What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-13 compared with 2021-11-29 · 80 added, 82 removed, 57 unchanged (74% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

This Quarterly Report on Form 10-Q contain s certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).

You can identify these forward-looking statements by the fact they use words such as “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will,” “potential,” “opportunity,” “future” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance.

Certain forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.

Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations.

These statements relate to, among other things, our business strategy, our research and development, our product development efforts, our ability to commercialize our product candidates, our prospects for initiating partnerships or collaborations, the timing of the introduction of products, the effect of new accounting pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds as well as our plans, objectives, expectations, and intentions.

We have included more detailed descriptions of these risks and uncertainties and other risks and uncertainties applicable to our business that we believe could cause actual results to differ materially from any forward-looking statements in Part II-Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.

We encourage you to read those descriptions carefully.

Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved.

We caution investors not to place significant reliance on forward-looking statements contained in this document;

such statements need to be evaluated in light of all the information contained in this document.

Furthermore, the statements speak only as of the date of this document, and we undertake no obligation to update or revise these statements.

We are a clinical stage biopharmaceutical company pioneering the discovery, development and commercialization of allogeneic, off-the-shelf, invariant natural killer T (iNKT) cell therapies to treat cancer and other immune-mediated diseases.

MiNK Therapeutics, Inc.

(“we,” “us” and “our”) is a clinical stage biopharmaceutical company pioneering the discovery, development, and commercialization of allogeneic, off-the-shelf invariant natural killer T (“iNKT”) cell therapies to treat cancer and other immune-mediated diseases.

iNKT cells are a distinct T cell population that combine durable memory responses with the rapid cytolytic features of natural killer (“NK”) cells.

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As such, we believe that our approach represents a highly versatile application for therapeutic development in cancer and immune diseases.

We have leveraged our platform and manufacturing capabilities to develop a wholly owned or exclusively licensed pipeline for both native and engineered iNKT cells and have multiple preclinical and clinical readouts expected in 2021 and 2022.

We are leveraging our platform and manufacturing capabilities to develop a wholly owned or exclusively licensed pipeline of both native and engineered iNKT cells.

Our business activities include product research and development, manufacturing, regulatory and clinical development, corporate finance, and support of our collaborations.

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and we retain the rights to expand a proprietary pipeline of products and technologies.

Our most advanced product candidate, AGENT-797, is an off-the-shelf, allogeneic, native iNKT cell therapy.

We have commenced a Phase 1 clinical trial of AGENT-797 for the treatment of multiple myeloma and expect to report top-line data from this trial in the fourth quarter of 2021.

In addition, in August 2021, we received FDA clearance to initiate a Phase 1 a clinical trial for the treatment of solid tumors, which we intend to advance as our lead indication for AGENT-797 as a monotherapy and in combination with checkpoint inhibitors.

We currently expect to have preliminary readouts from this clinical trial in the first half of 2022 in indications that may lead to an accelerated path to marketing approval.

We also intend to initiate a Phase 1 clinical trial of AGENT-797 in GvHD in the fourth quarter of 2021, and we currently expect to report top-line data from this trial in the second half of 2022.

Finally, with the unique circumstances of the COVID-19 pandemic, we were able to employ this variant-agnostic therapy for patients with ARDS secondary to COVID-19 and recently published top-line data from this Phase 1 clinical trial in the fourth quarter of 2021, reporting a 77% Survival Rate in older, mechanically ventilated patients with COVID-19 respiratory failure.

We are expanding the clinical trial to include patients with viral ARDS (secondary to COVID-19 and influenza) and expect to report expanded clinical trial data in the second half of 2022.

Our most advanced product, AGENT-797, is an off-the-shelf, allogeneic, native iNKT cell therapy.

We have commenced a Phase 1 clinical trial of AGENT-797 for the treatment of multiple myeloma, reported preliminary signals of activity, and expect to report data from this trial in the fourth quarter of 2022.

In addition, we announced the initiation of our Phase 1 clinical trial for the study of solid tumor cancers with AGENT-797 as a monotherapy and in combination with checkpoint inhibitors, which we intend to advance as a priority.

We currently expect to have preliminary readouts from this clinical trial in 2022 in indications that may lead to an accelerated path to marketing approval.

We also intend to initiate a Phase 1 study of AGENT-797 in GvHD in 2022 and expect to report top-line data from this trial in the second half of 2022.

Finally, with the unique circumstances of the COVID-19 pandemic, we were able to commence first-in-human studies of AGENT-797 in acute respiratory distress (“ ARDS”) secondary to COVID-19 and reported encouraging survival benefit exceeding 75% presented at the Society of Immunotherapy for Cancer in 2021.

Later this year, we expect to present updated data of the clinical effect of AGENT-797 on viral ARDS where there are currently no effective therapies.

In addition, we are advancing a pipeline of next-generation allogeneic, engineered iNKT programs.

Our two most advanced engineered programs are (1) a CAR-iNKT program targeting B-cell maturation antigen (“BCMA”), which we refer to as BCMA-CAR-iNKT, and (2) a tumor stromal targeting CAR-iNKT program, which we refer to as stromal target-CAR-iNKT.

These programs are both in preclinical development and we expect to initiate our investigational new drug (IND) filings for these candidates in 2022.

Our research and development expenses for the nine months ended September 30, 2021 and 2020 were $10.0 million and $8.7 million, respectively.

These programs are both in preclinical development and we expect to initiate our investigational new drug application filings for these candidates in 2022.

Our research and development expenses for the three months ended March 31, 2022 and 2021 were $5.3 million and $3.1 million, respectively.

We have incurred losses since our inception.

As of September 30, 2021, we had an accumulated deficit of $77.2 million.

As of March 31, 2022, we had an accumulated deficit of $90.7 million.

Until the completion of our initial public offering, we were reliant on Agenus to finance our operations.

We expect to continue to incur operating losses and negative cash flows for the foreseeable future.

Based on our current plans and projections, we believe our quarter end cash balance, plus the proceeds received subsequently from our initial public offering, will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued.

Based on our current plans and projections, we believe our quarter-end cash and cash equivalents balance will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued.

Management continues to address our liquidity position and will adjust spending as needed in order to preserve liquidity.

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Potential sources of additional funding include:

(1) pursuing collaboration, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with one or more third parties, (2) selling assets, (3) securing additional debt financing and/or (4) selling equity securities.

(1) pursuing collaboration, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with one or more third parties, (2) securing debt financing and/or (3) selling equity securities.

Historical Results of Operations

Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

Research and development expense

Research and development (“R&D”) expense includes compensation and other direct costs plus an allocation of indirect costs, based on certain assumptions.

R&D expense increased 33% to $3.3 million for the three months ended September 30, 2021 from $2.5 million for the three months ended September 30, 2020.

This increase is primarily due to the increased costs associated with an increase in preclinical activities, the initiation of our clinical trials late in 2020, increased personnel costs and increased costs associated with the allocation of Agenus services, partially offset by reduced activity of our UK subsidiary.

R&D expense increased 70% to $5.3 million for the three months ended March 31, 2022 from $3.1 million for the three months ended March 31, 2021.

This increase is primarily due to costs associated with an increase in preclinical activities, the continued advancement of our clinical trials and increased personnel costs.

General and administrative expense

General and administrative (“G&A”) expense consists primarily of personnel costs, facility expenses, and professional fees.

G&A expense increased 75% to $0.8 million for the three months ended September 30, 2021 from $0.5 million for the three months ended September 30, 2020.

This increase results primarily from increased stock-based compensation expense and increased costs associated with the allocation of Agenus services.

Change in fair value of convertible affiliated note

Change in fair value of convertible affiliated note reflects the result of our fair value measurement of our note at the balance sheet date.

Interest expense

Interest expense relates to our outstanding convertible affiliated note and increased 38%, to $0.9 million for the three months ended September 30, 2021 from $0.6 million for the three months ended September 30, 2020, due to the increased principal amount outstanding period over period.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Research and development expense

R&D expense includes compensation and other direct costs plus an allocation of indirect costs, based on certain assumptions.

R&D expense increased 15% to $10.0 million for the nine months ended September 30, 2021 from $8.7 million for the nine months ended September 30, 2020.

This increase is primarily due to the increased costs associated with an increase in preclinical activities, the initiation of our clinical trials late in 2020 and increased costs associated with the allocation of Agenus services, partially offset by reduced payroll costs and the reduced activity of our UK and Belgium subsidiaries.

General and administrative expense

G&A expense consists primarily of personnel costs, facility expenses, and professional fees.

G&A expense increased 43% to $2.3 million for the nine months ended September 30, 2021 from $1.6 million for the nine months ended September 30, 2020.

This increase results primarily from increased stock-based compensation expense and increased costs associated with the allocation of Agenus services, partially offset by the reduced activity of our Belgium subsidiary.

G&A expense increased 252% to $2.1 million for the three months ended March 31, 2022 from $0.6 million for the three months ended March 31, 2021.

This increase is primarily due to increased personnel costs, including stock-based compensation expense, and increased professional fees, primarily attributable to additional legal, strategy and audit and tax fees.

Change in fair value of convertible affiliated note

Change in fair value of convertible affiliated note reflects the result of our fair value measurement of our note at the balance sheet date.

Change in fair value of convertible affiliated note reflects the result of our fair value measurement of our convertible affiliated note issued to Agenus (the “Note”) at the balance sheet date.

In October 2021, in connection with our initial public offering, the Note was automatically converted into 5,451,958 shares of our common stock and was not outstanding as of March 31, 2022.

Interest expense

Interest expense relates to our outstanding convertible affiliated note and increased 39%, to $2.4 million for the nine months ended September 30, 2021 from $1.8 million for the nine months ended September 30, 2020, due to the increased principal amount outstanding period over period.

Interest expense related to the Note was $0.7 million for the three months ended March 31, 2021.

In October 2021, in connection with our initial public offering, the Note was automatically converted into 5,451,958 shares of our common stock and was not outstanding as of March 31, 2022.

Research and Development Programs

R&D program costs include compensation and other direct costs plus an allocation of indirect costs, based on certain assumptions.

For the nine months ended September 30,

For the three months ended March 31,

For the years ended December 31,

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Liquidity and Capital Resources

We have incurred annual operating losses since inception, and we had an accumulated deficit of $77.2 million as of September 30, 2021.

We have incurred annual operating losses since inception, and we had an accumulated deficit of $90.7 million as of March 31, 2022.

We expect to incur losses over the next several years as we continue development of our technologies and product candidates, manage our regulatory processes, initiate and continue clinical trials, and prepare for potential commercialization of products.

Through September 30, 2021, we had been reliant on Agenus to finance our operations.

From our inception through September 30, 2021, we received funding of $45.5 million from Agenus.

As of September 30, 2021, we had a convertible affiliated note (the Note) outstanding of $45.5 million in principal plus accrued and unpaid interest of $6.8 million.

In October 2021, in connection of the completion of our initial public offering, the Note was automatically converted into 5,451,958 shares of our common stock.

In October 2021, we completed an initial public offering of 3,333,334 shares of our common stock, at a public offering price of $12.00 per share.

The gross proceeds from the offering, before deducting underwriting discounts, commissions and other offering expenses, were approximately $46.0 million, which includes the exercise of the underwriters option to acquire an additional 500,000 shares at the public offering price, which shares were delivered in November 2021.

Underwriting discounts, commissions and other offering expenses, were approximately $6.2 million, resulting in net proceeds of approximately $39.8 million.

Prior to our initial public offering, we had been reliant on Agenus to finance our operations.

From our inception through our initial public offering in October 2021, we received funding of $45.5 million from Agenus through the Note.

The Note had a $45.5 million principal balance, plus accrued and unpaid interest of $6.8 million, as of October 14, 2021, the date we priced our initial public offering.

In connection of the completion of our initial public offering, the Note was automatically converted into 5,451,958 shares of our common stock and was not outstanding as of March 31, 2022.

In December 2018, we entered into an agreement with the Belgium Walloon Region Government (the “Walloon Region”) in which the Walloon Region agreed to provide a grant of €1.3 million and a repayable advance of €8.3 million for the development of one of our research programs.

As of September 30, 2021, we received $881,000 of the grant portion and $5.4 million of the repayable advance.

As of March 31, 2022, we had received $881,000 of the grant portion and $5.2 million of the repayable advance.

During 2020, we discontinued research efforts related to this program and are evaluating our options in accordance with the terms of the agreement.

We recognized the grant portion received as income during the years ended December 31, 2019 and 2020 and

have included the repayable advance balance of $5.

4 million in other current liabilities in our condensed consolidated balance sheet at September 30, 2021 , while we finalize the termination of the agreement with the Walloon Region.

We recognized the grant portion received as income during the years ended December 31, 2019 and 2020 and have included the repayable advance balance of $5.2 million in other current liabilities in our condensed consolidated balance sheet at March 31, 2022, while we finalize the termination of the agreement with the Walloon Region.

We received a notice from the Walloon Region in February 2021 informing us that, pursuant to the terms of the agreement, they have assumed we plan to exploit the results of our research under the program and as such expect us to reimburse the repayable advance, and we have responded to the Walloon Region that we do not plan to exploit the results of such research.

It is uncertain at this time if we will be obligated to repay any or all of this advance.

Our cash balance as of September 30, 2021 was $0.8 million.

Based on our current plans and projections, we believe this cash balance, plus the net proceeds of $42.8 million received subsequently from our initial public offering, will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued.

Our cash and cash equivalents balance as of March 31, 2022 was $34.7 million.

Based on our current plans and projections we believe this cash balance will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued.

Management continues to address our liquidity position and will adjust spending as needed in order to preserve liquidity.

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Potential sources of additional funding include:

Net cash used in operating activities for the nine months ended September 30, 2021 was $11.1 million.

Net cash used in operating activities for both the three months ended March 31, 2022 and 2021 was $4.2 million.

Our future ability to generate cash from operations will depend on achieving regulatory approval and market acceptance of our product candidates, and our ability to enter into collaborations.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward Looking Statements” in Part I, Item 2, and the risks highlighted under Part II, Item 1A.

“Risk Factors”, of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

The preparation of consolidated financial statements in conformity with U.S.

generally accepted accounting principles (U.S.

GAAP) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

We base those estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances.

Actual results could differ from those estimates.

The following is not intended to represent all of our accounting policies.

Our significant accounting policies are described in Note 2 of the notes to our audited consolidated financial statements included in our Amended Registration Statement on Form S-1 filed with the Securities and Exchange Commission (SEC) on October 12, 2021.

In many cases, the accounting treatment of a particular transaction is dictated by U.S.

GAAP, with no need for our judgment in its application.

There are also areas in which our judgment in selecting an available alternative would not produce a materially different result.

We have identified the following as our critical accounting policy.

Fair Value Measurements

In accordance with the Fair Value Option subsection of Accounting Standards Codification (ASC) 825, Financial Instruments - Overall, we measure the Note at fair value.

In accordance with ASC 820, Fair Value Measurements and Disclosures, we measure fair value based on a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available.

We measured the Note using a scenario based present value methodology which was derived by evaluating the nature and terms of each note and considering the prevailing economic and market conditions at the balance sheet date.

Recent Accounting Pronouncements

Refer to Note 12 to our unaudited interim condensed consolidated financial statements included within this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our business.

We qualify as an “emerging growth company” as defined in the JOBS Act.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements.

Certain forward-looking statements in this Quarterly Report on Form 10-Q can be identified by the fact that they do not relate strictly to historical or current facts.

In particular, these statements relate to, among other things, our business strategy, our research and development, our ability to commercialize our product candidates, our prospects for initiating partnerships or collaborations, uncertainty regarding our future operating results and our profitability, anticipated sources of funds as well as our plans, objectives, expectations, and intentions.

Therefore, we caution investors not to place significant reliance on forward-looking statements contained in this document;

such statements need to be evaluated in light of all the information contained in this document.

Furthermore, the statements speak only as of the date of this document, and we undertake no obligation to update or revise these statements, except as required by law.

Some of the factors that could cause actual results to differ are identified below, as well as those discussed in the Item 1A.

Risk Factors section in our Annual Report on Form 10-K for the year ended December 31, 2021.

It is not possible to predict or identify all such factors.

Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties:

we expect to incur losses for the foreseeable future;

if we fail to raise capital, we would be forced to delay, reduce, or eliminate certain projects;

raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies;

we may fail to develop AGENT-797 successfully or be unable to obtain regulatory approval for it;

allogeneic iNKT cells represents a novel approach to immunotherapy;

our product candidates will require significant additional testing before we can seek regulatory approval;

we may experience delays or difficulties in the enrollment of patients in our clinical trials;

serious adverse events, undesirable side effects or unexpected characteristics caused by our product candidates could delay or prevent regulatory approval or limit their commercial potential;

data produced in our clinical trials is at an early stage and future data may not support continued development;

if our clinical trials fail to demonstrate safety and efficacy, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of product candidates;

we face significant competition and there is a possibility that our competitors may achieve regulatory approval before us or develop adoptive cell therapies that are safer or more advanced or effective than ours;

product candidates we develop may be complex and difficult to manufacture;

the regulatory landscape that will govern any product candidates we may develop is complex and uncertain;

failure to comply with laws and regulations could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings;

Agenus owns a majority of our common stock and will be able to exert control over specific matters subject to stockholder approval;

certain of our directors and officers may have actual or potential conflicts of interest;

we rely on third parties, which may not perform satisfactorily;

if we are not able to establish collaborations, we may have to alter our development and commercialization plans which may cause delays or increase costs;

we may be unable to obtain and maintain satisfactory patent and other intellectual property protection for any product candidates we develop;

our rights to develop and commercialize our cell-based immunotherapies and product candidates are subject, in part, to the terms and conditions of licenses granted to us by others, including Agenus;

third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights;

we may be unable to retain our key executives and to attract, retain and motivate qualified personnel;

our internal computer systems, or those of our third-party vendors, collaborators or other contractors or consultants, may fail or suffer security breaches;

the continuing outbreak of COVID-19 in the United States and other countries may adversely affect our business and that of our suppliers, contract research organizations or other third parties relevant to our business;

and a market for our common stock may not be sustained .

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

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Therefore, the reported results of operations contained in our consolidated financial statements may not be directly comparable to those of other public companies.

Quantitative and Qualitative Disclosures About Market Risk.

This item is not required for smaller reporting companies.

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