UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company |
| Emerging growth company |
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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|
| The |
At April 25, 2022, the issuer had
IOVANCE BIOTHERAPEUTICS, INC.
FORM 10-Q
For the Quarter Ended March 31, 2022
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | |
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1
PART I. FINANCIAL INFORMATION
Item 1. | Condensed Consolidated Financial Statements |
IOVANCE BIOTHERAPEUTICS, INC.
Condensed Consolidated Balance Sheets
(unaudited; in thousands, except share and per share information)
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| March 31, | December 31, | |||
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| 2022 |
| 2021 | ||
ASSETS |
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Current Assets |
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Cash and cash equivalents | $ | | $ | | ||
Short-term investments |
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Prepaid expenses and other assets |
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Total Current Assets |
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Property and equipment, net | | | ||||
Operating lease right-of-use assets | | | ||||
Long-term investments |
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Restricted cash | | | ||||
Long-term assets |
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Total Assets | $ | | $ | | ||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable | $ | | $ | | ||
Accrued expenses |
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Operating lease liabilities | | | ||||
Total Current Liabilities |
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Non-Current Liabilities |
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Operating lease liabilities – noncurrent |
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Long-term note payable | | | ||||
Total Non-Current Liabilities |
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Total Liabilities |
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Commitments and contingencies |
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Stockholders’ Equity |
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Series A Convertible Preferred stock, $ |
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Series B Convertible Preferred stock, $ |
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Common stock, $ |
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Accumulated other comprehensive loss |
| ( |
| ( | ||
Additional paid-in capital |
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Accumulated deficit |
| ( |
| ( | ||
Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
IOVANCE BIOTHERAPEUTICS, INC.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share information)
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
Costs and expenses |
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Research and development |
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General and administrative |
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Total costs and expenses |
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Loss from operations |
| ( |
| ( | ||
Other income |
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Interest income, net |
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Net Loss | $ | ( | $ | ( | ||
Net Loss Per Share of Common Stock, Basic and Diluted | ( | ( | ||||
Weighted Average Shares of Common Stock Outstanding, Basic and Diluted |
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|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
IOVANCE BIOTHERAPEUTICS, INC.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited; in thousands)
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
Net Loss | $ | ( | $ | ( | ||
Other comprehensive (loss) income: |
|
| ||||
Unrealized (loss) gain on investments |
| ( |
| | ||
Comprehensive Loss | $ | ( | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
IOVANCE BIOTHERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
For the Three Months Ended March 31, 2022 and 2021
(unaudited; in thousands, except share information)
Series A | Series B | ||||||||||||||||||||||||||
Convertible | Convertible | Additional | Accumulated other | Total | |||||||||||||||||||||||
Preferred Sock | Preferred Stock | Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | |||||||||||||||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Income (Loss) |
| Deficit |
| Equity | |||||||
Balance - December 31, 2021 |
| | $ | — | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||||
Stock-based compensation expense | — | — | — | — | — | — |
| | — | — |
| | |||||||||||||||
Common stock issued upon exercise of stock options | — | — | — | — |
| |
| — |
| | — | — |
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Unrealized loss on investments | — | — | — | — | — | — | — |
| ( | — |
| ( | |||||||||||||||
Net loss | — | — | — | — | — | — | — | — |
| ( |
| ( | |||||||||||||||
Balance - March 31, 2022 |
| | $ | — |
| | $ | |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Balance - December 31, 2020 |
| | $ | — |
| | $ | |
| | $ | | $ | | $ | | $ | ( | $ | | |||||||
Stock-based compensation expense | — | — | — | — | — | — | | — | — |
| | ||||||||||||||||
Common stock issued upon exercise of stock options | — | — | — | — | | — | | — | — |
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Common stock sold in public offering, net of offering costs | — | — | — | — | | — | | — | — | | |||||||||||||||||
Common stock issued from preferred stock conversion | — | — | ( | ( | | — | | — | — | — | |||||||||||||||||
Unrealized gain on investments | — | — | — | — | — | — | — | | — |
| | ||||||||||||||||
Net loss | — | — | — | — | — | — | — | — |
| ( |
| ( | |||||||||||||||
Balance - March 31, 2021 |
| | $ | — |
| | $ | |
| | $ | | $ | | $ | | $ | ( | $ | |
5
IOVANCE BIOTHERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited; in thousands)
Three Months Ended | |||||||
March 31, | |||||||
|
| 2022 |
| 2021 | |||
Cash Flows from Operating Activities | |||||||
Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation expense | | | |||||
Amortization of right of use asset | | | |||||
Depreciation and amortization | |
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Accretion (amortization) of discounts and premiums on investments | | | |||||
Loss on write-off of fixed assets | | | |||||
Changes in assets and liabilities: | |||||||
Prepaid expenses, other assets and long-term assets | ( |
| ( | ||||
Operating lease liabilities | |
| ( | ||||
Accounts payable | ( |
| ( | ||||
Accrued expenses and other liabilities |
| ( |
| ( | |||
Net cash used in operating activities |
| ( |
| ( | |||
Cash Flows from Investing Activities | |||||||
Maturities of investments |
| |
| | |||
Purchase of investments |
| ( |
| ( | |||
Purchase of property and equipment |
| ( |
| ( | |||
Net cash provided by investing activities |
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Cash Flows from Financing Activities | |||||||
Proceeds from the issuance of common stock upon exercise of options | | | |||||
Proceeds from the issuance of common stock, net | | | |||||
Proceeds from the issuance of debt | | | |||||
Net cash provided by financing activities |
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Net increase in cash, cash equivalents and restricted cash |
| |
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Cash, Cash Equivalents and Restricted Cash Beginning of Period |
| |
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Cash, Cash Equivalents and Restricted Cash End of Period | $ | | $ | | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Net unrealized (loss) gain on short-term investments | $ | ( | $ | | |||
Acquisition of property and equipment included in accounts payable and accrued expenses |
| |
| | |||
Conversion of convertible preferred stock to common stock | | ( | |||||
Lease liabilities arising from obtaining right-of-use asset from lease modifications | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
IOVANCE BIOTHERAPEUTICS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. GENERAL ORGANIZATION, BUSINESS AND LIQUIDITY
General Organization and Business
Iovance Biotherapeutics, Inc. (the “Company”) is a clinical-stage biopharmaceutical company pioneering a transformational approach to cure cancer by harnessing the human immune system’s ability to recognize and destroy diverse cancer cells in each patient. Tumor infiltrating lymphocyte (“TIL”) therapy is an autologous cell therapy platform technology that was originally developed by the National Cancer Institute (“NCI”), which conducted initial clinical trials in diseases such as metastatic melanoma and cervical cancer, as well as non-small cell lung cancer. The Company’s mission is to be the global leader in innovating, developing and delivering TIL therapy for patients with cancer. The Company has developed a new, shorter proprietary TIL manufacturing process known as Generation 2 (“Gen 2”), which yields a cryopreserved TIL product. This centralized, proprietary, and scalable manufacturing method is being investigated in multiple indications. The Company’s lead product candidates include lifileucel for metastatic melanoma and metastatic cervical cancer, as well as LN-145 for metastatic non-small cell lung cancer (“NSCLC”). In addition, the Company is investigating the effectiveness and safety of combinations of TIL therapy with immune checkpoint inhibitors (“ICI”), in metastatic melanoma, cervical cancer, NSCLC, and head and neck squamous cell carcinoma (“HNSCC”). The Company is investigating peripheral blood lymphocyte (“PBL”) therapy for patients with relapsed or refractory chronic lymphocytic leukemia (“CLL”) and small lymphocytic lymphoma (“SLL”) through its sponsored trials. The Company is also investigating the potential for TIL therapy in other oncology indications through academic collaborations with leading cancer research centers. On June 1, 2017, the Company reincorporated from a Nevada corporation to a Delaware corporation.
Basis of Presentation of Unaudited Condensed Consolidated Financial Information
The accompanying unaudited condensed consolidated financial statements of the Company for the three months ended March 31, 2022 and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for audited financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company's financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2022 or for any other period. The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2022. These interim financial statements should be read in conjunction with that report. Certain prior period amounts reported in our condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.
Liquidity
The Company is currently engaged in the development of therapeutics to fight cancer, specifically solid tumors. The Company currently does not have any commercial products and has not yet generated any revenues from its business, nor does the Company currently anticipate that it will generate any significant revenues from the sale or licensing of any of its product candidates during the twelve months from the date these financial statements are issued. The Company has incurred a net loss of $
7
The Company expects to continue its research and development activities, increase pre-commercial activities and complete construction of the remaining tenant improvements for the Iovance Cell Therapy Center (the “iCTC”), which are expected to increase the amount of cash used during the remainder of 2022 and beyond. Specifically, the Company expects continued spending on its current and planned clinical trials, continued expansion of manufacturing activities, higher payroll expenses as the Company increases its professional and scientific staff and continuation of pre-commercial activities. Based on the funds the Company has available as of the date these financial statements are issued, the Company believes that it has sufficient capital to fund its anticipated operating expenses and capital expenditures as planned for at least the next twelve months from the date these financial statements are issued.
Concentrations of Risk
The Company is subject to credit risk from its portfolio of cash, cash equivalents and investments. Under its investment policy, the Company limits amounts invested in securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company does not believe it is exposed to any significant concentrations of credit risk from these financial instruments. The goals of its investment policy are safety and preservation of principal, diversification of risk, and liquidity of investments sufficient to meet cash flow requirements.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash, Cash Equivalents, and Investments
The Company’s cash and cash equivalents include short-term investments with original maturities of three months or less when purchased. The Company's investments are classified as “available-for-sale.” The Company includes these investments in current assets or non-current assets in the Condensed Consolidated Balance Sheets based on the length of maturity from the reporting date and carries them at fair value. Unrealized gains and losses on available-for-sale securities are recorded in accumulated other comprehensive loss. Impairment losses related to credit losses (if any) are recorded as an allowance for credit losses with an offsetting entry to Interest income, net. No impairment losses related to credit losses were recognized for the three months ended March 31, 2022 and 2021. The cost of debt securities is adjusted for the amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in Interest income, net in the Condensed Consolidated Statements of Operations. Gains and losses on securities sold are recorded based on the specific identification method and are included in Interest income, net in the Condensed Consolidated Statements of Operations. The Company has not incurred any realized gains or losses from sales of securities to date. The Company’s investment policy limits investments to certain types of instruments such as certificates of deposit, money market instruments, obligations issued by the U.S. government and U.S. government agencies as well as corporate debt securities and commercial paper, and places restrictions on maturities and concentration by type and issuer, except for securities issued by the U.S. government.
Restricted Cash
The Company maintains a required minimum balance in a segregated bank account in connection with three letters of credit, one for $
8
The following table provides a reconciliation of cash, cash equivalents, and restricted cash, reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):
|
| March 31, | ||||
| 2022 | 2021 | ||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash |
| |
| | ||
Total cash, cash equivalents and restricted cash | $ | | $ | |
Net Loss per Share
Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period.
Diluted net loss per share is computed by dividing the net loss by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalents outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options, (ii) purchases though the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), (iii) vesting of restricted stock units, and (iv) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.
As of March 31, 2022 and 2021, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive:
March 31, | ||||
|
| 2022 |
| 2021 |
Stock options | |
| | |
Employee Stock Purchase Plan | | | ||
Restricted stock units | | — | ||
Series A Convertible Preferred Stock* | | | ||
Series B Convertible Preferred Stock* | |
| | |
|
| |
* on an as-converted basis
The dilutive effect of potentially dilutive securities would be reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company's common stock could result in a greater dilutive effect from potentially dilutive securities.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include assumptions made in the fair value of equity awards and related stock-based compensation, assumptions used in measuring operating right-of-use assets and operating lease liabilities, accounting for potential liabilities, including estimates inherent in accruals related to clinical trials, and the realizability of the Company’s deferred tax assets.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Iovance Biotherapeutics, Inc. and its wholly-owned subsidiaries, Iovance Biotherapeutics Manufacturing LLC, Iovance Biotherapeutics GmbH, and Iovance Biotherapeutics B.V. All intercompany accounts and transactions have been eliminated. The U.S. dollar is the functional currency for all the Company's consolidated operations.
9
Leases
The Company determines if an arrangement includes a lease at inception and thereafter, if modified. Operating leases are included in its Condensed Consolidated Balance Sheets as Operating lease right-of-use assets and Operating lease liabilities as of March 31, 2022 and December 31, 2021. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date or modification date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses an estimated incremental borrowing rate that is applicable to the Company based on the information available at the later of the lease commencement or modification date.
The operating lease right-of-use assets also include any lease payments made less lease incentives. The Company’s leases may include options to extend or terminate the lease, which is considered in the lease term when it is reasonably certain that the Company will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term and recorded in costs and expenses in the Condensed Consolidated Statements of Operations. The Company has elected not to apply the recognition requirements of Accounting Standards Update (“ASU”) No. 2016-02 and No. 2018-10 (together “Topic 842”) for short-term leases.
For lease agreements entered into by the Company that include lease and non-lease components, such components are generally accounted for separately.
Stock-Based Compensation
The Company periodically grants stock options to employees and non-employees as compensation for services rendered. The Company accounts for all stock-based payment awards made to employees, including the employee stock purchase plans, and non-employees in accordance with the authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) where the value of the award is measured on the date of grant and recognized over the vesting period. Forfeitures are recognized in the period in which they occur. The Company accounts for stock option grants to non-employees in a similar manner as stock option grants to employees except for the term used in the grant date fair value, therefore no longer requiring a re-measurement at the then-current fair values at each reporting date until the shares underlying the options have vested. The non-employee awards that contain a performance condition that affects the quantity or other terms of the award are measured based on the outcome that is probable.
The fair value of the Company's common stock option grants is estimated using a Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected term of the common stock options, and future dividends. The stock-based compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model. The assumptions used in the Black-Scholes option pricing model could affect compensation expense recorded in future periods.
The Company issues restricted stock units (“RSUs”) from time to time as part of its equity incentive plans. The Company measures the compensation cost with respect to RSUs issued to employees based upon the estimated fair value of the equity instruments at the date of the grant, which is recognized as an expense over the period during which an employee is required to provide services in exchange for the awards. The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date.
Accrued Research and Development Costs
Research and development costs are expensed as incurred. Clinical development costs compose a significant component of research and development costs. The Company has a history of contracting with third parties, including contract research organizations (“CROs”), independent clinical investigators, and contract manufacturing organizations (“CMOs”) that perform various clinical trial activities on the Company’s behalf in connection with the ongoing development of the Company’s product candidates. The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow. The Company accrues and expenses costs for clinical trial activities performed by third parties based upon estimates of work completed to date for each clinical trial in accordance with agreements established with CROs, hospitals, and clinical investigators. Accruals for CROs and CMOs are recorded based on estimates of services received and efforts expended pursuant to agreements established with CROs, CMOs and other outside service providers. The Company determines its estimates through discussions with internal clinical stakeholders and outside service providers as to the progress or stage of completion of clinical trials or services and the contracted fee to be paid for such services.
10
Included in the Company’s clinical development costs are investigator costs, which are costs associated with treatments administered at clinical sites as required under each clinical study protocol. The Company’s estimates for clinical investigator costs and timing of expense recognition will depend on a number of factors that include, but are not limited to, (i) the overall number of patients that enroll in the trial at each individual site, (ii) the length of study enrollment period, (iii) discontinuation and completion rates of patients, (iv) duration of patient safety follow-ups, (v) the number of sites included in the clinical trial, and (vi) the contracted fee of each participating site for patient treatment while on study, which can vary greatly for several reasons including, but not limited to, geographic region, medical center or physician costs, and overhead costs. In addition, the Company’s estimates for per patient trial costs will vary based on a number of factors that include, but are not limited to, the extent of additional treatments that may be administered by investigators as a result of patient health status, recoverability of patient costs through insurance carriers of patients, and unanticipated cost of injuries incurred as a result of the study treatment. The Company accrues for estimated expenses resulting from obligations under investigator site agreements as the timing of payments does not always timely align with the periods over which the treatments are administered by the clinical investigators. These estimates are typically based on contracted amounts, patient visit data, discussions with internal clinical stakeholders and outside service providers, and historical look-back analysis of actual payments made to date.
The Company makes judgements and estimates in determining the accrual balance in each reporting period.
In the event advance payments are made to a CRO, CMO or other outside service provider, the payments are recorded within prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets and subsequently recognized as research and development expense in the Condensed Consolidated Statements of Operations when the associated services have been performed. As actual costs become known, the Company adjusts its estimates, liabilities and assets. Inputs used in the determination of estimates discussed above may vary from actual, which will result in adjustments to research and development expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect its results of operations. The Company’s historical estimates have not been materially different from actual amounts recorded.
Segment Reporting
The Company operates in
NOTE 3. CASH EQUIVALENTS, INVESTMENTS AND FAIR VALUE MEASUREMENTS
The amortized cost, fair value measurements, and fair value of cash equivalents and investments as of March 31, 2022 and December 31, 2021 were as follows (in thousands):
| Gross | Gross | ||||||||||
| Amortized | Unrealized | Unrealized | |||||||||
As of March 31, 2022 |
| Cost |
| Gains |
| Losses |
| Fair Value | ||||
U.S. treasury securities | $ | | $ | — | $ | ( | $ | | ||||
U.S. government agency securities |
| |
| — |
| ( |
| | ||||
Corporate securities | | — | ( | | ||||||||
Commercial paper | | | ( | | ||||||||
Money market funds | | — | — | | ||||||||
Total investments | $ | | $ | | $ | ( | $ | |
| Gross | Gross | ||||||||||
| Amortized | Unrealized | Unrealized | |||||||||
As of December 31, 2021 |
| Cost |
| Gains |
| Losses |
| Fair Value | ||||
U.S. treasury securities | $ | | $ | — | $ | ( | $ | | ||||
U.S. government agency securities |
| |
| — |
| ( |
| | ||||
Corporate securities | | — | ( | | ||||||||
Commercial paper | | | ( | | ||||||||
Money market funds | | — | — | | ||||||||
Total investments | $ | | $ | | $ | ( | $ | |
11
The fair value of cash equivalents and investments as of March 31, 2022 and December 31, 2021 are classified as follows in the Company’s Consolidated Balance Sheets (in thousands):
March 31, | December 31, | |||||
Classified as: | 2022 |
| 2021 | |||
Cash equivalents | $ | | $ | | ||
Short-term investments | | | ||||
Long-term investments | | | ||||
Total investments | $ | | $ | |
Cash equivalents in the tables above exclude cash demand deposits of $
The following table summarizes the Company’s cash equivalents and available-for-sale investments by contractual maturity (in thousands):
March 31, 2022 | ||||||
| Amortized Cost |
| Fair Value | |||
Within one year | $ | | $ | | ||
One year to two years | | | ||||
Total investments | $ | | $ | |
Recurring Fair Value Measurements
As of March 31, 2022 and December 31, 2021, the fair value of the Company’s financial assets that are measured at fair value on a recurring basis, which consist of cash equivalents and short-term and long-term investments classified as available-for-sale securities, are categorized in the table below based upon the lowest level of significant input to the valuations (in thousands):
Assets at Fair Value as of March 31, 2022 | ||||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
U.S. treasury securities | $ | | $ | — | $ | — | $ | | ||||
U.S. government agency securities |
| — |
| |
| — |
| | ||||
Corporate securities | — | | — | | ||||||||
Commercial paper | — | | — | | ||||||||
Money market funds | | — | — | | ||||||||
Total | $ | | $ | | $ | — | $ | |
Assets at Fair Value as of December 31, 2021 | ||||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
U.S. treasury securities | $ | | $ | — | $ | — | $ | | ||||
U.S. government agency securities |
| — |
| |
| — |
| | ||||
Corporate securities | — | | — | | ||||||||
Commercial paper | — | | — | | ||||||||
Money market funds | | — | — | | ||||||||
Total | $ | | $ | | $ | — | $ | |
Level 2 assets consist of commercial paper and government agency securities. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset.
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NOTE 4. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following (in thousands):
| March 31, | December 31, | ||||
|
| 2022 |
| 2021 | ||
Leasehold improvements | $ | | $ | | ||
Lab, process, and validation equipment | | | ||||
Utility equipment |
| |
| | ||
Office furniture and equipment |
| |
| | ||
Computer software | | | ||||
Computer equipment |
| |
| | ||
Machinery and equipment | | | ||||
Construction in progress |
| |
| | ||
Total Property and equipment, cost |
| |
| | ||
Less: Accumulated depreciation and amortization |
| ( |
| ( | ||
Property and equipment, net | $ | | $ | |
Depreciation expense for the three months ended March 31, 2022 and 2021, was $
NOTE 5. ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
| March 31, | December 31, | ||||
| 2022 |
| 2021 | |||
Accrued payroll and employee related expenses | $ | | $ | | ||
Clinical related | | | ||||
Manufacturing related |
| |
| | ||
Facilities related | | | ||||
Legal and related services |
| |
| | ||
Other accrued expenses |
| |
| | ||
Total accrued expenses | $ | | $ | |
NOTE 6. STOCKHOLDERS’ EQUITY
Common Stock
The Company’s certificate of incorporation, as amended, authorizes the issuance of up to
At the Market Offering Program
On February 8, 2021, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) with respect to an “at the market” offering program, under which the Company may, from time to time, in its sole discretion, issue and sell through Jefferies, acting as sales agent, up to $
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Pursuant to the Sales Agreement, Jefferies may sell the Common Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended. Jefferies will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Common Shares from time to time, based upon instructions from the Company (including any price or size limits or other customary parameters or conditions the Company may impose). The Company will pay Jefferies a commission of up to
The Company is not obligated to make any sales of Common Shares under the Sales Agreement. The offering of Common Shares pursuant to the Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through Jefferies, of all Common Shares subject to the Sales Agreement and (ii) termination of the Sales Agreement in accordance with its terms.
Preferred Stock
The Company’s certificate of incorporation authorizes the issuance of up to
Series A Convertible Preferred Stock
A total of
The Series A Convertible Preferred Stock may, at the option of each investor, be converted into fully paid and non-assessable shares of common stock. The holders of shares of Series A Convertible Preferred Stock do not have the right to vote on matters that come before the Company’s stockholders. In the event of any dissolution or winding up of the Company, proceeds shall be paid pari passu among the holders of common stock and preferred stock, pro rata based on the number of shares held by each holder. The Company may not declare, pay, or set aside any dividends on shares of capital stock of the Company (other than dividends on shares of common stock payable in shares of common stock) unless the holders of the Series A Convertible Preferred Stock shall first receive an equal dividend on each outstanding share of Series A Convertible Preferred Stock.
Series B Convertible Preferred Stock
A total of
The Series B Convertible Preferred Stock may, at the option of each investor, be converted into fully paid and non-assessable shares of common stock. The holders of shares of Series B Convertible Preferred Stock do not have the right to vote on matters that come before the Company's stockholders. In the event of any dissolution or winding up of the Company, proceeds shall be paid pari passu among the holders of common stock and preferred stock, pro rata based on the number of shares held by each holder. Holders of Series B Convertible Preferred Stock are entitled to dividends on an as-if-converted basis in the same form as any dividends actually paid on shares of the Series A Convertible Preferred Stock or the Company’s common stock. So long as any Series B Convertible Preferred Stock remains outstanding, the Company may not redeem, purchase, or otherwise acquire any material amount of the Series A Convertible Preferred Stock or any securities junior to the Series B Convertible Preferred Stock.
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During the three months ended March 31, 2022,
Equity Incentive Plans
The Company has multiple equity incentive plans under which it grants awards. As of March 31, 2022, there are
On April 22, 2018, the Company’s board of directors (the “Board”) adopted the Iovance Biotherapeutics, Inc. 2018 Equity Incentive Plan (the “2018 Plan”), which was approved by the Company’s stockholders in June 2018. The 2018 Plan as approved initially authorized the issuance up to an aggregate of
On September 22, 2021, the Board adopted the Iovance Biotherapeutics, Inc. 2021 Inducement Plan (the “2021 Inducement Plan”). The 2021 Inducement Plan provides for the grant of non-qualified options, common stock, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards, other cash-based awards, or any combination of the foregoing. The 2021 Inducement Plan was recommended for approval by the Compensation Committee of the Board (the “Compensation Committee”), and subsequently approved and adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the rules and regulations of The Nasdaq Stock Market, LLC (the “Nasdaq Listing Rules”).
The Board initially reserved
In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, equity awards under the 2021 Inducement Plan may only be made to an employee if such employee is granted such equity awards in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. In addition, awards under the 2021 Inducement Plan may only be made to employees who have not previously been an employee or member of the Board (or any parent or subsidiary of the Company) or following a bona fide period of non-employment of the employee by the Company (or a parent or subsidiary of the Company). As of March 31, 2022,
Stock Options
A summary of the stock option activity during the three months ended March 31, 2022, is presented in the following table:
Weighted |
| |||||||||
Weighted | Average | Aggregate | ||||||||
Number | Average | Remaining | Intrinsic | |||||||
of | Exercise | Contract | Value | |||||||
| Options |
| Price |
| Life |
| (in thousands) | |||
Outstanding at December 31, 2021 | |
| $ | | ||||||
Issued | |
| | |||||||
Exercised | ( |
| | |||||||
Expired/Cancelled | ( |
| | |||||||
Outstanding at March 31, 2022 | |
| $ | |
| $ | | |||
Ending vested and expected to vest at March 31, 2022 | | $ | | $ | | |||||
Options exercisable at March 31, 2022 |
| | $ | |
| $ | |
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As of March 31, 2022, there was $
The weighted average grant date fair value for employee options granted under the Company’s stock option plans during the three months ended March 31, 2022 and 2021 was $
The aggregate intrinsic value in the table above reflects the total pre-tax intrinsic value (calculated as the difference between the Company’s closing stock price on the last trading day of the quarter ended March 31, 2022 and the exercise price of the options, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on March 31, 2022. The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s common stock.
Employee Stock Purchase Plan
In June 2020, the Company adopted the 2020 ESPP upon its approval by the Company’s shareholders at its Annual Stockholders Meeting on June 8, 2020. The Company reserved
Under the 2020 ESPP, employees of the Company can purchase shares of its common stock based on a percentage of their compensation subject to certain limits. The purchase price per share is equal to the lower of
The compensation expense related to the 2020 ESPP for the three months ended March 31, 2022 and 2021 was $
Restricted Stock Units and Performance Restricted Stock Units
In addition to RSUs that have time-based vesting requirements, from time to time the Company may issue RSUs that include certain performance vesting criteria based upon the satisfaction of stated objectives (“PRSUs”). Compensation expense related to PRSUs is based on the grant date fair value of the award and recorded from the period that achievement is determined to be probable through the stated service period associated with the award.
Activity for RSUs and PRSUs units during the three months ended March 31, 2022 is presented in the following table:
Weighted | |||||
Number | Average | ||||
of | Grant Date | ||||
| RSUs and PRSUs |
| Fair Value | ||
Outstanding, non-vested as of December 31, 2021 | | $ | | ||
Granted | | | |||
Canceled/Forfeited | ( | | |||
Outstanding, non-vested as of March 31, 2022 | | $ | |
As of March 31, 2022, there was $
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Stock-Based Compensation
Total stock-based compensation expense related to all of the Company’s stock-based awards was recorded on the Condensed Consolidated Statements of Operations as follows (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
|
| 2022 |
| 2021 | ||
Research and development | $ | | $ | | ||
General and administrative |
| |
| | ||
Total stock-based compensation expense | $ | | $ | |
Total stock-based compensation expense by type of award was as follows (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
|
| 2022 |
| 2021 | ||
Stock option expense | $ | | $ | | ||
Restricted stock expense |
| |
| — | ||
ESPP expense |
| |
| | ||
Total stock-based compensation expense | $ | | $ | |
NOTE 7. LICENSES AND AGREEMENTS
National Institutes of Health (the “NIH”) and the National Cancer Institute (the “NCI”)
Cooperative Research and Development Agreement (the “CRADA”)
In August 2011, the Company signed a
In August 2021, the NCI and the Company entered into a third amendment to the CRADA. The third amendment, among other things, extended the term of the CRADA by
Pursuant to the terms of the CRADA, as amended, the Company is required to make quarterly payments of $
17
Patent License Agreement Related to the Development and Manufacture of TIL
The Company entered into an Exclusive Patent License Agreement (the “Patent License Agreement”) with the NIH, an agency of the U.S. Public Health Service within the Department of Health and Human Services, in 2011, as amended in 2015. Pursuant to the Patent License Agreement, as amended, the NIH granted the Company licenses, including exclusive, co-exclusive, and non-exclusive licenses, to certain technologies relating to autologous tumor infiltrating lymphocyte adoptive cell therapy products for the treatment of metastatic melanoma, lung, breast, bladder and HPV-positive cancers.
Effective May 6, 2021, the Company entered into an Amended and Restated Patent License Agreement with NIH (the “Amended and Restated Patent License Agreement”), which includes the grant of additional exclusive, worldwide patent rights in the Indications to cytokine-tethered TIL technology, and expands the non-exclusive, worldwide field of use to all cancers. The Amended and Restated Patent License Agreement requires the Company to pay royalties based on a percentage of net sales in jurisdictions where patent rights exist, which percentage can fall into a tier that may be less than one percent to mid-single digits depending upon certain events, including the exclusivity of the rights, and the Company expects lower overall royalty payments as a result. The Company also agreed to potential milestone payments on the achievement of certain clinical, regulatory, and commercial sales milestones for each of the Indications and other direct costs incurred by the NIH pursuant to the Amended and Restated Patent License Agreement. The Company anticipates making milestone payments, including a payment in the low-single-digit millions of dollars in conjunction with the approval of a Biologics License Application for any of its product candidates covered by the Amended and Restated Patent License Agreement. The term of the Amended and Restated Patent License Agreement continues until the expiry of the last-to-expire patent rights licensed thereunder, and the agreement contains standard termination provisions.
Exclusive Patent License Agreement Related to TIL Selection
On February 10, 2015, the Company entered into an exclusive patent license agreement (the “Exclusive Patent License Agreement”) with the NIH under which the Company received an exclusive license to the NIH’s rights to patent-pending technologies related to methods for improving adoptive cell therapy through more potent and efficient production of TIL from melanoma tumors by selecting for T cell populations that express various inhibitory receptors. Unless terminated sooner, the license shall remain in effect until the last licensed patent right expires.
Under the Exclusive Patent License Agreement, the Company agreed to pay customary royalties based on a percentage of net sales of a licensed product (which percentage is in the mid-single digits), a percentage of revenues from sublicensing arrangements, and lump sum benchmark payments upon the successful completion of clinical studies involving licensed technologies, the receipt of the first Food and Drug Administration (the “FDA”) approval or foreign equivalent for a licensed product or process resulting from the licensed technologies, the first commercial sale of a licensed product or process in the U.S., and the first commercial sale of a licensed product or process in any foreign country.
H. Lee Moffitt Cancer Center
Research Collaboration and Clinical Grant Agreements with Moffitt
In June 2020, the Company entered into a Sponsored Research Agreement with the H. Lee Moffitt Cancer Center (“Moffitt”), with a term that ends either upon completion of the research thereunder or on July 1, 2022, whichever is sooner, and under which immaterial payments will be made to Moffitt in connection with the research services thereunder.
In December 2016, the Company entered into a clinical grant agreement with Moffitt to support an ongoing clinical trial at Moffitt that combines TIL therapy with nivolumab for the treatment of patients with metastatic melanoma. In June 2017, the Company entered into a second clinical grant agreement with Moffitt to support a new clinical trial at Moffitt that combines TIL therapy with nivolumab for the treatment of patients with non-small cell lung cancer, under which the Company obtained a non-exclusive, royalty-free license to any new Moffitt inventions made in the performance of the agreement. Under both clinical grant agreements with Moffit, the Company has non-exclusive rights to clinical data arising from the respective clinical trials. The Company recorded $
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Exclusive License Agreements with Moffitt
The Company entered into a license agreement with Moffitt (the “First Moffitt License”), effective as of June 28, 2014, under which the Company received a world-wide license to Moffitt’s rights to patent-pending technologies related to methods for improving TIL for adoptive cell therapy using toll-like receptor agonists. Unless earlier terminated, the term of the license extends until the earlier of the expiration of the last issued patent related to the licensed technology or
Pursuant to the First Moffitt License, the Company paid an upfront licensing fee in the amount of $
The Company entered into a second license agreement with Moffitt effective as of May 7, 2018 (the “Second Moffitt License”), under which the Company received a license to Moffitt’s rights to patent-pending technologies related to the use of 4-1BB agonists in conjunction with TIL manufacturing processes and therapies. Pursuant to the Second Moffitt License, the Company paid an upfront licensing fee in the amount of $
The Company subsequently exercised an optio