☒ | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2020
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Incorporation or Organization)
Identification No.)
SymbolSymbol(s) Name (par value $0.001 per share)
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Large Accelerated Filer | Accelerated Filer | ☐ | ||||
Non- Accelerated Filer | ☐ | Smaller Reporting Company | ☐ | |||
Emerging Growth Company | ☐ |
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PART I | ||||||
Item 1. | Business | |||||
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Item 1B. | ||||||
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PART II | ||||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | |||||
Item 6. | ||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||
Item 7A. | ||||||
Item 8. | ||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures | |||||
Item 9A. | ||||||
Item 9B. | ||||||
PART III | ||||||
Item 10. | Directors, Executive Officers and Corporate Governance | |||||
Item 11. | ||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |||||
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PART IV | ||||||
Item 15. | Exhibits and Financial Statement Schedules | |||||
Signatures | ||||||
Financial Statements | F-1 |
our
OurControlled IL-12 platform uses virotherapy based on an engineered replication-incompetent adenovirus, referred to asAd-RTS-hIL-12, plus veledimex as a gene delivery system to conditionallyproduce IL-12, a potent, naturally occurring anti-cancer protein, to treat patients with solid tumors where a specific target is unknown. OurControlled IL-12 platform allows us todeliver IL-12 in a tunable dose as the cytokine is under transcriptional control of the RheoSwitch Therapeutic System® (RTS®). We are currently studying our ControlledIL-12 Platform as a monotherapy in a Phase 1 clinical trial of patients with recurrent glioblastoma multiforme, or rGBM. Our substudy of this clinical trial is fully enrolled with 36 patients and is designed to encourage useof low-dose steroids and 20 mg veledimex to further understand the potential ofControlled IL-12 as a monotherapy. We are also developing ourControlled IL-12 platform in combination with immune checkpoint inhibitors. We have completed dosing in a Phase 1 dose-escalation clinical trialof Ad-RTS-hIL-12 plus veledimex in combination with PD-1 antibody OPDIVO® (nivolumab) in patients with rGBM. Dosing is ongoing in a Phase 2 clinical trial evaluatingAd-RTS-hIL-12 plus veledimex in combinationwith PD-1 antibody Libtayo® (cemiplimab-rwlc) for the treatment of recurrent or progressive glioblastoma multiforme in adults.
NCI.
aftera gene transfer which is made possible by the genetic modification of resting T cellsdelivery system to express CAR and membrane boundIL-15, or mbIL15. We are also advancing our RPM technology in Greater China with Eden BioCell, Ltd., or Eden BioCell, our joint venture with TriArm Therapeutics, Ltd. Eden BioCell will lead the clinical development and commercialization ofSleeping Beauty-generated CD19-specific RPM CAR+T therapies using patient-derived (autologous) T cells in order
Our Pipeline
in combination with blockade of the immune checkpoint protein
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T cells are a type of white blood cell that play a central role in the immune system. T cells are involved in both detecting and killing infected or abnormal cells, such as cancer cells, as well as coordinating immune responses.
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HLA.
The
The figure below describes how T cell recognition of genetic mutations leads to the killing of tumor cells.
Neoantigens are encoded by tumor-specific mutated genes that are often unique to each patient. Targeting these neoantigens requires TCRs that are generated on
Other Approaches to Targeting Neoantigens
Several companies are pursuing “public” antigens that are encoded within a patient’s normal germline, such as cancer testes, PRAME, MAGE series,and NY-ESO-1. Targeting these antigens when they occur in tumors typically enables a libraryof pre-assembled TCRs to be created as proteins from these germline targets that can be shared within cancer types between patients. We believe there are several drawbacks to relying solely on this approach:
Public antigens are not present in many tumors, which limits their appeal.
Public antigens are often not homogeneously expressed throughout the tumor because they are typically not driver mutations, which increases the likelihood that the infusedTCR-modified T cells will not deliver a complete response.
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We believe the superior approach is to genetically modify T cells to target neoantigens present in the cancer genome but not in the germline that are presented though MHC class I and II, which should increase the number of targets and improve the therapeutic potential of the product. This requires a “personal” approach to T cell therapy in which the introduced TCRs recognize neoantigens of a patient’s tumor. When targeting unique neoantigens it is likely that more than one mutated protein will need to be addressed by more than one TCR to
prevent relapse of tumors that fail to express the targeted neoantigens. Neoantigens that can be shared between patients and thus occur in “hotspots,” may be driver mutations and, therefore, the cancer cell relies upon their presence rendering it less likely the tumor can escape and thus relapse when T cells are infused with a single specificity. We believe that neoantigen-targeted therapies will improve patient outcomes, particularly for patients with solid tumors and we believe we are the only company using non-viral gene transfer to develop TCR+T therapies that target neoantigens through both classes of MHC.
Our Approach to Targeting Neoantigens
The genetic modification using the Sleeping Beauty system of recipient-derived products enables us to target neoantigens in two ways, which we refer to as our Personalized TCR Approach and as our Library TCR Approach (Figure 1). We believe we are the only company that is using non-viral gene transfer to develop both personalized TCR+ T therapies and TCR+ T therapies from a library of TCRs derived from third parties. We believe using theSleeping Beauty system to scaleTCR-T to infuse multiple products per patient and develop a library of TCRs to facilitate the recruitment of patients is a competitive advantage.
Figure 1: Our two approaches to TCR+ T therapies targeting neoantigens. Both approaches use the Sleeping Beauty system to genetically modify T cells from the patients’ peripheral blood, or PB, to express one or more TCRs. The “PersonalizedTCR-T Process” (left) is based on the real-time identification of unique neoantigens and TCRs generated on apatient-by-patient basis. The “LibraryTCR-T Process” (right) is based on the science that some tumors share mutations in hotspots and TCRs can be prepared in anticipation of a patient’s need.
Our Personalized TCR Approach
Most neoantigens are unique to each patient’s tumor. We plan to address this uniqueness in our Personalized TCR Approach by infusing TCR+ T cells expressing recipient-derived TCRs. There are three essential steps in creating a T cell therapy targeting personalized neoantigens:
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The process for the production and infusion of Sleeping Beauty TCR-modified T cells is based on the electro-transfer of DNA plasmids containing coding for TCR(s) recognizing one or more neoantigens into T cells derived from a patient’s peripheral blood. The TCRs are typically sequenced from TIL responding to the targeted neoantigens. Following electroporation, the genetically modified T cells are propagated to large numbers using the “rapid expansion protocol” which is a technology that has been shown by the NCI to generate T cells that can recognize solid tumors. We believe the use of circulating T cells as the source of effector cells, rather than TIL, will improve the T cell’s ability to kill tumor cells because these circulating lymphocytes are generally “young” and can proliferate and survivein vivo to sustain anti-tumor effects.
Figure 2: Overview of process to manufacture clinical-grade Sleeping BeautyTCR-modified T cells. Peripheral blood mononuclear cells, or PBMC, are obtained by apheresis and “young” T cells therein genetically modified by electroporation using the Sleeping Beauty system to insert TCRs. As needed, the gene transfer step is repeated to generateT-cell products with more than one specificity. The genetically modified T cells are numerically expanded using the rapid expansion protocol and then infused in the patient.
To be successful, genetically modified T cells targeting one or more neoantigens will likely need to address the fact that (1) among a population of patients, not all tumors express the targeted neoantigen, referred to as inter-tumor heterogeneity, and (2) within a single patient, not all tumor cells express the targeted antigen, referred to as intra-tumor heterogeneity. Inter-tumor heterogeneity limits the number of recipients that are eligible to receive a treatment and intra-tumor heterogeneity creates the risk of antigen-escape variants, increasing the likelihood of cancer relapse. As a result, we believe companies developing T cell therapies targeting neoantigens must address both inter- and intra-tumor heterogeneity.
The
Our Library TCRTCR-T Approach is based on the finding that a subsetsubsets of neoantigens are shared between patients and between classes of tumors. These neoantigens can be considered as “drivers” for tumor formation. These neoantigens are referred to as “hotspots” and their presence allows us to potentially administer TCR+TCR+ T cells expressing TCRs from a library derived from internal research and third parties. The advantage of the Library TCRTCR-T Approach is that a subsetsubsets of patients with solid tumors may be rapidly treated based on screening them for targettargeted neoantigens (e.g., KRAS, TP53), identifying MHC,patient HLA, and matching these two data sets to the TCRs in the library. Once a match has been identified, the TCR is introduced into peripheral blood-derived T cells using theSleeping Beauty system, propagated to largeclinically sufficient numbers using the “rapid expansion protocol” and then infused into the patient in the same process employed by our Personalized TCR Approach.
patient. We havein-licensed from the NCI multiple allogeneic TCRs derived from third parties that are reactive to mutated KRAS, TP53 and EGFR in hotspots and we plan to expand our TCR library as part of our commitment to advance clinical development for the treatment of patients whose solid tumors have driver mutations. These TCRs
1. | Detecting and prioritizing neoantigens |
2. | Detecting and prioritizing TCRs be co-cultured with antigen presenting cells to efficiently identify the reactive T cells. One or more of the TCRs from individual reactive T cells are then sequenced. The TCRs are typically sequenced from TIL responding to the targeted neoantigens. |
3. | Manufacturing TCR + T cells Sleeping Beauty + T cells in clinically-sufficient numbers before they are released for administration into a patient. |
therapy manufacturing. We expect the pilot CPU will be operational by the end of 2021 and will be used to manufacture a portion of the
We are also planning a clinical program to study our TCR approach with MD Anderson. We are engaging with the FDA regarding the trial designtechnology. The progress and timeline for this program that will evaluate both our Personalized TCR Approach and our Library TCR Approach.
trial, including the timeline for dosing patients, are under the control of the NCI.
all cancer cases according to the Surveillance, Epidemiology, and End Results Program of the National Cancer Institute.NCI. These diseases include colorectal, lung, ovarian, skin, bladder, head and neck cancers, among others.
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Therecombinant IL-12 using a
ControlledIL-12We havetested Ad-RTS-IL-12 plus veledimex in several Phase 1 and 2 clinical trials for the treatment of patients with metastatic melanoma, breast cancer and brain cancer. We have focused much of our efforts in developingAd-RTS-IL-12 plus veledimex, as both a monotherapy and in combination with immune checkpoint inhibitors, for adults and children with recurrent brain tumors. We believe may have broad applicability potentially across many tumor times and we expect to initiate clinical trials ofAd-RTS-IL-12 plus veledimex in additional oncology indications as a monotherapy and, potentially, in combination with checkpoint inhibitors.Monotherapy: ClinicalDevelopment Ad-RTS-IL-12 plus Veledimex for Adult rGBMWe previously conducted a Phase 1 clinical trial of patients with rGBM, referred to as the Main Study, in patients with rGBM. The primary objective of the trial is to determine the safety and tolerability of a singleintra-tumoral Ad-RTS-hIL-12 injection activated upon dosing with oral veledimex. Secondary objectives are to determine the maximum tolerated dose, the immune responses elicited, and assessment of biologic response.A subset of patients in the Main Study (n=6) with unifocal disease who received single administrationof Ad-RTS-hIL-12 with 20 mg daily dosing (15 total planned doses) of veledimex along with low-dose steroids, achieved 17.8 months median overall survival, or mOS. Based on this result, we initiated a substudy, referred to as the Expansion Substudy, designed to encourageuse of low-dose steroids and 20 mg veledimex to further understand the potentialof Controlled IL-12 as a monotherapy.Thirty-six additional patients with rGBM were recruited into the Expansion Substudy and at the 2019 Society for Neuro-Oncology, or SNO, Annual Meeting, we announced the following interim results from the Expansion Substudy:We observed a decrease in tumor from baseline resulted in a patient’s lesion being too small to measure, assessed as a partial response (per iRANO), with follow up ongoing.We provided an analysis of MRI findings of pseudoprogression in subjects with initial increases and subsequent decreases in tumor size, which was consistent with immune-mediated anti-tumor effects.We observed that subjects in the Expansion Substudy were comparable to the subjects in the Main Study, except a higher percentage of subjects enrolled in the Expansion Substudy had multifocal disease (as compared with unifocal disease) and fewer previous recurrences of disease.Subjects receiving 20 mg of veledimex in both the Main Study and Expansion Substudy (n=20) with unifocal disease at entry, receivinglow-dose steroids (defined as <20 mg cumulative dosing of dexamethasone during the time of veledimex dosing) had a mOS of 16.2 months. The mOS for these subjects in the Expansion Substudy alone (n=14) had not been reached at a mean follow up of 9.7 months.We observed subjects with multifocal disease at initial enrollment that received 20mg of veledimex andlow-dose steroids (n=13) had a mOS of 10.1 months. We believe this is consistent with literature, which shows that multifocal glioblastoma is associated with worse prognosis compared to unifocal disease.Adverse reactions that we observed in the Expansion Substudy as of the datacut-off date were consistent with prior studies of ControlledIL-12 and were predictable, dose-related, and promptly reversible upon discontinuation of veledimex.Drug-related toxicities we observed as of the datacut-off date were comparable to the Main Study, and were predictable, dose-related, and promptly reversible upon discontinuation of veledimex. There were no drug-related deaths reported.Interim Results from Expansion Substudy Presented at 2019 SNO Annual MeetingCombination TherapyWe have completed enrollment in a Phase 1 clinical trial to evaluate Ad-RTS-hIL-12 plus veledimex in combination with Bristol-Myers Squibb Company’s OPDIVO® (nivolumab), an immune checkpoint inhibitor, or PD-1 inhibitor, in adult patients with rGBM. This trial was initiated in 2018 and is exploring the potentially synergistic effect of this combination in 21 patients, which have been enrolled. This multi-center, open-label, single-arm trial is being conducted at four sites. Patients with rGBM scheduled for resection who had not been treated previously with inhibitors of immune-checkpoint pathways received Ad-RTS-hIL-12 intratumorally at the time of surgical resection plus a dose of veledimex (10 or 20mg), daily for 14 days. Patients receive nivolumab intravenously (1 or 3 mg/kg) every two weeks until documented progression or withdrawal from the clinical trial and an expansion cohort at the full dose of 20 mg veledimex and 3mg/kg of nivolumab was included. We provided an interim update for this trial at the 2019 SNO Annual Meeting where we announced that:We observed a decrease of approximately 64% in a patient’s tumor from baseline resulting in a partial response (per iRANO), with follow up ongoing.We provided an analysis of MRI findings of pseudoprogression in subjects, which was consistent with immune-mediated anti-tumor effects.
Active dosing is ongoing in the trial and mOS had not been reached, with a mean follow up for these subjects of 4.8 months.
No dose limiting toxicities, no serious adverse events that were considered related to the combination with nivolumab and no clinically significant overlapping toxicities had been observed in the trial as of the datacut-off date.
In November 2018, we announced a clinical supply agreement with Regeneron toevaluate Ad-RTS-hIL-12 plus veledimex in combination withRegeneron’s PD-1 antibody Libtayo® (cemiplimab-rwlc) to treat patients with rGBM. Libtayo has been approved in the United States for the treatment of patients with metastatic cutaneous squamous cell carcinoma, or CSCC, or locally advanced CSCC who are not candidates for curative surgery or curative radiation. We are currently enrolling subjects in a Phase 2 clinical trialof Ad-RTS-hIL-12 plus veledimex in combination with Libtayo. This multi-center, open-label,single-arm trial will be conducted at approximately 10 hospitals and will enroll approximately 36 patients with rGBM, with the primary endpoints being safety and efficacy. Patients with rGBM scheduled for resection who have not been treated previously with inhibitors of immune-checkpoint pathways will receiveAd-RTS-hIL-12 intratumorally at the time of surgical resection plus a dose of veledimex (20mg), daily for 14 days. Patients will receive cemiplimab intravenously (350 mg) every three weeks until documented progression or withdrawal from the clinical trial. Under the terms of our agreement with Regeneron, we will be responsible for the conduct and costs of the clinical trial, and Regeneron will supply Libtayo for the trial.
Expansion of ControlledIL-12 Program
In our clinical trials, we have observed that ControlledIL-12 increases T cell activity in the tumor microenvironment including the compelling mOS of patients with rGBM with unifocal disease at entry, the decrease in a patient’s tumor from baseline (after pseudo-progression), and the increased infiltration of T cells consistent with pseudo-progression. These data suggest that our ControlledIL-12 may be effective in other tumor types as both a monotherapy and in combination with immune checkpoint inhibitors. We expect to evaluate
ControlledIL-12 in multiple tumor types in smaller clinical trials. The first such clinical trial is a Phase 1 clinical trialof Ad-RTS-hIL-12 plus veledimex for the treatment of glioma in the pontine region of the brain, known as diffuse intrinsic pontine glioma, or DIPG.
Glioblastoma Prevalence
We are currently developingControlled IL-12 to treat
In children, the incidence of brain cancer is approximately 4.84 per 100,000, according to the NCI. DIPG accounts for approximately 15 percent of all cases of pediatric brain tumors, with a median survival time of less than one year. Because of where these tumors are situated, DIPG is inaccessible to surgery and there are no known curative options.
SLEEPING BEAUTY CAR+T PROGRAM
Background
We are developing CAR+ T cell therapies targeting CD19 for hematologic malignancies using our Sleeping Beauty platform. Our CAR+ T program is focused on (1) shortening the time the patient must wait for treatment with engineered T cells, (2) increasing the access of hospitals to deliver, and patients to receive, this therapy, and (3) providing safe and efficacious T cell therapies to patients.
CARs are engineered molecules that, when present on the surface of a T cell, enable the T cell to directly recognize specific proteins or antigens that are present on the surface of other cells. CAR+ T cell therapies are manufactured individually for the recipient’s use by modifying T cells outside the body, causing the T cells to stably express CARs. Our CAR+ T program is focused on CD19, which is a protein expressed on the cell surface of B cells and a validated target for B cell driven hematological malignancies.
Two autologous anti-CD19 CAR+ T cell therapies have been approved by the FDA for the treatment of relapsed/refractory(R/R) B-cell precursor acute lymphoblastic leukemia (Kymriah®) and R/Rlarge B-cell lymphoma (Kymriah® and Yescarta®). These approaches have been successful in helping patients fight cancer, in particular CD19-positive cancers, resulting in significant remission rates. However, we believe the viral manufacturing approaches used to manufacture these therapies will limit their commercial success.
We believe our Sleeping Beauty CAR+ T therapy will offer distinct advantages to the approach used by otherCAR-T cell companies. In particular, the ability of the DNA plasmids from the Sleeping Beauty system to integrate into resting T cells, coupled with expression of mbIL15 and CAR, will enable infused T cells to propagate within the patient to target leukemias and lymphoma, thereby avoiding the need to numerically expand T cells for weeks in bioreactors before administration. The reduced cost associated with using DNA plasmids, instead of virus and avoiding lengthy ex vivo manufacturing, and the flexibility to insert industry leading CAR technology in a “cassette” based approach, provides a solution to the cost and complexity of the current approach to manufacturing CAR+ T cells.
of CAR+ TIn the preclinical setting, the time to manufactureAd-RTS-IL-12 plus Veledimexadminister third-generation Sleeping Beauty-modified CAR+ Tcells co-expressing mbIL15 has been reduced to two days or less from gene transfer. This very rapid manufacturing process may deliver genetically modified T cells with superior therapeutic potentialin vivo. Preclinical studies of our third-generation Sleeping Beauty CAR+ T cells, presented at the 2017 Annual Meeting of ASH, demonstrated that a single dose of Tcells co-expressing a CD19-specific CAR, mbIL15, and kill switch resulted in sustained in vivo persistence that produced potent anti-tumor effects and superior leukemia-free survival in mice. Combination)
This trial will build upon the results seen in our second generation CAR+ T clinical trial, which employed a revised CAR design and shortened manufacturing process advancement, with culturing times as short as two weeks. This clinical trial enrolled 26 patients with advanced lymphoid malignancies at MD Anderson. A summary of this trial was presented by Dr. Partow Kebriaei of MD Anderson in a presentation immune-checkpoint pathways
Joint Venture withmild to moderate and predominantly reversible upon withholding of veledimex doses; and
In conjunction with TriArm Therapeutics, Ltd., or TriArm,BioCell-sponsored CAR-T clinical trial, we have launched Eden BioCellelected to lead clinical developmentallocate an increasing amount of our resources and commercialization ofcapital to our Sleeping Beauty-generated CAR-T therapies TCR program. As a result, we expect to reduce the amount of resources and capital allocated to our Controlled
We licensed the rights to Eden BioCell for our third-generation Sleeping Beauty-generated CAR-T therapies targeting the CD19 antigen. Eden BioCell is owned equally by us and TriArm and the parties share decision-making authority. TriArm has committed up to $35.0 million to this joint venture and will manage all clinical development to execute trials in the territory.
Hematologic Tumor Malignancy Prevalence
According to the Leukemia and Lymphoma Society, an estimated 176,200 people are expected to be diagnosed with leukemia, lymphoma, or myeloma in 2019. New diagnoses for such hematologic malignancies in the United States represented approximately 10% of the new cancer cases in the United States in 2019.
PGEN has also granted us an exclusive, worldwide, royalty-bearing,sub-licensable license to research, develop and commercialize products utilizing an additional construct that expresses RTSIL-12 for the treatment
which was fully paid during the year ending December 31, 2019.
We are responsible for all development costs associated with each of the licensed products, other than GorillaIL-12products. We and PGEN will share the development costs and operating profits for GorillaIL-12 products, and we are responsible for 80% of the development costs and receiving 80% of the operating profits, and PGEN responsible for the remaining 20% of the development costs and receiving 20% of the operating profits.
share.
Anderson.
Pursuant to The activities under the 2015 R&D Agreement we, Precigen and MD Anderson formedare directed by a joint steering committee to overseecomprised of two members from our company and manage the ongoing research programs. Under our License Agreement with Precigen, we and Precigen agreed that Precigen would no longer participate on the joint steering committee after the date of the License Agreement. one member from MD Anderson.
activities in support of the research programs under the 2015 R&D Agreement for a period of three years and in an amount of no less than $15.0 million and no greater than $20.0 million per year. On November 14, 2017, we entered into an amendment to the 2015 R&D Agreement extending its term until April 15, 2021. During the year ended December 31, 2019, we made no payments to MD Anderson compared to $2.7 million during the year ended December 31, 2018. The decrease in cash paid to MD Anderson during the year ended December 31, 2019 as compared to the same period in the prior year is a result of the final quarterly payment being made to MD Anderson in January 2018 and the result of approved expenditures incurred by us being deducted from the January 2018 quarterly payment. The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $20.3$8.1 million, which is included in other current assets on our balance sheet at December 31, 2019.
2020.
its TCR products. The aggregate potential benchmark payments are $36.5 million, of which only $3.0 million will be due prior to the first marketing approval of our TCR products. The royalty rates and benchmark payments owed to MD Anderson may be reduced upon the occurrence of certain events. We also agreed to sell our TCR products to MD Anderson at preferential prices and will sell our TCR products in Texas exclusively to MD Anderson for a limited period of time following the first commercial sale of our TCR products.
As of December 31, 2020, none of the milestones have been met.
License at rates in the low to
confidentiality agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business.
CAR+ T
In January 2015, wein-licensed from MD Anderson a technology portfolio that includes intellectual property directed to certainnon-viralSleeping Beauty system and CAR+ T cell and bioprocessing technology. Under the terms of the agreement, we have an exclusive license to certain of the intellectual property, aco-exclusive license to certain of the intellectual property technology and anon-exclusive license to certain of the intellectual property technology. Our rights to the MD Anderson intellectual property flow to us via our agreement with PGEN.
TCR+ T
In May 2019, wein-licensed from NCI a technology portfolio that includes intellectual property directed to certain TCR+ T cell therapy and manufacturing technology. Under the terms of the agreement, we hold an exclusive, worldwide license to certain intellectual property to develop and commercialize patient-derived (autologous), peripheral bloodT-cell therapy products engineered by transposon-mediated gene transfer to express TCRs reactive to mutated KRAS, TP53 and EGFR neoantigens. In addition, we hold an exclusive, worldwide license to certain intellectual property for manufacturing technologies to develop and commercialize autologous, peripheral bloodT-cell therapy products engineered bynon-viral gene transfer to express TCRs, as well as anon-exclusive, worldwide license to certain additional manufacturing technologies.
distribution, post-approval monitoring and reporting, marketing and export and import of biopharmaceutical products such as those we are developing. Our product candidates must be approved by the FDA before they may be legally marketed in the United States and by the appropriate foreign regulatory agency before they may be legally marketed in foreign countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. The process for obtaining regulatory marketing approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
include laboratory evaluations as well as
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During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA, the NIH and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or
U.S. Review and Approval Processes
Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an
through the abbreviated pathway, but does not prevent approval of BLAs that are accompanied by a full data package and that do not rely on the reference product. A biosimilar may be approved if the product is highly similar to the reference product notwithstanding minor differences in clinically inactive components and there are no clinically meaningful differences with the reference product in terms of the safety, purity, and potency.
Reimbursement may impact the demand for, and/or the price of, any product candidate which obtains marketing approval. Even if coverage and reimbursement is obtained for a given product candidate by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require
The U.S. Supreme Court is currently reviewing this case, but it is unknown when a decision will be reached. Although the U.S. Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how this decision, future decisions, subsequent appeals,the Supreme Court ruling, other such litigation, and other efforts to repeal and replace ACAthe healthcare reform measures of the Biden administration will impact ACA.
the ACA and our business.
phase Phase 2 clinical trials, including, but not limited to, Abbvie Inc., DNAtrix Therapeutics, Istari Oncology, Karyopharm and MedImmune LLC/AstraZeneca plc, and other companies are actively developing additional products to treat brain cancer including Mustang Bio Inc. and Northwest Biotherapeutics, Inc.
and Human Capital Resources
agreement and we believe our relations with our employees is good.
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products to treat brain cancer including Mustang Bio Inc. and Northwest Biotherapeutics, Inc. Other competitors with product candidates currently in Phase 2 clinical trials include AbbVie Inc.’s
In addition, under our License Agreement, PGEN is obligated to provide certain transition services and transfer certainknow-how to us. For example, PGEN was previously responsible for manufacturing the products used in our clinical programs and is now responsible for transferring the relatedknow-how so that we can begin manufacturing products used in our clinical trials. There is no guarantee that PGEN will perform these activities to our satisfaction, if at all. If PGEN fails to perform these activities our ability to pursue our clinical programs may be adversely affected.
Further, in response to the
terminates the CRADA or the CRADA lapses without any extension, part or all of the research and development of the
Ethical, legal and social concerns about synthetic biologically engineered products could limit or prevent the use of our product candidates.
Our product candidates use an immuno-oncology platform. Public perception about the safety and environmental hazards of, and ethical concerns over, genetically engineered products could influence public acceptance of our product candidates. If we and our collaborators are not able to overcome the ethical, legal and social concerns relating to biological engineering, our product candidates may not be accepted. These concerns could result in increased expenses, regulatory scrutiny, delays or other impediments to the public acceptance and commercialization of our product candidates. Our ability to develop and commercialize products could be limited by public attitudes and governmental regulation.
The subject of genetically modified organisms has received negative publicity, which has aroused public debate. This adverse publicity could lead to greater regulation and trade restrictions on the development and commercialization of genetically altered products. Further, there is a risk that our product candidates could cause adverse health effects or other AEs, which could also lead to negative publicity.
The biological platform that we use may have significantly enhanced characteristics compared to those found in naturally occurring organisms, enzymes or microbes. While we believe we produce biological technologies only for use in a controlled laboratory and industrial environment, the release of such biological technologies into uncontrolled environments could have unintended consequences. Any adverse effect resulting from such a release could have a material adverse effect on our business and financial condition, and we may have exposure to liability for any resulting harm.
We may not be able to retain the rights licensed to us and PGEN by MD Anderson to technologies relating to CAR,T-cell therapies and other related technologies.
Under the MD Anderson License, we, together with PGEN, received an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR+ T cell and TCR cell therapies arising from the laboratory of Laurence Cooper, M.D., Ph.D., who was then at MD Anderson, as well as eitherco-exclusive ornon-exclusive licenses under certain related technologies. When combined with PGEN’s technology suite and Ziopharm’s clinically tested RTS® interleukin 12 modules, the resulting proprietary methods and technologies may help realize the promise of genetically modified CAR+ T cells and TCR therapies by controlling cell expansion and activation in the body, minimizingoff-target and unwantedon-target effects and toxicity while maximizing therapeutic efficacy. The term of the MD Anderson License expires on the last to occur of (a) the expiration of all patents licensed thereunder, or (b) the twentieth anniversary of the date of the MD Anderson License; provided, however, that following the expiration of the term, we and PGEN shall then have a fully-paid up, royalty free, perpetual, irrevocable and sublicensable license to use the licensed intellectual property thereunder.
After 10 years from the date of the MD Anderson License and subject to a90-day cure period, MD Anderson will have the right to convert the MD Anderson License into anon-exclusive license if we and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on acase-by-case basis. After five years from the date of the MD Anderson License and subject to a180-day cure period, MD Anderson will have the right to terminate the MD Anderson License with respect to specific technology(ies) funded by the government or subject to a third-party contract if we and PGEN are not meeting the diligence requirements in such funding agreement or contract, as applicable. MD Anderson may also terminate the agreement with written notice upon material breach by us or PGEN, if such breach has not been cured within 60 days of receiving such notice. In addition, the MD Anderson License will terminate upon the occurrence of certain insolvency events for both us or PGEN and may be terminated by the mutual written agreement of us, PGEN and MD Anderson.
There can be no assurance that we will be able to successfully perform under the MD Anderson License and if the MD Anderson License is terminated it may prevent us from achieving our business objectives.
Because we currently do not have internal research capabilities, we are dependent upon pharmaceutical and biotechnology companies and academic and other researchers to sell or license us their product candidates and technology.
Proposing, negotiating, and implementing an economically viable product acquisition or license is a lengthy and complex process. We compete for partnering arrangements and license agreements with pharmaceutical, biopharmaceutical, and biotechnology companies, many
may delay or otherwise adversely affect the development of our existing product candidates. We must manage our development efforts and clinical trials effectively, and hire, train and integrate additional management, administrative, and research and development personnel. We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing.
Further, to advance our TCR program, we anticipate significantly expanding our internal research capabilities, including hiring additional employees focusing onpre-clinical research. This growth will place a significant strain on our management and on our administrative, operational, and financial resources. Therefore, ourOur future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To manage this growth, we must expand our facilities, augment our operational, financial and management systems, and hire and train additional qualified personnel. If we are unable to manage our growth effectively, our business may be harmed. executive officers and scientific and medical advisors, and their knowledge of our business and technical expertise would be difficult to replace. Dr. Laurence J.N. Cooper, our Chief Executive Officer; Dr. David Mauney, our President; and our principal scientific, regulatory, and medical advisors. Each of Dr. Cooper or Dr. Mauney may terminate their employment with us at any time, subject, however, to certainnon-compete andnon-solicitation covenants. The loss of the technical knowledge and management and industry expertise of each of Dr. Cooper or Dr. Mauney, or any of our other key personnel, could result in delays in product development, loss of key personnel or partnerships, and diversion of management resources, which could adversely affect our operating results. We do not carry “key person” life insurance policies on any of our officers or key employees.In particular, we expect to significantly expand our internal cell therapy capabilities in our Houston, Texas facilities by hiring additional research and development personnel. We compete for
intense and we cannot be certain that our search for such personnel will be successful. Attracting and retaining qualified personnel will be critical to our success. If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.
predict with any certainty if or when we might submit a BLA for regulatory approval of our product candidates or whether such a BLA will be accepted. Because we do not anticipate generating revenues unless and until we submit one or more BLAs and thereafter obtain requisite FDA approvals, the timing of our BLA submissions and FDA determinations regarding approval thereof, will directly affect if and when we are able to generate revenues.
for a restricted distribution system. If any of our product candidates receives marketing approval, the accompanying label may limit the approved uses, which could limit sales of the product.
however, we cannot assure that we will be able to market, sell, and distribute our products successfully. Our future success also may depend, in part, on our ability to enter into and maintain collaborative relationships for such capabilities and to encourage the collaborator’s strategic interest in the products under development, and such
December 2017,
In addition, other legislative changes
Additionally, on May 30, 2018,
COVID-19 pandemic.
entities, by prohibiting, among other things, soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, either the referral of an individual or the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; |
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challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
date. Therefore, patent applications covering our products or technology could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our products or the use of our products.
If we breach any of the agreements under which we license rights to products or technology from others, we could lose license rights that are material to our business or be subject to claims by our licensors.
Market conditions or trends in our industry or the economy as a whole;
Preclinical or clinical trial results;
Public concern as to the safety of drugs developed by us or others;
at least 15% of its common stock unless the business combination is approved by the company’s board of directors before the person acquires the 15% ownership stake or later by its board of directors and
stockholders may have interests that conflict with our other stockholders and, if acting together, have the ability to influence the outcome of matters submitted to our stockholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. Accordingly, this concentration of ownership may harm the market price of our common stock by:
We cannot assure you that the measures we have taken to date, together with any measures we may take in the future, will be sufficient to remediate the control deficiencies that led to the material weakness in our internal control over financial reporting or to avoid potential future material weaknesses. If we are unable to successfully remediate our existing or any future material weakness in our internal control over financial reporting, or if we identify any additional material weaknesses, the accuracy and timing
2021.2021 at an average monthly rate of approximately $60 thousand.lab space.currently includes approximately 14,037 square feet of laboratory and office space on MD Anderson’s campus. The laboratory supports our internal research and development activities. A portion of the space will be used for a pilot clinical production unit for GMP cell therapy manufacturing. The lease expires in February 2027. The monthly rent expense of these leases with MD Anderson is deducted from our prepayment at MD Anderson.There are no matters, as
As of February 18, 2021, we had approximately 29,049 beneficial holders of our common stock.
Recent Sales of Unregistered Securities
During the quarter ended December 31, 2019, we granted a new employee an inducement award in the form of an option to purchase an aggregate of 65,000 shares of our common stock at an exercise price of $4.59 per share, the closing price of our common stock on November 21, 2019. The options were granted as an inducement material to such employee’s entry into employment with us in accordance with Nasdaq Listing Rule 5635(c)(4) and Section 4(a)(2) of the Securities Act of 1933, as amended. The option has a ten-year term and vests over four years, subject to the new employee’s continued service with us on each applicable vesting date. The option was granted the inducement award outside of, but subject to terms generally consistent with, our Amended and Restated 2012 Equity Incentive Plan.
We intend to file a registration statement on a Form S-8 to register the shares of common stock underlying the options granted to this employee prior to the time at which the shares underlying such options become exercisable.
Issuer Purchases of Equity Securities
During the three months ended December 31, 2019, we purchased an aggregate of 60,161 shares of restricted stock from certain members of our board of directors to cover the applicable withholding taxes due from them for the shares of restricted stock at the time that the applicable forfeiture restrictions lapsed. The following table provides information about these purchases of restricted shares for the three months ended December 31, 2019:
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under Plans or Programs | ||||||||||||
October 1 to 31, 2019 | — | $ | — | — | — | |||||||||||
November 1 to 30, 2019 | — | — | — | — | ||||||||||||
December 1 to 31, 2019 | 60,161 | 4.72 | — | — | ||||||||||||
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Total | 60,161 | $ | 4.72 | |||||||||||||
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2020.
The selected financial data presented below has been derived from our financial statements. This data may not be indicative
Year Ended December 31, | ||||||||||||||||||||
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2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
Statements of Operations Data: | ||||||||||||||||||||
Collaboration revenue | $ | — | $ | 146 | $ | 6,389 | $ | 6,861 | $ | 4,332 | ||||||||||
Total operating expenses | 57,858 | 54,052 | 59,882 | 172,168 | 124,432 | |||||||||||||||
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Loss from operations | (57,858 | ) | (53,906 | ) | (53,493 | ) | (165,307 | ) | (120,100 | ) | ||||||||||
Other income (expense), net | 813 | 631 | 465 | 134 | 12 | |||||||||||||||
Non-cash inducement warrant expense | (60,751 | ) | — | — | — | — | ||||||||||||||
Change in fair value of derivative liabilities | — | 158 | (1,295 | ) | (124 | ) | — | |||||||||||||
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Net loss | (117,796 | ) | (53,117 | ) | (54,323 | ) | (165,297 | ) | (120,088 | ) | ||||||||||
Preferred stock dividends | — | (16,998 | ) | (18,938 | ) | (7,123 | ) | — | ||||||||||||
Settlement of a related party relationship | — | 207,361 | — | — | — | |||||||||||||||
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Net income (loss) applicable to common stockholders | (117,796 | ) | 137,246 | (73,261 | ) | (172,420 | ) | (120,088 | ) | |||||||||||
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Net income (loss) per share - basic | $ | (0.70 | ) | $ | 0.96 | $ | (0.53 | ) | $ | (1.32 | ) | $ | (0.96 | ) | ||||||
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Net income (loss) per share - diluted | $ | (0.70 | ) | $ | 0.96 | $ | (0.53 | ) | $ | (1.32 | ) | $ | (0.96 | ) | ||||||
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Weighted average number of common shares outstanding: basic | 167,952,114 | 143,508,674 | 136,938,264 | 130,391,463 | 125,416,084 | |||||||||||||||
Weighted average number of common shares outstanding: diluted | 167,952,114 | 143,710,160 | 136,938,264 | 130,391,463 | 125,416,084 | |||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 79,741 | $ | 61,729 | $ | 70,946 | $ | 81,053 | $ | 140,717 | ||||||||||
Total assets | 109,114 | 95,051 | 105,606 | 106,348 | 153,724 | |||||||||||||||
Derivative liabilities | — | — | 2,424 | 862 | — | |||||||||||||||
Total liabilities | 14,104 | 9,487 | 58,420 | 58,325 | 66,353 | |||||||||||||||
Series 1 Preferred Stock | — | — | 143,992 | 125,321 | — | |||||||||||||||
Stockholders’ equity (deficit) | 95,010 | 85,564 | (96,806 | ) | (77,298 | ) | 87,371 |
those contained in or implied by any forward-looking statements. Factors that could cause or contribute to these differences include those under “Risk Factors” included in Part I, Item 1A and under “Special Note Regarding Forward-Looking Statements” or in other parts of this Annual Report onBusiness
Using ourSleeping Beauty platform, we are developing T cell receptor, or TCR, T cell therapies to target neoantigens in solid tumors. Our program designstumors using two approaches, which we refer to as our “Library TCR-T Approach” and manufactures“our Personalized TCR-T Approach.” The Library TCR-T Approach uses third party (allogeneic) TCRs that have
OurControlled IL-12 platform uses virotherapy based on an engineered replication-incompetent adenovirus, referred to asAd-RTS-hIL-12, plus veledimex as a gene delivery system to conditionallyproduce IL-12, a potent, naturally occurring anti-cancer protein, to treat patients with solid tumors where a specific target is unknown. OurControlled IL-12 platform allows us todeliver IL-12 in a tunable dose as the cytokine is under transcriptional control of the RheoSwitch Therapeutic System® (RTS®). We are currently studying our ControlledIL-12 Platform as a monotherapy in a Phase 1 clinical trial of patients with recurrent glioblastoma multiforme, or rGBM. Our substudy of this clinical trial is fully enrolled with 36 patients and is designed to encourage useof low-dose steroids and 20 mg veledimex to further understand the potential ofControlled IL-12 as a monotherapy. We are also developing ourControlled IL-12 platform in combination with immune checkpoint inhibitors. We have completed dosing in a Phase 1 dose-escalation clinical trialof Ad-RTS-hIL-12 plus veledimex in combination with OPDIVO® (nivolumab) in patients with rGBM. Dosing is ongoing in a Phase 2 clinical trial evaluatingAd-RTS-hIL-12 plus veledimex in combinationwith PD-1 antibody Libtayo® (cemiplimab-rwlc) for the treatment of recurrent or progressive glioblastoma multiforme in adults.
NCI.
ourso-called rapid personalized manufacture, or RPM, technology.technology, in Greater China with Eden BioCell, Ltd., or Eden BioCell, our joint venture with TriArm Therapeutics, Ltd. RPM enables small numbers of T cells to be infused as soon as the day after gene transfer which is made possible by the genetic modification of resting T cells to express CAR and membrane boundIL-15, or mbIL15. We are also advancing our RPM technology in Greater China with Eden BioCell Ltd., or Eden BioCell, our joint venture with TriArm Therapeutics, Ltd. Eden BioCell will leadis leading the clinical development and commercialization ofSleeping Beauty-generatedBeauty-generated CD19-specific RPM CAR+CAR+T therapies using patient-derived (autologous) T cells in order to treat patients with relapsed or refractory CD19+CD19+ leukemias and lymphomas.
In the fourth quarter of 2020, an IND was cleared by the Taiwan FDA for a Phase 1 clinical trial designed to evaluate safety and efficacy in this patient group. In our Phase 1 clinical trial being conducted in the United States, we plan to infuse donor-derived T cells after allogeneic bone marrow transplantation, or BMT, for recipients who have relapsed with CD19+ leukemias and lymphomas with our CD19- specific CAR+ T therapies manufactured using our technology.
2020. The expense incurred by us to third parties for our Phase 2 clinical trial of
Clinical Phase | Estimated Completion Period | |
Phase 1 | 1 - 2 years | |
Phase 2 | 2 - 3 years | |
Phase 3 | 2 - 4 years |
Year Ended December 31, | ||||||||||||||||
2020 | 2019 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Research and development | $ | 52,696 | $ | 38,331 | $ | 14,365 | 37 | % |
Year ended December 31, | ||||||||||||||||
2020 | 2019 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
General and administrative | $ | 27,665 | $ | 19,527 | $ | 8,138 | 42 | % |
Year ended December 31, | ||||||||||||||||
2020 | 2019 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Other income | $ | 385 | $ | 813 | $ | (428 | ) | -53 | % | |||||||
Non-cash inducement warrant expense | — | (60,751 | ) | 60,751 | -100 | % | ||||||||||
Total | $ | 385 | $ | (59,938 | ) | $ | 60,323 | |||||||||
Year ended December 31, | ||||||||||||||||
2019 | 2018 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Collaboration revenue | $ | — | $ | 146 | $ | (146) | -100 | % |
Year ended December 31, | ||||||||||||||||
2019 | 2018 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Collaboration revenue | $ | — | $ | 146 | $ | (146 | ) | -100 | % |
Year ended December 31, | ||||||||||||||||
2019 | 2018 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Research and development | $ | 38,331 | $ | 34,134 | $ | 4,197 | 12 | % |
Year ended December 31, | ||||||||||||||||
2019 | 2018 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Research and development | $ | 38,331 | $ | 34,124 | $ | 4,207 | 12 | % |
compared to the year ended December 31, 2018. The increase in expense during the year ended December 31,
2019 was due to an increase of $1.5 million in T cell therapy expenses, driven primarily by manufacturing costs and costs associated with our Patent License with the NCI, an increase of $1.2 million in employee related expenses, driven primarily by increased headcount in 2019 compared to 2018, $1.1 million of Gorilla
Year ended December 31, | ||||||||||||||||
2019 | 2018 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
General and administrative | $ | 19,527 | $ | 19,918 | $ | (391 | ) | -2 | % |
Year ended December 31, | ||||||||||||||||
2019 | 2018 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Other income (expense), net | $ | 813 | $ | 631 | $ | 182 | 29 | % | ||||||||
Non-cash inducement warrant expense | (60,751 | ) | — | (60,751 | ) | -100 | % | |||||||||
Change in fair value of derivative liabilities | — | 158 | (158 | ) | -100 | % | ||||||||||
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Total | $ | (59,938 | ) | $ | 789 | $ | (60,727 | ) | ||||||||
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Year ended December 31, | ||||||||||||||||
2019 | 2018 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Other income (expense), net | $ | 813 | $ | 631 | $ | 182 | 29 | % | ||||||||
Non-cash inducement warrant expense | (60,751 | ) | — | (60,751 | ) | 100 | % | |||||||||
Change in fair value of derivative liabilities | — | 158 | (158 | ) | -100 | % | ||||||||||
Total | $ | (59,938 | ) | $ | 789 | $ | (60,727 | ) | ||||||||
Resultsaccounts.
Collaboration Revenues
Revenues for the years ended December 31, 20182020, we have received an aggregate of $[●] from public offerings and 2017 were as follows:
Year ended December 31, | ||||||||||||||||
2018 | 2017 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Collaboration revenue | $ | 146 | $ | 6,389 | $ | (6,243 | ) | -98 | % |
Revenue for the year ended December 31, 2018 decreased by $6.2 million in comparison to revenue for the year ended December 31, 2017 due to the adoption of ASC 606 (Note 3). During the year ended December 31, 2018,
we recognized $146 thousand of revenue related to the Ares Trading Agreement under ASC 606. During the year ended December 31, 2017, we recognized $6.4 million of revenue through our Ares Trading Agreement under ASC 605. (Note 3).
Research and Development Expenses
Research and development expenses during the years ended December 31, 2018 and 2017 were as follows:
Year ended December 31, | ||||||||||||||||
2018 | 2017 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Research and development | $ | 34,134 | $ | 45,084 | $ | (10,950 | ) | -24 | % |
Research and development expenses for the year ended December 31, 2018 decreased by $11.0 million when compared to the year ended December 31, 2017. The decrease in expense during the year ended December 31, 2018 was due to a decrease of $10.4 million in preclinical activities, a decrease of $1.7 million related to graft versus host disease, or GvHD, expenses, and a reduction of $0.6 million in other clinical expenses. The decrease in preclinical, GvHD, and other clinical expenses was offset by increases in GorillaIL-12 expenses due to PGEN under the License Agreement of $1.0 million (Note 7) and of $0.7 million related to salary and employee related expense during the year ended December 31, 2018. We previously determined that the pursuit of GvHD as an indication was not a material part of its corporate strategy and decided to stop pursuing the development of engineered cell therapy strategies, used either separately or in combination, for targeted treatment of GvHD.
General and Administrative Expenses
General and administrative expenses during the years ended December 31, 2018 and 2017 were as follows:
Year ended December 31, | ||||||||||||||||
2018 | 2017 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
General and administrative | $ | 19,918 | $ | 14,798 | $ | 5,120 | 35 | % |
General and administrative expenses for the year ended December 31, 2018 increased by $5.1 million as compared to the prior year. The change was primarily due to increased contracted outside services and advisory fees related to our license agreement with PGEN (Note 7) of $4.1 million and an increase of $1.3 million related to salary and employee related expense during the year ended December 31, 2018. The increased costs in 2018 were offset by a reduction of milestone payments of $0.3 million due to Baxter Healthcare S.A., or Baxter, as our license agreement with Baxter expired in November 2017.
Other Income (Expense)
Other income (expense) during the years ended December 31, 2018 and 2017 were as follows:
Year ended December 31, | ||||||||||||||||
2018 | 2017 | Change | ||||||||||||||
($ in thousands) | ||||||||||||||||
Other income (expense), net | $ | 631 | $ | 465 | $ | 166 | 36 | % | ||||||||
Change in fair value of derivative liabilities | 158 | (1,295 | ) | 1,453 | -112 | % | ||||||||||
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Total | $ | 789 | $ | (830 | ) | $ | 1,619 | |||||||||
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During the year ended December 31, 2018, we recorded a gain on the change in fair value of the derivative liabilities of $158 thousand, compared to a loss of $1.3 million during the year ended December 31, 2017
(Note 13). These changes are derived from the number of previously outstanding shares of Series 1 preferred stock and their respective valuations. Additionally, we recorded $631 thousand in other income for the year ended December 31, 2018, compared to $465 thousand earned in the prior year, due to increases in our cash equivalent accounts (Note 3).
Subsequent to
May 2017 Offering
On May 11, 2017, we sold in an underwritten public offering an aggregate of 9,708,738 shares of our common stock to a single institutional investor in an underwritten offering. The price to the investor in the offering was $5.15 per share, and the underwriters agreed to purchase the shares from us pursuant to the underwriting agreement at a purchase price of $4.893 per share. The offering was made pursuant to a registration statement on FormS-3ASR previously filed with the SEC, and a prospectus supplement thereunder. The net proceeds from the offering were approximately $47.3 million after deducting underwriting commissions and estimated offering expenses payable by us.
Year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
($ in thousands) | ||||||||||||
Net cash provided by (used in): | ||||||||||||
Operating activities | $ | (40,854 | ) | $ | (49,457 | ) | $ | (54,669 | ) | |||
Investing activities | (284 | ) | (459 | ) | (737 | ) | ||||||
Financing activities | 59,150 | 40,311 | 45,299 | |||||||||
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Net increase (decrease) in cash and cash equivalents | $ | 18,012 | $ | (9,605 | ) | $ | (10,107 | ) | ||||
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2018:
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
($ in thousands) | ||||||||||||
Net cash provided by (used in): | ||||||||||||
Operating activities | $ | (57,013 | ) | $ | (40,854 | ) | $ | (49,457 | ) | |||
Investing activities | (9,778 | ) | (284 | ) | (459 | ) | ||||||
Financing activities | 102,119 | 59,150 | 40,311 | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 35,328 | $ | 18,012 | $ | (9,605 | ) | |||||
2020.
($ in thousands) | Total | Less than 1 year | 2 - 3 years | 4 - 5 years | More than 5 years | |||||||||||||||
Operating leases | $ | 2,799 | $ | 925 | $ | 914 | $ | 446 | $ | 514 | ||||||||||
CRADA | $ | 5,000 | 2,500 | 2,500 | — | — | ||||||||||||||
Royalty and license fees | $ | 4,150 | 850 | 700 | 700 | 1,900 | ||||||||||||||
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Total | $ | 11,949 | $ | 4,275 | $ | 4,114 | $ | 1,146 | $ | 2,414 | ||||||||||
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($ in thousands) | Total | Less than 1 year | 2 - 3 years | 4 - 5 years | More than 5 years | |||||||||||||||
Operating leases | $ | 6,171 | $ | 1,189 | $ | 1,620 | $ | 1,714 | $ | 1,648 | ||||||||||
CRADA | 2,500 | 2,500 | — | — | — | |||||||||||||||
Royalty and license fees | 3,050 | 100 | 700 | 700 | 1,550 | |||||||||||||||
Strategic advisory services | 1,125 | 1,125 | ||||||||||||||||||
Total | $ | 12,846 | $ | 4,914 | $ | 2,320 | $ | 2,414 | $ | 3,198 | ||||||||||
On April 13, 2020, we entered into another lease agreement for additional office and laboratory space in Houston through February 2027. On June 1, 2020, we entered into a short-term lease in Houston for office and laboratory space. On September 1, 2020, we entered an additional short-term lease in Houston for additional office and laboratory space. On December 15, 2020, we entered into another lease for additional office and laboratory space in Houston through April 2028.
Income taxes.
Development Costs / Clinical Trial Expenses
Clinical trial
development expenses.
without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer which would be accounted for as a separate contract upon the customer’s election.
reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the
Procedures.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for us. Internal control over financial reporting (as defined in Rule 13a-15(f)
Management conducted an evaluation of the effectiveness, as of December 31, 2019, of our internal control over financial reporting based on the frameworkwe had material weaknesses inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on this evaluation, management concluded that our internal control over financial reporting was not effective at December 31, 2019 because of the material weakness described below.
As of December 31, 2019, management identified a material weakness in the design and effectiveness of our internal control over financial reporting. We did not design and maintain effective controls relating to the monitoring and oversight of expensing third party clinical trial costs. Specifically, our internal controls were not designed effectively to provide reasonable assurance regarding the accurate and timely evaluation of the amount of third-party costs to record. There were no changes to any of our previously released financial statements. Based on this material weakness, our management concluded that at December 31, 2019, our internal control over financial reporting was not effective.
Remediation
We are committed and are taking steps necessary
in conditions, or the degree of compliance with the policies or procedures may deteriorate. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
None.
Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) | ||||||||||
Plan Category | (A) | (B) | (C) | |||||||||
Equity compensation plans approved by stockholders: | ||||||||||||
2003 Stock Option Plan | 185,000 | $ | 4.80 | — | ||||||||
2012 Stock Option Plan | 5,657,879 | 3.90 | 2,503,508 | |||||||||
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| |||||||
Total: | 5,842,879 | $ | 3.93 | 2,503,508 | ||||||||
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| |||||||
Equity compensation plans not approved by stockholders: | ||||||||||||
Inducement Awards | 1,030,000 | 5.80 | — | |||||||||
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| |||||||
Total: | 1,030,000 | $ | 5.80 | — | ||||||||
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|
|
2020 Plan:
Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) | ||||||||||
Plan Category | (A) | (B) | (C) | |||||||||
Equity compensation plans approved by stockholders: | ||||||||||||
2012 Stock Option Plan | 5,659,018 | $ | 4.01 | — | ||||||||
2020 Equity Incentive Plan | 1,173,368 | 2.83 | 5,714,648 | |||||||||
Total: | 6,832,386 | $ | 3.93 | 5,714,648 | ||||||||
Equity compensation plans not approved by stockholders: | ||||||||||||
Inducement Awards | 588,333 | 5.78 | — | |||||||||
Total: | 588,333 | $ | 5.78 | — | ||||||||
Item 14. Principal Accountant Fees and Services
Information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the section titled
Page | ||||
F-1 – F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 –F-9 | ||||
F-10 | ||||
F-11 |
Exhibit No. | Description of Document | |
32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* | Inline XBRL Instance Document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
| ||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
104* | Cover Page Interactive Data File—the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments |
* | Filed herewith. |
** | Furnished herewith. |
+ | Indicates management contract or compensatory plan. |
† | Confidential treatment has been granted by the Securities and Exchange Commission as to certain portions of this document. |
# | Portions of this document (indicated by “[***]”) have been omitted because they are not material and would likely cause competitive harm to Ziopharm Oncology, Inc. if disclosed. |
ZIOPHARM ONCOLOGY, INC. | ||||
Date: March | By: | /s/ | ||
Heidi Hagen | ||||
Interim Chief Executive Officer | ||||
( Principal Executive Officer | ||||
Date: March | By: | /s/ | ||
Interim Chief Financial Officer ( Principal Financial Officer |
Signature | Title | Date | ||
| ||||
/s/ Heidi Hagen Heidi Hagen | Interim Chief Executive Officer and Director ( | March | ||
|
| |||
/s/ Timothy Cunningham Timothy Cunningham | Interim Chief Financial Officer ( Principal Financial Officer | March | ||
/s/ Kevin G. Lafond Kevin G. Lafond | Senior Vice President Finance, Chief Accounting Officer and Treasurer ( Principal Accounting Officer | March | ||
/s/ Christopher Bowden Christopher Bowden | Director | March | ||
/s/
J. Kevin Buchi | Director | March |
Signature | Title | Date | ||
| ||||
/s/ James Huang James Huang | ||||
Director | March 1, 2021 | |||
/s/
Robert Postma | Director | March | ||
| ||||
/s/ Mary Thistle Mary Thistle | Director | March | ||
/s/ Jaime Vieser Jaime Vieser | Director | March 1, 2021 | ||
/s/ Holger Weis Holger Weis | Director | March 1, 2021 |
Page | ||||
F-1–F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7–F-9 | ||||
F-10 | ||||
F-11 |
reporting.
Accounting forit relates.
Matter:
for 10,000,000 ordinary shares of Eden BioCell. As a result of the design and purpose of Eden BioCell, management applied significant judgment in determining that Eden BioCell was considered a variable interest entity, or VIE. They , and concluded the equity interest in Eden BioCell would be accounted for under the equity method of accounting as the Company was not the primary beneficiary of the VIE as it did not have the power to direct the activities of the VIE that most significantly impact its performance. The Company determined that the contribution of certain intellectual property should be accounted for as a transfer on nonfinancial assets recognized at fair value. Management determined the intellectual property had a de minimis fair value as a result of the early stage of the technology and the likelihood of clinical success.
there may be delays in invoicing from clinical study sites and other vendors.
We obtained and read the joint venture agreement, gained an understanding of the purpose and nature of the joint venture and the rights and control provided under the agreement, and evaluated management’s documentation.
We evaluated
/s/ RSM US LLP
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment: Management did not design and maintain effective internal controls relating to the monitoring and oversight of expensing third party clinical trial costs. Specifically, their internal controls were not designed effectively to provide reasonable assurance regarding the accurate and timely evaluation of the amount of third party costs to record. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2019 financial statements, and this report does not affect our report dated March 2, 2020 on those financial statements.
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
December 31, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 79,741 | $ | 61,729 | ||||
Receivables | 3,330 | 1,864 | ||||||
Prepaid expenses and other current assets | 22,421 | 20,692 | ||||||
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|
| |||||
Total current assets | 105,492 | 84,285 | ||||||
Property and equipment, net | 1,110 | 1,097 | ||||||
Deposits | 130 | 128 | ||||||
Right-of-use asset | 2,272 | — | ||||||
Othernon-current assets | 110 | 9,541 | ||||||
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| |||||
Total assets | $ | 109,114 | $ | 95,051 | ||||
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LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 906 | $ | 707 | ||||
Accrued expenses | 10,846 | 8,763 | ||||||
Lease liability - current portion | 774 | — | ||||||
Deferred rent - current portion | — | 13 | ||||||
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| |||||
Total current liabilities | 12,526 | 9,483 | ||||||
Lease liability - noncurrent portion | 1,578 | — | ||||||
Deferred rent - noncurrent portion | — | 4 | ||||||
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| |||||
Total liabilities | 14,104 | 9,487 | ||||||
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| |||||
Commitments and contingencies (Note 9) | ||||||||
Preferred stock, $0.001 par value, 30,000,000 shares authorized | ||||||||
Series 1 preferred stock, $1,200 stated value; 250,000 designated; 0 shares issued and outstanding at December 31, 2019 and 2018; liquidation value of $0 million at December 31, 2019 and 2018 | — | — | ||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value; 250,000,000 shares authorized; 181,803,320 and 161,066,136 shares issued and outstanding at December 31, 2019 and 2018, respectively | 182 | 161 | ||||||
Additionalpaid-in capital | 778,953 | 651,732 | ||||||
Accumulated deficit | (684,125 | ) | (566,329 | ) | ||||
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|
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| |||||
Total stockholders’ equity | 95,010 | 85,564 | ||||||
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| |||||
Total liabilities and stockholders’ equity | $ | 109,114 | $ | 95,051 | ||||
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|
December 31, 2020 | December 31, 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 115,069 | $ | 79,741 | ||||
Receivables | 4,665 | 3,330 | ||||||
Prepaid expenses and other current assets | 10,855 | 22,421 | ||||||
Total current assets | 130,589 | 105,492 | ||||||
Property and equipment, net | 10,231 | 1,110 | ||||||
Deposits | 130 | 130 | ||||||
Right-of-use | 4,650 | 2,272 | ||||||
Other non-current assets | 745 | 110 | ||||||
Total assets | $ | 146,345 | $ | 109,114 | ||||
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 960 | $ | 906 | ||||
Accrued expenses | 16,589 | 10,846 | ||||||
Lease liability - current portion | 819 | 774 | ||||||
Total current liabilities | 18,368 | 12,526 | ||||||
Lease liability - noncurrent portion | 3,995 | 1,578 | ||||||
Total liabilities | 22,363 | 14,104 | ||||||
Commitments and contingencies (Note 9) | 0 | 0 | ||||||
Preferred stock, $0.001 par value, 30,000,000 shares authorized | ||||||||
Series 1 preferred stock, $1,200 stated value; 250,000 designated; 0 shares issued and outstanding at December 31, 2020 and 2019; liquidation value of $0 million at December 31, 2020 and 2019 | 0— | — | ||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value; 250,000,000 shares authorized; 214,591,906 and 181,803,320 shares issued and outstanding at December 31, 2020 and 2019, respectively | 215 | 182 | ||||||
Additional paid-in capital | 887,868 | 778,953 | ||||||
Accumulated deficit | (764,101 | ) | (684,125 | ) | ||||
Total stockholders’ equity | 123,982 | 95,010 | ||||||
Total liabilities and stockholders’ equity | $ | 146,345 | $ | 109,114 | ||||
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Collaboration revenue | $ | — | $ | 146 | $ | 6,389 | ||||||
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| |||||||
Operating expenses: | ||||||||||||
Research and development | 38,331 | 34,134 | 45,084 | |||||||||
General and administrative | 19,527 | 19,918 | 14,798 | |||||||||
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| |||||||
Total operating expenses | 57,858 | 54,052 | 59,882 | |||||||||
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|
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| |||||||
Loss from operations | (57,858 | ) | (53,906 | ) | (53,493 | ) | ||||||
Other income, net | 813 | 631 | 465 | |||||||||
Non-cash inducement warrant expense | (60,751 | ) | — | — | ||||||||
Change in fair value of derivative liabilities | — | 158 | (1,295 | ) | ||||||||
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| |||||||
Net loss | $ | (117,796 | ) | $ | (53,117 | ) | $ | (54,323 | ) | |||
Preferred stock dividends | $ | — | $ | (16,998 | ) | $ | (18,938 | ) | ||||
Settlement of a related party relationship | $ | — | $ | 207,361 | $ | — | ||||||
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| |||||||
Net income (loss) applicable to common stockholders | $ | (117,796 | ) | $ | 137,246 | $ | (73,261 | ) | ||||
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Net income (loss) per share - basic | $ | (0.70 | ) | $ | 0.96 | $ | (0.53 | ) | ||||
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Net income (loss) per share - diluted | $ | (0.70 | ) | $ | 0.96 | $ | (0.53 | ) | ||||
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| |||||||
Weighted average common shares outstanding used to compute basic net income (loss) per share | 167,952,114 | 143,508,674 | 136,938,264 | |||||||||
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Weighted average common shares outstanding used to compute diluted net income (loss) per share | 167,952,114 | 143,710,160 | 136,938,264 | |||||||||
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For the Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Collaboration revenue | $ | — | $ | — | $ | 146 | ||||||
Operating expenses: | ||||||||||||
Research and development | 52,696 | 38,331 | 34,134 | |||||||||
General and administrative | 27,665 | 19,527 | 19,918 | |||||||||
Total operating expenses | 80,361 | 57,858 | 54,052 | |||||||||
Loss from operations | (80,361 | ) | (57,858 | ) | (53,906 | ) | ||||||
Other income, net | 385 | 813 | 631 | |||||||||
Non-cash inducement warrant expense | — | (60,751 | ) | — | ||||||||
Change in fair value of derivative liabilities | — | — | 158 | |||||||||
Net loss | $ | (79,976 | ) | $ | (117,796 | ) | $ | (53,117 | ) | |||
Preferred stock dividends | $ | — | $ | — | $ | (16,998 | ) | |||||
Settlement of a related party relationship | $ | — | $ | — | $ | 207,361 | ||||||
Net income (loss) applicable to common stockholders | $ | (79,976 | ) | $ | (117,796 | ) | $ | 137,246 | ||||
Net income (loss) per share - basic | $ | (0.38 | ) | $ | (0.70 | ) | $ | 0.96 | ||||
Net income (loss) per share - diluted | $ | (0.38 | ) | $ | (0.70 | ) | $ | 0.96 | ||||
Weighted average common shares outstanding used to compute basic net income (loss) per share | 209,636,456 | 167,952,114 | 143,508,674 | |||||||||
Weighted average common shares outstanding used to compute diluted net income (loss) per share | 209,636,456 | 167,952,114 | 143,710,160 | |||||||||
Series 1 Preferred | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2016 | 106,184 | $ | 125,321 | 132,376,670 | $ | 132 | $ | 580,567 | $ | (657,997 | ) | $ | (77,298 | ) | ||||||||||||||||||||||||||
Cumulative effect adjustment ASUNo. 2016-09 | — | — | — | — | 122 | (122 | ) | — | ||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | 59,864 | 1 | 87 | — | 88 | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 8,454 | — | 8,454 | |||||||||||||||||||||||||||||||||
Issuance of restricted common stock | — | — | 907,032 | 1 | (1 | ) | — | — | ||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (394,267 | ) | (1 | ) | (2,058 | ) | — | (2,059 | ) | |||||||||||||||||||||||||||||
Issuance of common stock, net of commissions and expenses of $2.7 million | — | — | 9,708,738 | 10 | 47,260 | — | 47,270 | |||||||||||||||||||||||||||||||||
Preferred stock dividends | 13,460 | 18,672 | — | — | (18,938 | ) | — | (18,938 | ) | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (54,323 | ) | (54,323 | ) | |||||||||||||||||||||||||||||||
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Balance at December 31, 2017 | 119,644 | $ | 143,993 | 142,658,037 | $ | 143 | $ | 615,493 | $ | (712,442 | ) | $ | (96,806 | ) | ||||||||||||||||||||||||||
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Series 1 Preferred Stock-Mezzanine | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | 119,644 | $ | 143,992 | 142,658,037 | $ | 143 | $ | 615,493 | $ | (712,442 | ) | $ | (96,806 | ) | ||||||||||||||||||||||||||
Adjustment for implementation of ASU No. 2014-09, Revenue from Contracts with Customers | — | — | — | — | — | (8,131 | ) | (8,131 | ) | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 7,534 | — | 7,534 | |||||||||||||||||||||||||||||||||
Issuance of restricted common stock | — | — | 150,321 | 2 | (1 | ) | — | 1 | ||||||||||||||||||||||||||||||||
Exercise of employee stock options | — | — | 104,166 | 2 | 240 | — | 242 | |||||||||||||||||||||||||||||||||
Cancelled restricted common stock | — | — | (271,433 | ) | (2 | ) | 3 | — | 1 | |||||||||||||||||||||||||||||||
Repurchase of restricted common stock | — | — | (514,349 | ) | (3 | ) | (1,621 | ) | — | (1,624 | ) | |||||||||||||||||||||||||||||
Issuance of warrants and common stock in a private placement, net of commissions and expenses of $2,898 | — | — | 18,939,394 | 19 | 47,082 | — | 47,101 | |||||||||||||||||||||||||||||||||
Preferred stock dividends | 11,415 | 16,775 | — | — | (16,998 | ) | — | (16,998 | ) | |||||||||||||||||||||||||||||||
Settlement of a related party relationship (Note 7) | (131,059 | ) | (160,767 | ) | — | — | — | 207,361 | 207,361 | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (53,117 | ) | (53,117 | ) | |||||||||||||||||||||||||||||||
Balance at December 31, 2018 | — | $ | — | 161,066,136 | $ | 161 | $ | 651,732 | $ | (566,329 | ) | $ | 85,564 | |||||||||||||||||||||||||||
Series 1 Preferred Stock-Mezzanine | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Adjustment for implementation of ASU No.2014-09, Revenue from Contracts with Customers | — | — | — | — | — | (8,131 | ) | (8,131 | ) | |||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 7,534 | — | 7,534 | |||||||||||||||||||||||||||||
Issuance of restricted common stock | — | — | 150,321 | 2 | (1 | ) | — | 1 | ||||||||||||||||||||||||||||
Exercise of employee stock options | — | — | 104,166 | 2 | 240 | — | 242 | |||||||||||||||||||||||||||||
Cancelled restricted common stock | — | — | (271,433 | ) | (2 | ) | 3 | — | 1 | |||||||||||||||||||||||||||
Repurchase of restricted common stock | — | — | (514,349 | ) | (3 | ) | (1,621 | ) | — | (1,624 | ) | |||||||||||||||||||||||||
Issuance of warrants and common stock in a private placement, net of commissions and expenses of $2,898 | — | — | 18,939,394 | 19 | 47,082 | — | 47,101 | |||||||||||||||||||||||||||||
Preferred stock dividends | 11,415 | 16,775 | — | — | (16,998 | ) | — | (16,998 | ) | |||||||||||||||||||||||||||
Settlement of a related party relationship (Note 7) | (131,059 | ) | (160,767 | ) | — | — | — | 207,361 | 207,361 | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (53,117 | ) | (53,117 | ) | |||||||||||||||||||||||||||
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Balance at December 31, 2018 | — | $ | — | 161,066,136 | $ | 161 | $ | 651,732 | $ | (566,329 | ) | $ | 85,564 | |||||||||||||||||||||||
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Series 1 Preferred Stock-Mezzanine | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | — | $ | — | 161,066,136 | $ | 161 | $ 651,732 | $ | (566,329 ) | $ | 85,564 | |||||||||||||||||||||||||
Stock-based compensation | — | — | 6,341 | — | 6,341 | |||||||||||||||||||||||||||||||
Issuance of restricted common stock | 1,519,766 | 2 | 998 | — | 1,000 | |||||||||||||||||||||||||||||||
Exercise of employee stock options | 443,051 | — | 1,219 | — | 1,219 | |||||||||||||||||||||||||||||||
Cancelled restricted common stock | (74,599 | ) | — | — | — | — | ||||||||||||||||||||||||||||||
Repurchase of restricted common stock | (225,339 | ) | — | (653 | ) | — | (653 | ) | ||||||||||||||||||||||||||||
Issuance of inducement warrants | — | — | 60,751 | — | 60,751 | |||||||||||||||||||||||||||||||
Issuance of common stock in connection with at the market offering, net of commssions and expenses of $0.1 million | 1,271,274 | 1 | 6,084 | — | 6,085 | |||||||||||||||||||||||||||||||
Warrant exercise, net of commissions and expenses of $1.1 milliom | 17,803,031 | 18 | 52,481 | — | 52,499 | |||||||||||||||||||||||||||||||
Net loss | — | — | — | (117,796 | ) | (117,796 | ) | |||||||||||||||||||||||||||||
Balance at December 31, 2019 | — | $ | — | 181,803,320 | $ | 182 | $ | 778,953 | $ | (684,125 | ) | $ | 95,010 | |||||||||||||||||||||||
Series 1 Preferred Stock-Mezzanine | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 6,341 | — | 6,341 | |||||||||||||||||||||||||||||||
Issuance of restricted common stock | 1,519,766 | 2 | 998 | — | 1,000 | |||||||||||||||||||||||||||||||
Exercise of employee stock options | 443,051 | — | 1,219 | — | 1,219 | |||||||||||||||||||||||||||||||
Cancelled restricted common stock | (74,599 | ) | — | — | — | — | ||||||||||||||||||||||||||||||
Repurchase of restricted common stock | (225,339 | ) | — | (653 | ) | — | (653 | ) | ||||||||||||||||||||||||||||
Issuance of inducement warrants | — | — | 60,751 | 60,751 | ||||||||||||||||||||||||||||||||
Issuance of common stock in connection with at the market offering, net of commssions and expenses of $0.1 million | 1,271,274 | 1 | 6,084 | 6,085 | ||||||||||||||||||||||||||||||||
Warrant exercise, net of commissions and expenses of $1.1 million | 17,803,031 | 18 | 52,481 | — | 52,499 | |||||||||||||||||||||||||||||||
Net loss | — | — | — | (117,796 | ) | (117,796 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Balance at December 31, 2019 | — | $ | — | 181,803,320 | $ | 182 | $ | 778,953 | $ | (684,125 | ) | $ | 95,010 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series 1 Preferred Stock-Mezzanine | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | — | $ | — | $ 181,803,320 | $ | 182 | $ 778,953 | $ (684,125 ) | $ | 95,010 | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 6,829 | — | 6,829 | |||||||||||||||||||||||||||||
Exercise of employee stock options | — | — | 252,799 | 442 | 442 | |||||||||||||||||||||||||||||||
Restricted stock awards | — | — | 805,900 | 1 | (1 | ) | — | — | ||||||||||||||||||||||||||||
Cancelled restricted common stock | — | — | (194,897 | ) | — | — | — | — | ||||||||||||||||||||||||||||
Issuance of common stock in connection with a public offering, net of commissions and expenses of $5,900 | — | — | 29,110,111 | 29 | 88,632 | — | 88,661 | |||||||||||||||||||||||||||||
Issuance of common stock in connection with an at the market offering, net of commissions and expenses of $400 | — | — | 2,814,673 | 3 | 13,013 | — | 13,016 | | ||||||||||||||||||||||||||||
Net loss | (79,976 | ) | (79,976 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | — | $ | — | 214,591,906 | $ | 215 | $ | 887,868 | $ | (764,101 | ) | $ | 123,982 | |||||||||||||||||||||||
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (117,796 | ) | $ | (53,117 | ) | $ | (54,323 | ) | |||
Adjustments to reconcile net loss to net cash | ||||||||||||
used in operating activities: | ||||||||||||
Depreciation | 629 | 575 | 369 | |||||||||
Stock-based compensation | 7,341 | 7,534 | 8,454 | |||||||||
Non-cash inducement warrant expense | 60,751 | — | — | |||||||||
Change in fair value of derivative liabilities | — | (158 | ) | 1,295 | ||||||||
Change in operating assets and liabilities: | ||||||||||||
(Increase) decrease in: | ||||||||||||
Receivables | (1,466 | ) | (1,845 | ) | 2 | |||||||
Prepaid expenses and other current assets | (1,729 | ) | (1,263 | ) | 3,992 | |||||||
Deposits | (2 | ) | — | — | ||||||||
Other noncurrent assets | 9,431 | 3,942 | (12,991 | ) | ||||||||
Increase (decrease) in: | ||||||||||||
Accounts payable | 199 | (3,709 | ) | 4,261 | ||||||||
Accrued expenses | 1,725 | (1,145 | ) | 800 | ||||||||
Deferred revenue | — | (146 | ) | (6,389 | ) | |||||||
Deferred rent | — | (125 | ) | (139 | ) | |||||||
Lease liabilities | 63 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net cash used in operating activities | (40,854 | ) | (49,457 | ) | (54,669 | ) | ||||||
|
|
|
|
|
| |||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (284 | ) | (459 | ) | (737 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash used in investing activities | (284 | ) | (459 | ) | (737 | ) | ||||||
|
|
|
|
|
| |||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from exercise of stock options | 1,219 | 240 | 88 | |||||||||
Issuance of restricted common stock | — | — | (2,059 | ) | ||||||||
Repurchase of common stock | (653 | ) | (1,622 | ) | — | |||||||
Proceeds from issuance of common stock, net | — | — | 47,270 | |||||||||
Proceeds from underwritten financing | — | 47,101 | — | |||||||||
Issuance of common stock upon exercise of warrants, net | 52,499 | — | — | |||||||||
Issuance of common stock in connection with an at the market offering, net | 6,085 | — | — | |||||||||
Cash paid for settlement of related party relationship | — | (5,408 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Net cash provided by financing activities | 59,150 | 40,311 | 45,299 | |||||||||
|
|
|
|
|
| |||||||
Net decrease in cash and cash equivalents, and restricted cash | 18,012 | (9,605 | ) | (10,107 | ) | |||||||
Cash and cash equivalents, and restricted cash, beginning of period | 61,729 | 71,334 | 81,441 | |||||||||
|
|
|
|
|
| |||||||
Cash and cash equivalents, and restricted cash, end of period | $ | 79,741 | $ | 61,729 | $ | 71,334 | ||||||
|
|
|
|
|
| |||||||
Supplementary disclosure of cash flow information: | ||||||||||||
Bonus paid in common stock | $ | 1,000 | $ | — | $ | — | ||||||
|
|
|
|
|
| |||||||
Fixed assets in accrued expenses | $ | 358 | $ | — | $ | — | ||||||
|
|
|
|
|
| |||||||
Supplementary disclosure of noncash investing and financing activities: | ||||||||||||
Noncash portion of related party relationship settlement | $ | — | $ | 212,769 | $ | — | ||||||
|
|
|
|
|
| |||||||
Payment of Series 1 preferred stock dividends in preferred stock | $ | — | $ | 16,998 | $ | 18,938 | ||||||
|
|
|
|
|
|
For the Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (79,976 | ) | $ | (117,796 | ) | $ | (53,117 | ) | |||
Adjustments to reconcile net loss to net cash | ||||||||||||
used in operating activities: | ||||||||||||
Depreciation | 1,128 | 629 | 575 | |||||||||
Stock-based compensation | 6,829 | 7,341 | 7,534 | |||||||||
Non-cash inducement warrant expense | — | 60,751 | — | |||||||||
Change in fair value of derivative liabilities | — | — | (158 | ) | ||||||||
Change in operating assets and liabilities: | ||||||||||||
(Increase) decrease in: | ||||||||||||
Receivables | (1,335 | ) | (1,466 | ) | (1,845 | ) | ||||||
Prepaid expenses and other current assets | 11,566 | (1,729 | ) | (1,263 | ) | |||||||
Right of use assets | (2,378 | ) | — | — | ||||||||
Deposits | — | (2 | ) | — | ||||||||
Other noncurrent assets | (635 | ) | 9,431 | 3,942 | ||||||||
Increase (decrease) in: | ||||||||||||
Accounts payable | 54 | 199 | (3,709 | ) | ||||||||
Accrued expenses | 5,272 | 1,725 | (1,145 | ) | ||||||||
Deferred revenue | — | — | (146 | ) | ||||||||
Deferred rent | — | — | (125 | ) | ||||||||
Lease liabilities | 2,462 | 63 | — | |||||||||
Net cash used in operating activities | (57,013 | ) | (40,854 | ) | (49,457 | ) | ||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (9,778 | ) | (284 | ) | (459 | ) | ||||||
Net cash used in investing activities | (9,778 | ) | (284 | ) | (459 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from exercise of stock options | 442 | 1,219 | 240 | |||||||||
Issuance of restricted common stock | — | — | — | |||||||||
Repurchase of common stock | — | (653 | ) | (1,622 | ) | |||||||
Proceeds from underwritten financing | — | — | 47,101 | |||||||||
Issuance of common stock upon exercise of warrants, net | — | 52,499 | — | |||||||||
Issuance of common stock in connection with a public offering, net | 88,661 | |||||||||||
Issuance of common stock in connection with an at the market offering, net | 13,016 | 6,085 | — | |||||||||
Cash paid for settlement of related party relationship | — | — | (5,408 | ) | ||||||||
Net cash provided by financing activities | 102,119 | 59,150 | 40,311 | |||||||||
Net decrease in cash and cash equivalents, and restricted cash | 35,328 | 18,012 | (9,605 | ) | ||||||||
Cash and cash equivalents, and restricted cash, beginning of period | 79,741 | 61,729 | 71,334 | |||||||||
Cash and cash equivalents, and restricted cash, end of period | $ | 115,069 | $ | 79,741 | $ | 61,729 | ||||||
Supplementary disclosure of cash flow information: | ||||||||||||
Bonus paid in common stock | $ | — | $ | 1,000 | $ | — | ||||||
Fixed assets in accrued expenses | $ | 471 | $ | 358 | $ | — | ||||||
Supplementary disclosure of noncash investing and financing activities: | ||||||||||||
Noncash portion of related party relationship settlement | $ | — | $ | — | $ | 212,769 | ||||||
Payment of Series 1 preferred stock dividends in preferred stock | $ | — | $ | — | $ | 16,998 | ||||||
1. | Organization |
2. | Financings |
common commo
2. | Financings (Continued) |
At-the-Market Offering
Subsequent
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
During the year ended December 31, 2019, the Company sold an aggregate of 1,271,274 shares of its common stock. The offering was made pursuant to the Company’s effective registration statement on Form (File
2. | Financings (Continued) |
May 2017 Offering
On May 11, 2017, the Company sold in an underwritten offering an aggregate of 9,708,738 shares of its common stock to a single investor. The price to the investor in the offering was $5.15 per share, and the underwriters agreed to purchase the shares from the Company pursuant to the underwriting agreement at a purchase price of $4.893 per share. The net proceeds from the offering were approximately $47.3 million after deducting underwriting commissions and estimated offering expenses payable by the Company.
3. | Summary of Significant Accounting Policies |
ZIOPHARM Oncology, Inc.NOTES TO FINANCIAL STATEMENTS3.Summary of Significant Accounting Policies (Continued) Series 1 preferred stock (and related dividends); and
3. | Summary of Significant Accounting Policies (Continued) |
February 2020 Public Offering
At-the-Market Offering
Subsequenteffective December 31, 2020. Included in his separation agreement, Mr. Shukla was to the balance sheet date,receive his annual bonus which was accrued at December 31, 2020.
Amendment - License Agreement with the National Cancer Institute
On January 8, 2020, we amended the Patent License to expand the TCR library licensed from the NCI to include additional TCRs reactive to mutated KRAS and TP53 neoantigens. Under the amendment to the patent license, we agreed to pay the NCI a cash payment of $600,000 within sixty days of the amendment.
R&D programs.
3. | Summary of Significant Accounting Policies (Continued) |
table provides a reconciliation of cash, cash equivalents, and restricted cash within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.
December 31, | ||||||||||||
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Cash and cash equivalents | $ | 79,741 | $ | 61,729 | $ | 70,946 | ||||||
Restricted cash included in prepaid expenses and other current assets | — | — | 388 | |||||||||
|
|
|
|
|
| |||||||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | 79,741 | $ | 61,729 | $ | 71,334 | ||||||
|
|
|
|
|
|
Operations. group of assets, based on the present value of the expected future cash flows associated with the use of the asset.recordedstated at cost.cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are capitalized. Depreciation and amortization is providedcalculated on a straight-line basis using the straight-line method overfollowing periods, which represent the following estimated useful lives of the assets:Office and computer equipment 3 years Software 3 years Laboratory equipment 5 years Leasehold improvements Life of the lease whichthat are under construction and are in the process of being readied for their intended use, are recorded as construction in progress and are not depreciated until such time as the subject asset is between threeplaced in service. Repairs and five years. Upon retirement or sale,maintenance that do not extend the costuseful life of the asset are expensed as incurred. Upon sale,disposed ofthe costs and the related accumulated depreciation are eliminatedremoved from the balance sheetsrespective accounts and related gainsany gain or losses are reflected inloss on the statementsdisposition is included on our Statements of operations.The Company reviews the carrying values its long-lived assets and the remaining useful lives of such long-lived assets are reviewed for possible impairment whenever eventsa triggering event occurs or changes in circumstances indicate that the carrying amountsamount of the assets may not be recoverable. Any long-livedAn asset, or group of assets, held for disposal are reported atconsidered to be impaired when the lowerundiscounted estimated net cash flows expected to be generated by the asset, or group of theirassets, are less than its carrying amountsamount. The impairment recognized is the amount by which the carrying amount exceeds the fair market value of the impaired asset, or fair values less costs to sell.Chief Executive Officer,chief operating decision maker, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and does not track expenses on a
3. | Summary of Significant Accounting Policies (Continued) |
($ in thousands) | Fair Value Measurements at Reporting Date Using | |||||||||||||||
Description | Balance as of December 31, 2019 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash equivalents | $ | 68,031 | $ | 68,031 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
($ in thousands) | Fair Value Measurements at Reporting Date Using | |||||||||||||||
Description | Balance as of December 31, 2018 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash equivalents | $ | 24,437 | $ | 24,437 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
($ in thousands) | Fair Value Measurements at Reporting Date Using | |||||||||||||||
Description | Balance as of December 31, 2020 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash equivalents | $ | 75,990 | $ | 75,990 | $ | — | $ | — | ||||||||
($ in thousands) | Fair Value Measurements at Reporting Date Using | |||||||||||||||
Description | Balance as of December 31, 2019 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash equivalents | $ | 68,031 | $ | 68,031 | $ | — | $ | — | ||||||||
3. | Summary of Significant Accounting Policies (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
used in historical years. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods and/or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and/or services. To determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) each performance obligation is satisfied.
3. | Summary of Significant Accounting Policies (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
any development, regulatory or commercial milestones or royalty revenue resulting from any of its collaboration arrangements. Consideration that would be received for optional goods and/or services is excluded from the transaction price at contract inception.
3. | Summary of Significant Accounting Policies (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
ensure that estimates of variable consideration would be included in the transaction price only to the extent the Company had a high degree of confidence that revenue would not be reversed in a subsequent reporting period. The Company willre-evaluate the transaction price, including the estimated variable consideration
($ in thousands) | Impact of Topic 606 Adoption on the Balance Sheet as of January 1, 2018 | |||||||||||
Description | As reported under Topic 606 | Adjustments | Balances without adoption of Topic 606 | |||||||||
Contract liability, current portion | $ | 622 | $ | (5,767 | ) | $ | 6,389 | |||||
Contract liability, net of current portion | $ | 49,037 | $ | 13,898 | $ | 35,139 | ||||||
Accumulated deficit | $ | (720,573 | ) | $ | (8,131 | ) | $ | (712,442 | ) | |||
($ in thousands) | Impact of Topic 606 Adoption on the Statement of Operations for the Year Ended December 31, 2018 | |||||||||||
Description | As reported under Topic 606 | Adjustments | Balances without adoption of Topic 606 | |||||||||
Collaboration revenue | $ | 146 | $ | (4,732 | ) | $ | 4,878 | |||||
Net loss | $ | (53,117 | ) | $ | (4,732 | ) | $ | (48,385 | ) | |||
Net income (loss) applicable to common shareholders | $ | 137,246 | $ | (4,732 | ) | $ | 141,978 | |||||
Net income (loss) per share - basic | $ | 0.96 | $ | (0.03 | ) | $ | 0.99 | |||||
Net income (loss) per share - diluted | $ | 0.96 | $ | (0.03 | ) | $ | 0.99 | |||||
($ in thousands) | Impact of Topic 606 Adoption on the Statement of Cash Flows for the Year Ended December 31, 2018 | |||||||||||
Description | As reported under Topic 606 | Adjustments | Balances without adoption of Topic 606 | |||||||||
Net loss | $ | (53,117 | ) | $ | (4,732 | ) | $ | (48,385 | ) | |||
Changes in contract liability | $ | — | $ | — | $ | — |
($ in thousands) | Impact of Topic 606 Adoption on the Balance Sheet as of January 1, 2018 | |||||||||||
Description | As reported under Topic 606 | Adjustments | Balances without adoption of Topic 606 | |||||||||
Contract liability, current portion | $ | 622 | $ | (5,767 | ) | $ | 6,389 | |||||
Contract liability, net of current portion | $ | 49,037 | $ | 13,898 | $ | 35,139 | ||||||
Accumulated deficit | $ | (720,573 | ) | $ | (8,131 | ) | $ | (712,442 | ) |
($ in thousands) | Impact of Topic 606 Adoption on the Statement of Operations for the Year Ended December 31, 2018 | |||||||||||
Description | As reported under Topic 606 | Adjustments | Balances without adoption of Topic 606 | |||||||||
Collaboration revenue | $ | 146 | $ | (4,732 | ) | $ | 4,878 | |||||
Net loss | $ | (53,117 | ) | $ | (4,732 | ) | $ | (48,385 | ) | |||
Net income (loss) applicable to common shareholders | $ | 137,246 | $ | (4,732 | ) | $ | 141,978 | |||||
Net income (loss) per share - basic | $ | 0.96 | $ | (0.03 | ) | $ | 0.99 | |||||
Net income (loss) per share - diluted | $ | 0.96 | $ | (0.03 | ) | $ | 0.99 |
($ in thousands) | Impact of Topic 606 Adoption on the Statement of Cash Flows for the Year Ended December 31, 2018 | |||||||||||
Description | As reported under Topic 606 | Adjustments | Balances without adoption of Topic 606 | |||||||||
Net loss | $ | (53,117 | ) | $ | (4,732 | ) | $ | (48,385) | ||||
Changes in contract liability | $ | — | $ | 0 | $ | — |
3. | Summary of Significant Accounting Policies (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
satisfaction of the performance obligation. In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to the budgeted costs to complete the research programs. These costs consist primarily of internal full-time equivalent effort and third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs. As a result, although the performance obligations noted above and identified under ASC 606
Research and development expenditures
expenses.
3. | Summary of Significant Accounting Policies (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
on the balance sheets. The Company recognized $4.3 million, $4.0 million, $3.0 million, and $2.5$3.0 million of compensation expense related to stock options during the years ended December 31, 2020, 2019, 2018, and 2017,2018, respectively. In the years ended December 31, 2020, 2019, 2018, and 2017,2018, the Company recognized $2.5 million, $2.3 million, $4.5 million, and $6.0$4.5 million of compensation expense, respectively, related to restricted stock (Note 14). The total compensation expense relating to vesting of stock options and restricted stock awards for the years ended December 31, 2020, 2019, and 2018 and 2017 was $6.8 million, $6.3 million, and $7.5 million, and $8.5 million, respectively. Therespectively.The following table presents share-based compensation expense included in the Company’s Statements of Operations:
Year ended December 31, | ||||||||||||
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Research and development | $ | 1,461 | $ | 1,683 | $ | 2,401 | ||||||
General and administrative | 4,880 | 5,851 | 6,053 | |||||||||
|
|
|
|
|
| |||||||
Share based employee compensation expense before tax | $ | 6,341 | $ | 7,534 | $ | 8,454 | ||||||
Income tax benefit | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Net share based employee compensation expense | $ | 6,341 | $ | 7,534 | $ | 8,454 | ||||||
|
|
|
|
|
|
Year ended December 31, | ||||||||||||
(in thousands) | 2020 | 2019 | 2018 | |||||||||
Research and development | $ | 2,098 | $ | 1,461 | $ | 1,683 | ||||||
General and administrative | 4,731 | 4,880 | 5,851 | |||||||||
Share based employee compensation expense before tax | 6,829 | 6,341 | 7,534 | |||||||||
Income tax benefit | — | — | — | |||||||||
Net share based employee compensation expense | $ | 6,829 | $ | 6,341 | $ | 7,534 | ||||||
3. | Summary of Significant Accounting Policies (Continued) |
2019 | 2018 | 2017 | ||||
Weighted average risk-free interest rate | 1.39 - 2.53% | 2.55 - 3.06% | 1.85 - 2.27% | |||
Expected life in years | 5.75 - 6.25 | 6 | 6 | |||
Expected volatility | 71.39 - 85.00% | 80.75 - 84.71% | 80.31 - 81.03% | |||
Expected dividend yield | 0 | 0 | 0 |
2020 | 2019 | 2018 | ||||
Weighted average risk-free interest rate | 0.36 - 1.68% | 1.39 - 2.53% | 2.55 - 3.06% | |||
Expected life in years | 5.75 - 6.25 | 5.75 - 6.25 | 6 | |||
Expected volatility | 71.11 - 74.41% | 71.39 - 85.00% | 80.75 - 84.71% | |||
Expected dividend yield | 0 | 0 | 0 |
For the Year Ended December 31, | ||||||||||||
in thousands, except share and per share data | 2019 | 2018 | 2017 | |||||||||
Basic | ||||||||||||
Net loss | $ | (117,796 | ) | $ | (53,117 | ) | $ | (54,323 | ) | |||
Preferred stock dividends | — | (16,998 | ) | (18,938 | ) | |||||||
Settlement of a related party relationship | — | 207,361 | — | |||||||||
|
|
|
|
|
|
For the Year Ended December 31, | ||||||||||||
in thousands, except share and per share data | 2020 | 2019 | 2018 | |||||||||
Basic | ||||||||||||
Net loss | $ | (79,976 | ) | $ | (117,796 | ) | $ | (53,117 | ) | |||
Preferred stock dividends | — | — | (16,998 | ) | ||||||||
Settlement of a related party relationship | — | — | 207,361 | |||||||||
Net income / (loss) applicable to common shareholders | $ | (79,976 | ) | $ | (117,796 | ) | $ | 137,246 | ||||
Weighted-average common shares outstanding | 209,636,456 | 167,952,114 | 143,508,674 | |||||||||
Earnings per share, basic | $ | (0.38 | ) | $ | (0.70 | ) | $ | 0.96 | ||||
Diluted | ||||||||||||
Net Loss | $ | (79,976 | ) | $ | (117,796 | ) | $ | (53,117 | ) | |||
Preferred stock dividends | — | — | (16,998 | ) | ||||||||
Precigen license transaction | — | — | 207,361 | |||||||||
Net income / (loss) applicable to common shareholders | $ | (79,976 | ) | $ | (117,796 | ) | $ | 137,246 | ||||
Weighted-average common shares outstanding | 209,636,456 | 167,952,114 | 143,508,674 |
3. | Summary of Significant Accounting Policies (Continued) |
For the Year Ended December 31, | ||||||||||||
in thousands, except share and per share data | 2019 | 2018 | 2017 | |||||||||
Net income / (loss) applicable to common shareholders | $ | (117,796 | ) | $ | 137,246 | $ | (73,261 | ) | ||||
|
|
|
|
|
| |||||||
Weighted-average common shares outstanding | 167,952,114 | 143,508,674 | 136,938,264 | |||||||||
|
|
|
|
|
| |||||||
Earnings per share, basic | $ | (0.70 | ) | $ | 0.96 | $ | (0.53 | ) | ||||
|
|
|
|
|
| |||||||
Diluted | ||||||||||||
Net Loss | $ | (117,796 | ) | $ | (53,117 | ) | $ | (54,323 | ) | |||
Preferred stock dividends | — | (16,998 | ) | (18,938 | ) | |||||||
Precigen license transaction | — | 207,361 | — | |||||||||
|
|
|
|
|
| |||||||
Net income / (loss) applicable to common shareholders | $ | (117,796 | ) | $ | 137,246 | $ | (73,261 | ) | ||||
|
|
|
|
|
| |||||||
Weighted-average common shares outstanding | 167,952,114 | 143,508,674 | 136,938,264 | |||||||||
Effect of dilutive securities | ||||||||||||
Stock options | — | 201,362 | — | |||||||||
Unvested restricted common stock | — | 124 | — | |||||||||
Warrants | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Dilutive potential common shares | — | 201,486 | — | |||||||||
|
|
|
|
|
| |||||||
Shares used in calculating diluted earnings per share | 167,952,114 | 143,710,160 | 136,938,264 | |||||||||
|
|
|
|
|
| |||||||
Earnings per share, diluted | $ | (0.70 | ) | $ | 0.96 | $ | (0.53 | ) | ||||
|
|
|
|
|
|
For the Year Ended December 31, | ||||||||||||
in thousands, except share and per share data | 2020 | 2019 | 2018 | |||||||||
Effect of dilutive securities | ||||||||||||
Stock options | — | — | 201,362 | |||||||||
Unvested restricted common stock | — | — | 124 | |||||||||
Warrants | — | — | — | |||||||||
Dilutive potential common shares | — | — | 201,486 | |||||||||
Shares used in calculating diluted earnings per share | 209,636,456 | 167,952,114 | 143,710,160 | |||||||||
Earnings per share, diluted | $ | (0.38 | ) | $ | (0.70 | ) | $ | 0.96 |
December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Stock options | 6,872,879 | 5,075,723 | 4,352,135 | |||||||||
Unvested restricted stock | 939,636 | 681,946 | 1,808,559 | |||||||||
Preferred stock | — | — | 34,134,524 | |||||||||
Warrants | 22,272,727 | 18,939,394 | — | |||||||||
|
|
|
|
|
| |||||||
30,085,242 | 24,697,063 | 40,295,218 | ||||||||||
|
|
|
|
|
|
December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Stock options | 6,832,386 | 6,872,879 | 5,075,723 | |||||||||
Inducement stock options | 588,333 | 1,030,000 | 500,000 | |||||||||
Unvested restricted stock | 786,280 | 939,636 | 681,946 | |||||||||
Warrants | 22,272,727 | 22,272,727 | 18,939,394 | |||||||||
30,479,726 | 31,115,242 | 25,197,063 | ||||||||||
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
Company all shares of the Company’s Series 1 Preferred Stock held by or payable to Precigen as of the date of the License Agreement (Note 7).
In June 2018, the FASB issued ASUNo. 2018-07,Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, or ASU2018-07. The guidance in this ASU expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The new standard was effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within each annual reporting period. The Company adopted this ASU on January 1, 2019. The adoption did not have a material impact on the Company’s financial statements.
In February 2016, the FASB issued ASUNo. 2016-02,Leases (Topic 842), which requires lessees to recognize aright-of-use asset and lease liability for most lease arrangements. The Company adopted ASUNo. 2016-02, on January 1, 2019 using the effective date method, in which it did not restate prior periods. Upon adoption, the Company elected the package of practical expedients permitted under the transition guidance within Topic 842 which, among other things, allowed it to carry forward the historical lease classification. The Company does not allocate consideration in its leases to lease andnon-lease components and does not record leases on its balance sheets with terms of 12 months or less. Refer to Note 8—Leases for further details.
In May 2017, the FASB issued ASUNo. 2017-09,Compensation—Stock Compensation(Topic 718): Scope of Modification Accounting, or ASU2017-09, to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this new guidance modification accounting is required if the fair value, vesting conditions, or classificationon its consolidated financial statements.
4. | Property and Equipment, net |
December 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Office and computer equipment | $ | 1,436 | $ | 1,249 | ||||
Software | 1,030 | 1,030 | ||||||
Leasehold improvements | 1,892 | 1,839 | ||||||
Research and development equipment | 1,195 | 1,182 | ||||||
Capitalin-process | 389 | — | ||||||
|
|
|
| |||||
5,942 | 5,300 | |||||||
Less: accumulated depreciation | (4,832 | ) | (4,203 | ) | ||||
|
|
|
| |||||
Property and equipment, net | $ | 1,110 | $ | 1,097 | ||||
|
|
|
|
December 31, | ||||||||
(in thousands) | 2020 | 2019 | ||||||
Office and computer equipment | $ | 869 | $ | 1,436 | ||||
Software | 1,153 | 1,030 | ||||||
Leasehold improvements | 7,457 | 1,195 | ||||||
Research and development equipment | 5,401 | 1,892 | ||||||
Construction - in-process | 313 | 389 | ||||||
15,193 | 5,942 | |||||||
Less: accumulated depreciation | (4,962 | ) | (4,832 | ) | ||||
Property and equipment, net | $ | 10,231 | $ | 1,110 | ||||
5. | Accrued Expenses |
December 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Clinical services | $ | 5,247 | $ | 3,003 | ||||
Employee compensation | 1,910 | 1,786 | ||||||
Preclinical services | 1,147 | 1,247 | ||||||
Professional services | 991 | 745 | ||||||
Manufacturing services | 586 | 1,164 | ||||||
Accrued vacation | 489 | 363 | ||||||
Payroll taxes and benefits | 284 | 349 | ||||||
Other consulting services | 192 | 106 | ||||||
|
|
|
| |||||
Total | $ | 10,846 | $ | 8,763 | ||||
|
|
|
|
December 31, | ||||||||
(in thousands) | 2020 | 2019 | ||||||
Clinical services | $ | 4,450 | $ | 5,247 | ||||
Employee compensation | 3,298 | 1,910 | ||||||
Preclinical services | 749 | 1,147 | ||||||
Professional services | 3,993 | 991 | ||||||
Manufacturing services | 3,159 | 586 | ||||||
Accrued vacation | 725 | 489 | ||||||
Payroll taxes and benefits | 16 | 284 | ||||||
Other consulting services | 199 | 192 | ||||||
Total | $ | 16,589 | $ | 10,846 | ||||
6. | Related Party Transactions |
Precigen/ (Note
6. | Related Party Transactions (Continued) |
7. | Settlement of a Related Party Relationship |
Ares Trading to pursue such target under the Ares Trading Agreement, andRheoSwitch® RheoSwitchRTS®RTSZIOPHARM Oncology, Inc.NOTES TO FINANCIAL STATEMENTS7.Settlement of a Related Party Relationship (Continued)PGEN has also granted the Company an exclusive, worldwide, royalty-bearing,sub-licensable license to research, develop and commercialize products utilizing an additional construct that expresses RTSIL-12 for the treatment of cancer, referred to as GorillaIL-12 Products.we will paythe Company pays PGEN an annual license fee of $100 thousand and we have agreed to reimburse PGEN for certain historical costs of the licensed programs up to $1.0 million, payable quarterly. The Company determined that the fair value of this program was $1.0 million and this was expensed in accordance with ASC 730, Research and Development during the year ended December 31, 2018. $ million and $1.0 million for the years ended December 31, 2019, and 2018, respectively, and has included these amountsthis amount in accrued expenses on the balance sheet.The agreement also calls for an annual license fee of $100 thousand as long as the agreement is effective.
7. | Settlement of a Related Party Relationship (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
all shares of the Company’s Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement.
8. | Leases |
8. | Leases (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
two hundred and ten square feet and arewere required to make rental payments at an average monthly rate of approximately $1.0 thousand through April 2021. All future rent expense incurred in Houston, will be deducted from the Company’s prepayments at MD Anderson.
$1 thousand. This lease was terminated effective March 31, 2020.
Effective April 13, 2020, the Company leased an additional
(in thousands) | Year Ended December 31, 2019 | |||
Operating lease cost | $ | 772 | ||
|
| |||
Total lease cost | $ | 772 | ||
|
| |||
Weighted-average remaining lease term (years) | 4.42 | |||
Weighted-average discount rate | 8.00 | % |
Years Ended December 31, | ||||||||
2020 | 2019 | |||||||
Operating lease cost | $ | 1,054 | $ | 772 | ||||
Total lease cost | $ | 1,054 | $ | 772 | ||||
Weighted-average remaining lease term (years) | 6.19 | 4.42 | ||||||
Weighted-average discount rate | 8.00 | % | 8.00 | % |
2020.
8. | Leases (Continued) |
Maturity of Lease Liabilities | Operating Leases | |||
2020 | $ | 925 | ||
2021 | 701 | |||
2022 | 213 | |||
2023 | 220 | |||
2024 | 226 | |||
Thereafter | 514 | |||
|
| |||
Total lease payments | $ | 2,799 | ||
Less: Imputed Interest and Adjustments | (447 | ) | ||
|
| |||
Present value of lease payments | $ | 2,352 | ||
|
|
Disclosures related to periods prior to adoption of the New Lease Standard
Prior to the adoption of ASC 842, the Company recorded rent expense on a straight-line basis over the term of the lease under ASC 840. Total rent expense was approximately $0.7 million and $0.7 million for the years ended December 31, 2018 and 2017, respectively.
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
Maturity of Lease Liabilities | Operating Leases | |||
2021 | $ | 1,189 | ||
2022 | 800 | |||
2023 | 820 | |||
2024 | 844 | |||
2025 | 869 | |||
Thereafter | 1,650 | |||
Total lease payments | $ | 6,172 | ||
Less : imputed interest and adjustments | (1,358 | ) | ||
Present value of lease payments | $ | 4,814 | ||
9. |
For comparative purposes, the Company’s aggregate future minimumnon-cancellable commitments under operating leases as of December 31, 2018 were as follows:
2019 | 723 | |||
2020 | 736 | |||
2021 | 488 | |||
|
| |||
Future minimum lease payments, net | $ | 1,947 | ||
|
|
Commitments and Contingencies |
7—7 –Agreements—TheAgreements —The University of Texas MD Anderson Cancer Centerbecameserved as the Company’s Chief Executive Officer infromis now currentlysublicensable license to use the licensed intellectual property thereunder. After ten years from the date of the MD Anderson License and subject to a visiting scientist under that institution’s policies.
9. | Commitments and Contingencies (Continued) |
December 31, 2026.
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
The Company will own all intellectual property developed under the 2019 Agreement and will retain all rights to intellectual property for oncology products manufactured using
In connection with the execution of the 2019 Agreement, the Company issued MD Anderson a warrant to purchase 3,333,333 shares of common stock. Refer to Note 10 –Warrants for further details.
9. | Commitments and Contingencies (Continued) |
2020.
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
respectively.
9. | Commitments and Contingencies (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
Company to sublicense the rights to the product candidates covered by the Patent License upon certain conditions, including if the Company is not reasonably satisfying required health and safety needs and (ii) terminate or modify the Patent License, including if the Company is not satisfying requirements for public use as specified by federal regulations.
9. | Commitments and Contingencies (Continued) |
Agreement.
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
.
9. | Commitments and Contingencies (Continued) |
10. | Warrants |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
The Company assessed whether the both the 2019 and 2018 warrants required accounting as derivatives. The Company determined that the warrants were (1) indexed to the Company’s own stock and (2) classified in stockholders’ equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815,Derivatives and Hedging. As such, the Company has concluded the warrants meet the scope exception for determining whether the instruments require accounting as derivatives and should be classified in stockholders’ equity.
operations
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
11. | Income Taxes |
11. | Income Taxes (Continued) |
December 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 124,115 | $ | 106,430 | ||||
Start-up and organizational costs | 30,480 | 33,977 | ||||||
Research and development credit carryforwards | 35,130 | 33,684 | ||||||
Stock compensation | 1,087 | 990 | ||||||
Capitalized acquisition costs | 4,501 | 5,160 | ||||||
Lease liability | 626 | — | ||||||
Depreciation | 176 | 132 | ||||||
Other | 1,186 | 920 | ||||||
|
|
|
| |||||
197,301 | 181,293 | |||||||
Less valuation allowance | (196,696 | ) | (181,293 | ) | ||||
|
|
|
| |||||
Total deferred tax assets | 605 | — | ||||||
|
|
|
| |||||
Deferred tax liabilities: | ||||||||
Right of use asset | (605 | ) | — | |||||
|
|
|
| |||||
Total deferred tax liabilities | $ | (605 | ) | $ | — | |||
|
|
|
| |||||
Net deferred taxes | $ | — | $ | — | ||||
|
|
|
|
December 31, | ||||||||
(in thousands) | 2020 | 2019 | ||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 147,004 | $ | 124,115 | ||||
Start-up and organizational costs | 25,909 | 30,480 | ||||||
Research and development credit carryforwards | 37,183 | 35,130 | ||||||
Stock compensation | 1,478 | 1,087 | ||||||
Capitalized acquisition costs | 3,691 | 4,501 | ||||||
Lease liability | 1,225 | 626 | ||||||
Depreciation | 71 | 176 | ||||||
Other | 135 | 1,186 | ||||||
216,696 | 197,301 | |||||||
Less valuation allowance | (215,513 | ) | (196,696 | ) | ||||
Total deferred tax assets | 1,183 | 605 | ||||||
Deferred tax liabilities: | ||||||||
Right of use asset | (1,183 | ) | (605 | ) | ||||
Total deferred tax liabilities | $ | (1,183 | ) | $ | (605 | ) | ||
Net deferred taxes | $ | 0 | $ | 0 | ||||
In March 2016, the FASB issued ASUNo. 2016-09, “Improvements to Employee Share-Based Payment Accounting” (ASU2016-09), which is intended to simplify several aspects of accounting for share-based payment transactions, including the income tax effects, statutory withholding requirements, forfeitures, and classification on the statement of cash flows. ASU2016-09 is effective for annual reporting periods after December 15, 2016, including interim reporting periods within each annual reporting period. The Company adopted this standard on January 1, 2017. The update revises requirements in the following areas: minimum statutory withholding, accounting for income taxes, and forfeitures. Prior to adoption, the Company recognized share-based compensation, net of estimated forfeitures, over the vesting period of the grant. Upon adoption of ASU2016-09, the Company elected to change its accounting policy to recognize forfeitures as they occur. The new forfeiture policy election was adopted using a modified retrospective approach with a cumulative effect adjustment of $122 thousand recorded to retained earnings as of January 1, 2017. The update requires the
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
Company to recognize the income tax effect of awards in the income statement when the awards vest or are settled without triggering a liability. The income tax related items had no effect on the current period presentation and the Company maintains a full valuation allowance against its deferred tax assets. As a result, an accumulated excess tax benefit of 10.2 million was recognized as a deferred tax asset with a full valuation allowance against it. Additionally, the Company continued to estimate the number of awards expected to be vested. The adoption had no material impact on the Company’s financial statements for the 2017 tax year or the interim periods within.
In May 2014, the FASB issued an accounting standard update which provides for new revenue recognition guidance, superseding nearly all prior revenue recognition guidance. The new revenue standard outlines a single comprehensive model for accounting for revenue from contracts with customers and requires more detailed revenue disclosures.
The Company adopted the new revenue standard on January 1, 2018 and as a result of the adoption increased deferred revenue by $8.1 million and decreased retained earnings by the same amount. Previously the Company had recorded revenue of $15.9 million and had deferred revenue of $41.5 million at December 31, 2017. The increase in the deferred revenue represented the recapture of revenue that was previously recorded and taxed. There was no impact to tax as the increase to the deferred tax asset was fully offset by the Company’s full valuation allowance.
11. | Income Taxes (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
Year Ended December 31, | ||||||||||||
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Federal income tax at statutory rates | 21 | % | 21 | % | 34 | % | ||||||
State income tax, net of federal tax benefit | 3 | % | 4 | % | 4 | % | ||||||
Non-cash inducement warrant expense | -11 | % | 0 | % | 0 | % | ||||||
Research and development credits | 1 | % | 2 | % | 3 | % | ||||||
Stock compensation | 0 | % | -1 | % | -1 | % | ||||||
Research and developmenttrue-up | 0 | % | 0 | % | -7 | % | ||||||
Officers compensation | 0 | % | -1 | % | -2 | % | ||||||
Other | -1 | % | -2 | % | -3 | % | ||||||
Federal rate change | 0 | % | 3 | % | -124 | % | ||||||
Change in valuation allowance | -13 | % | -26 | % | 96 | % | ||||||
|
|
|
|
|
| |||||||
Effective tax rate | 0 | % | 0 | % | 0 | % | ||||||
|
|
|
|
|
|
Year Ended December 31, | ||||||||||||
(in thousands) | 2020 | 2019 | 2018 | |||||||||
Federal income tax at statutory rates | 21 | % | 21 | % | 21 | % | ||||||
State income tax, net of federal tax benefit | 3 | % | 3 | % | 4 | % | ||||||
Non-cash inducement warrant expense | 0 | % | -11 | % | 0 | % | ||||||
Research and development credits | 3 | % | 1 | % | 2 | % | ||||||
Stock compensation | -1 | % | 0 | % | -1 | % | ||||||
Research and development true-up | 0 | % | 0 | % | 0 | % | ||||||
Officers compensation | 0 | % | 0 | % | -1 | % | ||||||
Other | 0 | % | -1 | % | -2 | % | ||||||
Federal rate change | -2 | % | 0 | % | 3 | % | ||||||
Change in valuation allowance | -24 | % | -13 | % | -26 | % | ||||||
Effective tax rate | 0 | % | 0 | % | 0 | % | ||||||
2018.
2020.
11. | Income Taxes (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
12. | Preferred Stock and Stockholders’ Equity (Deficit) |
On March 10, 2020, the underwriters exercised their option to purchase an additional 1,284,025 shares. The net proceeds were approximately $3.9 million after deducting underwriting discounts and offering expenses paid by the Company.
Also, subsequent to December 31, 2019, the Company sold an aggregate of 2,814,673 shares of our common stock. The offering was made pursuant to the Company’s effective registration statement on FormS-3ASR (File No. 333-232283) previously filed with the SEC, and a prospectus supplement thereunder. The net proceeds from the offering were approximately $13.0 million after deducting underwriting discounts and offering expenses payable by the Company.
12. | Preferred Stock and Stockholders’ Equity (Deficit) (Continued) |
May 2017 Offering
On May 11, 2017, the Company sold in an underwritten offering an aggregate of 9,708,738 shares of its common stock. The price to the investor in the offering was $5.15 per share, and the underwriters agreed to purchase the
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
shares from the Company pursuant to the Company’s registration statement on FormS-3ASR (FileNo. 333-201826) previously filed with the SEC, and a prospectus supplement thereunder. The net proceeds from the offering were approximately $47.3 million after deducting underwriting commissions and offering expenses payable by the Company.
(Note 10).
13. | Derivative Financial Instruments |
13. | Derivative Financial Instruments (Continued) |
Fair Value | ||||
Balance, December 31, 2016 | $ | 862 | ||
Dividends | 267 | |||
Change in fair value | 1,295 | |||
|
| |||
Balance, December 31, 2017 | $ | 2,424 | ||
Dividends | 223 | |||
Change in fair value | (158 | ) | ||
Settlement of a related party relationship | (2,489 | ) | ||
|
| |||
Balance, December 31, 2018 | $ | — | ||
Dividends | — | |||
Change in fair value | — | |||
|
| |||
Balance, December 31, 2019 | $ | — | ||
|
|
Fair Value | ||||
Balance, December 31, 2017 | $ | 2,424 | ||
Dividends | 223 | |||
Change in fair value | (158 | ) | ||
Settlement of a related party relationship | (2,489 | ) | ||
Balance, December 31, 2018 | $ | 0 | ||
Dividends | 0 | |||
Change in fair value | 0 | |||
Balance, December 31, 2019 | $ | 0 | ||
Dividends | 0 | |||
Change in fair value | 0 | |||
Balance, December 31, 2020 | $ | 0 | ||
December 31, | ||||
2018 | ||||
Risk-free interest rate | 2.50 - 3.13% | |||
Expected dividend rate | 0 | |||
Expected volatility | 77.6 - 82.4% | |||
Preferred stock conversion limit - percentage of outstanding common stock | 19.90% | |||
Preferred conversion floor price | $ | 1.00 |
14. | ||
| ||
| ||
| ||
| ||
|
Stock Option Plan |
14. | Stock Option Plan (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
(in thousands, except share and per share data) | Number of Shares | Weighted- Average Exercise Price | Weighted- Average Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||
Outstanding, December 31, 2016 | 3,465,335 | $ | 5.07 | |||||||||||||
Granted | 688,800 | 5.27 | ||||||||||||||
Exercised | (180,000 | ) | 3.67 | |||||||||||||
Cancelled | (122,000 | ) | 6.64 | |||||||||||||
|
|
|
| |||||||||||||
Outstanding, December 31, 2017 | 3,852,135 | 5.12 | ||||||||||||||
Granted | 1,744,950 | 2.35 | ||||||||||||||
Exercised | (104,167 | ) | 2.30 | |||||||||||||
Cancelled | (215,833 | ) | 5.72 | |||||||||||||
|
|
|
| |||||||||||||
Outstanding, December 31, 2018 | 5,277,085 | 4.24 | ||||||||||||||
Granted | 2,880,691 | 3.40 | ||||||||||||||
Exercised | (581,105 | ) | 3.30 | |||||||||||||
Cancelled | (1,733,792 | ) | 4.21 | |||||||||||||
|
|
|
| |||||||||||||
Outstanding, December 31, 2019 | 5,842,879 | $ | 3.21 | 8.07 | $ | 7,482 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Options exercisable, December 31, 2019 | 2,765,357 | $ | 4.39 | 6.70 | $ | 3,603 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Options exercisable, December 31, 2018 | 3,099,935 | $ | 5.15 | 4.93 | $ | 88 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Options available for future grant at December 31, 2019 | 2,503,508 | |||||||||||||||
|
|
(in thousands, except share and per share data) | Number of Shares | Weighted- Average Exercise Price | Weighted- Average Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||
Outstanding, December 31, 2017 | 3,852,135 | $ | 5.12 | |||||||||||||
Granted | 1,744,950 | 2.35 | ||||||||||||||
Exercised | (104,167 | ) | 2.35 | |||||||||||||
Cancelled | (215,833 | ) | 5.72 | |||||||||||||
Outstanding, December 31, 2018 | 5,277,085 | 4.24 | ||||||||||||||
Granted | 2,880,691 | 3.40 | ||||||||||||||
Exercised | (581,105 | ) | 3.30 | |||||||||||||
Cancelled | (1,733,792 | ) | 4.21 | |||||||||||||
Outstanding, December 31, 2019 | 5,842,879 | 3.21 | ||||||||||||||
Granted | 2,222,368 | 3.39 | ||||||||||||||
Exercised | (338,333 | ) | 2.01 | |||||||||||||
Cancelled | (894,528 | ) | 4.22 | |||||||||||||
Outstanding, December 31, 2020 | 6,832,386 | $ | 3.81 | 7.94 | $ | 812 | ||||||||||
Options exercisable, December 31, 2020 | 3,596,315 | $ | 4.17 | 6.90 | $ | 598 | ||||||||||
Options exercisable, December 31, 2019 | 2,765,357 | $ | 4.39 | 6.70 | $ | 3,603 | ||||||||||
Options available for future grant at December 31, 2020 | 5,714,648 | |||||||||||||||
14. | Stock Option Plan (Continued) |
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
At
directors.
Number of Shares | Weighted-Average Grant Date Fair Value | |||||||
Non-vested, December 31, 2016 | 1,680,492 | $ | 7.49 | |||||
Granted | 907,032 | 4.14 | ||||||
Vested | (778,965 | ) | 7.66 | |||||
Cancelled | — | — | ||||||
|
|
|
| |||||
Non-vested, December 31, 2017 | 1,808,559 | 5.74 | ||||||
Granted | 150,321 | 1.87 | ||||||
Vested | (1,005,377 | ) | 6.62 | |||||
Cancelled | (271,433 | ) | 5.00 | |||||
|
|
|
| |||||
Non-vested, December 31, 2018 | 682,070 | 3.47 | ||||||
Granted | 1,519,766 | 2.44 | ||||||
Vested | (1,187,601 | ) | 2.82 | |||||
Cancelled | (74,599 | ) | 3.41 | |||||
|
|
|
| |||||
Non-vested, December 31, 2019 | 939,636 | $ | 2.93 | |||||
|
|
|
|
Number of Shares | Weighted-Average Grant Date Fair Value | |||||||
Non-vested, December 31, 2017 | 1,808,559 | $ | 5.74 | |||||
Granted | 150,321 | 1.87 | ||||||
Vested | (1,005,337 | ) | 6.62 | |||||
Cancelled | (271,433 | ) | 5.00 | |||||
Non-vested, December 31, 2018 | 682,110 | 3.47 | ||||||
Granted | 1,519,766 | 2.44 | ||||||
Vested | (1,187,601 | ) | 2.82 | |||||
Cancelled | (74,599 | ) | 3.41 | |||||
Non-vested, December 31, 2019 | 939,676 | 2.93 | ||||||
Granted | 805,900 | 3.75 | ||||||
Vested | (764,360 | ) | 3.51 | |||||
Cancelled | (194,897 | ) | 3.44 | |||||
Non-vested, December 31, 2020 | 786,319 | $ | 3.08 | |||||
ZIOPHARM Oncology, Inc.
NOTES TO FINANCIAL STATEMENTS
15. | Employee Benefit Plan |
15. | Employee Benefit Plan (Continued) |
16. | Joint Venture |
17. | Selected Quarterly Information (Unaudited) |
Year Ended December 31, 2019 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenue | $ | — | $ | — | $ | — | �� | $ | — | |||||||
Total operating expenses | 13,621 | 14,753 | 13,448 | 16,036 | ||||||||||||
Loss from operations | (13,621 | ) | (14,753 | ) | (13,448 | ) | (16,036 | ) | ||||||||
Non-cash inducement warrant expense | — | — | (60,751 | ) | — | |||||||||||
Net income (loss) applicable to common shareholders | (13,434 | ) | (14,620 | ) | (73,996 | ) | (15,746 | ) | ||||||||
Net income (loss) per share, basic | $ | (0.08 | ) | $ | (0.09 | ) | $ | (0.43 | ) | $ | (0.09 | ) | ||||
Net income (loss) per share, diluted | $ | (0.08 | ) | $ | (0.09 | ) | $ | (0.43 | ) | $ | (0.09 | ) | ||||
Year Ended December 31, 2018 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenue | $ | 146 | $ | — | $ | — | $ | — | ||||||||
Total operating expenses | 16,342 | 12,378 | 12,570 | 12,762 | ||||||||||||
Loss from operations | (16,196 | ) | (12,378 | ) | (12,570 | ) | (12,762 | ) | ||||||||
Preferred stock dividends | (5,120 | ) | (5,462 | ) | (6,074 | ) | (342 | ) | ||||||||
Settlement of a related party relationship | — | — | — | 207,361 | ||||||||||||
Net income (loss) applicable to common shareholders | (21,140 | ) | (17,493 | ) | (18,659 | ) | 194,538 | |||||||||
Net income (loss) per share, basic | $ | (0.15 | ) | $ | (0.12 | ) | $ | (0.13 | ) | $ | 1.29 | |||||
Net income (loss) per share, diluted | $ | (0.15 | ) | $ | (0.12 | ) | $ | (0.13 | ) | $ | 1.29 |
Year Ended December 31, 2020 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenue | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Total operating expenses | 18,660 | 18,606 | 20,321 | 22,774 | ||||||||||||
Loss from operations | (18,660 | ) | (18,606 | ) | (20,321 | ) | (22,774 | ) | ||||||||
Net income (loss) applicable to common shareholders | (18,293 | ) | (18,596 | ) | (20,315 | ) | (22,772 | ) | ||||||||
Net income (loss) per share, basic | $ | (0.09 | ) | $ | (0.09 | ) | $ | (0.10 | ) | $ | (0.11 | ) | ||||
Net income (loss) per share, diluted | $ | (0.09 | ) | $ | (0.09 | ) | $ | (0.10 | ) | $ | (0.11 | ) | ||||
Year Ended December 31, 2019 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
Total operating expenses | 13,621 | 14,753 | 13,448 | 16,036 | ||||||||||||
Loss from operations | (13,621 | ) | (14,753 | ) | (13,448 | ) | (16,036 | ) | ||||||||
Non-cash inducement warrant expense | — | — | (60,751 | ) | — | |||||||||||
Net income (loss) applicable to common shareholders | (13,434 | ) | (14,620 | ) | (73,996 | ) | (15,746 | ) | ||||||||
Net income (loss) per share, basic | $ | (0.08 | ) | $ | (0.09 | ) | $ | (0.43 | ) | $ | (0.09 | ) | ||||
Net income (loss) per share, diluted | $ | (0.08 | ) | $ | (0.09 | ) | $ | (0.43 | ) | $ | (0.09 | ) |