APTEVO THERAPEUTICS INC. This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements in this Quarterly Report on Form 10-Q other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, future royalty payments, the achievement of milestones, projected costs, prospects, plans, intentions, expectations, and objectives could be forward-looking statements. The words "anticipates," "believes," "could," "designed," "estimates," "expects," "goal," "intends," "may," "plans," "projects," "pursuing," "will," "would" and similar expressions (including the negatives thereof) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements largely on our current assumptions, expectations, projections, intentions, objectives and/or beliefs about future events or occurrences and these forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, but not limited to, those described in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. The timing of certain events and circumstances and known and unknown risks and uncertainties could cause actual results to differ materially from those anticipated or implied in the forward-looking statements that we make. Therefore, you should not place undue reliance on our forward-looking statements.
Our forward-looking statements in this Quarterly Report on Form 10-Q are based on current information and we do not assume any obligation to update any forward-looking statements expect as required by the federal securities laws.
You should read the following Management's Discussion and Analysis of Financial
Condition and Results of Operations (this MD&A) together with the unaudited
condensed consolidated financial statements and the related notes thereto
included in this Quarterly Report on Form 10-Q. This MD&A contains
forward-looking statements that are subject to risks and uncertainties, such as
those set forth in the sections of this Quarterly Report on Form 10-Q captioned
"Cautionary Note Regarding Forward-Looking Statements," "Risk Factors" and
elsewhere. As a result, our actual results may differ materially from those
anticipated in these forward-looking statements.
Overview
We are a clinical-stage, research and development biotechnology company focused
on developing novel immunotherapeutic candidates for the treatment of different
forms of cancer. We have developed two versatile and enabling platform
technologies for rational design of precision immune modulatory drugs. Our lead
clinical candidate, APVO436, and preclinical candidates, ALG.APV-527 and
APVO603, were developed using our ADAPTIR™ modular protein technology platform.
Our preclinical candidate APVO442, was developed using our ADAPTIR-FLEX™ modular
protein technology platform.
The versatile and robust ADAPTIR and ADAPTIR-FLEX platforms are designed to
generate monospecific, bispecific, and multispecific antibody candidates that
are capable of enhancing the human immune system against cancer cells. ADAPTIR
and ADAPTIR-FLEX are both modular platforms, which gives us the flexibility to
generate immunotherapeutic candidates with a variety of mechanisms of action.
This flexibility in design allows us to potentially generate novel therapeutic
candidates that may provide the foundation for the establishment of effective
strategies against difficult to treat, as well as advanced forms of cancer. We
have successfully designed and constructed numerous investigational-stage
prototype product candidates based on our ADAPTIR and ADAPTIR FLEX platforms.
The ADAPTIR platform technology is designed to generate monospecific and
bispecific immunotherapeutic proteins that specifically bind to one or more
targets, for example, bispecific therapeutic molecules, which may have
structural and functional advantages over monoclonal antibodies. The structural
differences of ADAPTIR molecules over monoclonal antibodies allow for the
development of ADAPTIR immunotherapeutics that are designed to engage immune
effector cells and disease targets in a novel manner to produce unique signaling
responses and ultimately kill tumors or modulate the immune system to kill
tumors. The ADAPTIR FLEX platform technology is designed to generate bispecific
and multispecific immunotherapeutic proteins and uses heterodimer technology so
that two or more targets can be engaged simultaneously.
We are skilled at candidate generation, validation, and subsequent preclinical
and clinical development using the ADAPTIR platform and have added the
ADAPTIR-FLEX platform to generate multispecific candidates or other candidates
to our platform capabilities. We have developed preclinical candidates based on
the ADAPTIR-FLEX platform which are advancing in our pipeline. We are developing
our ADAPTIR and ADAPTIR-FLEX molecules by way of our protein engineering,
preclinical development, process development, and clinical development
capabilities.
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--------------------------------------------------------------------------------Recent Developments:
Enrollment and dosing have commenced in Part 2 (Expansion Phase) of Company's multicenter 5001 Phase 1B clinical trial to evaluate APVO436 in adult patients with acute myeloid leukemia (AML).
Reported 3 publications in two peer-reviewed journals (Cancers[Basel]) and Frontiers in Aging) regarding the salient features of the data obtained during Part 1 (Dose escalation phase) of the 5001 APVO436 Phase 1B trial.
Participated in Euroleukemia2021 Meeting with an oral and a poster presentation.
Showcased the Company's preclinical assets, APVO442 and APVO603, and their potential to improve efficacy in the treatment of solid tumors and participated in discussions about risk mitigation in cell engager candidates at the Virtual Cell Engager Summit.
Presented the unique aspects of the Company's proprietary ADAPTIR AND
ADAPTIR-FLEX platforms at the
OnNovember 4, 2021 , our Board amended the Rights Agreement dated as ofNovember 8, 2020 by and between the Company andBroadridge Corporate Issuer Solutions, Inc. to extend the expiration date of such agreement fromNovember 8, 2021 toNovember 5, 2022 . Other than extending the expiration date of the Rights Agreement, the terms of the Rights Agreement have remained the same.
Results of Operations
Except as otherwise stated below, the following discussions of our results of operations reflect the results of our continuing operations, excluding the results related toAptevo BioTherapeutics LLC (Aptevo BioTherapeutics), which was sold inFebruary 2020 to Medexus and has been separated from continuing operations and reflected as a discontinued operation. See Note 2 - Discontinued Operations to the accompanying financial statements for additional information.
Comparison of the Nine Months Ended
Royalty Revenue
We recorded royalty revenue of$8.6 million and$1.9 million for the nine months endedSeptember 30, 2021 andSeptember 30, 2020 . The payment from Pfizer relates to a Collaboration and License Agreement (Definitive Agreement) acquired by Aptevo as part of our spin-off from Emergent in 2016. The agreement was originally executed byTrubion Pharmaceuticals , which was subsequently acquired by Emergent, and Wyeth, a wholly-own subsidiary of Pfizer. The royalty term runs throughJanuary 2027 , which is the seventh anniversary of the first commercial sale of the CD20 biosimilar. OnMarch 30, 2021 , we entered into the Royalty Purchase Agreement pursuant to which we sold to HCR the right to receive royalty payments made by Pfizer in respect of net sales of RUXIENCE. We maintain our rights under the Definitive Agreement originally between Trubion and Wyeth, with the exception of the cash flows of the RUXIENCE royalty payments purchased by HCR. Due to our continuing involvement under the Definitive Agreement originally between Trubion and Wyeth, we continue to recognize royalty revenue on net sales of RUXIENCE and record the royalty payments to HCR as a reduction of the liability when paid. As such payments are made to HCR, the balance of the liability will be effectively repaid over the life of the Royalty Purchase Agreement. To the extent total future royalties collected are an amount less than the liability, the Company is not obligated to fund any such shortfall.
Research and Development Expenses
We expense research and development costs as incurred. These expenses consist primarily of the costs associated with our research and discovery activities, including conducting non-clinical studies and clinical trials, fees to professional service providers for analytical testing, independent monitoring or other administration of our clinical trials and obtaining and evaluating data from our clinical trials and non-clinical studies, as well as costs of contract manufacturing services for clinical trial material, and costs of materials used in clinical trials and research and development. Our research and development expenses primarily consist of:
• employee salaries and related expenses, including stock-based compensation
and benefits for our employees involved in our drug discovery and
development activities;
• external research and development expense incurred under agreements with
third-party contract research organizations (CRO's) and investigative
sites;
• manufacturing material expense for third-party manufacturing; and
• overhead costs such as rent, utilities and depreciation.
We expect our research and development spending will be dependent upon such
factors as the results from our clinical trials, the availability of
reimbursement of research and development spending, the number of product
candidates under development, the size, structure and duration of any clinical
programs that we may initiate, and the costs associated with manufacturing our
product candidates on a large-scale basis for later stage clinical trials. We
may experience interruption of key clinical trial activities, such as patient
enrollment and clinical trial site monitoring, and key non-clinical activities
due to the ongoing COVID-19 pandemic. While programs
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--------------------------------------------------------------------------------are still in the preclinical trial phase, we do not provide a breakdown of the initial associated expenses as we are often evaluating multiple product candidates simultaneously. Costs are reported in preclinical research and discovery until the program enters the clinic.
Our research and development expenses by program for the three and nine months
ended
For the Three Months Ended September 30,
(in thousands) 2021 2020 Change
Clinical programs:
APVO436 $ 1,162 $ 849 $ 313
Other (239 ) 30 (269 )
Total clinical programs 923 879 44
Preclinical program, general research
and discovery 3,444 3,615 (171 )
Total $ 4,367 $ 4,494 $ (127 )
For the Nine Months Ended September 30,
(in thousands) 2021 2020 Change
Clinical programs:
APVO436 $ 3,663 $ 3,125 $ 538
Other (199 ) 253 (452 )
Total clinical programs 3,464 3,378 86
Preclinical program, general research
and discovery 10,987 9,562 1,425
Total $ 14,451 $ 12,940 $ 1,511
For the three months ended September 30, 2021 , research and development expenses
decreased by $0.1 million , to $4.4 million from $4.5 million for September 30,
2020 . Research and development costs in the third quarter included higher
spending on our APVO436 clinical trial as we continue to advance that trial and
have now started dosing in our Phase 1b Expansion program. This increase was
offset by reduced costs in our discontinued clinical trials and lower spending
on other preclinical projects. For the nine months ended September 30, 2021 ,
research and development expenses increased by $1.5 million , to $14.4 million
from $12.9 million for September 30, 2020 . The increase is due to increased
spending on consulting services for our APVO436 clinical trial as we continue to
advance that trial and increased spending on analytical analysis for our
preclinical programs, including ALG.APV-527, APVO603 and APVO442.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs and professional fees in support of our executive, business development, finance, accounting, information technology, legal and human resource functions. Other costs include facility costs not otherwise included in research and development expenses. For the three months endedSeptember 30, 2021 , general and administrative expenses increased by$0.3 million , to$3.5 million from$3.2 million forSeptember 30, 2020 . For the nine months endedSeptember 30, 2021 , general and administrative expenses increased by$1.9 million , to$11.5 million from$9.7 million forSeptember 30, 2020 . This increase was primarily due to higher costs related to responding to stockholder activism matters and higher employee costs.
Other Expense, Net
Other expense, net consists primarily of gains or losses realized on foreign currency revaluation, costs related to debt extinguishment, accrued exit fees on debt, non-cash interest on financing agreements, and interest on debt. Other expense, net was$2.3 million for the three months endedSeptember 30, 2021 and$0.7 million for the three months endedSeptember 30, 2020 . Other expense, net was$5.5 million for the nine months endedSeptember 30, 2021 and$1 million for the nine months endedSeptember 30, 2020 . The increase in other expense, net is primarily related to interest expense and accrued exit fees for the MidCap Credit Agreement, as well as non-cash interest expense for the Royalty Purchase Agreement. Discontinued Operations The accompanying unaudited condensed consolidated financial statements include discontinued operations from two separate transactions: the sale of hyperimmune business toSaol International Limited inSeptember 2017 , from which we received a payment in 2021 related to the collection of a certain accounts receivable, and the sale of Aptevo BioTherapeutics in 2020. 19 --------------------------------------------------------------------------------
The following table represents the components attributable to income from discontinued operations in the unaudited condensed consolidated statements of operations (in thousands):
For the Three Months Ended For the Nine Months Ended
September, September,
2021 2020 2021 2020
Loss from operations - Aptevo BioTherapeutics - - - (1,580 )
Gain on sale of Aptevo BioTherapeutics - - - 14,338
Payment from Saol - - 227 -
Deferred payment from Medexus 80 157 399 297
Income from discontinued operations $ 80 $ 157 $ 626 $ 13,055
For the nine months ended September 30, 2021 , we collected $0.2 million related
to the sale of the hyperimmune business to Saol as a result of the collection of
certain accounts receivable and a deferred payment of $0.4 million received from
Medexus related to first and second quarter 2021 IXINITY sales. For the nine
months ended September 30, 2020 , we recognized net income from discontinued
operations totaling $13.0 million . This included the gain on the sale of Aptevo
BioTherapeutics of $14.3 million , net operating losses from Aptevo
BioTherapeutics of $1.6 million related to the period prior to the sale on
February 28, 2020 , and a deferred payment from Medexus related to IXINITY sales.
Critical Accounting Policies and Significant Judgments and Estimates
The preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted inthe United States (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other factors. Although we believe that our judgments and estimates are appropriate, actual results may differ materially from our estimates and changes in these estimates are recorded when known. An accounting policy is considered critical if it is important to a company's financial condition and results of operations and if it requires the exercise of significant judgment and the use of estimates on the part of management in its application.
Refer to Note 1 for discussion of our accounting policies, significant judgments, and estimates.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
Liquidity and Capital Resources
Cash Flows
The following table provides information regarding our cash flows for the nine
months ended
For the Nine Months Ended
September 30,
(in thousands) 2021 2020
Net cash (used in) provided by:
Operating activities $ (17,799 ) $ (23,195 )
Investing activities (595 ) 28,120
Financing activities 29,237 2,626
Increase (decrease) in cash, cash equivalents, and
restricted cash $ 10,843 $ 7,551
Net cash used in operating activities of $17.8 million for the nine months ended
September 30, 2021 was primarily due to our net loss of $22.2 million and
changes in working capital accounts. Net cash used in operating activities of
$23.2 million for the nine months ended September 30, 2020 , was primarily due to
our net loss of $10.7 million , changes in working capital accounts, and gain on
sale of Aptevo BioTherapeutics of $14.3 million , which was offset by the loss on
extinguishment of debt of $2.1 million .
Net cash used in investing activities for the nine months ended September 30,
2021 , was due to purchases of property and equipment. Net cash provided by
investing activities for the nine months ended September 30, 2020 , was due to
the cash received from the sale of Aptevo BioTherapeutics, net of transaction
fees.
Net cash provided by financing activities for the nine months ended September
30, 2021 is primarily due to the $35.0 million received from the Royalty
Purchase Agreement, $10.2 million received from the common stock sold to Lincoln
Park , offset by the $10.5 million partial repayment of the MidCap Financial term
loan. Net cash provided by financing activities for the nine months ended
September 30, 2020 , is primarily due to the proceeds of $24.7 million from the
Credit Agreement we entered into with MidCap on
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August 5, 2020 , which was offset by the $22.1 million repayment of long-term
debt in the first quarter of 2020 when we repaid in full our prior term debt
facility with MidCap Financial Trust .
Sources of Liquidity
Equity Distribution Agreement
OnDecember 14, 2020 , we entered into an Equity Distribution Agreement withPiper Sandler & Co (Piper Sandler). The Equity Distribution Agreement provides that, upon the terms and subject to the conditions set forth therein, we may issue and sell through Piper Sandler, acting as sales agent, shares of our common stock having an aggregate offering price of up to$50 million . We have no obligation to sell any such shares under the Equity Distribution Agreement. The sale of the shares of our common stock by Piper Sandler, if any, will be effected pursuant to a Registration Statement on Form S-3 which we filed onDecember 14, 2020 . We did not issue any shares under the Equity Distribution Agreement in the nine months endedSeptember 30, 2021 . The Equity Distribution Agreement will terminate upon the issuance and sale of all shares under the Equity Distribution Agreement or upon the earlier termination thereof at any time by us or Piper Sandler upon notice to the other party. Registration Statement We previously filed a registration statement with theSecurities and Exchange Commission onNovember 13, 2017 , amended onDecember 6, 2017 and declared effective onDecember 15, 2017 (the Prior Registration Statement). The Prior Registration Statement registered the offer and sale of an indeterminate number of shares of common stock and preferred stock, an indeterminate principal amount of debt securities and an indeterminate number of warrants to purchase common stock, preferred stock, and various series of debt securities and/or warrants to purchase any of such securities, having an aggregate initial offering price of$150 million , of which an aggregate of$127.8 million remained unsold as of theDecember 14, 2020 . OnDecember 14, 2020 , we filed a new registration statement covering the offering, issuance, and sale up to$200 million in common stock, preferred stock, and various series of debt securities and/or warrants to purchase any of such securities, which included the unsold securities from the Prior Registration Statement. Purchase Agreement OnDecember 20, 2018 , we entered into a Purchase Agreement, and a Registration Rights Agreement withLincoln Park Financial LLC (Lincoln Park). Pursuant to the purchase agreement, Lincoln Park has committed to purchase up to$35.0 million worth of our common stock over a 36-month period commencing onFebruary 13, 2019 , the date the registration statement covering the resale of the shares was declared effective by theSEC . Under the Purchase Agreement, on any business day selected by us, we may direct Lincoln Park to purchase shares of our common stock provided that Lincoln Park's maximum commitment on any single day does not exceed$2.0 million . The purchase price per share will be based off of prevailing market prices of our common stock immediately preceding the time of sale; provided, however, that we cannot direct any such purchase if the prevailing market price is less than$1.00 . In addition, we may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases if the closing sale price of our common stock exceeds certain threshold prices as set forth in the Purchase Agreement. In the nine months endedSeptember 30, 2021 , the Company issued 407,047 shares of common stock to Lincoln Park under the Purchase Agreement. We received$10.2 million in proceeds from issuance of these shares and now have a remaining$24.8 million worth of shares of our common stock that we may direct Lincoln Park to purchase pursuant to our Purchase Agreement. Actual sales of shares of our common stock to Lincoln Park under the Purchase Agreement will occur at our discretion from time to time and depend on a variety of factors, including, among others, market conditions, the trading price of our common stock and additional determinations as to the appropriate sources of funding for our operations. Lincoln Park has no right to require any sales, but is obligated to make purchases as we direct, in accordance with the Purchase Agreement. Warrants
On
• for a combined public offering price of
and related warrants, 1,417,857 shares of common stock and related
warrants with a 5-year life to purchase up to 1,417,857 shares of common
stock at an exercise price of $18.20 per share,
• for a combined public offering price of
related warrant, pre-funded warrants with a 10-year life to purchase up to
153,571 shares of common stock at an exercise price of
related warrants with a 5-year life to purchase up to 153,571 shares of
common stock at an exercise price of
warrants were exercised on March 21, 2019 .
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-------------------------------------------------------------------------------- For the nine months endedSeptember 30, 2021 , certain of the holders of our warrants exercised warrants with a strike price of$18.20 per share, resulting in the issuance of 54,105 shares of our common stock and aggregate proceeds to the Company of approximately$1.0 million . As ofSeptember 30, 2021 , there were warrants to purchase 350,589 shares of our common stock outstanding.
Liquidity
We have financed our operations to date primarily through revenue generated from our commercial products, the Royalty Purchase Agreement with HCR, royalty payments from Pfizer, deferred payments from Medexus, the sale of our hyperimmune products business inSeptember 2017 , the sale of Aptevo BioTherapeutics onFebruary 28, 2020 , public offerings of our common stock, loan proceeds, milestone payments, research and development funding from strategic partners, and funds received at the date of our spin-off from Emergent. We had a net loss of$22.7 million and$23.8 million for the nine months endedSeptember 30, 2021 and 2020, respectively. We had cash and cash equivalents of$52.1 million , restricted cash of$1.3 million and an accumulated deficit of$207.8 million as ofSeptember 30, 2021 .
For the nine months ended
Our future success is dependent on our ability to develop our product candidates and ultimately upon our ability to attain profitable operations. We anticipate that we will continue to incur significant operating losses for the next several years as we incur expenses to continue to execute on our development strategy to advance our preclinical and clinical stage assets. We will not generate revenues from our development stage product candidates unless and/or until we or our collaborators successfully complete development and obtain regulatory approval for such product candidates, which we expect will take a number of years and is subject to significant uncertainty. If we obtain regulatory approval for one of our development stage product candidates, we expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution, to the extent that such costs are not paid by collaborators. We do not have sufficient cash to complete the clinical development of any of our development stage product candidates and will require additional funding in order to complete the development activities required for regulatory approval of such product candidates. We will require substantial additional funds to continue our development programs and to fulfill our planned operating goals. Due to the ongoing COVID-19 pandemic, we may experience delays in opportunities to partner our product candidates, due to financial and other impacts on potential partners. Additionally, we may experience potential impacts on our future deferred payments and milestones from Medexus due to effects of the COVID-19 pandemic, which may impact Medexus' ability to continue to successfully commercialize the IXINITY businesses. Additionally, we may experience potential impacts on our future milestones, which are based on global net sales of RUXIENCE, from HCR due to the effects of the COVID-19 pandemic, which may impact Pfizer's ability to continue to successfully commercialize the RUXIENCE business. We believe that our existing cash resources, the Investment Amount received pursuant to the Royalty Purchase Agreement with HCR, the cash to be generated from future IXINITY deferred payments, release of restricted cash securing letters of credit, and funds available to us from the remaining principal balance of the Credit Agreement withMidcap Financial , will be sufficient to meet our projected operating requirements and debt service for at least twelve months from the date of filing this Quarterly Report on Form 10-Q.
There are numerous risks and uncertainties associated with research, development, and commercialization of pharmaceutical products. Accordingly, our future funding requirements may vary from our current expectations and will depend on many factors, including, but not limited to:
• our ability to establish and maintain strategic partnerships, licensing or
other arrangements and the financial terms of such agreements;
• the number and characteristics of the product candidates we pursue;
• the scope, progress, results, and costs of researching and developing our
product candidates, and of conducting preclinical and clinical trials;
• our ability to obtain regulatory clearance to commence clinical trials for
product candidates;
• the timing of, and the costs involved in, completing our clinical trials,
and obtaining regulatory approvals for our product candidates;
• the costs involved in preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims, including litigation costs and the
outcome of such litigation;
• the cost of commercialization activities if any of our product candidates
are approved for sale, including marketing, sales, and distribution costs;
• the cost of manufacturing our product candidates and any products we
successfully commercialize;
• the cost of attracting and retaining skilled personnel;
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• whether and to what extent future proceeds are received under our RoyaltyPurchase Agreement with HCR; and,
• the timing, receipt and amount of any milestone payments and deferred
payments from Medexus with respect to IXINITY.
If we are unable to raise substantial additional capital in the next year, whether on terms that are acceptable to us or at all, then we may be required to:
• delay, limit, reduce or terminate our clinical trials or other development
activities for one or more of our product candidates; and/or,
• delay, limit, reduce or terminate our establishment of other activities
that may be necessary to commercialize our product candidates, if
approved.
The sale of additional equity or convertible debt securities may result in additional dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock or through credit facilities, these securities and/or the loans under credit facilities could provide for rights senior to those of our common stock and could contain covenants that would restrict our operations. Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. We also expect to seek additional funds through arrangements with collaborators, licensees or other third parties. These arrangements would generally require us to relinquish or encumber rights to some of our technologies or drug candidates, and we may not be able to enter into such arrangements on acceptable terms, if at all. Due to the ongoing COVID-19 pandemic, we may experience delays in clinical trials and non-clinical work, and opportunities to partner our product candidates, due to financial and other impacts on potential partners.
Contractual Obligations
We have an operating lease related to our office and laboratory space inSeattle, Washington . This lease was amended and extended inMarch 2019 . The term of the amended lease is throughApril 2030 and we have two options to extend the lease term, each by five years, as well as a one-time option to terminate the lease inApril 2023 . InJanuary 2020 , we entered into a contract withThe Leukemia & Lymphoma Society (LLS) to be part of an ongoing national AML master clinical trial called the 'Beat AML Master Clinical Trial.' The Beat AML Master Clinical Trial provides access to leading academic cancer centers and allows us to study APVO436 in a front-line AML setting. Once we begin participation in the Beat AML Master Clinical Trial, our purchase obligation for the Beat AML Master Clinical Trial may total up to$8.1 million over four years. As of the third quarter of 2021, we have not begun participation in the Beat AML Master Clinical Trial and we do not currently intend to participate under the current trial design. The Clinical Trial Participation Agreement contains a termination for convenience clause where we may terminate the agreement with 180 days prior written notice. We may re-assess our participation in the master clinical trial as Part 2 (expansion phase) of our Phase 1B APVO436 clinical trial progresses. OnAugust 5, 2020 , we entered into a new Credit and Security Agreement (Credit Agreement), withMidCap Financial . The Credit Agreement provided us with up to$25 million of available borrowing capacity. TheMidCap Financial loan has a 48 month term, is interest-only for the first 18 months, with straight-line amortization for the remaining 30 months and bears interest at a rate of one month LIBOR plus 6.25% per annum, subject to a 1.50% LIBOR floor and a 2.50% LIBOR cap. Additionally, onMarch 30, 2021 , we amended our Credit Agreement withMidCap Financial and used$10 million of the proceeds received from the Royalty Purchase Agreement with HCR to pay down the outstanding principal under this agreement from$25 million to$15 million . The Company's Credit Agreement currently references LIBOR. Contract language is expected to be incorporated into these agreements to address the transition to an alternative reference rate. The Company is currently evaluating the impact that ASU 2020-04 may have on its consolidated financial statements.
On
Our principal commitments include obligations under vendor contracts to purchase
research services and other purchase commitments with our vendors. In the normal
course of business, we enter into services agreements with contract research
organizations, contract manufacturing organizations and other third parties.
Generally, these agreements provide for termination upon notice, with specified
amounts due upon termination based on the timing of termination and the terms of
the agreement. The actual amounts and timing of payments under these agreements
are uncertain and contingent upon the initiation and completion of the services
to be provided.
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