What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-05 · 242 added, 180 removed, 546 unchanged (44% of the section changed)

26 unchanged sentences

Series A Convertible Preferred stock, $ 0.001 par value;

17,000 shares designated, 194 shares issued and outstanding as of March 31, 2020 and December 31, 2019 (aggregate liquidation value of $ 194 )

17,000 shares designated, 194 shares issued and outstanding as of June 30, 2020 and December 31, 2019 (aggregate liquidation value of $ 194 )

Series B Convertible Preferred stock, $ 0.001 par value;

11,500,000 shares designated, 3,581,119 shares issued and outstanding as of March 31, 2020 and December 31, 2019 (aggregate liquidation value of $ 17,010 )

11,500,000 shares designated, 3,581,119 shares issued and outstanding as of June 30, 2020 and December 31, 2019 (aggregate liquidation value of $ 17,010 )

Common stock, $ 0.000041666 par value;

300,000,000 shares authorized, 126,823,156 and 126,411,808 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

300,000,000 shares authorized, 146,434,810 and 126,411,808 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

Accumulated other comprehensive income

8 unchanged sentences

Three Months Ended

Six Months Ended

Costs and expenses

4 unchanged sentences

Interest income, net

Net Loss Per Common Share, Basic and Diluted

Weighted- Average Common Shares Outstanding, Basic and Diluted

Net Loss Per Share of Common Stock, Basic and Diluted

Weighted Average Shares of Common Stock Outstanding, Basic and Diluted

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

3 unchanged sentences

Three Months Ended

Other comprehensive income:

Unrealized gain on short-term investments

Six Months Ended

Other comprehensive loss:

Unrealized gain / (loss) on short-term investments

Comprehensive Loss

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the Six Months Ended June 30, 2020 and 2019

in thousands, except share information)

6 unchanged sentences

Stock-based compensation expense

Vesting of restricted shares issued for services

Vesting of shares issued for services

Tax payments related to shares withheld for vested restricted stock units

1 unchanged sentence

Unrealized gain on short-term investments

Balance - March 31, 2020

Common stock sold in public offering, net of offering costs

Balance - June 30, 2020

Balance - December 31, 2018

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Unrealized gain on short-term investments

Cancellation of common shares from settlement of dispute

Cancellation of common stock from settlement of dispute

Balance - June 30, 2019

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

IOVANCE BIOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended June 30, 2020 and 2019

in thousands, except share information)

Accumulated other

Preferred Sock

Preferred Stock

Comprehensive

Stockholders’

Balance - March 31, 2020

Stock-based compensation expense

Vesting of restricted shares issued for services

Tax payments related to shares withheld for vested restricted stock units

Common stock issued upon exercise of stock options

Unrealized loss on short-term investments

Common stock sold in public offering, net of offering costs

Balance - June 30, 2020

Balance - March 31, 2019

Stock-based compensation expense

Vesting of restricted shares issued for services

Tax payments related to shares withheld for vested restricted stock units

Common stock issued upon exercise of stock options

Unrealized gain on short-term investments

Balance - June 30, 2019

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

IOVANCE BIOTHERAPEUTICS, INC.

1 unchanged sentence

in thousands)

Three Months Ended

Six Months Ended

Cash Flows from Operating Activities

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Noncash lease expense

Amortization of premiums on investments

Depreciation and amortization

Gain on settlement of dispute

Amortization of premiums on investments

Changes in assets and liabilities:

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Purchase of property and equipment

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash Flows from Financing Activities

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Proceeds from the issuance of common stock upon exercise of options

Net cash provided by / (used in) financing activities

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

Proceeds from the issuance of common stock, net

Net cash provided by financing activities

Net increase in cash, cash equivalents, and restricted cash

Cash, Cash Equivalents, and Restricted Cash Beginning of Period

Cash, Cash Equivalents, and Restricted Cash, End of Period (Note 2)

Cash, Cash Equivalents, and Restricted Cash End of Period

Supplemental disclosure of non-cash investing and financing activities:

Net unrealized gain on short-term investments

Acquisitions of property and equipment included in accounts payable and accrued expenses

Unrealized gain on short-term investments

Acquisitions of property and equipment included in accounts payable and accrued expense

Accrued offering costs in accrued expenses

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

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(the “Company”, “we”, “us” or “our”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of cell therapies as novel cancer immunotherapy products designed to harness the power of a patient’s own immune system to eradicate cancer cells.

Tumor infiltrating lymphocyte or TIL therapy is an autologous cell therapy platform technology that was originally developed by the National Cancer Institute (NCI), which conducted initial clinical trials in diseases such as metastatic melanoma and cervical cancer.

The Company has developed a new, shorter manufacturing process for TIL therapy known as Generation 2, or Gen 2, which yields a cryopreserved TIL product.

Tumor infiltrating lymphocyte (“TIL”) therapy is an autologous cell therapy platform technology that was originally developed by the National Cancer Institute (“NCI”), which conducted initial clinical trials in diseases such as metastatic melanoma and cervical cancer.

The Company has developed a new, shorter manufacturing process for TIL therapy known as Generation 2 (“Gen 2”), which yields a cryopreserved TIL product.

This proprietary and scalable manufacturing method is being further investigated in multiple indications.

The Company’s lead product candidates include lifileucel for metastatic melanoma and LN-145 for metastatic cervical cancer.

In addition to metastatic melanoma and metastatic cervical cancer, it is investigating the effectiveness and safety of TIL therapy and peripheral blood lymphocyte therapy for the treatment of squamous cell carcinoma of the head and neck, non-small cell lung cancer, and chronic lymphocytic leukemia through its sponsored trials, as well as in other oncology indications through collaborations.

On June 1, 2017, the Company reincorporated to become a company governed by Delaware corporation laws.

In addition to metastatic melanoma and metastatic cervical cancer, the Company is investigating the effectiveness and safety of TIL therapy and peripheral blood lymphocyte therapy for the treatment of squamous cell carcinoma of the head and neck, non-small cell lung cancer, and chronic lymphocytic leukemia through its sponsored trials, as well as in other oncology indications through collaborations.

On June 1, 2017, the Company reincorporated from a Nevada corporation to a Delaware corporation.

Basis of Presentation of Unaudited Condensed Consolidated Financial Information

The unaudited condensed consolidated financial statements of the Company for the three months ended March 31, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K.

Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations.

The unaudited condensed consolidated financial statements of the Company for the three and six months ended June 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X.

Accordingly, they do not include all the information and footnotes required by GAAP for audited financial statements.

Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year.

The balance sheet information as of December 31, 2019, was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2020.

These financial statements should be read in conjunction with that report.

The Company is currently engaged in the development of therapeutics to fight cancer, specifically solid tumors.

The balance sheet information as of December 31, 2019, was derived from the audited financial statements included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2020.

These interim financial statements should be read in conjunction with that report.

The Company is currently developing therapeutics for the treatment of cancer, including solid tumors and hematological malignancies.

The Company currently does not have any commercial products and has not yet generated any revenues from its business.

The Company currently does not anticipate that it will generate any revenues from the sale or licensing of any of its product candidates during the 12 months from the date these financial statements are issued.

The Company has incurred a net loss of $ 69.6 million for the three months ended March 31, 2020 and used $ 65.3 million of cash in its operating activities during the three months ended March 31, 2020.

As of March 31, 2020, the Company had $ 251.2 million in cash, cash equivalents, short-term investments, and restricted cash ($ 52.5 million of cash and cash equivalents, $ 193.1 million in short-term investments and $ 5.5 million in restricted cash).

The Company expects to continue its research and development activities, increase pre-commercial activities and initiate the construction on the tenant improvements on its new manufacturing facility, which will increase the amount of cash used during 2020 and beyond.

The Company currently does not anticipate that it will generate any significant revenues from the sale or licensing of any of its product candidates during the 12 months from the date these financial statements are issued.

The Company has incurred a net loss of $ 132.6 million for the six months ended June 30, 2020 and used $ 101.9 million of cash in its operating activities during the six months ended June 30, 2020.

In June 2020, the Company received net proceeds of approximately $ 567.0 million from the June 2020 Public Offering (as discussed in Note 5).

As of June 30, 2020, the Company had $ 777.4 million in cash, cash equivalents, short-term investments, and restricted cash ($ 160.6 million of cash and cash equivalents, $ 611.3 million in short-term investments and $ 5.5 million in restricted cash).

The Company expects to continue its research and development activities, increase pre-commercial activities and initiate the construction on the tenant improvements for its new manufacturing facility, which will increase the amount of cash used during 2020 and beyond.

Specifically, the Company expects continued spending on its current and planned clinical trials, continued expansion of manufacturing activities, including construction of a manufacturing facility, higher payroll expenses as the Company increases its professional and scientific staff and continuation of pre-commercial activities.

Based on the funds the Company has available as of the date these financial statements are issued, the Company believes that it has sufficient capital to fund its anticipated operating expenses and capital expenditures for at least the next twelve months from the date these financial statements are issued.

The Company has latitude as to the timing and amount of expenditures for its commercial-scale production facility under construction in Philadelphia, Pennsylvania.

Based on the funds the Company has available as of the date these financial statements are issued, the Company believes that it has sufficient capital to fund its anticipated operating expenses and capital expenditures as planned for at least the next twelve months from the date these financial statements are issued.

Impact of COVID-19

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The full impact of the COVID-19 Pandemic is unknown and rapidly evolving.

While the potential economic impact brought by and the duration of the COVID-19 Pandemic may be difficult to assess or predict, the Company believes the COVID-19 Pandemic has resulted in significant disruption of global financial markets, which could in the future negatively affect its liquidity.

While the potential economic impact brought by and over the duration of the COVID-19 Pandemic may be difficult to assess or predict, the COVID-19 Pandemic has resulted in significant disruption of global financial markets, which could in the future negatively affect the Company's liquidity.

In addition, a recession or market volatility resulting from the COVID-19 Pandemic could affect the Company’s business.

Given the nature and type of the Company’s short-term investments in US government securities, the Company does not believe the COVID-19 Pandemic will have a material impact on the Company's current investment liquidity.

Given the nature and type of the Company’s short-term investments in U.S.

government securities, the Company does not believe the COVID-19 Pandemic has had or will have a material impact on the Company's current investment liquidity.

Concentrations of Risk

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The Company’s cash and cash equivalents include short-term investments with original maturities of three months or less when purchased.

The Company's short-term investments are classified as “available-for-sale”.

The Company includes these investments in current assets and carries them at fair value.

The Company's short-term investments are classified as “available-for-sale.” The Company includes these investments in current assets and carries them at fair value.

Unrealized gains and losses on available-for-sale securities are included in accumulated other comprehensive income.

Any impairment losses related to credit losses (if any) are included in an allowance for credit losses with an offsetting entry to net loss.

No impairment losses related to credit losses were recognized for the three months ended March 31, 2020 or for the same period in 2019.

No impairment losses related to credit losses were recognized for the three and six months ended June 30, 2020 and 2019.

The cost of debt securities is adjusted for the amortization of premiums and accretion of discounts to maturity.

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government and U.S.

government agencies as well as corporate debt securities, and places restrictions on maturities and concentration by type and issuer.

government agencies as well as corporate debt securities, and places restrictions on maturities and concentration by type and issuer, except for securities issued by the U.S.

Currently the Company invests excess cash only in obligations issued by the U.S.

1 unchanged sentence

government agencies.

The Company maintains a certain minimum balance, currently $ 5.5 million in a segregated bank account in connection with two letters of credit, one for $ 5.45 million for the benefit of the landlord for its commercial manufacturing facility used as a security deposit for the lease (See Note 9 - Leases), and a second one for $ 74,685 for the benefit of a utilities service provider.

The Company maintains a required minimum balance, currently $ 5.5 million in a segregated bank account in connection with two letters of credit, one for $ 5.45 million for the benefit of the landlord for its commercial manufacturing facility used as a security deposit for the lease (See Note 9 - Leases), and a second one for $ 74,685 for the benefit of a utilities service provider.

The total amount is classified as Restricted Cash on the Balance Sheet.

The letter of credit will expire on May 28, 2020, however, it will be automatically extended, without written agreement, for one-year periods to May 28 in each succeeding calendar year, through at least 60 days after the lease expiration rate.

The original term of the letter of credit expired on May 28, 2020;

however, the term was automatically extended for an additional one-year period on May 28, 2020, and will be automatically extended for additional one-year periods, without written agreement, to May 28 in each succeeding calendar year, through at least 60 days after the lease expiration date.

Further, on the expiration of the seventh year of the lease, and each anniversary date thereafter, the letter of credit may be decreased by $ 1,000,000 , with a minimum security deposit of $ 1,450,000 maintained through the end of the lease term.

The $ 74,685 letter of credit will expire on February 25, 2021, however, it will be automatically extended, without written agreement, to the expiration date of December 1, 2022.

As of March 31, 2020, restricted cash consisted of $ 5.5 million and this amount has been classified as a non-current asset on the Company’s condensed consolidated balance sheets.

As of June 30, 2020, restricted cash consisted of $ 5.5 million and this amount has been classified as a non-current asset on the Company’s condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash, reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

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Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period.

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed by dividing the net loss by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent shares outstanding during the period.

The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants (ii) vesting of restricted stock units and restricted stock awards, and (iii) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.

At March 31, 2020 and 2019, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive.

The Company’s potentially dilutive common stock equivalent shares, which include incremental shares of common stock issuable upon (i) the exercise of outstanding stock options, (ii) vesting of restricted stock units, and (iii) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.

At June 30, 2020 and 2019, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive.

Stock options

3 unchanged sentences

* on an as-converted basis

The effect of potentially dilutive securities would be reflected in diluted earnings per common share by application of the treasury stock method.

The effect of potentially dilutive securities would be reflected in diluted earnings per share of common stock by application of the treasury stock method.

Under the treasury stock method, an increase in the fair market value of the Company's common stock could result in a greater dilutive effect from potentially dilutive securities.

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Level 2–These are investments where values are based on quoted market prices in markets that are not active or model derived valuations in which all significant inputs are observable in active markets

The Company does not have fair valued assets classified under Level 2 as of March 31, 2020 and December 31, 2019.

The Company does not have fair valued assets classified under Level 2 as of June 30, 2020 and December 31, 2019.

Level 3–These are financial instruments where values are derived from techniques in which one or more significant inputs are unobservable.

The Company does not have fair valued assets classified under Level 3 as of March 31, 2020 and December 31, 2019.

The Company does not have fair valued assets classified under Level 3 as of June 30, 2020 and December 31, 2019.

The Company’s financial instruments consist of cash and cash equivalents and short-term investments, all of which are reported at their respective fair value on its condensed consolidated balance sheets.

As of March 31, 2020 and December 31, 2019, financial assets measured at fair value on a recurring basis are categorized in the table below based upon the lowest level of significant input to the valuations (in thousands):

Assets at Fair Value as of March 31, 2020

US treasury securities

US government agency securities

As of June 30, 2020 and December 31, 2019, financial assets measured at fair value on a recurring basis are categorized in the table below based upon the lowest level of significant input to the valuations (in thousands):

Assets at Fair Value as of June 30, 2020

treasury securities

government agency securities

Assets at Fair Value as of December 31, 2019

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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

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All intercompany accounts and transactions have been eliminated.

dollar is the functional currency for all the Company's consolidated operations.

dollar is the functional currency for all of the Company's consolidated operations.

The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized.

Deferred tax assets are reduced by a

valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

1 unchanged sentence

ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

The Company will classify as income

tax expense any interest and penalties.

The Company will classify as income tax expense any interest and penalties.

The Company has no material uncertain tax positions for any of the reporting periods presented.

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The CARES Act also provides other non-tax benefits to assist those impacted by the pandemic.

The Company evaluated the impact of the CARES Act and determined no material tax provision impact for the quarter ended March 31, 2020.

The Company evaluated the impact of the CARES Act and determined no material tax provision impact for the quarter ended June 30, 2020.

The Company determines if an arrangement includes a lease at inception.

Operating leases are included in its condensed consolidated balance sheet as Operating lease right-of-use assets and Operating lease liabilities as of March 31, 2020 and December 31, 2019.

Operating leases are included in its condensed consolidated balance sheet as Operating lease right-of-use assets and Operating lease liabilities as of June 30, 2020 and December 31, 2019.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

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Upon the adoption of ASU No.

2018-07, Compensation-Stock Compensation (“Topic 718”), the Company accounts for stock option grants to non-employees in a similar manner as stock option grants to employees except for the term used in the grant date fair value, therefore no longer requiring a re-measurement at the then-current fair values at each reporting date until the share options have vested.

The nonemployee awards that contain a performance condition that affects the quantity or other terms of the award are measured based on the outcome that is probable.

The non-employee awards that contain a performance condition that affects the quantity or other terms of the award are measured based on the outcome that is probable.

The fair value of the Company's common stock option grants is estimated using a Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends.

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The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

The Company has in the past issued restricted stock units (RSU) and restricted stock awards (RSA) as part of its share-based compensation programs.

The Company has in the past issued restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) as part of its share-based compensation programs.

The Company measures the compensation cost with respect to RSUs and RSAs issued to employees based upon the estimated fair value of the equity instruments at the date of the grant, which is recognized as an expense over the period during which an employee is required to provide services in exchange for the awards.

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Three Months Ended

Six Months Ended

Research and development

General and administrative

Total stock-based compensation expense

Total stock-based compensation expenses

Total stock-based compensation expenses broken down based on each individual instrument were as follows (in thousands):

Three Months Ended

Stock option expense

Restricted stock unit expense

Total stock-based compensation expense

Six Months Ended

Stock option expenses

Restricted stock unit expenses

Total stock-based compensation expenses

Preferred Stock

The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock.

Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value.

Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity.

At all other times, preferred shares are classified as stockholders’ equity.

Preferred stock subject to mandatory redemption are classified as liability instruments and are measured at fair value.

Conditionally redeemable preferred stock (including preferred stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity.

At all other times, preferred stock is classified as stockholders’ equity.

Convertible Instruments

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Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (“CECL”).

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, and ASU 2020-03 (collectively, Topic 326), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (“CECL”).

Under Topic 326, an entity is required to estimate CECL on available-for-sale (“AFS”) debt securities only when the fair value is below the amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”.

Topic 326 also

requires the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating the CECL.

Topic 326 also requires the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating the CECL.

The credit-related losses are required to be recognized through earnings and non-credit related losses are reported in other comprehensive income.

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The Company adopted this guidance on January 1, 2020.

There was no impact on its condensed consolidated balance sheets and statements of operations as of and for the three months ended March 31, 2020, however, the Company believes it will have a material impact on its condensed consolidated balance sheets and statements of operations in 2020 by deferring recognition of costs as it prepares to invest in information technology infrastructure for its commercial manufacturing build-out.

Subsequent Event

There was no impact on the Company's condensed consolidated balance sheets and statements of operations as of and for the three and six months ended June 30, 2020.

However, the Company believes it will have a material impact on its condensed consolidated balance sheets and statements of operations in the future by deferring recognition of costs as it prepares to invest in information technology infrastructure for its commercial manufacturing build-out.

Subsequent Events

The Company’s management evaluates events that have occurred after the balance sheet date but before the financial statements are issued.

Reclassifications

Certain amounts within the condensed consolidated statements of cash flows and notes to the financial statements for the prior period have been reclassified to conform with the current period presentation.

These reclassifications had no impact on the Company's previously reported financial position or cash flows for any of the periods presented.

See Note 11 Subsequent Event.

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

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Cash equivalents - Money market funds

Cash equivalents - U.S.

treasury securities

Cash equivalents - U.S.

government agency securities

Cash equivalents total

Cash equivalents in the tables above exclude cash demand deposits of $ 12.6 million and $ 3.9 million as of March 31, 2020 and December 31, 2019, respectively (in thousands).

Cash equivalents in the tables above exclude cash demand deposits of $ 9.5 million and $ 3.9 million as of June 30, 2020 and December 31, 2019, respectively (in thousands).

Short-term investments

US treasury securities

US government agency securities

treasury securities

government agency securities

Short-term investments total

The cost and fair value of cash equivalents and short-term investments at March 31, 2020 and December 31, 2019 were as follows (in thousands):

As of March 31, 2020

The cost and fair value of cash equivalents and short-term investments at June 30, 2020 and December 31, 2019 were as follows (in thousands):

As of June 30, 2020

(Amortization)

US treasury securities

US government agency securities

treasury securities

government agency securities

As of December 31, 2019

US treasury securities

US government agency securities

treasury securities

government agency securities

Upon adoption of Topic 326 on January 1, 2020, the Company is required to assess and estimate CECL on AFS debt securities only when the fair value is below the amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”.

The credit-related losses are required to be recognized through the statements of operations and non-credit related losses are reported in other comprehensive income.

For the three months ended March 31, 2020, no CECL was recognized in the condensed consolidated statement of operations and all unrealized gains and losses are included in accumulated other comprehensive income.

All short-term investments held by the Company as of March 31, 2020 and December 31, 2019 have a maturity of less than one year.

For the three and six months ended June 30, 2020, no CECL was recognized in the condensed consolidated statement of operations and all unrealized gains and losses are included in accumulated other comprehensive income.

All short-term investments held by the Company as of June 30, 2020 and December 31, 2019 have a maturity of less than one year.

BALANCE SHEET COMPONENTS

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STOCKHOLDERS’ EQUITY

Authorized Shares of Common Stock

On June 10, 2019, the certificate of incorporation of the Company was amended to increase the number of authorized shares of the Company's common stock, par value $ 0.000041666 , from 150,000,000 shares to 300,000,000 shares (the "Certificate of Amendment").

The Certificate of Amendment was approved by the Company's stockholders at the Company's 2019 Annual Meeting of Stockholders held on June 10, 2019.

Public Offerings

In June 2020, the Company closed an underwritten public offering of 16,935,484 shares of the Company’s common stock at a public offering price of $ 31.00 per share, before underwriting discounts, which included 2,540,322 shares issued upon the exercise in full by the underwriter of its option to purchase additional shares at the public offering price less the underwriting discount (the "June 2020 Public Offering").

The gross proceeds from the offering, before deducting the underwriting discounts and commissions and other offering expenses payable by the Company, were $ 603.7 million, with net proceeds to the Company of approximately $ 567.0 million.

In October 2018, the Company completed an underwritten public offering of 25,300,000 shares of the Company’s common stock at a public offering price of $ 9.97 per share, before underwriting discounts, which included 3,300,000 shares issued upon the exercise in full by the underwriter of its option to purchase additional shares at the public offering price less the underwriting discount.

The gross proceeds from the offering, before deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were $ 252.2 million, with net proceeds to the Company of $ 236.7 million.

In January 2018, the Company closed an underwritten public offering of 15,000,000 shares of the Company's common stock at a public offering price of $ 11.50 per share, before underwriting discounts, which included 1,956,521 shares issued upon the exercise in full by the underwriter of its option to purchase additional shares at the public offering price less the underwriting discount.

The gross proceeds from the offering, before deducting the underwriting discounts and commissions and other offering expenses payable by the Company, were $ 172.5 million, with net proceeds to the Company of $ 162.0 million.

On October 17, 2018, the Company completed an underwritten public offering of 25,300,000 shares of the Company’s common stock at a public offering price of $ 9.97 per share, before underwriting discounts, which included 3,300,000 shares issued upon the exercise in full by the underwriter of its option to purchase additional shares at the public offering price less the underwriting discount.

On June 10, 2019, the certificate of incorporation of the Company was amended to increase the number of authorized shares of the Company’s common stock, par value $ 0.000041666 , from 150,000,000 shares to 300,000,000 shares (the “Certificate of Amendment”).

The Certificate of Amendment was approved by the Company’s stockholders at the Company’s 2019 Annual Meeting of Stockholders held on June 10, 2019.

Preferred Stock

The Company’s certificate of incorporation authorizes the issuance of up to 50,000,000 shares of “blank check” preferred stock.

At March 31, 2020, 17,000 shares were designated as Series A Convertible Preferred Stock (“Series A Convertible Preferred Stock”) and 11,500,000 shares were designated as Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”).

At June 30, 2020, 17,000 shares were designated as Series A Convertible Preferred Stock (“Series A Convertible Preferred Stock”) and 11,500,000 shares were designated as Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”).

Series A Convertible Preferred Stock

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The shares of Series A Convertible Preferred Stock have a stated value of $ 1,000 per share and are initially convertible into shares of common stock at a price of $ 2.00 per share, subject to adjustment.

Each share of Series A Preferred Stock is initially convertible into 500 shares of common stock.

The Series A Convertible Preferred Stock may, at the option of each investor, be converted into fully paid and non-assessable shares of common stock.

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The Company may not declare, pay or set aside any dividends on shares of capital stock of the Company (other than dividends on shares of common stock payable in shares of common stock) unless the holders of the Series A Convertible Preferred Stock shall first receive an equal dividend on each outstanding share of Series A Convertible Preferred Stock.

The common shares issued were determined on a formula basis of 500 common shares for each share of Series A Convertible Preferred Stock converted.

No Shares of Series A Convertible Preferred Stock were converted during the three months ended March 31, 2020 or 2019.

At March 31, 2020 and December 31, 2019, 194 shares of Series A Convertible Preferred Stock (that are convertible into 97,000 shares of common stock) remained outstanding.

No Shares of Series A Convertible Preferred Stock were converted during the six months ended June 30, 2020 or 2019.

At June 30, 2020 and December 31, 2019, 194 shares of Series A Convertible Preferred Stock (that are convertible into 97,000 shares of common stock) remained outstanding.

Series B Convertible Preferred Stock

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The shares of Series B Convertible Preferred Stock have a stated value of $ 4.75 per share and are convertible into shares of the Company’s common stock at an initial conversion price of $ 4.75 per share.

Each share of Series B Preferred Stock is initially convertible into 1 share of common stock.

The Series B Convertible Preferred Stock may, at the option of each investor, be converted into fully paid and non-assessable shares of common stock.

The holders of shares of Series B Convertible Preferred Stock do not have the right to vote on matters that come before the Company's stockholders.

In the event of any dissolution or winding up of the Company, proceeds shall be paid pari passu among the holders of common stock and preferred stock, pro rata based on the number of shares held by each holder.

Holders of Series B Convertible Preferred Stock are entitled to dividends on an as-if-converted basis in the same form as any dividends actually paid on shares of the Series A Convertible Preferred Stock or the Company’s common stock.

So long as any Series B Convertible Preferred Stock remains outstanding, the Company may not redeem, purchase or otherwise acquire any material amount of the Series A Convertible Preferred Stock or any securities junior to the Series B Convertible Preferred Stock.

No shares of Series B Convertible Preferred Stock were converted during the three months ended March 31, 2020 and 2019.

At March 31, 2020 and December 31, 2019, 3,581,119 shares of Series B Preferred Stock (that are convertible into 3,581,119 shares of common stock) remained outstanding.

Cancellation of Common Shares

On September 30, 2013, Iovance and a third party entered into an agreement under which the Company issued 50,000 shares of unregistered stock in the Company to the third party.

No shares of Series B Convertible Preferred Stock were converted during the six months ended June 30, 2020 and 2019.

At June 30, 2020 and December 31, 2019, 3,581,119 shares of Series B Preferred Stock (that are convertible into 3,581,119 shares of common stock) remained outstanding.

Cancellation of Common Stock

On September 30, 2013, the Company and a third party entered into an agreement under which the Company issued 50,000 shares of unregistered stock in the Company to the third party.

On January 16, 2019, the two parties entered into a confidential settlement agreement in connection with a dispute related to their prior relationship and activities.

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STOCK BASED COMPENSATION

On October 14, 2011, the Company adopted the 2011 Equity Incentive Plan (the “2011 Plan”).

On October 14, 2011, the Company’s Board of Directors (the "Board") adopted the 2011 Equity Incentive Plan (the “2011 Plan”).

Employees, directors, consultants and advisors of the Company are eligible to participate in the 2011 Plan.

The 2011 Plan initially had 180,000 shares of common stock reserved for issuance in the form of incentive stock options, non-qualified options, common stock, and grant appreciation rights.

The 2011 Plan was not approved by the Company’s stockholders within the required one-year period following its adoption and, accordingly, no incentive stock options can be granted under that plan.

In August 2013, the Company’s Board of Directors and a majority of the Company’s stockholders approved an amendment to increase the number of shares available under the 2011 Plan from 180,000 shares to 1,700,000 shares, and an amendment to increase the number options or other awards that can be granted to any one person during a twelve (12) month period from 50,000 shares to 300,000 shares.

The 2011 Plan was not approved by the Company’s stockholders within the required one-year period following its adoption and, accordingly, no incentive stock options can be granted under the 2011 Plan.

In August 2013, the Board and a majority of the Company’s stockholders approved an amendment to increase the number of shares available under the 2011 Plan from 180,000 shares to 1,700,000 shares, and an amendment to increase the number options or other awards that can be granted to any one person during a twelve (12) month period from 50,000 shares to 300,000 shares.

The foregoing amendment to the 2011 Plan became effective in September 2013.

On August 20, 2014, the Company’s Board of Directors amended the 2011 Plan to increase the number of shares available for issuance upon the exercise of stock options under the 2011 Plan from 1,700,000 to 1,900,000 shares, effective immediately.

At March 31, 2020, 151,240 shares were available for future grant under the 2011 Plan.

On September 19, 2014, the Company’s Board of Directors adopted the Iovance Biotherapeutics, Inc.

On August 20, 2014, the Board amended the 2011 Plan to increase the number of shares available for issuance upon the exercise of stock options under the 2011 Plan from 1,700,000 to 1,900,000 shares, effective immediately.

At June 30, 2020, 11,240 shares were available for future grant under the 2011 Plan.

On September 19, 2014, the Board adopted the Iovance Biotherapeutics, Inc.

2014 Equity Incentive Plan (the “2014 Plan”).

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On August 16, 2016, the Company’s stockholders approved an increase in the total number of shares that can be issued under the 2014 Plan to 9,000,000 shares of the Company’s common stock.

At March 31, 2020, 89,408 shares were available for grant under the Company’s 2014 Plan.

On April 22, 2018, the Board of Directors adopted the Iovance Biotherapeutics, Inc.

At June 30, 2020, 5,962 shares were available for grant under the Company’s 2014 Plan.

On April 22, 2018, the Board adopted the Iovance Biotherapeutics, Inc.

2018 Equity Incentive Plan (the “2018 Plan”).

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The 2018 Plan as approved by the stockholders authorized the issuance up to an aggregate of 6,000,000 shares of common stock reserved for issuance in the form of incentive (qualified) stock options, non-qualified options, common stock, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards, other cash-based awards or any combination of the foregoing.

At March 31, 2020, 336,222 shares of common stock were available for grant under the Company’s 2018 Plan.

On June 8, 2020, the Company's stockholders approved an amendment to the 2018 Plan to increase the number of shares available for issuance upon the exercise of stock options under the 2018 Plan from 6,000,000 to 14,000,000 shares, which became effective immediately.

At June 30, 2020, 7,972,159 shares of common stock were available for grant under the Company’s 2018 Plan.

Restricted Stock Units

On June 1, 2016, the Company entered into a restricted stock unit agreement with the Company’s new Chief Executive Officer, Maria Fardis, Ph.D., pursuant to which the Company granted Dr.

Fardis 550,000 non-transferrable restricted stock units at fair market value of $ 5.87 per share as an inducement of employment pursuant to the exception to The Nasdaq Global Market rules that generally require stockholder approval of equity incentive plans.

The 550,000 restricted stock units vest in installments as follows:

On June 1, 2016, the Company entered into an RSU agreement with the Company’s new Chief Executive Officer, Maria Fardis, Ph.D., M.B.A., pursuant to which the Company granted Dr.

Fardis 550,000 non-transferrable RSUs at a fair market value price of $ 5.87 per share as an inducement to her employment pursuant to the exception to The Nasdaq Global Market rules that generally require stockholder approval of equity incentive plans.

The 550,000 RSUs vested in installments as follows:

(i) 137,500 restricted stock units vested upon the first anniversary of the effective date of Dr.

Fardis’ employment agreement;

(ii) 275,000 restricted stock units vest upon the satisfaction of certain clinical trial milestones;

and (iii) 137,500 restricted stock units vest in equal monthly installments over the 36 -month period following the first anniversary of the effective date of Dr.

Fardis’ employment, provided that Dr.

Fardis has been continuously employed with the Company as of such vesting dates.

At March 31, 2020, 11,458 restricted stock units remained unvested.

Stock-based compensation expense for restricted stock units are measured based on the closing fair market value of the Company’s common stock on the date of grant.

The stock-based compensation expenses relating to restricted stock units were $ 0.1 million and $ 0.1 million for the three months ended March 31, 2020 and 2019, respectively, recorded as part of general and administrative expenses.

As of March 31, 2020, $ 0.04 million of total unrecognized compensation costs related to non-vested restricted stock units to be recognized over a weighted average period of 0.17 years.

(ii) 275,000 restricted stock units vested upon the satisfaction of certain clinical trial milestones;

and (iii) 137,500 restricted stock units vested in equal monthly installments over the 36 -month period following the first anniversary of the effective date of Dr.

Fardis’ employment, such that the RSUs were fully vested as of June 1, 2020.

At June 30, 2020, the Company had no RSUs outstanding.

Stock-based compensation expense for RSUs are measured based on the closing fair market value of the Company’s common stock on the date of grant.

The stock-based compensation expenses relating to RSUs were $ 0.04 million and $ 0.1 million for the three months ended June 30, 2020 and 2019, respectively, and $ 0.1 million and $ 0.1 million for the six months ended June 30, 2020 and 2019, respectively, recorded as part of general and administrative expenses.

Employee Stock Purchase Plan

In June 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the "2020 ESPP") upon its approval by the Company's shareholders at its Annual Stockholders Meeting on June 8, 2020.

The Company reserved 500,000 shares of its common stock for issuance under the 2020 ESPP, and as of June 30, 2020, no shares were issued under the 2020 ESPP and there was no unrecognized compensation cost related to the 2020 ESPP.

Stock Options

A summary of the status of stock options at March 31, 2020, and the changes during the three months then ended, is presented in the following table:

A summary of the status of stock options at June 30, 2020, and the changes during the six months then ended, is presented in the following table:

Contract Life

Outstanding at January 1, 2020

Outstanding at December 31, 2019

Expired/Forfeited

Outstanding at March 31, 2020

Options exercisable at March 31, 2020

The Company recorded stock-based compensation expenses related to stock options of $ 9.3 million and $ 5.8 million for the three months ended March 31, 2020 and 2019.

As of March 31, 2020, there was $ 81.1 million of total unrecognized compensation expense related to the options to be recognized over a weighted average period of 2.24 years.

The weighted average grant date fair value for employee options granted under the Company’s stock option plans during the three months ended March 31, 2020 and 2019 was $ 15.67 and $ 6.99 per option respectively.

The aggregate intrinsic value in the table above reflects the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the three months ended March 31, 2020 and the exercise price of the options, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on March 31, 2020.

Outstanding at June 30, 2020

Options exercisable at June 30, 2020

The Company recorded stock-based compensation expenses related to stock options of $ 10.5 million and $ 6.4 million for the three months ended June 30, 2020 and 2019 respectively, and $ 19.8 million and $ 12.1 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, there was $ 82.0 million of total unrecognized compensation expense related to the options to be recognized over a weighted average period of 2.09 years.

The weighted average grant date fair value for employee options granted under the Company’s stock option plans during the six months ended June 30, 2020 and 2019 was $ 16.20 and $ 7.98 per option, respectively.

The aggregate intrinsic value in the table above reflects the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the quarter ended June 30, 2020 and the exercise price of the options, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on June 30, 2020.

The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s common stock.

The following table summarizes the assumptions relating to options granted pursuant to the Company’s equity incentive plans for the three months ended March 31, 2020 and 2019:

Three Months Ended March 31,

The following table summarizes the assumptions relating to options granted pursuant to the Company’s equity incentive plans for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

Expected term (years)

Expected volatility

69.99 % - 70.75 %

Risk-free interest rate

0.37 % - 1.83 %

Expected dividend yield

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As amended, in addition to metastatic melanoma, the CRADA included the development of TIL therapy for the treatment of patients with bladder, lung, triple-negative breast, and Human Papilloma Virus (“HPV”)-associated cancers.

In August 2016, the NCI and the Company entered into a second amendment to the CRADA.

In August 2016, the NCI and the Company entered a second amendment to the CRADA.

The principal changes effected by the second amendment included (i) extending the term of the CRADA by another five years to August 2021, and (ii) modifying the focus on the development of unmodified TIL as a stand-alone therapy or in combination with U.S.

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In addition, the Company may be required to supply certain test articles, including TIL, grown and processed under cGMP conditions, suitable for use in clinical trials, where the Company holds the investigational new drug application for such clinical trial.

The extended CRADA has a five-year term expiring in August 2021.

extended CRADA has a five-year term expiring in August 2021.

The Company or the NCI may unilaterally terminate the CRADA for any reason or for no reason at any time by providing written notice at least 60 days before the desired termination date.

The Company recorded costs associated with the CRADA of $ 0.5 million for the three months ended March 31, 2020 and 2019 as research and development expenses.

The Company recorded costs associated with the CRADA of $ 0.5 million for the three months ended June 30, 2020 and 2019, and $ 1.0 million for the six months ended June 30, 2020 and 2019 as research and development expenses.

Patent License Agreement Related to the Development and Manufacture of TIL

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The Patent License Agreement requires the Company to pay royalties based on a percentage of net sales (which percentage is in the mid-single digits), a percentage of revenues from sublicensing arrangements, and lump sum benchmark royalty payments on the achievement of certain clinical and regulatory milestones for each of the various indications and other direct costs incurred by the NIH pursuant to the agreement.

The Company anticipates to pay a milestone payment in conjunction with the submission of Biologics License Application.

The Company anticipates making a milestone payment in conjunction with the submission of Biologics License Application.

Exclusive Patent License Agreement Related to TIL Selection

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In December 2016, the Company entered into a new three-year Sponsored Research Agreement with H.

Lee Moffitt Cancer Center (“Moffitt”).

Lee Moffitt Cancer Center (“Moffitt"), which expired in December 2019.

In June 2020, the Company entered into a new Sponsored Research Agreement with Moffitt, with a term that ends either upon completion of the research thereunder or on July 1, 2022, whichever is sooner, and under which immaterial payments will be made to Moffitt in connection with the research services thereunder.

At the same time, the Company entered into a clinical grant agreement with Moffitt to support an ongoing clinical trial at Moffitt that combines TIL therapy with nivolumab for the treatment of patients with metastatic melanoma.

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Under both clinical grant agreements with Moffit, the Company has non-exclusive rights to clinical data arising from the respective clinical trials.

The Company recorded research and development costs of $ 0.2 million and $ 0.3 million for the three months ended March 31, 2020 and 2019, respectively, in connection with the research collaboration and clinical grant agreements with Moffitt.

The Company recorded research and development costs of $ 0.1 and $ 0.2 million for the three months ended June 30, 2020 and 2019, respectively, and $ 0.3 million and $ 0.5 million for the six months ended June 30, 2020 and 2019, respectively, in connection with the research collaboration and clinical grant agreements with Moffitt.

Exclusive License Agreements with Moffitt

The Company entered into a license agreement with Moffitt (the “First Moffitt License”), effective as of June 28, 2014, under which the Company received a world-wide license to Moffitt’s rights to patent-pending technologies related to methods for improving TIL for adoptive cell therapy using toll-like receptor agonists.

Unless earlier terminated, the term of the license extends until the earlier of the expiration of the last issued patent related to the licensed technology or 20 years after the effective date of the license agreement.

Unless earlier terminated, the term of the license extends until the

earlier of the expiration of the last issued patent related to the licensed technology or 20 years after the effective date of the license agreement.

Pursuant to the First Moffitt License, the Company paid an upfront licensing fee in the amount of $ 0.1 million.

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The Company will also be responsible for all costs associated with the preparation, filing, maintenance and prosecution of the patent applications and patents covered by the First Moffitt License related to the treatment of any cancers in the United States, Europe and Japan and in other countries designated by the Company in agreement with Moffitt.

No expenses were recorded for the First Moffitt License for the three months ended March 31, 2020 and 2019.

No expenses were recorded for the First Moffitt License for the three and six months ended June 30, 2020 and 2019.

The Company entered into a license agreement with Moffitt effective as of May 7, 2018 (the “Second Moffitt License”), under which the Company received a license to Moffitt’s rights to patent-pending technologies related to the use of 4-1BB agonists in conjunction with TIL manufacturing processes and therapies.

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In addition, the Company agreed to pay an annual commercial use payment for each indication for which a first sale has occurred, which in the aggregate amounts to up to $ 0.4 million a year.

The Company recorded research and development costs of $ 0.02 million for the Second Moffit License for the three months ended March 31, 2020.

No expenses were recorded for the same period in 2019.

The Company recorded de minimis amount and $ 0.1 million for the three months ended June 30, 2020 and 2019, respectively, and de minimis amount and $ 0.1 million for the six months ended June 30, 2020 and 2019, respectively, as research and development expenses in connection with the Second Moffit License.

Anderson Cancer Center

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In May 2017, the Company made a prepayment of $ 1.4 million under this agreement.

In light of the COVID-19 Pandemic, MDACC has temporarily suspended their research programs and decommissioned their research

labs, and as a result, enrollment in our MDACC-sponsored studies under the SAA is temporarily paused.

The Company recorded $ 0.2 million and $ 1.2 million associated with the MDACC SAA for the three months ended March 31, 2020 and 2019, respectively as research and development expenses.

In light of the COVID-19 Pandemic, MDACC has temporarily suspended their research programs and decommissioned their research labs, and as a result, enrollment in the Company’s MDACC-sponsored studies under the SAA is temporarily paused.

The Company recorded $ 0.4 million associated with the MDACC SAA for the three months ended June 30, 2019, and $ 0.2 million and $ 1.6 million for the six months ended June 30, 2020 and 2019, respectively as research and development expenses.

The Company did not record any expenses associated with the MDACC SAA for the three months ended June 30, 2020.

WuXi Apptech, Inc.

In November 2016, the Company entered into a three-year manufacturing and services agreement (“MSA”) with WuXi AppTech, Inc.

(“WuXi”) pursuant to which WuXi agreed to provide manufacturing and other services.

(“WuXi”) pursuant to which WuXi agreed to provide manufacturing and other services, which has since been amended and assigned to our subsidiary Iovance Biotherapeutics Manufacturing LLC.

Under the agreement, the Company entered into two statements of work for two cGMP manufacturing suites to be established and operated by WuXi for the Company, both of the suites are expected to be capable of being used for the commercial manufacture of its products.

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The terms of the related statements of work for the first and second dedicated manufacturing suites currently extend to May 2020 and June 2021, respectively.

The Company recorded costs associated with agreements with WuXi of $ 6.7 million and $ 3.8 million for the three months ended March 31, 2020 and 2019 respectively, as research and development expenses.

The Company recorded costs associated with agreements with WuXi of $ 5.7 million and $ 6.8 million for the three months ended June 30, 2020 and 2019 respectively, and $ 12.3 million and $ 10.7 million for the six months ended June 30, 2020 and 2019, respectively, as research and development expenses.

Cellectis S.A.

On January 12, 2020, the Company announced that it had entered into a research collaboration and exclusive worldwide license agreement whereby the Company will license gene-editing technology from Cellectis S.A.

On January 12, 2020, the Company entered into a research collaboration and exclusive worldwide license agreement whereby the Company will license gene-editing technology from Cellectis S.A.

("Cellectis"), a clinical-stage biopharmaceutical company, in order to develop TIL therapies that have been genetically edited.

Financial terms of the license include development, regulatory and sales milestone payments from the Company to Cellectis, as well as royalty payments based on net sales of TALEN-modified TIL products.

The Company recorded costs associated with the license agreement from Cellectis of $ 0.1 million for the three months ended March 31, 2020

The Company recorded costs associated with the license agreement from Cellectis of $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2020, respectively.

Novartis Pharma AG (Novartis)

On January 12, 2020, the Company announced that it had obtained a license from Novartis Pharma AG (“Novartis”) to develop and commercialize an antibody cytokine engrafted protein, which the Company refers to as IOV-3001.

On January 12, 2020, the Company obtained a license from Novartis Pharma AG (“Novartis”) to develop and commercialize an antibody cytokine engrafted protein, which the Company refers to as IOV-3001.

Under the agreement, the Company has paid an upfront payment to Novartis and may pay future milestones related to initiation of patient dosing in various phases of clinical development for IOV-3001 and approval of the product in the U.S, EU and Japan.

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The Company recorded costs associated with the license agreement from Novartis of $ 10.0 million as research and development expenses for the three months ended March 31, 2020.

The Company did not record any expenses for the three months ended June 30, 2020.

LEGAL PROCEEDINGS

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3:17-cv-2086) seeking class action status that alleges, among other things, that the defendants violated federal securities laws by making materially false and misleading statements, or by failing to make certain disclosures, regarding the actions taken by Manish Singh and the Company’s former investor relations firm that were the subject of the In the Matter of Certain Stock Promotions SEC investigation.

On February 5, 2018, the court entered an order

dismissing two of plaintiff’s six claims.

On February 5, 2018, the court entered an order dismissing two of plaintiff’s six claims.

As a result of mediation, on September 28, 2018, lead plaintiff filed an unopposed motion for settlement.

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A final hearing was held on April 12, 2019 to determine whether the proposed settlement was fair, reasonable, and adequate, and whether the claims should be dismissed.

On April 17, 2019, the court approved the final settlement, involving a payment of $ 3,250,000 by the Company's insurance carrier to a settlement fund, awarded attorney's fees and costs to be paid to plaintiff's counsel from the settlement fund, approved the plan of allocation for settlement class members, and ordered that the claims against us should be dismissed with prejudice.

The Company does not expect to incur any costs or expenses in connection with this settlement.

On April 17, 2019, the court approved the final settlement, involving a payment of $ 3,250,000 by the Company’s insurance carrier to a settlement fund, awarded attorney’s fees and costs to be paid to plaintiff’s counsel from the settlement fund, approved the plan of allocation for settlement class members, and ordered that the claims against the Company should be dismissed with prejudice.

The Company does not expect to incur any significant costs or expenses in connection with this settlement.

Derivative Lawsuits.

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The complaint alleges breaches of fiduciary duties, unjust enrichment, and violations of Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder arising from the SEC’s investigation in the In the Matter of Certain Stock Promotions investigation and its April 10, 2017 settlement thereof, and seeks unspecified damages on behalf of the Company and injunctive relief.

On March 28, 2018, a purported stockholder derivative complaint was filed by plaintiff Nazeer Khaleeluddin on behalf of the Company, against the Company, as nominal defendant, and certain of the Company’s current and former officers and directors, and others, as defendants, in the U.S.

On March 28, 2018, a purported stockholder

derivative complaint was filed by plaintiff Nazeer Khaleeluddin on behalf of the Company, against the Company, as nominal defendant, and certain of the Company’s current and former officers and directors, and others, as defendants, in the U.S.

District Court for the District of Delaware (case no.

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On April 24, 2020, the court granted preliminary approval for the proposed settlement.

The terms of the settlement will be disseminated to shareholders as part of the notice process by May 8, 2020.

If the proposed settlement is given final approval by the court, the Company does not expect to incur any significant costs or expenses in connection with this settlement.

Based on the current stage of the litigation, and the uncertainty of final approval by the court, it is not possible to estimate the amount or range of possible loss that might result from an adverse judgment or a settlement of these matters.

The terms of the settlement were disseminated to shareholders as part of the notice process on May 8, 2020.

On July 2, 2020, the court granted final approval for the settlement.

The Company does not expect to incur any significant costs or expenses in connection with this settlement.

Solomon Capital, LLC.

On April 8, 2016, a lawsuit (the "First Solomon Suit") titled Solomon Capital, LLC, Solomon Capital 401(K) Trust, Solomon Sharbat and Shelhav Raff v.

On April 8, 2016, a lawsuit (“the First Solomon Suit”) titled Solomon Capital, LLC, Solomon Capital 401(K) Trust, Solomon Sharbat and Shelhav Raff v.

Lion Biotechnologies, Inc.

was filed by Solomon Capital, LLC, Solomon Capital 401(k) Trust, Solomon Sharbat and Shelhav Raff ("Solomon Plaintiffs") against the Company in the Supreme Court of the State of New York, County of New York (index no.

was filed by Solomon Capital, LLC, Solomon Capital 401(k) Trust, Solomon Sharbat and Shelhav Raff (“Solomon Plaintiffs”) against the Company in the Supreme Court of the State of New York, County of New York (index no.

651881/2016 ).

The Solomon Plaintiffs allege that, between June and November 2012, they provided to the Company $ 0.1 million and that they advanced and paid on behalf of the Company an additional $ 0.2 million.

The complaint further alleges that the Company agreed to (i) provide them with promissory notes totaling $ 0.2 million, plus interest, (ii) issue a total of 1,110 shares to the Solomon Plaintiffs (after the 1-for-100 reverse split of the Company’s common stock effected in March 2013), and (iii) allow the Solomon Plaintiffs to convert the foregoing funds into its securities in the next transaction.

The complaint further alleges that the Company agreed to (i) provide them with promissory notes totaling $ 0.2 million, plus interest, (ii) issue a total of 1,110 shares to the Solomon Plaintiffs (after the 1-for-100 reverse split of the Company’s common stock effected in March 2013) (the “Equity Claim”), and (iii) allow the Solomon Plaintiffs to convert the foregoing funds into its securities in the next transaction.

The Solomon Plaintiffs allege that they should have been able to convert their advances and payments into shares of the Company’s common stock in the restructuring that took effect in May 2013.

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In its counterclaims, the Company is seeking damages in an amount exceeding $ 0.5 million and an order rescinding any and all agreements that the plaintiffs contend entitled them to obtain shares of Company stock.

No trial date has been set for the First Solomon Suit.

On September 27, 2019, the Solomon Plaintiffs filed a new lawsuit (through new legal counsel) (the "Second Solomon Suit") titled Solomon Capital, LLC, Solomon Capital 401(K) Trust, Solomon Sharbat and Shelhav Raff v.

On May 12, 2020, the court granted the Company’s motion for summary judgment limiting the Solomon Plaintiffs’ damages for the Equity Claim to $ 47,420 .

The Solomon Plaintiffs filed a notice of appeal of this summary judgment on June 9, 2020.

On July 2, 2020, the court granted the Company’s motion to dismiss the First Solomon Suit for want of prosecution.

On July 31, 2020, the Solomon Plaintiffs filed a motion seeking leave to reargue the court’s decision to dismiss the First Solomon Suit for want of prosecution.

On September 27, 2019, the Solomon Plaintiffs filed a new lawsuit (through new legal counsel) (“the Second Solomon Suit”) titled Solomon Capital, LLC, Solomon Capital 401(K) Trust, Solomon Sharbat and Shelhav Raff v.

Iovance Biotherapeutics, Inc., f/k/a/ Lion Biotechnologies Inc.

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Finally, the Solomon Plaintiffs allege that they were promised a license to use the Company’s technology in Israel.

The plaintiffs claim that the

Company breached the foregoing understandings, promises and agreements and, as a result, they are entitled to certain damages.

The plaintiffs claim that the Company breached the foregoing understandings, promises and agreements and, as a result, they are entitled to certain damages.

The Solomon Plaintiffs also allege that Manish Singh, the Company’s former Chief Executive Officer, committed fraud and took shares belonging to them.

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The Company has not yet responded to the complaint in the Second Solomon Suit.

On May 22, 2020, the Company moved to dismiss the Second Solomon Suit for lack of personal jurisdiction.

The Company intends to vigorously defend these complaints and pursue its counterclaims, as applicable.

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Fischkoff amended his complaint to assert a new claim for defamation arising from SEC filings in which the Company provided the information about this litigation.

No trial date has been set in this matter, and the parties are currently engaged in fact discovery.

On August 4, 2020, the parties agreed in principle to a confidential settlement subject to final negotiation and, accordingly, the court dismissed the litigation without prejudice during such negotiation.

The Company intends to vigorously defend against Dr.

Fischkoff’s lawsuit and pursue the Company’s counterclaims.

Fischkoff’s lawsuit and pursue the Company’s counterclaims if a settlement is not reached after negotiation.

Based on the current stage of the litigation, it is not possible to estimate the amount or range of (i) a possible loss that might result from an adverse judgment or settlement of this action, or (ii) the potential recovery that might result from a favorable judgment or a settlement of this action.

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In December 2019, the Company entered into an agreement to extend the lease term to December 18, 2024 for approximately $ 20,500 a month.

In June 2020, the Company amended the lease agreement to further increase the rentable space to 13,139 square feet and extend the lease term to June 5, 2025 for approximately $ 34,500 a month.

San Carlos Lease

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On November 2, 2018, the Company entered into an agreement to extend the lease term to July 31, 2019 for approximately $ 4,000 a month.

On May 1, 2019, the Company entered into an

agreement to extend the lease term to January 31, 2020 for approximately $ 4,000 a month.

On May 1, 2019, the Company entered into an agreement to extend the lease term to January 31, 2020 for approximately $ 4,000 a month.

On October 24, 2019, the Company entered into an agreement to extend the lease term to April 30, 2020 for approximately $ 4,000 a month.

On January 23, 2020, the Company entered into an agreement to extend the lease term to July 31, 2020 for approximately $ 4,000 a month.

On May 24, 2020, the Company entered into an agreement to extend the lease term to October 31, 2020 for approximately $ 4,000 a month.

Philadelphia Office Lease

24 unchanged sentences

The Company identified the use of a dedicated suite as a single lease deliverable, and related labor services as a single non-lease deliverable in each of the CMO arrangements.

Judgment is required to determine the relative standalone selling price of each deliverable as the observable

standalone selling prices are not readily available.

Judgment is required to determine the relative standalone selling price of each deliverable as the observable standalone selling prices are not readily available.

Therefore, management used estimates and assumptions in determining relative standalone selling price of lease of a suite and labor service using information that includes market and other observable inputs to the extent possible.

2 unchanged sentences

The balance sheet classification of the Company’s right-of-use asset and lease liabilities was as follows:

March 31, 2020

June 30, 2020

December 31, 2019

4 unchanged sentences

Total Operating lease liabilities

The components of lease expenses, which were included in Total expenses in the Company’s condensed consolidated statement of operations, were as follows:

For the Three Months Ended

The following table summarizes components of lease expenses, which were included in Total expenses in the Company’s condensed consolidated statement of operations, and other information related to our operating leases as follows (in thousands except weighted-average remaining lease terms and discount rates):

Three Months Ended

Six Months Ended

Operating lease cost

2 unchanged sentences

Total lease cost

Other information

Cash paid for amounts included in the measurement of lease liabilities included in Operating cashflows

Increase in right-of-use assets from the adoption of Topic 842

Right-of-use assets obtained from entering new leases

Increase /(decrease) in right-of-use assets from lease modifications

Weighted-average remaining lease terms (years)

Weighted-average discount rates

Variable lease cost is determined based on performance or usage in accordance with the contractual agreements, and not based on an index or rate.

Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2020 and 2019 were $ 2.2 million and $ 1.4 million, respectively, and were included in Net cash provided by operating activities in its condensed consolidated statement of cash flows.

During the three months ended March 31, 2020 and 2019, the Company increased operating lease right-of-use assets by $ 0.5 million and $ 1.0 million, respectively, and operating lease liability by $ 0.01 million and $ 1.0 million, respectively, as a result of lease modifications.

As of March 31, 2020, the maturities of the Company’s operating lease liabilities were as follows (in thousands):

As of June 30, 2020, the maturities of the Company’s operating lease liabilities were as follows (in thousands):

Total lease payments

3 unchanged sentences

In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the date of adoption of Topic 842.

As of March 31, 2020, the weighted average remaining lease term is 1.73 years and the weighted average discount rate used to determine the operating lease liabilities was 7.5 %.

As of March 31, 2020, the Company has a finance lease for the commercial manufacturing facility that has not yet commenced.

As of June 30, 2020, the weighted average remaining lease term is 1.69 years and the weighted

average discount rate used to determine the operating lease liabilities was 7.5 %.

As of June 30, 2020, the Company has a finance lease for the commercial manufacturing facility that has not yet commenced.

This finance lease will commence in December 2020 with a lease term of 20 years.

1 unchanged sentence

On September 14, 2017, the Company entered into a three-year consulting agreement with Iain Dukes, D.

Phil, the Chairman of the Board of Directors.

Phil, the Chairman of the Board.

As compensation for his consulting services, the Company granted Dr.

5 unchanged sentences

The vesting of the granted stock options will accelerate, and the entire award will become fully vested upon the closing of a significant licensing transaction, a material product acquisition, a material strategic transaction, or upon a change of control transaction.

The Company recognized $ 0.1 million and $ 0.1 million in stock-based compensation expense related to this consulting agreement during the three months ended March 31, 2020 and 2019, respectively.

The Company recognized $ 0.1 million and $ 0.1 million in stock-based compensation expense related to this consulting agreement during the three months ended June 30, 2020 and 2019, respectively, and $ 0.2 million and $ 0.2 million for the six months ended June 30, 2020 and 2019, respectively.

In addition, in connection with the adoption of ASC 2018-07, the Company recognized $ 0.3 million to retained earnings as of January 1, 2019.

SUBSEQUENT EVENTS

On August 1, 2020, the Company entered into an agreement to lease approximately 2,965 square feet of a training facility space in Philadelphia, Pennsylvania for a twelve month term at a rate of approximately $ 6,500 per month.

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