BELLICUM PHARMACEUTICALS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the year endedDecember 31, 2021 , filed with theSEC onMarch 24, 2022 , or our Annual Report, as well as our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q, or this Quarterly Report. Forward-Looking Statements This report contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the "safe harbor" created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words "anticipate," "believe," "could," "designed," "estimate," "expect," "intend," "may," "plan," "potential," "project," "will," "would," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q, Part I, Item 1A, "Risk Factors" in our Annual Report and in our other filings with theSEC . The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
We are a clinical stage biopharmaceutical company focused on discovering and
developing novel, controllable cellular immunotherapies for various forms of
cancer, including both hematological cancers and solid tumors. We are advancing
CAR-T cell therapies which are an innovative approach in which a patient's or
donor's T cells are genetically modified to carry chimeric antigen receptors, or
CARs. We are using our proprietary Chemical Induction of Dimerization, or CID,
technology platform to engineer our product candidates with switch technologies
that are designed to control components of the immune system in real time. By
incorporating our CID platform, our product candidates may offer better efficacy
and safety outcomes than are seen with current cellular immunotherapies.
Cell behavior is controlled by cascades of specialized signaling proteins. CID
consists of molecular switches, modified forms of these signaling proteins,
which are triggered inside the patient by infusion of a small molecule, instead
of by natural upstream signals. We genetically introduce these molecular
switches into the appropriate immune cells and deliver the cells to the patient
in the manner of conventional cellular immunotherapy. We have developed two such
switches: an "activation switch," designed to stimulate activation,
proliferation and persistence of the immunotherapy cells and provide other
immunomodulatory benefits, and a "safety switch," designed to initiate
programmed cell death, or apoptosis, of the immunotherapy cells. Each of our
product candidates incorporates one or both switches, for enhanced, real time
control of efficacy and safety:
•The inducible MyD88/CD40 (iMC) activation switch that is incorporated into our
GoCAR product candidates is designed to enhance CAR-based cell therapies by
augmenting multiple mechanisms of action, including: 1) boosting effector cell
proliferation; 2) enhancing functional persistence by resisting exhaustion and
inhibitory signals found in the tumor microenvironment; and 3) stimulating the
cancer patient's own immune system to intensify tumor killing. Unlike other CAR
therapies that can behave unpredictably due to their autonomous activity, GoCAR
antitumor effects are controlled through scheduled administration of rimiducid.
In the event of severe side effects, GoCAR activity can be attenuated by
extending the interval between rimiducid doses or suspending further rimiducid
administration.
•Our CaspaCIDe™ safety switch (also known as inducible Caspase-9, or iC9) is
designed to be inactive unless the patient experiences a serious side effect
(e.g., cytokine release syndrome, or CRS, neurologic toxicities or off-tumor /
on-target toxicities). In that event, rimiducid or temsirolimus is administered
to induce Caspase-9 and eliminate the cells, with the goal of attenuating the
therapy and resolving the serious side effect.
•Some of our product candidates are "dual-switch" GoCARs that are designed to
provide a user-controlled system for managing proliferation, persistence and
safety of tumor antigen-specific CAR cells by incorporating both our iMC and
CaspaCIDe switches. We also have an active research effort to further develop
and enhance these molecular switch approaches.
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--------------------------------------------------------------------------------By incorporating our novel switch technologies, we are developing product candidates with the potential to elicit positive clinical outcomes and ultimately change the treatment paradigm in various areas of cellular immunotherapy. Our most advanced programs are described below.
•BPX-601 is an autologous GoCAR-T product candidate containing our proprietary iMC activation switch, designed to treat solid tumors expressing prostate stem cell antigen, or PSCA. We believe iMC enhances T cell proliferation and persistence, enhances host immune activity, and modulates the tumor microenvironment to improve the potential to treat solid tumors compared to traditional CAR-T therapies. A Phase 1/2 clinical trial called BP-012 in patients with metastatic castration-resistant prostate cancer and metastatic pancreatic cancer expressing PSCA is ongoing. •BPX-603 is an autologous dual-switch GoCAR-T product candidate containing both the iMC activation and CaspaCIDe safety switches. BPX-603 is our first dual-switch GoCAR-T product candidate and is designed to target solid tumors that express the human epidermal growth factor receptor 2 antigen, or HER2. A Phase 1/2 clinical trial, called BPX603-201A, in patients with metastatic HER2+ solid tumors is ongoing. We have developed efficient and scalable processes to manufacture genetically modified T cells of high quality, which are currently being used to generate products for our clinical trials. We are leveraging this know how in combination with our proprietary cellular control technologies, resources, capabilities and expertise for the manufacture of CAR-T product candidates to create and develop first and best-in-class product candidates.
Impact of COVID-19
We have experienced limited impact to date, and do not anticipate experiencing a
substantial impact in the future to our operations as a result of the ongoing
COVID-19 pandemic. However, depending the duration and severity of the pandemic,
we could experience impact in the future, including with respect to the
operations of our manufacturing partners, clinical trial sites and regulatory
agencies, all of which we are substantially dependent upon for our business. In
particular, as we seek to pursue clinical trial enrollment and site activation
for BPX-601 and BPX-603, it is possible that we may experience challenges in
site enrollment due to factors related to the COVID-19 pandemic. For example, in
Q4 2021 and Q1 2022, we experienced delays related to COVID-19 in patient
screening and enrollment and site activation activities, delaying anticipated
data presentations from our studies from 2022 to the first half of 2023. We are
continuing to closely monitor the impact and potential future of the COVID-19
pandemic on our business.
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--------------------------------------------------------------------------------Results of Operations
The following table sets forth a summary of our statement of operations for the
periods indicated:
Three Months Ended
(in thousands) March 31, 2022 March 31, 2021 Change
Operating expenses:
Research and development $ 4,486 $ 6,460 $ (1,974)
General and administrative 1,453 2,012 (559)
Total operating expenses 5,939 8,472 (2,533)
Loss on dispositions, net - 464 (464)
Loss from operations (5,939) (8,936) 2,997
Other income (expense):
Interest income 14 10 4
Interest expense - (4) 4
Change in fair value of warrant derivative and
private placement option liabilities (1,637) (2,337) 700
Total other expense (1,623) (2,331) 708
Net loss $ (7,562) $ (11,267) $ 3,705 Research and Development Expenses (R&D)
The decrease in R&D expenses for the three months endedMarch 31, 2022 , compared to the same period last year, was primarily due to continued reduction of expenses related to rivo-cel activities in connection with our restructuring plan effected in late 2020. We discontinued active efforts to identify a partner for rivo-cel in late 2021. As a result, we have further decreased the budget on rivo-cel by limiting activities to maintaining regulatory compliance and long-term follow-up and monitoring of patients previously enrolled in rivo-cel clinical trials. This reduction in activity resulted in a$1.6 million reduction in clinical research and pharmaceutical development expenses and a$0.3 million reduction in salaries, benefits, travel, depreciation and share-based compensation related charges.
General and Administrative Expenses (G&A)
The decrease in G&A expenses for the three months endedMarch 31, 2022 , compared to the same period last year, was primarily due to reduced share-based compensation expenses by$0.3 million . This is a result of expiration of stock options along with lower cost of new stock option grants driven by a lower average stock price. Additionally, our exit from theHouston and South San Francisco leases along with the sale of ourHouston facilities resulted in a combined reduction of$0.3 million in facility charges, depreciation expenses, and business property tax. The total change in G&A expenses was partially offset by an increase in the insurance premium and consulting expenses by$0.1 million .
Loss on dispositions, net
For the three months endedMarch 31, 2022 , we did not incur any gain or loss on dispositions. The loss recognized for the three months endedMarch 31, 2021 was due to the lease termination of the South San Francisco office space. Upon the termination and exit of the office space, we disposed of substantially all of the assets and liabilities associated with the lease including a right-of-use asset of$0.6 million , leased equipment with net book value less than$0.1 million , and the related lease liability of$1.0 million . A loss on termination of$0.5 million was recognized for the three months endedMarch 31, 2021 . Other Income (Expense) Other expense primarily consists of interest income, offset by changes in fair value of our warrant derivative liability, which is remeasured at each reporting period. Due to the nature of the inputs in the model used to assess the fair value of the warrant derivative liability, the Company may experience significant fluctuations at each reporting period. These fluctuations may be due to a variety of factors, including changes in our stock price and changes in stock price volatility over the remaining term of the warrants. 19 -------------------------------------------------------------------------------- The increase in other income (expense) for the three months endedMarch 31, 2022 , compared to the same period last year, was primarily due to a decreased loss from the change in fair value of our warrant liability of$1.6 million , compared to the loss from change in fair value of$2.3 million for the three months endedMarch 31, 2021 . The bigger change in fair value over the first quarter of 2021 was primarily driven by a more significant increase in our stock price compared to the first three months of 2022.
Liquidity and Capital Resources
Going Concern and Management's Plans
The accompanying consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As ofMarch 31, 2022 , we had cash and cash equivalents of$39.8 million , restricted cash of$1.5 million , and net cash used in operations of approximately$6.4 million for the three months endedMarch 31, 2022 . Notably, inDecember 2021 , we completed a private placement equity financing transaction for gross proceeds of approximately$35.0 million before deducting placement agent commissions and offering expenses. Our cash resources are primarily consumed by operating activities and we expect negative cash flows from operations to continue for at least the next 12 months. We do not have any material contractual obligations or commitments as ofMarch 31, 2022 . Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, clinical costs, legal and other regulatory expenses, and general overhead costs. Based on the Company's current business plan, we believe that our cash and cash equivalents, revenues and other cash inflows will be sufficient to fund our operating expenses and capital expenditure requirements throughJune 2023 . However, the Company's operating plan may change as a result of many factors currently unknown, and the Company may need to seek additional funds sooner than planned. Moreover, it is particularly difficult to estimate with certainty the Company's future expenses given the dynamic nature of its business, the COVID-19 pandemic and the macro-economic environment generally. Existing cash, cash equivalents are not likely to be sufficient to fund the Company's operations through the third quarter of 2023 as management expects to incur additional losses in the future to conduct research and development and recognizes that the Company will need to raise additional capital to fully implement its business plan. We plan to continue attempting to obtain future financing and/or engage in strategic transactions, but we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional equity or debt financing, or whether such actions would generate the expected liquidity as currently planned. To continue as a going concern, we may postpone or eliminate some of our research and development programs and reduce our administrative costs. We may also intend to seek additional funding including, but not limited to any or all of the following potential sources: We have an effective shelf registration statement on Form S-3 for the offer and sale of up to$400.0 million of our securities, of which approximately$290.5 million remains available for future offerings. We may pursue additional funding through the sale of our securities in one or more offerings under this registration statement; however, we cannot assure you that we will be able to do so on favorable terms. Our ability to offer and sell our securities in a primary offering on our Form S-3 is currently limited by Instruction I.B.6 of Form S-3, commonly referred to as the "baby shelf" limitation. If we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms may include liquidation or other preferences that could adversely affect the rights of our existing stockholders. If we raise additional capital through the issuance of debt securities, we could incur fixed payment obligations and become subject to certain restrictive covenants, including limitations on our ability to incur additional debt and acquire or license intellectual property rights, and other operating restrictions that could restrict our ability to conduct our business In addition, we may receive additional capital through the exercise of outstanding warrants to purchase our stock if our stock price sufficiently increases. As ofMarch 31, 2022 , warrants to purchase 5,750,000 shares of our Series 1 preferred stock at an exercise price of$130.00 per share (equivalent to$13.00 per share of common stock), warrants to purchase 4,149,378 shares of our common stock at an exercise price of$6.50 per share and warrants to purchase 2,055,920 shares of our common stock at an exercise price of$1.69 per share were outstanding. The preferred stock warrants expire onAugust 21, 2026 and the common warrants expire onNovember 3, 2025 andDecember 7, 2028 , respectively. As a result of the COVID-19 pandemic, global inflation and the ongoing military conflict between Russian andUkraine , the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. Further deterioration in credit and financial markets and confidence in economic conditions could occur. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Moreover, if we do not obtain such additional funds, there could be substantial doubt about our ability to 20 --------------------------------------------------------------------------------
continue as a going concern and increased risk of insolvency, which could result in a total loss of investment to our stockholders and other security holders.
Cash Flows Operating Activities Net cash used in operating activities during the quarter endedMarch 31, 2022 , was$6.4 million compared to$8.3 million for the same period last year. The primary operating activities during the three months endedMarch 31, 2022 , were (1)$7.6 million of net losses, (2) a non-cash loss of$1.6 million recognized from the change in the fair value of the warrant derivative liability, and (3)$0.6 million share-based compensation expenses. These activities were partially offset by a$1.1 million decrease from changes in operating assets and liabilities.
Investing Activities
Net cash used in investing activities during the quarter endedMarch 31, 2022 , was less than$0.1 million compared to net cash provided by investing activities of less than$0.9 million for the same period last year. The cash used in investing activities during the three months endedMarch 31, 2022 , was primarily for the purchase of computer equipment.
Financing Activities
There was no cash used in or provided by financing activities during the quarter endedMarch 31, 2022 , compared to net cash used in financing activities of less than$0.1 million for the same period last year primarily due to payment on financing lease obligations.
As of
Critical Accounting Policies and Estimates
There have been no material changes to the Company's critical accounting policies and use of estimates from those disclosed in the Company's Form 10-K for the year endedDecember 31, 2021 . For a discussion of our critical accounting policies and use of estimates, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Significant Estimates in Part II, Item 7 of our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
Recent Accounting Pronouncements
See Note 1 - Organization, Basis of Presentation, and Summary of Significant Accounting Policies for discussion regarding recent accounting pronouncements.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commissions.
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