What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-12 compared with 2021-08-12 · 545 added, 279 removed, 763 unchanged (52% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

2021 December 31,

Current assets:

11 unchanged sentences

Other assets (including amounts with related parties) 7,442 2,598

Total assets $ 214,421 $ 221,381

LIABILITIES AND STOCKHOLDERS’ DEFICIT

15 unchanged sentences

394,509,695 and

382,243,142 shares issued and outstanding as of June 30, 2021 and

382,243,142 shares issued and outstanding as of September 30, 2021 and

December 31, 2020, respectively;

excluding treasury stock, 163,800 shares

outstanding as of June 30, 2021 and December 31, 2020, respectively

outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,682,072 1,495,163

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Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Revenue $ 66 $ 151 $ 544 $ 752

Operating expenses:

1 unchanged sentence

with related parties)

49,277 35,772 144,205 96,151

Selling, general and administrative (including amounts

with related parties)

29,625 19,596 107,345 47,436

Impairment of intangible assets — 10,660 — 10,660

Total operating expenses 78,902 66,028 251,550 154,247

Loss from operations ( 78,836 ) ( 65,877 ) ( 251,006 ) ( 153,495 )

Other (expense) income:

Other expense, net:

Interest and investment (loss) income, net ( 5,941 ) 149 2,826 1,213

Interest expense (including amounts with related parties) ( 3,614 ) ( 2,226 ) ( 10,359 ) ( 6,238 )

Other income, net (including amounts with related parties)

Total other (expense) income

Other (expense) income, net (including amounts

with related parties) ( 38 ) 84 252 1,269

Total other expense, net ( 9,593 ) ( 1,993 ) ( 7,281 ) ( 3,756 )

Loss before income taxes and noncontrolling interests ( 88,429 ) ( 67,870 ) ( 258,287 ) ( 157,251 )

Income tax expense

Income tax benefit (expense) — 1,700 ( 8 ) 1,637

Net loss ( 88,429 ) ( 66,170 ) ( 258,295 ) ( 155,614 )

Net loss attributable to noncontrolling interests, net of tax ( 800 ) ( 567 ) ( 2,764 ) ( 1,534 )

3 unchanged sentences

net loss per share – basic and diluted

391,853,623 381,763,170 386,606,200 375,369,638

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net loss $ ( 88,429 ) $ ( 66,170 ) $ ( 258,295 ) $ ( 155,614 )

Other comprehensive income (loss), net of income taxes:

Net unrealized gains on available-for-sale securities

Net unrealized (losses) gains on available-for-sale securities ( 1 ) 5 16 10

Foreign currency translation adjustments 17 ( 53 ) ( 85 ) ( 46 )

Reclassification of net realized gains on

Reclassification of net realized losses on

available-for-sale securities included in net loss

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common stockholders

$ ( 87,613 ) $ ( 65,649 ) $ ( 255,600 ) $ ( 154,114 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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and Subsidiaries

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands, except share amounts)

Three Months Ended September 30, 2021 Common Stock Additional

Deficit Accumulated

Comprehensive

1 unchanged sentence

Noncontrolling

Interests Total

Stockholders’

Three Months Ended June 30, 2021

Balance as of March 31, 2021

Issuance of common stock

under “at-the market”

offering net of

commissions and

offering costs

Stock-based compensation

Exercise of stock options

Vesting of restricted stock

Net share settlement for

Other comprehensive income,

Shares Amount

Balance as of June 30, 2021

390,347,740 $ 39 $ 1,625,018 $ ( 1,783,033 ) $ 37 $ ( 157,939 ) $ ( 646 ) $ ( 158,585 )

Issuance of common stock under “at-the market”

offering net of commissions and

offering costs of $ 962

3,796,537 — 42,061 — — 42,061 — 42,061

Stock-based compensation expense

— — 13,840 — — 13,840 — 13,840

Exercise of stock options 176,196 — 678 — — 678 — 678

Vesting of restricted stock units (RSUs)

285,280 — — — — — — —

Net share settlement for RSUs vesting

( 96,058 ) — ( 960 ) — — ( 960 ) — ( 960 )

Sale of assets to an entity under

common control (Note 8)

— — 1,435 — — 1,435 — 1,435

Other comprehensive income, net of tax

— — — — 16 16 — 16

Net loss — — — ( 87,629 ) — ( 87,629 ) ( 800 ) ( 88,429 )

Balance as of September 30, 2021

394,509,695 $ 39 $ 1,682,072 $ ( 1,870,662 ) $ 53 $ ( 188,498 ) $ ( 1,446 ) $ ( 189,944 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

ImmunityBio, Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands, except share amounts)

Nine Months Ended September 30, 2021 Common Stock Additional

Deficit Accumulated

Comprehensive

1 unchanged sentence

Noncontrolling

Interests Total

Stockholders’

Six Months Ended June 30, 2021

Shares Amount

Balance as of December 31, 2020

Issuance of common stock

under “at-the market”

offering net of

commissions and

offering costs

Stock-based compensation

382,243,142 $ 38 $ 1,495,163 $ ( 1,615,131 ) $ 122 $ ( 119,808 ) $ 1,318 $ ( 118,490 )

Issuance of common stock under “at-the market”

offering net of commissions and

offering costs of $ 4,039

10,216,978 1 136,947 — — 136,948 — 136,948

Stock-based compensation expense

— — 47,001 — — 47,001 — 47,001

Exercise of stock options 1,626,300 — 5,110 — — 5,110 — 5,110

Vesting of RSUs 621,364 — — — — — — —

Net share settlement for

Other comprehensive loss,

Balance as of June 30, 2021

Net share settlement for RSUs vesting

( 198,089 ) — ( 3,584 ) — — ( 3,584 ) — ( 3,584 )

Sale of assets to an entity under

common control (Note 8)

— — 1,435 — — 1,435 — 1,435

Other comprehensive loss, net of tax

— — — — ( 69 ) ( 69 ) — ( 69 )

Net loss — — — ( 255,531 ) — ( 255,531 ) ( 2,764 ) ( 258,295 )

Balance as of September 30, 2021

394,509,695 $ 39 $ 1,682,072 $ ( 1,870,662 ) $ 53 $ ( 188,498 ) $ ( 1,446 ) $ ( 189,944 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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and Subsidiaries

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

Three Months Ended September 30, 2020 Common Stock Additional

Deficit Accumulated

Comprehensive

1 unchanged sentence

Noncontrolling

Interests Total

Stockholders’

Three Months Ended June 30, 2020

Balance as of March 31, 2020

Shares Amount

Balance as of June 30, 2020

381,280,749 $ 38 $ 1,493,486 $ ( 1,481,757 ) $ ( 75 ) $ 11,692 $ 2,687 $ 14,379

Issuance of common stock,

net of offering costs

Stock-based compensation

net of offering costs of $ 4,373

— — 19 — — 19 — 19

Stock-based compensation expense

— — 714 — — 714 — 714

Exercise of stock options 883,256 — 353 — — 353 — 353

Vesting of RSUs 83,260 — — — — — — —

Net share settlement for

Other comprehensive loss,

Balance as of June 30, 2020

Net share settlement for RSUs vesting

( 138,091 ) — ( 321 ) — — ( 321 ) — ( 321 )

Other comprehensive loss, net of tax

— — — — ( 46 ) ( 46 ) — ( 46 )

Net loss — — — ( 65,603 ) — ( 65,603 ) ( 567 ) ( 66,170 )

Balance as of September 30, 2020

382,109,174 $ 38 $ 1,494,251 $ ( 1,547,360 ) $ ( 121 ) $ ( 53,192 ) $ 2,120 $ ( 51,072 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

ImmunityBio, Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

Nine Months Ended September 30, 2020 Common Stock Additional

Deficit Accumulated

Comprehensive

1 unchanged sentence

Noncontrolling

Interests Total

Stockholders’

Six Months Ended June 30, 2020

Shares Amount

Balance as of December 31, 2019

371,976,995 $ 37 $ 1,406,002 $ ( 1,393,280 ) $ ( 87 ) $ 12,672 $ 3,654 $ 16,326

Issuance of common stock,

net of offering costs

Stock-based compensation

net of offering costs of $ 4,373

8,521,500 1 86,301 — — 86,302 — 86,302

Stock-based compensation expense

— — 1,516 — — 1,516 — 1,516

Exercise of stock options 1,142,273 — 917 — — 917 — 917

Vesting of RSUs 642,236 — — — — — — —

Net share settlement for

Other comprehensive income,

Balance as of June 30, 2020

Net share settlement for RSUs vesting

( 173,830 ) — ( 485 ) — — ( 485 ) — ( 485 )

Other comprehensive income, net of tax

— — — — ( 34 ) ( 34 ) — ( 34 )

Net loss — — — ( 154,080 ) — ( 154,080 ) ( 1,534 ) ( 155,614 )

Balance as of September 30, 2020

382,109,174 $ 38 $ 1,494,251 $ ( 1,547,360 ) $ ( 121 ) $ ( 53,192 ) $ 2,120 $ ( 51,072 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

Net loss $ ( 258,295 ) $ ( 155,614 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense 47,001 1,516

Impairment of intangible assets — 10,660

Unrealized gains on equity securities ( 2,383 ) ( 490 )

Depreciation and amortization 10,643 10,513

Non-cash interest items, net (including amounts with related parties)

Non-cash interest expense, net (including amounts with related parties) 9,126 5,743

Non-cash lease expense related to operating lease right-of-use assets 3,500 3,374

1 unchanged sentence

Amortization of net premiums and discounts on marketable debt securities 261 425

Change in fair value of contingent consideration obligations

Change in fair value of contingent consideration ( 134 ) ( 797 )

Deferred tax — ( 2,731 )

Changes in operating assets and liabilities:

Prepaid expenses and other current assets 425 ( 6,769 )

Other assets ( 4,844 ) ( 22 )

Accounts payable ( 170 ) 7,275

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Purchases of property, plant and equipment ( 23,160 ) ( 2,368 )

Proceeds from sales of property, plant and equipment ( Note 8 )

Purchases of marketable debt securities, available-for-sale ( 2,749 ) ( 85,651 )

1 unchanged sentence

Proceeds from sales of marketable debt and equity securities 13,568 54,080

Net cash provided by investing activities

Net cash provided by (used in) investing activities 52,916 ( 27,357 )

Financing activities:

2 unchanged sentences

Proceeds from exercises of stock options 5,110 917

Sale of assets to an entity under common control ( Note 8 )

Payment for contingent consideration ( 419 ) —

Net share settlement for RSUs vesting ( 3,584 ) ( 485 )

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(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Reconciliation of cash, cash equivalents, and restricted cash, end of period:

4 unchanged sentences

Cash paid during the period for:

Interest $ 1,466 $ 19

Income taxes 11 9

Supplemental disclosure of non-cash activities:

1 unchanged sentence

expenses and due to related parties

Unpaid offering costs included in accounts payable and accrued expenses

$ 5,582 $ 524

Right-of-use assets obtained in exchange for operating lease liabilities 19,461 1,492

Unrealized gains on marketable debt securities

Unrealized gains (losses) on marketable debt securities 16 ( 12 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Description of Business

We were incorporated in Illinois on October 7, 2002 under the name ZelleRx Corporation.

On January 22, 2010, we changed our name to Conkwest, Inc.

In March 2014, we formed Conkwest, Inc., our wholly-owned subsidiary in the state of Delaware, or Conkwest Delaware, for the purposes of changing the state of our incorporation to the state of Delaware.

In March 2014, we merged with and into Conkwest Delaware, with Conkwest Delaware surviving the merger.

The company was established following a series of mergers and name changes, beginning with the original predecessor company, which was incorporated in Illinois on October 7, 2002 under the name ZelleRx Corporation.

On January 22, 2010, the name was changed to Conkwest, Inc.

In March 2014, the company formed Conkwest, Inc.

(“Conkwest Delaware”), a wholly-owned subsidiary in the state of Delaware, for the purposes of changing the state of our incorporation to the state of Delaware.

In March 2014, the parent company merged with and into Conkwest Delaware, with Conkwest Delaware surviving the merger.

On July 10, 2015, we changed our name to NantKwest, Inc.

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In these notes to the unaudited condensed consolidated financial statements, the terms “ImmunityBio,” “the company,” “the combined company,” “we,” “us,” and “our” refer to ImmunityBio and subsidiaries.

We established ImmunityBio to advance next-generation immunotherapies and address unmet needs within oncology and infectious disease.

Our platform is designed to overcome limitations of the current standards of T cell-based immunotherapies, including checkpoint inhibitors and CAR-T cells and is based on our four key modalities:

(1) activating natural killer (“NK”), and T cells using antibody cytokine fusion proteins, (2) activating tumoricidal macrophages using low-dose synthetic immunomodulators, (3) generating memory T cells using vaccine candidates developed with our second-generation adenovirus, or hAd5, technology, and (4) off-the-shelf natural killer cells from the NK‑92 cell line and memory-like cytokine-enhanced NK cells (“M‑ceNK”) from allogenic and autologous donors.

We own a broad, clinical-stage immunotherapy pipeline, including an antibody cytokine fusion protein (an IL‑15 superagonist (N‑803) known as Anktiva), an albumin-associated anthracycline synthetic immunomodulator (aldoxorubicin), second-generation adenovirus (“hAd5”) and yeast vaccine technologies (targeting tumor-associated antigens and neoepitopes), off-the-shelf genetically engineered natural killer cell lines inducing cancer and virally infected cell death through a variety of concurrent mechanisms (including innate killing, antibody-mediated killing, and CAR-directed killing), patient specific NK cell product for cancer (M-ceNK), macrophage polarizing peptides, and bi-specific fusion proteins targeting CD20, PD‑L1, TGF‑ b and IL‑12.

Our immunotherapy clinical pipeline consists of over 40 clinical trials in Phase 1, 2, or 3 development across 19 indications in solid and liquid cancers and infectious diseases.

We have an expansive clinical-stage pipeline and intellectual property portfolio with 17 first-in-human assets in 25 Phase II to III clinical trials.

In December 2019, the United States (“U.S.”) Food and Drug Administration (“FDA”) granted Breakthrough Therapy designation to Anktiva for bacillus Calmette-Guérin (“BCG”) unresponsive carcinoma in situ non-muscle invasive bladder cancer.

We established ImmunityBio to advance next-generation immunotherapies and address unmet needs within the clinical fields of oncology and infectious disease.

We are developing treatments based on a proprietary immunotherapy platform that is designed to overcome limitations of the current standards of T cell-based immunotherapies, including checkpoint inhibitors and CAR-T cells.

Our platform is based on four key modalities:

(1) activating natural killer (“NK”), and T cells using antibody cytokine fusion proteins, (2) activating tumoricidal macrophages using low-dose synthetic immuno-modulators, (3) generating memory T cells using vaccine candidates developed with our second-generation adenovirus (“hAd5”), yeast and saRNA technologies, and (4) off-the-shelf NK cells from the NK‑92 cell line and memory-like cytokine-enriched NK cells (“M‑ceNK”) from allogenic and autologous donors.

ImmunityBio’s immunotherapy pipeline includes an antibody cytokine fusion protein (an IL‑15 superagonist (N‑803) known as Anktiva™), an albumin-associated anthracycline synthetic immuno-modulator (aldoxorubicin), hAd5 and yeast vaccine technologies (targeting the novel strain of coronavirus disease (“SARS‑CoV‑2”) , tumor-associated antigens and neoepitopes), off-the-shelf genetically engineered natural killer cell lines inducing cancer and virally infected cell death through a variety of concurrent mechanisms (including innate killing, antibody-mediated killing, and CAR-directed killing), patient specific NK cell product for cancer (M-ceNK), macrophage polarizing peptides, and bi-specific fusion proteins targeting CD20, PD‑L1, TGF‑b and IL‑12 .

Our immunotherapy clinical pipeline consists of 20 actively recruiting clinical trials in Phase I, II, or III development.

There are 13 active clinical trials in Phase II or III development across 12 indications in solid and liquid cancers (including bladder, pancreatic and lung cancers) and infectious diseases (including SARS‑CoV‑2 and the human immunodeficiency virus (“HIV”)).

We have an expansive clinical-stage pipeline and intellectual property portfolio with 16 first-in-human assets.

In December 2019, the United States (“U.S.”) Food and Drug Administration (“FDA”) granted Breakthrough Therapy designation to Anktiva™ for bacillus Calmette-Guérin (“BCG”) unresponsive non-muscle invasive bladder cancer carcinoma in situ (“CIS”).

Based on patient readout data that was submitted with our application to obtain our Breakthrough Therapy designation, Anktiva™ achieved its primary endpoint of complete response rate at any time in the ongoing registrational Phase II/III trial.

Other indications currently with registration-potential studies include BCG unresponsive papillary bladder cancer, first- and second-line lung cancer, and metastatic pancreatic cancer.

Other indications currently with registration-potential studies include BCG unresponsive papillary bladder cancer, lung cancer, and metastatic pancreatic cancer.

On December 21, 2020 , we and NantCell entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which we and NantCell agreed to combine our businesses.

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On March 9, 2021, we completed the Merger pursuant to the terms of the Merger Agreement.

Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of NantCell common stock , par value $ 0.001 per share, issued and outstanding immediately prior to the Effective Time, subject to certain exceptions as set forth in the Merger Agreement, was converted automatically into a right to receive 0.8190 (the “Exchange Ratio”) newly issued shares of common stock, par value $ 0.0001 per share, of the company (“Company Common Stock”), with cash paid in lieu of any fractional shares.

Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of NantCell common stock , par value $ 0.001 per share, issued and outstanding immediately prior to the Effective Time, subject to certain exceptions as set forth in the Merger Agreement, was converted auto matically into a right to receive 0.8190 (the “Exchange Ratio”) newly issued shares of common stock, par value $ 0.0001 per share, of the company (“Company Common Stock”), with cash paid in lieu of any fractional shares.

At the Effective Time, each share of the company’s common stock issued and outstanding immediately prior to the Effective Time, remained an issued and outstanding share of the combined company.

At the Effective Time, each outstanding option, warrant or restricted stock unit to purchase NantCell common stock was converted using the Exchange Ratio into an option, warrant or restricted stock unit, respectively, on the same terms and conditions immediately prior to the Effective Time, to purchase shares of Company Common Stock.

Immediately following the Effective Time, the former stockholders of NantCell held approximately 71.5 % of the outstanding shares of Company Common Stock and the stockholders of the company as of immediately prior to the Merger held approximately 28.5 % of the outstanding shares of Company Common Stock.

As a result of the Merger and immediately following the Effective Time, Dr.

Patrick Soon-Shiong, our Executive Chairman, and his affiliates beneficially owned, in the aggregate, approximately 81.8 % of the outstanding shares of Company Common Stock.

Patrick Soon-Shiong, our Executive Chairman and Global Chief Scientific and Medical Officer, and his affiliates beneficially owned, in the aggregate, approxim ately 81.8 % of th e outstanding shares of Company Common Stock.

Following the consummation of the Merger, shares of the company’s common stock were listed on the Nasdaq Global Select Market under the symbol “IBRX.”

We incurred costs totaling $ 23.3 million in connection with the Merger, consisting of financial advisory, legal and other professional fees, of which $ 13.0 million was recorded during the six months ended June 30, 2021.

We incurred costs tota ling $ 23.3 million in connection with the Merger, consisting of financial advisory, legal and other professional fees, of which $ 13.0 million was recorded during the nine months ended September 30, 2021.

Merger-related costs are reported in selling, general and administrative expense , on the condensed consolidated statements of operations.

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All material intercompany accounts and transactions have been eliminated in consolidation.

The following tables provide the impact of the change in reporting entity on our unaudited condensed consolidated statements of operations for the three months ended March 31, 2021 and the three and six months ended June 30, 2020, respectively (in thousands):

The following tables provide the impact of the change in reporting entity on our unaudited condensed consolidated statements of operations for the three months ended March 31, 2021 and the three and nine months ended September 30, 2020, respectively (in thousands):

Three Months Ended

March 31, 2021

NantCell NantKwest Intercompany

Eliminations ImmunityBio,

Revenue $ 183 $ — $ ( 44 ) $ 139

Operating expenses:

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Income tax expense — ( 6 ) — ( 6 )

Net loss $ ( 46,556 ) $ ( 33,997 ) $ 72 $ ( 80,481 )

Three Months Ended

June 30, 2020

September 30, 2020

NantCell NantKwest Intercompany

Eliminations ImmunityBio,

Revenue $ 126 $ 68 $ ( 43 ) $ 151

Operating expenses:

3 unchanged sentences

with related parties) 14,885 4,711 — 19,596

Impairment of intangible assets 10,660 — — 10,660

Loss from operations ( 44,330 ) ( 21,927 ) 380 ( 65,877 )

1 unchanged sentence

with related parties) ( 2,146 ) 153 — ( 1,993 )

Income tax expense

Six Months Ended

June 30, 2020

Income tax benefit (expense) 1,702 ( 2 ) — 1,700

Net loss $ ( 44,774 ) $ ( 21,776 ) $ 380 $ ( 66,170 )

Nine Months Ended

September 30, 2020

NantCell NantKwest Intercompany

Eliminations ImmunityBio,

Revenue $ 1,819 $ 90 $ ( 1,157 ) $ 752

Operating expenses:

3 unchanged sentences

with related parties) 30,833 16,603 — 47,436

Impairment of intangible assets 10,660 — — 10,660

Loss from operations ( 92,221 ) ( 60,740 ) ( 534 ) ( 153,495 )

1 unchanged sentence

with related parties) ( 4,251 ) 495 — ( 3,756 )

Income tax expense

Income tax benefit (expense) 1,643 ( 6 ) — 1,637

Net loss $ ( 94,829 ) $ ( 60,251 ) $ ( 534 ) $ ( 155,614 )

Summary of Significant Accounting Policies

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GAAP for annual reports.

As of June 30, 2021, the company had an accumulated deficit of $ 1.8 billion.

We also had negative cash flows from operations of $ 130.1 million for the six months ended June 30, 2021.

As of September 30, 2021, the company had an accumulated deficit of $ 1.9 billion.

We also had negative cash flows from operations of $ 202.8 million for the nine months ended September 30, 2021.

The company will likely need additional capital to further fund the development of, and seek regulatory approvals for, our product candidates, and to begin to commercialize any approved products.

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As a result of continuing anticipated operating cash outflows, we believe that substantial doubt exists regarding our ability to continue as a going concern without additional funding or financial support.

However, we believe our existing cash, cash equivalents, and investments in marketable securities, together with capital to be raised through equity offerings (including but not limited to the offering, issuance and sale by us of up to a maximum aggregate offering of $ 500.0 million of our common stock that may be issued and sold under an “at-the-market” sales agreement with Jefferies LLC (the “ATM”)), and our potential ability to borrow from affiliated entities, will be sufficient to fund our operations through at least the next 12 months following the issuance date of the financial statements based primarily upon our Executive Chairman’s intent and ability to support our operations with additional funds, including loans from affiliated entities, as required, which we believe alleviates such doubt.

However, we believe our existing cash, cash equivalents, and investments in marketable securities, together with capital to be raised through equity offerings (including but not limited to the offering, issuance and sale by us of up to a maximum aggregate offering of $ 500.0 million of our common stock that may be issued and sold under an “at-the-market” sales agreement with Jefferies LLC (the “ATM”)), and our potential ability to borrow from affiliated entities, will be sufficient to fund our operations through at least the next 12 months following the issuance date of the financial statements based primarily upon our Executive Chairman and Global Chief Scientific and Medical Officer’s intent and ability to support our operations with additional funds, including loans from affiliated entities, as required, which we believe alleviates such doubt.

We may also seek to sell additional equity, through one or more follow-on public offerings, or in separate financings, or obtain a credit facility.

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This analysis is performed at the initial investment in the entity or upon any reconsideration event.

For entities we hold as an equity investment that are not consolidated under the VIE m odel, we consider whether our investment constitutes ownership of a majority of the voting interests in the entity and therefore should be considered for consolidation under the voting interest model.

For entities we hold as an equity investment that are not consolidated under the VIE model, we consider whether our investment constitutes ownership of a majority of the voting interests in the entity and therefore should be considered for consolidation under the voting interest model.

Unconsolidated equity investments in the common stock or in-substance common stock of an entity under which we are able to exercise significant influence, but not control, are accounted for using the equity method.

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Risks and Uncertainties

In March 2020, the World Health Organization declared the novel strain of coronavirus disease (SARS‑CoV‑2) a pandemic.

In March 2020, the World Health Organization declared SARS‑CoV‑2 a pandemic.

To date, our operations have not been significantly disadvantaged by the pandemic.

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Financial instruments that potentially subject us to concentrations of risk consist principally of cash and cash equivalents, marketable securities, and a convertible note receivable.

Our cash and cash equivalents are held by one major financial institution in the U.S., one in South Korea and one in Italy.

Product candidates developed by us will require approvals or clearances from the FDA or international regulatory agencies prior to commercial sales.

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If we were to be denied approval or clearance or any such approval or clearance was to be delayed, it would have a material adverse impact on us.

Common Control Transactions

Transactions between us and entities where Dr.

Soon-Shiong and his affiliates are the controlling stockholders are accounted for as common control transactions whereby the net assets acquired or transferred are accounted at their carrying value.

Any difference between the carrying value and consideration recognized is treated as a capital transaction.

Cash consideration up to the carrying value of the net assets acquired or transferred is presented as an investing activity in our condensed consolidated statement of cash flows.

Cash consideration in excess of the carrying value of the net assets acquired or transferred is presented as a financing activity in our condensed consolidated statement of cash flows.

Sale-leaseback Transaction

A sale-leaseback transaction occurs when an entity sells an asset it owns and immediately leases the asset back from the buyer.

The seller then becomes the lessee and the buyer becomes the lessor.

When entering into a sale-leaseback transaction as a seller-lessee, the requirements in ASC Topic 606, Revenue from Contracts with Customers , and all related accounting standards updates to such Topic are applied in determining whether the transfer of an asset shall be accounted for as a sale of the asset by assessing whether it satisfies a performance obligation under the contract by transferring control of an asset.

If the company transfers control of an asset to the buyer-lessor, the transfer is accounted for as a sale and the company derecognizes the transferred asset.

The subsequent leaseback of the asset is accounted for in accordance with ASC Topic 842, Leases , in the same manner as any third-party lease.

If the company does not transfer control of an asset to the buyer-lessor, the sale-leaseback transaction is accounted for as a financing arrangement.

In September 2021, we entered into a sale transaction with Nant Capital, LLC (“Nant Capital”), a related party, for a building located at 557 South Douglas Street, El Segundo, California.

We subsequently leased back the building for an initial seven-year lease term with an option to extend the lease for two additional seven-year periods.

There is no purchase option at the end of the lease term.

Since we transferred the legal title and all benefits and risks incidental to the ownership of the property to Nant Capital, we accounted for the transfer as a sale.

We have classified the leaseback of the building as an operating lease and accordingly, a right-of-use asset and an operating lease liability were established on the lease commencement date that will be amortized through the end of the lease term.

See Note 8 , Related-Party Agreements , for further information.

Stock-Based Compensation

We account for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”).

We account for stock-based compensation under the provisions of ASC Topic 718, Compensation—Stock Compensation (“ASC 718”).

We measure the fair value of an equity-classified award at the grant date and recognize the stock-based compensation expense over the period of vesting on the straight-line basis for our outstanding share awards that do not contain a performance condition.

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The following table details those securities that have been excluded from the computation of potentially dilutive securities:

As of June 30,

As of September 30,

Outstanding stock options 4,194,268 5,221,543

1 unchanged sentence

Outstanding related-party warrants 1,638,000 1,638,000

Total 12,908,670 7,339,835

Amounts in the table above reflect the common stock equivalents of the noted instruments, including awards issued under the NantKwest 2015 Equity Incentive Plan (the “2015 Plan”), the NantKwest 2014 Equity Incentive Plan (the “2014 Plan”), and awards issued under the NantCell, Inc.

2015 Stock Incentive Plan (the “NC 2015 Plan”) that, in the case of June 30, 2021, were outstanding immediately prior to the Effective Time of the Merger and in the case of June 30, 2020 have been adjusted to include the combined NC 2015 Plan and NantCell warrants then outstanding (in both cases adjusted using the Exchange Ratio of 0.8190 ).

2015 Stock Incentive Plan (the “NC 2015 Plan”) that, in the case of September 30, 2021, were outstanding immediately prior to the Effective Time of the Merger and in the case of September 30, 2020 have been adjusted to include the combined NC 2015 Plan and NantCell warrants then outstanding (in both cases adjusted using the Exchange Ratio of 0.8190 ).

See Note 10 , Stock-Based Compensation , for further information.

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We continue to evaluate the impact that this new standard and its related amendments will have on our consolidated financial statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the SEC during the three months ended June 30, 2021 did not, or are not expected to, have a material effect on our consolidated financial statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the SEC during the three months ended September 30, 2021 did not, or are not expected to, have a material effect on our consolidated financial statements.

Financial Statement Details

Prepaid expenses and other current assets

As of June 30, 2021 and December 31, 2020, prepaid expenses and other current assets consist of the following (in thousands):

Prepaid preclinical and clinical trial services – with

related party (Note 8)

Prepaid license fees

As of September 30, 2021 and December 31, 2020, prepaid expenses and other current assets consist of the following (in thousands):

September 30,

2021 December 31,

Insurance premium financing asset $ 4,137 $ 1,421

Prepaid services 2,373 1,294

Prepaid insurance 2,208 1,365

Insurance premium financing asset

Prepaid license fees 1,377 801

Prepaid preclinical and clinical trial services – with

related party ( Note 8 )

Prepaid rent 672 589

Prepaid property taxes 373 —

Prepaid equipment maintenance 229 243

Prepaid supplies – with related party (Note 8)

Insurance claims receivable 92 2,518

Equipment deposits

Interest receivable – marketable debt securities

Prepaid supplies – with related party ( Note 8)

Equipment deposits — 66

Other 255 110

Prepaid expenses and other current assets $ 12,776 $ 13,649

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This includes instances where our third-party insurers have agreed to pay, on our behalf, certain legal defense costs and settlement amounts directly to applicable law firms and a settlement fund.

Our insurance claims receivable as of December 31, 2020 were the result of the recovery of legal costs, which had been previously charged in prior periods to s elling, general and administrative expense, on the condensed consolidated statements of operations.

Property, p lant and e quipment, n et

As of June 30, 2021 and December 31, 2020, property, plant and equipment, net, consist of the following (in thousands):

Our insurance claims receivable as of September 30, 2021 and December 31, 2020 were the result of the recovery of legal costs, which had been previously charged in prior periods to s elling, general and administrative expense, on the condensed consolidated statements of operations.

Property, plant and equipment, net

As of September 30, 2021 and December 31, 2020, property, plant and equipment, net, consist of the following (in thousands):

September 30,

2021 December 31,

Leasehold improvements $ 62,484 $ 52,251

Equipment 47,523 34,738

Construction in progress 6,730 1,333

Software 1,600 2,376

Furniture & fixtures 1,052 1,015

Building — 22,690

Gross property, plant and equipment 119,389 114,403

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Property, plant and equipment, net $ 69,878 $ 72,541

Construction in progress at June 30, 2021 is related primarily to expansion of our pharmaceutical development and manufacturing facilities, including construction of a new filling suite at our leased facilities in El Segundo, California .

For the three months ended June 30, 2021, costs totaling $ 8.2 million were transferred from construction in progress to leasehold improvements as the construction was complete and the asset was ready for its intended use.

Depreciation and amortization expense related to property, plant and equipment totaled $ 7.0 million and $ 7.0 million for the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021 and December 31, 2020, other assets consist of the following (in thousands):

In September 2021, we entered into a sale transaction with Nant Capital, a related party, for a building located at 557 South Douglas Street, El Segundo, California.

We subsequently leased back the building for an initial seven-year lease term with an option to extend the lease for two additional seven-year periods.

The net proceeds from the transaction totaled $ 21.9 million and the net carrying value of the building was $ 20.5 million at the time of the transaction.

See Note 8 , Related-Party Agreements , for further information.

Depreciation and amortization expense related to property, plant and equipment totaled $ 10.6 million and $ 10.5 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021 and December 31, 2020, other assets consist of the following (in thousands):

September 30,

2021 December 31,

Prepaid insurance $ 3,042 $ —

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Due from related party 55 51

Other 359 323

Other assets $ 7,442 $ 2,598

Prepaid insurance consists of policies required by and associated with the Merger.

Restricted cash is comprised of a certificate of deposit that serves as collateral for a letter of credit required by our landlord as a security deposit related to our facility in San Diego, California.

Accrued e xpenses and other liabilities

As of June 30, 2021 and December 31, 2020, accrued expenses and other liabilities consist of the following (in thousands):

Accrued expenses and other liabilities

As of September 30, 2021 and December 31, 2020, accrued expenses and other liabilities consist of the following (in thousands):

September 30,

2021 December 31,

Accrued dissenting shares ( Note 7 )

Accrued professional and service fees

$ 7,029 $ 6,769

Accrued bonus 5,560 5,288

Accrued preclinical and clinical trial costs 5,426 4,339

Accrued professional and service fees 4,785 7,668

Financing obligation – current portion 4,137 1,421

Accrued compensation 3,990 3,891

Accrued research and development costs 3,871 4,002

Accrued bonus

Accrued construction costs

Accrued contingent consideration payable

Accrued capital expenditures 1,585 337

Accrued laboratory equipment, supplies and related services 801 641

Financing obligation – current portion

Deferred revenue

Accrued contingent consideration 397 856

Accrued franchise, sales, use and property taxes 199 103

Accrued capital expenditures

Deferred revenue 145 270

Other 594 1,186

Accrued expenses and other liabilities $ 38,519 $ 36,771

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Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

Unrealized (losses) gains from equity securities $ ( 6,008 ) $ ( 4 ) $ 2,383 $ 490

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Investment amortization expense, net ( 34 ) ( 381 ) ( 282 ) ( 474 )

Realized gains on investments

Realized (losses) gains on investments — ( 2 ) 173 ( 2 )

Interest and investment (loss) income, net $ ( 5,941 ) $ 149 $ 2,826 $ 1,213

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Investments in Marketable Debt Securities

As of June 30, 2021, the amortized cost, gross unrealized gains, gross unrealized losses and fair value of marketable debt securities, which were considered as available-for-sale, by type of security were as follows (in thousands):

June 30, 2021

As of September 30, 2021, the weighted-average remaining contractual life, amortized cost, gross unrealized gains, gross unrealized losses and fair value of marketable debt securities, which were considered as available-for-sale, by type of security were as follows (in thousands):

September 30, 2021

Contractual Life

(in years) Amortized

Corporate debt securities 0.1 $ 1,805 $ — $ ( 1 ) $ 1,804

Foreign bonds 0.5 344 — ( 18 ) 326

Mutual funds 35 3 — 38

Current portion 2,184 3 ( 19 ) 2,168

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Noncurrent portion 747 55 — 802

Total $ 2,931 $ 58 $ ( 19 ) $ 2,970

As of December 31, 2020, the amortized cost, gross unrealized gains, gross unrealized losses and fair value of marketable debt securities, which were considered as available-for-sale, by type of security were as follows (in thousands):

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Corporate debt securities $ 54,789 $ 2 $ ( 19 ) $ 54,772

Mutual funds 35 2 — 37

Current portion 54,824 4 ( 19 ) 54,809

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Noncurrent portion 861 89 — 950

We do no t have debt securities classified as available-for-sale that were in an unrealized loss position as of June 30, 2021.

Accumulated unrealized losses on debt securities that have been in a continuous loss position for less than 12 months and more than 12 months as of December 31, 2020 were as follows (in thousands):

Total $ 55,685 $ 93 $ ( 19 ) $ 55,759

Accumulated unrealized losses on marketable debt securities that have been in a continuous loss position for less than 12 months and more than 12 months as of September 30, 2021 and December 31, 2020 were as follows (in thousands):

September 30, 2021

Less than 12 months More than 12 months

Losses Estimated

Corporate debt securities $ 1,804 $ ( 1 ) $ — $ —

Foreign bonds 207 ( 1 ) — —

Total $ 2,011 $ ( 2 ) $ — $ —

December 31, 2020

Less than 12 months

More than 12 months

Less than 12 months More than 12 months

Losses Estimated

Corporate debt securities $ 42,762 $ ( 19 ) $ — $ —

We evaluated our securities for other-than-temporary impairment, and we did no t recognize any other-than-temporary impairment losses for the six months ended June 30, 2021 and 2020.

Realized gains and losses on sales of available-for-sale debt securities were not significant for the six months ended June 30, 2021 and 2020.

Marketable E quity S ecurities

We held investments in marketable equity securities with readily determinable fair values of $ 19.7 million and $ 6.3 million as of June 30, 2021 and December 31, 2020, respectively.

Unrealized gains recorded on these securities totaled $ 8.4 million and $ 0.5 million in interest and investment (loss) income, net , on the condensed consolidated statements of operations for the six months ended June 30, 2021 and 2020, respectively.

We recorded a realized gain totaling $ 0.2 million from sales of equity securities in interest and investment (loss) income, net , on the condensed consolidated statements of operations for the six months ended June 30, 2021.

Total $ 42,762 $ ( 19 ) $ — $ —

We evaluated our securities for other-than-temporary impairment, and we did not recognize any other-than-temporary impairment losses for the nine months ended September 30, 2021 and 2020.

Realized gains and losses on sales of available-for-sale marketable debt securities were not significant for the nine months ended September 30, 2021 and 2020.

Marketable Equity Securities

We held investments in marketable equity securities with readily determinable fair values of $ 13.7 million and $ 6.3 million as of September 30, 2021 and December 31, 2020, respectively.

Unrealized gains recorded on these securities totaled $ 2.4 million and $ 0.5 million in interest and investment (loss) income, net , on the condensed consolidated statements of operations for the nine months ended September 30, 2021 and 2020, respectively.

We recorded a realized gain totaling $ 0.2 million from sales of marketable equity securities in interest and investment (loss) income, net , on the condensed consolidated statements of operations for the nine months ended September 30, 2021.

Fair Value Measurements

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Recurring Valuations

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of June 30, 2021 and December 31, 2020 (in thousands):

Fair Value Measurements at June 30, 2021

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of September 30, 2021 and December 31, 2020 (in thousands):

Fair Value Measurements at September 30, 2021

Total Level 1 Level 2 Level 3

Cash and cash equivalents $ 64,524 (1) $ 62,710 $ 1,814 $ —

Equity securities 13,680 (2) 13,680 — —

Corporate debt securities 1,804 — 1,804 —

Foreign bonds 326 326 — —

Mutual funds 38 38 — —

Foreign bonds 802 802 — —

Total assets measured at fair value $ 81,174 $ 77,556 $ 3,618 $ —

Contingent consideration obligations

Contingent consideration $ ( 419 ) (3) $ — $ — $ ( 419 )

Fair Value Measurements at December 31, 2020

Total Level 1 Level 2 Level 3

Cash and cash equivalents $ 34,915 $ 34,915 $ — $ —

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Equity securities 6,337 6,337 — —

Mutual funds 37 37 — —

Foreign bonds 950 950 — —

Total assets measured at fair value $ 97,011 $ 42,239 $ 54,772 $ —

Contingent consideration obligations

Contingent consideration $ ( 972 ) (3) $ — $ — $ ( 972 )

(1) Includes money market funds of $ 23.7 million and corporate debt securities of $ 1.8 million with original maturities of less than 90 days.

(2) Our equity securities include a $ 12.5 million investment in Viracta Therapeutics, Inc.

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Prior to the acquisition by Sunesis, we accounted for our investment in Viracta by applying the measurement alternative under ASC 321.

As of December 31, 2020, the carrying value of our investment in Viracta, which was reflected in non-marketable equity investment , on the condensed combined consolidated balance sheets, was $ 7.8 million.

Contingent consideration obligations are recorded at their estimated fair values and are revalued each reporting period until the related contingencies are resolved.

The fair value measurements of these obligations are based on inputs that are unobservable and significant to the overall fair value measurement (i.e., a Level 3 measurement within the fair value hierarchy) and are reviewed periodically by management.

See Note 7 , Commitments and Contingencies, for additional information.

Changes in the carrying amount of contingent consideration obligations were as follows (in thousands):

Six Months Ended

As of December 31, 2020, the carrying value of our investment in Viracta, which was reflected in non-marketable equity investment , on the condensed consolidated balance sheets, was $ 7.8 million.

(3) Contingent consideration is recorded at estimated fair value and revalued each reporting period until the related contingency is resolved.

The fair value measurement is based on inputs that are unobservable and significant to the overall fair value measurement (i.e., a Level 3 measurement within the fair value hierarchy) and are reviewed periodically by management.

See Note 7 , Commitments and Contingencies, for further information.

Changes in the carrying amount of contingent consideration were as follows (in thousands):

Nine Months Ended

September 30,

Fair value, beginning of period $ ( 972 ) $ ( 1,725 )

Net change in fair value

Consideration paid 419 —

Net decrease in fair value 134 797

Fair value, end of period $ ( 419 ) $ ( 928 )

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Non-financial assets and liabilities are recognized at fair value subsequent to initial recognition when they are deemed to be other-than-temporarily impaired.

There were no material non-financial assets and liabilities deemed to be other-than-temporarily impaired and measured at fair value on a non-recurring basis for the six months ended June 30, 2021 and 2020.

There were no material non-financial assets and liabilities deemed to be other-than-temporarily impaired and measured at fair value on a non-recurring basis for the nine months ended September 30, 2021 and 2020.

Collaboration and License Agreements

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National Cancer Institute

2015 NCI CRADA

In May 2015, Etubics Corporation (“Etubics”) entered into a Cooperative Research and Development Agreement (“CRADA”) with the U.S.

Department of Health and Human Services as represented by the National Cancer Institute (“NCI”) of the National Institutes of Health (“NIH”) to collaborate on the preclinical and clinical development of an adenovirus technology expressing tumor-associated antigens for cancer immunotherapy.

Department of Health and Human Services (“HHS”) as represented by the National Cancer Institute (“NCI”) of the National Institutes of Health (“NIH”) to collaborate on the preclinical and clinical development of an adenovirus technology expressing tumor-associated antigens for cancer immunotherapy.

In January 2016, we acquired all of the outstanding equity interests in Etubics and Etubics became a wholly-owned subsidiary.

Effective January 2018, we assumed the CRADA and it was amended to cover a collaboration for the preclinical and clinical development of our proprietary yeast-based T armogens expressing tumor-associated antigens and proprietary adenovirus technology expressing tumor-associated antigens for cancer immunotherapy.

Pursuant to the CRADA, the N IH provides scientific staff and other support necessary to conduct research and related activities as described in the CRADA .

During the term of the CRADA, we are required to make annual payments of $ 0.6 million to the NIH for support of research activities.

We made payments of $ 0.6 million in each of the six months ended June 30, 2021 and 2020, respectively, and recorded $ 0.3 million in research and development expense , on the condensed consolidated statements of operations for the six months ended June 30, 2021 and 2020.

The CRADA expires in May 2023.

In February 2018, we entered into an amendment to a CRADA with the NIH that was originally executed between the NIH and Amgen, Inc.

(“Amgen”) in May 2012 and subsequently assigned by Amgen to the company effective as of December 17, 2015.

Effective January 2018, our subsidiary NantCell assumed the CRADA and it was amended to cover a collaboration for the preclinical and clinical development of our proprietary yeast-based Tarmogens expressing tumor-associated antigens and proprietary adenovirus technology expressing tumor-associated antigens for cancer immunotherapy.

Pursuant to the CRADA, the NCI provides scientific staff and other support necessary to conduct research and related activities as described in the CRADA.

During the term of the CRADA, we were required to make annual payments of $ 0.6 million to the NCI for support of research activities.

We made payments of $ 0.6 million in each of the nine months ended September 30, 2021 and 2020, respectively, and recorded $ 0.5 million in research and development expense , on the condensed consolidated statements of operations for the nine months ended September 30, 2021 and 2020.

In November 2021, NantCell entered into a third amendment to the CRADA, which was effective as of March 16, 2021.

The principal changes effected by the third amendment are the following:

(i) assignment of the CRADA from NantCell to ImmunityBio;

(ii) modification of the research plan;

(iii) extension of the CRADA term through May 2026;

and (iv) an increase in funding for a total of $ 1.3 million per year, payable in semi-annual installments from 2022 through 2025.

Pursuant to the updated CRADA research plan, NCI and ImmunityBio will collaborate on the preclinical and clinical development of ImmunityBio’s proprietary adenovirus platform expressing tumor-associated antigens;

proprietary yeast platform expressing tumor-associated antigens;

proprietary agent N-803 ( Anktiva™) and derivatives, agent N-808 and derivatives, and/or TxM product candidates;

proprietary recombinant NK cells and monoclonal antibodies (“mAbs”);

proprietary RNA vaccines and adjuvants;

and other proprietary agents owned or controlled by ImmunityBio as contemplated in the research plan, for cancer immunotherapy.

In accordance with the terms of the amended CRADA, the company is required to make an additional $ 0.7 million payment within 30 days of the execution date in addition to a $ 0.6 million payment to the NCI for support of research activities during 2021.

We recorded an additional $ 0.4 million for the third amendment in research and development expense , on the condensed consolidated statement of operations for the nine months ended September 30, 2021.

2018 NCI CRADA

In February 2018, we entered into an amendment to a CRADA with the NCI that was originally executed between the NCI and Amgen, Inc.

(“Amgen”) in May 2012 and subsequently assigned by Amgen to us effective as of December 17, 2015.

The research goal of this CRADA, as amended, is for the non-clinical and clinical development of ganitumab, our licensed monoclonal antibody targeting insulin-like growth factor one receptor, to evaluate its safety and efficacy in patients with hematological malignancies and solid tumors.

The CRADA has a five-year term commencing on February 20, 2018 and expiring on February 20, 2023.

During the term of the agreement, we are required to make minimum annual payments of $ 0.2 million to the NIH for support of research activities and additional payments for the clinical trials based on the scope and phase of the clinical trials.

Unpaid research and development expense was estimated at $ 0.5 million and $ 0.6 million as of June 30, 2021 and December 31, 2020, respectively.

In February 2021, we entered into a CRADA with the NIH to conduct collaborative analysis of human clinical trial samples from clinical trials utilizing our proprietary recombinant NK cells and/or monoclonal antibodies (“mAbs”) for preclinical development in monotherapy and in combination immunotherapies.

During the term of the agreement, we are required to make minimum annual payments of $ 0.2 million to the NCI for support of research activities and additional payments for the clinical trials based on the scope and phase of the clinical trials.

Unpaid research and development expense was estimated at $ 0.5 million and $ 0.6 million as of September 30, 2021 and December 31, 2020, respectively.

National Institute of Deafness and Communication Disorders

2021 NIDCD CRADA

In February 2021, we entered into a CRADA with HHS as represented by the National Institute of Deafness and Communication Disorders (“NIDCD”) of the NIH to conduct collaborative analysis of human clinical trial samples from clinical trials utilizing our proprietary recombinant NK cells and/or mAbs for preclinical development in monotherapy and in combination immunotherapies.

The CRADA has a two-year term commencing on February 22, 2021 and expiring on February 22, 2023.

During the term of the agreement, we are required to provide $ 0.1 million per year to the NIH for support of the research activities.

We made a payment of $ 0.1 million during the six months ended June 30, 2021.

All CRADA agreements may be terminated at any time upon the mutual written consent of the company and the NIH.

Either party may unilaterally terminate either of the CRADAs at any time by providing written notice to the other party at least 60 days before the desired termination date.

Pursuant to the terms of the CRADAs, we have an option to elect to negotiate an exclusive or non-exclusive commercialization license to any inventions discovered in the performance of either of the CRADAs, whether solely by an NIH employee or jointly with a company employee for which a patent application has been filed.

During the term of the agreement, we are required to provide $ 0.1 million per year to the NIDCD for support of the research activities.

We made a payment of $ 0.1 million during the nine months ended September 30, 2021.

Under any of the CRADAs, any party may unilaterally terminate the agreement by providing timely advance written notice to the other party before the desired termination date.

The parties jointly own any inventions and materials that are jointly produced by employees of both parties in the course of performing activities under the CRADAs.

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Infectious Disease Research Institute

In May 2021, we entered into license agreements with the Infectious Disease Research Institute (“IDRI”), pursuant to which we received licenses to certain of their platforms and formulations relevant to our product portfolio.

Under the licenses, we were obligated to pay one-time, non-creditable, non-refundable upfront cash payments totaling $ 2.0 million that we recorded in research and development expense , on the condensed consolidated statements of operations for the six months ended June 30, 2021.

In addition, we will owe IDRI milestone payments based on the achievement of certain development and regulatory milestones and royalties on net sales of licensed products.

No milestone fees were incurred for the six months ended June 30, 2021.

In connection with the license agreements, we also entered into a Sponsored Research Agreement (“SRA”) with IDRI pursuant to which we will fund continued research of at least $ 2 million per year, payable in four equal quarterly installments each year until May 2024, or such year of earlier termination.

For the six months ended June 30, 2021, we recorded $ 0.2 million in research and development expense , on the condensed consolidated statements of operations related to the SRA.

In May 2021, we entered into two license agreements with the Infectious Disease Research Institute (“IDRI”) pursuant to which we received a license to certain patents and know-how relating to IDRI’s (i) adjuvant formulations for the treatment, prevention and/or diagnosis of SARS-CoV-2 (the “IDRI Adjuvant Formulation License Agreement”) and (ii) RNA vaccine platform as further described below (the “IDRI RNA License Agreement”).

Under both agreements, we were obligated to pay one-time, non-creditable, non-refundable upfront cash payments totaling $ 2.0 million.

In addition, under the IDRI Adjuvant Formulation License Agreement we owe IDRI milestone payments to a total of up to $ 2.5 million based on the achievement of certain development and regulatory milestones for the first licensed product and royalties on annual net sales of licensed products on a country-by-country and product-by-product basis of a low-single digit percentage, subject to certain royalty-reduction provisions.

Under these agreements, we made a $ 2.0 million upfront payment and recognized $ 2.0 million in research and development expense , on the condensed consolidated statement of operations, and no milestone fees were incurred for the nine months ended September 30, 2021.

In September 2021, we amended and restated the IDRI RNA License Agreement, pursuant to which IDRI granted us an exclusive, worldwide, sublicensable license to IDRI’s rights to an RNA vaccine platform for the development and commercialization of certain therapeutic, diagnostic or prophylactic products for the prevention, treatment or diagnosis of any indication, other than those subject to pre-existing third-party license grants, including, without limitation, SARS-CoV-2.

Pursuant to the terms of the amended and restated IDRI RNA License Agreement, we are required to make an additional one-time, non-creditable, non-refundable, upfront payment to IDRI of $ 1.5 million.

The company is also required to pay license maintenance fees to IDRI as follows:

$ 3.0 million in 2022 and $ 5.5 million annually from 2023 through 2030.

The company may terminate the restated agreement without cause by paying IDRI a $ 10.0 million one-time early termination fee.

In addition, the milestone payments to IDRI based on the achievement of certain development and regulatory milestones for the first licensed product were amended to a total of up to $ 4.0 million.

We are required to pay royalties on annual net sales of licensed products on a country-by-country and product-by-product basis of a low to mid-single digit percentage.

We accrued $ 1.5 million in research and development expense , on the condensed consolidated statements of operations for the three months ended September 30, 2021.

In connection with the license agreements, in May 2021 we also entered into a Sponsored Research Agreement (“SRA”) with IDRI pursuant to which we will fund continued research of at least $ 2.0 million per year, payable in four equal quarterly installments each year until May 2024, or such year of earlier termination.

For the three and nine months ended September 30, 2021, we recorded $ 0.2 million and $ 0.7 million, respectively, in research and development expense , on the condensed consolidated statements of operations related to the SRA.

Exclusive License Agreement

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(“iosBio”), pursuant to which we and our affiliates will receive an exclusive, worldwide license to certain of iosBio’s intellectual property rights relating to the SARS-CoV-2 and successor vaccine candidates.

In return, we are required to pay mid-to-high single-digit royalties on net sales of the resulting licensed products.

In return, we are required to pay mid-to-high single-digit percentage royalties on net sales of the resulting licensed products.

Concurrently we entered into a non-exclusive license agreement with iosBio, which grants iosBio and its affiliates a non-exclusive, worldwide license for the intellectual property and technology relating to our adenovirus constructs for the prevention and treatment of shingles and other infectious disease targets to be mutually agreed by the parties in good faith.

As of June 30, 2021 and December 31, 2020, we accrued $ 0.2 million and $ 0.5 million payable, respectively, to iosBio for costs of supplies and reimbursable costs related to the clinical trial activities initiated by iosBio.

As of September 30, 2021 and December 31, 2020, we accrued $ 0.2 million and $ 0.5 million payable, respectively, to iosBio for costs of supplies and reimbursable costs related to the clinical trial activities initiated by iosBio.

Commitments and Contingencies

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In connection with this transaction, we are obligated to pay the former owners up to $ 3.7 million upon the achievement of certain sales milestones relating to scaffold technology and certain clinical and regulatory milestones relating to the GMP-in-a-Box technology.

The fair value of the contingent consideration obligation decreased $ 0.1 million during the six months ended June 30, 2021 to $ 0.8 million.

A clinical milestone totaling $ 0.8 million was earned by the former owners of VivaBioCell in connection with the acquisition, of which $ 0.4 million was paid during the three months ended September 30, 2021.

The remaining $ 0.4 million was accrued as of September 30, 2021.

Altor BioScience Corporation

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If we are served with any such complaints, we will assess at that time any contingencies for which we may need to reserve.

Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Altor BioScience, LLC Litigation

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The plaintiffs filed an answer denying the counterclaims and asserting defenses.

The trial has been set to commence in October 2021, but trial is likely to be continued until the second half of 2022.

The trial has been set to commence on August 8, 2022.

The shares of these former Altor stockholders met the definition of dissenting shares under the merger agreement and were not entitled to receive any portion of the merger consideration at the closing date.

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Payment for dissenting shares will be on the same terms and conditions originally stated in the merger agreement.

As of June 30, 2021 and December 31, 2020, we had accrued $ 6.9 million and $ 6.8 million related to these obligations, respectively.

As of September 30, 2021 and December 31, 2020, we had accrued $ 7.0 million and $ 6.8 million related to these obligations, respectively.

The accrued amount represents the estimated low-end of the range of currently estimated payout amounts in accordance with ASC Topic 450, Contingencies , after considering the reasonable outcomes for settling the dissenting stockholder dispute along with any accrued statutory interest.

We cannot reasonably estimate a range of loss or likelihood of loss beyond the amounts recorded for dissenting shares as of June 30, 2021, as the dissenting stockholders have not yet provided a quantified value of their claim and, therefore, an upper end of the range of loss cannot be determined.

We cannot reasonably estimate a range of loss or likelihood of loss beyond the amounts recorded for dissenting shares as of September 30, 2021, as the dissenting stockholders have not yet provided a quantified value of their claim and, therefore, an upper end of the range of loss cannot be determined.

Discovery is ongoing, and class certification motions relating to the putative class have not yet been filed or decided.

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Soon-Shiong in the Cynviloq arbitration.

The hearing in the Cynviloq arbitration commenced in June 2021, and is scheduled to continue with breaks until at least September 2021.

The hearing in the Cynviloq arbitration commenced in June 2021, and continued with breaks until early October 2021.

There may or may not be additional hearing days, depending on the outcome of a pending motion.

Also in 2019, the company and Dr.

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The hearings in the antibody arbitration commenced in April 2021 and concluded in early August 2021.

Post-hearing briefing will be followed by concluding arguments on November 10, 2021.

Post-hearing briefing has concluded and final arguments remain to be scheduled.

We intend to prosecute our claims, and to defend the claims asserted against us, vigorously.

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In 2020, we received a Request for Arbitration before the International Chamber of Commerce, International Court of Arbitration, served by Shenzhen Beike Biotechnology Corporation (“Beike”).

The arbitration relates to a license, development, and commercialization agreement that Altor Bioscience Corporation (succeeded by our wholly-owned subsidiary Altor BioScience, LLC (“Altor”)) entered into with Beike in 2014, which agreement was amended and restated in 2017, pursuant to which Altor granted to Beike an exclusive license to use, research, develop and commercialize products based on Anktiva in China for human therapeutic uses.

The arbitration relates to a license, development, and commercialization agreement that Altor Bioscience Corporation (succeeded by our wholly-owned subsidiary Altor BioScience, LLC) entered into with Beike in 2014, which agreement was amended and restated in 2017, pursuant to which Altor granted to Beike an exclusive license to use, research, develop and commercialize products based on Anktiva™ in China for human therapeutic uses.

In the arbitration, Beike is asserting a claim for breach of contract under the license agreement.

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The standstill agreement may be terminated by any party on ten calendar days’ notice, and upon termination, the parties will have the right to pursue claims arising from the license agreement in any appropriate tribunal.

The parties have been asked to provide an update to the International Chamber of Commerce by August 31, 2021 of any further developments.

The parties have been asked to provide an update to the International Chamber of Commerce by January 17, 2022 of any further developments.

Given that this action remains at the pleading stage and no discovery has occurred, it remains too early to evaluate the likely outcome of the case or to estimate any range of potential loss.

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Fox Chase filed a Cross-Complaint raising a patent inventorship challenge and moved the case to federal court.

On June 4, 2021, the federal court separated the parties’ claims, and returned ImmunityBio’s declaratory judgment claims back to the San Diego County court while retaining the patent inventorship challenge.

On June 4, 2021, the federal court separated the parties’ claims, and returned ImmunityBio’s declaratory judgment claims back to the San Diego County court but retained the patent inventorship challenge.

While the litigation is in the early stage, its outcome cannot be predicted.

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Our leases generally have initial terms ranging from two to ten years and often include one or more options to renew.

These renewal terms can extend the lease term from one to five years , and are included in the lease term when it is reasonably certain that we will exercise the option.

These renewal terms can extend the lease term from one to seven years , and are included in the lease term when it is reasonably certain that we will exercise the option.

Information regarding our leases is as follows:

Weighted average remaining lease term

September 30,

2021 December 31,

Weighted average remaining lease term 7.7 years 3.9 years

Weighted average discount rate 9 % 9 %

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Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

Operating lease costs $ 1,546 $ 863 $ 5,410 $ 4,269

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Cash paid for amounts included in the measurement of lease liabilities is as follows (in thousands):

Six Months Ended

Operating cash flows for operating leases

Future minimum lease payments as of June 30, 2021, including $ 12.6 million related to options to extend lease terms that are reasonably certain of being exercised, are presented in the following table (in thousands).

Nine Months Ended

September 30,

Cash paid for operating leases (excluding variable lease costs) $ 5,878 $ 4,222

Future minimum lease payments as of September 30, 2021, including $ 21.9 million related to options to extend lease terms that are reasonably certain of being exercised, are presented in the following table (in thousands).

Common area maintenance costs and taxes are not included in these payments.

Years ending December 31:

2021 (excluding the six months ended June 30, 2021)

2021 (excluding the nine months ended September 30, 2021)

Thereafter 28,144

Total future minimum lease payments 60,162

Interest 19,507

Tenant improvement allowance receivable 2,941

Present value of operating lease liabilities $ 37,714

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See Note 8 , Related-Party Agreements , for further information.

In September 2021, we entered into a sale transaction with Nant Capital, a related party, for a building located at 557 South Douglas Street, El Segundo, California.

We subsequently leased back the building for an initial seven-year lease term with an option to extend the lease for two additional seven-year periods.

See Note 8 , Related-Party Agreements , for further information.

In September 2021, we entered into a lease agreement with 420 Nash, LLC, a related party, for a property primarily used for the warehousing and storage of drug manufacturing supplies, products and equipment and ancillary office space.

Future minimum lease payments totaling $ 5.2 million were not reflected in the operating lease table shown above since the lease term began on October 1, 2021.

See Note 12 , Subsequent Events , for further information.

There have been no other material changes related to our existing lease agreements from those disclosed in Note 8 of the Notes to Combined Consolidated Financial Statements included in the Combined Consolidated Financial Statements of ImmunityBio, Inc.

as of December 31, 2020 and December 31, 2019 (including NantCell, Inc.) filed as Exhibit 99.2 to our Current Report on Form 8‑K/A filed with the SEC on April 22, 2021.

We did not enter into any significant contracts during the six months ended June 30, 2021, other than those disclosed in these condensed consolidated financial statements.

We did not enter into any significant contracts during the nine months ended September 30, 2021, other than those disclosed in these condensed consolidated financial statements.

In addition, we are also a party to various contracts with contract research organizations and contract manufacturers that generally provide for termination on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement.

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Below is a summary of outstanding balances and a description of significant relationships (in thousands):

Due from related party–NantBio

Due from related party–NantOmics

September 30,

2021 December 31,

Due from related party–NantBio, Inc.

$ 1,294 $ 1,294

Due from related party–NantOmics LLC — 591

Due from related parties–Various 10 118

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Due to related party–NantWorks $ 4,974 $ 10,650

Due to related party–Duley Road

Due to related party–NantBio

Due to related party–Immuno-Oncology Clinic

Due to related party–Duley Road, LLC 2,374 2,787

Due to related party–NantBio, Inc.

Due to related party–605 Nash, LLC 284 —

Due to related party–Immuno-Oncology Clinic, Inc.

Due to related party–Various — 187

Total due to related parties $ 8,697 $ 14,838

Our Executive Chairman, and principal stockholder, founded and has a controlling interest in NantWorks, which is a collection of multiple companies in the healthcare and technology space.

Our Executive Chairman, Global Chief Scientific and Medical Officer, and principal stockholder founded and has a controlling interest in NantWorks, which is a collection of companies in the healthcare and technology space.

As described below, we have entered into arrangements with NantWorks, and certain affiliates of NantWorks, to facilitate the development of new genetically modified NK cells for our product pipeline.

Affiliates of NantWorks are also affiliates of the company due to the common control by and/or common ownership interest of our Executive Chairman.

Affiliates of NantWorks are also affiliates of the company due to the common control by and/or common ownership interest of our Executive Chairman and Global Chief Scientific and Medical Officer.

Under the NantWorks shared services agreement executed in November 2015, but effective August 2015, NantWorks, a related party, provides corporate, general and administrative, manufacturing strategy, research and development, regulatory and clinical trial strategy, and other support services.

We are charged for the services at cost plus reasonable allocations of employee benefits, facilities and other direct or fairly allocated indirect costs that relate to the employees providing the services.

For the three months ended June 30, 2021 and 2020, we recorded $ 1.2 million and $ 2.4 million, respectively, in selling, general and administrative expense , and $ 0.1 million and $ 0.2 million, respectively, of expense reimbursements under this arrangement in research and development expense , on the condensed consolidated statements of operations.

For the six months ended June 30, 2021 and 2020, we recorded $ 3.0 million and $ 3.9 million, respectively, in selling, general and administrative expense , and $ 0.4 million and $ 1.2 million, respectively, of expense reimbursements under this arrangement in research and development expense , on the condensed consolidated statements of operations.

These amounts exclude certain general and administrative expenses provided by third-party vendors directly for our benefit, which have been reimbursed to NantWorks based on those vendors’ invoiced amounts without markup by NantWorks.

As of June 30, 2021 and December 31, 2020, we owed NantWorks a net amount of $ 12.9 million and $ 10.7 million, respectively, for all agreements between the two affiliates, which is included in due to related parties, on the condensed consolidated balance sheets.

We also recorded $ 1.2 million and $ 1.1 million of prepaid expenses for services that have been passed through to the company from NantWorks as of June 30, 2021 and December 31, 2020, respectively, which are included in prepaid expenses and other current assets , on the condensed consolidated balance sheets.

For the three months ended September 30, 2021 and 2020, we recorded $ 1.2 million and $ 0.6 million, respectively, in selling, general and administrative expense, on the condensed consolidated statements of operations .

For the three months ended September 30, 2021 and 2020, we recorded $ 0 million and $ 0.6 million of expense reimbursements under this arrangement in research and development expense , on the condensed consolidated statements of operations.

For the nine months ended September 30, 2021 and 2020, we recorded $ 4.2 million and $ 4.5 million, respectively, in selling, general and administrative expense , and $ 0.4 million and $ 1.8 million, respectively, of expense reimbursements under this arrangement in research and development expense , on the condensed consolidated statements of operations.

These amounts exclude certain general and administrative expenses provided by third-party vendors directly for our benefit, which were reimbursed to NantWorks based on those vendors’ invoiced amounts without markup by NantWorks.

As of September 30, 2021 and December 31, 2020, we owed NantWorks a net amount of $ 5.0 million and $ 10.7 million, respectively, for all agreements between the two affiliates, which is included in due to related parties, on the condensed consolidated balance sheets.

We also recorded $ 1.5 million and $ 1.1 million of prepaid expenses for services that have been passed through to the company from NantWorks as of September 30, 2021 and December 31, 2020, respectively, which are included in prepaid expenses and other current assets , on the condensed consolidated balance sheets.

In November 2015, we entered into a facility license agreement with NantWorks for approximately 9,500 square feet of office space in Culver City, California, which has been converted to a research and development laboratory and a current Good Manufacturing Practice (“cGMP”) manufacturing facility.

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If we exercise the option to extend the lease through December 31, 2022, or continue on a month-to-month basis, the base rent will increase by 3 % annually commencing on January 1 of each year.

On the date of amendment, we recorded an increase of $ 1.2 million in both operating lease right-of-use assets and operating lease liabilities , on the condensed consolidated balance sheets, reflecting our belief that we will extend the term of this lease through December 31, 2022.

Lease expense for this facility totaling $ 0.3 million and $ 0.3 million for the six months ended June 30, 2021 and 2020, respectively, was recorded in research and development expense , on the condensed consolidated statements of operations.

On the date of the amendment, we recorded an increase of $ 1.2 million in both operating lease right-of-use assets and operating lease liabilities , on the condensed consolidated balance sheets, reflecting our belief that we will extend the term of this lease through December 31, 2022.

Lease expense for this facility totaling $ 0.5 million and $ 0.5 million for the nine months ended September 30, 2021 and 2020, respectively, was recorded in research and development expense , on the condensed consolidated statements of operations.

Immuno-Oncology Clinic, Inc.

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In July 2019, we entered into a new agreement with the Clinic (the “Clinic Agreement”), which became effective on July 1, 2019.

The Clinic Agreement, as amended on March 31, 2020, covers clinical trial and research-related activities on a non-exclusive basis relating to our existing clinical trials, commenced prior to July 1, 2019, and prospective clinical trials and research projects.

The Clinic Agreement, as amended on March 31, 2020, covers clinical trial and research-related activities on a non-exclusive basis relating to existing clinical trials, commenced prior to July 1, 2019, and prospective clinical trials and research projects.

The Clinic Agreement also specifies certain services and related costs that are excluded from the Clinic Agreement.

Prior to commencing any work under the Clinic Agreement, the parties have agreed to execute written work orders setting forth the terms and conditions related to specific services to be performed, including financial terms.

For clinical trials that commenced prior to July 1, 2019, fees incurred for services performed after July 1, 2019 are covered under the Clinic Agreement and applied towards the below-mentioned prepayments.

For clinical trials that commenced prior to July 1, 2019, excluding certain NantCell trials not covered by the agreement, fees incurred for services performed after July 1, 2019 are covered under the Clinic Agreement and applied towards the below-mentioned prepayments.

The Clinic Agreement allows for automatic renewal and additional extensions beyond the initial one-year term.

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We executed a clinical trial work order under the Clinic Agreement for an open-label, Phase I study of PD‑L1.t‑haNK for infusion in subjects with locally advanced or metastatic solid cancers.

In July 2020, but effective on June 22, 2020, we and NantCell executed a clinical trial work order under our existing master agreement with the Clinic for an open-label, randomized, comparative Phase II study of NantCell’s proprietary IL‑15 superagonist (“N‑803”) and aldoxorubicin hydrochloride (“Aldoxorubicin”) and our PD‑L1.t‑haNK with standard-of-care chemotherapy versus standard-of-care chemotherapy for first and second-line treatment of locally or advanced metastatic pancreatic cancer.

In April 2021, ImmunityBio executed two work orders under an existing master agreement with the Clinic.

In July 2020, but effective on June 22, 2020, we and NantCell executed a clinical trial work order under our existing master agreement with the Clinic for an open-label, randomized, comparative Phase II study of NantCell’s proprietary IL‑15 superagonist (“N‑803”) and aldoxorubicin hydrochloride (“Aldoxorubicin”) and our PD‑L1.t‑haNK with standard-of-care chemotherapy versus standard-of-care chemotherapy for patients with locally advanced or metastatic pancreatic cancer treated as first-line, second-line, or third-line or greater, in three separate cohorts, respectively.

During the nine months ended September 30, 2021, ImmunityBio executed multiple work orders under an existing master agreement with the Clinic.

Under these work orders, the parties agreed that the Clinic would serve as a site for the following multi-site clinical trials:

• A Phase IB open-label study of the safety, reactogenicity, and immnogenicity of prophylactic vaccination with 2nd generation E1/E2B/E3-deleted adenoviral-COVID-19 in normal healthy volunteers;

• A Phase IB open-label study of the safety, reactogenicity, and immunogenicity of subcutaneously and orally administered prophylactic vaccination with 2nd generation E1/E2B/E3-deleted adenoviral-COVID-19 in normal healthy volunteers;

• A Phase I study of the safety, reactogenicity, and immunogenicity of subcutaneously- and orally-administered supplemental spike & nucleocapsid-targeted COVID‑19 vaccine to enhance T cell-based immunogenicity in participants who have already received a vaccine authorized for emergency use;

• A Phase I study of the safety, reactogenicity, and immunogenicity of a supplemental spike & nucleocapsid-targeted COVID‑19 vaccine to enhance T cell-based immunogenicity in participants who have already received a vaccine authorized for emergency use;

• A Phase I open-label study of M‑ceNK cells in subjects with locally advanced or metastatic solid tumors.

Based on a review of our updated clinical trial programs post-Merger, we updated our estimates of the investigator fees for the clinical trials currently underway or planned at the Clinic.

As certain programs costs are excluded from and certain services are subject to credit adjustments under the Clinic Agreement, we determined the expected future fees for services to be performed are less than the carrying value of the prepaid asset on the condensed consolidated balance sheets.

As a result, we partially wrote down the value of our prepayments under the Clinic Agreement and recorded approximately $ 1.9 million in research and development expense , on the condensed consolidated statements of operations for the three months ended June 30, 2021.

In addition , we reclassified $ 0.9 million of prepaid assets from prepaid expenses and other current assets to other assets, on the condensed consolidated balance sheets as of June 30, 2021 based on the additional time expected for them to be realized than initially estimated .

For the three months ended June 30, 2021 and 2020, we incurred $ 0.5 million and $ 0.1 million in research and development expense , on the condensed consolidated statements of operations related to the Clinic Agreement.

For the six months ended June 30, 2021 and 2020, we incurred $ 0.8 million and $ 0.2 million in research and development expense , on the condensed consolidated statements of operations related to the Clinic Agreement.

As of June 30, 2021 and December 31, 2020, we owed the Clinic $ 0.2 million and $ 0.3 million, respectively, for services excluded from the Clinic Agreement.

As of June 30, 2021 and December 31, 2020, we had prepaid balances related to the Clinic Agreement of $ 2.7 million and $ 4.7 million, respectively.

In addition , we reclassified $ 0.8 million of prepaid assets from prepaid expenses and other current assets to other assets, on the condensed consolidated balance sheets during the three months ended September 30, 2021 based on the additional time expected for them to be realized than initially estimated .

For the three months ended September 30, 2021 and 2020, we incurred $ 0.6 million and $ 0.2 million in research and development expense , on the condensed consolidated statements of operations related to the Clinic Agreement.

For the nine months ended September 30, 2021 and 2020, we incurred $ 1.4 million and $ 0.4 million in research and development expense , on the condensed consolidated statements of operations related to the Clinic Agreement.

As of September 30, 2021 and December 31, 2020, we owed the Clinic $ 0.1 million and $ 0.3 million, respectively, for services excluded from the Clinic Agreement.

As of September 30, 2021 and December 31, 2020, we had prepaid balances related to the Clinic Agreement of $ 2.6 million and $ 4.7 million, respectively.

NantBio, Inc.

In March 2016, NantBio, Inc.

(“NantBio”) and the NCI entered into a cooperative research and development agreement.

In March 2016, NantBio and the NCI entered into a CRADA.

The initial five-year agreement covered NantBio and its affiliates, including us.

Under the agreement, the parties collaborated on the preclinical and clinical development of proprietary recombinant natural killer cells and monoclonal antibodies in monotherapy and combination immunotherapies.

In each of the contractual years under the agreement we paid $ 0.6 million to the NCI as a payment for services under the agreement.

We recognize expense related to this agreement ratably over a 12-month period for each funding year.

We accrued $ 0.2 million in research and development expense , on the condensed consolidated statements of operations related to this agreement for the six months ended June 30, 2021 and 2020.

As of December 31, 2020, we recorded $ 0.1 million in prepaid expenses and other current assets , on the condensed consolidated balance sheets related to this agreement.

Under the agreement, the parties collaborated on the preclinical and clinical development of proprietary recombinant NK cells and mAbs in monotherapy and combination immunotherapies.

In each of the contractual years under the agreement, we paid $ 0.6 million to the NCI for services under the agreement.

We recognized expenses related to this agreement ratably over a 12-month period for each funding year.

This CRADA expired in March 2021.

In November 2021, we entered into a third amendment to the 2015 NCI CRADA, which was effective as of March 16, 2021, and transferred the research plan from this expired CRADA into the research plan of the amended 2015 NCI CRADA.

We accrued $ 0.4 million in research and development expense , on the condensed consolidated statements of operations related to the third amendment for the nine months ended September 30, 2021.

See Note 6 , Collaboration and License Agreements—National Cancer Institute, for further information.

In August 2018, we entered into a supply agreement with NantCancerStemCell, LLC (“NCSC”), a 60% owned subsidiary of NantBio (with the other 40% owned by Sorrento).

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The agreement has an initial term of five years and renews automatically for successive one-year terms unless terminated by either party in the event of material default upon prior written notice of such default and the failure of the defaulting party to remedy the default within 30 days of the delivery of such notice, or upon 90 days’ prior written notice by NCSC.

We recognized revenue of $ 0.3 million for the six months ended June 30, 2021.

We recorded $ 0.1 million and $ 0.3 million of deferred revenue for bioreactors that were delivered but not installed as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021 and December 31, 2020, we recorded $ 0.9 million in due to related parties , on the condensed consolidated balance sheets related to this agreement.

In 2018, we entered into a shared service agreement, pursuant to which, we are charged for services at cost, without mark-up or profit for NantBio, but including reasonable allocations of employee benefits that relate to the employees providing the services.

We recognized revenue of $ 0.3 million for the nine months ended September 30, 2021 .

We recorded $ 0.1 million and $ 0.3 million of deferred revenue for bioreactors that were delivered but not installed as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021 and December 31, 2020, we recorded $ 0.9 million in due to related parties , on the condensed consolidated balance sheets related to this agreement.

In 2018, we entered into a shared service agreement pursuant to which we are charged for services at cost, without mark-up or profit by NantBio, but including reasonable allocations of employee benefits that relate to the employees providing the services.

In April 2019, we agreed with NantBio to transfer certain NantBio employees and associated research and development projects, comprising the majority of NantBio’s business, to the company.

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In addition, we settled certain employee bonuses and benefits that were accrued by NantBio for 2018.

As of June 30, 2021 and December 31, 2020, we recorded a net receivable from NantBio of $ 1.3 million, which included $ 1.0 million for employee bonuses and $ 0.3 million for vendor costs we paid on behalf of NantBio.

In 2019, we made a strategic decision and transferred certain employees from NantOmics, LLC (“NantOmics”), a related party that is controlled by our Executive Chairman, to the company.

After the transfer, we settled certain employee bonuses and benefits that were accrued by NantOmics for the year ended December 31, 2020 and recorded a $ 0.6 million receivable from NantOmics as of June 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, we recorded a net receivable from NantBio of $ 1.3 million, which included $ 1.0 million for employee bonuses and $ 0.3 million for vendor costs we paid on behalf of NantBio.

NantOmics, LLC

In 2019, we made a strategic decision and transferred certain employees from NantOmics, a related party that is controlled by our Executive Chairman and Global Chief Scientific and Medical Officer, to the company.

After the transfer, we settled certain employee bonuses and benefits that were accrued by NantOmics for the year ended December 31, 2020.

We recorded no receivable and a $ 0.6 million receivable from NantOmics as of September 30, 2021 and December 31, 2020, respectively.

605 Doug St, LLC

In September 2016, we entered into a lease agreement with 605 Doug St, LLC, an entity owned by our Executive Chairman, for approximately 24,250 square feet in El Segundo, California, which has been converted to a research and development laboratory and a cGMP manufacturing facility.

In September 2016, we entered into a lease agreement with 605 Doug St, LLC, an entity owned by our Executive Chairman and Global Chief Scientific and Medical Officer, for approximately 24,250 rentable square feet in El Segundo, California, which has been converted to a research and development laboratory and a cGMP manufacturing facility.

The lease runs from July 2016 through July 2023.

We have the option to extend the lease for an additional three-year term through July 2026.

We have the option to extend the lease for one additional three-year term through July 2026.

The base rent is approximately $ 72,385 per month, with annual increases of 3 % that began in July 2017.

Lease expense of $ 0.4 million for this facility for the six months ended June 30, 2021 and 2020, respectively, was recorded in research and development expense , on the condensed consolidated statements of operations.

The prepaid rent for this lease was $ 0.1 million, which was included in prepaid expenses and other current assets , and the security deposit for this lease was $ 0.1 million, which was included in other assets , on the condensed consolidated balance sheets as of June 30, 2021.

Lease expense of $ 0.7 million for this facility for the nine months ended September 30, 2021 and 2020, respectively, was recorded in research and development expense , on the condensed consolidated statements of operations.

Duley Road, LLC

In February 2017, Altor BioScience Corporation (succeeded by our wholly-owned subsidiary Altor BioScience, LLC), through its wholly-owned subsidiary, entered into a lease agreement with Duley Road, LLC (“Duley Road”), a related party that is indirectly controlled by our Executive Chairman, for approximately 12,000 square feet of office and cGMP manufacturing facility space in El Segundo, California.

In February 2017, Altor BioScience Corporation (succeeded by our wholly-owned subsidiary Altor BioScience, LLC), through its wholly-owned subsidiary, entered into a lease agreement with Duley Road, a related party that is indirectly controlled by our Executive Chairman and Global Chief Scientific and Medical Officer, for approximately 12,000 rentable square feet of office and cGMP manufacturing facility space in El Segundo, California.

The lease term is from February 2017 through October 2024.

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The base rent is approximately $ 40,700 per month, with annual increases of 3 % that began in November 2018.

As of June 30, 2021 and December 31, 2020, we recorded rent payable to Duley Road of $ 1.1 million and $ 1.0 million, respectively.

For the six months ended June 30, 2021 and 2020, we recorded rent expense of $ 0.3 million and $ 0.3 million, respectively, which is reflected in research and development expense , on the condensed consolidated statements of operations.

As of September 30, 2021 and December 31, 2020, we recorded rent payable to Duley Road of $ 1.2 million and $ 1.0 million, respectively.

For the nine months ended September 30, 2021 and 2020, we recorded rent expense of $ 0.4 million and $ 0.4 million, respectively, which is reflected in research and development expense , on the condensed consolidated statements of operations.

Effective in January 2019, we entered into two lease agreements with Duley Road for a second building located in El Segundo, California.

The first lease is for the first floor of the building with approximately 5,650 square feet.

The first lease is for the first floor of the building with approximately 5,650 rentable square feet.

The lease has a seven-year term commencing in September 2019.

The second lease is for the second floor of the building with approximately 6,488 square feet.

The second lease is for the second floor of the building with approximately 6,488 rentable square feet.

The lease has a seven-year term commencing in July 2019.

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The base rent for the two leases is approximately $ 35,800 per month that increases at a rate of 3 % per year.

As of June 30, 2021 and December 31, 2020, we recorded $ 0.9 million and $ 0.7 million of leasehold improvement payables, respectively, and $ 0.4 million and $ 1.1 million of lease-related payables to Duley Road, which were included in due to related parties , on the condensed consolidated balance sheets.

For the six months ended June 30, 2021 and 2020, we recorded $ 0.2 million and $ 0.1 million of rent expense for the two leases, respectively, which was included in research and development expense , on the condensed consolidated statements of operations.

The security deposits for the leases totaled $ 0.1 million as of June 30, 2021, which were included in other assets , on the condensed consolidated balance sheets.

As of September 30, 2021 and December 31, 2020, we recorded $ 0.9 million and $ 0.7 million of leasehold improvement payables, respectively, and $ 0.3 million and $ 1.1 million of lease-related payables to Duley Road, which were included in due to related parties , on the condensed consolidated balance sheets.

For the nine months ended September 30, 2021 and 2020, we recorded $ 0.3 million and $ 0.2 million of rent expense for the two leases, respectively, which was included in research and development expense , on the condensed consolidated statements of operations.

The security deposits for the leases totaled $ 0.1 million as of September 30, 2021 , which were included in other assets , on the condensed consolidated balance sheets.

605 Nash, LLC

In February 2021, but effective on January 1, 2021, we entered into a lease agreement with 605 Nash, LLC, a related party, whereby we leased approximately 6,883 square feet (the “Initial Premises”) in a two story mixed use building containing approximately 64,643 rentable square feet on 605-607 Nash Street in El Segundo, California.

In February 2021 , but effective on January 1, 2021 , we entered into a lease agreement with 605 Nash, a related party, whereby we leased approximately 6,883 square feet (the “Initial Premises”) in a two story mixed use building containing approximately 64,643 rentable square feet on 605-607 Nash Street in El Segundo, California.

This facility is used primarily for pharmaceutical development and manufacturing purposes.

The lease term commenced in January 2021 and expires in December 2027, and includes an option to extend the lease for an additional three-year term through December 2030.

The lease term commenced in January 2021 and expires in December 2027 , and includes an option to extend the lease for one three-year term through December 2030 .

The base rent is approximately $ 20,300 per month with an annual increase of 3 % on January 1 of each year during the initial term and, if applicable, during the option term.

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We will receive a rent abatement for the first seven months , and a tenant improvement incentive of $ 0.3 million from the landlord for costs and expenses associated with the construction of tenant improvements for the Initial Premises.

During the three months ended June 30, 2021, we completed the build out of certain facility space in connection with this lease and transferred costs totaling $ 8.2 million from construction in progress to leasehold improvements.

For the three and six months ended June 30, 2021, we recorded rent expense of $ 0.1 million, which is reflected in research and development expense, on the condensed consolidated statements of operations.

In May 2021, but effective on April 1, 2021, we entered into an amendment to our Initial Premises lease with 605 Nash, LLC.

During the nine months ended September 30, 2021, we recorded rent expense of $ 0.2 million, which is reflected in research and development expense, on the condensed consolidated statements of operations.

In May 2021, but effective on April 1, 2021, we entered into an amendment to our Initial Premises lease with 605 Nash.

The amendment expanded the leased square feet by approximately 57,760 rentable square feet (the “Expansion Premises”).

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We are responsible for the build out of the facility space and associated costs.

The amended lease provides for a rent abatement for the first seven month s, and for a tenant improvement allowance of approximately $ 2.6 million for costs and expenses related to improvements made by us to the Expansion Premises.

During the three and six months ended June 30, 2021, we incurred $ 0.5 million of rent expense related to the Expansion Premises lease agreement.

The security deposits for the leases total $ 0.2 million as of June 30, 2021, which are included in other assets , on the condensed consolidated balance sheets.

The amended lease provides for a rent abatement for the first seven months , and for a tenant improvement allowance of approximately $ 2.6 million for costs and expenses related to improvements made by us to the Expansion Premises.

During the nine months ended September 30, 2021, we incurred $ 1.0 million of rent expense related to the Expansion Premises lease agreement.

The security deposits for the leases total $ 0.2 million as of September 30, 2021, which are included in other assets , on the condensed consolidated balance sheets.

557 Doug St, LLC

On September 27, 2021, we entered into a Membership Interest Purchase Agreement with Nant Capital (the “Purchase Agreement”).

Nant Capital is a related party controlled by Dr.

Patrick Soon-Shiong.

The Purchase Agreement transferred all outstanding membership interests in 557 Doug St, LLC from the company to Nant Capital.

The only asset owned by 557 Doug St, LLC is the improved property located at 557 South Douglas Street, El Segundo, California with a building area of approximately 36,434 rentable square feet (the “Douglas Property”).

The purchase price under the Purchase Agreement was $ 22.0 million, and after the offset prorated property taxes of $ 0.1 million, the net proceeds from the sale were $ 21.9 million.

An independent appraisal of the Douglas Property (the “Appraisal”) assigned the Douglas Property a value of $ 22.0 million.

The net carrying value of the property was $ 20.5 million as of the closing date.

We accounted for the transfer as a sale of an asset to an entity under common control, recorded the transfer at book value and recognized the excess of net consideration over carrying book value of $ 1.4 million as a capital contribution received from Nant Capital in additional paid-in capital , on the condensed consolidated statements of stockholders’ deficit for the three and nine months ended September 30, 2021.

In September 2021, we entered into a lease agreement with Nant Capital under which we leased back 557 South Douglas Street for an initial lease term of seven years , which commenced on September 27, 2021.

The monthly base rent under the lease is approximately $ 81,976 per month with an annual increase of 3 % on October 1 of each year beginning in 2022 during the initial term and, if applicable, during the option term .

For the first two years under the lease we will not be charged rent;

we will begin paying rent on October 1, 2023 at the current monthly base rent.

We will prepay the first month rent and security deposit totaling $ 0.2 million upon the execution of the lease.

We have an option to extend the lease for two additional seven-year periods when the prior term expires.

We have included the first option to extend the lease term for seven years as part of the initial lease term as it is reasonably certain that we will exercise the option, which implies lease expiration on September 30, 2035.

The lease is classified as an operating lease, and as of September 30, 2021, future minimum lease obligations associated with the lease total $ 7.1 million, which will be recognized over the lease term.

Related-Party Notes Payable

As of June 30, 2021 and December 31, 2020, related-party notes payable consist of the following (in thousands):

As of September 30, 2021 and December 31, 2020, related-party notes payable consist of the following (in thousands):

Total Notes and Interest Payable

Related-Party Notes Payable

Related-Party Notes Payable Note

Year Outstanding

Advances Interest

Rate September 30,

2021 December 31,

Nant Capital (1)

2015 $ 55,226 5.0 % $ 60,632 (2) $ 58,482 (2)

Nant Capital (1)

2020 50,000 6.0 % 53,009 (3) 50,764 (3)

Nant Capital (4)

2021 40,000 6.0 % 40,000 (4) —

NantMobile (1)

2019 55,000 3.0 % 57,930 (5) 56,660 (5)

NantWorks (1)

2017 43,418 5.0 % 53,402 (6) 51,546 (6)

2018 33,000 5.0 % 38,267 (7) 36,901 (7)

Total related-party notes payable $ 276,644 $ 303,240 $ 254,353

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There are no equity or equity-linked convertible rights related to these promissory notes.

Accrued and unpaid interest on this note totaled $ 4.7 million and $ 3.3 million as of June 30, 2021 and December 31, 2020, respectively.

Accrued and unpaid interest on this note totaled $ 2.3 million and $ 0.8 million as of June 30, 2021 and December 31, 2020, respectively.

(2) Accrued and unpaid interest on this note totaled $ 5.4 million and $ 3.3 million as of September 30, 2021 and December 31, 2020, respectively.

(3) Accrued and unpaid interest on this note totaled $ 3.0 million and $ 0.8 million as of September 30, 2021 and December 31, 2020, respectively.

(4) The outstanding principal is due and payable on September 30, 2025.

Interest on this related-party note is compounded annually and payable quarterly commencing on June 30, 2021.

We paid $ 0.8 million in interest on this loan during the three months ended June 30, 2021.

We paid $ 1.4 million in interest on this loan during the nine months ended September 30, 2021.

All outstanding amounts under the note become due and payable upon certain bankruptcy and insolvency-related events.

There are no equity or equity-linked convertible rights related to this promissory note.

Accrued and unpaid interest on this note totaled $ 2.5 million and $ 1.7 million as of June 30, 2021 and December 31, 2020, respectively.

Accrued and unpaid interest on this note totaled $ 9.4 million and $ 8.1 million as of June 30, 2021 and December 31, 2020, respectively.

Accrued and unpaid interest on this note totaled $ 4.8 million and $ 3.9 million as of June 30, 2021 and December 31, 2020, respectively.

(5) Accrued and unpaid interest on this note totaled $ 2.9 million and $ 1.7 million as of September 30, 2021 and December 31, 2020, respectively.

(6) Accrued and unpaid interest on this note totaled $ 10.0 million and $ 8.1 million as of September 30, 2021 and December 31, 2020, respectively.

(7) Accrued and unpaid interest on this note totaled $ 5.3 million and $ 3.9 million as of September 30, 2021 and December 31, 2020, respectively.

Stockholders’ Deficit

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Stock Repurchases

No shares of our common stock were repurchased during the six months ended June 30, 2021 and 2020 under the company’s 2015 Share Repurchase Program.

As of June 30, 2021, $ 18.3 million remained authorized for repurchase under the program.

No shares of our common stock were repurchased during the nine months ended September 30, 2021 and 2020 under the company’s 2015 Share Repurchase Program.

As of September 30, 2021, $ 18.3 million remained authorized for repurchase under the program.

Common Stock Reserved for Future Issuance

As of June 30, 2021, a total of approximately 11.8 million shares of common stock were reserved for issuance, including awards issued under the NC 2015 Plan that were outstanding immediately prior to the Effective Time of the Merger.

As of September 30, 2021, a total of approximately 11.3 million shares of common stock were reserved for issuance, including awards issued under the NC 2015 Plan that were outstanding immediately prior to the Effective Time of the Merger.

At the Effective Time, all outstanding equity awards granted under the NC 2015 Plan to purchase NantCell common stock were converted into equity awards to purchase shares of Company Common Stock (using the Exchange Ratio of 0.8190 ), on the same terms and conditions as immediately prior to the Effective Time.

As of June 30, 2021, there were approximately 6.8 million RSUs and 0.7 million stock options outstanding under the NC 2015 Plan, and there were no additional shares available for future grant.

As of September 30, 2021, there were approximately 5.8 million RSUs and 0.6 million stock options outstanding under the NC 2015 Plan, and there were no additional shares available for future grants.

Open Market Sale Agreement

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We pay our sales agent a commission of up to 3.0 % of the gross sales proceeds of any shares of our common stock sold through them under the Sale Agreement, and also have provided them with customary indemnification and contribution rights.

During the three months ended June 30, 2021, we received net proceeds totaling $ 94.9 million from the issuance of 6,420,441 shares under the ATM, which we expect to use for general corporate purposes, including to progress our clinical development programs, fund other research and development activities, for capital expenditures and to fund working capital.

During the nine months ended September 30, 2021, we received net proceeds totaling $ 136.9 million from the issuance of 10,216,978 shares under the ATM, which we expect to use for general corporate purposes, including to progress our clinical development programs, fund other research and development activities, make capital expenditures and fund working capital.

We may also use a portion of the net proceeds to license intellectual property or to make acquisitions or investments.

As of June 30, 2021, we had $ 402.0 million available for future stock issuances under the ATM.

As of September 30, 2021, we had $ 359.0 million available for future stock issuances under the ATM.

We are not obligated to sell any shares and may at any time suspend solicitation and offers under the Sale Agreement.

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Pursuant to the Merger, we assumed 7,121,110 RSUs (adjusted for the Exchange Ratio of 0.8190 ) issued under NantCell’s equity incentive plan.

As of June 30, 2021, the 2015 Plan is the only equity plan available for grant of equity awards to employees, directors and consultants of the company.

As of June 30, 2021, a total of approximately 5.9 million shares were available for future grant under the 2015 Plan.

As of September 30, 2021, the 2015 Plan is the only equity plan available for grant of equity awards to employees, directors and consultants of the company.

As of September 30, 2021, a total of approximately 5.3 million shares were available for future grants under the 2015 Plan.

Stock-based Compensation

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Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

Stock-based compensation expense:

Stock options $ 1,815 $ 548 $ 9,780 $ 876

RSUs 12,025 166 37,221 640

$ 13,840 $ 714 $ 47,001 $ 1,516

Stock-based compensation expense in operating expenses:

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Selling, general and administrative 8,912 636 30,640 1,330

$ 13,840 $ 714 $ 47,001 $ 1,516

On March 18, 2021, the Board of Directors approved to modify certain non-qualified stock options that were assumed in the Merger and otherwise would have expired during a period when the grantees were legally restricted from exercising these awards.

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1 on Form S-3 to our Form S-4 Registration Statement.

We recorded incremental stock-based compensation expense of approximately $ 2.7 million for this stock option modification.

We recorded an incremental stock-based compensation expense of approximately $ 2.7 million for this stock option modification.

On March 29, 2021, in connection with the resignation of two former independent directors, the Board of Directors approved the acceleration of vesting of 83,333 shares of unvested stock options of the former directors on the date of their respective resignations.

The modified options are exercisable for ninety ( 90 ) days after the date of the modification.

We recorded incremental stock-based compensation expense of approximately $ 2.3 million for this stock option modification.

We recorded an incremental stock-based compensation expense of approximately $ 2.3 million for this stock option modification.

The stock option modifications were measured as the excess of the fair value of the modified awards over the fair value of the original awards immediately before the modifications.

The incremental stock-based compensation was recorded in selling, general and administrative expense , on the condensed consolidated statements of operations during the six months ended June 30, 2021.

The incremental stock-based compensation was recorded in selling, general and administrative expense , on the condensed consolidated statements of operations during the nine months ended September 30, 2021.

Stock Options

The following table summarizes stock option activity and related information for the six months ended June 30, 2021:

The following table summarizes stock option activity and related information for the nine months ended September 30, 2021:

(in thousands)

Outstanding at December 31, 2020

4,996,284 $ 9.96 $ 29,746 4.7

Granted 1,069,940 $ 21.38

Exercised ( 1,747,962 ) $ 3.90

Expired/forfeited ( 123,994 ) $ 10.07

Outstanding at June 30, 2021

Vested and exercisable at June 30, 2021

On February 5, 2021, the compensation committee of the board of directors of the c ompany granted Richard Adcock, our c hief e xecutive o fficer, a stock option award (the “ Option Grant”) to purchase 750,000 shares of our common stock pursuant to our 2015 Plan.

Outstanding at September 30, 2021

4,194,268 $ 15.44 $ 10,434 5.5

Vested and exercisable at September 30, 2021

3,082,660 $ 13.78 $ 9,823 4.1

On February 5, 2021, the compensation committee of the board of directors of the company granted Richard Adcock, our chief executive officer, a stock option award (the “Option Grant”) to purchase 750,000 shares of our common stock pursuant to our 2015 Plan.

The Option Grant has an exercise price of $ 23.72 per share, the closing price as reported on the Nasdaq on the date of grant.

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one-third of the Option Grant (i.e., 250,000 options) shall vest in equal installments on each of the first, second, and third anniversaries of the date of grant, such that all shares shall be fully vested on the third anniversary of the date of grant, subject to Mr.

Adcock remaining in c ontinuous s ervice as defined in the 2015 Plan through the applicable vesting dates.

Adcock remaining in continuous service as defined in the 2015 Plan through the applicable vesting dates.

This grant of equity awards to Mr.

Adcock was made in connection with his appointment as c hief e xecutive o fficer of the c ompany, which was effective as of October 26, 2020, and was modified from the recommended equity grant described in Mr.

Adcock was made in connection with his appointment as chief executive officer of the company, which was effective as of October 26, 2020, and was modified from the recommended equity grant described in Mr.

Adcock’s offer of employment as of that date.

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The shares subject to the award will vest 100 % on the earlier to occur of June 10, 2022 or the date immediately preceding the 2022 annual meeting of stockholders, subject to the recipient continuing to be a service provider as defined in the 2015 Plan through the applicable vesting date.

These grants were made in connection with the re-election of our Executive Chairman and independent directors to the company’s board of directors at the 2021 annual meeting of stockholders.

As of June 30, 2021, the unrecognized compensation cost related to outstanding stock options was $ 16.2 million, which is expected to be recognized over a remaining weighted-average period of 2.4 years.

The total intrinsic value of stock options exercised during the six months ended June 30, 2021 was $ 20.6 million.

Cash proceeds received from stock option exercises during the six months ended June 30, 2021 was $ 4.4 million.

These grants were made in connection with the re-election of our Executive Chairman and Global Chief Scientific and Medical Officer, and independent directors to the company’s board of directors at the 2021 annual meeting of stockholders.

As of September 30, 2021, the unrecognized compensation cost related to outstanding stock options was $ 13.7 million, which is expected to be recognized over a remaining weighted-average period of 2.2 years.

The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 was $ 21.2 million.

Cash proceeds received from stock option exercises during the nine months ended September 30, 2021 was $ 5.0 million.

As of December 31, 2020, a total of 4,345,497 vested and exercisable shares were outstanding.

The fair value of stock options issued was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

Six Months Ended

Expected term (in years)

Nine Months Ended

September 30,

Expected term 5.9 years

Risk-free interest rate 0.7 %

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Restricted Stock Units

The following table summarizes RSU activity during the six months ended June 30, 2021:

The following table summarizes RSU activity during the nine months ended September 30, 2021:

Nonvested balance at December 31, 2020

466,842 $ 2.52

Granted 8,351,301 $ 23.93

Vested ( 621,364 ) $ 17.62

Forfeited/canceled ( 1,120,377 ) $ 24.72

Nonvested balance at June 30, 2021

As of June 30, 2021, there was $ 159.9 million of unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 3.9 years.

Nonvested balance at September 30, 2021

7,076,402 $ 22.95

As of September 30, 2021, there was $ 134.3 million of unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 3.7 years.

The total intrinsic value of RSUs vested during the nine months ended September 30, 2021 was $ 10.7 million.

We may grant RSUs to both employees and directors of the company and to employees of related parties that provide shared services to the company under our shared services agreement with NantWorks as discussed in Note 8 , Related-Party Agreements .

On February 5, 2021, the compensation committee of the board of directors of the c ompany granted Mr.

On February 5, 2021, the compensation committee of the board of directors of the company granted Mr.

Adcock two awards totaling 400,000 RSUs (each an “RSU Award” and collectively, the “RSU Awards”) of our common stock pursuant to the 2015 Plan.

The RSU Awards are comprised of two separate awards, one settled by issuing 150,000 shares of our common stock and the other to be settled by issuing 250,000 shares of our common stock upon vesting.

The first RSU Aw a rd vested immediately on the date of grant with the c ompany retaining shares equal in value to the c ompany’s tax withholding obligations.

The second RSU Aw a rd will vest according to the following schedule:

The first RSU Award vested immediately on the date of grant with the company retaining shares equal in value to the company’s tax withholding obligations.

The second RSU Award will vest according to the following schedule:

one-third (i.e.

83,333 ) of the shares subject to the RSU Aw a rd shall vest in equal annual installments on each of the first, second and third anniversaries of the date of grant , such that all shares shall be fully vested on the third anniversary of the date of g rant, subject to Mr.

Adcock remaining in c ontinuous s ervice as defined in the 2015 Plan through the applicable vesting dates.

83,333 ) of the shares subject to the RSU Award shall vest in equal annual installments on each of the first, second and third anniversaries of the date of grant, such that all shares shall be fully vested on the third anniversary of the date of grant, subject to Mr.

Adcock remaining in continuous service as defined in the 2015 Plan through the applicable vesting dates.

This grant of equity awards to Mr.

Adcock was made in connection with his appointment as chief executive officer of the company, which was effective as of October 26, 2020, and was modified from the recommended equity grant described in Mr.

Adcock’s offer of employment as of that date.

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Once the liquidity event related performance condition was met as of March 9, 2021 due to the Merger, compensation expense for these RSUs began to be recognized on a graded vesting attribution approach over the requisite service period for each participant, which ranges from six -month to seventy ( 70 )-month vesting periods.

During the six months ended June 30, 2021, we recorded approximately $ 21.1 million of stock-based compensation expense related to these awards, of which approximately $ 11.3 million was recorded in research and development expense and approximately $ 9.8 million was recorded in selling, general and administrative expense , on the condensed consolidated statements of operations.

During the nine months ended September 30, 2021, we recorded approximately $ 33.0 million of stock-based compensation expense related to these awards, of which approximately $ 16.6 million was recorded in research and development expense and approximately $ 16.4 million was recorded in selling, general and administrative expense , on the condensed consolidated statements of operations.

The RSUs awarded to employees and consultants of affiliated companies were accounted for as stock-based compensation in accordance with ASU 2018-07, Compensation—Stock Compensation (Topic 718) , as the compensation was in exchange for continued support or services expected to be provided to the company over the vesting periods under the NantWorks shared services agreement discussed in Note 8 , Related-Party Agreements .

We have evaluated the associated benefit of these awards to the affiliated companies under common control and determined that the benefit is limited to the retention of their employees.

We estimated such benefit at the grant date fair value of $ 4.0 million and recorded $ 0.5 million of deemed dividends for the six months ended June 30, 2021 in additional paid-in capital, on the condensed consolidated balance sheets, with a corresponding credit to stock compensation expense.

We estimated such benefit at the grant date fair value of $ 4.0 million and recorded $ 0.8 million of deemed dividends for the nine months ended September 30, 2021 in additional paid-in capital, on the condensed consolidated balance sheets, with a corresponding credit to stock compensation expense.

In connection with the Merger, warrants issued to NantWorks, a related party, in connection with NantCell’s acquisition of Altor were assumed by the company.

After applying the Exchange Ratio at the Effective Time of the Merger, a total of 1,638,000 warrants with an exercise price of $ 3.24 per share were outstanding as of June 30, 2021.

After applying the Exchange Ratio at the Effective Time of the Merger, a total of 1,638,000 warrants with an exercise price of $ 3.24 per share were outstanding as of September 30, 2021.

The fair value of $ 18.0 million assigned to the warrants will be recognized in equity upon achievement of a performance-based vesting condition pertaining to building manufacturing capacity to support supply requirements for one of our product candidates.

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however, its tax attributes, such as net operating loss (“NOL”) carryforwards and tax credits, are still subject to examination in the year they are used.

Subsequent Events

420 Nash, LLC

On September 27, 2021, we entered into a lease agreement with 420 Nash, LLC, a related party, whereby we leased an approximately 19,125 rentable square foot property located at 420 Nash Street, El Segundo, California, to be used primarily for the warehousing and storage of drug manufacturing supplies, products and equipment and ancillary office space.

Under the terms of the lease agreement, the lease term began on October 1, 2021 and expires on September 30, 2026.

The base rent is approximately $ 38,250 per month with an annual increase of 3 % on October 1 of each year beginning in 2022 during the initial term.

The company is responsible for the payment of real property taxes, repairs and maintenance, improvements, insurance and operating expenses during the term of the lease.

We will receive a rent abatement for the first month of the lease, and a one-time improvement allowance of $ 15,000 from the landlord that will be credited against base rent obligations for the second month of the lease.

The company has options to extend the lease term for two additional consecutive periods of five years each.

At the beginning of each option term, the initial monthly base rent will be adjusted to market rent (as defined in the lease agreement) with an annual increase of 3 % during the option term.

Joint Venture with Amyris, Inc.

During the fourth quarter of 2021, the company signed a binding term sheet to pursue a 50:50 joint venture arrangement with Amyris, Inc., a leading synthetic biotechnology company, to accelerate the commercialization of a next-generation COVID-19 vaccine utilizing IDRI’s RNA vaccine platform to which Amyris holds a license.

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-Q

Item 1. Financial Statements