What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-25 compared with 2020-02-25 · 422 added, 412 removed, 808 unchanged (51% of the section changed)

7 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2019 based on the framework in Internal Control—Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission , or COSO.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the framework in Internal Control—Integrated Framework

2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.

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Certificate of Amendment of Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 27, 2017).

Bylaws (incorporated herein by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 2, 2017).

Amendment to the Bylaws (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 27, 2017).

Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 31, 2013).

Certificate of Amendment of Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8 K filed with the Commission on June 11, 2019).

Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 27, 2020).

Specimen of Stock Certificate (incorporated herein by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 12, 2018).

Description of Securities (filed herewith).

Genesis Biopharma, Inc.

2010 Equity Compensation Plan (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010).#

Form of Stock Option Agreement under the Genesis Biopharma Inc.

2010 Equity Compensation Plan (incorporated herein by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2010).#

Description of Securities (incorporated herein by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 6, 2019).

Genesis Biopharma, Inc.

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Form of Incentive Stock Option Agreement under the Genesis Biopharma Inc.

2011 Equity Incentive Plan.#

2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K filed with the Commission on February 25, 2020).#

Form of Non-Qualified Stock Option Agreement under the Genesis Biopharma Inc.

2011 Equity Incentive Plan.#

2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K filed with the Commission on February 25, 2020).#

Lion Biotechnologies, Inc.

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Form of Incentive Stock Option Agreement under the Lion Biotechnologies, Inc.

2014 Equity Incentive Plan.#

2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K filed with the Commission on February 25, 2020).#

Form of Non-Qualified Stock Option Agreement under the Lion Biotechnologies, Inc.

2014 Equity Incentive Plan.#

2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K filed with the Commission on February 25, 2020).#

Iovance Biotherapeutics, Inc.

2018 Equity Incentive Plan (incorporated herein by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 25, 2018).#

2018 Equity Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 9, 2020).#

Form of Incentive Stock Option Agreement under the Iovance Biotherapeutics, Inc.

2018 Equity Incentive Plan.#

2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.10 of Registrant’s Annual Report on Form 10-K filed with the Commission on February 25, 2020).#

Form of Non-Qualified Stock Option Agreement under the Iovance Biotherapeutics, Inc.

2018 Equity Incentive Plan.#

2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.11 of Registrant’s Annual report on Form 10-K filed with the Commission on February 25, 2020).#

Iovance Biotherapeutics, Inc, 2020 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 9, 2020).#

Patent License Agreement by and between Genesis Biopharma, Inc.

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on January 22, 2015 (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 27, 2015).*

Patent License Agreement, dated February 9, 2015, by and between the Company and the National Institutes of Health (incorporated herein by reference to Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 16, 2015).*

Patent License Agreement, dated February 9, 2015, by and between Lion Biotechnologies, Inc.

and the National Institutes of Health (incorporated herein by reference to Exhibit 10.47 to the Registrant’s Annual Report on Form 10 K filed with the Commission on March 16, 2015).*

Patent License Agreement, dated February 10, 2015, by and between Lion Biotechnologies, Inc.

and the National Institutes of Health (incorporated herein by reference to Exhibit 10.46 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 16, 2015).*

First Amendment to Patent License Agreement, effective October 2, 2015, by and between Lion Biotechnologies, Inc.

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and the Investors thereunder (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 3, 2016).

Form of Retention Bonus Agreement (incorporated herein by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the Commission on June 3, 2016).#

Amendment #2 to the Cooperative Research and Development Agreement #02734, dated August 18, 2016, by and between the National Cancer Institute and Lion Biotechnologies, Inc.

(incorporated herein by reference to Exhibit 10.3 to Amendment No.

2 to Registrant’s Amendment No.

2 to Registration Statement on Form S-1 filed with the Commission on August 31, 2016).

Exclusive and Co-Exclusive License Agreement, dated September 14, 2016, by and between Lion Biotechnologies, Inc.

and PolyBioCept AB (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 4, 2016).*

2 to Registrant’s Registration Statement on Form S 1 filed with the Commission on August 31, 2016).

Manufacturing Services Agreement, dated November 23, 2015, by and between WuXi AppTec, Inc.

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(incorporated herein by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 9, 2017).*

Description of 2018 Corporate Goals and Cash Bonus Plan (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on February 12, 2018).#

Strategic Alliance Agreement, effective as of April 17, 2017, between Lion Biotechnologies, Inc.

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Anderson Cancer Center (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10 Q filed with the Commission on August 3, 2017).*

Executive Employment Agreement, effective June 1, 2016, by and between Maria Fardis and Lion Biotechnologies, Inc.

(incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 9, 2016).*,#

Executive Employment Agreement, effective as of August 14, 2017, by and between Timothy E.

Morris and Iovance Biotherapeutics, Inc.

(incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 2, 2017).#

Consulting Agreement, dated as of September 8, 2017, by and between Iovance Biotherapeutics, Inc.

and Iain Dukes (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on September 15, 2017).#

Executive Employment Agreement, effective September 30, 2016, by and between Frederick G.

Vogt and Lion Biotechnologies, Inc.

(incorporated herein by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 12, 2018).#

First Amendment to the Strategic Alliance Agreement by and between Iovance Biotherapeutics, Inc.

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Anderson Cancer Center, effective February 16, 2018 (incorporated herein by reference to Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 12, 2018).

Office Lease dated as of August 4, 2016, by and between Lion Biotechnologies, Inc.

and Hudson Skyway Landing, LLC (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on August 8, 2016).

Office Lease dated as of October 19, 2018, by and between Iovance Biotechnologies, Inc.

and Hudson Skyway Landing, LLC (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 25, 2018).

Executive Employment Agreement, effective as of June 1, 2016, by and between Maria Fardis and Lion Biotechnologies, Inc.

(incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10 Q filed with the Commission on August 9, 2016).*#

Severance Agreement and General Release, effective as of July 8, 2020, between Iovance Biotherapeutics, Inc.

and Timothy Morris (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 6, 2020).*#

Executive Employment Agreement, effective as of September 30, 2016, by and between Frederick G.

Vogt and Lion Biotechnologies, Inc.

(incorporated herein by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10 K filed with the Commission on March 12, 2018).#

Executive Employment Agreement effective as of July 18, 2019, by and between Friedrich-Reinhard Graf Finck von Finckenstein, M.D.

and Iovance Biotherapeutics, Inc.

(incorporated herein by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 1, 2019).

Executive Employment Agreement, effective as of December 14, 2020, by and between Jean-Marc Bellemin and Iovance Biotherapeutics, Inc.# **+

Office Lease, effective as of August 4, 2016, by and between Lion Biotechnologies, Inc.

and Hudson Skyway Landing, LLC (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8 K filed with the Commission on August 8, 2016).

Office Lease, effective as of October 19, 2018, by and between Iovance Biotechnologies, Inc.

and Hudson Skyway Landing, LLC (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8 K filed with the Commission on October 25, 2018).

First Amendment to the Office Lease, effective as of June 19, 2019, between Iovance Biotherapeutics, Inc.

and Hudson Skyway Landing, LLC (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 4, 2019).

Second Amendment to the Office Lease, effective as of February 8, 2021, by and between Iovance Biotherapeutics, Inc.

and Hudson Skyway Landing, LLC (incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 9, 2021).

First Amendment to the Office Lease, effective as of February 8, 2021, by and between Iovance Biotherapeutics, Inc.

and Hudson Skyway Landing, LLC (incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 9, 2021).

Lease Agreement, effective as of May 28, 2019, by and between Iovance Biotherapeutics, Inc.

and 300 Rouse Boulevard, LLC (incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Commission on June 3, 2019).

First Amendment to the Lease Agreement, effective as of August 20, 2019, between Iovance Biotherapeutics, Inc.

and 300 Rouse Boulevard, LLC (incorporated herein by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 4, 2019).

Second Amendment to the Lease Agreement, effective as of June 30, 2020, between Iovance Biotherapeutics, Inc.

and 300 Rouse Boulevard, LLC (incorporated herein by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 6, 2020).

Lease Agreement, effective as of February 8, 2021, by and between Iovance Biotherapeutics, Inc.

and ARE-San Francisco No.

63, LLC (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 9, 2021).

Subsidiaries of the Company.**

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for the year ended December 31, 2020, formatted in XBRL (eXtensible Business Reporting Language):

(1) Balance Sheets as of December 31, 2019 and 2018;

(2) Statements of Income for the years ended December 31, 2019 and 2018;

(1) Balance Sheets as of December 31, 2020 and 2019 (2) Statements of Income for the years ended December 31, 2020 and 2019;

(3) Statements of Shareholders’ Equity for the years ended December 31, 2020 and 2019;

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and (5) Notes to Financial Statements.

Cover Page Interactive Data File – the cover page interactive date file does not appear in the Interactive Date File because its XBRL tags are embedded within the Inline XBRL document.

Certain portions of the Exhibit have been omitted based upon a request for confidential treatment filed by us with the Commission.

The omitted portions of the Exhibit have been separately filed by us with the Commission.

** Filed herewith.

Indicates a management contract or compensatory plan or arrangement.

+ Certain portions of the Exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

Form 10-K Summary

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POWER OF ATTORNEY

Know all persons by these presents, that each person whose signature appears below constitutes and appoints Maria Fardis and Timothy E.

Morris, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substituted, may lawfully do or cause to be done by virtue thereof.

Know all persons by these presents, that each person whose signature appears below constitutes and appoints Maria Fardis and Jean-Marc Bellemin, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substituted, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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Executive Officer) and Director

/s/ Timothy E.

/s/ Jean-Marc Bellemin

Chief Financial Officer and Treasurer

February 25, 2021

(Principal Financial Officer and Accounting Officer)

Jean-Marc Bellemin

(Principal Financial Officer)

/s/ Michael C.

Vice President, Finance

February 25, 2021

(Principal Accounting Officer)

/s/ Merrill A.

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We have audited the accompanying consolidated balance sheets of Iovance Biotherapeutics, Inc.

(the “Company”) as of December 31, 2019 and 2018 and the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company’s internal control over financial reporting as of December 31, 2019, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated February 25, 2020, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated February 25, 2021, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of the guidance in ASC Topic 842, Leases (“Topic 842”).

As discussed in Note 10 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation and Accounting for – Leases

Incremental Borrowing Rate (Leases)

Description of the Matter

As described in Notes 2 and 10 to the consolidated financial statements, the Company adopted Topic 842, on January 1, 2019.

In conjunction with the adoption of Topic 842, the Company evaluated the overall accounting implications, including review of contracts

and manufacturing agreements to determine whether such agreements contained an embedded lease.

On the adoption date, the Company recorded approximately $10.4 million in operating lease right-of-use assets and approximately $10.7 million in operating lease liabilities on its consolidated balance sheet for existing operating leases.

The calculation of operating lease right-of-use assets and lease liabilities includes an estimate of the present value of future lease payments.

Since the Company’s leases do not provide an implicit rate, management estimated their incremental borrowing rates used in its present value calculation, which required subjectivity.

As discussed in Note 10 to the consolidated financial statements, the Company’s reported right-of-use assets, current lease liabilities and long-term lease liabilities, utilize discount rates to calculate the estimated present value of future lease payments.

the Company’s leases do not provide an implicit rate, management utilized a third-party valuation specialist to assist in estimating the incremental borrowing rates used in its present value calculation, which required subjectivity.

The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Auditing management’s contract evaluation performed in conjunction with the adoption of Topic 842 was complex and required judgment to analyze the terms within the contracts and manufacturing agreements to determine whether we concurred with management’s evaluation.

Further, auditing management’s assessment of its incremental borrowing rate is especially subjective and judgmental as the Company has no outstanding debt nor committed credit facilities, secured or otherwise that would have comparable collateral or similar terms as their underlying leases.

As of December 31, 2020, the weighted average incremental borrowing rate used to determine the operating lease liability is 8.3%.

Auditing management’s assessment of its incremental borrowing rate is highly subjective and judgmental as the Company has no outstanding debt nor committed credit facilities, secured or otherwise, that would have comparable collateral or similar terms as their underlying leases.

Further, changes in the incremental borrowing rate may have a material impact on the measurement of the Company’s right-of-use assets, current lease liabilities and long-term lease liabilities.

Based on the level of management judgment, we have determined the incremental borrowing rate to be a critical audit matter.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our valuation specialists, when performing audit procedures to evaluate the reasonableness of management’s estimation of the incremental borrowing rate.

How We Addressed the Matter in Our Audit

Our audit procedures included, amongst others:

● We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls with regards to the contract evaluation, and review of the methodology, inputs, and assumptions used to determine the incremental borrowing rate.

● We tested the contracts and manufacturing agreements to determine whether management appropriately evaluated whether such agreements contained an embedded lease.

● We reviewed the contractual terms of the lease agreements to ensure any lease term extensions and/or early termination clauses were properly considered in determining the appropriate lease term for calculating the incremental borrowing rates.

● We tested the underlying leases and other information that served as the basis for valuation and tested inputs and terms used in the valuation to determine completeness and accuracy.

● We evaluated the reasonableness of the valuation methods and assumptions used by management to estimate the incremental borrowing rates for borrowing amounts and terms comparable to their outstanding leases by:

o Developing an independent estimate of the incremental borrowing rates by utilizing third party data related to comparable company borrowings with comparable payment terms.

● We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls with regards to the methodology, inputs, and assumptions used to determine the incremental borrowing rate, including those over management’s review of its third-party specialist valuation report.

● We obtained an understanding of the factors considered and assumptions made by management and the valuation specialists in developing the estimate of the incremental borrowing rate, the sources of data relevant to these factors and assumptions and the procedures used to obtain the data, and the methods used to calculate the estimate.

● We reviewed the contractual terms of the lease agreements to ensure the commencement dates, any lease term extensions and/or early termination clauses were properly considered in determining the appropriate lease term for calculating the incremental borrowing rates.

● With the assistance of our valuation specialists, we performed an independent estimate of the incremental borrowing rate and compared the results to the Company’s estimate.

● We evaluated the reasonableness of the valuation methods and assumptions used by management and the Company’s valuation specialist to estimate the incremental borrowing rates for borrowing amounts and terms comparable to their outstanding leases by:

o Developing an independent estimate of the incremental borrowing rates with the assistance of our valuation specialists by utilizing third party data related to comparable company borrowings with comparable payment terms.

o Performing a sensitivity analysis on incremental borrowing rates used to determine the impact rate changes could have on the present value calculation of the Company’s operating lease right-of-use assets and operating lease liabilities.

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Total Current Assets

Operating lease right-of-use assets

Property and equipment, net

Operating lease right-of-use assets

Restricted cash

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Accrued expenses

Operating lease liabilities

Operating lease liabilities - current

Total Current Liabilities

Non-Current Liabilities

Operating lease liabilities

Operating lease liabilities – noncurrent

Other liabilities

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Total Liabilities

Commitments and contingencies (Note 11)

Commitments and contingencies (Note 10 and 11)

Stockholders’ Equity

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Series B Convertible Preferred stock, $ 0.001 par value;

11,500,000 shares designated, 3,581,119 and 5,854,845 shares issued and outstanding as of December 31, 2019 and December 31, 2018 (aggregate liquidation value of $ 17,010 )

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

Common stock, $ 0.000041666 par value;

300,000,000 and 150,000,000 shares authorized , 126,411,808 and 123,415,576 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively

Accumulated other comprehensive loss

300,000,000 shares authorized, 146,874,917 and 126,411,808 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

Accumulated other comprehensive income

Additional paid-in capital

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Interest income, net

Net Loss Per Common Share, Basic and Diluted

Weighted-Average Common Share 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 consolidated financial statements.

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Years Ended December 31,

Other comprehensive gain (loss):

Net unrealized gain (loss) on short-term investments

Other comprehensive loss:

Unrealized (loss) / gain on short-term investments

Comprehensive Loss

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Vesting of restricted shares issued for services

Tax payments related to shares witheld for vested restricted stock awards

Tax payments related to shares withheld for vested restricted stock units

Common stock issued upon exercise of warrants

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Conversion of convertible preferred stock into common stock

( 1,523,396 )

Common stock sold in public offering, net of offering costs

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Balance - December 31, 2018

Adoption of ASU 2018-07

Stock-based compensation expense

Vesting of restricted shares issued for services

Tax payments related to shares witheld for vested restricted stock awards

Common stock issued upon exercise of warrants

Tax payments related to shares withheld for vested restricted stock units

Common stock issued upon exercise of stock options

Common stock sold in public offering, net of offering costs

Conversion of convertible preferred stock into common stock

( 2,273,726 )

Cancellation of resticted shares

Unrealized loss on short- term investments

Cancellation of common shares from settlement of dispute

Balance - December 31, 2019

Adoption of ASU 2018-07

Stock-based compensation expense

Vesting of restricted stock shares issued for service

Tax payments related to shares witheld for vested restricted stock units

Tax payments related to shares withheld for vested restricted stock units

Common stock issued upon exercise of stock options

Common stock issued from preferred stock conversion

( 2,273,726 )

Common stock sold in public offering, net of offering costs

Unrealized gain on short- term investments

Cancellation of common shares from settlement of dispute

Balance - December 31, 2020

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Noncash lease expense

Accretion (amortization) of discounts and premiums on investments

Depreciation and amortization

Gain on settlement of dispute

Accretion (amortization) of discounts and premiums on investments

Loss on disposal of assets

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Purchase of property and equipment

Net cash provided by (used in) 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

Proceeds from the issuance of preferred stock and common stock, net

Proceeds from the issuance of common stock, net

Net cash provided by financing activities

Net (decrease) 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)

Supplemental disclosure of cash flow information:

Cash paid for income taxes

Interest paid

Supplemental disclosure of noncash investing and financing activities:

Net unrealized gain (loss) on short-term investments

Acquisitions of property and equipment included in accounts payable

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

Cash, Cash Equivalents, and Restricted Cash Beginning of Year

Cash, Cash Equivalents, and Restricted Cash End of Year

Supplemental disclosure of non-cash investing and financing activities:

Net unrealized (loss) gain on short-term investments

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

Conversion of convertible preferred stock to common stock

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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.

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

Lifileucel for metastatic cervical cancer was formerly known as LN-145.

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.

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

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 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 $ 259.6 million for the year ended December 31, 2020 and used $ 205.1 million of cash in its operating activities during the year ended December 31, 2020.

As of December 31, 2020, the Company had $ 635.0 million in cash, cash equivalents, short-term investments, and restricted cash ($ 67.3 million of cash and cash equivalents, $ 562.1 million in short-term investments and $ 5.5 million in restricted cash).

The Company expects to further increase its research and development activities, 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 initiation 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 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.

The Company expects to continue its research and development activities, increase pre-commercial activities and continue the construction of the tenant improvements for its new manufacturing facility, which will increase the amount of cash used during 2021 and beyond.

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

In December 2019, a novel coronavirus known as SARS-CoV-2 was first detected in Wuhan, Hubei Province, People’s Republic of China, causing outbreaks of the coronavirus disease, known as COVID-19, that has now spread globally.

On January 30, 2020, the World Health Organization (“WHO”) declared COVID-19 a pandemic (the “COVID-19 Pandemic”).

The Secretary of Health and Human Services declared a public health emergency on January 31, 2020, under section 319 of the Public Health Service Act (42 U.S.C.

247d), in response to the COVID-19 Pandemic.

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

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 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

The Company is subject to credit risk from its portfolio of cash equivalents and short-term investments.

Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S.

Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

except for securities issued by the U.S.

The Company does not believe it is exposed to any significant concentrations of credit risk from these financial instruments.

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safety and preservation of principal and diversification of risk and liquidity of investments sufficient to meet cash flow requirements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

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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.

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

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 loss or 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 years ended December 31, 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.

government and U.S.

government agencies.

Restricted Cash

The Company maintains a certain minimum balance, currently $ 5.5 million in a segregated bank account in connection with a letter of credit for the benefit of the landlord for its commercial manufacturing facility used as a security deposit for the lease (See Note 10 - Leases).

This 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 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 $ 1.0 million, with a minimum security deposit of $ 1.5 million maintained through the end of the lease term.

As of December 31, 2019, restricted cash consisted of $ 5.5 million and this amount has been classified as a non-current asset on the Company’s consolidated balance sheets.

The Company maintains a certain minimum balance, approximately $ 5.5 million in a segregated bank account in connection with a letter 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 10 - 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 Consolidated Balance Sheet.

The letter of credit originally expired on May 28, 2020, however, it automatically extends 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 March 9, 2021, however, it will be automatically extended, without written agreement, to the expiration date of December 1, 2022.

As of December 31, 2020 and 2019, restricted cash consisted of $ 5.5 million and this amount has been classified as a non-current asset on the Company’s Consolidated Balance Sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash, reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows:

Cash and cash equivalents

Restricted cash (included in non-current assets on the Consolidated Balance Sheets)

Total cash, cash equivalents and restricted cash

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment, net

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The cost of property and equipment is depreciated or amortized on the straight-line method over the following estimated useful lives.

The depreciation or amortization of capitalized construction in progress costs, a component of property and equipment, net, begins once the underlying asset is placed into service and is recognized over the estimated useful lives:

Computer equipment

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For the years ended December 31, 2020, 2019, and 2018, the Company did not recognize any impairments for its property and equipment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loss per Share

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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.

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) purchases though the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), (iii) vesting of restricted stock units and restricted stock awards, and (vi) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.

At December 31, 2020, 2019, and 2018, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive.

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Stock options

Series A Convertible Preferred*

Series B Convertible Preferred*

Series A Convertible Preferred Stock*

Series B Convertible Preferred Stock*

Restricted stock units

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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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 Consolidated Balance Sheets.

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Assets at Fair Value as of December 31, 2020

US treasury securities

US government agency securities

treasury securities

government agency securities

Assets at Fair Value as of December 31, 2019

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Actual results could differ from those estimates.

Significant estimates include the assumptions made in valuing stock instruments issued for services and used in measuring operating right-of-use assets and operating lease liabilities, valuation of short-term investments, accounting for potential liabilities, and the valuation allowance associated with the Company’s deferred tax assets.

Significant estimates include the assumptions made in valuing stock instruments issued for services and used in measuring operating right-of-use assets and operating lease liabilities, accounting for potential liabilities, capitalization of internal-use software development costs, and the valuation allowance associated with the Company’s deferred tax assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Iovance Biotherapeutics, Inc.

and its wholly-owned subsidiary, Iovance Biotherapeutics GmbH.

and its wholly-owned subsidiaries, Iovance Biotherapeutics Manufacturing LLC and Iovance Biotherapeutics GmbH.

All intercompany accounts and transactions have been eliminated.

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For lease agreements entered into after the adoption of Topic 842 that include lease and non-lease components, such components are generally accounted for separately.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Prior period amounts continue to be reported in accordance with the Company's historic accounting under previous lease guidance, Topic 840.

See “Recently Adopted Accounting Standards - Leases” below, for more information about the impact of the adoption on Topic 842.

Stock-Based Compensation

The Company periodically grants stock options to employees in non-capital raising transactions as compensation for services rendered.

The Company accounts for stock option grants to employees based on the authoritative guidance provided by the FASB where the value of the award is measured on the date of grant and recognized over the vesting period.

The Company also offers employee stock purchase plans to employees.

The Company accounts for all stock-based payment awards made to employee, including the employee stock purchase plans, based on the authoritative guidance provided by the FASB where the value of the award is measured on the date of grant and recognized over the vesting period.

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 fair value of RSUs and RSAs is based on the closing price of the Company’s common stock on the grant date.

Total stock-based compensation expense related to all of the Company’s stock-based awards was recorded on the consolidated statements of operations as follows (in thousands):

Years Ended December 31,

Research and development

General and administrative

Total stock-based compensation expense

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

Years Ended December 31,

Stock option expense

Restricted stock award expense

Restricted stock unit expense

Total stock-based compensation expense

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cloud Computing Arrangements

The Company defers implementation costs incurred in cloud computing arrangements in accordance with ASC 2018-15 and amortizes it over the noncancelable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the Company or (2) for which exercises of the renewal option is controlled by the cloud service provider.

Costs incurred during the application development stage that are directly attributable to developing or obtaining software for internal use are defined as implementation costs and capitalized.

Costs incurred during operation and post-implementation stages are charged to expense.

Research and Development Expenses

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Research and development costs are expensed as incurred.

Nonrefundable advance payments for goods or services that will be used or rendered for future

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

research and development activities are deferred and amortized over the period that the goods are delivered, or the related services are performed, subject to an assessment of recoverability.

Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered, or the related services are performed, subject to an assessment of recoverability.

Clinical development costs are a significant component of research and development expenses.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law, and GAAP requires recognition of the tax effects of new legislation during the reporting period that includes the enactment date.

The CARES Act, among other things, includes changes to the tax provisions that benefits business entities and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act.

The tax relief measures for business entities include a five-year net operating loss (“NOL”) carrybacks, suspension of annual deduction limitation of 80% taxable income from net operating losses generated in a tax year beginning after December 31, 2017, changes in the deductibility of interest, acceleration of alternative minimum tax credit refunds, payroll tax relief, and technical correction to allow accelerated deductions for qualified improvement property.

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 the impact is immaterial.

Concentrations

The Company is subject to credit risk from its portfolio of cash equivalents and short-term investments.

Under its investment policy, it limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S.

The Company is not exposed to any significant concentrations of credit risk from these financial instruments.

Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S.

The Company does not believe it is exposed to any significant concentrations of credit risk from these financial instruments.

The goals of its investment policy, in order of priority, are as follows:

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liquidity of investments sufficient to meet cash flow requirements.

and a competitive after-tax rate of return.

The Company maintains cash, cash equivalents and short-term investment balances at three financial institutions.

At times, the amounts on deposit may exceed the federally insured limits.

Management believes that the financial institutions which hold its cash are financially sound and, accordingly, minimal credit risk exists.

As of December 31, 2020, and 2019, respectively, the Company’s cash balances were in excess of insured limits maintained at the financial institutions.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Convertible Instruments

The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options.

The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria.

The criteria include circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations.

Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.

The Company also records, when necessary, deemed dividends for the intrinsic value of the conversion options embedded in preferred stock based upon the difference between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred stock.

Recent Accounting Standards

On January 1, 2019, the Company adopted Topic 842, which establishes a new lease accounting method for lessees.

The updated guidance requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures.

The Company elected the package of practical expedients requiring no reassessment of whether any expired or existing contracts are or contain leases, the lease classification of any expired or existing leases, or initial direct costs for any existing leases.

The standard had a material impact on its consolidated balance sheets by recognizing Operating lease right-of-use assets and Operating lease liabilities for operating leases but did not have an impact on its consolidated statement of operations or cash flows.

The adoption of Topic 842 resulted in recognition of Operating lease right-of-use assets of $ 10.4 million, $ 4.9 million of Operating lease liabilities - current, and $ 5.8 million of Operating lease liabilities - noncurrent as of January 1, 2019, the date of adoption.

Improvements to Nonemployee Share-Based Payment Accounting

On January 1, 2019, the Company adopted Topic 718, which eliminates the separate accounting method for nonemployee share-based payment awards and requires companies to account for share-based payment transactions with nonemployees in the same manner as share-based payment transactions with employees except for the term used in the grant date fair value.

Under the new guidance, nonemployee share-based payment transactions are measured at the grant-date fair value and are no longer remeasured at the then-current fair values at each reporting date until the share options have vested.

The guidance requires a modified-retrospective approach in transition.

The Company compared the cumulative amounts that were recorded for its nonemployee share-based payments through December 31, 2018 immediately preceding the date of adoption to the cumulative amounts that should be recognized at the adoption date and recognized a cumulative effect of the transition adjustment of $ 0.3 million to retained earnings as of the date of adoption, January 1, 2019.

Fair Value Measurements Disclosure

In August 2018, the FASB issued ASU No.

2018-13 Fair Value Measurement (Topic 820):

Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates disclosure requirement regarding transfers between level 1 and level 2 of the fair value of hierarchy, however, adds disclosure requirements on the range and weighted average used to develop

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

significant unobservable inputs for level 3 fair value measurements.

The Company adopted the guidance on January 1, 2019, however, there was no adjustment required to its disclosures as it did not have fair value assets classified under level 2 or 3 as of December 31, 2019 and 2018.

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”.

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Topic 326 will be effective for public entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The new guidance will require modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective.

The Company will adopt this guidance on January 1, 2020, however, the Company does not believe the adoption of this new guidance will have any material impact on its consolidated financial statements.

The new guidance requires modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective.

The Company adopted this guidance on January 1, 2020, however, the adoption of this new guidance did not have any material impact on its consolidated financial statements.

Cloud Computing Arrangements

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15), to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license.

The guidance provided generally means that an intangible asset is recognized for the software license and, to the extent that the payments attributable to the software license are made over time, a liability also is recognized.

If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract.

This generally means that the fees associated with the hosting element (service) of the arrangement are expensed as incurred.

The guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance to determine which implementation costs to defer and recognize as an asset.

It therefore requires a customer to defer potentially significant implementation costs incurred in a cloud computing arrangement that were often expensed as incurred under the legacy GAAP and recognize them as expense over the term of the hosting arrangement.

ASU 2018-15 is effective for fiscal years beginning subsequent to December 15, 2019.

The Company plans to adopt this guidance on January 1, 2020, and believes it will have a material impact on its consolidated balance sheets and statements of operations during 2020 by deferring recognition of costs as it prepares to invest in information technology infrastructure for its commercial manufacturing build-out.

The Company adopted this guidance on January 1, 2020.

The Company recorded $ 1.4 million as prepaid expenses and long-term assets on the Consolidated Balance Sheet as of December 31, 2020.

The Company recorded $ 0.2 million of amortization expense for the year ended December 31, 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Segment reporting

The Company operates in one segment, focused on developing and commercializing ACT using autologous TIL for the treatment of metastatic melanoma and other solid cancers.

The Company operates in one segment, focused on developing and commercializing therapies using autologous TIL for the treatment of metastatic melanoma and other solid tumor cancers.

Subsequent Events

Management of the Company evaluates events that have occurred after the balance sheet date through the date the financial statements are issued.

Based upon the review, the Company identified the following subsequent events.

Research collaboration and exclusive worldwide license agreement

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.

(“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.

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, referred to as IOV-3001.

Under the agreement, Iovance has paid an upfront

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

payment to Novartis and may pay future milestones related to initiation of patent dosing in various phases of clinical development for IOV-3001 and approval of the product in the U.S, EU and Japan.

Novartis is also entitled to low-to-mid single digit royalties from commercial sales of the product.

See Note 14 - Subsequent Events.

CASH AND CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS

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Short-term investments

US treasury securities

US government agency securities

treasury securities

government agency securities

Short-term investments total

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As of December 31, 2020

US treasury securities

US government agency securities

(Amortization)

treasury securities

government agency securities

As of December 31, 2019

US treasury securities

US government agency securities

treasury securities

government agency securities

Unrealized gains and losses are included in accumulated other comprehensive loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BALANCE SHEET COMPONENTS

PROPERTY AND EQUIPMENT

Property and equipment, net consists of the following (in thousands):

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Depreciation expense for the years ended December 31, 2020, 2019, and 2018 was approximately $ 1.1 million, $ 1.2 million and $ 1.0 million, respectively.

Accrued liabilities consist of the following (in thousands):

Accrued payroll and employee related expenses

Legal and related services

ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

Clinical related

Accrued payroll and employee related expenses

Commercial manufacturing facility related

Manufacturing related

Deferred rent - current

Legal and related services

Accrued other

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 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.

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 $ 567.0 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.

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.

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.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 year ended December 31, 2019.

A total of 1,500 shares of Series A Convertible Preferred Stock were converted into 750,000 shares of common stock during the year ended December 31, 2018.

No Shares of Series A Convertible Preferred Stock were converted during the year ended December 31, 2020 and 2019.

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

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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 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.

A total of 2,273,726 shares of Series B Convertible Preferred Stock were converted into 2,273,726 shares of common stock during the year ended December 31, 2019.

No Shares of Series B Convertible Preferred Stock were converted during the year ended December 31, 2020.

A total of 2,273,726 shares of Series B Convertible Preferred Stock were converted into 2,273,726 shares of common stock during the year ended December 31, 2019.

At December 31, 2019 and 2018, 3,581,119 and 5,854,845 shares of Series B Preferred Stock (that are convertible into 3,581,119 and 5,854,845 shares of common stock) remained outstanding, respectively.

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

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cancellation of Common Shares

3 unchanged sentences

The Company included a gain of $ 335,000 on cancellation of 32,500 shares in Other income in its Consolidated Statement of Operations.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no remaining outstanding warrants as of December 31, 2020 and 2019.

A summary of the changes of stock warrants is presented in the following table.

(in thousands)

Outstanding at January 1, 2017

Expired/Cancelled

Outstanding at December 31, 2017

( 6,301,216 )

Expired/Cancelled

Outstanding at December 31, 2018

Outstanding at December 31, 2019

STOCK BASED COMPENSATION

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

Restricted Stock Units

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

Fardis 550,000 non-transferrable RSU 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 RSU vest in installments as follows:

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

Fardis’ employment agreement;

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

and (iii) 137,500 RSU vest 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 December 31, 2020, the Company had no RSUs outstanding.

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, $ 0.3 million, and $ 0.3 million for the years ended December 31, 2020, 2019, and 2018, respectively, recorded as part of general and administrative expenses.

Equity Incentive Plans

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.

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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.

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.

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 December 31, 2020, 11,240 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 September 19, 2014, the Board adopted the Iovance Biotherapeutics, Inc.

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

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At December 31, 2020, 61,575 shares were available for grant under the Company’s 2014 Plan.

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

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

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

The 2018 Plan was approved by the Company’s stockholders at the annual meeting of stockholders held in June 2018.

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 December 31, 2019, 3,297,600 shares of common stock were available for grant under the Company’s 2018 Plan.

The 2018 Plan as

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

(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 December 31, 2019, 22,916 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 $ 0.3 million, $ 0.3 million, and $ 1.1 million for the years ended December 31, 2019, 2018, and 2017, respectively, recorded as part of general and administrative expenses.

As of December 31, 2019, $ 0.1 million of total unrecognized compensation costs related to non-vested restricted stock units to be recognized over a weighted average period of 0.42 years.

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.

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 December 31, 2020, 7,455,537 shares of common stock were available for grant under the Company’s 2018 Plan.

Stock Options

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Expired/Cancelled

( 1,338,298 )

Outstanding at December 31, 2018

( 1,336,514 )

Expired/Cancelled

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Outstanding at December 31, 2020

Exercisable at December 31, 2019

The Company recorded stock-based compensation expenses related to stock options of $ 24.0 million, $ 19.8 million, and $ 10.9 million for the years ended December 31, 2019, 2018, and 2017, respectively.

As of December 31, 2019, there was $ 41.2 million of total unrecognized compensation expenses related to non-vested employee options to be recognized over a weighted average period of 1.97 years.

The weighted average grant date fair value for employee options granted under the Company's stock option plans during the years ended December 31, 2019, 2018, and 2017 was $ 9.48 , $ 14.44 , and $ 6.58 per option respectively.

Options exercisable at December 31, 2020

A summary of outstanding and exercisable stock options as of December 31, 2020 is as follows:

Options Outstanding

Options Exercisable

Range of Exercise

Exercise Price

$ 5.05 -$ 7.3

$ 7.4 -$ 8.17

$ 8.3 -$ 11.05

$ 11.15 -$ 11.26

$ 11.44 -$ 16.8

$ 16.94 -$ 22.9

$ 23 -$ 23.87

$ 23.88 -$ 23.88

$ 23.93 -$ 25.78

$ 27.5 -$ 117

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Stock Purchase Plan

In June 2020, the Company adopted 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.

Under the 2020 ESPP, employees of the Company can purchase shares of our common stock based on a percentage of their compensation subject to certain limits.

The purchase price per share is equal to the lower of 85 % of the fair market value of its common stock on the offering date or the purchase date with a six month look-back feature.

The 2020 ESPP purchases are settled with common stock from the 2020 ESPP’s previously authorized and available pool of shares.

The compensation expense related to the 2020 ESPP for the year ended December 31, 2020 was $ 0.06 million.

As of December 31, 2020, no shares were issued under the 2020 ESPP and there was $ 0.5 million of unrecognized compensation cost associated with the 2020 ESPP, which will be recognized over 6 months .

Stock-Based Compensation

Total stock-based compensation expense related to all of the Company’s stock-based awards was recorded on the Consolidated Statements of Operations as follows (in thousands):

Years Ended December 31,

Research and development

General and administrative

Total stock-based compensation expenses

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

Years Ended December 31,

Stock option expenses

Restricted stock unit expenses

2020 ESPP expenses

Total stock-based compensation expenses

As of December 31, 2020, there was $ 75.9 million of total unrecognized compensation expenses related to non-vested employee options to be recognized over a weighted average period of 1.90 years.

The weighted average grant date fair value for employee options granted under the Company's stock option plans during the years ended December 31, 2020, 2019, and 2018 was $ 17.32 , $ 9.48 , and $ 14.44 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 year ended December 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 December 31, 2020.

1 unchanged sentence

The total pre-tax intrinsic value of stock options exercised during the year ended December 31, 2020, 2019, and 2018 were $ 21.4 million, $ 5.3 million, and $ 2.3 million, respectively.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the assumptions relating to options granted pursuant to the Company’s equity incentive plans for the years ended December 31, 2020, 2019, and 2018:

Years Ended December 31,

Expected dividend yield

Risk-free interest rate

Expected term (years)

Expected volatility

69.99 % - 70.99 %

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200.28 % - 167.54 %

Expected term (in years)

Expected volatility

Risk-free interest rate

0.28 % - 1.83 %

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2.97 % - 2.27 %

Expected dividend yield

Expected Dividend Yield —The Company has never paid dividends and does not expect to pay dividends in the foreseeable future.

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Each of the inputs discussed above is subjective and generally requires significant management judgment.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of outstanding and exercisable stock options as of December 31, 2019 is as follows:

Options Outstanding

Options Exercisable

Range of Exercise

Exercise Price

$ 5.05 - $ 5.87

$ 5.88 - $ 7.55

$ 7.56 - $ 9.10

$ 9.11 - $ 10.69

$ 10.70 - $ 11.15

$ 11.16 - $ 11.26

$ 11.27 - $ 16.50

$ 16.51 - $ 19.75

$ 19.76 - $ 25.78

$ 25.79 - 117.00

Restricted Common Stock Awards

There were no unvested restricted common stock awards as of December 31, 2019, 2018, and 2017.

During the year ended December 31, 2019, 2018 and 2017, no expense was recognized in connection with these awards.

NOTE.7 EMPLOYEE BENEFIT PLAN

EMPLOYEE BENEFIT PLAN

The Company maintains a defined contribution plan covering substantially all U.S.

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The state NOLs will expire if unused in years 2030 through 2038.

The Company’s utilization of NOLs is subject to an annual limitation due to ownership changes that have occurred previously or that could occur in the future as provided in Section 382 of the IRC (“Section 382”), as well as similar state provisions.

The Company’s utilization of NOLs is subject to an annual limitation due to ownership changes that have occurred previously or that could occur in the future as provided in Section 382 of the Code (“Section 382”), as well as similar state provisions.

Section 382 limits the utilization of NOLs when there is a greater than 50% change of ownership as determined under the regulations.

Since its formation, the Company has raised capital through the issuance of capital stock and various convertible instruments which, combined with the purchasing shareholders’ subsequent disposition of these shares, has resulted in an ownership change as defined by Section 382, and could result in an ownership change in the future upon subsequent disposition.

The Company’s utilization of NOLs may also be adversely affected by future changes in federal and state tax laws and regulations.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized.

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Patent License Agreement Related to the Development and Manufacture of TIL

Effective October 5, 2011, the Company entered into an Exclusive Patent License Agreement (the “Patent License Agreement”) with the NIH, an agency of the United States Public Health Service within the Department of Health and Human Services (NIH), which was subsequently amended on February 9, 2015 and October 2, 2015.

Effective October 5, 2011, the Company entered into an Exclusive Patent License Agreement (the “Patent License Agreement”) with the NIH, an agency of the U.S.

Public Health Service within the Department of Health and Human Services (NIH), which was subsequently amended on February 9, 2015 and October 2, 2015.

Pursuant to the Patent License Agreement, as amended, the NIH granted the Company licenses, including exclusive, co-exclusive, and non-exclusive licenses, to certain technologies relating to autologous tumor infiltrating lymphocyte adoptive cell therapy products for the treatment of metastatic melanoma, lung, breast, bladder and HPV-positive cancers.

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 making a milestone payment in conjunction with the submission of a Biologics License Application for any of its product candidates covered by the Patent License Agreement.

Exclusive Patent License Agreement Related to TIL Selection

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Unless terminated sooner, the license shall remain in effect until the last licensed patent right expires.

Under the Exclusive Patent License Agreement, the Company agreed to pay customary royalties based on a percentage of net sales of a licensed product (which percentage is in the mid-single digits), a percentage of revenues from sublicensing arrangements, and lump sum benchmark payments upon the successful completion of clinical studies involving licensed technologies, the receipt of the first FDA approval or foreign equivalent for a licensed product or process resulting from the licensed technologies, the first commercial sale of a licensed product or process in the United States, and the first commercial sale of a licensed product or process in any foreign country.

Under the Exclusive Patent License Agreement, the Company agreed to pay customary royalties based on a percentage of net sales of a licensed product (which percentage is in the mid-single digits), a percentage of revenues from sublicensing arrangements, and lump sum benchmark payments upon the successful completion of clinical studies involving licensed technologies, the receipt of the first FDA approval or foreign equivalent for a licensed product or process resulting from the licensed technologies, the first commercial sale of a licensed product or process in the U.S., and the first commercial sale of a licensed product or process in any foreign country.

Lee Moffitt Cancer Center

1 unchanged sentence

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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patent covering the subject technology.

In addition, the Company agreed to pay milestone license fees upon completion of specified milestones, customary royalties based on a specified percentage of net sales (which percentage is in the low single digits) and sublicensing payments, as applicable, and annual minimum royalties beginning with the first sale of products based on the licensed technologies, which minimum royalties will be credited against the percentage royalty payments otherwise payable in that year.

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

In addition, the Company agreed to pay milestone license fees upon completion of specified milestones, customary

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

royalties based on a specified percentage of net sales (which percentage is in the low single digits) and sublicensing payments, as applicable, and annual minimum royalties beginning with the first sale of products based on the licensed technologies, which minimum royalties will be credited against the percentage royalty payments otherwise payable in that year.

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 U.S., 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 year ended December 31, 2020, 2019, and 2018.

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.

Pursuant to the Second Moffitt License, the Company paid an upfront licensing fee in the amount of $ 0.1 million for the year ended December 31, 2018.

Pursuant to the Second Moffitt License, the Company paid an upfront licensing fee in the amount of $ 0.1 million in 2018.

An annual license maintenance fee is also payable commencing on the first anniversary of the effective date.

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The SAA’s term shall continue in effect until the later of the fourth anniversary of the SAA or the completion or termination of the research and receipt by the Company of all deliverables due from MDACC thereunder.

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

The Company recorded $ 3.4 million and $ 0.8 million associated with the SAA for the year ended December 31, 2019 and 2018 as research and development expenses, respectively.

No expense was recognized in 2017.

In December 2015, the Company entered into a collaboration agreement (the “MedImmune Agreement”) with MedImmune, the global biologics research and development arm of AstraZeneca (“MedImmune”), to conduct clinical and preclinical research immuno-oncology.

Under the MedImmune Agreement, the Company funded and sought to conduct at least one clinical trial combining MedImmune's PD-L1 inhibitor, durvalumab, with TIL for the treatment of patients.

MedImmune will supply durvalumab for the clinical trials.

On April 3, 2019, the Company and MedImmune announced that the study was closed because of a changing treatment landscape and a lack of enrollment, and the collaboration agreement was terminated as of April 1, 2019.

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.

In May 2017, the Company made a prepayment of $ 1.4 million followed by subsequent payment of $ 2.5 million under this agreement.

The Company recorded $ 1.1 million, $ 3.4 million and $ 0.8 million associated with the SAA for the year ended December 31, 2020, 2019, and 2018 as research and development expenses, respectively.

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

(“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.

The statements of work for each of the suites were amended in 2019.

The statements of work for the first suite were amended in 2019 and September 2020, and the second suite was amended in 2019.

The statements of work for facility include a fixed component to reserve a dedicated suite and a trained work force, and a variable component, mainly materials and testing used during the manufacturing processes.

Both statements of work provide for adjustments to the targeted production capacity levels and the corresponding fixed quarterly fees upon written notice from the Company of 30 days and 90 days for the first and second dedicated suites, respectively.

The quarterly fixed fees payable for each of the dedicated manufacturing suites ranges from $ 1.2 million to $ 2.7 million depending on the production capacity level targeted.

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 terms of the related statements of work for the first and second dedicated manufacturing suites currently extend to August 2022 and June 2021, respectively.

The Company recorded costs associated with agreements with WuXi of $ 20.6 million, $ 28.4 million, and $ 15.1 million for the years ended December 31, 2020, 2019, and 2018 respectively, as research and development expenses.

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

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As described further in "Note 2.

Summary of Significant Accounting Policies", the Company adopted Topic 842 as of January 1, 2019.

Prior period amounts have not been adjusted and continue to be reported in accordance with its historic accounting under ASU Topic 840- Leases (Topic 840).

The Company recorded costs associated with the license agreement from Cellectis of $ 0.4 million the year ended December 31, 2020, respectively.

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.

Novartis is also entitled to low-to-mid single digit percentage royalties from commercial sales of the product.

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

Facilities Leases

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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

7 unchanged sentences

On October 19, 2018, the Company entered into an agreement to lease 12,322 square feet of office space located adjacent to the Company's headquarters in San Carlos, California.

This lease replaces the sublease of 11,449 square feet of office space in the same facility that expired on October 31, 2018.

This lease replaces the sublease of 11,449 square feet of office space in the same

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

facility that expired on October 31, 2018.

The term of the lease is 30 months subsequent to the commencement date, November 1, 2018, and will expire in April 2021.

Monthly lease payments are approximately $ 59,000 , subject to an annual increase of 3 %.

On June 19, 2019, the Company entered into a first amendment (the "Amended Lease") to its previously disclosed lease agreement with Hudson Skyway Landing, LLC (the "Lease") for additional space at its corporate headquarters in San Carlos, California.

Under the Amended Lease, the Company will lease an additional 8,110 square feet (the "Expansion Space"), for a total of approximately 20,432 square feet of space on the first floor of the building located at 999 Skyway Road, San Carlos, California, commonly known as Skyway Landing II.

On June 19, 2019, the Company entered into a first amendment (the “Amended Lease”) to its previously disclosed lease agreement with Hudson Skyway Landing, LLC (the “Lease”) for additional space at its corporate headquarters in San Carlos, California.

Under the Amended Lease, the Company will lease an additional 8,110 square feet (the “Expansion Space”), for a total of approximately 20,432 square feet of space on the first floor of the building located at 999 Skyway Road, San Carlos, California, commonly known as Skyway Landing II.

The term of the Amended Lease remains the same as that of the Lease and expires on April 30, 2021, unless earlier terminated in accordance with the Amended Lease.

The Company's monthly base rent for the Expansion Space under the Amended Lease will be approximately $ 39,000 for the first year, and $ 40,000 for the second year.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

New York Lease

5 unchanged sentences

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.

On September 1, 2020, the Company entered into an agreement to extend the lease term to January 31, 2021, for approximately $ 4,000 a month.

On January 31, 2021, the lease terminated, and we closed our New York office.

Philadelphia Office Lease

On May 2, 2019, the Company entered into an agreement to lease approximately 1,500 square feet of office space in Philadelphia, Pennsylvania until July 1, 2019 for a rate of $ 2,000 a month, and then approximately 4,500 square feet of office space for the remainder of a three-year term at an initial rate of $ 11,063 per month, subject to annual increases of 2.5 %.

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.

Commercial Manufacturing Facility Agreement

On May 28, 2019, the Company entered into a lease agreement with 300 Rouse Boulevard, LLC (the “Commercial Manufacturing Facility Lease”) for a build-to-suit commercial manufacturing facility, laboratories, and offices located in Philadelphia, Pennsylvania.

Under the Commercial Manufacturing Facility Lease, the Company will lease approximately 136,000 rentable square feet of space in a building to be located at 300 Rouse Boulevard, Philadelphia, Pennsylvania (the “Premises”).

The commercial manufacturing facility is expected to be constructed in two phases:

Phase I-A, the construction of the commercial manufacturing facility, with approximately 66,000 rentable square feet of space;

and Phase I-B, the construction of offices and laboratories, with approximately 70,000 rentable square feet of space.

The Commercial Manufacturing Facility Lease is for a term of 242 months , commencing on the earlier of (i) the date on which the Company occupies any portion of the Premises for the normal operation of its business or (ii) the date that is the later of (A) one hundred sixty ( 160 ) days after the Phase I-A substantial completion date, currently anticipated to be July 16, 2020, or (B) the Phase I-B Substantial Completion Date (the “Commencement Date”).

The Commencement Date shall be extended by one day for each day of landlord delay, net of any tenant delay, as defined in the Lease.

Under the Commercial Manufacturing Facility Lease, the Company leases approximately 136,000 rentable square feet of space in a building located at 300 Rouse Boulevard, Philadelphia, Pennsylvania (the “Premises”).

The construction of the commercial manufacturing facility began in July 2019 and has been substantially completed.

The Company determined the commencement date of the Commercial Manufacturing Lease to be October 7, 2020 in accordance with Topic 842 when its landlord made the Premise available for the Company’s use and the Company obtained control over the use of the Premises.

The Commercial Manufacturing Facility Lease includes an option to extend the term of the lease, exercisable under certain conditions as described in the Commercial Manufacturing Facility Lease, such that the overall term, when added to the initial term, shall be 359 months , by giving the landlord prior written notice thereof at least 18 months in advance of the expiration date.

Beginning on the Commencement Date, the Company’s monthly base rent under the Lease will be approximately $ 320,000 , subject to an annual increase of 2 % for the first ten years, and an annual increase of the greater of 2 % or 75 % of the average ten-year consumer price index.

The Company will also be responsible for paying operating expenses, which are expected to be approximately $ 53,000 per month in 2020.

In determining the lease term, the Company did not include the periods covered by the option to extend the lease as it determined that it is not reasonably certain that the Company will exercise such option.

Upon the commencement date, the Company recognized operating lease liabilities and right-of-use assets of $ 41.3 million and $ 45.7 million, respectively.

The Company’s monthly base rent under the Lease will be approximately $ 320,000 , subject to an annual increase of 2 % for the first ten years, and an annual increase of the greater of 2 % or 75 % of the average ten-year consumer price index.

The Company is also responsible for paying operating expenses, which are expected to be approximately $ 72,000 per month in 2021.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Manufacturing Contracts

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Further, the Company controls the use of the facilities by obtaining all of the economic benefits from the use of the facilities and direct the use of the facilities throughout the period of use.

The terms of the CMO

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

contracts include options to terminate the lease with an advance notice of five to six months.

The terms of the CMO contracts include options to terminate the lease with an advance notice of five to six months.

The termination clauses and extension clauses are included in the calculation of the lease term for each of the CMOs when it is reasonably certain that it will not exercise such options.

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December 31, 2020

December 31, 2019

Operating lease right-of-use assets

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Total Operating lease liabilities

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

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes components of lease expenses, which were included in Total expenses in the Company’s 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):

December 31, 2020

December 31, 2019

Operating lease cost

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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 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 year ended December 31, 2019 was $ 8.6 million, respectively, and were included in Net cash used by operating activities in its consolidated statement of cash flows.

Upon the adoption of Topic 842 on January 1, 2019, the Company increased noncash balances of operating lease right-of-use assets and operating lease liabilities by $ 10.4 million and $ 10.7 million, respectively.

The Company additionally increased operating lease right-of-use assets by $ 7.8 million and operating lease liability by $ 8.9 million for the twelve months ended December 31, 2019 as a result of lease modifications and additional lease agreements entered by the Company.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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As of December 31, 2020, the weighted average remaining lease term is 16.76 years and the weighted average discount rate used to determine the operating lease liabilities was 8.3 %.

As of December 31, 2019, the Company has a finance lease for the commercial manufacturing facility that has not yet commenced.

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

LEGAL PROCEEDINGS

Class Action Lawsuit .

On April 10, 2017, the SEC announced settlements with the Company and with other public companies and unrelated parties in the In the Matter of Certain Stock Promotion investigation.

The Company's settlement with the SEC is consistent with its previous disclosures (including in its Annual Report on Form 10-K that the Company filed with the SEC on March 9, 2017).

On April 14, 2017, a purported shareholder filed a complaint seeking class action status in the United States District Court, Northern District of California for violations of the federal securities laws ( Leonard DeSilvio v.

Lion Biotechnologies, Inc., et al., case no.

3:17cv2086) against its company and three of its former officers and directors.

On April 19, 2017, a second class action complaint (Amra Kuc vs.

Lion Biotechnologies, Inc., et al., case no.

3:17-cv-2188) was filed in the same court.

Both complaints allege, among other things, that the defendants violated the federal securities laws by making materially false and misleading statements, or by failing to make certain disclosures, regarding the actions taken by Manish Singh, its former CEO, and its former investor relations firm that were the subject of the In the Matter of Certain Stock Promotions investigation.

On July 20, 2017, the plaintiff in the Kuc case filed a notice to voluntarily dismiss that case.

The court entered an order dismissing the Kuc complaint on July 21, 2017.

On July 26, 2017, the court appointed a movant as lead plaintiff.

On September 8, 2017, the lead plaintiff filed an amended complaint ( Jay Rabkin v.

Lion Biotechnologies, Inc., et al., case no.

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 its 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.

As the result of mediation, on September 28, 2018, lead plaintiff filed an unopposed motion for settlement, the cost of which, if approved, is expected to be borne by the Company’s insurance carrier and would result in no loss to the Company.

The court gave preliminary approval to the proposed settlement on November 30, 2018, and the final hearing is currently scheduled for April 12, 2019.

Derivative Lawsuits.

On December 15, 2017, a purported stockholder derivative complaint was filed by plaintiff Kevin Fong against the Company, as nominal defendant, and certain of its current and former officers and directors, and others, as defendants, in the U.S.

District Court for the District of Delaware (case no.

1:17-cv-1806).

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.

District Court for the District of Delaware (case no.

1:18-cv-00469).

The complaint alleges, among other things, violations of securities law, breach

Derivative Lawsuit.

On December 11, 2020, a purported stockholder derivative complaint was filed by plaintiff Leo Shumacher against the Company, as nominal defendant, and its current directors, as defendants, in the Court of Chancery in the State of Delaware.

The complaint alleges breach of fiduciary duty and a claim for unjust enrichment in connection with alleged excessive compensation of certain non-executive directors of the Company and seeks unspecified damages on behalf of the Company .

The defendants intend to vigorously defend against the foregoing complaints.

Based on the early stage of the litigation, it is not possible to estimate the amount or range of possible loss that might result from these matters.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of fiduciary duty, aiding and abetting, waste of corporate assets, and unjust enrichment.

The complaint is based on claims arising from the SEC’s investigation in the In the Matter of Certain Stock Promotions investigation and the Company’s April 10, 2017 settlement thereof, and seeks unspecified damages on behalf of the Company and injunctive relief.

On May 1, 2018, the court consolidated this case with the aforementioned purported stockholder derivative case filed by plaintiff Kevin Fong.

The consolidated case is titled In re Iovance Biotherapeutics, Inc.

Stockholder Derivative Litigation (lead case no.

On January 28, 2020, the parties reached a proposed settlement, which is currently awaiting preliminary approval by the court.

The terms of the settlement will be disseminated to shareholders as part of the notice process for the settlement if preliminary approval is granted.

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.

Solomon Capital, LLC.

On April 8, 2016, a lawsuit 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 against the Company in the Supreme Court of the State of New York, County of New York (index no.

651881/2016) (the "First Solomon Suit").

The 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 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.

Based on the foregoing, the plaintiffs allege causes for breach of contract and unjust enrichment and demand judgment against the Company in an unspecified amount exceeding $ 1.5 million, plus interest.

The Company has asserted counterclaims for fraudulent inducement, fraudulent misrepresentation, fraudulent concealment, breach of fiduciary duty, and breach of contract, alleging principally that the counterclaim defendants misrepresented their qualifications and failed to disclose that Solomon Sharbat was the subject of an investigation by the Financial Industry Regulatory Authority ("FINRA") that resulted in the loss of his FINRA license.

In our counterclaims, the Company are 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 lawsuit.

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

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) (the “Equity Claim”), and (iii) allow the Solomon Plaintiffs to convert the foregoing funds into its securities in the next financing of the Company on the same terms offered to other investors, which Solomon Plaintiffs allege, should have given them the right to convert their advances and payments into shares of the Company's common stock in the restructuring that took effect in May 2013.

Based on the foregoing, the Solomon Plaintiffs allege causes for breach of contract and unjust enrichment and demand judgment against the Company in an unspecified amount exceeding $ 1.5 million, plus interest.

On June 3, 2016, the Company filed an answer and counterclaims in the lawsuits.

The Company has asserted counterclaims for fraudulent inducement, fraudulent misrepresentation, fraudulent concealment, breach of fiduciary duty, and breach of contract, alleging principally that the counterclaim defendants misrepresented their qualifications and failed to disclose that Solomon Sharbat was the subject of an investigation by the Financial Industry Regulatory Authority (“FINRA”) that resulted in the loss of his FINRA license.

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.

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, through new counsel, filed a motion for reconsideration of the dismissal of the First Solomon Suit for want of prosecution.

On August 11, 2020, the Company filed an opposition brief against the Solomon Plaintiffs’ motion for reconsideration.

On August 17, 2020, the Solomon Plaintiffs filed a reply brief in support of their motion for reconsideration.

On September 2, 2020, the Solomon Plaintiffs filed a notice of appeal of the dismissal for want of prosecution.

On January 4, 2021, the court granted the Solomon Plaintiffs motion for reconsideration, and reinstituted the case.

On January 15, 2021, the Company filed a notice of appeal of the court’s grant of the Solomon Plaintiffs motion for reconsideration.

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.

f/k/a/ Genesis Biopharma Inc., and Manish Singh in the Supreme Court of the State of New York, County of New York (index no.

655668/2019) (the “Second Solomon Suit”).

In the Second Solomon Suit, the Solomon Plaintiffs allege that they are third party beneficiaries of a “finder’s fee agreement” that prior management entered into with a third party unlicensed entity in 2012 in connection with seeking financing, that an agreement or understanding existed between the Company and the plaintiffs that the plaintiffs would be paid fees and commissions (in cash and stock) if they obtained financing for the Company, and that they directly and indirectly introduced investors to the Company who invested, or were willing to invest.

655668/2019).

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

1 unchanged sentence

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

On February 18, 2020, the Company filed a removal petition and removed the Second Solomon Suit to the United States District Court for the Southern District of New York, where the case has been assigned case no.

On February 18, 2020, the Company filed a removal petition and removed the Second Solomon Suit to the U.S.

District Court for the Southern District of New York, where the case has been assigned case no.

1:20-cv-1391.

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.

On July 17, 2020, the Solomon Plaintiffs filed an opposition brief against the Company’s motion to dismiss for lack of personal jurisdiction.

On August 7, 2020, the Company filed a reply brief in support of the Company’s motion to dismiss for lack of personal jurisdiction.

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

9 unchanged sentences

In his complaint, Dr.

Fischkoff alleges breaches of his employment agreement and violation of New York Labor Law for failure to pay monies purportedly owed to him, and seeks to recover amounts including severance pay and retention bonus (totaling $ 300,000 ), a prorated incentive bonus, and amounts relating to unvested options to 150,000 shares of the Company's common stock, together with prejudgment

Fischkoff alleges breaches of his employment agreement and violation of New York Labor Law for failure to pay monies purportedly

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

interest, costs, expenses and attorneys’ fees.

On July 5, 2017, the Company filed a removal petition and removed the lawsuit to the United States District Court for the Southern District of New York, where the case has been assigned case no.

owed to him, and seeks to recover amounts including severance pay and retention bonus (totaling $ 300,000 ), a prorated incentive bonus, and amounts relating to unvested options to 150,000 shares of the Company's common stock, together with prejudgment interest, costs, expenses and attorneys’ fees.

On July 5, 2017, the Company filed a removal petition and removed the lawsuit to the U.S.

District Court for the Southern District of New York, where the case has been assigned case no.

1:17-cv-05041.

9 unchanged sentences

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.

The Company intends to vigorously defend against Dr.

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

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.

On September 23, 2020, the parties reached a confidential settlement in this matter, and on October 13, 2020, the court approved a stipulation of dismissal with prejudice filed by the parties.

Other Matters.

During the second quarter of 2016, warrants representing 128,500 shares were exercised.

The 128,500 shares of common stock had previously been registered for re-sale.

However, the Company believes that these 128,500 warrant shares were sold by the holders in open market transactions in May 2016 at a time when the registration statement was ineffective.

Accordingly, those sales were not made in accordance with Sections 5 and 10(a)(3) of the Securities Act of 1933, as amended, and the purchasers of those shares may have rescission rights (if they still own the shares) or claims for damages (if they no longer own the shares).

The amount of any such liability is uncertain and as such, an accrual for any potential loss has not been made.

The Company believes that any claims brought against it would not result in a material impact to the Company’s financial position or results of operations.

The Company has not accrued a loss for a potential claim associated with this matter as it is unable to estimate any at this time.

In connection with the Company’s reincorporation from Nevada to Delaware in 2017, the Company (as a Delaware corporation) untimely filed a post-effective amendment to adopt a Form S-8 registration statement that the Company filed (as a Nevada corporation) to register the shares underlying the Company’s 2011 Equity Incentive Plan.

2 unchanged sentences

The existence of any liability to the Company, and the amount of any such liability to the Company, as a result of the issuance of the 200,000 shares is uncertain.

Accordingly, no accrual for a potential claim has been made by the Company in its financial statements.

Accordingly, no accrual for a potential claim has been made by the Company in its consolidated financial statements.

The Company may be involved, from time to time, in legal proceedings and claims arising in the ordinary course of its business.

3 unchanged sentences

QUARTERLY UNAUDITED RESULTS

The results of operations by quarter for the years ended December 31, 2019 and 2018 are as follow:

The results of operations by quarter for the years ended December 31, 2020 and 2019 are as follows:

(in thousands, except per share information)

1 unchanged sentence

Weighted average share used in computing net loss per share, basic and diluted

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED PARTY TRANSACTIONS

A former member of the Company’s board of directors was an attorney at a law firm, TroyGould PC, that rendered legal services to the Company during the period of his directorship until June 6, 2018, but did not provide legal services to the Company himself during that period.

The Company paid TroyGould PC $ 0.4 million, $ 0.5 million, and $ 0.7 million during the years ended December 31, 2019, 2018, and 2017, respectively.

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

7 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 $ 0.4 million, $ 0.7 million and $ 0.2 million in stock-based compensation expense related to this consulting agreement during the years ended December 31, 2019, 2018 and 2017, respectively.

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company recognized $ 0.2 million, $ 0.4 million and $ 0.7 million in stock-based compensation expense related to this consulting agreement during the years ended December 31, 2020, 2019 and 2018, respectively.

SUBSEQUENT EVENTS

New Headquarters Lease

On February 3, 2021, the Company entered into a lease agreement with ARE-San Francisco No.

63, LLC (the “New Headquarters Lease”) for laboratories and offices to be constructed in Suite 400 of an existing building located at 825 Industrial Road, San Carlos, California (the “Building”), commonly known as The District.

Under the New Headquarters Lease, the Company will lease approximately 49,918 rentable square feet of space in the Building (the “Premises”).

The New Headquarters Lease is for a term of 120 months, commencing upon the first day of the first full month (the “Rent Commencement Date”) after the earlier to occur of (i) the date that is 12 months and one day after the execution date (the “Commencement Date”), which is January 30, 2022, or (ii) the date that the Tenant Improvements are substantially completed;

provided, however, that the Rent Commencement Date shall be delayed 1 day for each day after the Commencement Date that (a) to the extent that, after the Commencement Date, any governmental authority having jurisdiction, as a result of the COVID-19 outbreak in the U.S., declares or implements any order or mandate that restricts construction activities in San Mateo County, California (any such order or mandate, a “Government Mandate”), to the extent that such Government Mandate precludes the construction of tenant improvements, or (b) a landlord delay occurs.

Construction of the Company’s offices is expected to extend through 2021.

The New Headquarters Lease includes an option to extend the term of the lease for 60 months , exercisable under certain conditions and at a market rate as described in the New Headquarters Lease.

Commencing 210 days after the Rent Commencement Date as the result of a rent abatement, the Company’s monthly base rent under the New Headquarters Lease will be $ 279,540.80 , subject to an annual increase of 3 % .

Beginning in 2022, the Company will also be responsible for paying operating expenses.

Extension of Existing Headquarters Leases

On February 3, 2021, the Company entered into two amendments (the “Suite 150 Second Amendment” and the “Suite 100 and Suite 125 First Amendment”) to its previously disclosed lease agreements with Hudson Skyway Landing, LLC, for space located on the first floor of the building located at 999 Skyway Road, San Carlos, California, commonly known as Skyway Landing II.

Under the Suite 100 and Suite 125 Second Amendment, the Company will extend its previously disclosed amended lease of approximately 20,432 rentable square feet of space, which would have expired on April 30, 2021, to December 31, 2021.

The Company’s monthly base rent under the Suite 100 and Suite 125 Second Amendment will be $ 103,181.60 .

The Company is also responsible for paying its portion of operating expenses and real estate taxes.

The Company has an option to extend the expiration of the Suite 100 and Suite 125 Second Amendment for one month or six months , at its discretion, by providing notice as specified in the Suite 100 and Suite 125 Second Amendment.

Under the Suite 150 First Amendment, the Company will extend its previously disclosed lease of approximately 8,733 rentable square feet of space, which also would have expired on April 30, 2021, to December 31, 2021.

The Company’s monthly base rent under the Suite 150 First Amendment will be $ 44,101.65 .

The Company is also responsible for paying its portion of operating expenses and real estate taxes.

The Company has an option to extend the expiration of the Suite 150 First Amendment for one month or six months , at its discretion, by providing notice as specified in the Suite 150 First Amendment.

Economic Stimulus Program Loan

On January 26, 2021, the Company entered into a Loan Note dated January 26, 2021 (the “Loan Note”) and accompanying Economic Stimulus Program Loan Agreement with PIDC – Local Development Corporation, a Pennsylvania nonprofit corporation (the “Lender”), pursuant to which the Lender agreed to make a loan (the “Job Creation Loan”) to the Company in a principal amount of $ 1.0 million.

The Job Creation Loan will be for a term of five years starting on the date of the issuance of a final certificate of occupancy for the Company’s leased premises in Philadelphia, Pennsylvania.

The Job Creation Loan is unsecured, bears no interest, and will be forgiven by the Lender in the amount of $ 2,000 per full-time or “full time equivalent” (defined as two or more part time employees whose working hours total at least 35 hours a week) employee with an average salary of at least $ 80,000 (“FT Employees”), up to a maximum amount equal to the amount of the Job Creation Loan, as calculated based on the average number of

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FT Employees employed at the Company’s premises during the period of the 5-year term beginning on the date that is six months prior to the maturity date and ending on the maturity date.

If the Job Creation Loan is not forgiven in full by the maturity date, the remaining balance of the loan not forgiven will become payable on the maturity date.

The Loan Note includes customary events of default.

Upon the occurrence of an event of default, the Lender will have the right to exercise remedies against the Company, including the right to require immediate payment of all amounts due under the Loan Note.

Entry Into a Material Definitive Agreement

On February 8, 2021, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) with respect to an “at the market” offering program, under which the Company may, from time to time, in its sole discretion, issue and sell through Jefferies, acting as sales agent, up to $ 350.0 million of shares of the Company’s common stock, par value $ 0.000041666 per share (the “Common Shares”).

The issuance and sale, if any, of the Common Shares by the Company under the Sales Agreement will be made pursuant to a prospectus supplement, dated February 8, 2021, to the Company’s registration statement on Form S-3ASR, originally filed with the Securities and Exchange Commission on May 27, 2020, which became effective immediately upon filing.

Pursuant to the Sales Agreement, Jefferies may sell the Common Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”).

Jefferies will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Common Shares from time to time, based upon instructions from the Company (including any price or size limits or other customary parameters or conditions the Company may impose).

The Company will pay Jefferies a commission of up to 3.0 % of the gross sales proceeds of any Common Shares sold through Jefferies under the Sales Agreement.

The Company is not obligated to make any sales of Common Shares under the Sales Agreement.

The offering of Common Shares pursuant to the Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through Jefferies, of all Common Shares subject to the Sales Agreement and (ii) termination of the Sales Agreement in accordance with its terms.

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

What changed 10-K

Item 9A. Controls and Procedures