, and marketable securities of approximately $43.1 million, working capital of approximately $38.5million, and stockholders’ equity of approximately $37.7 million.During the year ended December 31, 2018, we met our immediate cash requirements through existing cash balances. Additionally, we used equity andequity-linked instruments to pay for services and compensation.Net cash provided by or used in operating, investing and financing activities from continuing operations were as follows (in thousands): 43Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index Year Ended December 31, 2018 2017Net cash used in operating activities - continuing operations$(19,986) $(20,238)Net cash (used in) provided by investing activities - continuing operations(4,707) 41,460Net cash provided by (used in) financing activities - continuing operations824 (858) Operating Activities - Continuing OperationsOur cash used in operating activities in the year ended December 31, 2018 totaled approximately $20.0 million, which is the sum of (i) our net loss fromcontinuing operations of $16.2 million, and adjusted for non-cash income and expenses totaling $1.5 million (which includes adjustments for equity-basedcompensation, depreciation and amortization, gain on disposal of assets, and amortization/accretion of marketable securities), and (ii) changes in operatingassets and liabilities of approximately $5.3 million.Our cash used in operating activities in the year ended December 31, 2017 totaled approximately $20.2 million, which is the sum of (i) our net loss fromcontinuing operations of $16.2 million, and adjusted for non-cash income and expenses totaling $9.2 million (which includes adjustments for equity-basedcompensation, depreciation and amortization, loss on disposal of assets, deferred income taxes, income tax benefit, and amortization/accretion of marketablesecurities), and (ii) changes in operating assets and liabilities of approximately $5.1 million.Investing Activities - Continuing OperationsOur cash used in investing activities in the year ended December 31, 2018 totaled approximately $4.7 million and was primarily due to investments of$7.1 million in marketable securities (net), approximately $0.1 million for equipment purchases, and partially offset by $2.6 million in proceeds from the saleof our Counterflow Centrifuge System, or CFC, device.Our cash provided by investing activities in the year ended December 31, 2017 totaled approximately $41.5 million. In 2017, we received $74.6 millionin net proceeds in connection with the sale of our 80.1% ownership interest in PCT to Hitachi, less $6.7 million of cash held by our PCT subsidiary on thedate of the acquisition. We also invested $26.3 million in marketable securities (net) and spent approximately $0.1 million for property and equipment.Financing Activities - Continuing OperationsDuring the year ended December 31, 2018, our financing activities consisted of the following: •We raised net proceeds of approximately $1.0 million through the issuance of 149,041 shares of our common stock under the provisions of ourCommon Stock Sales Agreement with H.C. Wainwright.•We raised $0.4 million option exercise proceeds.•We paid $0.2 million for obligations under equipment finance leases.•We made tax withholding-related payments on net share settlement equity awards to employees of $0.4 million.During the year ended December 31, 2017, our financing activities consisted of the following: •We paid $5.7 million in principal payments on our long-term debt to Oxford Finance, which was fully repaid and retired in May 2017.•We raised gross proceeds of approximately $4.4 million through the issuance of approximately 932,204 shares of our common stock under theconditions of the Second Closing relating to the September 2016 private placement offering.•We raised gross proceeds of approximately $1.2 million through the issuance of approximately 210,506 shares of our common stock under theprovisions of our Common Stock Purchase Agreement with Aspire.•We received proceeds of $0.4 million from the issuance of notes payable relating to certain insurance policies and equipment financings, lessrepayments of $1.0 million.44Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexLiquidity and Capital Requirements OutlookTo meet our short and long-term liquidity needs, we expect to use existing cash balances and a variety of other means. Other sources of liquidity couldinclude additional potential issuances of debt or equity securities in public or private financings, partnerships and/or collaborations and/or sale of assets. Ourhistory of operating losses and liquidity challenges may make it difficult for us to raise capital on acceptable terms or at all. The demand for the equity anddebt of biopharmaceutical companies like ours is dependent upon many factors, including the general state of the financial markets. During times of extrememarket volatility, capital may not be available on favorable terms, if at all. Our inability to obtain such additional capital could materially and adverselyaffect our business operations. We will also continue to seek, as appropriate, grants for scientific and clinical studies from various governmental agencies andfoundations. We believe that our cash on hand will enable us to fund operating expenses for at least the next 12 months following the issuance of ourfinancial statements. Any future development of CLBS14-NORDA will be the subject of the use of proceeds of a future capital raise. Similarly, any futuredevelopment of CLBS12 in the USA will also be the subject of the use of proceeds of a future capital raise.On March 13, 2019, the Company and Lincoln Park Capital Fund, LLC (“Lincoln Park”) entered into a purchase agreement (the “Purchase Agreement”)and a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company has the right to sell to Lincoln Park shares of theCompany’s common stock having an aggregate value of up to $26 million, subject to certain limitations and conditions set forth in the Purchase Agreement(the “Offering”). As consideration for entering into the Purchase Agreement, the Company will issue to Lincoln Park an additional 181,510 shares of commonstock as commitment shares. Pursuant to the Purchase Agreement, Lincoln Park will purchase 250,000 shares of common stock, at a price of $4.00 per share,for a total gross purchase price of $1.0 million (the “Initial Purchase”) upon commencement. Thereafter, as often as every business day from and after onebusiness day following the date of the Initial Purchase and over the 36-month term of the Purchase Agreement, the Company has the right, from time to time,at its sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 100,000 shares of common stock, with such amount increasingas the closing sale price of the common stock increases; provided Lincoln Park’s obligation under any single such purchase will not exceed $2,500,000,unless the Company and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a “Regular Purchase”). If the Companydirects Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such RegularPurchase, and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park in an “accelerated purchase” topurchase an additional amount of common stock that may not exceed the lesser of (i) 300% the number of shares purchased pursuant to the correspondingRegular Purchase or (ii) 30% of the total number of shares of the Company’s common stock traded during a specified period on the applicable purchase dateas set forth in the Purchase Agreement. Under certain circumstances and in accordance with the Purchase Agreement, the Company may direct Lincoln Park topurchase shares in multiple accelerated purchases on the same trading day.In February 2018, we entered into a common stock sales agreement (the "Sales Agreement") with H.C. Wainwright & Co., LLC ("HCW"), as sales agent, inconnection with an “at the market offering” under which we from time to time may offer and sell shares of our common stock, which was further amended inAugust 2018, having an aggregate offering price of up to $25 million. Subject to the terms and conditions of the Sales Agreement, HCW will use itscommercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon our instructions,including any price, time or size limits specified by us. We have provided HCW with customary indemnification rights, and HCW will be entitled to acommission at a fixed commission rate equal to 3.0% of the gross proceeds per share sold. We have no obligation to sell any of the shares and may at anytime suspend sales under the Sales Agreement or terminate the Sales Agreement. The Sales Agreement will terminate upon the sale of all of the shares underthe Sales Agreement unless terminated earlier by either party as permitted under the Sales Agreement. As of December 31, 2018, we issued 149,041 shares ofcommon stock under the Sales Agreement for net proceeds of $1.0 million.In February 2017, the California Institute for Regenerative Medicine ("CIRM") awarded us funds of up to $12.2 million to support the T-Rex Study. Thefunding was based upon the achievement of certain milestones related to the proportion of subjects enrolled in California, as well as manufacturing anddevelopment costs incurred in California. In March 2018, CIRM calculated the precise amount of the funding award as $8.6 million, based on the actualnumber of subjects enrolled in California. We have received total funding of $7.9 million through December 31, 2018.In 2016, Hitachi purchased a 19.9% membership interest in PCT for $19.4 million. In 2017, we received $74.6 million (net) in connection with the saleof our remaining 80.1% ownership interest in PCT to Hitachi, less $6.7 million of cash held by our PCT subsidiary on the date of the acquisition.In 2016, we entered into a securities purchase agreement with a single institutional investor pursuant to which we issued in a registered direct offering, anaggregate of 0.8 million shares of our common stock at a purchase price of $4.72 per share. The gross proceeds to us from the registered direct offering of theshares of common stock were $4.0 million. In concurrent private placements, in 2016, we entered into securities purchase agreements with certain accreditedinvestors with whom we had a substantive, pre-existing relationship, including certain existing stockholders, for the sale by us of common stock, at apurchase price of $4.72 per share. The investments were placed in two tranches whereby (i) $6.6 million was received and 1.4 million shares45Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexof common stock were issued in 2016 upon an initial closing, and (ii) $4.4 million was received and 0.9 million shares of common stock were issued in 2017,which was subject to certain closing conditions, including the enrollment of 70 subjects in our Phase 2 CLBS03 clinical trial, in a second closing.While we continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms,if at all, and our negotiating position in capital generating efforts may worsen as existing resources are used. Additional equity financing may be dilutive toour stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as abusiness; our stock price may not reach levels necessary to induce option or warrant exercises; and asset sales may not be possible on terms we consideracceptable. If we are unable to access capital necessary to meet our long-term liquidity needs, we may have to delay the expansion of our business or raisefunds on terms that we currently consider unfavorable.SEASONALITYWe do not believe that its operations are seasonal in nature. OFF-BALANCE SHEET ARRANGEMENTSWe do not have any off-balance sheet arrangements. CRITICAL ACCOUNTING POLICIES AND ESTIMATESThe preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to makeestimates and judgments that affect the amounts reported in the financial statements. On an ongoing basis, we evaluate our estimates and assumptions. Webase our estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis formaking judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from theseestimates.An accounting policy is considered to be critical if it is important to our financial condition and results of operations and if it requires management’smost difficult, subjective and complex judgments in its application. For a summary of all of our significant accounting policies, see Note 2 to ourConsolidated Financial Statements.Share-Based Compensation We expense all share-based payment awards to employees, directors, and consultants, including grants of stock options, warrants, and restricted stock,over the requisite service period based on the grant date fair value of the awards. Consultant awards are remeasured each reporting period through vesting. Forawards with performance-based vesting criteria, we estimate the probability of achievement of the performance criteria and recognize compensation expenserelated to those awards expected to vest. We determine the fair value of option awards using the Black-Scholes option-pricing model which uses bothhistorical and current market data to estimate the fair value. This method incorporates various assumptions such as the risk-free interest rate, expectedvolatility, expected dividend yield and expected life of the options or warrants. The fair value of our restricted stock and restricted stock units is based on theclosing market price of our common stock on the date of grant.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.Not applicable.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.The financial statements and notes thereto required to be filed under this Item are presented commencing on page 50 of this Annual Report on Form 10-K.46Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCaladrius Biosciences, Inc. and SubsidiariesTable of ContentsReport of Independent Registered Public Accounting Firm48Financial Statements: Consolidated Balance Sheets at December 31, 2018 and 201749 Consolidated Statements of Operations - Years Ended December 31, 2018 and 201750 Consolidated Statements of Comprehensive Loss - Years Ended December 31, 2018 and 201751 Consolidated Statements of Equity - Years Ended December 31, 2018 and 201752 Consolidated Statements of Cash Flows - Years Ended December 31, 2018 and 201753 Notes to Consolidated Financial Statements7047Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and ShareholdersCaladrius Biosciences, Inc.Opinion on the financial statementsWe have audited the accompanying consolidated balance sheets of Caladrius Biosciences, Inc., (a Delaware corporation), and subsidiaries (the “Company”)as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for each of thetwo years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financialstatements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operationsand its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the UnitedStates of America.Basis for opinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulationsof the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financialreporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ GRANT THORNTON LLPWe have served as the Company’s auditor since 2011.New York, New YorkMarch 14, 201948Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share data)December 31, 2018 December 31, 2017ASSETS Current Assets Cash and cash equivalents$10,299 $29,163Restricted cash— 5,005Marketable securities32,754 25,917Prepaid and other current assets1,053 1,312Total current assets44,106 61,397Property and equipment, net165 257Other assets309 1,722Total assets$44,580 $63,376LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY Liabilities Accounts payable$762 $1,343Accrued liabilities4,857 7,812Notes payable, current— 159Total current liabilities5,619 9,314Other long-term liabilities1,507 3,873Total liabilities7,126 13,187Commitments and Contingencies Stockholders' Equity Preferred stock; authorized, 20,000,000 sharesSeries B convertible redeemable preferred stock liquidation value, 0.001 share of common stock, $.01 par value; 825,000shares designated; issued and outstanding, 10,000 shares at December 31, 2018 and December 31, 2017, respectively— —Common stock, $.001 par value, authorized 500,000,000 shares; issued and outstanding, 9,865,735 and 9,483,911 shares, atDecember 31, 2018 and December 31, 2017, respectively10 9Additional paid-in capital436,433 433,044Treasury stock, at cost; 11,080 shares at December 31, 2018 and December 31, 2017 respectively(708) (708)Accumulated deficit(397,977) (381,810)Accumulated other comprehensive loss(32) (28)Total Caladrius Biosciences, Inc. stockholders' equity37,726 50,507Noncontrolling interests(272) (318)Total equity37,454 50,189 $44,580 $63,376 See accompanying notes to consolidated financial statements.49Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data) Year Ended December 31, 20182017Operating Expenses: Research and development$7,594 $15,843General, and administrative9,393 11,750Operating expenses16,987 27,593 Operating loss(16,987) (27,593) Other income (expense): Other income (expense), net824 273Interest expense(5) (378) 819 (105) Loss before benefit from income taxes and noncontrolling interests(16,168) (27,698)Benefit from income taxes— (11,527)Net loss from continuing operations(16,168) (16,171)Discontinued operations - net— 38,399Net (loss) income(16,168) 22,228 Less - net loss from continuing operations attributable to noncontrolling interests(1) (182)Less - net loss from discontinued operations attributable to noncontrolling interests— (569)Net (loss) income attributable to Caladrius Biosciences, Inc. common shareholders(16,167) 22,979 Amounts Attributable to Caladrius Biosciences, Inc. common shareholders: Loss from continuing operations(16,167) (15,989)Income from discontinued operations - net of taxes— 38,968Net (loss) income attributable to Caladrius Biosciences, Inc. common shareholders$(16,167) $22,979 Basic and diluted (loss) income per share: Continuing operations$(1.67) $(1.78)Discontinued operations$— $4.34Caladrius Biosciences, Inc. common shareholders$(1.67) $2.56 Weighted average common shares outstanding: Basic shares9,689 8,969Diluted shares9,689 8,969 See accompanying notes to consolidated financial statements.50Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME(In thousands) Year Ended December 31, 2018 2017Net (loss) income$(16,168) $22,228 Other comprehensive loss: Available for sale securities - net unrealized loss(4) (28)Total other comprehensive loss(4) (28) Comprehensive (loss) income(16,172) 22,200 Comprehensive loss attributable to noncontrolling interests(1) (751) Comprehensive (loss) income attributable to Caladrius Biosciences, Inc. common stockholders$(16,171) $22,951 See accompanying notes to consolidated financial statements.51Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EQUITY(In thousands) Series B ConvertiblePreferred Stock Common Stock AdditionalPaid inCapital AccumulatedOtherComprehensiveIncome AccumulatedDeficit TreasuryStock TotalCaladriusBiosciences,Inc.Stockholders'Equity Non-ControllingInterest inSubsidiary TotalEquity Shares Amount Shares Amount Balance at December 31, 201610 $— 8,206 $8 $410,372 $— $(404,789) $(708) $4,883 $(817) $4,066Net income— — — — — — 22,979 — 22,979 (751) 22,228Unrealized loss on marketablesecurities— — — — — (28) — — (28) — (28)Share-based compensation— — 54 — 2,494 — — — 2,494 — 2,494Net proceeds from issuance ofcommon stock— — 1,220 1 5,700 — — — 5,701 — 5,701Proceeds from option exercises— — 4 — 14 — — — 14 — 14Elimination of equity associatedwith PCT sale— — — — — — — — — (3,686) (3,686)Conversion of redeemablesecurities— — — — 14,734 — — — 14,734 4,666 19,400Change in ownership insubsidiary— — — — (270) — — — (270) 270 —Balance at December 31, 201710 $— 9,484 $9 $433,044 $(28) $(381,810) $(708) $50,507 $(318) $50,189Net loss— — — — — — (16,167) — (16,167) (1) (16,168)Unrealized loss on marketablesecurities— — — — — (4) — — (4) — (4)Share-based compensation— — 129 — 2,053 — — — 2,053 — 2,053Net proceeds from issuance ofcommon stock— — 176 1 1,028 — — — 1,029 — 1,029Proceeds from option exercises— — 77 — 355 — — — 355 — 355Change in ownership insubsidiary— — — — (47) — — — (47) 47 —Balance at December 31, 201810 $— 9,866 $10 $436,433 $(32) $(397,977) $(708) $37,726 $(272) $37,454 See accompanying notes to consolidated financial statements. 52Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Year Ended December 31, 2018 2017Cash flows from operating activities: Net (loss) income$(16,168) $22,228Income from discontinued operations— (38,399)Adjustments to reconcile net (loss) income to net cash used in operating activities: Equity-based compensation expense2,453 1,963Depreciation and amortization225 372(Gain) loss on disposal of assets(1,429) 212Income tax benefit— (11,526)Deferred income taxes— (575)Amortization/accretion on marketable securities282 340Changes in operating assets and liabilities: Prepaid and other current assets261 1,014Other assets291 148Due to PCT— (1,682)Accounts payable, accrued liabilities and other liabilities(5,901) 5,667Net cash used in operating activities - continuing operations(19,986) (20,238)Net cash used in operating activities - discontinued operations— (638)Net cash used in operating activities(19,986) (20,876)Cash flows from investing activities: Purchase of marketable securities(69,690) (60,158)Sales of marketable securities62,567 33,873Proceeds from CFC device sale2,550 —Proceeds from PCT sale— 74,607Net cash sold in PCT sale— (6,727)Acquisition of property and equipment(134) (135)Net cash (used in) provided by investing activities - continuing operations(4,707) 41,460Net cash used in investing activities - discontinued operations— (189)Net cash (used in) provided by investing activities(4,707) 41,271Cash flows from financing activities: Proceeds from exercise of options355 13Tax withholding payments on net share settlement equity awards(403) (358)Net proceeds from issuance of capital stock1,031 5,702Repayment of long-term debt— (5,651)Proceeds from notes payable— 401Repayment of notes payable(159) (965)Net cash provided by (used in) financing activities - continuing operations824 (858)Net cash used in financing activities - discontinued operations— (74)Net cash provided by (used in) financing activities824 (932)Net (decrease) increase in cash, cash equivalents and restricted cash(23,869) 19,463Cash and cash equivalents at beginning of year - continuing operations34,168 7,077Cash and cash equivalents at beginning of year - discontinued operations— 7,628Cash, cash equivalents and restricted cash at end of year$10,299 $34,168 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest$5 $712Taxes— —See accompanying notes to consolidated financial statements. 53Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexCALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1 – The BusinessOVERVIEWCaladrius Biosciences, Inc. (“we,” “us,” "our," “Caladrius” or the “Company”) is a late-stage therapeutics development biopharmaceutical companycommitted to the development of innovative products that have the potential to restore the health of people with chronic illnesses. The Company's leadershipteam collectively has decades of biopharmaceutical development experience and world-recognized scientific achievement in the fields of cardiovascularmedicine and cell therapy, among other areas. Its goal is to build a broad portfolio of novel and versatile products that address important unmet medicalneeds. The Company's current product candidates include three developmental treatments for cardiovascular diseases based on its CD34+ cell therapyplatform: CLBS12, in Phase 2 and eligible for early conditional approval in Japan for the treatment of critical limb ischemia ("CLI"); CLBS14-CMD, in Phase2 in the U.S. for the treatment of coronary microvascular dysfunction ("CMD"); CLBS14-NORDA (previously known as CLBS14-RfA), for which theCompany is in discussions with the U.S. Food and Drug Administration (the "FDA") to finalize the Phase 3 trial protocol for no-option refractory disablingangina ("NORDA"); and one autoimmune product candidate, CLBS03, an ex vivo expanded polyclonal T regulatory cell therapy for the treatment of recent-onset Type 1 diabetes ("T1D") for which the Company completed the analysis of the one-year follow-up data for the primary endpoint of a Phase 2a study andpublicly reported on February 13, 2019 that the study did not meet its primary endpoint.Ischemic Repair (CD34 Cell Technology)The Company's CD34+ cell technology has led to the development of therapeutic product candidates designed to address diseases and conditionscaused by ischemia. Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted. Through the administration of CD34+ cells, theCompany seeks to promote the development and formation of new microvasculature and thereby increase blood flow to the impacted area. The Companybelieves that a number of conditions caused by underlying ischemic injury can be improved through its CD34+ cell technology, including but not limited toCLI, CMD and NORDA.Regarding CLBS12, the Company's product candidate for CLI, after detailed discussion and agreement with the Japanese Pharmaceutical and MedicalDevice Agency ("PMDA"), the Company opened a Phase 2 trial for enrollment in December 2017 and announced in March 2018 treatment of the first patient.Based on discussions with the PMDA, the Company expects that a successful outcome of this trial will make CLBS12 eligible for early conditional approvalin Japan, thereby effectively making the Phase 2 trial a potential registration trial in that strategic market. The initial responses observed in the small numberof subjects who have reached an endpoint in this open label study are consistent with a positive therapeutic effect and safety profile as reported by previouslypublished clinical trials in Japan and the U.S. While these early signs are encouraging, it is clear that the final outcome of the trial will be dependent on alldata from all subjects.In October 2017, the Company announced the award of a $1.9 million grant from the National Institutes of Health to support a clinical study of CD34+cells in patients with CMD. This led to the initiation of development of CLBS14-CMD and enrollment of patients in the Company's ESCaPE-CMD Phase 2proof-of-concept study at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center, Los Angeles, CA. The early results observed in this open labeltrial from the small number of subjects who have reached the 6-month (primary endpoint) follow-up visit support our expectations for CLBS14-CMD and apositive therapeutic effect and acceptable safety profile in this indication. While the final outcome of the trial will be dependent on the 6-month data from allsubjects, these early observations of increased coronary flow reserve and decreased angina symptoms in treated patients are encouraging.To support a development program of CD34+ cells in the indication of NORDA, the Company acquired the rights to data and regulatory filings for aCD34+ cell therapy program for refractory angina that had been advanced to Phase 3 under the previous investigational new drug application (“IND”) holder.The Company has designated this program CLBS14-NORDA and reactivated the IND with the FDA with Caladrius as the sponsor. The Company is presentlyworking with the FDA to finalize the design of a single registration trial for the registration of CLBS14-NORDA and is targeting the initiation of that trial infall if 2019.Immunomodulation (Treg Technology)The Company has been developing for the last several years an innovative therapy for T1D (identified as CLBS03) that is based on a proprietary Tregulatory cell platform technology for immunomodulation. CLBS03 was granted Fast Track and Orphan drug designations from the FDA for this proposedindication and was granted Advanced Therapeutic Medicinal Product ("ATMP") classification from the European Medicines Agency ("EMA"). This programis based on the use of Tregs (T-regulatory cells) to treat diseases caused by imbalances in an individual's immune system. This novel approach seeks to restoreimmune balance by54Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexenhancing Treg number and function. Tregs are a natural part of the human immune system and regulate the activity of effector T cells, the cells that areresponsible for protecting the body from pathogens and foreign antigens. When Tregs function properly, only harmful foreign materials are attacked byeffector T cells. In autoimmune disease, however, it is thought that deficient Treg activity and numbers permit the effector T cells to attack the body's ownbeneficial cells. In the case of T1D, the beta cells in the pancreas are attacked, thereby reducing and/or eliminating over time the patient's ability to produceinsulin.In 2016, the Company commenced patient enrollment in the first of two cohorts in The Sanford Project: T-Rex Study, a Phase 2a prospective,randomized, placebo-controlled, double-blind clinical trial to evaluate the safety and efficacy of CLBS03 in adolescents with recent onset T1D (the "T-RexStudy"). On February 13, 2019, the Company announced top line results indicating that the therapy was well-tolerated but that the study's primary endpointof preservation of C-peptide had not been achieved. The Company further indicated that it and its advisors would conduct, over time, a comprehensiveanalysis of all data from the trial (including any 2-year follow-up data to come) and would make decisions regarding further development of CLBS03 basedon the results of those analyses.Additional Out-licensing OpportunitiesThe Company broad intellectual property portfolio of cell therapy assets includes notable programs available for out-licensing in order to continue theirclinical development. These include additional indications for both its Treg product and its CD34+ cell technology.The Company's current long-term strategy focuses on advancing its therapies through development with the aim of eventually obtaining marketauthorizations and entering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medicalconditions. The Company believes that it is are positioned to realize potentially meaningful value increases within its own proprietary pipeline if it issuccessful in advancing its product candidates to their next significant development milestones.Discontinued OperationsOn May 18, 2017, the Company completed the previously announced sale of its remaining 80.1% membership interest in PCT, LLC, a Caladriuscompany ("PCT") to Hitachi Chemical Co. America, Ltd. ("Hitachi"), pursuant to the Interest Purchase Agreement (the "Purchase Agreement") dated as ofMarch 16, 2017, by and among the Company, PCT and Hitachi (the "2017 Hitachi Transaction"), for $75.0 million in cash plus an additional cash adjustmentof $4.4 million based on PCT’s cash and outstanding indebtedness as of the closing date and a potential future milestone payment (see Note 3). The sale ofPCT represented a strategic shift that has had a major effect on the Company's operations, and therefore, all periods presented were adjusted to reflect PCT asdiscontinued operations. PCT is now known as Hitachi Chemical Advanced Therapeutic Systems (HCATS).Basis of PresentationThe accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the UnitedStates of America (“GAAP”). In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiariesinclude all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of December 31, 2018 and 2017, andthe results of its operations and its cash flows for the years then ended.Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affectthe reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and other assumptionsbelieved to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilitiesthat are not readily apparent from other sources. The Company makes critical estimates and assumptions in determining stock-based awards values andincome taxes. Accordingly, actual results could differ from those estimates and assumptions.An accounting policy is considered to be critical if it is important to the Company’s financial condition and results of operations and if it requiresmanagement’s most difficult, subjective and complex judgments in its application.Principles of Consolidation55Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexThe Consolidated Financial Statements include the accounts of Caladrius Biosciences, Inc. and its wholly-owned and partially-owned subsidiaries andaffiliates, as well as the operations of our former subsidiaries PCT, LLC, a Caladrius company, NeoStem Family Storage, LLC, and PCT Allendale, LLCentities (collectively the "PCT Segment") through May 18, 2017, representing the date which these entities were sold to Hitachi (see Note 3). The PCTSegment is reported in discontinued operations. All intercompany activities have been eliminated in consolidation, except for intercompany activitiesbetween Caladrius and the PCT Segment, which are reported without intercompany eliminations in continuing operations and discontinued operations,respectively.Note 2 – Summary of Significant Accounting PoliciesCash and Cash EquivalentsCash and cash equivalents include short-term, highly liquid, investments with maturities of ninety days or less when purchased.Concentration of RisksThe Company is subject to credit risk from its portfolio of cash, cash equivalents, restricted cash, and marketable securities. Under its investment policy,the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued bythe U.S. government. Cash is held at major banks in the United States. Therefore, the Company is not exposed to any significant concentrations of credit riskfrom these financial instruments. The goals of the Company's investment policy, in order of priority, are as follows: safety and preservation of principal anddiversification of risk, liquidity of investments sufficient to meet cash flow requirements, and a competitive after-tax rate of return.Marketable SecuritiesThe Company determines the appropriate classification of our marketable securities at the time of purchase and reevaluates such designation at eachbalance sheet date. All of our marketable securities are considered as available-for-sale and carried at estimated fair values and reported in cash equivalents.Unrealized gains and losses on available-for-sale securities are excluded from net income and reported in accumulated other comprehensive income (loss) asa separate component of stockholders' equity. Other income (expense), net, includes interest, dividends, amortization of purchase premiums and discounts,realized gains and losses on sales of securities and other-than-temporary declines in the fair value of securities, if any. The cost of securities sold is based onthe specific identification method. We regularly review all of our investments for other-than-temporary declines in fair value. Our review includes theconsideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss position, theseverity and duration of the unrealized losses, whether we have the intent to sell the securities and whether it is more likely than not that we will be requiredto sell the securities before the recovery of their amortized cost basis. When we determine that the decline in fair value of an investment is below ouraccounting basis and this decline is other-than-temporary, we reduce the carrying value of the security we hold and record a loss for the amount of suchdecline.Property and EquipmentThe cost of property and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed on the straight-linemethod. Repairs and maintenance expenditures that do not extend original asset lives are charged to expense as incurred. The estimated useful lives ofproperty and equipment are as follows:Furniture and fixtures10 yearsComputer equipment3 yearsSoftware3 yearsLeasehold improvementsLife of leaseLong-lived AssetsLong-lived assets consist of property and equipment. The assets are amortized on a straight line basis over their respective useful lives. The Companyreviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds the fair value ofthe asset. If other events or changes in circumstances indicate that the carrying amount of an asset that the Company expects to hold and use may not berecoverable, the Company will estimate the undiscounted future cash flows expected to result from the use of the asset and/or its eventual disposition, andrecognize an56Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indeximpairment loss, if any. The impairment loss, if determined to be necessary, would be measured as the amount by which the carrying amount of the assetsexceeds the fair value of the assets.Share-Based Compensation The Company expenses all share-based payment awards to employees, directors, and consultants, including grants of stock options, warrants, andrestricted stock, over the requisite service period based on the grant date fair value of the awards. Consultant awards are remeasured each reporting periodthrough vesting. For awards with performance-based vesting criteria, the Company estimates the probability of achievement of the performance criteria andrecognizes compensation expense related to those awards expected to vest. The Company determines the fair value of option awards using the Black-Scholesoption-pricing model which uses both historical and current market data to estimate the fair value. This method incorporates various assumptions such as therisk-free interest rate, expected volatility, expected dividend yield and expected life of the options or warrants. The fair value of the Company’s restrictedstock and restricted stock units is based on the closing market price of the Company’s common stock on the date of grant.Income (Loss) Per ShareBasic income (loss) per share is based on the weighted effect of all common shares issued and outstanding and is calculated by dividing net income (loss)attributable to common stockholders by the weighted average shares outstanding during the period. Diluted loss per share, which is calculated by dividingnet income (loss) attributable to common stockholders by the weighted average number of common shares used in the basic income (loss) per sharecalculation plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding. Diluted income(loss) per share is not presented as such potentially dilutive securities are anti-dilutive to losses incurred from continuing operations in all periods presented.Income Taxes The Company recognizes (a) the amount of taxes payable or refundable for the current year and (b) deferred tax liabilities and assets for the future taxconsequences of events that have been recognized in the Company’s financial statements or tax returns.The Tax Cuts and Jobs Act (“the Act”) was enacted on December 22, 2017. The income tax effects of changes in tax laws are recognized in the periodwhen enacted. The Act provides for significant tax law changes and modifications with varying effective dates, which include reducing the U.S. federalcorporate income tax rate from 35% to 21%, creating a territorial tax system (with a one-time mandatory repatriation tax on previously deferred foreignearnings), and allowing for immediate capital expensing of certain qualified property acquired and placed in service after September 27, 2017 and beforeJanuary 1, 2023.In response to the enactment of the Act in late 2017, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB118”) to address situations where the accounting is incomplete for certain income tax effects of the Tax Act upon issuance of an entity’s financial statementsfor the reporting period in which the Tax Act was enacted. Under SAB 118, a company may record provisional amounts during a measurement period forspecific income tax effects of the Tax Act for which the accounting is incomplete but for which a reasonable estimate can be determined, and when unable todetermine a reasonable estimate for any income tax effects, report provisional amounts in the first reporting period in which a reasonable estimate can bedetermined.The Company continues to evaluate the accounting for uncertainty in tax positions at the end of each reporting period. The guidance requires companiesto recognize in their financial statements the impact of a tax position if the position is more likely than not of being sustained if the position were to bechallenged by a taxing authority. The position ascertained inherently requires judgment and estimates by management. The Company recognizes interestand penalties as a component of income tax expense.Treasury StockTreasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Gains orlosses on the subsequent reissuance of shares are credited or charged to additional paid in capital.Research and Development Costs Research and development (“R&D”) expenses include salaries, benefits, and other headcount related costs, clinical trial and related clinicalmanufacturing costs, contract and other outside service fees including sponsored research agreements, and facilities and overhead costs. The Companyexpenses the costs associated with research and development activities when incurred.To further drive the Company’s cell therapy initiatives, the Company will continue targeting key governmental agencies, congressional committees andnot-for-profit organizations to contribute funds for the Company’s research and development57Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexprograms. The Company accounts for such grants as a deduction to the related expense in research and development operating expenses when earned.New Accounting PronouncementsIn February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires that a lessee recognize lease assets and lease liabilities for thoseleases classified as operating leases. The guidance is effective for interim and annual periods beginning after December 15, 2018. The Company will adoptthis new standard on January 1, 2019 (the "effective date") and use the effective date as our date of initial application. As such, we will not adjust prior periodamounts. Furthermore, we expect to elect the practical expedients upon transition, which permit companies to not reassess lease identification, classification,and initial direct costs under the new standard for leases that commenced prior to the effective date. We have substantially completed the process ofanalyzing and extracting relevant data from the Company’s lease contracts. We are finalizing our evaluation of the impact that this guidance will have on ourfinancial statements, including related disclosures, and expect to recognize additional right-of-use assets of approximately $1.3 million as of January 1, 2019,and corresponding lease liabilities related to operating leases of approximately $1.4 million as of January 1, 2019. The ultimate impact that the new standardwill depend on the total amount of the Company's lease commitments as of our first reporting period subsequent to the adoption date. The impact of the ASUis non-cash in nature and will not affect the Company’s cash position.In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU2016-15 clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows where diversity in practice exists.ASU 2016-15 was effective in first quarter of fiscal 2018. The adoption of this new guidance did not have a material effect on the consolidated results ofoperations, cash flows and financial position.In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires the income taxconsequences of intra-entity transfers of assets other than inventory to be recognized as current period income tax expense or benefit at the transaction dateand removes the option to defer and amortize the consolidated tax consequences of intra-entity transfers. The new standard was effective on January 1, 2018.The adoption of this new guidance did not have a material effect on the consolidated results of operations, cash flows and financial position.In May 2017, the FASB issued ASU 2017-09, "Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting," to provide clarity andreduce both diversity in practice and cost complexity when applying the guidance in Topic 718 to a change to the terms and conditions of a stock-basedpayment award. ASU 2017-09 also provides guidance about the types of changes to the terms or conditions of a share-based payment award that require anentity to apply modification accounting in accordance with Topic 718. For all entities, including emerging growth companies, the standard is effective forannual periods beginning after December 15, 2017, and for interim periods therein. Early adoption is permitted. The adoption of this new guidance did nothave a material effect on the consolidated results of operations, cash flows and financial position.In June 2018, the FASB issued ASU No. 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting", which supersedes ASC 505-50and expands the scope of ASC 718 to include all share-based payments arrangements related to the acquisition of goods and services from both employeesand nonemployees. For public companies, the amendments are effective for annual reporting periods beginning after December 15, 2018, including interimperiods within those annual periods. Early adoption is permitted, but no earlier than a company's adoption date of ASC 606. The Company is currentlyassessing the impact that adopting this new accounting guidance will have on its financial statements and footnote disclosures.Note 3 – Collaboration and Hitachi License Agreement2016 Hitachi TransactionIn March 2016, PCT entered into a global collaboration with Hitachi (the "2016 Hitachi Transaction"). This collaboration consisted of an equityinvestment in and a license agreement with PCT.Under the equity investment agreement, Hitachi purchased a 19.9% membership interest in PCT for $19.4 million of which $15.0 million of proceedswas distributed to Caladrius from PCT and $4.4 million remained at PCT to be used for the continued expansion and improvements at PCT in support ofcommercial product launch readiness as well as for general corporate purposes.PCT and Hitachi also entered into an exclusive license agreement for the acceleration of the creation of a global commercial cell therapy developmentand manufacturing expertise in Asia pursuant to which PCT received $5.6 million from Hitachi in 2016. PCT licensed certain cell therapy technology andknow-how (including an exclusive license in Asia) and agreed to provide Hitachi with certain training and support. As additional consideration, Hitachiagreed to pay PCT royalties on contract revenue generated58Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexin Asia for a minimum of ten years. In connection with the 2017 Hitachi Transaction described below, this exclusive license agreement was terminated.2017 Hitachi TransactionIn May 2017, the Company sold its remaining 80.1% membership interest in PCT to Hitachi pursuant to the Purchase Agreement, dated March 16, 2017,by and among Caladrius PCT and Hitachi (the "2017 Hitachi Transaction"). The aggregate purchase price to the Company consisted of (i) $75.0 million incash, (ii) $4.4 million, representing additional consideration based on PCT’s cash and outstanding indebtedness as of the closing date, and (iii) a potentialfuture milestone payment of $5.0 million if PCT had achieved $125 million in cumulative revenue (excluding clinical service reimbursables) (the“Milestone”) for the period from January 1, 2017 through December 31, 2018 (the “Milestone Period”). The Company had determined that the fair value ofthe milestone payment as of the closing date was zero and has since confirmed as of December 31, 2018 that the Milestone was not achieved.Hitachi paid the Company $5.0 million in March 2017 as an advance payment pending shareholder approval of the transaction and other closingconditions. On the closing date, the Company received $65.0 million, with an additional $5.0 million of the purchase consideration (the "Escrow Amount")deposited into an escrow account to cover potential indemnification claims against Caladrius. The Escrow Amount was classified as restricted cash on theconsolidated balance sheet as of December 31, 2017. In June 2018, the escrow agent disbursed to the Company the Escrow Amount in full. The Companyalso received the $4.4 million additional consideration payment in July 2017. The Company incurred approximately $6.9 million in transaction costs relatedto the 2017 Hitachi Transaction, including $4.3 million in retention payments to PCT employees, of which 50% was paid in June 2017, and the other 50%was paid in May 2018 on the one year anniversary of the closing date.Concurrent with the signing of the Purchase Agreement, on March 16, 2017, Caladrius entered into a Retention and Incentive Agreement with Robert A.Preti, a former Caladrius director and co-founder and the President of PCT, (the “Retention Agreement”). The Retention Agreement superseded all prioragreements and understandings between Dr. Preti and Caladrius regarding the subject matter of the Retention Agreement. Among other things, the RetentionAgreement provided:•Simultaneously with the closing of the 2017 Hitachi Transaction, Caladrius paid to Dr. Preti $1.9 million (the “First Retention Payment”).•As an incentive to remain employed with PCT and to use commercially reasonable efforts to cause PCT to maximize its overall performance and inparticular to achieve the Milestone (but not contingent upon achieving the Milestone), Dr. Preti would receive a lump-sum cash retention andincentive payment equal to $1.9 million for the period from the closing date of the 2017 Hitachi Transaction until the date one year after the date ofthe closing (the “Anniversary Date”), subject to Dr. Preti’s continued employment with PCT through the Anniversary Date (the “Second RetentionPayment”). In May 2018, the Second Retention Payment was paid to Dr. Preti.•Dr. Preti was entitled to 5% of the Milestone payment if it was successfully earned. As of December 31, 2018, the Company confirmed that theMilestone was not achieved. Note 4 – Available-for-Sale-SecuritiesThe following table is a summary of available-for-sale securities recorded in cash and cash equivalents in our Consolidated Balance Sheets (inthousands): December 31, 2018 December 31, 2017 Cost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFair Value Cost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFair ValueCorporate debt securities$33,536 $— $(32) $33,504 $42,701 $— $(28) $42,673Money market funds4,314 — — 4,314 9,212 — — 9,212Total$37,850 $— $(32) $37,818 $51,913 $— $(28) $51,885Estimated fair values of available-for-sale securities are generally based on prices obtained from commercial pricing services. The following tablesummarizes the classification of the available-for-sale debt securities on our Consolidated Balance Sheets (in thousands):59Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index December 31, 2018 December 31, 2017Cash and cash equivalents$5,064 $25,968Marketable securities32,754 25,917Total$37,818 $51,885The following table summarizes our portfolio of available-for-sale securities by contractual maturity (in thousands): December 31, 2018 Amortized Cost Estimated FairValueLess than one year$37,850 $37,818Greater than one year— —Total$37,850 $37,818Note 5 – Property and EquipmentProperty and equipment consisted of the following (in thousands): December 31, 2018 2017Furniture and fixtures$26 $25Computer equipment247 998Leasehold improvements76 66Property and equipment, gross349 1,089Accumulated depreciation(184) (832)Property and equipment, net$165 $257The Company’s results included depreciation expense of approximately $0.2 million and $0.4 million for the years ended December 31, 2018 and 2017,respectively.Note 6 – Loss Per ShareFor the years ended December 31, 2018 and 2017, the Company incurred net losses from continuing operations and therefore no common stockequivalents were utilized in the calculation of loss per share as they are anti-dilutive in the periods presented. At December 31, 2018 and 2017, the Companyexcluded the following potentially dilutive securities (in thousands): December 31, 2018 2017Stock Options1,019 1,072Warrants30 210Restricted Stock Units58 10 Note 7 – Fair Value MeasurementsFair value of financial assets and liabilities that are being measured and reported are defined as the exchange price that would be received to sell an assetor paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price). The Companyis required to classify fair value measurements in one of the following categories:Level 1 inputs are defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability toaccess at the measurement date.Level 2 inputs are defined as inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly orindirectly.60Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexLevel 3 inputs are defined as unobservable inputs for the assets or liabilities. Financial assets and liabilities are classified based on the lowest level ofinput that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurementrequires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.The Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2018 and December 31, 2017were as follows (in thousands): December 31, 2018 December 31, 2017 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 TotalAssets: Marketable securities -available for sale $— $32,754 $— $32,754 $— $25,917 $— $25,917 $— $32,754 $— $32,754 $— $25,917 $— $25,917Note 8 – Accrued LiabilitiesAccrued liabilities were as follow (in thousands): December 31, 2018 2017Salaries, employee benefits and related taxes$1,758 $1,389Retention payments— 2,233CIRM upfront funding - current2,583 2,446Other516 1,743 $4,857 $7,811Note 9 – Notes PayableAs of December 31, 2017, the Company had notes payable of approximately $0.2 million, relating to certain insurance policies and equipmentfinancings.Note 10 – Stockholders' EquityEquity PlansThe Company has used long-term incentive plans for the purpose of granting equity awards to employees of the Company, including officers, andnonemployees, including consultants and nonemployee members of the Company's board of directors (collectively, "Participants"). The Participants mayreceive awards as determined by a committee of independent members of the Company's board of directors or, to the extent authorized by such committeewith respect to certain Participants, a duly authorized employee (collectively, the "Committee"). The incentive plan currently used by the Company is the2018 Equity Incentive Compensation Plan (the "2018 Plan"), which was adopted by the stockholders of the Company in June 2018, with 1,500,000 sharesauthorized for issuance thereunder, plus any shares currently awarded under the 2015 Equity Compensation Plan (the "2015 Plan") or the Amended andRestated 2009 Equity Compensation Plan (the "2009 Plan") that are not issued due to their subsequent forfeiture, cancellation, or other settlement thereof.Concurrent with the adoption of the 2018 Plan, no future awards will occur under the 2015 Plan or the 2009 Plan. The awards that may be made under the2018 Plan include: (a) incentive stock options and nonqualified stock options, (b) shares of restricted stock, (c) restricted stock units, and (d) other kinds ofequity-based compensation awards. All stock options under the 2015 Plan and 2009 Plan were granted and the 2018 Plan are granted at the fair market valueof the common stock at the grant date. Stock options vest either on the date of grant, ratably over a period determined at time of grant, or upon theaccomplishment of specified business milestones, and generally expire 2, 3, or 10 years from the grant date depending on the status of the recipient as anonemployee, employee or director of the Company. As of December 31, 2018, there were 1,054,411 shares available for future grants under the 2018Plan. No additional awards may be made under the 2015 Plan or the 2009 Plan.The Company adopted an employee stock purchase plan effective January 1, 2013 and authorized 50,000 shares under the plan (the "2012 ESPP"). Theplan has two six-month offering periods per year under which eligible employees may contribute up to 15% of their compensation toward the purchase of theCompany's common stock per offering period (with a $25,000 cap per calendar year). The employee's purchase price is equal to (i) 85% of the closing price ofa share of the Company's common stock on the enrollment date of such offering period or (ii) 85% of the closing price of a share of the Company's commonstock on the61Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexExercise Date of such Offering Period, whichever is lower. In May 2017, the Company's stockholders approved an amendment and restatement to the 2012ESPP (the "2017 ESPP") in order to effect an increase of authorized shares from 50,000 to 100,000. In June 2018, the Company's stockholders approved anamendment to the 2017 ESPP (the " Amended 2017 ESPP") in order to effect an increase of authorized shares from 100,000 to 500,000. During the year endedDecember 31, 2018, 26,875 shares were issued under the 2017 ESPP. At December 31, 2018, the Company had 405,655 shares of the Company's commonstock available for future grant in connection with this plan.Equity IssuancesSeptember 2016 Private PlacementIn September 2016, the Company entered into Securities Purchase Agreements with certain accredited investors with whom it had a substantive, pre-existing relationship, including certain existing stockholders, for the sale by the Company of its common stock, at a purchase price of $4.72 per share. Theinvestments were placed in two tranches whereby (i) $6.6 million was received and 1.4 million shares of common stock were issued in 2016 upon an initialclosing, and (ii) $4.4 million was received and 0.9 million shares of common stock were issued in 2017, which was subject to certain closing conditions,including the enrollment of 70 subjects in the Company’s Phase 2 CLBS03 clinical trial, in a second closing.Aspire Purchase AgreementIn November 2015, the Company entered into a common stock purchase agreement (the "Purchase Agreement") with Aspire Capital Fund, LLC, anIllinois limited liability company (“Aspire Capital”), which provided that, subject to certain terms and conditions and Nasdaq rules, Aspire Capital wascommitted to purchase up to an aggregate of $30 million of shares (limited to a maximum of approximately 1.1 million shares, unless stockholder approvalwas obtained or certain minimum sale price levels were reached) of the Company's common stock over a 24-month term. The Company issued 319,776 sharesof under the Purchase Agreement for gross proceeds of $1.5 million, which Purchase Agreement expired in November 2017.Common Stock Sales AgreementIn February 2018, the Company entered into a common stock sales agreement (the "Sales Agreement") with H.C. Wainwright & Co., LLC ("HCW") assales agent, in connection with an “at the market offering” under which the Company from time to time may offer and sell shares of its common stock, havingan aggregate offering price of up to $12.0 million (limited to a maximum of 2,790,697 shares). Subject to the terms and conditions of the Sales Agreement,HCW will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon theCompany's instructions, including any price, time or size limits specified by the Company. The Company has provided HCW with customaryindemnification rights, and HCW is entitled to a commission at a fixed commission rate equal to 3.0% of the gross proceeds per share sold. The Company hasno obligation to sell any of the shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement. The Sales Agreementwill terminate upon the sale of all of the shares under the Sales Agreement unless terminated earlier by either party as permitted under the Sales Agreement.In August 2018, the Company entered into an amendment to the Sales Agreement to reflect that the shares will be issued pursuant to a RegistrationStatement on Form S-3 (Registration No. 333-226319) that was declared effective in August 2018 and that replaced the Company’s previously effective shelfregistration statement. In connection with the amendment, the number of shares of common stock that may be sold pursuant to the Sales Agreement wasincreased from an aggregate offering amount of $12.0 million to $25.0 million (limited to a maximum of 4,921,260 shares). All other provisions of the SalesAgreement remained unchanged. During the year ended December 31, 2018, the Company issued 149,041 shares of common stock under the SalesAgreement for net proceeds of $1.0 million.Stock Options and WarrantsThe following table summarizes the activity for stock options and warrants for the year ended December 31, 2018:62Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index Stock Options Warrants Shares WeightedAverageExercise Price WeightedAverageRemainingContractualTerm (Years) AggregateIntrinsic Value(In Thousands) Shares WeightedAverageExercise Price WeightedAverageRemainingContractualTerm (Years) AggregateIntrinsic Value (InThousands)Outstanding at December 31,20171,072,499 $33.50 4.76 $0.1 209,818 $53.20 0.95 $— Changes during the Year: Granted157,360 $4.00 — $— Exercised(77,498) $4.60 — $— Forfeited(3,030) $3.80 — $— Expired(130,801) $32.50 (179,818) $60.40 Outstanding at December 31,20181,018,530 $30.50 5.30 $3.3 30,000 $5.90 4.19 $—Vested at December 31, 2018 orexpected to vest in the future1,008,918 $30.80 5.26 $3.3 30,000 $5.90 4.19 $—Exercisable at December 31,2018895,861 $34.20 4.78 $3.3 30,000 $5.90 4.19 $—Restricted StockDuring the years ended December 31, 2018 and 2017, the Company issued restricted stock for services as follows ($ in thousands, except share data): 2018 2017Number of Restricted Stock Issued91,740 181,908Value of Restricted Stock Issued$347.7 $627.7The weighted average estimated fair value of restricted stock issued for services in the years ended December 31, 2018 and 2017 was $3.79 and $3.45 pershare, respectively. The fair value of the restricted stock was determined using the Company’s closing stock price on the date of issuance. The vesting termsof restricted stock issuances are generally between one to four years.Restricted Stock UnitsDuring the years ended December 31, 2018 and 2017, the Company issued restricted stock units for services as follows ($ in thousands, except sharedata): 2018 2017Number of Restricted Stock Units Issued139,497 10,260Value of Restricted Stock Units Issued$711.9 $55.1The weighted average estimated fair value of restricted stock issued for services in the years ended December 31, 2018 and 2017 was $5.10 and $5.37 pershare, respectively. The fair value of the restricted stock units was determined using the Company’s closing stock price on the date of issuance. The vestingterms of restricted stock unit issuances are generally one year, or upon the achievement of performance-based milestones.Note 11 – Share-Based CompensationShare-based CompensationWe utilize share-based compensation in the form of stock options and restricted stock. The following table summarizes the components of share-basedcompensation expense for the years ended December 31, 2018 and 2017 ($ in thousands):63Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index Year Ended December 31, 2018 2017Research and development$446 $269General and administrative2,007 1,694Discontinued operations— 889Total share-based compensation expense$2,453 $2,852The approval of the 2017 Hitachi Transaction (see Note 3) by our stockholders resulted in a change in control under our equity compensation plans (asdefined in the 2009 Plan and the 2015 Equity Plan, and, together with the 2009 Plan, the “Equity Compensation Plans”). Accordingly, all outstandingunvested equity awards were accelerated upon the Closing Date, resulting in an acceleration of $1.9 million of equity compensation for the years endedDecember 31, 2017. In addition, in connection with the 2017 Hitachi Transaction, the Company agreed to extend the post-termination option exercise periodfor all PCT employees transitioning to Hitachi from 90 days to the earlier of (i) two years (May 18, 2019) or (ii) the date of the employees' termination fromPCT. The post-termination option exercise period modification resulted in an additional expense of $0.3 million in 2017 and recorded in discontinuedoperations, since there were no future service requirements to receive the extended benefit.Total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards are expected to berecognized at December 31, 2018 were as follows ($ in thousands): Stock Options Restricted StockUnrecognized compensation cost$540 $—Expected weighted-average period in years of compensation cost to be recognized1.95 0.00Total fair value of shares vested and the weighted average estimated fair values of shares granted for the years ended December 31, 2018 and 2017 wereas follows ($ in thousands): Stock Options Year Ended December31, 2018 2017Total fair value of shares vested $218 $5,002Weighted average estimated fair value of shares granted 2.61 1.72Valuation AssumptionsThe fair value of stock options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based uponhistorical volatility of the Company’s stock. The expected term for the options is based upon observation of actual time elapsed between date of grant andexercise of options for all employees.The range of assumptions made in calculating the fair values of stock options was as follow:64Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index Stock Options Year Ended December 31, 2018 2017Expected term - minimum (in years)5.5 6Expected term - maximum (in years)6 6Expected volatility - minimum68% 71%Expected volatility - maximum73% 74%Weighted Average volatility72% 35%Expected dividend yield— —Risk-free interest rate - minimum2.35% 1.99%Risk-free interest rate - maximum2.96% 2.28%Note 12 – Research FundingCalifornia Institute of Regenerative Medicine Grant AwardIn February 2017, the California Institute for Regenerative Medicine ("CIRM") awarded us funds of up to $12.2 million to support the T-Rex Study. Thefunding will be based upon the achievement of certain milestones related to the proportion of subjects enrolled in California, as well as manufacturing anddevelopment costs incurred in California. In March 2018, CIRM calculated the precise amount of the funding award as $8.6 million, based on the actualnumber of subjects enrolled in California. We received $5.7 million in initial funding in May 2017, and a $1.9 million milestone payment in December 2017,and $0.3 million progress payment in March 2018, of which the total will be amortized over the estimated award period through July 2020 as a reduction tothe related research and development expenses. As of December 31, 2018, $2.6 million of the funding received is recorded in accrued liabilities, representingthe amount expected to be recognized over the next 12 months, and $1.5 million of the funding received is recorded in other long-term liabilities. During theyears ended December 31, 2018 and December 31, 2017, the Company amortized and recognized a $2.6 million and $1.3 million credit to research anddevelopment related to CIRM funds received.Note 13 – Income TaxesThe Tax Cuts and Jobs Act (“the Act”) was enacted on December 22, 2017. The income tax effects of changes in tax laws are recognized in the periodwhen enacted. The Act provides for significant tax law changes and modifications with varying effective dates, which include reducing the U.S. federalcorporate income tax rate from 35% to 21%, creating a territorial tax system (with a one-time mandatory repatriation tax on previously deferred foreignearnings), and allowing for immediate capital expensing of certain qualified property acquired and placed in service after September 27, 2017 and beforeJanuary 1, 2023.In response to the enactment of the Act in late 2017, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB118”) to address situations where the accounting is incomplete for certain income tax effects of the Tax Act upon issuance of an entity’s financial statementsfor the reporting period in which the Tax Act was enacted. The measurement period allowed by SAB 118 has closed during the fourth quarter of 2018 inwhich the Company did not record any adjustments to the $31.9 million recorded in 2017 for the re-measurement of its deferred tax balances which was offsetby a reduction in the valuation allowance resulting in no tax expense. The prospects of supplemental legislation or regulatory processes to addressuncertainties that arise due to the Act, or evolving technical interpretations of the tax law, may cause the Company’s financial statements to be impacted inthe future. The Company will continue to analyze the effects of the Act as subsequent guidance continues to emerge.The Company remeasured certain U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which isgenerally 21%. The provisional amount recorded related to the remeasurement of the deferred tax balance was tax expense of $30 million which was offset bya reduction in the valuation allowance resulting in no tax expense.The provision (benefit) for income taxes is based on loss from operations before provision for income taxes and noncontrolling interests as follows ($ inthousands):65Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index Years Ended December 31, 2018 2017United States$(16,168) $(27,698) $(16,168) $(27,698)The benefit from income taxes was as follows ($ in thousands): Years Ended December 31, 2018 2017Current U.S. Federal$— $(9,310) State and local— (1,641) $— $(10,951)Deferred U.S. Federal$— $(576) State and local— — $— $(576)Total U.S. Federal$— $(9,886) State and local— (1,641) $— $(11,527)The provision (benefit) for income taxes is determined by applying the U.S. Federal statutory rate of 21% to income before income taxes as a result of thefollowing ($ in thousands): Years Ended December 31, 2018 2017U.S. Federal benefit at statutory rate $(3,395) $(9,417)State and local (benefit) / expense net of U.S. federal tax — (1,641)Permanent non deductible expenses for U.S. taxes 11 107AMT credit benefit — (576)Change in state deferred 2,799 —Return to actual (177) —Other true ups (1,949) —Effect of change in deferred tax rate — 29,809Valuation allowance for deferred tax assets 2,711 (29,809)Tax provision benefit $— $(11,527)Deferred income taxes at December 31, 2018 and 2017 consist of the following ($ in thousands):66Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index December 31, 2018 2017Deferred Tax Assets: Accumulated net operating losses (tax effected) $60,544 $60,171CIRM funding 1,033 1,780Deferred rent 5 3Share-based compensation 6,390 2,656Intangibles 199 270Charitable contributions 9 11Accumulated depreciation 9 22Accrued payroll 117 682AMT credit — 575Other 525 526Deferred tax assets 68,831 66,696Deferred tax liabilities — — 68,831 66,696Valuation allowance (68,831) (66,121)Net deferred tax asset $— $575In assessing the realizability of deferred tax assets, including the net operating loss carryforwards (NOLs), the Company assesses the available positiveand negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred tax assets. Based on its assessment, theCompany has provided a full valuation allowance against its net deferred tax assets as their future utilization remains uncertain at this time.As of December 31, 2018, and 2017, the Company had approximately $225.1 million and $210.3 million, respectively of Federal NOLs available tooffset future taxable income expiring from 2030 through 2036. In accordance with Section 382 of the Internal Revenue code, the usage of the Company’sNOLs could be limited in the event of a change in ownership. The ultimate realization of deferred tax assets is dependent upon the generation of futuretaxable income during the period when those temporary differences become deductible. The Company performed an analysis and determined that they have had ownership change of greater than 50% over a 3-year testing period. The lastownership change was determined to be on June 3, 2015. Based on a market capitalization of $124.5M and using an applicable federal rate of 2.5% theannual limitation would be approximately $3.0 million. Post change losses from June 3, 2015 would not be subject to 382 limitations.The Company applies the FASB’s provisions for uncertain tax positions. The Company utilizes the two-step process to determine the amount ofrecognized tax benefit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is thelargest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizesinterest and penalties associated with certain tax positions as a component of income tax expense.As of December 31, 2018, management does not believe the Company has any material uncertain tax positions that would require it to measure andreflect the potential lack of sustainability of a position on audit in its financial statements. The Company will continue to evaluate its uncertain tax positionsin future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be anymaterial changes in its unrecognized tax positions over the next year.For years prior to 2014 the federal statute of limitations is closed for assessing tax. The Company’s state tax returns remain open to examination for aperiod of three to four years from date of filing.Note 14 – Discontinued Operations PCT SegmentIn May 2017, the Company sold its remaining 80.1% membership interest in PCT to Hitachi pursuant to the 2017 Hitachi Transaction (see Note 3). Theaggregate purchase price to the Company consisted of (i) $75.0 million in cash, (ii) $4.4 million,67Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexrepresenting additional consideration based on PCT’s cash and outstanding indebtedness as of the closing date, and (iii) a potential future milestone paymentof $5.0 million if PCT had achieved $125 million in cumulative revenue (excluding clinical service reimbursables) for the period from January 1, 2017through December 31, 2018. The Company had determined that the fair value of the milestone payment as of the closing date was zero and has sinceconfirmed as of December 31, 2018 that the Milestone was not achieved. The Company recognized the following gain on the date of sale of its 80.1% interestin PCT (in thousands):Fair value of consideration received$79,425Transaction and retention costs(6,919)Carrying value of segment non-controlling interest3,687 $76,193Less carrying amount of assets and liabilities sold: Cash$6,727Accounts receivable3,702Deferred costs4,685Prepaid expenses and other current assets743Property, plant and equipment, net14,900Goodwill7,013Intangibles, net2,090Other assets215Accounts payable(2,278)Accrued liabilities(2,927)Due from Caladrius450Unearned revenues(10,529)Notes payable(342) $24,449 Gain on sale of PCT$51,744The operations and cash flows of the PCT Segment were eliminated from ongoing operations with the sale of the Company's PCT Interest. The operatingresults of the PCT Segment for the year ended December 31, 2017 were as follows (in thousands): 2017Revenue$16,039Cost of revenues(15,321)Research and development(257)Selling, general, and administrative(3,251)Other expense(14)Provision for income taxes(10,541)Gain on sale of segment51,744Income from discontinued operations$38,399Note 15 – Commitments and ContingenciesLease CommitmentsWe lease facilities under various operating lease agreements in Basking Ridge, NJ, and Rye Brook, NY, of which certain have escalation clauses andrenewal options. We also lease equipment under certain noncancelable operating leases. Our leases expire from time to time through 2023.A summary of future minimum rental payments required under operating leases that have initial or remaining terms in excess of one year as ofDecember 31, 2018 are as follows (in thousands): 68Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexYears ended Operating Leases2019 $4142020 3272021 3082022 and thereafter 130Total minimum lease payments $1,179 Expense incurred under operating leases were approximately $0.8 million and $1.4 million for the years ended December 31, 2018 and 2017,respectively. ContingenciesUnder license agreements with third parties the Company is typically required to pay maintenance fees, make milestone payments and/or pay other feesand expenses and pay royalties upon commercialization of products. The Company also sponsors research at various academic institutions, which researchagreements generally provide us with an option to license new technology discovered during the course of the sponsored research.From time to time, the Company is subject to legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business.While the outcome of pending claims cannot be predicted with certainty, the Company does not believe that the outcome of any pending claims will have amaterial adverse effect on the Company's financial condition or operating results.Note 16 – Subsequent EventsPurchase AgreementOn March 13, 2019, the Company and Lincoln Park Capital Fund, LLC (“Lincoln Park”) entered into a purchase agreement (the “Purchase Agreement”)and a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company has the right to sell to Lincoln Park shares of theCompany’s common stock having an aggregate value of up to $26 million, subject to certain limitations and conditions set forth in the Purchase Agreement(the “Offering”). As consideration for entering into the Purchase Agreement, the Company will issue to Lincoln Park an additional 181,510 shares of commonstock as commitment shares.Pursuant to the Purchase Agreement, Lincoln Park will purchase 250,000 shares of common stock, at a price of $4.00 per share, for a total gross purchaseprice of $1.0 million (the “Initial Purchase”) upon commencement. Thereafter, as often as every business day from and after one business day following thedate of the Initial Purchase and over the 36-month term of the Purchase Agreement the Company has the right, from time to time, at its sole discretion andsubject to certain conditions, to direct Lincoln Park to purchase up to 100,000 shares of common stock, with such amount increasing as the closing sale priceof the common stock increases; provided Lincoln Park’s obligation under any single such purchase will not exceed $2,500,000, unless the Company andLincoln Park mutually agree to increase the maximum amount of such single purchase (each, a “Regular Purchase”). If the Company directs Lincoln Park topurchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject tocertain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park in an “accelerated purchase” to purchase an additionalamount of common stock that may not exceed the lesser of (i) 300% the number of shares purchased pursuant to the corresponding Regular Purchase or(ii) 30% of the total number of shares of the Company’s common stock traded during a specified period on the applicable purchase date as set forth in thePurchase Agreement. Under certain circumstances and in accordance with the Purchase Agreement, the Company may direct Lincoln Park to purchase sharesin multiple accelerated purchases on the same trading day.The Company controls the timing and amount of any sales of its common stock to Lincoln Park. There is no upper limit on the price per share thatLincoln Park must pay for its common stock under the Purchase Agreement, but in no event will shares be sold to Lincoln Park on a day the closing price isless than the floor price specified in the Purchase Agreement. In all instances, the Company may not sell shares of its common stock to Lincoln Park under thepurchase agreement if it would result in Lincoln Park beneficially owning more than 9.99% of its common stock.The Purchase Agreement does not limit the Company’s ability to raise capital from other sources at the Company’s sole discretion, except that (subject tocertain exceptions) the Company may not enter into any Variable Rate Transaction (as defined in the Purchase Agreement, including the issuance of anyfloating conversion rate or variable priced equity-like securities) during69Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Indexthe 36 months after the date of the Purchase Agreement. The Company has the right to terminate the Purchase Agreement at any time, at no cost to theCompany.70Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable.ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and ProceduresDisclosure controls and procedures are the Company’s controls and other procedures that are designed to ensure that information required to be disclosedin the reports that we file or submit under the Securities Exchange Act of 1934 (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities ExchangeAct of 1934), as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities andExchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure thatinformation required to be disclosed in the reports that we file under the Exchange Act is accumulated and communicated to management, including theChief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating thedisclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives. Due to the inherent limitations of control systems, not all misstatements may be detected.These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error ormistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management overrideof the control. Controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.As of December 31, 2018, we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the SecuritiesExchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controlsand procedures were effective, at the reasonable assurance level, in ensuring that information required to be disclosed by the Company in the reports that itfiles or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms andis accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timelydecisions regarding required disclosure.Internal Control Over Financial ReportingManagement’s Annual Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies andprocedures that:•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of theCompany;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations ofmanagement and the board of directors of the Company; and•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets thatcould have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions or because of declines in thedegree of compliance with policies or procedures.Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. In making thisassessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in InternalControl-Integrated Framework (2013).As of December 31, 2018, based on management’s assessment, the Company’s internal control over financial reporting was effective.Changes in Internal Control over Financial Reporting71Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexThere have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2018 thathave materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.ITEM 9B. OTHER INFORMATION.None.72Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe response to this item is incorporated by reference from the discussion responsive thereto under the captions "Management and Corporate andGovernance Matters," "Section 16(a) Beneficial Ownership Reporting Compliance," and "Code of Conduct and Ethics" in the Company's Proxy Statement forthe 2019 Annual Meeting of Stockholders.ITEM 11. EXECUTIVE COMPENSATIONThe response to this item is incorporated by reference from the discussion responsive thereto under the caption “Executive Officer and DirectorCompensation,” in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe response to this item is incorporated by reference from the discussion responsive thereto under the caption[s] “Security Ownership of CertainBeneficial Owners and Management” and “Equity Compensation Plan Information” in the Company’s Proxy Statement for the 2019 Annual Meeting ofStockholders.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe response to this item is incorporated by reference from the discussion responsive thereto under the captions “Certain Relationships and RelatedTransactions” and “Management and Corporate Governance Matters” in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESThe response to this item is incorporated by reference from the discussion responsive thereto under the caption “Independent Public Accountants” in theCompany’s Proxy Statement for the 2019 Annual Meeting of Stockholders.PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.The following documents are being filed as part of this Report:(a)(1) FINANCIAL STATEMENTS:Reference is made to the Index to Financial Statements and Financial Statement Schedule on Page 44 of this Annual Report on Form 10-K.(a)(2) FINANCIAL STATEMENT SCHEDULE:Reference is made to the Index to Financial Statements and Financial Statement Schedule on Page 44 of this Annual Report on Form 10-K.All other schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of theschedule, or because the information required is included in the Financial Statements or Notes thereto.73Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index(a)(3) EXHIBITS:The following is a list of exhibits filed (or furnished, where specified) as part of this Annual Report on Form 10-K. Exhibits that were previously filed aredescribed below and are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated. Exhibit Description3.1 Amended and Restated Certificate of Incorporation of Caladrius Biosciences, Inc., as amended, effective July 27, 2016 (filedas Exhibit 3.1 to the Company’s on Form 10-Q for the quarter ended June 30, 2016, filed with the SEC on August 9, 2016). 3.2 Amended and Restated By-Laws of the Caladrius Biosciences, Inc. as amended, effective as of July 27, 2016 (filed as Exhibit3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the SEC on August 9,2016). 3.3 Amendments to Amended and Restated Bylaws of Caladrius Biosciences, Inc., effective as of September 18, 2017 (filed asExhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on September 21, 2017). 4.1 Form of Trust Indenture (filed as Exhibit 4.5 to the Company's Registration Statement on Form S-3, File No. 333-206175,filed with the SEC on August 6, 2015). 4.2 Form of Warrant (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on May 5, 2016). 10.1 Director Compensation Policy (filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2018, filed with the SEC on March 22, 2018 and amended on April2, 2018). 10.2 2015 Equity Compensation Plan (filed as Annex A to the Company’s Definitive Proxy Statement filed on Schedule 14A,filed with the SEC on June 8, 2015). 10.3+2017 Employee Stock Purchase Plan (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with theSEC on August 10, 2017). 10.4 Form of Indemnification Agreement for executive officers (filed as Exhibit 10.44 to the Company's Annual Report on Form10-K for the fiscal year ended December 31, 2014 as filed with the SEC on March 2, 2015). 10.5 First Amendment to Loan and Security Agreement, dated June 17, 2015, by and between the Company and Oxford FinanceLLC (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed withthe SEC on August 6, 2015). 10.6 Second Amendment to Loan and Security Agreement, dated September 15, 2015, by and between the Company and OxfordFinance LLC (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30,2015, filed with the SEC on November 5, 2015). 10.7 Consent and Third Amendment to Loan and Security Agreement, dated March 11, 2016, by and between CaladriusBiosciences, Inc., and Oxford Finance LLC (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q. for thequarter ended March 31, 2016, filed with the SEC on May 5, 2016). 10.8 Form of Securities Purchase Agreement, dated as of September 14, 2016, by and between Caladrius Biosciences, Inc. and thepurchaser named therein (registered direct offering) (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled with the SEC on September 15, 2016). 10.9 Form of Securities Purchase Agreement, dated as of September 14, 2016, by and between Caladrius Biosciences, Inc. and thepurchaser named therein (private placement) (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed withthe SEC on September 15, 2016). 10.10 Form of Securities Purchase Agreement, dated as of September 14, 2016, by and between Caladrius Biosciences, Inc. and thepurchaser named therein (private placement) (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed withthe SEC on September 15, 2016). 74Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index10.11 Form of Registration Rights Agreement, dated as of September 14, 2016, by and between Caladrius Biosciences, Inc. and theinvestors named therein (private placement) (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed withthe SEC on September 15, 2016). 10.12 Common Stock Purchase Agreement, dated as of November 4, 2015, by and between the Company and Aspire Capital Fund,LLC (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filedwith the SEC on November 5, 2015). 10.13 Securities Purchase Agreement, dated March 10, 2016, by and among Caladrius Biosciences, Inc., TJP Opportunities FundL.L.C., GPP Opportunities Fund L.L.C. and IEA Private Investments LTD (filed as Exhibit 10.7 to the Company’s QuarterlyReport on Form 10-Q. for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016). 10.14 Registration Rights Agreement, dated March 10, 2016, by and among Caladrius Biosciences, Inc., TJP Opportunities FundL.L.C., GPP Opportunities Fund L.L.C. and IEA Private Investments LTD (filed as Exhibit 10.8 to the Company’s QuarterlyReport on Form 10-Q. for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016). 10.15 Unit Purchase Agreement, dated March 11, 2016, by and among Caladrius Biosciences, Inc., PCT, LLC, a CaladriusCompany and Hitachi Chemical Co. America, LTD (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Qfor the quarter ended March 31, 2016, filed with the SEC on May 5, 2016). 10.16 Amended and Restated Operating Agreement of PCT, LLC, a Caladrius Company, dated March 11, 2016, by and amongPCT, LLC, a Caladrius Company, Caladrius Biosciences, Inc. and Hitachi Chemical Co. America, LTD (filed as Exhibit 10.2to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016). 10.17 Technology License Agreement, dated March 22, 2016, by and between PCT, LLC, a Caladrius Company and HitachiChemical Co. LTD (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q. for the quarter ended March 31,2016, filed with the SEC on May 5, 2016). 10.18 Interest Purchase Agreement, by and among Hitachi Chemical Co. America, Ltd., PCT LLC, a Caladrius Company andCaladrius Biosciences, Inc., dated as of March 16, 2017 (filed as Exhibit 2.1 to the Company's Current Report on Form 8-Kfiled with the SEC on March 17, 2017). 10.19 Warrant for the Purchase of Units of PCT, LLC, a Caladrius Company, effective as of March 16, 2017 (filed as Exhibit 10.1 tothe Company's Current Report on Form 8-K filed with the SEC on March 17, 2017). 10.20 Office Lease Between 110 Allen Road LLC, Landlord and Caladrius Biosciences, Inc. (filed as Exhibit 10.1 to theCompany’s Current Report on Form 8-K filed with the SEC on May 17, 2017). 10.21 Lease Termination Agreement Between 106 Allen Road LLC and Caladrius Biosciences, Inc. (filed as Exhibit 10.2 to theCompany’s Current Report on Form 8-K filed with the SEC on May 17, 2017). 10.22 Common Stock Sales Agreement, dated February 8, 2018, by and between Caladrius Biosciences, Inc. and H.C. Wainwright& Co., LLC (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 8, 2018). 10.23 First Amendment to the Common Stock Sales Agreement, dated August 2018, by and between Caladrius Biosciences, Inc.and H.C. Wainwright & Co., LLC (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC onAugust 2, 2018). 10.24+Employment Agreement, dated as of January 5, 2015 and effective on January 5, 2015, by and between the Company andDavid J. Mazzo, Ph.D. (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on January 5, 2015). 10.25+Amendment, dated as of January 16, 2015, to Employment Agreement, dated as of January 5, 2015 and effective on January5, 2015, by and between the Company and David J. Mazzo, Ph.D. (filed as Exhibit 10.2 to the Company's Current Report onForm 8-K filed on January 16, 2015). 10.26+Amendment to Employment Agreement, dated as of July 25, 2016, by and between the Company and David J. Mazzo, PhD(filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q. for the quarter ended June 30, 2016, filed with theSEC on August 9, 2016). 75Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index10.27+Amendment to Employment Agreement with David J. Mazzo, effective September 18, 2017 (filed as Exhibit 10.1 to theCompany’s Current Report on Form 8-K filed with the SEC on September 21, 2017). 10.28+Amendment to Employment Agreement with David J. Mazzo, dated December 6, 2018 (filed as Exhibit 10.1 to theCompany’s Current Report on Form 8-K filed with the SEC on December 7, 2018). 10.29+Employment Agreement, dated as of August 9, 2016, by and between Caladrius Biosciences, Inc. and Douglas W. Losordo,MD (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 9, 2016). 10.30+Amendment to Employment Letter with Doug Losordo, effective November 1, 2017 (filed as Exhibit 10.1 to the Company’sCurrent Report on Form 8-K filed with the SEC on November 1, 2017). 10.31+Letter Agreement dated June 28, 2011 between the Company and Joseph Talamo (filed as Exhibit 10.10 to the Company'sQuarterly Report on Form 10-Q for the quarter ended June 30, 2011 as filed with the SEC on August 12, 2011). 10.32+Offer Letter Amendment dated October 6, 2015, to Employment Agreement dated June 28, 2011 and effective October 6,2015, by and between the Company and Joseph Talamo. 10.33+Amendment to Letter Agreement, dated as of July 25, 2016, by and between the Company and Joseph Talamo (filed asExhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the SEC onAugust 9, 2016). 10.34+Employment Agreement, dated March 11, 2016, by and between PCT, LLC, a Caladrius Company and Robert A. Preti, PhD(filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with theSEC on May 5, 2016). 10.35+Amendment to Employment Agreement, dated as of July 25, 2016, by and between the Company and Robert Preti, PhD(filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with theSEC on August 9, 2016). 10.36+Retention and Incentive Agreement, by and between Robert A. Preti and Caladrius Biosciences, Inc., dated as of March 16,2017 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 17, 2017). 14.1†Code of Ethics for Senior Financial Officers 21.1†Subsidiaries of Caladrius Biosciences, Inc. 23.1†Consent of Grant Thornton LLP 31.1†Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2†Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32†Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002 101.INS†XBRL Instance Document101.SCH†XBRL Taxonomy Extension Schema101.CAL†XBRL Taxonomy Extension Calculation Linkbase101.DEF†XBRL Taxonomy Extension Definition Linkbase101.LAB†XBRL Taxonomy Extension Label Linkbase101.PRE†XBRL Taxonomy Extension Presentation Linkbase Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.+ Management contract or compensatory plan, contract or arrangement required to be filed as an exhibit to this Form 10-Kpursuant to Item 15(b) of Form 10-K.† Filed herewith.76Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Index†† Furnished herewith.(1) Certain portions of this exhibit were omitted based upon a request for confidential treatment, and the omitted portions were filedseparately with the SEC on a confidential basis.ITEM 16. FORM 10-K SUMMARYNone.77Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IndexSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on March 14, 2019. CALADRIUS BIOSCIENCES, INC. By:/s/ David J. Mazzo, PhDName: David J. MazzoTitle: President and Chief Executive Officer (Principal ExecutiveOfficer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Signature Title Date/s/ David J. MazzoDavid J. Mazzo, PhD Director, and President and Chief Executive Officer (PrincipalExecutive Officer) March 14, 2019/s/ Joseph TalamoJoseph Talamo Senior Vice President, and Chief Financial Officer (Principal Financialand Accounting Officer) March 14, 2019/s/ Gregory B. BrownGregory B. Brown, MD Chairman of the Board of Directors March 14, 2019/s/ Steven S. MyersSteven S. Myers Director March 14, 2019/s/ Steven M. KloskSteven M. Klosk Director March 14, 2019/s/ Peter G. TraberPeter G. Traber, MD Director March 14, 2019/s/ Cynthia Schwalm Cynthia Schwalm Director March 14, 201978Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.1Director Compensation PolicyOn December 4, 2018 the Compensation Committee of Caladrius Biosciences, Inc. (the "Company"), after consultation with the Board,adopted the revised Board of Directors Compensation Policy (the "Board of Directors Compensation Policy"), for all non-employeeBoard members, which policy was previously amended by the Board on March 27, 2018, May 16, 2017 and December 4, 2016, andcurrently provides that:•each Board member shall be authorized to receive an annual cash compensation retainer of $40,000 for his or her service as aBoard member;•the Lead Director shall be authorized to receive an additional annual cash compensation retainer of $10,000 for his or herservice as the Lead Director;•the Non-executive Chair shall be authorized to receive an additional annual cash compensation retainer of $30,000 for his orher service as the Non-executive Chair;•each member of the Company's Audit Committee shall be entitled to receive annual cash compensation of $8,000 for his or herservice on such committee;•each member of the Company's Compensation Committee shall be entitled to receive annual cash compensation of $6,000 forhis or her service on such committee;•each member of the Company's Nominating and Governance Committee shall be entitled to receive annual cash compensationof $4,500 for his or her service on such committee;•each member of the Company's Science and Technology Committee shall be entitled to receive annual cash compensationof$4,500 for his or her service on such committee;•the Audit Committee Chair shall be authorized to receive annual cash compensation of $18,000 for his or her service as theChair;•the Compensation Committee Chair shall be authorized to receive annual cash compensation of $12,000 for his or her service asthe Chair;•the Nominating and Governance Committee Chair shall be authorized to receive annual cash compensation of $9,000 for his orher service as the Chair;•the Science and Technology Committee Chair shall be authorized to receive annual cash compensation of $9,000 for his or herservice as the Chair;•each member of the Board shall receive annually on the second Monday in January a grant of restricted stock with a BlackScholes value of $60,000 with the number of shares to be issued on the grant date calculated based on the grant date fair valuewith annual vesting at one year from the grant date; and•each newly appointed Board member shall receive an initial grant of restricted stock with a Black Scholes value of $60,000 withthe number of shares to be issued on the grant date calculated based on the grant date fair value with one-third vesting annuallyon each of the first, second and third anniversaries of the grant date.Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.32October 6, 2015Joseph Talamo27 Brushy Ridge RoadNew Canaan, CT 06840Dear Joe,This letter serves as an amendment to your offer letter dated June 28, 2011, and confirms your appointment to Senior Vice President& Chief Financial Officer of Caladrius Biosciences, Inc., (the “Company”), reporting to the Chief Executive Officer. Thisappointment is effective October 6, 2015.In accordance with your appointment, your annual base salary shall be $300,000.00 and your target bonus shall be up to 30% ofbase salary. With your appointment, you shall serve as a member of the Company’s Executive Committee.Should the Company terminate your employment without cause, or should you realize a reduction in duties, title, authority orresponsibility that occurs by virtue of the Company being acquired, you will be entitled to receive severance in the amount of six (6)months’ base salary and benefits continuation for the severance period.All other terms and conditions of your employment shall remain the same.Congratulations on your well-deserved appointment! We look forward to your continued efforts and success.Caladrius Biosciences, Inc./s/ David Schloss David SchlossVice President, Human ResourcesAcknowledged and Agreed:106 Allen Road │ 4th Floor │ Basking Ridge, NJ│ 07920 │ Phone: (908) 842-0100www.caladrius.comSource: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 14.1CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERSI.PURPOSEThe Board of Directors (the "Board") of Caladrius Biosciences, Inc. (the "Company") has adopted the following Code of Ethics (the"Code") to apply to the Company's Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or Controller, orpersons performing similar functions (the "Senior Financial Officers"). This Code is intended to focus Senior Financial Officers onareas of ethical risk, provide guidance to help them recognize and deal with ethical issues, provide mechanisms to report unethicalconduct, foster a culture of honesty and accountability, deter wrongdoing and promote fair and accurate disclosure and financialreporting.No code or policy can anticipate every situation that may arise. Accordingly, this Code is intended to serve as a source of guidingprinciples. Senior Financial Officers are encouraged to bring questions about particular circumstances that may involve one or more ofthe provisions of this Code to the attention of the Audit Committee, who may consult with inside or outside legal counsel asappropriate.II.INTRODUCTIONEach Senior Financial Officer is expected to adhere to a high standard of ethical conduct. The good name of the Company depends onthe way Senior Financial Officers conduct business and the way the public perceives that conduct. Unethical actions, or the appearanceof unethical actions, are not acceptable. Senior Financial Officers are expected to be guided by the following principles in carrying outtheir responsibilities.•Loyalty. Senior Financial Officers should not be, or appear to be, subject to influences, interests or relationships that conflictwith the best interests of the Company.•Compliance with Applicable Laws. Senior Financial Officers are expected to comply with all laws, rules and regulationsapplicable to the Company's activities.•Observance of Ethical Standards. Senior Financial Officers must adhere to high ethical standards in the conduct of their duties.These include honesty and fairness.III.DUTY TO REPORT VIOLATIONSYou are responsible for reporting in good faith to the Company any circumstances that you believe may constitute a violation of thisCode of Conduct. Senior Financial Officers should communicate any suspected violations of this Code promptly to the Chairman ofthe Audit Committee.an independent director and member of our Audit Committee. The Audit Committee Chair will then inform theother independent directors and they will determine whether a violation has occurred, according to the standards outlined above, hold aformal meeting, if required, to question the officer, employee or director reported, and if necessary recommend a disciplinary remedy ortermination of employment, or notify the appropriate legal authorities. Reports may be made to the Company’s secure hotline at (646)606-2191. The Company’s Whistleblower Policy provides details for reporting illegal or unethical conduct. The Whistleblower Policyis available on the Company’s website. Only the Audit Committee may grant any waivers of this policy.Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IV.INTEGRITY OF RECORDS AND FINANCIAL REPORTINGSenior Financial Officers are responsible for the accurate and reliable preparation and maintenance of the Company's financial records.Accurate and reliable preparation of financial records is of critical importance to proper management decisions and the fulfillment ofthe Company's financial, legal and reporting obligations. Diligence in accurately preparing and maintaining the Company's recordsallows the Company to fulfill its reporting obligations and to provide stockholders, governmental authorities and the general publicwith full, fair, accurate, timely and understandable disclosure.Senior Financial Officers are responsible for establishing and maintaining adequate disclosure controls and procedures, and internalcontrols and procedures, including procedures that are designed to enable the Company to: (a) accurately document and account fortransactions on the books and records of the Company; and (b) maintain reports, vouchers, bills, invoices, payroll and service records,business measurement and performance records and other essential data with care and honesty.Senior Financial Officers shall immediately bring to the attention of the Audit Committee any information they may have concerning:1.Defects, deficiencies, or discrepancies related to the design or operation of internal controls which may affect the Company'sability to accurately record, process, summarize, report and disclose its financial data; or2.Any fraud, whether or not material, that involves management or other employees who have roles in the Company's financialreporting, disclosures or internal controls.V.CONFLICT OF INTERESTSenior Financial Officers must avoid any conflicts of interest between themselves and the Company. Any situation that involves, ormay involve, a conflict of interest with the Company, should be disclosed promptly to the Audit Committee, who may consult withinside or outside legal counsel as appropriate.A "conflict of interest" can occur when an individual's personal interest is adverse to or may appear to be adverse to the interests of theCompany as a whole. Conflicts of interest also arise when an individual, or a member of his or her family, receives improper personalbenefits as a result of his or her position with the Company.This Code does not attempt to describe all possible conflicts of interest which could develop. Some of the more common conflicts fromwhich Senior Financial Officers must refrain, however, are set forth below:•Improper conduct and activities. Senior Financial Officers may not engage in any conduct or activities that are inconsistent withthe Company's best interests or that disrupt or impair the Company's relationship with any person or entity with which theCompany has, or proposes to enter into, a business or contractual relationship.•Compensation from non-Company Sources. Senior Financial Officers may not accept compensation for services performed forthe Company from any source other than the Company.•Gifts. Senior Financial Officers and members of their immediate families may not accept gifts from persons or entities whereany such gift is being made in order to influence their actions in their position with the Company, or where acceptance of thegifts could create the appearance of a conflict of interest.Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•Personal use of Company assets. Senior Financial Officers may not use Company assets, labor or information for personal use,other than incidental personal use, unless approved by the Audit Committee or as part of a compensation or expensereimbursement program.•Financial Interests in other Businesses. Senior Financial Officers should avoid having an ownership interest in any otherenterprises, such as a customer, supplier or competitor, if that interest compromises the officer's loyalty to the Company.VI. CORPORATE OPPORTUNITIESSenior Financial Officers are prohibited from: (a) taking for themselves personally opportunities related to the Company's businesswithout first presenting those opportunities to the Company and obtaining approval from the Board; (b) using the Company's property,information, or position for personal gain; or (c) competing with the Company for business opportunities.I.CONFIDENTIALITYSenior Financial Officers should maintain the confidentiality of information entrusted to them by the Company and any otherconfidential information about the Company, its business or finances, customers or suppliers that comes to them, from whatever source,except when disclosure is authorized or legally mandated. For purposes of this Code, "confidential information" includes all non-publicinformation relating to the Company, its business or finances, customers or suppliers.II.COMPLIANCE WITH LAWS, RULES AND REGULATIONSSenior Financial Officers shall comply with laws, rules and regulations applicable to the Company, including insider trading laws, andall other Company policies.I.ENCOURAGING THE REPORTING OF ANY ILLEGAL OR UNETHICAL BEHAVIORSenior Financial Officers must promote ethical behavior and create a culture of ethical compliance. Senior Financial Officers shouldfoster an environment in which the Company: (a) encourages employees to talk to supervisors, managers and other appropriatepersonnel when in doubt about the best course of action in a particular situation; (b) encourages employees to report violations of laws,rules and regulations to appropriate personnel; and (c) informs employees that the Company will not allow retaliation for reports madein good faith.Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 21.1Subsidiaries of Caladrius Biosciences, Inc.Entity Percentage of Ownership LocationAmorcyte, LLC 100% United States of AmericaAthelos Corporation (1) 97% United States of AmericaNeoStem Oncology, LLC 100% United States of America(1) As of December 31, 2018, Becton Dickinson's ownership interest in Athelos Corporation was 1.6%.Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23.1CONSENT OF INDEPENENT REGISTERED PUBLIC ACCOUNTING FIRMWe have issued our report dated March 14, 2019, with respect to the consolidated financial statements included in the Annual Reportof Caladrius Biosciences, Inc. on Form 10-K for the year ended December 31, 2018. We consent to the incorporation by reference ofsaid report in the Registration Statements of Caladrius Biosciences, Inc. on Forms S-3 (File No. 333-196702, File No. 333-206175, FileNo. 333-210664, 333-214607, File No. 333-220354, and File No. 333-226319) and on Forms S-8 (File No. 333-107438, File No. 333-144265, File No. 333-159282, File No. 333-162733, File No. 333-173854, File No. 333-181365, File No. 333- 184927, File No. 333-191572, File No. 333-205662, File No. 333-212202, File No. 333-215455, File No. 333-218642, File No. 333-222410, File No. 333-225743, and File No. 333-225744).New York, New YorkMarch 14, 2019Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.1 CERTIFICATIONS UNDER SECTION 302 I, David J. Mazzo, certify that: 1. I have reviewed this annual report on Form 10-K of Caladrius Biosciences, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading withrespect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented inthis report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, oris reasonably likely to materially affect, the registrant's internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;andb) any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date: March 14, 2019/s/ David J. MazzoDavid J. Mazzo, PhDPresident and Chief Executive Officer(Principal Executive Officer) Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.2 CERTIFICATIONS UNDER SECTION 302 I, Joseph Talamo, certify that: 1. I have reviewed this annual report on Form 10-K of Caladrius Biosciences, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading withrespect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented inthis report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, oris reasonably likely to materially affect, the registrant's internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;andb) any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date: March 14, 2019 /s/ Joseph TalamoJoseph TalamoSenior Vice President and Chief Financial Officer(Principal Financial Officer) Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32 CERTIFICATIONS UNDER SECTION 906 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), eachof the undersigned officers of Caladrius Biosciences, Inc. a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:The Annual Report for the year ended December 31, 2018 (the “Form 10-K”) of the Company fully complies with the requirements of Section 13(a)or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all material respects, the financialcondition and results of operations of the Company. Dated:March 14, 2019/s/ David J. Mazzo David J. Mazzo, PhD President and Chief Executive Officer (Principal Executive Officer) Dated:March 14, 2019/s/ Joseph Talamo Joseph Talamo Senior Vice President and Chief Financial Officer (Principal Financial Officer) Source: Caladrius Biosciences, Inc., 10-K, March 14, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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