IOVANCE BIOTHERAPEUTICS, INC. The management's discussion and analysis of our financial condition as ofSeptember 30, 2021 and results of operations for the three and nine months endedSeptember 30, 2021 , should be read in conjunction with management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 which was filed with theSecurities and Exchange Commission , orSEC , onFebruary 25, 2021 . Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the "Business" section of our Annual Report on Form 10-K and elsewhere in this report and other reports we file with theSEC . We use words such as "may," "will," "might," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "aim," "potential," "continue," "ongoing," "goal," "forecast," "guidance," "outlook," or the negative of these terms or other similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. All forward-looking statements included in this report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update any such forward-looking statements. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "Iovance," "we," "us" and "our" refer toIovance Biotherapeutics, Inc. and our subsidiaries.
Overview
We are a clinical-stage biopharmaceutical company focused on the development and commercialization of cell therapies as novel cancer immunotherapy products designed to harness the power of a patient's own immune system to eradicate cancer cells. Tumor-infiltrating lymphocyte, or TIL, therapy is an autologous, polyclonal cell therapy platform technology that was originally developed by theNational Cancer Institute , or NCI, which conducted initial clinical trials of this therapy in diseases such as metastatic melanoma and cervical cancer. We have developed a new, shorter TIL manufacturing process known as Gen 2, which yields a cryopreserved TIL product. This centralized, proprietary, and scalable manufacturing method is being investigated in multiple indications. Our lead product candidates include lifileucel for metastatic melanoma and metastatic cervical cancer. In addition to metastatic melanoma and metastatic cervical cancer, we are investigating the effectiveness and safety of TIL therapy for the treatment of head and neck squamous cell carcinoma, or HNSCC, non-small cell lung cancer, or NSCLC. We are investigating peripheral blood lymphocyte, or PBL, therapy for patients with relapsed or refractory chronic lymphocytic leukemia, or CLL, and small lymphocytic lymphoma, or SLL, through our sponsored trials. We are also investigating the potential for TIL therapy in other oncology indications through academic collaborations with leading cancer research centers.
Our current product candidate pipeline is summarized in the figure below:
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TIL as Monotherapy in Metastatic Solid Tumor Cancers
We have investigated TIL as a monotherapy in metastatic melanoma, cervical cancer, HNSCC and NSCLC. We are conducting a Phase 2 clinical trial, C-144-01, of our lead TIL product candidate, lifileucel, for the treatment of metastatic melanoma. This multicenter pivotal trial enrolled melanoma patients with disease progression following treatment with at least one systemic therapy, including a PD-1 inhibitor and, if BRAF mutated, a BRAF inhibitor, or a combination of BRAF and MEK inhibitors. Cohort 4 of the C-144-01 clinical trial is a single-arm cohort intended to support a Biologics License Application, or BLA, submission for lifileucel. Cohorts 2 and 4 of the C-144-01 trial use our Gen 2 manufacturing process. We completed and closed enrollment of patients into Cohort 2 of the C-144-01 trial in 2018. Results from Cohort 2 of the C-144-01 clinical trial were initially reported at theAmerican Society of Clinical Oncology , or ASCO, annual meeting onJune 1, 2019 and subsequently updated at the ASCO annual meeting onJune 6, 2021 . As of the data extract inApril 2021 , in 66 patients with metastatic melanoma in Cohort 2, treatment with lifileucel resulted in an objective response rate, or ORR, of 36%, as assessed by investigator, with 3 complete responses and 21 partial responses. The disease control rate, or DCR, was 80.3%. Median duration of response, or DOR, in Cohort 2 had not been reached after 33.1 months of median study follow up. Results from Cohort 2 presented at ASCO inJune 2021 also suggest that early intervention with lifileucel at the time of initial progression on anti-PD-1 therapy may maximize benefit. Patients in Cohort 2 were heavily pretreated and had a mean of 3.3 prior therapies. We have previously reported durable responses across a wide age range of metastatic melanoma patients, among those who have received prior anti-CTLA-4 and BRAF targeted treatments, regardless of BRAF mutation status, and in patients with PD-L1 high and low status. The adverse event profile was generally consistent with the underlying advanced disease and the profile of the lymphodepletion and IL-2 regimens. In addition, detailed Cohort 2 data was published in theJournal of Clinical Oncology onMay 12, 2021 . Pivotal Cohort 4 of the C-144-01 trial was enrolled to evaluate ORR as read out by an Independent Review Committee, or IRC, as the primary endpoint based on our interpretation of discussions with theU.S. Food and Drug Administration , or the FDA, as part of an End of Phase 2, or EOP2, meeting held with the FDA in the third quarter of 2018. InOctober 2018 , based on the data provided to the FDA during the EOP2 meeting, we announced that lifileucel had received a Regenerative Medicines Advanced Therapy, or RMAT, designation from the FDA. Enrollment in Cohort 4 of the C-144-01 trial commenced inMarch 2019 and patient dosing was completed inJanuary 2020 . A total of 87 patients were dosed with Gen 2 product released for Cohort 4. InMay 2020 , we disclosed initial results from Cohort 4 for 68 patients with two radiological assessments, as determined by investigator.
Previously, we reported the submission of additional potency assay data to the FDA, and at the same time, we also announced that we had reached agreement with the FDA on the minimum duration of follow up for Cohort 4 to support our BLA submission for lifileucel in the treatment of metastatic melanoma. InMay 2021 , we announced that we had received regulatory feedback from the FDA regarding our potency assays for lifileucel. Following FDA feedback, we have continued our ongoing work developing and validating our potency assays and have engaged in discussions with the FDA during the second half of 2021. Our BLA submission for lifileucel in metastatic melanoma is expected to occur during the first half of 2022. In connection with this BLA submission, the IRC is expected to independently assess responses for Cohort 4 patients through the data cut date, which must be completed prior to BLA submission or disclosure of IRC-read data. We are also conducting a Phase 2 clinical trial, C-145-04, which is a multicenter pivotal trial that will assess the safety and efficacy of our lead product candidate lifileucel for the treatment of patients with recurrent, metastatic, or persistent cervical cancer. InFebruary 2019 , lifileucel received Fast Track designation from the FDA for development in the treatment of cervical cancer with disease progression on or after chemotherapy. InMarch 2019 , the protocol for this trial was amended to modify the primary endpoint of ORR to be determined by IRC. InMay 2019 , lifileucel received Breakthrough Therapy Designation, or BTD, from the FDA for development in the treatment of cervical cancer. Updated results from the C-145-04 clinical trial were reported at the ASCO annual meeting onJune 1, 2019 . In 27 patients with metastatic cervical cancer, treatment with lifileucel resulted in an ORR of 44%. At the time of the study data cut, there were 3 complete responses and 9 partial responses. The DCR was 85%. Patients were heavily pretreated and had a mean of 2.4 prior therapies. The median DOR had not been reached. The adverse event profile was generally consistent with the underlying advanced disease and the profile of the lymphodepletion and IL-2 regimens. InNovember 2019 , we amended the C-145-04 trial to collect additional data on early-line patients as well as late-line patients by adding additional cohorts, in anticipation of a changing landscape in this indication, including Cohort 2 for patients that had previously received anti-PD-1 therapy. These additional cohorts may also allow access to TIL therapy after completion of the enrollment in the registrational cohorts. InJanuary 2021 , we announced that Cohort 2 of the C-145-04 trial had completed enrollment and that data from this cohort may be supportive of registration because of the expected changing landscape of care for cervical cancer patients. For example, the potential shift from chemotherapy in front-line followed by pembrolizumab in second-line cervical cancer to the use of pembrolizumab in 31
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combination with chemotherapy in first-line cervical cancer, as well as the approval of TIVDAK™ in theU.S. for the treatment of adult patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. We intend to initiate a dialog with the FDA to discuss these cohorts and potential BLA submission plans for lifileucel in cervical cancer after resolution of regulatory discussions regarding our potency assays. InNovember 2020 , we announced that we had finalized the protocol for our potential registrational clinical trial in NSCLC, IOV-LUN-202, to investigate LN-145 in patients with metastatic NSCLC, without driver mutations, who previously received a single line of approved systemic therapy of combined checkpoint inhibitor and chemotherapy. The IOV-LUN-202 clinical trial includes three cohorts. Cohorts 1 and 3 of the IOV-LUN-202 clinical trial are enrolling patients with a PD-L1 TPS of less than one percent, and Cohort 2 will enroll patients with a PD-L1 TPS of greater than or equal to one percent. Cohort 3 will also explore manufacturing TIL extracted from core biopsies using our third-generation, or Gen 3, manufacturing process. InJune 2021 , we reported that the first patient was dosed in the IOV-LUN-202 clinical trial. We intend to continue to enroll patients in the IOV-LUN-202 clinical trial throughout 2021 and 2022. We also intend to engage in regulatory discussions with the FDA on LUN-202 and potential registrational trials in NSCLC. InJune 2021 , we reported initial data for LN-145 in Cohort 3B of the IOV-COM-202 clinical trial in metastatic NSCLC. IOV-COM-202 is a Phase 2, multicenter trial that is composed of seven cohorts that can enroll up to a total of 135 patients. Cohort 3B of IOV-COM-202 enrolled patients with metastatic NSCLC that had progressed on prior immune checkpoint inhibitor therapy, including patients with oncogene-driven tumors who received prior tyrosine kinase inhibitor therapy. Patients were treated with LN-145 monotherapy. We reported results from Cohort 3B of the IOV-COM-202 trial, as follows. The ORR was 21.4% for the 28 patients that participated in the trial, including one complete response and five partial responses, and the DCR was 64.3%, including two responders with PD-L1 negative tumors. Median DOR was not reached at a median study follow up of 8.2 months. The treatment-emergent adverse event profile was consistent with the underlying disease and known adverse event profiles of non-myeloablative lymphodepletion and IL-2. All patients treated in Cohort 3B of the IOV-COM-202 trial received prior anti-PD-1/L1 therapy and all six responding patients also received prior chemotherapy. Historically, ORRs of approximately 20% were reported with ICIs as second-line therapy in ICI-naïve patients who progressed on front-line chemotherapy. We intend to provide an update on Cohort 3B at theSociety for Immunotherapy in Cancer, or SITC, meeting inNovember 2021 . C-145-03 is our Phase 2, multicenter trial to assess the safety and efficacy of our product candidate LN-145 for the treatment of patients with metastatic HNSCC. InOctober 2018 , we reported that, to date, preliminary data for 13 patients in the C-145-03 clinical trial yielded an ORR of 31% with a DOR ranging from 2.8 to 7.6 months. The adverse event profile remained consistent with previous reports. We redesigned our C-145-03 trial to include multiple cohorts, in order to allow for dosing of TIL therapies produced by multiple manufacturing methods, including our Gen 2 manufacturing process, our Gen 3 manufacturing process, and our PD-1 selected TIL manufacturing process. Our PD-1 selected TIL manufacturing process results in a product that we refer to as LN-145-S1. InJanuary 2021 , we announced that we are closing the C-145-03 clinical trial after the trial reached its pre-specified enrollment target.
TIL Combinations in Earlier Treatment Settings for Solid Tumors
We are also investigating the potential of our TIL therapies in earlier lines of treatment in combination with pembrolizumab or other agents in cancer patients who are naïve to anti-PD-1 therapy, including in four cohorts in our IOV-COM-202 study in solid tumors as well as in one cohort in our C-145-04 clinical study in cervical cancer. InMay 2019 , we reported that the first patient was dosed in the IOV-COM-202 trial. In addition to its ongoing enrollment in theU.S. , the IOV-COM-202 trial has also received regulatory approval inCanada and in certain European countries. InSeptember 2021 , we announced that our the iCTC had successfully manufactured and delivered the first clinical batch of LN-145 for the IOV-COM-202 trial. There are four TIL combination cohorts in the IOV-COM-202 study. In Cohort 1A, we are enrolling advanced unresectable or metastatic melanoma patients who are naïve to anti-PD-1 therapy. We reported results from ongoing Cohort 1A of the IOV-COM-202 trial at the ASCO meeting inJune 2021 , as follows. Seven patients received lifileucel in combination with pembrolizumab. Six of the seven patients had a confirmed objective response, with an ORR of 86%, including two complete responses, one unconfirmed complete response who had not yet reached the confirmatory complete response assessment, and three partial responses, with one best response of stable disease. The complete response rate, including the unconfirmed complete response, was 43%. The median follow up was 8.2 months. The Cohort 1A results also demonstrated that lifileucel can be safely combined
with
pembrolizumab.
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In Cohort 2A of the IOV-COM-202 trial, we are enrolling advanced, recurrent, or
metastatic HNSCC patients who are naïve to prior immunotherapy including
anti-PD-1/anti-PD-L1 therapy. The patients receive LN-145 in combination with
pembrolizumab. We reported results from ongoing Cohort 2A of the IOV-COM-202
trial at the SITC meeting in November 2020 , as follows. As of October 16, 2020 ,
nine HNSCC patients have received LN-145 plus pembrolizumab with a median
duration of follow up of 8.6 months. Nine and eight patients were evaluable for
safety and efficacy, respectively. Four patients had a confirmed, objective
response with an ORR of 44% including one complete response and three partial
responses. Median DOR was not reached. The DCR at data cutoff was 89% in nine
patients, and seven of the eight evaluable patients, or 87.5%, had a reduction
in target lesions. The median number of prior therapies was 1.0 with 89% of the
patients having received prior chemotherapy. Four patients were positive for
Human Papilloma Virus, or HPV, three patients were HPV negative, and two
patients had unknown HPV status.
The Cohort 1A and Cohort 2A results from the IOV-COM-202 study demonstrated that
lifileucel or LN-145 can be safely combined with pembrolizumab. The treatment
emergent adverse event, or TEAE, profile in both Cohorts was consistent with the
underlying advanced disease and the known adverse event profiles of
pembrolizumab, lymphodepletion, and IL-2 regimens.
Cohort 3A and 3C in the IOV-COM-202 study include LN-145 combinations in NSCLC.
Cohort 3A is evaluating LN-145 in combination with pembrolizumab in patients
with recurrent or metastatic NSCLC who have not received prior immunotherapy,
including checkpoint inhibitors. Cohort 3C is investigating LN-145 therapy in
combination with ipilimumab and nivolumab in patients with recurrent or
metastatic NSCLC who have previously received one line of approved checkpoint
inhibitor monotherapy as the only prior line of systemic therapy.
Next-Generation Product Candidates
Our clinical pipeline also includes next generation TIL product candidates and manufacturing processes. Our TIL candidate LN-145-S1, in which specific TIL are selected for PD-1 expression, is being investigated in post-anti-PD-1 melanoma Cohort 1B in the IOV-COM-202 basket study as well Cohort 4 in post-anti-PD-1 HNSCC in the C-145-03 trial in HNSCC. We are using our Gen 3 manufacturing process in Cohort 1C of the IOV-COM-202 clinical trial in melanoma and in Cohort 3 of the IOV-LUN-202 clinical trial in NSCLC and have previously used it in the C-145-03 clinical trial in HNSCC. InNovember 2019 , we announced that our Investigational New Drug, or IND, application for our PBL therapy, IOV-2001, was authorized by the FDA and our sponsored clinical trial using this therapy, IOV-CLL-01, was cleared to proceed. IOV-2001 is a non-genetically modified, polyclonal T cell product that is manufactured using a nine-day process from 50 mL of patient's blood. IOV-CLL-01 is a Phase 1/2 clinical trial evaluating the safety and efficacy of IOV-2001 in patients with relapsed or refractory CLL or SLL. The IOV-CLL-01 trial is expected to enroll up to approximately 70 patients.
In addition, we are nearing completion of IND-enabling studies for our lead genetically modified TIL product candidate, IOV-4001, in which the gene coding for the PD-1 protein is inactivated, as well as our novel IL-2 analog, IOV-3001.
Investigator-Sponsored Trials Through our academic collaborators, we are also exploring the potential for TIL therapies in additional indications. As part of our collaboration program withM.D. Anderson Cancer Center , or MDACC, two Phase 2 trials were initiated in 2018. Both trials are sponsored by MDACC. The first trial, NCT03449108, is intended to allow for investigation of LN-145 manufactured by us, using our manufacturing processes, to treat patients with soft tissue sarcoma, osteosarcoma, platinum resistant ovarian cancer, and thyroid cancer. A second trial under the collaboration with MDACC, NCT03610490, was previously active. This trial treated patients with platinum resistant ovarian cancer, pancreatic and colorectal cancer with TIL manufactured by MDACC. The data obtained using this manufacturing process may not be representative of our data using our
Gen 2 manufacturing process. We are also collaborating with Centre hospitalier de l'Université deMontreal , or CHUM,Yale University , and Moffitt on investigator-sponsored clinical trials of TIL therapies in other indications. The clinical trials sponsored by CHUM and Moffitt use, or will use, TIL manufactured by different manufacturing processes, which may not be representative of our data using our Gen 2 manufacturing process. We currently own more than 30 U.S. patents related to TIL therapy, including patents directed to compositions and methods of treatment in a broad range of cancers, such asU.S. Patent Nos. 10,130,659; 10,166,257; 10,272,113; 10,363,273; 10,398,734; 33 Table of Contents 10,420,799; 10,463,697; 10,517,894; 10,537,595; 10,639,330; 10,646,517; 10,653,723; 10,695,372; 10,894,063; 10,905,718; 10,918,666; 10,925,900; 10,933,094; 10,946,044; 10,946,045; 10,953,046; 10,953,047; 11,007,225; 11,007,226; 11,013,770; 11,026,974; 11,040,070; 11,052,115; 11,052,116; 11,058,728; 11,083,752; 11,123,371; and 11,141,438. More than 25 of these patents are related to our Gen 2 manufacturing processes and have terms that we anticipate will extend toJanuary 2038 , not including any patent term extensions or adjustments that may be available. Our owned and licensed intellectual property portfolio also includes patent applications and patents relating to TIL, marrow infiltrating lymphocyte, or MIL, and PBL therapies; frozen tumor-based TIL technologies; remnant TIL and digest TIL compositions, methods and processes; methods of treatment of a broad range of cancers using TIL therapies; methods of manufacturing TIL, MIL, and PBL therapies; the use of costimulatory molecules in TIL therapy and manufacturing; stable and transient genetically-modified TIL therapies; methods of using immune checkpoint inhibitors in combination with TIL therapies; TIL selection technologies; and methods of treating patient subpopulations. InJanuary 2020 , we obtained a license from Novartis to develop and commercialize an antibody cytokine engrafted protein, which we refer to as IOV-3001. Under the agreement, we paid an upfront payment to Novartis and may pay milestones involved in initiation of patient dosing in various phases of clinical development for IOV-3001 and approval of a potential product in theU.S. , EU, andJapan . Novartis is also entitled to low-to-mid single digit percentage royalties from commercial sales of IOV-3001. In addition, inJanuary 2020 , we announced a research collaboration and exclusive worldwide licensing agreement withCellectis S.A. , or Cellectis, a clinical-stage biopharmaceutical company focused on developing immunotherapies based on gene-edited allogeneic chimeric antigen receptor modified T cells, whereby we licensed certain TALEN technology from Cellectis to develop TIL that have been genetically edited to create potentially more potent cancer therapeutics. The worldwide exclusive license enables us to use TALEN technology addressing multiple gene targets to modify TIL for therapeutic use in several cancer indications. Financial terms of the license include development, regulatory and sales milestone payments from us to Cellectis, as well as royalty payments based on net sales of TALEN-modified TIL products.
Components of Operating Results
Revenue
We have not yet generated any revenues since our formation, and we currently do not anticipate that we will generate any significant revenues from the sale or licensing of our product candidates during the 12 months from the date these financial statements are issued. Our ability to generate revenues in the future will depend on our ability to complete the development of our product candidates and to obtain regulatory approval for them.
Research and Development Expenses
Research and development expenses include personnel and facility-related expenses, outside contracted services including clinical trial costs, manufacturing and process development costs, research costs and other consulting services. Research and development costs are expensed as incurred. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered, or the related services are performed, subject to an assessment of recoverability. Clinical development costs are a significant component of research and development expenses. We have a history of contracting with third parties that perform various clinical trial activities on our behalf in connection with the ongoing development of our 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. We accrue and expense costs for clinical trial activities performed by third parties based upon estimates of work completed to date of the individual trial in accordance with agreements established with contract research organizations and clinical trial sites. We determine our estimates through discussions with internal clinical personnel and outside service providers as to the progress or stage of completion of trials or services and the agreed upon fee to be paid for such services. We expect our research and development expenses to continue to increase as we prepare for commercial manufacturing of our products and continue to conduct our clinical trials for other indications. However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, legal, investor relations, facilities, business development, marketing, commercial,
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information technology and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to corporate matters and intellectual property, insurance, public company expenses relating to maintaining compliance with Nasdaq listing rules andSEC requirements, investor relations costs, and fees for accounting and consulting services. General and administrative costs are expensed as incurred, and we accrue for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from its service providers and adjusting its accruals as actual costs become known. We anticipate general and administrative expenses will increase as we continue to prepare for commercialization and support an expected growth of the internal general and administrative team.
Interest Income, Net
Interest income, net results from our interest-bearing cash and investment balances.
Results of Operations
Comparison of the Three and Nine Months Ended
Revenues
We did not generate any revenues during the three and nine months ended
Research and Development expenses (in thousands)
Three Months Ended Increase / Nine Months Ended Increase /
September 30, (Decrease) September 30, (Decrease)
2021 2020 $ % 2021 2020 $ %
Research and development $ 65,355 $ 43,050 22,305 52 % $ 183,423 $ 149,276 34,147 23 %
Stock-based compensation
expense included in
research and development
expense 11,504 5,282 6,222 118 % 29,291 15,065 14,226 94 %
Research and development expense for the three months ended September 30, 2021
increased by $22.3 million , or 52%, compared to the same period in 2020. The
increase was primarily attributable to (i) $6.2 million of stock-based
compensation expenses and a $5.4 million increase in payroll and related
expenses, both driven by increased hiring of research and development employees
to support our on-going and planned clinical development activities, (ii) a $5.0
million increase in clinical trial costs due to continued enrollment in our
IOV-COM-202 clinical trial and initiation of IOV-LUN-202 clinical trial, (iii) a
$4.6 million increase in costs associated with the iCTC such as rent,
depreciation and lab maintenance related expenses, and (iv) a $1.1 million
increase in other costs, including manufacturing, insurance, and travel
expenses.
Research and development expense for the nine months ended September 30, 2021
increased by $34.1 million , or 23%, compared to the same period in 2020. The
increase was primarily attributable to (i) a $19.5 million increase in payroll
and related expenses and, a $14.2 million increase in stock-based compensation
expenses, both driven by increased hiring of research and development employees
to support our on-going and planned clinical development activities, (ii) a $8.8
million increase in costs associated with the iCTC, (iii) a $1.6 million
increase in clinical trial costs, and (iv) a $2.4 million increase in
consumables and other costs, including allocated costs associated with the
build-out of our IT infrastructure to further support the growth in the
organization and infrastructure associated with our clinical trials. These
increases were partially offset by a $10.9 million decrease in research alliance
costs primarily due to a license fee from Novartis to further develop IOV-3001
which was recognized in full in January 2020 , and a $1.5 million decrease in
manufacturing costs.
General and Administrative expenses (in thousands)
Three Months Ended Increase / Nine Months Ended Increase /
September 30, (Decrease) September 30, (Decrease)
2021 2020 $ % 2021 2020 $ %General and administrative$ 20,887 $ 15,916 4,971 31 %$ 59,815 $ 44,127 15,688 36 % Stock-based compensation expense included in general and administrative expense 7,802 5,424 2,378 44 %
21,370 15,590 5,780 37 %
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General and administrative expenses for the three months ended September 30,
2021 increased by $5.0 million , or 31%, compared to the same period in 2020. The
increase was primarily attributable to (i) a $2.3 million increase in payroll
and related expenses and a $2.4 million increase in stock-based compensation
expenses, both resulting from increases in headcount to support the growth in
the overall business and related corporate infrastructure, and (ii) a $1.3
million increase in other costs, including insurance and costs associated with
the build-out of our IT infrastructure. These costs were partially offset by a
$1.0 million decrease in commercial and marketing costs due to reprioritization
of corporate initiatives.
General and administrative expenses for the nine months ended September 30, 2021
increased by $15.7 million , or 36%, compared to the same period in 2020. The
increase was primarily attributable to (i) a $7.0 million increase in payroll
and related expenses and a $5.8 million increase in stock-based compensation
expenses, both resulting from increases in headcount to support the growth in
the overall business and related corporate infrastructure, and (ii) a $3.0
million increase in insurance and intellectual property filing related costs,
and iv) a $1.4 million increase in other costs, including professional fees and
costs associated with the build-out of our IT infrastructure to support the
continued growth in the overall company. These costs were partially offset by a
$1.5 million decrease in commercial and marketing costs due to reprioritization
of corporate initiatives.
Interest income, net (in thousands)
Three Months Ended Increase / Nine Months Ended Increase /
September 30, (Decrease) September 30, (Decrease)
2021 2020 $ % 2021 2020 $ %
Interest income, net $ 120 $ 395 (275) (70) % $ 316 $ 2,219 (1,903) (86) %
Interest income, net for the three and nine months endedSeptember 30, 2021 and 2020 decreased by$0.3 million , or 70%, and$1.9 million , or 86%, respectively, due primarily to declining interest rates and lower interest received on our cash, cash equivalents and investment portfolio. Net Loss (in thousands) Three Months Ended Increase / Nine Months Ended Increase / September 30, (Decrease) September 30, (Decrease) 2021 2020 $ % 2021 2020 $ % Net loss$ (86,122) $ (58,571) (27,551) 47
%$ (242,922) $ (191,184) (51,738) 27 % Net loss for the three and nine months endedSeptember 30, 2021 increased by$27.6 million or 47% and$51.7 million or 27%, respectively, compared to the same periods in 2020. The increase in our net loss was due to the continued expansion of our research and development activities and the overall growth of our corporate infrastructure. We anticipate that we will continue to incur net losses in the future as we further invest in our research and development activities and commercial preparation activities.
Liquidity and Capital Resources
We have incurred net losses and generated negative cash flows from operations since inception. We expect to continue to incur significant losses in 2021 and may incur significant losses and negative cash flows from operations for the foreseeable future. Historically, we have funded our operations from various public and private offerings of our equity securities (both common stock and preferred stock), from option and warrant exercises, and from interest income. Since 2017, our primary source of funds has been from the public sale of our common stock. Corporate Capitalization As ofSeptember 30, 2021 , we had outstanding 156,702,653 shares of our$0.000041666 par value common stock, 194 shares of our$0.001 par value Series A Convertible Preferred Stock, and 2,842,158 shares of our$0.001 par value Series B Convertible Preferred Stock. The outstanding shares of Series A Convertible Preferred Stock are currently convertible into 97,000 shares of our common stock, and the outstanding shares of Series B Convertible Preferred Stock are currently convertible into 2,842,158 shares of our common stock. The shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock do not have voting rights or accrue dividends. OnDecember 28, 2017 , we filed a shelf registration statement with theSEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of$250 million , which we refer to as the 2017 Shelf Registration Statement. The 2017 Shelf Registration Statement was declared effective onJanuary 19, 2018 . OnJanuary 29, 2018 , we sold 36
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15,000,000 shares of our common stock at a public offering price of$11.50 per share pursuant to the 2017 Shelf Registration Statement. We received gross proceeds of approximately$172.5 million and net proceeds of approximately$162.0 million , after deducting underwriting discounts and offering expenses. The 2017 Shelf Registration Statement was terminated upon effectiveness of the 2018 Shelf Registration Statement (as discussed below). OnSeptember 7, 2018 , we filed a shelf registration statement with theSEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of$250 million , which we refer to as the 2018 Shelf Registration Statement. The 2018 Shelf Registration Statement was declared effective onOctober 3, 2018 and the aggregate amount of securities we could issue thereunder was subsequently increased by$50 million through a post-effective amendment that we filed onOctober 11, 2018 , pursuant to Rule 462(b) of the Securities Act. OnOctober 17, 2018 , we sold 25,300,000 shares of our common stock at a public offering price of$9.97 per share pursuant to the 2018 Shelf Registration Statement. We received gross proceeds of approximately$252.2 million and net proceeds of$236.7 million , after deducting underwriting discounts and offering expenses. The 2018 Shelf Registration Statement is no longer available for future offerings. OnSeptember 17, 2019 , we filed a shelf registration statement with theSEC for the issuance up to an aggregate amount of$400 million , which we refer to as the 2019 Shelf Registration Statement. The 2019 Shelf Registration Statement was declared effective onSeptember 24, 2019 . The 2019 Shelf Registration Statement was terminated upon effectiveness of the 2020 Automatic Shelf Registration Statement (as discussed below). No shares were sold under the 2019 Shelf Registration Statement prior to its termination. OnMay 27, 2020 , we filed an automatic shelf registration statement with theSEC for the issuance of an indeterminate amount ofShelf Securities , which we refer to as the 2020 Automatic Shelf Registration Statement. The 2020 Automatic Shelf Registration Statement was immediately effective upon filing with theSEC , and the 2019 Shelf Registration Statement was simultaneously terminated. OnJune 2, 2020 , we sold 19,475,806 shares of our common stock at a public offering price of$31.00 per share pursuant to the 2020 Automatic Shelf Registration Statement. We received gross proceeds of$603.7 million and net proceeds of$567.0 million , after deducting underwriting discounts and offering expenses. Following the public offering, the 2020 Automatic Shelf Registration Statement remains available for the future issuance of an indeterminate amount ofShelf Securities .
OnFebruary 8, 2021 , we entered into an Open Market Sale Agreement, or the Sales Agreement, withJefferies LLC , or Jefferies, with respect to an "at the market" offering program, under which we may, from time to time, in our sole discretion, issue and sell through Jefferies, acting as sales agent, up to$350.0 million of shares of our common stock. The issuance and sale, if any, of shares of our common stock under the Sales Agreement will be made pursuant to a prospectus supplement, datedFebruary 8, 2021 , to the 2020 Automatic Shelf Registration Statement. For the nine months endedSeptember 30, 2021 , we received approximately$203.2 million in net proceeds through the sale of 6,474,099 shares of our common stock. There were no sales of our common stock through the Sales Agreement for the three months endedSeptember 30, 2021 . In the future, we may periodically offer one or more of these securities in amounts, prices, and terms to be announced when and if the securities are offered. If any of the securities covered by the 2020 Automatic Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with theSEC containing specific information about the terms of such offering at that time. We are currently engaged in the development of therapeutics to fight cancer. We do not have any commercial products and have not yet generated any revenues from our biopharmaceutical business. We currently do not anticipate that we will generate any significant revenues from the sale or licensing of any products during the 12 months from the date these financial statements are issued. We have incurred a net loss of$242.9 million for the nine months endedSeptember 30, 2021 and used$174.1 million of cash in our operating activities for the same period endedSeptember 30, 2021 . As ofSeptember 30, 2021 , we had$58.6 million of cash, cash equivalents,$596.1 million of investments ($517.9 million of short-term investments and$78.2 million of long-term investments),$698.3 million of stockholders' equity and had working capital of$518.3 million . We expect to increase our research and development activities and pre-commercial activities, which will increase the amount of cash we will use during the remainder of 2021 and beyond. Based on the funds we have available as of the date of the filing of this Quarterly Report on Form 10-Q, we believe that we have sufficient capital to fund our anticipated operating expenses and capital expenditure for at least 12 months from the date of filing this report. 37 Table of Contents Cash Flows
The following table summarizes our cash flows for the periods presented from Operating, Investing and Financing Activities (in thousands):
Nine Months Ended September 30,
2021 2020
Net cash (used in) provided by:
Operating activities $ (174,092) $ (142,442)
Investing activities (69,206) (376,606)
Financing activities 235,118 573,464
Net increase in cash, cash equivalents and restricted cash $ (8,180) $ 54,416
Operating Activities Net cash used in operating activities for the nine months endedSeptember 30, 2021 was$174.1 million compared to$142.4 million for the same period in 2020. The increase of$31.7 million was primarily due to an increase in net loss driven by increased costs in research and development and pre-commercial activities.
Investing Activities
Net cash used by investing activities for periods presented primarily relate to the purchase and maturity of investments used to fund the day-to-day needs of our business. Net cash used by investing activities for the nine months endedSeptember 30, 2021 was$69.2 million compared to net cash used of$376.6 million for the same period in 2020. The decrease in cash provided by investing activities of$307.4 million was primarily due to the timing of maturities
and purchases of investments. Financing Activities Net cash provided by financing activities for the nine months endedSeptember 30, 2021 was$235.1 million compared to$573.5 million for the same period in 2020. The decrease of$338.3 million was primarily due to net proceeds of$567.0 million received from ourJune 2020 public offering as compared to net proceeds of$203.2 million received from sales of common shares through the "at the market" offering program during the nine months endedSeptember 30, 2021 . The decrease in net proceeds from sales of our common stock in the nine months endedSeptember 30, 2021 as compared toSeptember 30, 2021 was offset by an increase of$24.3 million in proceeds from exercises of stock options during the nine months endedSeptember 30, 2021 .
Impact of COVID-19 on our Business
Operations and Liquidity
The full impact of the COVID-19 pandemic is unknown and rapidly evolving. While the potential economic impact brought by and over the duration of the COVID-19 pandemic may be difficult to assess or predict, the COVID-19 pandemic has resulted in significant disruption of global financial markets, which could in the future negatively affect our liquidity. In addition, a recession or market volatility resulting from the COVID-19 pandemic could affect our business. We have taken proactive, aggressive action throughout the COVID-19 pandemic to protect the health and safety of our employees and expect to continue to implement these measures until we determine that the COVID-19 pandemic is adequately contained for purposes of our business. We may take further actions as government authorities require or recommend or as we determine to be in the best interests of our employees. We do not believe that the COVID-19 pandemic had a material impact on our liquidity or results of operations for the year endedDecember 31, 2020 . Further, to date, the COVID-19 pandemic has not had significant effects on our clinical trial enrollment. Given the nature and type of our short-term investments inU.S. government securities, we do not believe that the COVID-19 pandemic will have a material impact on our current investment liquidity. Outlook Although there is uncertainty related to the anticipated impact of the recent COVID-19 pandemic on our future results, we believe our current cash reserves leave us well-positioned to manage our business through this crisis as it continues to unfold. However, the impacts of the COVID-19 pandemic are broad-reaching and continuing and the financial impacts associated with the COVID-19 pandemic are still uncertain. 38
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The COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the pandemic, and actions that would be taken by governmental authorities to contain the pandemic or to treat its impact, makes it difficult to forecast any effects on our results for the three and nine months endedSeptember 30, 2021 . Despite the economic uncertainty resulting from the COVID-19 pandemic, we intend to continue to focus on the development of our product candidates. We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state, and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.
Off-Balance Sheet Arrangements
As of
Significant Accounting Policies and Recent Accounting Standards
See Note 2 of the financial statements for a discussion of our significant accounting policies, including the discussion of recently issued and adopted accounting standards.
Inflation
Inflation has not had a material effect on our business, financial condition, or results of operations over our two most recent fiscal years.
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