What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-10 · 107 added, 83 removed, 337 unchanged (36% of the section changed)

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• our expectations regarding our ability to utilize the Phase 1/2 aNK and haNK ® clinical trials data to support the development of our product candidates, including our haNK, taNK, t‑haNK ™ , MSC, and M-ceNK ™ product candidates;

• our expectations regarding the development, application, commercialization, marketing, prospects and use generally of our product candidates, including Anktiva, self-amplifying RNA (saRNA), hAd5 and yeast constructs, recombinant sub-unit proteins, EDV constructs, toll-like receptor-activating adjuvants, and aldoxorubicin;

• the timing or likelihood of regulatory filings or other actions and related regulatory authority responses, including any planned investigational new drug (IND), BLA or New Drug Application (NDA) filings including, without limitation, the anticipated timing of filing a BLA for BCG-unresponsive NMIBC CIS or pursuit of accelerated regulatory approval pathways or orphan drug status and Breakthrough Therapy designations;

• our expectations regarding the development, application, commercialization, marketing, prospects and use generally of our product candidates, including N-803, self-amplifying RNA (saRNA), hAd5 and yeast constructs, recombinant sub-unit proteins, EDV constructs, toll-like receptor-activating adjuvants, and aldoxorubicin;

• the timing or likelihood of regulatory submissions or other actions and related regulatory authority responses and approvals, including any planned investigational new drug (IND), BLA or New Drug Application (NDA) submissions to the FDA, including, without limitation, the progress of our BLA submission for N-803 in combination with BCG for the treatment of patients with BCG-unresponsive NMIBC with CIS with or without Ta or T1 disease submitted to the FDA in May 2022 or the pursuit of accelerated regulatory approval pathways or orphan drug status and Breakthrough Therapy designations for applicable product candidates;

• our ability to implement an integrated discovery ecosystem and the operation of that planned ecosystem, including being able to regularly add neoepitopes and subsequently formulate new product candidates;

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• our belief regarding the magnitude or duration for additional clinical testing of our antibody cytokine fusion proteins, DNA, RNA or recombinant protein vaccines, toll-like receptor-activating adjuvants, NK-cell therapy, or DAMP inducers along with other product candidate families;

• even if we successfully develop and commercialize specific product candidates like our Anktiva or PD-L1 t‑haNK, our ability to develop and commercialize our other product candidates either alone or in combination with other therapeutic agents;

• even if we successfully develop and commercialize specific product candidates like our N-803 or PD-L1 t‑haNK, our ability to develop and commercialize our other product candidates either alone or in combination with other therapeutic agents;

• the ability to obtain and maintain regulatory approval of any of our product candidates, and any related restrictions, limitations and/or warnings in the label of any approved product candidate;

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You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect.

Anktiva, ceNK, Conkwest, GlobeImmune, GlobeImmune (logo), haNK, haNK (Chinese characters), ImmunityBio, NantKwest, NK-92, Outsmart your disease, taNK, Tarmogen, and VivaBioCell are trademarks or registered trademarks of ImmunityBio, Inc., its subsidiaries, or its affiliates.

Anktiva, ceNK, Conkwest, GlobeImmune, GlobeImmune (logo), haNK, haNK (Chinese characters), ImmunityBio, NantKwest, NK-92, Outsmart your disease, taNK, Tarmogen, Vesanktiva, and VivaBioCell are trademarks or registered trademarks of ImmunityBio, Inc., its subsidiaries, or its affiliates.

This Quarterly Report on Form 10-Q contains references to our trademarks and trademarks belonging to other entities.

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We believe that our innovative approach to orchestrate and combine therapies for optimal immune system response will become a therapeutic foundation across multiple clinical indications.

Additionally, we believe that data from multiple clinical trials indicates Anktiva has broad potential to enhance the activity of therapeutic monoclonal antibodies (mAbs), including checkpoint inhibitors (e.g., Keytruda), across a wide range of tumor types.

Anktiva is currently being studied in 21 clinical trials (both ImmunityBio and investigator-sponsored) across 13 indications.

Although such designations may not lead to a faster development process or regulatory review and may not increase the likelihood that a product candidate will receive approval, N-803, ImmunityBio’s novel antibody cytokine fusion protein, has received Breakthrough Therapy and Fast Track designations in combination with BCG from the FDA for BCG -unresponsive NMIBC CIS .

Based on the reported results of our Phase 2/3 trial (QUILT 3.032), we have initiated discussions with the FDA to file a BLA for N-803 plus BCG for BCG-unresponsive NMIBC CIS.

We held a pre-BLA meeting with the FDA in May and reached agreement with the agency with regard to the content and plan to submit our BLA for N-803 plus BCG for BCG-unresponsive NMIBC CIS.

We anticipate that the final internal quality review of the BLA will be completed within the next ten days upon which we will submit our BLA.

Additionally, we believe that data from multiple clinical trials indicates N-803 has broad potential to enhance the activity of therapeutic monoclonal antibodies (mAbs), including checkpoint inhibitors (e.g., Keytruda), across a wide range of tumor types.

N-803 is currently being studied in 21 clinical trials (both ImmunityBio and investigator-sponsored) across 13 indications.

Although such designations may not lead to a faster development process or regulatory review and may not increase the likelihood that a product candidate will receive approval, N-803, ImmunityBio’s novel antibody cytokine fusion protein, has received Breakthrough Therapy and Fast Track designations from the FDA in combination with BCG for the treatment of patients with BCG -unresponsive NMIBC with CIS with or without Ta or T1 disease .

I n May 2022, we announced the submission of a BLA to the FDA for our product candidate, N-803 in combination with BCG for the treatment of patients with BCG-unresponsive NMIBC with CIS with or without Ta or T1 disease.

In July 2022, we announced the FDA has accepted our BLA for review and set a PDUFA target action date of May 23, 2023.

It is unclear when the FDA will approve our BLA, if at all.

We have established GMP manufacturing capacity at scale with cutting-edge cell manufacturing expertise and ready-to-scale facilities, as well as extensive and seasoned R&D, clinical trial, and regulatory operations, and development teams.

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We continue to monitor the impact of the COVID-19 pandemic on our business, including our clinical trials, manufacturing facilities and capabilities, and ability to access necessary resources.

For a discussion of the risks presented by the COVID-19 pandemic to our results of operations and financial condition, see Part I I , Item 1A.

For a discussion of the risks presented by the COVID-19 pandemic to our results of operations and financial condition, see Part II, Item 1A.

“Risk Factors.”

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We have no clinical products approved for commercial sale and have not generated any revenue from therapeutic and vaccine product candidates that are under development.

We have incurred net losses in each year since our inception and, as of March 31, 2022, we had an accumulated deficit of $2.1 billion.

Our net losses attributable to ImmunityBio common stockholders were $102.8 million and $79.6 million for the three months ended March 31, 2022 and 2021, respectively.

We have incurred net losses in each year since our inception and, as of June 30, 2022, we had an accumulated deficit of $2.2 billion.

Our net losses attributable to ImmunityBio common stockholders were $197.4 million and $167.9 million for the six months ended June 30, 2022 and 2021, respectively.

Substantially all of our net losses resulted principally from costs incurred in connection with our ongoing clinical trials and operations, our research and development programs, and from selling, general and administrative costs associated with our operations, including stock-based compensation expense.

As of March 31, 2022, we had 688 employees.

As of June 30, 2022, we had 740 employees.

Personnel of related companies who provide corporate, general and administrative, manufacturing strategy, research and development, regulatory and clinical trial strategy and other support services under our shared services agreement with NantWorks are not included in this number.

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We believe that our innovative approach to orchestrate and combine therapies for optimal immune system response will become a therapeutic foundation across multiple clinical indications.

Additionally, we believe that data from multiple clinical trials indicates Anktiva has broad potential to enhance the activity of therapeutic mAbs, including checkpoint inhibitors (e.g., Keytruda), across a wide range of tumor types.

Anktiva is currently being studied in 21 clinical trials (both ImmunityBio and investigator-sponsored) across 13 indications.

Additionally, we believe that data from multiple clinical trials indicates N-803 has broad potential to enhance the activity of therapeutic mAbs, including checkpoint inhibitors (e.g., Keytruda), across a wide range of tumor types.

N-803 is currently being studied in 21 clinical trials (both ImmunityBio and investigator-sponsored) across 13 indications.

We may also enter into supply arrangements for various investigational agents to be used in our clinical trials.

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Related-Party Promissory Notes

As of March 31, 2022, we have outstanding fixed-rate promissory notes with entities affiliated with Dr.

As of June 30, 2022, we have outstanding fixed-rate promissory notes with entities affiliated with Dr.

Soon-Shiong in an aggregate amount of $312.5 million, including accrued interest.

These notes bear interest at a per annum rate ranging from 3.0% to 6.0%, provide that the outstanding principal is due and payable on September 30, 2025, and accrued and unpaid interest is payable on either upon maturity or, with respect to one of the notes, on a quarterly basis beginning June 30, 2021.

We may prepay the outstanding amount of any advance under such notes, together with accrued and unpaid interest, at any time, in whole or in part, without premium or penalty.

In addition, as of March 31, 2022 we have a $300.0 million variable-rate promissory note with an entity affiliated with Dr.

In addition, as of June 30, 2022 we have a $300.0 million variable-rate promissory note with an entity affiliated with Dr.

Soon-Shiong that is due and payable on December 17, 2022.

This loan bears interest at Term SOFR + 5.4%, which is compounded annually and payable quarterly commencing on March 17, 2022.

As of March 31, 2022, the interest rate on this loan was 5.92%.

As of June 30, 2022, the interest rate on this loan was 7.29%.

In the event of a default on the loan (as defined in the promissory note), including if we do not repay the loan at maturity, the company has the right, at its sole option, to convert the outstanding principal amount and accrued and unpaid interest due under this note into shares of the company’s common stock at price of $5.67 per share.

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The Clinic is a related party as it is owned by an officer of the company and NantWorks manages the administrative operations of the Clinic.

In 2021, we completed a review of alternative structures that could support our more complex clinical trial requirements and made a decision to explore a potential transition of clinical trials at the Clinic to a new structure (including contracting with a new, non-affiliated professional corporation) to be determined and agreed upon by all parties and currently planned for the first half of 2022.

Based on this decision to explore a potential transition, we determined that it was more likely than not that the previously recorded prepaid asset would not result in the collection of fees for services performed by the Clinic as contemplated in the original agreements.

As a result, we wrote down the remaining value of our prepaid asset and recorded approximately $4.4 million in research and development expense , on the condensed consolidated statement of operations for the year ended December 31, 2021 .

For the three months ended March 31, 2022 and 2021, we incurred $0.4 million and $0.3 million in research and development expense , on the condensed consolidated statements of operations related to clinical trial and transition services provided by the Clinic.

For the six months ended June 30, 2022 and 2021, we incurred $1.3 million and $0.8 million in research and development expense , on the condensed consolidated statements of operations related to clinical trial and transition services provided by the Clinic.

NantWorks, LLC

On May 6, 2022, we amended our facility license agreement with NantWorks, a related party, to expand the licensed premises to an aggregate total of 46,330 rentable square feet.

See Subsequent Events for more information.

23 Alaska, LLC

On May 6, 2022, we entered into a lease agreement with 23 Alaska, LLC, a related party, for a 47,265 rentable square foot facility located at 2335 Alaska Ave., El Segundo, California, to be used primarily for pharmaceutical development and manufacturing, research and development, and office space.

See Subsequent Events for more information.

557 Doug St, LLC

Effective September 27, 2021, we entered into a lease agreement with Nant Capital under which we leased 557 South Douglas Street in El Segundo, California.

Effective May 31, 2022, we executed a lease termination agreement with Nant Capital under which we will receive a full refund of the first month’s rent and security deposit totaling $0.2 million that we paid upon execution of the lease.

See Note 9 , Related-Party Agreements , of the “Notes to Unaudited Condensed Consolidated Financial Statements” that appears in Item 1.

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• the efficacy and safety profile of the product candidate.

We have only one product candidate, N-803, currently planned for a BLA submission to the FDA in the near future.

However, there can be no assurance that it will be approved for commercial sale in the near term, if ever.

We have only one product candidate, N-803 in combination with BCG for the treatment of patients with BCG-unresponsive NMIBC with CIS with or without Ta or T1 disease, for which we submitted a BLA to the FDA in May 2022.

In July 2022, we announced the FDA has accepted our BLA for review and set a PDUFA target action date of May 23, 2023.

However, there can be no assurance that our product candidate will be approved for commercial sale by the PDUFA target action date, if ever.

We do not expect any of our other product candidates to be commercially available for the foreseeable future, if ever.

See “ —Ou r Business ” above for an update on the anticipated timing of a BLA submission.

Selling, General and Administrative

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federal income tax, as well as income tax in Italy, South Korea, California and other states.

From inception through March 31, 2022, we have not been required to pay U.S.

From inception through June 30, 2022, we have not been required to pay U.S.

federal and state income taxes because of current and accumulated NOLs.

Discussion of Condensed Consolidated Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021

Comparison of the Three Months Ended June 30, 2022 and 2021

Three Months Ended

March 31, $ Change % Change

June 30, $ Change % Change

(Unaudited, $ in thousands)

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Loss from operations (79,622) (85,906) 6,284 (7 %)

Other expense, net:

Interest and investment loss, net (1,800) (177) (1,623) 917 %

Interest expense (including amounts with related parties) (9,698) (3,577) (6,121) 171 %

Loss on equity method investment (3,900) — (3,900) n/a

Other income, net (including amounts

with related parties) 185 277 (92) (33 %)

Total other expense, net (15,213) (3,477) (11,736) 338 %

Loss before income taxes and noncontrolling interests (94,835) (89,383) (5,452) 6 %

Income tax expense — (2) 2 (100 %)

Net loss $ (94,835) $ (89,385) $ (5,450) 6 %

Revenue decreased $0.3 million for the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

The decrease was primarily driven by less warranty revenue received from a related party in 2022.

Research and Development Expense

Research and development expense increased $9.3 million during the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

The increase in research and development expense was primarily driven by a $5.0 million increase in facilities and equipment expense, primarily related to the expansion of our manufacturing facility in El Segundo, California and the Dunkirk Facility leasehold acquisition, a $4.9 million increase in regulatory and consulting costs related to the BLA submission for our N-803 program, a $4.8 million increase in personnel costs due to higher headcount in support of our continued research and development efforts and the acquisition of the Dunkirk facility, and a $0.9 million increase in conference costs.

These increases were partially offset by a $5.3 million decrease in stock-based compensation expense due to reduced grant activity during 2022 and a $1.0 million decrease in clinical trial costs.

We expect our research and development expense to increase significantly for the foreseeable future as we advance our product candidates through clinical development and conduct our ongoing and planned clinical trials.

Selling, General and Administrative Expense

Selling, general and administrative expense decreased $15.9 million during the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

The decrease in selling, general and administrative expense was primarily attributable to an $18.7 million decrease in legal expense related to the Merger completed in the first quarter of 2021 and an insurance reimbursement, a $2.4 million decrease in stock compensation expense, mainly driven by reduced grant activity during 2022, and a $1.2 million reduction in shared services costs.

These decreases were partially offset by a $5.4 million increase in personnel-related costs due to higher headcount and increased international travel, and an increase of $1.0 million of other costs.

Other Expense, Net

Other expense, net increased $11.7 million during the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

The increase in other expense, net was mainly due to a $6.1 million increase in interest expense driven by higher related-party borrowings, a $3.9 million loss on our equity method investment in the Amyris joint venture, a $1.6 million increase in net unrealized losses related to our marketable equity securities, and a $0.1 million decrease in other income, net.

Comparison of the Six Months Ended June 30, 2022 and 2021

Six Months Ended

June 30, $ Change % Change

(Unaudited, $ in thousands)

Revenue $ 49 $ 478 $ (429) (90 %)

Operating expenses:

Research and development (including amounts

with related parties) 118,460 94,928 23,532 25 %

Selling, general and administrative (including amounts

with related parties) 57,183 77,720 (20,537) (26 %)

Total operating expenses 175,643 172,648 2,995 2 %

Loss from operations (175,594) (172,170) (3,424) 2 %

Other (expense) income, net:

Interest and investment income, net 1,666 8,944 (7,278) (81 %)

Interest and investment (loss) income, net (134) 8,767 (8,901) (102 %)

Interest expense (including amounts with related parties) (18,189) (6,745) (11,444) 170 %

Loss on equity method investment (4,097) — (4,097) n/a

Other (expense) income, net (including amounts

Other income, net (including amounts

with related parties) 181 290 (109) (38 %)

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Net loss $ (197,833) $ (169,866) $ (27,967) 16 %

Revenue decreased $0.1 million for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021.

The decrease was primarily driven by warranty revenue in 2021.

Revenue decreased $0.4 million for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021.

The decrease was primarily driven by less warranty revenue received from a related party in 2022.

Research and Development Expense

Research and development expense increased $14.3 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021.

The increase in research and development expense was primarily driven by a $6.0 million increase in compensation expense due to higher headcount to support our continued research and development efforts, a $3.9 million increase in facilities and equipment expense, primarily related to the expansion of our manufacturing facility in El Segundo, California and the Dunkirk Facility leasehold acquisition, a $2.0 million increase in regulatory and consulting costs, a $2.0 million increase in research agreement and contract manufacturing costs, and a $0.4 million increase in shared services costs.

Research and development expense increased $23.5 million during the six months ended June 30, 2022, as compared to the six months ended June 30, 2021.

The increase in research and development expense was primarily driven by a $10.7 million increase in personnel costs due to higher headcount in support of our continued research and development efforts, an increase of $9.1 million in regulatory costs related to the BLA submission for our N-803 program, research agreements, and consulting fees, a $9.0 million increase in facilities and equipment expense, primarily related to the expansion of our manufacturing facility in El Segundo, California and the Dunkirk Facility during 2022, and a $1.0 million increase in conference costs.

These increases were partially offset by a $5.2 million decrease in stock-based compensation expense due to reduced grant activity during 2022 and a $1.1 million decrease in clinical trial and other expense.

Selling, General and Administrative Expense

Selling, general and administrative expense decreased $4.7 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021.

The decrease in selling, general and administrative expense was primarily attributable to a $12.6 million decrease in consulting and professional fees mainly due to Merger costs incurred during 2021, a $5.4 million decrease in stock compensation expense mainly driven by option modifications and certain RSU awards granted during 2021, a $1.6 million reduction in shared services costs and a $1.0 million reduction in insurance and other operating costs.

These decreases were partially offset by a $10.4 million increase in accruals for a legal settlement, $4.7 million in personnel related costs due to higher headcount and increase international travel, and $0.8 million in higher equipment and license expense.

Selling, general and administrative expense decreased $20.5 million during the six months ended June 30, 2022, as compared to the six months ended June 30, 2021.

The decrease in selling, general and administrative expense was primarily attributable to a $21.5 million decrease in legal, consulting and insurance costs related to the Merger completed in the first quarter of 2021 and an insurance reimbursement, a $7.7 million decrease in stock-based compensation expense due to reduced grant activity during 2022, and a $2.8 million reduction in shared services costs.

These decreases were partially offset by a $10.2 million increase in personnel-related costs due to higher headcount and increased international travel, and an increase of $1.3 million of license fee and other expense.

Other Expense, Net

Other expense, net increased $12.8 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021.

The increase in other expense, net was mainly due to a $7.3 million reduction in net unrealized gains related to our marketable equity securities, a $5.3 million increase in interest expense driven by higher related-party borrowings and a $0.2 million loss on equity method investment.

Other expense, net increased $24.6 million during the six months ended June 30, 2022, as compared to the six months ended June 30, 2021.

The increase was due to a $11.4 million increase in interest expense driven primarily by higher related-party borrowings, an increase of $8.9 million in net unrealized losses related to our marketable equity securities, a $4.1 million loss on our equity method investment in the Amyris joint venture, and a $0.1 million decrease in other income, net.

Financial Condition, Liquidity and Capital Resources

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The general condition of the financial markets and the economy may increase those risks and may affect the value and liquidity of investments and restrict our ability to access the capital markets.

As of March 31, 2022, we had cash and cash equivalents, and marketable securities of $193.2 million compared to $317.9 million as of December 31, 2021.

As of June 30, 2022, we had cash and cash equivalents, and marketable securities of $83.9 million compared to $317.9 million as of December 31, 2021.

On April 30, 2021, we entered into a Sale Agreement with respect to an ATM offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $500.0 million through our sales agent.

We issued no shares under the ATM during the three months ended March 31, 2022.

Although we made a decision to pause our ATM offering in the fourth quarter of 2021 after our $300.0 million promissory note financing with Nant Capital and do not have an active issuance notice with our sales agent, we expect to re-initiate activity at any time based on market dynamics and/or capital requirements.

As of March 31, 2022, we had $330.8 million available for future stock issuances under the ATM.

We issued no shares under the ATM during the six months ended June 30, 2022.

Although we made a decision to pause our ATM offering in the fourth quarter of 2021 after our $300.0 million promissory note financing with Nant Capital and do not have an active issuance notice with our sales agent, we may re-initiate activity at any time based on market dynamics and/or capital requirements.

As of June 30, 2022, we had $330.8 million available for future stock issuances under the ATM.

In order to complete the development of our current product candidates, and implement our business plan, we will require substantial additional funding.

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In addition to the cash used to fund our operating activities discussed in “ —Future Funding Requirements ” below, we will require cash to settle the following obligations:

• As of March 31, 2022, our indebtedness totals $609.0 million (consisting of related-party promissory notes and accrued and unpaid interest, less unamortized debt issuance costs), held by entities affiliated with Dr.

• As of June 30, 2022, our indebtedness totals $612.6 million (consisting of related-party promissory notes and accrued and unpaid interest, less unamortized debt issuance costs), held by entities affiliated with Dr.

Of this amount, $300.0 million is due and payable on December 17, 2022.

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We may prepay the outstanding amount of any advance under such notes, together with accrued and unpaid interest, at any time, in whole or in part, without premium or penalty.

• In connection with our acquisition of Altor, we issued CVRs under which we have agreed to pay the prior stockholders of Altor approximately $304.0 million upon successful approval of the BLA, or foreign equivalent, for N-803 by December 31, 2022 and approximately $304.0 million upon the first calendar year prior to December 31, 2026 in which worldwide net sales of N-803 exceed $1.0 billion (with payments payable in cash or shares of our common stock or a combination thereof).

• In connection with our acquisition of Altor, we issued CVRs under which we have agreed to pay the prior stockholders of Altor approximately $304.0 million contingent upon successful approval of a BLA, or foreign equivalent, for N-803 by December 31, 2022 and approximately $304.0 million contingent upon calendar-year worldwide net sales of N-803 exceeding $1.0 billion prior to December 31, 2026 (with amounts payable in cash or shares of our common stock or a combination thereof).

We have submitted the BLA, and in July 2022, we announced the FDA has accepted our BLA for review and set a PDUFA target action date of May 23, 2023.

It is unclear when the FDA will approve our BLA, if at all.

Soon-Shiong and his related party hold approximately $279.5 million in the aggregate of CVRs, and they have both irrevocably agreed to receive shares of common stock in satisfaction of their CVRs.

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The following table sets forth our primary sources and uses of cash for periods indicated (in thousands):

Three Months Ended

Six Months Ended

Cash (used in) provided by:

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Operating Activities

For the three months ended March 31, 2022, net cash used in operating activities of $74.9 million consisted of a net loss of $103.0 million, partially offset by $18.5 million in adjustments for non-cash items and $9.6 million of cash provided by net working capital changes.

Adjustments for non-cash items primarily consisted of $10.0 million in stock-based compensation expense, $4.1 million in depreciation and amortization expense, $3.4 million in non-cash interest related primarily to related-party promissory notes, $1.3 million in non-cash lease expense related to operating lease right-of-use assets, $0.9 million in other non-cash items, and a $0.2 million loss on equity method investment, reduced by $1.4 million in unrealized gains on equity securities driven by an increase in the value of our investments.

The changes in net working capital consisted primarily of increases of $10.9 million in accrued expenses and other liabilities and $0.8 million in accounts payable and a decrease of $0.1 million in other assets, partially offset by decreases of $1.6 million with related parties and $0.4 million in operating lease liabilities, and an increase of $0.2 million in prepaid and other current assets.

For the three months ended March 31, 2021, net cash used in operating activities of $60.5 million consisted of a net loss of $80.5 million, partially offset by $14.5 million in adjustments for non-cash items and $5.5 million of cash provided by net working capital changes.

Adjustments for non-cash items primarily consisted of $15.3 million in stock-based compensation expense, $3.4 million in non-cash interest primarily related to related-party loans, $3.0 million in depreciation and amortization, and $1.6 million in non-cash lease expense related to operating lease right-of-use assets, reduced by $8.8 million in unrealized gains on marketable equity securities driven by an increase in the value of our investments.

The change in net working capital consisted primarily of increases in accounts payable of $6.5 million and amounts with related parties of $2.6 million and decreases in other assets of $0.7 million.

The increases in net working capital were partially offset by decreases in accrued expenses and other liabilities of $1.9 million, and operating lease liabilities of $1.5 million, and increases in prepaid expenses and other current assets of $0.9 million, including changes related to insurance claim receivables and prepaid manufacturing services.

For the six months ended June 30, 2022, net cash used in operating activities of $166.2 million consisted of a net loss of $197.8 million, partially offset by $44.3 million in adjustments for non-cash items and $12.7 million of cash used in net working capital.

Adjustments for non-cash items primarily consisted of $20.2 million in stock-based compensation expense, $8.5 million in depreciation and amortization expense, $6.9 million in non-cash interest related primarily to related-party promissory notes, a $4.1 million loss on equity method investment, $2.8 million in non-cash lease expense related to operating lease right-of-use assets, $1.3 million in other non-cash items, and $0.5 million in unrealized losses on equity securities driven by a decrease in the value of our investments.

The changes in net working capital consisted primarily of an increase of $14.5 million in prepaid and other current assets and decreases of $3.9 million with related parties and $2.2 million in operating lease liabilities, partially offset by increases of $6.5 million in accounts payable and $0.6 million in accrued expenses and other liabilities and a decrease of $0.7 million in other assets.

For the six months ended June 30, 2021, net cash used in operating activities of $130.1 million consisted of a net loss of $169.9 million, partially offset by $40.2 million in adjustments for non-cash items and $0.4 million of cash used in net working capital.

Adjustments for non-cash items primarily consisted of $33.2 million in stock-based compensation expense, $7.0 million in depreciation and amortization, $6.2 million in non-cash interest primarily related to related-party loans, and $2.3 million in non-cash lease expense related to operating lease right-of-use assets, reduced by $8.4 million in unrealized gains on marketable equity securities driven by an increase in the value of our investments.

The change in net working capital consisted primarily of increases in other assets of $4.2 million and decreases in accrued expenses and other liabilities of $3.8 million and operating lease liabilities of $3.0 million, partially offset by decreases of $5.4 million in other current assets including changes related to insurance claim receivables and prepaid manufacturing services and increases in accounts payable of $2.6 million, and amounts with related parties of $2.6 million.

We have historically experienced negative cash flows from operating activities, with such negative cash flows likely to continue for the foreseeable future.

Investing Activities

For the three months ended March 31, 2022, net cash used in investing activities was $69.3 million, which included $34.1 million of purchases of marketable debt securities, $27.3 million of purchases of property, plant and equipment (including construction in process and depreciable property acquired in the Dunkirk acquisition), $21.2 million for purchase of intangible assets (related to the Dunkirk acquisition), and a $1.0 million investment in the joint venture, partially offset by cash inflows of $14.3 million from maturities and sales of marketable debt and equity securities.

For the six months ended June 30, 2022, net cash provided by investing activities was $47.4 million, which included cash inflows of $147.1 million from maturities and sales of marketable debt and equity securities, partially offset by $43.3 million of purchases of property, plant and equipment (including construction in process and depreciable property acquired in the Dunkirk acquisition), $34.2 million of purchases of marketable debt securities, $21.2 million for purchase of intangible assets (related to the Dunkirk acquisition), and a $1.0 million investment in the joint venture.

Our investments in property, plant and equipment are primarily related to acquisitions of equipment that will be used for the manufacturing of our product candidates and expenditures related to the build out of our manufacturing facilities.

For the three months ended March 31, 2021, net cash provided by investing activities was $31.8 million, which included cash inflows of $39.0 million from maturities and sales of marketable debt securities, partially offset by $7.1 million of purchases of property, plant and equipment and $0.1 million in purchases of marketable debt securities.

For the six months ended June 30, 2021, net cash provided by investing activities was $42.3 million, which included cash inflows of $57.7 million from maturities and sales of marketable debt securities, partially offset by $15.1 million of purchases of property, plant and equipment and $0.3 million in purchases of marketable debt securities.

Our investments in property, plant and equipment were related primarily to acquisitions of equipment that will be used for the manufacturing of our product candidates and expenditures related to the build out of our manufacturing facilities.

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Financing Activities

For the three months ended March 31, 2022, net cash used in financing activities was $0.3 million, which consisted of $0.4 million related to net share settlement of vested RSUs for payment of payroll tax withholding, partially offset by $0.1 million in proceeds from exercises of stock options.

For the three months ended March 31, 2021, net cash provided by financing activities was $38.5 million, which consisted of $40.0 million in net proceeds from issuances of related-party promissory notes and $1.1 million in proceeds from exercises of stock options, partially offset by $2.6 million related to net share settlement of vested RSUs for payment of payroll tax withholding.

For the six months ended June 30, 2022, net cash used in financing activities was $0.3 million, which consisted of $0.4 million related to net share settlement of vested RSUs for payment of payroll tax withholding, partially offset by $0.1 million in proceeds from exercises of stock options.

For the six months ended June 30, 2021, net cash provided by financing activities was $136.8 million, which consisted of $95.0 million in net proceeds from the ATM offering, $40.0 million in net proceeds from issuances of related-party promissory notes and $4.4 million in proceeds from exercises of stock options, partially offset by $2.6 million related to net share settlement of vested RSUs for payment of payroll tax withholding.

Future Funding Requirements

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However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms, or at all, including but not limited to the offering, issuance and sale by us of up to a maximum aggregate amount of $500.0 million of our common stock that may be issued and sold under the ATM.

As of March 31, 2022, we had $330.8 million available for future stock issuances under the ATM.

Although we made a decision to pause our ATM offering in the fourth quarter of 2021 after our $300.0 million promissory note financing with Nant Capital and do not have an active issuance notice with our sales agent, we may re-initiate activity at any time based on market dynamics and/or capital requirements.

As of June 30, 2022, we had $330.8 million available for future stock issuances under the ATM.

See Note 10 , Stockholders’ Deficit , of the “Notes to Unaudited Condensed Consolidated Financial Statements” that appears in Item 1.

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• In connection with the acquisitions of Altor and VivaBioCell, we are obligated to pay contingent consideration upon the achievement of certain milestones.

For information regarding our contingent consideration obligations, see Note 7 , Commitments and Contingencies—Contingent Considerations Related to Business Combinations, of the “Notes to Unaudited Condensed Consolidated Financial Statements” that appears in Item 1.

“Financial Statements” of this Quarterly Report on Form 10-Q.

• We have contractual obligations to make payments to related-party affiliates and third parties under our unconditional purchase arrangements.

For information on these unconditional purchase obligations, see Note 7 , Commitments and Contingencies, of the “Notes to Unaudited Condensed Consolidated Financial Statements” that appears in Item 1.

For information regarding our contingent consideration obligations, see Note 7 , Commitments and Contingencies—Contingent Consideration Related to Business Combinations, of the “Notes to Unaudited Condensed Consolidated Financial Statements” that appears in Item 1.

“Financial Statements” of this Quarterly Report on Form 10-Q.

• We have contractual obligations to make payments to related-party affiliates and third parties under unconditional purchase arrangements.

For information on these unconditional purchase obligations, see Note 7, Commitments and Contingencies—Unconditional Purchase Obligations, of the “Notes to Consolidated Financial Statements” that appears in Part II, Item 8.

“Financial Statements and Supplementary Data” of our Annual Report on Form 10-K filed with the SEC on March 1, 2022.

• We have certain contractual commitments that are expected to be paid within one year, depending on the progress of build outs, completion of services, and the realization of milestones associated with third-party agreements.

This amount totals $102.7 million and is primarily related to capital expenditures, open purchase orders as of March 31, 2022 for the acquisition of goods and services in the ordinary course of business, and near term up-front milestone payments to third parties.

This amount totals $100.6 million and is primarily related to capital expenditures, open purchase orders as of June 30, 2022 for the acquisition of goods and services in the ordinary course of business, and near term up-front milestone payments to third parties.

• In addition, we have contractual commitments that are expected to be paid in fiscal year 2023 and beyond based on the achievement of various development, regulatory and commercial milestones for agreements with third parties.

These payments may not be realized or may be modified and are contingent upon the occurrence of various future events, substantially all of which have a high degree of uncertainty of occurring.

As of March 31, 2022, the maximum amount that may be payable related to these commitments is $574.6 million.

As of June 30, 2022, the maximum amount that may be payable related to these commitments is $578.2 million.

• In connection with our leasehold interest in the Dunkirk Facility, we committed to spend an aggregate of $1.52 billion on operational expenses during the initial 10-year term, and an additional $1.50 billion on operational expenses if we elect to renew the lease for the additional 10-year term.

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“Financial Statements” of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to us.

Subsequent Events

Second Amendment to NantWorks Facility License Agreement

On May 6, 2022, we amended our facility license agreement with NantWorks, a related party, to expand the licensed premises by 36,830 rentable square feet to an aggregate total of 46,330 rentable square feet.

Effective May 1, 2022, the license fee is approximately $273,700 per month, which is subject to a 3% increase commencing on January 1 of each year.

The space continues to be rented on a month-to-month basis, which can be terminated by either party with at least 30 days’ prior written notice to the other party.

23 Alaska, LLC Lease Agreement

Under the terms of the agreement, the lease term begins on May 1, 2022 and expires on April 30, 2027.

The base rent is approximately $139,400 per month with an annual increase of 3% on May 1 of each year beginning in 2023 during the initial term.

We will receive a rent abatement for the second through sixth month of the lease.

We are also required to pay $7,600 per month for parking during the initial term and extension term, if exercised.

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.

The company is responsible for the costs associated with the build-out of the premises and will received a one-time tenant improvement allowance of $945,300 from the landlord.

The company has an option to extend the lease term for one additional consecutive five-year period.

At the beginning of the 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.

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 2. Management’s Discussion and Analysis