See accompanying notes to these unaudited condensed consolidated financial statements.

MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

See accompanying notes to these unaudited condensed consolidated financial statements.

MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

See accompanying notes to these unaudited condensed consolidated financial statements.

MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

See accompanying notes to these unaudited condensed consolidated financial statements.

See accompanying notes to these unaudited condensed consolidated financial statements.

MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

See accompanying notes to these unaudited condensed consolidated financial statements.

MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

See accompanying notes to these unaudited condensed consolidated financial statements.

MARKER THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 20182019

(Unaudited)

Note 1: Nature of Operations

Marker Therapeutics, Inc., a Delaware corporation formerly known as TapImmune, Inc. (the “Company” or “we”), is a clinical-stage immuno-oncology company specializing in the development and commercialization of innovativenovel T cell-based immunotherapies and innovative peptide-based vaccines for the treatment of hematological malignancies and solid tumor indications, and novel peptide-based vaccines for the treatment of breast and ovarian cancers.indications. The Company’s cell-based immunotherapyMultiTAA T cell technology is based on the selective expansion of non-engineered, tumor-specific T cells that recognize tumor associated antigens, (i.e.which are tumor targets)targets, and kill tumor cells expressing those targets. Once infused into patients, this population ofThese T cells recognizesare designed to recognize multiple tumor targets to produce broad spectrum anti-tumor activity. Because the Company does not genetically engineer its T cells, when compared to current engineered CAR-T and TCR-based approaches, its products (i) are significantly less expensive and easier to manufacture, (ii) appear to be markedly less toxic, and (iii) are associated with potentially meaningful clinical benefit. As a result, the Company believes its portfolio of T cell therapies has a potentially compelling therapeutic product profile, as compared to current gene-modified CAR-T and TCR-based therapies. In addition, the Company’s legacy Folate Receptor Alpha program (TPIV200) for breast and ovarian cancers and our HER2/neu program (TPIV100/110) are in a combined five Phase II clinical trials. In parallel, the Company has been working on a proprietary nucleic acid-based antigen expression technology named PolyStart™ to improve the ability of the immune system to recognize and destroy diseased cells. The Company was incorporated in Nevada in 1992 and reincorporated in Delaware in October 2018 in connection with the Marker Transaction.

On October 17, 2018, the Company completed its previously announced business combination with Marker Cell Therapy, Inc., formerly known as Marker Therapeutics, Inc., a privately-held Delaware corporation (“Marker Cell”), in accordance with the terms of an Agreement and Plan of Merger and Reorganization dated as of May 15, 2018 (the “Merger Agreement”) by and among the Company, Timberwolf Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Marker. On October 17, 2018, pursuant to the Merger Agreement, Merger Sub was merged with and into Marker Cell (the “Merger”), with Marker Cell being the surviving corporation and becoming a wholly-owned subsidiary of the Company. In connection with the Merger, the Company changed its name to Marker Therapeutics, Inc. and Marker Cell changed its name to Marker Cell Therapy, Inc. At the effective time of the Merger, the former Marker Cell stockholders received (i) an aggregate of 13,914,255 shares of the Company’s common stock which equaled the number of shares of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger, and (ii) an aggregate of 5,046,003 warrants which equaled the number of the Company’s warrants and stock options issued and outstanding immediately prior to the effective time of the Merger.

NOTE 2: Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

The results for the condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 20182019 or for any future interim period. The condensed consolidated balance sheet at September 30, 20182019 has been derived from unaudited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2017,2018 and notes thereto included in the Company’s annual report on Form 10-K filed on March 23, 2018 and the Company’s Form 8-K and Form 8-K/A filed on October 30, 2018 and October 26, 2018, respectively.15, 2019.

NOTE 3: LIQUIDITY AND FINANCIAL CONDITION

As of September 30, 2018,2019, the Company had cash and cash equivalents of approximately $4.3$48.5 million. On October 17, 2018, concurrent with the completion of the merger with Marker Cell, the Company issued shares of its common stock to certain accredited investors in a private placement transaction for proceeds of $61.8 million, net of banker fees, pursuant to the terms of the Securities Purchase Agreement.

The Company’s activities since inception have consisted principally of acquiring product and technology rights, raising capital, and performing research and development. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets; secure financing,financing; successfully progress its product candidates through preclinical and clinical development; obtain regulatory approval of one or more of its product candidates; maintain and enforce intellectual property rights; develop a customer base; attract, retain and motivate qualified personnel; and develop strategic alliances and collaborations. From inception, the Company has been funded by a combination of equity and debt financings.

The Company expects to continue to incur substantial losses over the next several years during its development phase. To fully execute its business plan, the Company will need to complete certain research and development activities and clinical studies.trials. Further, the Company’s product candidates will require regulatory approval prior to commercialization. These activities will span many years and require substantial expenditures to complete and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company plans to meet its capital requirements primarily through issuances of debt and equity securities and, in the longer term, revenue from sales of its product sales.candidates, if approved.

Based on the Company’s revised clinical and research and development plans and its revised timing expectations related to the progress of its programs, the Company expects that its cash and cash equivalents as of September 30, 2019 will enable the Company to fund its operating expenses and capital expenditure requirements through at least the fourth quarter of 2020. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could utilize its available capital resources sooner than it currently expects. Furthermore, the Company’s operating plan may change, and it may need additional funds sooner than planned in order to meet operational needs and capital requirements for product development and commercialization. Because of the numerous risks and uncertainties associated with the development and commercialization of the Company’s product candidates and the extent to which the Company may enter into additional collaborations with third parties to participate in their development and commercialization, the Company is unable to estimate the amounts of increased capital outlays and operating expenditures associated with its current and anticipated clinical trials. The Company’s future funding requirements will depend on many factors, as it:

Note 4: SIGNIFICANT ACCOUNTING POLICIES

ThereLeases

Effective January 1, 2019, the Company accounts for its leases under ASC Topic 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.

The Company continues to account for leases in the prior period financial statements under ASC Topic 840.

Other than above, there have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s annual reportAnnual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 23, 2018.15, 2019.

New Accounting PronouncementStandardss

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that we adoptthe Company adopts as of the specified effective date. Unless otherwise discussed, we dothe Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on ourits financial position or results of operations upon adoption.

Recent Accounting PronouncementsStandards Adopted in the Year

Compensation-Stock Compensation

In May 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period beginning after December 15, 2017 and interim periods within that annual period. Early adoption is permitted. The Company adopted ASU 2017-09 on January 1, 2018; the adoption of ASU 2017-09 did not have a material impact on its financial condition or results of operations, as the Company has not had any modifications to share-based payment awards. However, if the Company does have a modification to an award in the future, it will follow the guidance in ASU 2017-09.

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company adopted the new standard effective January 1, 2018, using the modified retrospective approach. The only impact of the adoption of ASU 2014-09 was to reclassify the Company's grant income as revenue.

Recent Accounting Pronouncements Not Yet Adopted

Accounting for Certain Financial Instruments with Down Round Features

On July 13, 2017, the FASB issued a two-part ASU, No. 2017-11, (i). Accounting for Certain Financial Instruments with Down Round Features and (ii) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception.

The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 and the interim periods within that annual period. Early adoption is permitted. The Company will be evaluating the impact of adopting this standard on the consolidated financial statements and disclosures.

Improvements to Non-Employee Share-Based Payment Accounting

In June 2018, the FASB issued ASU 2018-07 “Improvements to Non-employee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

Leases

In February 2016, the FASB issued ASU No. 2016-02, “LeasesLeases (Topic 842)” (“ASU 2016-02”) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees in order to recognize a right-of-use assetincrease transparency and a lease liability on their balance sheets for all the leases with terms greater than twelve months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy electioncomparability among organizations by, class of underlying asset not to recognizeamong other provisions, recognizing lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expenseliabilities on the balance sheet for suchthose leases generally on a straight-line basis over the lease term.classified as operating leases under previous GAAP. For public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and(including interim periods within those years, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presentedperiods) using a modified retrospective approach.approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous U.S. GAAP. In July 2018, the FASB issued ASU No. 2018-11, “LeasesLeases (Topic 842): Targeted Improvements” that allowsImprovements, which provides entities an optional transition method to apply the provisionsguidance under Topic 842 as of the new standard atadoption date, rather than as of the effective date (e.g.earliest period presented. The Company adopted Topic 842 on January 1, 2019),2019, using the optional transition method to apply the new guidance as opposed toof January 1, 2019, rather than as of the earliest period presented, underand elected the modified retrospective transition approach (January 1, 2017) and recognize a cumulative-effect adjustment to the opening balancepackage of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focuseddescribed above. Based on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities thatanalysis, on January 1, 2019, the Company reports relative to such amounts prior to adoption. The Company is evaluating the impactrecorded right of this guidance on its condensed consolidated financial statements.

use assets of approximately $637,000, lease liability of approximately $670,000 and eliminated deferred rent of approximately $33,000.

SEC Disclosure Update and Simplification

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective on November 5, 2018. The first presentation of the changes in stockholders’ equity in accordance with the new guidance was included in the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 10, 2019.

Improvements to Non-Employee Share-Based Payment Accounting

In June 2018, the FASB issued ASU 2018-07 “Improvements to Non-employee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is evaluatinghas early adopted the impactnew standard effective January 1, 2019 and the adoption of this guidancestandard did not have a material impact on itsthe Company’s condensed consolidated financial statements.

Note 5: NET LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDER

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similarly to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

The following table sets forth the computation of net loss per share:

The following securities, rounded to the nearest thousand, were not included in the diluted net loss per share calculation because their effect was anti-dilutive for the periods presented:

Note 6: PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of September 30, 2019 and December 31, 2018, respectively:

Depreciation expense for the three and nine months ended September 30, 2019 was approximately $31,000 and $71,000, respectively. Furniture and computer equipment were placed in use on January 1, 2019, therefore no depreciation expense was recorded during the year ended December 31, 2018.

Note 7: LEASES

The Company leases office space under agreements classified as operating leases that expire on various dates through 2022. All of the Company’s lease liabilities result from the lease of its corporate headquarters in Houston, Texas, which expires in 2021, and its Jacksonville, Florida office space, which expires in 2022. Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain to exercise the options. Variable expenses generally represent the Company’s share of the landlord’s operating expenses. The Company does not act as a lessor or have any leases classified as financing leases.

The Company excludes short-term leases having initial terms of 12 months or less from the new accounting guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company has two lease agreements, an office at the Florida Atlantic Research and Development Authority and laboratory space located at the Texas Medical Center in Houston, which are included in short-term lease expense below.

At September 30, 2019, the Company had operating lease liabilities of approximately $533,000 and right of use assets of approximately $502,000, which were included in the condensed consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases:

Maturities of the Company’s operating leases, excluding short-term leases, are as follows:

Note 8: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following as of September 30, 2019 and December 31, 2018, respectively:

Note 6:9: WARRANT LIABILITY AND FAIR VALUE MEASUREMENTS

A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s common stock purchase warrants that are categorized within Level 3 of the fair value hierarchy for the nine months ended September 30, 20182019 and 20172018 is as follows:

The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.

Financial Liabilities Measured at Fair Value on a Recurring Basis

Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Warrant liability:

The fair value accounting standards define fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:

There were no transfers between Level 1, 2 or 3 during the nine months ended September 30, 2018.2019.

The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2018:2019:

Note 10: commitmentS AND CONTINGENCIES

An arbitration proceeding was brought against the Company before the Financial Industry Regulatory Authority, Inc. by a broker seeking to be paid approximately $1 million as compensation for two 2018 transactions, a warrant conversion and a private placement brokered by another broker. The broker’s claims are based on a placement agent agreement for a private placement it brokered in 2017, under which it alleges it is entitled to compensation for the 2018 transactions. The Company believes it has defenses to all of the allegations and intends to vigorously defend itself in this matter.

Note 7:11: STOCKHOLDERS’ EQUITY

Common Stock Transactions

Common Stock Purchase Agreement

On May 14, 2018, the Company’s largest stockholder Eastern Capital Limited entered into a Common Stock Purchase Agreement with the Company pursuant to which it purchased 1,300,000 shares of common stock at a price per share of $2.40 providing gross proceeds to the Company of $3.12 million.

Exercise and Repricing of Warrants Held by Existing Institutional Investors

On May 14, 2018, certain institutional holders of outstanding warrants entered into Warrant Exercise Agreements with the Company that provide for an amendment to the exercise price of the warrants being exercised at $2.50 per share. Upon closing of the Warrant Exercise Agreements, such institutional holders immediately exercised warrants for 782,505 shares of common stock providing aggregate proceeds to the Company of approximately $2.0 million.

The fair value relating to the modification of exercise prices on the repriced and exercised warrants was treated as deemed dividend on the statement of stockholders’ equity of $728,000.

A weighted average summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s common stock purchase warrants that are included in the modification is as follows:

Exercise of Stock Warrants

During the nine months ended September 30, 2018,2019, certain outstanding warrants were exercised by warrant holdersfor 190,258 shares of common stock providing aggregate proceeds to the Company of approximately $2.4 million and resulted in$759,000.

Additionally, during the issuance of approximately 930,000nine months ended September 30, 2019, the Company issued 4,032 shares of common stock which is netupon cashless exercises of 152,588 warrant shares cancelled due to use of cashless exercise provisions. 215,344 of the stock warrants, exercised were exercised on a cashless basis.which resulted in cancellation of 3,295 shares of common stock subject to such warrants.

Exercise of Stock Options

In January 2018, 10,4162019, 11,980 shares of common stock were issued pursuant to stock option exercises at an exercise price equal to $1.74$4.82 per share.share, providing aggregate proceeds to the Company of approximately $58,000.

Consulting Arrangements

During the nine months ended September 30, 2018,2019, the Company issued 206,44647,400 shares of common stock in connection with consulting agreements. The fair value of the common stock of approximately $1.3 million$265,000 was recognized as stock-based compensation expense $1.2 million in general and administrative expensesexpenses.

Board Compensation

During the nine months ended September 30, 2019, the Company issued an aggregate of 29,040 shares of common stock to its non-employee directors. The fair value of the common stock of approximately $174,000 was recognized as stock-based compensation expense in general and $0.1 million in research and developmentadministrative expenses.

Share Purchase Warrants

A summary of the Company’s share purchase warrants as of September 30, 20182019 and changes during the period is presented below:

Note 8:12: STOCK-BASED COMPENSATION

The following table sets forth stock-based compensation expenses recorded during the respective periods:

At September 30, 2018, the2019, total stock-based compensation cost related to unvested awards not yet recognized was $108,000. The$14.4 million and the weighted-average period over which this amount is expected weighted average period compensation costs to be recognized was 0.40is 3.13 years. Future option grants will impact the compensation expense recognized.

Note 9: grant income

During the nine months ended September 30, 2018 and 2017, the Company received $0.2 million of a grant awarded to Mayo Foundation from the U.S. Department of Defense for the Phase II Clinical Trial of TPIV200. The grant compensated the Company for clinical supplies manufactured and provided by the Company for the clinical study. In accordance with Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” issued by the Financial Accounting Standards Board, the Company recorded the $0.2 million of grant income as revenue.

Note 10: SUBSEQUENT EVENT

The Merger

On October 17,19, 2018, the Company completed its previously announced business combination with Marker Cell Therapy, Inc., formerly known as Marker Therapeutics, Inc., a privately-held Delaware corporation (“Marker Cell”), in accordance with the terms of an Agreement and Plan of Merger and Reorganization dated as of May 15, 2018 (the “Merger Agreement”) by and among the Company, Timberwolf Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Marker. On October 17, 2018, pursuant to the Merger Agreement, Merger Sub was merged with and into Marker Cell (the “Merger”), with Marker Cell being the surviving corporation and becoming a wholly-owned subsidiary of the Company. In connection with the Merger, the Company changed its name to Marker Therapeutics, Inc. and Marker Cell changed its name to Marker Cell Therapy, Inc. At the effective time of the Merger, the former Marker Cell stockholders received (i) an aggregate of 13,914,255 shares ofMr. Peter Hoang, the Company’s common stock which equaled the numberChief Executive Officer, was granted an option award of shares of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger, and (ii) an aggregate of 5,046,003 warrants which equaled the number of the Company’s warrants and stock options issued and outstanding immediately prior to the effective time of the Merger.

The accounting for the business combination accounting is not complete.  The Company is in the process of concluding on the total fair value of consideration issued and the allocation of fair value of assets acquired and liabilities assumed and therefore such information has not been concluded in these financial statements.

Securities Purchase Agreements

On October 17, 2018, concurrent with the completion of the Merger, the Company issued to certain accredited investors in a private placement transaction (the “Financing”), an aggregate of 17,500,000 shares of its common stock, and warrants to purchase 13,437,5001,359,855 shares of common stock at an exercise price of $5.00 per share$9.18. In March 2019, Mr. Hoang’s option award was amended to change the vesting from being fully vested to being subject to vesting on a monthly basis over four years. There was no incremental stock-based compensation expense recorded during the nine months ended September 30, 2019 relating to this modification.

Note 13: RELATED PARTY TRANSACTIONS

Sponsored Research Agreement with The Baylor College of Medicine (“BCM”). On November 16, 2018, in furtherance of the BCM License Agreement and as contemplated by the terms thereof, the Company entered in a five-year term,Sponsored Research Agreement (“SRA”) with BCM, which provided for gross proceedsthe conduct of $70 million pursuantresearch for the Company by credentialed personnel at BCM’s Center for Cell and Gene Therapy.

During the three and nine months ended September 30, 2019, the Company incurred approximately $15,000 and $37,000, respectively, to BCM under the SRA.

Clinical Supply Agreement with BCM. On September 9, 2019, in furtherance of the BCM License Agreement and as contemplated by the terms thereof, the Company entered in a Clinical Supply Agreement (“CSA”) with BCM, which provided for BCM to provide to the termsCompany multi tumor antigen specific products.

During the nine months ended September 30, 2019, the Company did not incur any expenses under the CSA.

Consulting Agreement with Dr. Juan Vera. On October 19, 2018, after the closing of the Securities Purchase Agreements, dated June 8, 2018, by and amongCompany’s merger, the Company entered into a consulting agreement with Dr. Juan Vera, a member of the Company’s board of directors, to serve as the Company’s Chief Development Officer. On September 1, 2019, Dr. Vera became an employee of the Company and certain accredited investors (the “Securities Purchase Agreements”). Upon consummation ofhis consulting agreement was terminated.

During the Financing,three and as a condition to the Securities Purchase Agreements,nine months ended September 30, 2019, the Company is, among other things, obligated to file a resale registration statement with the SEC within 15 days following completionincurred approximately $58,000 and $233,000, respectively, of the Financing.expenses under Dr. Vera’s consulting agreement.

This quarterly reportQuarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, that involve risks and uncertainties. All statements other than statements relating to historical matters including statements to the effect that we “believe”, “expect”, “anticipate”, “plan”, “target”, “intend” and similar expressions should be considered forward-looking statements. Our actual results could differ materially from those discussed in the forward-looking statements as a result of a number of important factors, including factors discussed in this section and elsewhere in this quarterly reportQuarterly Report on Form 10-Q, and the risks discussed in our other filings with the Securities and Exchange Commission.SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as the date hereof. We assume no obligation to update these forward-looking statements to reflect events or circumstance that arise after the date hereof.

As used in this quarterly report: (i) the terms “we”, “us”, “our”, “Marker” and the “Company” mean Marker Therapeutics, Inc. and its wholly owned subsidiaries, Marker Cell Therapy, Inc. and GeneMax Pharmaceuticals Inc. which wholly owns GeneMax Pharmaceuticals Canada Inc., unless the context otherwise requires; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.

The following should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the three and nine months ended September 30, 20182019 included in this quarterly report, as well as our Annual Report on Form 10-K for the year ended December 31, 2017 filed on March 23, 2018.Quarterly Report.

Company Overview

We are a clinical-stage immuno-oncology company specializing in the development and commercialization of innovativenovel T cell-based immunotherapies and innovative peptide-based vaccines for the treatment of hematological malignancies and solid tumor indications and novel peptide-based vaccines for the treatment of breast and ovarian cancers.

Our cell-based immunotherapyindications. We developed our lead product candidates from our MultiTAA T cell technology, which is based on the selective expansion of non-engineered, tumor-specific T cells that recognize tumor associated antigens, (i.e.or TAAs, which are tumor targets)targets, and then kill tumor cells expressing those targets. Once infused into patients, this population ofThese T cells recognizesare designed to recognize multiple tumor targets to produce broad spectrum anti-tumor activity. We are advancing two pipelines of product candidates as part of our MultiTAA T cell program: our autologous T cells for the treatment of lymphoma, multiple myeloma, or MM, and selected solid tumors and our allogeneic T cells for the treatment of acute myeloid leukemia, or AML, and acute lymphoblastic leukemia, or ALL. Because we do not genetically engineer its T cells, when comparedour MultiTAA therapies, we believe that our product candidates are easier and less expensive to manufacture, with reduced toxicities, than current engineered CAR-T and TCR-based approaches, its products (i) are significantly less expensiveT cell receptor-based therapies and easier to manufacture, (ii) appear to be markedly less toxic, and (iii) are associatedmay provide patients with potentially meaningful clinical benefit. As a result, we believe our portfolioWe are also developing innovative peptide-based immunotherapeutic vaccines for the treatment of T cell therapies has a potentially compelling therapeutic product profile,metastatic solid tumors, as compared to current gene-modified CAR-T and TCR-based therapies. In addition, our legacy Folate Receptor Alpha program (TPIV200) for breast and ovarian cancers and its HER2/neu program (TPIV100/110) are in five Phase II clinical trials. In parallel, we have been working onwell as PolyStart, a proprietary nucleic acid-based antigen expression technology named PolyStart™designed to improve the ability of the immune system to recognize and destroy diseased cells.

Immuno-oncology, which utilizes a patient’s own immune system to combat cancer, is oneWe are pursuing post-transplant AML as the lead indication for our MultiTAA program. Our MultiTAA therapy has been well tolerated in an ongoing Phase 1/2 clinical trial conducted by our strategic partner Baylor College of Medicine, or BCM. As reported in March 2019, eleven of the most actively pursued areasthirteen patients in the adjuvant disease setting dosed with our MultiTAA therapy after receiving an allogeneic stem cell transplant survived, ranging from 6 weeks to 2.5 years post-infusion, with nine of research by biotechnology and pharmaceutical companies today. Interest and excitement about immunotherapy is driven by compelling efficacy datathese remaining patients in cancers with historically bleak outcomes, and the potential to achieve a cure or functional cure for some patients. Harnessing the powercontinuing complete remission. Survival of the immune systemsix patients with active disease ranged from 4 to 21 months, as compared to a historical survival rate of approximately 4.5 months for patients who receive the standard of care post-transplant. We have submitted an investigational new drug, or IND, application to the United States Food and Drug Administration, or the FDA to initiate a Phase 2 clinical trial in post-allogeneic hematopoietic stem cell transplant patients with AML in both the adjuvant and active disease setting, which may become pivotal pending the results of the interim analysis. The dose administered in this multicenter trial is the current maximum tolerated dose from the Phase 1/2 trial. In the adjuvant setting, patients will be randomized to either MultiTAA therapy at approximately 90 days post-transplant versus standard of care observation, while the active disease patients will receive MultiTAA T cells at the time of relapse post-transplant as part of a single-arm group.

We recently reported interim data for an important componentongoing Phase 1/2 clinical trial of fighting cancerousour MultiTAA therapy for the treatment of pancreatic adenocarcinoma being conducted by BCM. In this trial, we have observed a clinical benefit correlated with the post-infusion detection of tumor-reactive T cells in patient peripheral blood and within tumor biopsy samples in patients in the body. Our MultiTAA T cell therapy platform identifies and selects for effectively alltumor-resection arm of the trial. These T cells that are specific forexhibited activity against both targeted antigens and non-targeted TAAs, indicating induction of antigen spreading. To date, we have not observed any peptide from the antigens that our targets (e.g., WT1, MAGE-A4, PRAME, Survivin, NY-ESO-1, and SSX2). Our in-vitro manufacturing process promotes proliferation of very rare cancer-killing T cells to augment their anti-tumor properties and provide benefit to patients following their infusion. By using the multi-antigen targeted approach, our proprietary technology can kill heterogeneous tumor cell populations more effectively than single-antigen targeted approaches, thereby reducing the likelihood of tumor escape and potentially increasing the durability of a patient’s response to therapy.drug-related systemic or neurotoxicity in this trial.

Recent Developments

Merger Agreement

On October 17, 2018, the Company completed its previously announced business combination with Marker Cell Therapy, Inc., formerly known as Marker Therapeutics, Inc., a privately-held Delaware corporation (“Marker Cell”), in accordance with the terms of an Agreement and Plan of Merger and Reorganization dated as of May 15, 2018 (the “Merger Agreement”) by and among the Company, Timberwolf Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Marker. On October 17, 2018, pursuant to the Merger Agreement, Merger Sub was merged with and into Marker Cell (the “Merger”), with Marker Cell being the surviving corporation and becoming a wholly-owned subsidiary of the Company. In connection with the Merger, the Company changed its name to Marker Therapeutics, Inc. and Marker Cell changed its name to Marker Cell Therapy, Inc. At the effective time of the Merger, the former Marker Cell stockholders received (i) an aggregate of 13,914,255 shares of the Company’s common stock which equaled the number of shares of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger, and (ii) an aggregate of 5,046,003 warrants which equaled the number of the Company’s warrants and stock options issued and outstanding immediately prior to the effective time of the Merger.

The issuance of the shares of Company common stock to the former stockholders of Marker Cell in connection with the Merger and related transactions was approved by the Company’s stockholders at the 2018 annual meeting of stockholders (the “2018 Annual Meeting”) held on October 16, 2018.

In connection with the Merger, the Company filed an amendment to its articles of incorporation in Nevada to increase the authorized shares of common stock from 41,666,667 shares to 150,000,000 shares and to change the Company’s name to Marker Therapeutics, Inc. (“Certificate of Amendment”). The Company then reincorporated from a Nevada corporation to a Delaware corporation and filed its certificate of incorporation in Delaware. Finally, a certificate of merger was filed in Delaware to merge Marker Cell Therapy, Inc. (f/k/a Marker Therapeutics, Inc.) with and into Merger Sub, with Marker Cell Therapy, Inc. being the surviving corporation and wholly owned subsidiary of the Company. The name change, reincorporation and Merger were all effective as of October 17, 2018. Beginning as of the market open on October 18, 2018, shares of the Company’s common stock commenced trading on The Nasdaq Capital Market under its new ticker symbol “MRKR”.

Securities Purchase Agreements

On October 17, 2018, concurrent with the completion of the Merger, the Company issued to certain accredited investors in a private placement transaction (the “Financing”), an aggregate of 17,500,000 shares of its common stock, and warrants to purchase 13,437,500 shares of common stock at an exercise price of $5.00 per share with a five-year term, for aggregate proceeds of $70 million pursuant to the terms of the Securities Purchase Agreements, dated June 8, 2018, by and among the Company and certain accredited investors (the “Securities Purchase Agreements”). Upon consummation of the Financing, and as a condition to the Securities Purchase Agreements, the Company is, among other things, obligated to file a resale registration statement with the SEC within 15 days following completion of the Financing.

After taking into account the issuance of shares in the Financing described above, immediately following the effective time of the Merger, the pro forma ownership of the issued and outstanding shares of Company common stock on a fully diluted basis (assuming all issued and outstanding warrants and options are exercised) will be approximately as follows: Marker Cell’s former stockholders 27.5%, Company stockholders prior to the Merger 27.5%, and the private placement stockholders 45%. Following the completion of the Merger and the Financing, there were 45,328,510 issued and outstanding shares of the Company’s common stock.

Products and Technology in Development

The following chart sets forth our products and technologies under development.

Our MULTI TAA T Cell Products

We are advancing two legacy Marker Cell products throughalso evaluating our MultiTAA therapy in a Phase 2 clinical development:

While the blood source and the antigens for stimulation differ between the LAPP and the MAPP products, the manufacturing process for each product is otherwise identical.

Even if the single-antigen specific therapy can eliminate all the tumor cells expressing the targeted antigen, the residual tumor cells that do not express that antigen may survive and expand. In addition, tumor cells may also downregulate or mutate the targeted antigen, thus becoming invisible to the T cell therapy. Both phenomena create a transformed tumor that is impervious to that therapy. This process is referred to as antigen-negative tumor immune escape.

Our solution to the problem of tumor heterogeneity was to develop T cell products that simultaneously attack multiple tumor-expressed antigens and thereby enable more complete initial tumor targeting, thus minimizing the subsequent opportunitytrial for the treatment of breast cancer and in Phase 1/2 clinical trials for the treatment of ALL, lymphoma, MM and sarcoma, all of which are being conducted by BCM. As of September 2019, our MultiTAA therapy has been generally well tolerated by all of the patients enrolled in clinical trials in hematological and solid tumor indications with no incidents of cytokine release syndrome or neurotoxicity, which are frequently associated with CD19 CAR-T therapies. Based on our observations in clinical trials in AML, pancreatic cancer, lymphoma, ALL and MM, we believe that our MultiTAA therapies have the potential to engage escape mechanisms. Of note, data suggest this strategymediate a meaningful anti-tumor effect, as well as significant in vivo expansion of T cells. We may be responsible for recruitment and activation of unique cancer-killing cells from the patient’s own immune repertoireinitiate additional Phase 2 clinical trials in other indications in 2020 in addition to participateour planned Phase 2 trial in cancer eradication, further minimizing the possibility for tumor cell escape.

Our proprietary MultiTAA T cell platform may have meaningful advantages over current CAR-T and TCR cell therapy approaches. Compared to current gene-modified T cell therapies, our programs are characterized by the following:post-transplant AML patients.

• Demonstrated clinical benefit, without the need for lymphodepletion before infusion:In our Phase I lymphoma study, we saw complete responses (“CRs”) in 50 – 60% of its evaluable patients. We believe it is significant that no patient with a CR has subsequently relapsed with disease, whereas typically 30% or more of patients with CR in reported CAR-T studies relapse within one year. In patient results to date, observed therapeutic responses appear to be highly durable, with some patients being relapse-free beyond two years.

• Non-gene-modified: Unlike CAR-T and TCR approaches, our therapy requires no genetic modification of T cells, a costly and complex process that significantly complicates the manufacturing of a patient product. We believes our therapy can be manufactured at a fraction of the cost of a gene-modified T cell product, with substantially reduced complexity of manufacturing.

•Low incidence rate of adverse events: In approximately 60 patients treated to date, we have seen only one grade III adverse reaction possibly relatedaddition to our therapy. This appears to compare favorably with published CD19 CAR-T studies, wherein up to 95% of patients had associated grade III or higher adverse events during treatment. We believe that it is notable that there have been no cases of cytokine-release syndrome (“CRS”), or related serious adverse events (“SAEs”) in patients treated with its therapy to date.

•Capable of addressing a broad repertoire of cancer cells: While CAR-T and TCRMultiTAA therapies, generally target a single epitope, our manufacturing process selects for T cellswe are developing peptide-based immunotherapeutic vaccines that are specificdesigned to precisely target breast and ovarian cancer cells. TPIV100 is currently being evaluated for multiple peptides derived from several targeted antigens. Deep gene sequencing of our products shows that a typical patient dose usually consists of approximately 4,000 unique T cell clonotypes targeting up to five different tumor-associated antigens. In layman’s terms, the five antigen targets can be recognized by a very wide range of T cells, facilitating robust killing of targeted cancer cells.

•Appears to drive endogenous immune responses: We see evidence of “epitope spreading” in its patients, meaning that our therapy is potentially inducing an enhanced response by the patient’s own T cells (specific for an expanded set of tumor-associated antigens beyond those targeted by our infused product). Our correlative analyses show expansion of endogenous T cells, other than those present in our product, in the months following the infusion of our product. This phenomenon, also known as “antigen spreading,” is potentially important in generating a durable response for a patient, because it enables the killing of tumors that do not express any of the antigens initially targeted by our product.

Our Folate Products

Folate Receptor alpha (“FRa”) is overexpressed in over 80%treatment of breast cancers andthat overexpress human epidermal growth factor receptor 2, or HER2/neu, in addition, over 90%Phase 1b clinical trials funded by the Department of ovarian cancers, for which the only treatment options are surgery, radiation therapyDefense and chemotherapy, leaving a very important and urgent clinical need for a new therapeutic strategy. Time to recurrence is relatively short for ovarian cancer and survival prognosis is extremely poor after recurrence. In the United States alone, there are approximately 30,000 ovarian cancer patients and 40,000 triple-negative breast cancer patients newly diagnosed every year. The FRa vaccine (now called TPIV200) intended to treat these conditions is composed of a mixture of five FRa immunogenic peptides adjuvanted with low-dose granulocyte-macrophage colony-stimulating factor GM-CSF.

GMP Manufacturing Scale Up of TPIV200 and Production to Supply Additional Phase II Clinical Trials

We have developed a commercial-quality lyophilized formulation of the TPIV200 peptides in a single vial for reconstitution and injection. Multi-gram peptide production scale-up has been successfully concluded, as well as GMP manufacturing of a second clinical lot of the TPIV200 peptides. The supply will be used in the company’s ongoing Phase II study in platinum-sensitive ovarian cancer, as well as the 280-patient Phase II study sponsored by the Mayo Clinic and funded by the U.S. Department of Defense (DoD) for treating triple-negative breast cancer.Clinic. We are also made various improvements to the vaccine manufacturing process, resulting in what we believe to be a superior formulation of the vaccine that is more amenable to large-scale manufacturing and commercialization. Thus, Good Manufacturing Practice (“GMP”) manufacturing development for the Phase II trials has been completed.

Phase I Human Clinical Trial –Folate Alpha Breast and Ovarian Cancers – Mayo Clinic

On July 27, 2015, we exercised our option agreement with Mayo Foundation with the signing of a worldwide exclusive license agreement to commercialize the proprietary FRa vaccine technology for all cancer indications. As part of this agreement, the IND for the Folate Receptor alpha Phase I trial was transferred from Mayo Foundation to the Company for Phase II clinical trials as our lead product.

The results from the initial 21-patient Phase I clinical trial for the FRa vaccine have now been reported. Twenty-one patients with breast or ovarian cancer, who had undergone standard surgery and adjuvant treatment, were treated with one cycle of cyclophosphamide. Following this, patients were vaccinated intradermally with TPIV200 on day one of a 28-day cycle for a maximum of six vaccination cycles. On March 15, 2018, we announced the publication of the clinical data from this trial. The results show that over 90% developed robust and durable antigen-specific immune responses against FRa without regard for HLA type, which aligns with the intended mechanism of action of the vaccine. TPIV200 vaccine was safe and well-tolerated; 20 out of 21 evaluable patients showed positive immune responses, providing a strong rationale for progressing to Phase II trials. Further, the data showed that 16 out of 16 patients in the observation stage showed persistent immune responses (Source: published online 15Mar2018; DOI: 10.1158/1078-0432.CCR-17-2499).

Phase II Development ofevaluating TPIV200 for Triple-negative Breast Cancer

Triple-negative breast cancer (TNBC) is one of the most difficult cancers to treat and represents a clear unmet medical need. On September 15, 2015, we announced that our collaborators at the Mayo Foundation had been awarded a grant of $13.3 million from the DoD. This grant led by Dr. Keith Knutson of the Mayo Clinic in Jacksonville, Florida covers the costs for a 280-patient Phase II clinical trial of the FRa vaccine in patients with TNBC. We are working closely with Mayo Foundation on this clinical trial by providing clinical and manufacturing expertise, as well as providing GMP vaccine formulations under contract. This Phase II study of TPIV200 in the treatment of triple-negativebreast and ovarian cancers that overexpress folate receptor alpha, or FRa, in multiple Phase 2 clinical trials, including in triple negative breast cancer. Based on a preliminary analysis of 34 patients enrolled in the triple negative breast cancer began enrollingtrial to date, 31 patients in late 2017 and enrollment continues. Details regarding this trial can be found at www.clinicaltrials.gov under identifier numbers NCT03012100 and RU011501I.

On June 21, 2016, we announcedshowed meaningful immune response to vaccine treatment. These data are subject to final review by independent biostatistical analysis. As of September 30, 2019, 14 of the initiation of a randomized four-arm Phase II trial of TNBC that is sponsored and conducted by the Company (FRV-002), enrolling women80 patients treated have shown disease progression following treatment with stage I-III disease who have completed initial surgery and chemo/radiation therapy. This open-label, 80-patient clinical trial is designed to evaluate dosing regimens, pre-treatment, efficacy, and immune responses. The study is evaluating two doses of TPIV200 (a high dose and a low dose), each of which will be tested both with and without immune priming with cyclophosphamide prior to vaccination. Key data from the trial is expected to be included in a future Biologics License Application submission to the FDA for marketing clearance.TPIV200. We completed enrollment in late 2017 and are now treating and following the patients. An independent Data Safety Monitoring Board (DSMB) reviews the safety in this ongoing Phase II study; no safety issues have been identified to date. Details regarding this trial can be found at www.clinicaltrials.gov under the identifier number NCT02593227.

Phase II Development of TPIV200 for Ovarian Cancer

On December 9, 2015, we announced that we received Orphan Drug Designation from the U.S. Food & Drug Administration’s Office of Orphan Products Development (“OOPD”)FDA for our cancer vaccine TPIV200 infor the treatment of ovarian cancer. Thecancer, and we received Fast Track Designation for TPIV200 ovarian cancer clinical program will now receive benefits including tax credits on clinical research and seven-year market exclusivity upon receiving marketing approval. TPIV200 isas a multi-epitope peptide vaccine that targets Folate Receptor alpha which is overexpressed in multiple cancers including over 90% of ovarian cancer cells. On February 3, 2016, we announced that the U.S. FDA designated the investigation of the multiple-epitope TPIV200 vaccine for maintenance therapy in subjectsfor patients with platinum-sensitive advanced ovarian cancer who achieved stable disease or partial response following completion of standard-of-care chemotherapy, as a Fast Track Development Program.chemotherapy.

On April 21, 2016, we announcedWe believe that our participationtherapies present promising innovations in an ovarian cancer study sponsored by Memorial Sloan Kettering Cancer Center (MSKCC) in New York Cityimmuno-oncology. We developed our MultiTAA therapy in collaboration with AstraZeneca Pharmaceuticalsthe Cell and Gene Therapy Center at BCM, which was founded by Dr. Malcolm K. Brenner, M.D., Ph.D., a recognized pioneer in ovarian cancer patientsimmuno-oncology. BCM remains an important strategic partner and conducts early-stage clinical trials of our MultiTAA therapies pursuant to a sponsored research agreement. Our cell therapy founders include Drs. Brenner, Ann Leen, Ph.D., Juan Vera, M.D., Helen Heslop, M.D., DSc (Hon) and Cliona Rooney, Ph.D., who are not responsive to platinum, a commonly used chemotherapy for ovarian cancer. This study, an open-label Phase II study of TPIV200all have significant experience in 40 patients is designed to look at the effects of combination therapy with AstraZeneca’s checkpoint inhibitor durvalumab (anti-PD-L1). Because they are unresponsive to platinum, these patients have no real remaining options. Interim results from the first 27 patients were presented at the AACR-Rivkin Symposium in September 2018; safety of the combination was established in these heavily-pretreated patientsthis field. Drs. Brenner, Heslop, Rooney, James P. Allison and a subset of patients exhibited durable disease stabilization. ORR and PFS with combination treatment was not superior from the expected efficacy of single-agent PD-1/PD-L1 blockade. However, post-immunotherapy follow-up was suggestive of improved clinical benefit from standard therapies, as the majority of patients post-progression wentPadmanee Sharma serve on to receive subsequent standard therapy with durable clinical benefit, creating a rationale for exploration of these agents in combination with chemotherapy. Although we have no business relationship with AstraZeneca, we are paying for one-half of the costs of the clinical study, in addition to providing our TPIV200 for the study. Details regarding this trial can be found at www.clinicaltrials.gov under identifier numbers NCT02764333.Scientific Advisory Board.

On January 10, 2017, we announced the initiation of a Company-sponsored Phase II study in platinum-sensitive ovarian cancer patients (FRV-004). This multi-center, double-blind efficacy study is designed to evaluate TPIV200 compared to GM-CSF alone in a randomized, placebo-controlled fashion during the first maintenance period after primary surgery and chemotherapy. Patients at this stage of their treatment have the highest potential for an immunotherapeutic effect and no other approved treatment options. We have opened multiple clinical sites and enrollment of the 120 patients has proceeded ahead of schedule. Safety is reviewed by an independent DSMB quarterly and an interim efficacy analysis is planned in 2019, once 50 patients have progressed. Details regarding this trial can be found at www.clinicaltrials.gov under the identifier number NCT02978222.

TPIV 100/110 – HER2/neu peptides with GM-CSFPipeline

Human epidermal growth factor receptor 2 (HER2/neu) amplification/overexpression is an effective therapeutic target in breast and gastric cancer. Over-expressed HER2 is detected predominantly in malignancies of epithelial origin, such as breast, gastric, esophageal, colorectal, salivary gland, pancreatic, epithelial ovarian, endometrial, and bladder carcinomas, as well as gallbladder and extrahepatic cholangiocarcinomas. HER2 is over-expressed in approximately 25% of breast cancers and its expression is associated with unfavorable pathologic features and aggressive disease if not treated with targeted therapies, relative to other forms of breast cancer. While the outcome of patients with HER2 positive breast cancer has significantly improved in the past few decades with an advent of anti-HER2 therapies, a substantial number of resected patients still subsequently develop metastatic disease. The continued prevalence of these cancers represents a high unmet medical need, justifying the targeted development of immunotherapeutic strategies.

Phase I Human Clinical Trial –HER2/neu+ Breast Cancer – Mayo Clinic

A Phase I study using a vaccine containing four HER2/neu peptides adjuvanted with GM-CSF (now called TPIV100) was initiated in 2012 atOur clinical-stage pipeline, including clinical trials being conducted by BCM, the Mayo Clinic and the primary readout was completed in 2015. Final safety analysis on all the patients treated showed that the vaccine was safe in that context. In addition, 19 out of 20 evaluable patients showed robust T-cell immune responses to the antigens in the vaccine composition providing a solid case for advancement to Phase II. Data from the study was presented at the San Antonio Breast Cancer Symposium on December 10, 2015. An additional secondary endpoint incorporated into this Phase I Trial will be a two-year follow-on recording the time to disease recurrence in the participating breast cancer patients. Details regarding this trial can be found at www.clinicaltrials.gov under the identifier number NCT01632332.other partners, is set forth below.

MAPP: autologous

LAPP: allogeneic

Transition of the HER2/neu VaccineRecent Developments

On June 7, 2016, we announced that the Company had exercised its option agreement with Mayo Clinic and signed a worldwide license agreement to the proprietary HER2/neu vaccine technology. The license gives the Company the right to develop and commercialize the technology in any cancer indication in which the Her2/neu antigen is overexpressed. As partStatus of this agreement, the IND for the HER2/neu Phase I Trial was transferred from Mayo Foundation to the CompanyMultiTAA Therapy for Phase II clinical trials as TPIV100, our second product.Post-Transplant AML

On March 14, 2017,

In the third quarter of 2019, we announced thatfiled our partners atplanned IND with the Mayo Clinic received a $3.8 million grant from the DoDFDA with respect to conductour MultiTAA therapy in anticipation of commencing a Phase Ib study of the HER2-targeted vaccine candidate in an early form of breast cancer called ductal carcinoma in situ (DCIS). This is the second Company vaccine to be tested in a fully-funded study sponsored by the Mayo Clinic. We are working closely with Mayo Foundation on this2 clinical trial of our MultiTAA therapy for the treatment of patients with post-transplant AML. The FDA requested additional information regarding certain quality and technical specifications for two reagents supplied by providing clinical andthird party vendors that are used in our manufacturing expertise, as well as providing GMP vaccine formulationsprocess but not present in the final product infused to patients. Because the FDA requires these data before allowing the planned trial under contract. If the study is successful, our HER2/neu vaccine may eventually augment or even replace standard surgery and chemotherapy, and potentially could become part of a routine immunization schedule for preventing breast cancer in healthy women. The study is expected to enroll 40 – 45 women with DCIS and begin to commence such enrollment during late 2018.

Phase II Development of the HER2/neu TPIV110 Vaccine

For subsequent clinical studies, we have added a Class I peptide, also licensed from the Mayo Clinic on April 16, 2012, to the four Class II peptides, producing TPIV 110 when the five peptides are mixed with GM-CSF. Management believes that the combination of Class I and Class II HER2/neu antigens, gives us the leading HER2/neu vaccine platform. We are amending the IND to incorporateproceed, the fifth peptide in subsequent studiesIND has been placed on clinical hold until our complete response to produce an even more robust vaccine activating both CD4+ (helper) and CD8+ (killer) T-cells. Discussionsthe technical questions is satisfactory to the FDA.

We have worked with the regulatory and quality groups at the respective manufacturers to address the FDA’s request and submitted a complete response to the issues raised by the FDA have resultedon October 28, 2019. The FDA will respond within 30 days after receiving our complete response, indicating whether the hold is lifted and, if not, specifying the reasons the clinical trial remains on hold.  Consequently, we expect to initiate our Phase 2 clinical trial of our MultiTAA therapy for the treatment of post-transplant AML in similar Phase II manufacturing process development that we conducted for TPIV200 that should allow us to file the amended IND for TPIV110 in late-2018.2020.

On October 10, 2018, we announced that Mayo Clinic had been awarded a grantClosing of $11 million from the DoD. This grant is intended to cover the costs of a large randomized, double-blind Phase 2 study of the Company’s HER2/neu-targeted breast cancer vaccine, TPIV110 compared to GM-CSF alone, in combination with trastuzumab (Herceptin®) and pertuzumab (Perjeta®), for treating up to 190 women with HER2/neu-positive breast cancer. We are working closely with Mayo Foundation on this clinical trial by providing clinical and manufacturing expertise, as well as providing GMP vaccine formulations under contract. The study will ask whether the administration of vaccine during trastuzumab and pertuzumab maintenance therapy in patients with residual disease post-neoadjuvant chemotherapy blocks disease recurrence and the development of metastatic breast cancer. By prevention of recurrence and metastasis, the expectation is that mortality associated with breast cancer will be decreased. Aside from the immunization component of the approach, another unique aspect is study of the role of the immune response, induced by monoclonal antibody therapy, in the neoadjuvant setting by engaging another 190 patients that demonstrated complete pathologic response to therapy but who do not get vaccine, potentially enabling a better understanding of mechanisms of immune escape.

Products and Technology – Pre-clinical

PolystartPlatinum-Sensitive Advanced Ovarian Cancer Trial

In addition toOctober 2019, the Data and Safety Monitoring Board, or DSMB, reviewed the unblinded patient results from the interim analysis of our Phase 2 clinical developments, our peptide vaccine technology can be coupled with our PolyStart™ nucleic acid-based technology, which is designed to make vaccines significantly more effective by producing four times the required peptidestrial of TPIV200 for the immune systemstreatment of platinum-sensitive advanced ovarian cancer. Although the DSMB did not express any safety concerns with respect to recognize and act on.TPIV200, we have elected to suspend the trial because it did not meet our threshold for probability of success based upon our pre-specified criteria. Pending full review of the data, we anticipate closing the trial in the first quarter of 2020.

On February 7, 2017, we announced that we received a Notice of Allowance from the U.S. Patent and Trademark Office of our patent application titled, “Chimeric nucleic acid molecules with non-AUG initiation sequences and uses thereof,” which represents our first patent on our Polystart program.

On March 22, 2018, a Notice of Allowance was received that expanded the claims beyond FRA or Her2/neu peptide epitopes to broadly include any polypeptide portion comprising any poly-antigen arrays (PAAs) (i.e., for any tumor antigen or any infectious pathogen). We anticipate additional patent filings in connection with our research and development in this area. We plan to develop Polystart as both a stand-alone therapy and as a ‘boost strategy’ to be used synergistically with our peptide-based vaccines for breast and ovarian cancers.

Results of Operations

In this discussion of the Company’sour results of operations and financial condition, amounts, other than per-share amounts, have been rounded to the nearest thousand dollars.

Comparison of the Three Months Ended September 30, 2018 Compared to Three Months Ended2019 and September 30, 20172018

We recorded a net loss

The following table summarizes the results of $4.4 million or ($0.32) basic and diluted per share duringour operations for the three months ended September 30, 2018 compared to a net loss of $4.0 million or ($0.39) basic2019 and diluted per share during the three months ended September 30, 2017. The change in net loss period over period was due to the following changes:2018:

Revenue

Grant income

During the three months ended September 30, 2017, we received $183,000 of a grant awarded to Mayo Foundation from the US Department of Defense for the Phase II Clinical Trial of TPIV200. The grant compensated us for clinical supplies manufactured by us and provided for the clinical study.

Operating Expenses

Operating expenses incurred during the three months ended September 30, 20182019 were $4.4$5.7 million compared to $4.2$4.4 million induring the prior period.three months ended September 30, 2018. Significant changes in operating expenses are outlined as follows:included:

For the three-month period ended September 30, 2017, we recorded $0.8 million of stock-based compensation expenses relating to stock grants pursuant to Peter Hoang’s and Glynn Wilson’s employment agreements. These savings partially offset the increased expenses identified above.

Other ExpenseIncome (Expense)

Change in fair valueFair Value of warrant liabilitiesWarrant Liabilities

The changeChange in fair value of warrant liabilities for the three months ended September 30, 20182019 was ($40,000)64,000) as compared to ($4,000) for the three months ended September 30, 2017. This decrease by $40,000 for the three months ended September 30, 2018.

Interest Income

Interest income was $0.3 million for the three months ended September 30, 2019, attributable to interest income relating to a significant portion of the net proceeds received from our equity financing in October 2018 is reflected by a corresponding otherwhich are held in U.S. Treasury notes and U.S. government agency-backed securities with maturities of less than three months. We did not receive any interest income induring the condensed consolidated statement of operations. three months ended September 30, 2018.

Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017Net Loss

We recorded a net loss of $12.4$5.5 million, or ($1.03)a net loss per share, basic and diluted of ($0.12), during the three months ended September 30, 2019, compared to a net loss of $4.4 million, or a net loss per share, basic and diluted of ($0.32), during the three months ended September 30, 2018. The increase in our net loss during the three months ended September 30, 2019 compared to during the three months ended September 30, 2018 was due to the continued expansion of our research and development activities, increased expenses relating to current and future clinical trials, and the overall growth of our corporate infrastructure. We anticipate that we will continue to incur net losses in the future as we continue to invest in research and development activities, including clinical development of our MultiTAA T cell product candidates.

Comparison of the Nine months Ended September 30, 2019 and September 30, 2018

The following table summarizes the results of our operations for the nine months ended September 30, 2019 and 2018:

Revenue

Grant income

We did not receive any grant income during the nine months ended September 30, 2018 compared to a net loss of $8.3 million or ($0.91) basic and diluted per share during the nine months ended September 30, 2017. The change in net loss period over period was due to the following:

Revenue

Grant income

2019. During the nine months ended September 30, 2018, we received $206,000 of a grant awarded to the Mayo Foundation from the US Department of Defense to fund the Phase 2 clinical trial of TPIV200 for the Phase II Clinical Trialtreatment of TPIV200.triple-negative breast cancer. The portion of the grant we received compensated us for clinical supplies manufactured by us and provided for the clinical study. During the nine months ended September 30, 2017, we received $183,000 of grant income.trial.

Operating Expenses

Operating expenses incurred during the nine months ended September 30, 20182019 were $12.5$17.2 million compared to $9.0$12.5 million induring the prior period.nine months ended September 30, 2018. Significant changes in operating expenses are outlined as follows:included:

For the nine-month period ended September 30, 2017, we recorded $0.8 million of stock-based compensation expenses relating to stock grants pursuant to Peter Hoang’s and Glynn Wilson’s employment agreements. These savings partially offset the increased expenses identified above.

Other ExpenseIncome (Expense)

Change in fair valueFair Value of warrant liabilitiesWarrant Liabilities

The changeChange in fair value of warrant liabilities for the nine months ended September 30, 20182019 was $98,000($80,000) as compared to ($9,000)98,000) for the nine months ended September 30, 2017. This increase by $98,0002018.

Interest Income

Interest income was $0.9 million for the nine months ended September 30, 2019, attributable to interest income relating to a significant portion of the net proceeds received from our equity financing in October 2018 is reflected by a corresponding other expensewhich are held in the condensed consolidated statementU.S. Treasury notes and U.S. government agency-backed securities with maturities of operations.

Debt extinguishment gain

In 2003 we entered into a license agreement with a foreign based third-party for certain adenovirus technology. The license agreement was amended several times between inception and 2008 at which time it was amended and restated and had a fixed three-year term expiring in 2011. During such time, weless than three months. We did not pursue the technology and have not undertaken further work in the area covered by the technology license. Neither we nor the third-party took further actions under or pursuant to the license agreement. We carried a historical accrual of approximately $0.5 million under the amended license agreement related to certain obligations provided for in the license agreement. The license agreement was governed by the laws of a foreign jurisdiction. We sought and obtained legal advice related to such accrued obligations under the expired license agreement. We relied upon a judicial conclusion, as opined upon by outside legal counsel in the applicable foreign jurisdiction, that a court in such foreign jurisdiction would grant relief releasing us from liability under the license agreement, and in accordance with Accounting Standards Codification 405 “Extinguishment of Liabilities”, we recorded a debt extinguishment gain of $0.5 million and reduced the liability amount owed to $0receive any interest income during the nine months ended September 30, 2017.2018.

We recorded a net loss of $16.3 million, or a net loss per share, basic and diluted of ($0.36), during the nine months ended September 30, 2019, compared to a net loss of $12.4 million, or a net loss per share, basic and diluted of ($1.03), during the nine months ended September 30, 2018. The increase in our net losses during the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018, was due to the continued expansion of our research and development activities, increased expenses relating to current and future clinical trials, and the overall growth of our corporate infrastructure. We anticipate that we will continue to incur net losses in the future as we continue to invest in research and development activities, including clinical development of our MultiTAA T cell product candidates.

Liquidity and Capital Resources

We have not generated any revenues from product sales since inception other than revenue form grants we received.inception. We have financed our operations primarily through public and private offerings of our stockdebt and debt including warrants and the exercises thereof.equity securities.

The following table sets forth our cash and cash equivalents and working capital as of September 30, 20182019 and December 31, 2017:2018:

Cash Flows

The following table summarizes our cash flows for the nine months ended September 30, 20182019 and 2017:2018: