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Item 7. Management’s Discussion and Analysis

2021-02-24 compared with 2020-03-02 · 150 added, 126 removed, 257 unchanged (52% of the section changed)

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This section of this Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019.

Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 as filed with the Securities and Exchange Commission on March 5, 2019.

We are a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders.

Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as filed with the Securities and Exchange Commission on March 2, 2020 and incorporated herein by reference.

We are a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for patients with cancer.

We are developing first-in-class cell therapy product candidates based on a simple notion:

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To create better cell therapies, we use a therapeutic approach that we generally refer to as cell programming.

For certain of our product candidates, we use pharmacologic modulators, such as small molecules, to enhance the biological properties and therapeutic function of healthy donor-sourced cells ex vivo before our product candidates are administered to a patient.

In other cases, we use human induced pluripotent stem cells (iPSCs) to generate a clonal master iPSC line having preferred biological properties and direct the fate of the clonal master iPSC line to create our cell therapy product candidate.

For certain of our product candidates, we use pharmacologic modulators, such as small molecules, to enhance the biological properties and therapeutic function of allogeneic, or healthy donor-sourced, cells ex vivo before our product candidates are administered to a patient.

In other cases, we use human induced pluripotent stem cells (iPSCs) to generate a clonal master iPSC line having preferred biological properties, and we direct the fate of the clonal master iPSC line to create our cell therapy product candidate.

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, we believe clonal master iPSC lines can be used as a renewable source for manufacturing cell therapy products which are well-defined and uniform in composition, can be repeatedly mass produced at significant scale in a cost-effective manner, and can be delivered off-the-shelf to treat many patients.

Utilizing these therapeutic approaches, we program cells of the blood and immune system, including natural killer (NK) cells, T cells and CD34 + cells, and are advancing a pipeline of programmed cellular immunotherapies.

Utilizing these therapeutic approaches, we program cells of the blood and immune system and are advancing a pipeline of programmed cellular immunotherapies, including off-the-shelf natural killer (NK) and T-cell product candidates derived from clonal master iPSC lines for the treatment of cancer.

We have entered into a research collaboration and license agreement with the Regents of the University of Minnesota to develop off-the-shelf, engineered NK cell cancer immunotherapies derived from clonal master iPSC lines.

Additionally, we have entered into a research collaboration and license agreement with Memorial Sloan Kettering Cancer Center (Memorial Sloan Kettering) to develop off-the-shelf, engineered T-cell cancer immunotherapies derived from clonal master iPSC lines.

We have entered into a collaboration and option agreement with Ono Pharmaceutical Co.

(Ono) for the joint development and commercialization of two off-the-shelf iPSC-derived chimeric antigen receptor (CAR) T-cell product candidates.

In September 2018, we entered into a collaboration and option agreement with Ono Pharmaceutical Co.

(Ono) for the joint development and commercialization of off-the-shelf, iPSC-derived chimeric antigen receptor (CAR) T-cell product candidates (Ono Agreement) for the treatment of cancer.

In April 2020, we entered into a collaboration and option agreement with Janssen Biotech, Inc.

(Janssen), part of the Janssen Pharmaceutical Companies of Johnson & Johnson (Janssen Agreement), for the development and commercialization of off-the-shelf, iPSC-derived CAR NK and CAR T-cell product candidates for the treatment of cancer.

We were incorporated in Delaware in 2007, and are headquartered in San Diego, CA.

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conduct preclinical and clinical research to investigate the therapeutic activity of our product candidates;

continue our research, development and manufacturing activities, including under our sponsored research and collaboration agreements with Ono, University of Minnesota and Memorial Sloan Kettering;

continue our research, development and manufacturing activities, including under our sponsored research and collaboration agreements with Janssen, Ono, University of Minnesota and Memorial Sloan Kettering;

maintain, prosecute, protect, expand and enforce our intellectual property portfolio;

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hire general and administrative personnel to continue operating as a public company and support our operations.

We do not expect to generate any revenues from sales of any therapeutic products unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years.

We do not expect to generate any meaningful product sales or royalty revenue unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years.

If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

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Our failure to raise capital or enter into such other arrangements when needed would have a negative effect on our financial condition and ability to develop our product candidates .

Due to the global outbreak of SARS-CoV-2, the novel strain of coronavirus that causes Coronavirus disease 19 (COVID-19), we experienced impacts on certain aspects of our business, including our clinical trial and research and development activities, during the year ended December 31, 2020.

For example, certain of our research and development activities have been delayed or disrupted as a result of measures we have implemented in response to governmental “stay at home” orders and in the interests of public health and safety, and we have experienced delays or disruptions in the initiation and conduct of our clinical trials as a result of prioritization of hospital and other medical resources toward pandemic efforts, policies and procedures implemented at clinical sites with respect to the conduct of clinical trials, and other precautionary measures taken in treating patients or in practicing medicine in response to the COVID-19 pandemic.

The scope and duration of these delays and disruptions, and the ultimate impacts of COVID-19 on our operations, are currently unknown.

We are continuing to actively monitor the situation and may take further precautionary and preemptive actions as may be required by federal, state or local authorities or that we determine are in the best interests of public health and safety and that of our patient community, employees, partners, and stockholders.

We cannot predict the effects that such actions, or the impact of COVID-19 on global business operations and economic conditions, may have on our business, strategy, collaborations, or financial and operating results.

Financial Operations Overview

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Collaboration Revenue

To date, we have not generated any revenues from therapeutic product sales.

To date, we have not generated any revenues from therapeutic product sales or royalties.

Our revenues have been derived from collaboration agreements and government grants.

Agreement with Janssen Biotech, Inc.

On April 2, 2020 (the Effective Date), we entered into a Collaboration and Option Agreement (the Janssen Agreement) with Janssen Biotech, Inc.

(Janssen), part of the Janssen Pharmaceutical Companies of Johnson & Johnson.

Additionally, on the Effective Date, we entered into a Stock Purchase Agreement (the Stock Purchase Agreement) with Johnson & Johnson Innovation - JJDC, Inc.

Under the terms of the Janssen Agreement and the Stock Purchase Agreement taken together, we received $100.0 million, of which $50.0 million is an upfront cash payment and $50.0 million is in the form of an equity investment by JJDC.

Additionally, we are entitled to receive fees for the conduct of all research, preclinical development and IND-enabling activities performed by us under the Janssen Agreement.

We determined the common stock purchase by JJDC represented a premium of $9.93 per share, or $16.0 million in aggregate (the Equity Premium), and the remaining $34.0 million was recorded as issuance of common stock in shareholders’ equity.

We concluded that Janssen represented a customer and in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers , we determined that the initial transaction price under the Janssen Agreement equals $66.0 million, consisting of the upfront, non-refundable and non-creditable payment of $50.0 million and the Equity Premium of $16.0 million.

In addition, we identified our potential performance obligations under the Janssen Agreement, including our grant to Janssen of a license to certain of our intellectual property subject to certain conditions, our conduct of research and development services, and our participation in various joint oversight committees.

We determined that our grant of a license to Janssen and our conduct of research and development services should be accounted for as one combined performance obligation, and that the combined performance obligation is transferred over the expected term of the conduct of the research and development services, which is estimated to be four years.

Additionally, we determined that participation in the various joint oversight committees did not constitute a performance obligation as our participation in the various joint oversight committees does not transfer a service.

During the year ended December 31, 2020, we recognized $16.8 million of collaboration revenue under the Janssen Agreement.

As of December 31, 2020, aggregate deferred revenue related to the Janssen Agreement was $59.5 million.

Agreement with Ono Pharmaceutical Co., Ltd.

On September 14, 2018, we entered into a Collaboration and Option Agreement (the Ono Agreement) with Ono for the joint development and commercialization of two off-the-shelf iPSC-derived CAR T-cell product candidates.

Pursuant to the terms of the Ono Agreement, we received an upfront, non-refundable and non-creditable payment of $10.0 million.

Additionally, we are entitled to receive fees for the conduct of research and development under a joint development plan, which fees are estimated to be $20.0 million in aggregate, of which $6.5 million has been received as of December 31, 2019.

We concluded that Ono represented a customer and in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers , we determined that the initial transaction price under the Ono Agreement equals $30.0 million, consisting of the upfront, non-refundable and non-creditable payment of $10.0 million and the aggregate estimated research and development fees of $20.0 million.

Additionally, we are entitled to receive fees for the conduct of research and development under a joint development plan, which fees are estimated to be $20.0 million in aggregate.

We concluded that Ono represented a customer and in accordance with ASC 606, we determined that the initial transaction price under the Ono Agreement equals $30.0 million, consisting of the upfront, non-refundable and non-creditable payment of $10.0 million and the aggregate estimated research and development fees of $20.0 million.

In addition, we identified our performance obligations under the Ono Agreement, including our grant to Ono of a license to certain of our intellectual property subject to certain conditions, our conduct of research services, and our participation in a joint steering committee.

We determined that all performance obligations should be accounted for as one combined performance obligation since no individual performance obligation is distinct, and that the combined performance obligation is transferred over the expected term of the conduct of the research services, which is estimated to be four years .

On December 4, 2020, we entered into a letter agreement (the Ono Letter Agreement) with Ono in connection with the Ono Agreement.

Pursuant to the Ono Letter Agreement, Ono delivered to us proprietary antigen binding domains targeting an antigen expressed on certain solid tumors and nominated such antigen binding domains as the Ono Antigen Binding Domain for incorporation into Collaboration Candidate 2.

In connection with such nomination, Ono paid us a milestone fee of $10.0 million for further research and development of Collaboration Candidate 2 under the Ono Agreement, and Ono continues to maintain its option to Collaboration Candidate 2 under the Ono Agreement.

In addition, together with Ono, we agreed to the termination of the Ono Agreement with respect to Collaboration Candidate 1.

We retain all rights, in our sole discretion, to research, develop and commercialize Collaboration Candidate 1 throughout the world without any obligation to Ono.

During the years ended December 31, 2020 and 2019, we recognized $14.6 million and $9.3 million, respectively, of collaboration revenue under the Ono Agreement.

As of December 31, 2019, aggregate deferred revenue related to the Ono Agreement was $6.6 million.

As of December 31, 2020, aggregate deferred revenue related to the Ono Agreement and Ono Letter Agreement was $7.7 million.

Agreement with Juno Therapeutics, Inc.

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(Juno) to screen for and identify small molecule modulators that enhance the therapeutic properties of Juno’s genetically-engineered T-cell immunotherapies.

In connection with the Juno Agreement, during the years ended December 31, 2019 and 2018 , we recognized $1.4 million and $4.1 million, respectively, as collaboration revenue in the consolidated statements of operations and comprehensive loss.

No revenue was recognized during the year ended December 31, 2020.

During the year ended December 31, 2019, we recognized $1.4 million of collaboration revenue under the Juno Agreement.

On May 4, 2019, the four-year initial research term under the Juno Agreement concluded as scheduled.

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facilities, depreciation and other expenses including allocated expenses for rent and maintenance of facilities.

We plan to increase our current level of research and development expenses for the foreseeable future as we continue the clinical and preclinical development of our product candidates, research and develop our cell programming technology including our iPSC product platform, and perform our obligations under collaboration agreements including under our agreements with Ono, University of Minnesota and Memorial Sloan Kettering.

We plan to increase our current level of research and development expenses for the foreseeable future as we continue the clinical and preclinical development of our product candidates, research and develop our cell programming technology including our iPSC product platform, and perform our obligations under collaboration agreements including under our agreements with Janssen, Ono, University of Minnesota and Memorial Sloan Kettering.

Our current planned research and development activities over the next twelve months consist primarily of the following:

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conducting GMP production, process and scale-up development and technology transfer activities for the manufacture of our product candidates, including those undergoing clinical investigation and IND-enabling preclinical development;

source laboratory equipment, materials and supplies for the manufacture of our product candidates and the conduct of our research activities;

procuring laboratory equipment, materials and supplies for the manufacture of our product candidates and the conduct of our research activities;

conducting preclinical and clinical research to investigate the therapeutic activity of our product candidates;

conducting research, development and manufacturing activities, including under our sponsored research and collaboration agreements with Ono, University of Minnesota and Memorial Sloan Kettering.

conducting research, development and manufacturing activities, including under our sponsored research and collaboration agreements with Janssen, Ono, University of Minnesota and Memorial Sloan Kettering.

Due to the inherently unpredictable nature of preclinical and clinical development, and given our novel therapeutic approach and the current stage of development of our product candidates, we cannot determine and are unable to estimate with certainty the timelines we will require and the costs we will incur for the development of our product candidates.

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In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

We cannot predict the effects of the impact of COVID-19 on our business and operations, and our expenditures may be increased by delays or disruptions due to the COVID-19 pandemic, including as a result of actions we take in the near term to ensure business continuity and protect against possible supply chain shortages.

General and Administrative Expenses

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Other Income (Expense)

Other income (expense) consists primarily of interest income earned on cash and cash equivalents, interest income from investments (including the amortization of discounts and premiums), and interest expense.

Other income (expense) consists of changes in the fair value of stock price appreciation milestones associated with the Amended and Restated Exclusive License Agreement dated May 15, 2018 (the Amended MSK License) with Memorial Sloan Kettering Cancer Center (MSK), interest income earned on cash and cash equivalents, interest income from investments (including the amortization of discounts and premiums), and interest expense for the periods where debt was outstanding.

Critical Accounting Policies and Significant Judgments and Estimates

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The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-based compensation.

We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

On an ongoing basis, we evaluate our estimates and judgments, including those related to the fair value of the stock price appreciation milestones for the Amended MSK License, accrued expenses and stock-based compensation.

We base our estimates on historical experience, known trends and events, financial models, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions .

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For each distinct performance obligation, revenue is recognized when (or as) we transfer control of the product or the service applicable to such performance obligation.

To date, for collaboration arrangements that represent a single performance obligation, the revenues are recognized over time based on costs incurred compared to total estimated costs.

In those instances where we first receive consideration in advance of satisfying its performance obliga tion, we classify such consideration as deferred revenue until (or as) we satisf y such performance obligation.

In those instances where we first satisf y our performance obligation prior to our receipt of consideration, the consideration is recorded as acco unts receivable.

To date, for collaboration arrangements that represent a single performance obligation, the revenues are recognized over time based on costs incurred compared to total estimated costs or based on actual headcount utilized as a percentage of total headcount expected to be utilized over the expected term of the conduct of the research and development services .

In those instances where we first receive consideration in advance of satisfying its performance obligation, we classify such consideration as deferred revenue until (or as) we satisfy such performance obligation.

In those instances where we first satisfy our performance obligation prior to our receipt of consideration, the consideration is recorded as accounts receivable.

We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that would be recognized is one year or less, or if the amount of the asset is immaterial.

Otherwise, such costs are capitalized and amortized to research and development expense ratably in conjunction with the underlying revenue recognition.

Stock Price Appreciation Milestones

We estimate the fair value of the stock price appreciation milestones under the Amended MSK License using a Monte Carlo simulation model, which relies on our current stock price as well as significant estimates and assumptions to determine the estimated liability associated with the contingent milestone payments.

We account for the fair value of the stock price appreciation milestones in accordance with ASC 815, Derivatives and Hedging , with fair value marked to market.

The assumptions used to calculate the fair value of the stock price appreciation milestones are subject to a significant amount of judgment including the assessment of achieving a specified clinical milestone, the expected volatility of our common stock, the risk-free interest rate and the estimated term, which is based in part on the last valid patent claim date.

We remeasure the fair value of the stock price appreciation milestones at each balance sheet date, with changes in fair value recorded in earnings as a non-operating income or expense.

Accrued Research and Development Expenses

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These models require the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, (a) the risk-free interest rate, (b) the expected volatility of our stock, (c) the expected term of the award and (d) the expected dividend yield.

Due to the lack of an adequate history of a public market for the trading of our common stock and a lack of adequate company specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded.

For these analyses, we have selected companies with comparable characteristics to ours including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards.

We compute the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of our stock-based awards.

We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.

We have estimated the expected life of our employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the original contractual term of the option.

The expected volatility is based on the historical volatility of our common stock over the most recent period commensurate with the estimated expected term of our stock options which is derived from historical experience and anticipated future exercise behavior.

The risk-free interest rates for periods within the expected life of the option are based on the yields of zero-coupon U.S.

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The fair value of restricted stock units is based on the closing price of our common stock as reported on The NASDAQ Global Market on the date of grant.

Total stock-based compensation expense for t he years ended December 31, 201 9 , 201 8 , and 201 7 , was $ 17.4 million, $ 6.3 million, and $ 3.6 million, respect ively .

Expense related to unvested stock option grants not yet recognized as of December 31, 201 9 was $ 40.4 million and the weighted-average period over which these grants are expected to vest is 2.9 years .

As of December 31, 201 9 , the unrecognized compensation cost related to outstanding restricted stock units was $ 6.2 million, which is expected to be recognized as expense over approximately 2.7 years.

Recent Accounting Pronouncements

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General and administrative expenses

Total other income, net

During the years ended December 31, 2019 and 2018, we recognized revenue of $10.7 million and $4.7 million, respectively, under our collaboration agreements with Ono and Juno.

Total other income (expense), net

During the year ended December 31, 2020, we recognized revenue of $31.4 million, under our collaboration agreements with Janssen and Ono.

During the year ended December 31, 2019, we recognized revenue of $10.7 million under our collaboration agreements with Ono and Juno.

Research and development expenses.

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The increase in research and development expenses was attributable primarily to the following:

$14.7 million increase in employee compensation and benefits expense, including employee-stock based compensation expense;

$22.4 million increase in employee compensation and benefits expense, including $8.8 million in employee-stock based compensation expense;

$7.2 million increase in facility lease expense primarily relating to our future headquarters lease, which commenced in January 2020;

$6.6 million increase in expenditures for laboratory materials and supplies relating to the manufacture of our product candidates and the conduct of our research activities, including under our collaboration agreements.

$9.3 million increase in third-party professional consultant and service provider expenses relating to the manufacture and clinical development of our product candidates and the conduct of our research activities, including under our collaboration agreements;

$2.4 million increase in facility lease expense due to an office and lab expansion in January 2019.

These increases were partially offset by an aggregate decrease of $6.7 million in licensing expense resulting from the Amended and Restated Exclusive License with MSK that occurred in May 2018 and the Exclusive License Agreement with the J.

David Gladstone Institutes that occurred in September 2018.

No such expense was present in fiscal year 2019.

See Note 2 of the consolidated financial statements for additional detail.

General and administrative expenses.

General and administrative expenses were $33.9 million for the year ended December 31, 2020, compared to $23.6 million for the year ended December 31, 2019.

The increase in general and administrative expenses was attributable primarily to a $6.5 million increase in employee compensation and benefits expense, including employee stock-based compensation expense and an increase of $0.5 million in facility lease and related expense.

Other income, net.

Other income, net was $2.6 million and $0.5 million for the years ended December 31, 2019 and 2018, respectively.

Other income, net for each period consisted primarily of interest income earned on cash and cash equivalents, interest income from investments (including the amortization of discounts and premiums) and interest expense relating to our term loan with Silicon Valley Bank.

The increase in general and administrative expenses was attributable primarily to the following:

$ 7.0 million increase in employee compensation and benefits expense, including $ 4.5 million in employee stock-based compensation expense;

$1.1 million in facility lease expense primarily relating to our future headquarters lease, which commenced in January 2020.

Other income (expense), net.

Other income (expense), net was ($45.3) million and $2.6 million for the years ended December 31, 2020 and 2019, respectively.

During the year ended December 31, 2020, we recorded $47.7 million in other expense attributable to the fair value of the stock price appreciation milestones under the Amended MSK License.

Other income (expense), net for the year ended December 31, 2020 also consisted of interest income earned on cash and cash equivalents and interest income from investments (including the amortization of discounts and premiums).

Other income (expense), net for the year ended December 31, 2019 consisted of interest income earned on cash and cash equivalents, interest income from investments (including the amortization of discounts and premiums), and interest expense relating to the term loan with Silicon Valley Bank.

Liquidity and Capital Resources

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Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and

restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Operating Activities

Cash used in operating activities increased from $38.7 million for the year ended December 31, 2018 to $83.2 million for the year ended December 31, 2019.

The change in cash used in operating activities was attributable primarily to our increase in net loss and a decrease in the deferred revenue balance from 2018 to 2019, partially offset by an increase in stock-based compensation expense.

Cash used in operating activities decreased from $83.2 million for the year ended December 31, 2019 to $39.2 million for the year ended December 31, 2020.

During the year ended December 31, 2020, cash used in operating activities of $39.2 million was attributable to a net loss of $173.4 million, substantially offset by cash received and recorded as deferred revenue of $66.0 million for the upfront fee and Equity Premium associated with the Janssen Collaboration, and non-cash charges of $47.7 million associated with the fair value of the stock price appreciation milestones under the Amended MSK License and $30.8 million in stock-based compensation expense.

These were partially offset by payments made related to contract assets of $13.3 million.

Agreement with Janssen Biotech, Inc.

On April 2, 2020 (the Effective Date), we entered into the Janssen Agreement with Janssen to develop iPSC-derived CAR NK and CAR T-cell product candidates for the treatment of cancer.

Additionally, on the Effective Date, we entered into the Stock Purchase Agreement with JJDC.

Under the terms of the Janssen Agreement and the Stock Purchase Agreement taken together, we received $100.0 million as of the Effective Date, of which $50.0 million is an upfront cash payment and $50.0 million is in the form of an equity investment by JJDC.

Of the $50.0 million equity investment, $16.0 million represented a premium over the fair value of our common stock and was classified under operating activities.

We are entitled to receive fees for the conduct of all research, preclinical development and IND-enabling activities performed by us under the Janssen Agreement.

Additionally, we are eligible to receive (i) with respect to the first Janssen Cancer Target, payments of up to $898.0 million upon the achievement of specified development, regulatory and sales milestones (the Janssen Milestone Payments) for the first Collaboration Candidate, and up to $460.0 million in Janssen Milestone Payments for each additional Collaboration Candidate, directed to the first Janssen Cancer Target;

and (ii) with respect to each of the second, third and fourth Janssen Cancer Targets, payments of up to $706.0 million in Janssen Milestone Payments for each of the first Collaboration Candidates, and up to $340.0 million in Janssen Milestone Payments for each additional Collaboration Candidate, directed to the applicable Janssen Cancer Target, where certain Janssen Milestone Payments are subject to reduction in the event we elect to co-commercialize and share equally in the profits and losses in the United States of a respective Collaboration Candidate.

We are further eligible to receive double-digit tiered royalties ranging up to the mid-teens on net sales of Collaboration Candidates that are commercialized by Janssen under the Janssen Agreement, subject to reduction under certain circumstances.

No milestone or royalty payments have been received by us as of December 31, 2020.

As a direct result of our entry into the Janssen Agreement, we incurred $13.3 million in sublicense fees to certain of our existing licensors.

The $13.3 million in sublicense consideration represents an asset under ASC 340, Other Assets and Deferred Costs.

As of December 31, 2020, all such consideration has been paid .

Agreement with Ono Pharmaceutical Co., Ltd.

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Additionally, as consideration for our conduct of research and preclinical development under a joint development plan, Ono pays us annual research and development fees set forth in the annual budget included in the joint development plan, which fees are estimated to be $20.0 million in aggregate over the course of the joint development plan.

Further, under the terms of the Ono Agreement, Ono has agreed to pay us an additional $40.0 million, subject to the achievement of a preclinical milestone and the exercise by Ono of its options to obtain exclusive licenses to develop and commercialize the Candidates.

Further, under the terms of the Ono Agreement, Ono had agreed to pay us up to an additional $40.0 million, subject to the achievement of a preclinical milestone and the exercise by Ono of its options to obtain exclusive licenses to develop and commercialize the Candidates.

Such fees are in addition to the upfront payment and research and development fees.

Pursuant to the Ono Agreement, we and Ono are jointly conducting research and development activities under a joint development plan, with the goal of advancing each Candidate to a pre-defined preclinical milestone.

We have granted to Ono, during a specified period of time, an option to obtain an exclusive license under certain intellectual property rights to develop and commercialize (a) Candidate 1 in Asia, with us retaining rights for development and commercialization in all other territories of the world and (b) Candidate 2 in all territories of the world, with us retaining the right to co-develop and co-commercialize Candidate 2 in the United States and Europe under a joint arrangement whereby it is eligible to share at least 50% of the profits and losses.

Subject to Ono’s exercise of its options to obtain exclusive licenses to develop and commercialize the Candidates and to the achievement of certain clinical, regulatory and commercial milestones with respect to each Candidate in specified territories, we are entitled to receive an aggregate of up to $285.0 million in milestone payments for Candidate 1 and an aggregate of up to $895.0 million in milestone payments for Candidate 2, with the applicable milestone payments for Candidate 2 for the United States and Europe subject to reduction by 50% if we elect to co-develop and co-commercialize Candidate 2 as described above.

As of December 31, 2019, we have not received any such payments.

We are also eligible to receive tiered royalties ranging from the mid-single digits to the low-double digits based on annual net sales by Ono of each Candidate in specified territories, with such royalties subject to certain reductions.

Pursuant to the Ono Agreement, we and Ono are jointly conducting research and development activities under a joint development plan, with the goal of advancing Candidate 2 to a pre-defined preclinical milestone.

We have granted to Ono, during a specified period of time, an option to obtain an exclusive license under certain intellectual property rights to develop and commercialize Candidate 2 in all territories of the world, with us retaining the right to co-develop and co-commercialize Candidate 2 in the United States and Europe under a joint arrangement whereby it is eligible to share at least 50% of the profits and losses.

On December 4, 2020, we entered into the Ono Letter Agreement with Ono in connection with the Ono Agreement.

Pursuant to the Ono Letter Agreement, Ono delivered to us proprietary antigen binding domains targeting an antigen expressed on certain solid tumors, and nominated such antigen binding domains as the Ono Antigen Binding Domain for incorporation into Collaboration Candidate 2.

In connection with such nomination, Ono paid us a milestone fee of $10.0 million in December 2020 for further research and development of Collaboration Candidate 2 under the Ono Agreement, and Ono continues to maintain its option to Collaboration Candidate 2 under the Ono Agreement.

In addition, the Ono Letter Agreement terminated further development with respect to Candidate 1.

Subject to Ono’s exercise of its options to obtain exclusive licenses to develop and commercialize Candidate 2 and to the achievement of certain clinical, regulatory and commercial milestones in specified territories, we are eligible to receive an aggregate of up to $885.0 million in milestone payments for Candidate 2, with the applicable milestone payments for Candidate 2 for the United States and Europe subject to reduction by 50% if we elect to co-develop and co-commercialize Candidate 2 as described above.

As of December 31, 2020, we have not received any milestone payments other than the $10.0 million associated with the Ono Letter Agreement in December 2020.

We are also eligible to receive tiered royalties ranging from the mid-single digits to the low-double digits based on annual net sales by Ono for Candidate 2 in specified territories, with such royalties subject to certain reductions.

As of December 31, 2020, no royalties have been paid to us.

As a direct result of our entry into the Ono Agreement, we incurred an aggregate of $2.0 million in sublicense consideration to certain of our existing licensors.

As a direct result of our entry into the Ono Agreement and the Ono Letter Agreement, we incurred an aggregate of $4.0 million in sublicense consideration to certain of our existing licensors.

The $4.0 million in sublicense consideration represents an asset under ASC 340, Other Assets and Deferred Costs.

As of December 31, 2019, all such consideration has been paid, with $1.0 million paid during the year ended December 31, 2019.

As of December 31, 2020, $2.0 million such consideration has been paid, with the remaining $2.0 million included in accounts payable on our consolidated balance sheet at December 31, 2020.

Agreement with Juno Therapeutics, Inc.

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(the Juno Agreement) to screen for and identify small molecule modulators that enhance the therapeutic properties of Juno’s genetically-engineered T-cell immunotherapies.

During the year ended December 31, 2019, we received $1.2 million in research payments related to the Juno Agreement.

On May 4, 2019, the four-year initial research term under the Juno Agreement concluded as scheduled and t he overall agreement terminated upon our receipt of the final quarterly research payment of $0.2 million.

On May 4, 2019, the four-year initial research term under the Juno Agreement concluded as scheduled and the overall agreement terminated upon our receipt of the final quarterly research payment of $0.2 million.

Memorial Sloan Kettering Cancer Center License Agreement

On May 15, 2018, we entered into an Amended and Restated Exclusive License Agreement with Memorial Sloan Kettering Cancer Center (MSK).

The agreement amends and restates the license agreement entered into between us and MSK on August 19, 2016.

In consideration for the additional rights granted under the May 2018 agreement, we issued 500,000 shares of our common stock to MSK, which shares were valued at $4.8 million on the date of agreement.

We also paid an upfront cash fee of $0.5 million, and we are obligated to pay milestone payments upon the achievement of specified clinical, regulatory and commercial milestones and royalty payments to MSK on net sales of licensed products.

We are also obligated to pay MSK a percentage of certain sublicense income received by us.

Furthermore, in the event a licensed product achieves a specified clinical milestone, MSK is then eligible to receive additional milestone payments, where the amount of such payments owed to MSK are contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone .

David Gladstone Institutes License Agreement

On September 11, 2018, we entered into an exclusive license agreement with the J.

David Gladstone Institutes (Gladstone).

Pursuant to the license agreement with Gladstone, we issued 100,000 shares of our common stock to Gladstone, which shares were valued at $1.3 million on the date of the agreement.

We also paid an upfront cash fee of $0.1 million, and we are obligated to pay milestone payments in an aggregate amount of up to approximately $1.9 million upon the achievement of specified clinical, regulatory and commercial milestones and as well as royalties to Gladstone in the low single digits on net sales of licensed products.

We are also obligated to pay Gladstone a tiered percentage in the low to mid-single digits of certain sublicense income received by us .

On May 15, 2018, we entered into the Amended MSK License with MSK.

The Amended MSK License amends and restates the Exclusive License Agreement entered into between us and MSK on August 19, 2016, pursuant to which we entered into an exclusive license agreement with MSK for rights relating to compositions and methods covering iPSC-derived cellular immunotherapy, including T-cells and NK-cells derived from iPSCs engineered with CARs.

Pursuant to the Amended MSK License, MSK granted us additional licenses to certain patents and patent applications relating to new CAR constructs and off-the-shelf CAR T cells, including the use of clustered regularly interspaced short palindromic repeat (CRISPR) and other innovative technologies for their production, in each case to research, develop, and commercialize licensed products in the field of all human therapeutic uses worldwide.

We have the right to grant sublicenses to certain licensed rights in accordance with the terms of the Amended MSK License, in which case we are obligated to pay MSK a percentage of certain sublicense income received.

In the event a licensed product achieves a specified clinical milestone, MSK is then eligible to receive certain milestone payments totaling up to $75.0 million based on the price of the Company’s common stock, where the amount of such payments owed to MSK is contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone.

These payments are based on common stock price multiples, with the numerator being the fair value of the ten-trading day trailing average closing price of the Company’s common stock and the denominator being the ten-trading day trailing average closing price of the Company’s common stock as of the effective date of the Amended MSK License, adjusted for any stock splits, cash dividends, stock dividends, other distributions, combinations, recapitalizations, or similar events.

Under the terms of the Amended MSK License, upon a change of control of the Company, in certain circumstances, we may be required to pay a portion of these payments to MSK based on the price of our common stock in connection with such change of control.

As of December 31, 2020, we recorded a liability of $47.7 million associated with the stock price appreciation milestones for the Amended MSK License.

To date, no licensed products have achieved the specified clinical milestone, and no stock price appreciation milestones are currently owed to MSK.

Investing Activities

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Financing Activities

Financing activities provided cash of $149.9 million for the year ended December 31, 2019, which primarily consisted of $162.4 million of net proceeds from our September 2019 public offering of common stock and $2.5 million in proceeds from the issuance of common stock from equity incentive plans pursuant to the exercise of employee stock options net of issuance costs.

Financing activities provided cash of $282.8 million for the year ended December 31, 2020, which primarily consisted of $188.8 million of net proceeds from our June 2020 public offering of common stock, $50.0 million of net proceeds from our June 2020 private placement of common stock, and $33.9 million of net proceeds from the issuance of common stock in conjunction with our collaboration agreement with Janssen, which amount represents the fair value of the equity component from Janssen’s common stock purchase in connection with the collaboration agreement.

These proceeds were partially offset by $15.0 million in repayments on our long-term debt facility.

Financing activities provided cash of $140.8 million for the year ended December 31, 2018, which primarily consisted of the $134.6 million of net proceeds from our September 2018 public offering of common stock and $3.5 million of proceeds from the California Institute for Regenerative Medicine (CIRM) award.

From our inception through December 31, 2020 we have funded our consolidated operations primarily through the public and private sale of common stock, the private placement of preferred stock and convertible notes, commercial bank debt and revenues from collaboration activities and grants.

As of December 31, 2020, we had aggregate cash and cash equivalents and investments of $482.9 million.

Public Offering of Common Stock

In September 2019, we completed a public offering of common stock in which investors, certain of which are affiliated with our directors, purchased 9,890,000 shares of our common stock at a price of $17.50 per share under our shelf registration statement.

Stock Purchase Agreement with JJDC

In April 2020, we entered into a Stock Purchase Agreement with JJDC.

Under the Stock Purchase Agreement, we sold 1.6 million shares of our common stock to JJDC at $31.00 per share, for an aggregate purchase price of $50.0 million, of which $34.0 million was considered an equity component of the transaction, while the remaining $16.0 million was classified as a cash flow from operating activities.

Public Offerings of Common Stock

In June 2020, we completed a public offering of common stock in which investors, certain of which are affiliated with one of our directors, purchased 7.1 million shares of our common stock at a price of $28.31 per share under a shelf registration statement.

Gross proceeds from the offering were $201.3 million.

After giving effect to $12.5 million in underwriting discounts, commissions and expenses related to the offering, net proceeds were $188.8 million.

In September 2018, we completed a public offering of common stock in which investors, certain of which are affiliated with our directors, purchased 10,648,149 shares of our common stock at a price of $13.50 per share under our shelf registration statement.

In September 2019, we completed a public offering of common stock in which investors, certain of which are affiliated with one of our directors, purchased 9 .9 million shares of our common stock at a price of $17.50 per share under our shelf registration statement.

Gross proceeds from the offering were $173.1 million.

After giving effect to $10.7 million in underwriting discounts, commissions and expenses related to the offering, net proceeds were $162.4 million .

In December 2017, we completed a public offering of common stock in which investors purchased 10,953,750 shares of our common stock at a price of $4.20 per share under a shelf registration statement.

Gross proceeds from the offering were $46.0 million.

After giving effect to an estimated $3.0 million in underwriting discounts, commissions and expenses related to the offering (of which $0.

3 million was paid during 2018 ), n et proceeds were $43.0 million.

Private Placement of Common Stock

In June 2020, we exercised our right to cause JJDC to purchase, and JJDC purchased, in a private placement 1.8 million shares of our common stock at a price of $28.31 per share, for aggregate proceeds of $50.0 million.

The shares of common stock purchased in the private placement were not subject to any underwriting discounts or commissions.

California Institute for Regenerative Medicine Award

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Pursuant to the terms of the Award, we are eligible to receive five disbursements in varying amounts totaling $4.0 million throughout the project period of the Award.

In December 2018, we discussed with CIRM our intent to pursue the clinical development of FT516 in relapsed / refractory hematologic malignancies in addition to advanced solid tumors, and our preference to first submit an IND application for FT516 in relapsed / refractory hematologic malignancies rather than in advanced solid tumors.

In January 2019, we submitted our IND application for FT516 in relapsed / refractory hematologic malignancies, which IND submission was allowed by the FDA in February 2019.

We agreed with CIRM to suspend the Award until such time as we elected to proceed with our submission of an IND application for FT516 in advanced solid tumors.

In November 2019, we submitted an IND application for FT516 in advanced solid tumors and the Award was taken off of suspension by CIRM in January 2020.

In February 2020, we received a $0.4 million disbursement based on a milestone achievement .

In November 2019, we submitted an IND application for FT516 in advanced solid tumors.

As of December 31, 2020, the Company has received aggregate disbursements under the Award in the amount of $4.0 million.

The Award is subject to certain co-funding requirements by us.

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Silicon Valley Bank Debt Facility

On July 30, 2014, we entered into an Amended and Restated Loan and Security Agreement (Restated LSA) with Silicon Valley Bank (Bank), collateralized by substantially all of our assets, excluding certain intellectual property.

The Restated LSA amends and restates the Loan and Security Agreement, dated as of January 5, 2009, as amended, by and between us and the Bank (Loan Agreement).

Pursuant to the Restated LSA, the Bank agreed to make loans to us in an aggregate principal amount of up to $20.0 million, comprised of (i) a $10.0 million term loan, funded at the closing date (Term A Loan) and (ii) subject to the achievement of a specified clinical milestone, additional term loans totaling up to $10.0 million in the aggregate, which were available until December 31, 2014 (each, Term B Loan).

On December 24, 2014, we elected to draw $10.0 million under the Term B Loan.

On July 30, 2014, we entered into an Amended and Restated Loan and Security Agreement (Restated LSA) with Silicon Valley Bank (the Bank), collateralized by substantially all of our assets, excluding certain intellectual property.

On July 14, 2017, we entered into an amendment (SVB Loan Amendment) of the Restated LSA with the Bank where the Bank extended an additional term loan to us in the principal amount of $15.0 million (2017 Term Loan), a portion of which was applied to repay in full all amounts previously outstanding under the Restated LSA.

Following such repayment in full of our existing outstanding debt with the Bank under the Restated LSA, cash proceeds from the remaining portion of the 2017 Term Loan were $7.5 million.

On November 13, 2019 we used cash on hand in the amount of $14.2 million to repay in full all outstanding obligations related to the Restated LSA and SVB Loan Amendment.

Accordingly, all of our obligations under the Restated LSA and SVB Loan Amendment have been paid and discharged in full, and all security interests and other liens granted by us to the Bank to secure our obligations have been terminated and released.

In connection with the SVB Loan Amendment, we issued to the Bank on the First Amendment Effective Date a warrant to purchase up to an aggregate of 91,463 shares of our common stock, subject to adjustment, at an exercise price equal to $3.28 per share.

All such warrants have been exercised as of December 31, 2019.

Registration Statements on Form S-3

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The shelf registration statement allows us to issue certain securities, including shares of our common stock, from time to time.

The specific terms of any offering, if any, under the automatic shelf registration statement would be established at the time of such offering.

Additionally, we entered into a sales agreement with Leerink Partners LLC (Leerink) with respect to an at-the-market offering program, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million through Leerink as its sales agent.

In May 2018, the SEC declared effective a shelf regis tration statement filed by us in May 2018 (File No.

The shelf registration statement allows us to issue certain securities, including shares of our common stock, from time to time.

The specific terms of any offering, if any, under the shelf re gistration statement would be established at the time of such offering.

As of December 31, 201 9 , after giving effect to our September 2018 public offering, we are eligible to issue an aggregate of $ 6.2 million in securities under this shelf registration st atement.

In August 2017, the SEC declared effective a shelf registration statement filed by us in August 2017 (File No.

The shelf registration statement allows us to issue certain securities, including shares of our common stock, from time to time.

The specific terms of any offering, if any, under the shelf registration statement would be established at the time of such offering.

As of December 31, 2019, after giving effect to our December 2017 public offering, we are eligible to issue an aggregate of $54.0 million in securities under the shelf registration statement.

In addition, this registration statement registered for resale one million shares of common stock held by Juno, which were issued in May 2015 in conjunction with the Juno Agreement.

The specific terms of any offering under the automatic shelf registration statement are established at the time of such offering.

In addition, as of December 31, 2020 , we are eligible to issue an aggregate of $6.2 million in securities under a previously filed shelf registration statement (File No.

333-224680), which was declared effective by the SEC in May 2018.

Operating Capital Requirements

We anticipate that we will continue to incur losses for the foreseeable future, and we expect the losses to increase as we continue the research and development of, and seek regulatory approvals for, our product candidates and conduct additional research and development activities pursuant to our collaboration agreement with Ono.

We anticipate that we will continue to incur losses for the foreseeable future, and we expect the losses to increase as we continue the research, manufacture and development of, and seek regulatory approvals for, our product candidates and conduct additional research, manufacturing and development activities pursuant to our collaboration agreements with Janssen and Ono.

Our product candidates have not yet achieved regulatory approval and we may not be successful in achieving commercialization of our product candidates.

We believe our existing cash and cash equivalents and investments as of December 31, 2020 will be sufficient to fund our projected operating requirements for at least the next twelve months.

However, we are subject to all the risks and uncertainties incident in the research and development of therapeutic products.

For example, the FDA or other regulatory authorities may require us to generate additional data or conduct additional preclinical studies or clinical trials, or may impose other requirements beyond those that we currently anticipate.

However, we are subject to all the risks and uncertainties incident in the research, manufacture and development of therapeutic products.

For example, the FDA or other regulatory authorities may require us to generate additional data or conduct additional preclinical studies, manufacturing activities, or clinical trials, or may impose other requirements beyond those that we currently anticipate.

Additionally, it is possible for a product candidate to show promising results in preclinical studies or in clinical trials, but fail to establish sufficient safety and efficacy data necessary to obtain regulatory approvals.

As a result of these and other risks and uncertainties and the probability of success, the duration and the cost of our research and development activities required to advance a product candidate cannot be accurately estimated and are subject to considerable variation.

We may encounter difficulties, complications, delays and other unknown factors and unforeseen expenses in the course of our research and development activities, any of which may significantly increase our capital requirements and could adversely affect our liquidity.

We will require additional capital for the research and development of our product candidates and to perform our research and development obligations under our collaboration agreement with Ono, and we may be forced to seek additional funds sooner than expected to pursue our research and development activities.

As a result of these and other risks and uncertainties and the probability of success, the duration and the cost of our research, manufacturing and development activities required to advance a product candidate cannot be accurately estimated and are subject to considerable variation.

We may encounter difficulties, complications, delays and other unknown factors and unforeseen expenses in the course of our research, manufacturing and development activities, any of which may significantly increase our capital requirements and could adversely affect our liquidity.

We will require additional capital for the research, manufacture and development of our product candidates and to perform our obligations under our collaboration agreements, and we may need to seek additional funds sooner than expected due to any changes in our business, operations, financial condition or prospects, including any impacts of the COVID-19 pandemic.

We expect to finance our capital requirements in the foreseeable future through the sale of public or private equity or debt securities.

However, additional capital may not be available to us on reasonable terms, if at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the research or development of one or more of our product candidates.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the research, manufacture or development of one or more of our product candidates.

If we do raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our common stock.

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Any of these events could significantly harm our business, operations, financial condition and prospects.

In addition, while the full impact of the COVID-19 pandemic on our business, operations, financial condition and prospects, and on the global economy, are currently unknown and difficult to predict, the pandemic has caused significant disruptions and created uncertainties in the global financial markets, and the economic impacts of the pandemic could materially and adversely affect our ability to raise capital through equity or debt financings in the future.

Our forecast of the period of time through which our existing cash and cash equivalents and investments will be adequate to support our operations is a forward-looking statement and involves significant risks and uncertainties.

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the time, cost and outcome of seeking and obtaining regulatory approvals;

the extent to which we are required to pay milestone or other payments under our existing in-license agr eements and any in-license agreements that we may enter into in the future, and the timing of such payments;

the extent to which milestones are achieved under our collaboration agreement with Ono and any other strategic partnership or collaboration agreements that we may enter into in the future, and the time to achievement of such milestones and our receipt of any associated milestone payments;

the extent to which we are required to pay milestone or other payments under our existing in-license agreements and any in-license agreements that we may enter into in the future, and the timing of such payments, including payments owed to MSK in connection with the stock price appreciation milestones;

the extent to which milestones are achieved under our collaboration agreements with Ono and Janssen, and any other strategic partnership or collaboration agreements that we may enter into in the future, and the time to achievement of such milestones and our receipt of any associated milestone payments;

the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

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the cost of establishing sales, marketing, manufacturing and distribution capabilities for, and the pricing and reimbursement of, any products for which we may receive regulatory approval.

If we cannot continue or expand our research and development operations, or otherwise capitalize on our business opportunities, because we lack sufficient capital, our business, operations, financial condition and prospects could be materially adversely affected.

In addition, we are closely monitoring ongoing developments in connection with the COVID-19 pandemic and evaluating adjustments to our business and operations, which may negatively impact our financial condition and prospects and our operating results.

We will continue to assess our operating capital requirements and may make adjustments to our business and operations if circumstances warrant.

If we cannot continue or expand our research, manufacturing and development operations, or otherwise capitalize on our business opportunities, because we lack sufficient capital, our business, operations, financial condition and prospects could be materially adversely affected .

Contractual Obligations and Commitments

The following table summarizes our contractual obligations at December 31, 2019 that are expected to affect our liquidity and cash flows in future periods:

(in thousands)

Operating lease obligations

We lease our headquarters office and laboratory space under a non-cancelable operating lease.

In May 2018, we amended the operating lease, extending the term of the lease through approximately 2028 and agreeing to lease additional space comprising approximately 24,000 square feet in the same building as our existing space for a total occupancy of approximately 72,000 square feet under the lease.

We lease our headquarters office and laboratory space under a non-cancelable operating lease, comprising approximately 72,000 square feet.

In addition to rent, the lease is subject to certain fixed amenities fees.

The above table includes all such fixed fees.

The lease is subject to additional variable charges for common area maintenance and other costs.

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See Note 8 of the consolidated financial statements for additional detail.

During January 2020, we entered into a new lease agreement for a future headquarters facility.

The lease shall commence, subject to certain conditions, in May 2021 and has a term of 15 years from the commencement date, with the option to extend the lease for two successive five-year terms.

Total future minimum lease payments under the lease are $157.6 million, payable in monthly installments beginning on the lease commencement date.

These obligations are not included in the above contractual obligations table as of December 31, 2019.

We have a one-time option to terminate the lease after 10 years from the commencement date, subject to a payment of a $30.0 million early termination fee.

During January 2020, we entered into a new lease agreement for a future headquarters facility (the Premises).

The Premises are located in San Diego, California and we intend to move our corporate headquarters to the Premises during the third quarter of 2021.

Lease payments commence, subject to certain conditions, in May 2021 (the Rent Commencement Date) and the lease has a lease term of 15 years starting from the Rent Commencement Date.

We have the option to extend the lease for two successive five-year periods.

We also have a one-time option to terminate the lease after 10 years from the Rent Commencement Date, subject to payment of a $30.0 million early termination fee.

See Note 8 of the consolidated financial statements for additional detail.

Total undiscounted aggregate future operating lease obligations under all of our operating leases, as of December 31, 2020 are $194.0 million.

We have no material contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to the financial statements.

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Additionally, in the event a licensed product achieves a specified clinical milestone, Memorial Sloan Kettering Cancer Center is then eligible to receive additional milestone payments, where the amount of such payments owed to Memorial Sloan Kettering Cancer Center are contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone.

See Note 2 of the notes to the consolidated financial statements for additional detail related to the stock price appreciation milestone payments.

We enter into contracts in the normal course of business, including with clinical sites and professional service providers for the conduct of clinical trials, contract manufacturers for the production of our product candidates, contract research service providers for preclinical research studies, professional consultants for expert advice and vendors for the sourcing of clinical and laboratory supplies and materials.

These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis