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Item 7. Management’s Discussion and Analysis

2022-02-24 compared with 2021-02-25 · 228 added, 189 removed, 117 unchanged (78% of the section changed)

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We use words such as “may,” “will,” “might,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “aim,” “potential,” “continue,” “ongoing,” “goal,” “forecast,” “guidance,” “outlook,” or the negative of these terms or other similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words.

All forward-looking statements included in this report are based on information

available to us on the date hereof and, except as required by law, we assume no obligation to update any such forward-looking statements.

We are 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.

TIL therapy is an autologous cell therapy platform technology that was originally developed by the NCI, which conducted initial clinical trials of this therapy in diseases such as metastatic melanoma and cervical cancer.

We have developed a new, shorter manufacturing process for TIL known as Gen 2, which yields a cryopreserved TIL product.

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

Our lead product candidates include lifileucel for metastatic melanoma and metastatic cervical cancer.

In addition to metastatic melanoma and metastatic cervical cancer, we are investigating the effectiveness and safety of TIL for the treatment of squamous cell carcinoma of the head and neck, non-small cell lung cancer, and are investigating PBL therapy for CLL or SLL through our sponsored trials, as well as in other oncology indications through collaborations.

We are conducting a Phase 2 clinical trial, C-144-01, of our lead product candidate, lifileucel, for the treatment of metastatic melanoma.

All forward-looking statements included in this report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update any such forward-looking statements.

We are a clinical-stage biopharmaceutical company pioneering a transformational approach to cure cancer by harnessing the human immune system’s ability to recognize and destroy diverse cancer cells in each patient.

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

Our mission is to be the global leader in innovating, developing and delivering TIL therapies for patients with cancer.

We have developed a new, shorter TIL manufacturing

process known as Gen 2, which yields a cryopreserved TIL product.

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

Our lead product candidates include lifileucel for metastatic melanoma and metastatic cervical cancer, as well as LN-145 for metastatic non-small cell lung cancer, or NSCLC.

In addition, we are investigating the effectiveness and safety of combinations of TIL therapy with immune checkpoint inhibitors, or ICIs, in metastatic melanoma, cervical cancer, NSCLC, and head and neck squamous cell carcinoma, or HNSCC.

We are investigating peripheral blood lymphocyte, or PBL, therapy for patients with relapsed or refractory chronic lymphocytic leukemia, or CLL, and small lymphocytic lymphoma, or SLL, through our sponsored trials.

We are developing first-in-class genetically edited TIL products based on the inactivation of genes that encode immune checkpoint proteins and other proteins, as well as the insertion of genes that encode immunomodulatory proteins.

We are also developing an alternative interleukin-2, or IL-2, co-therapy for use with TIL therapies.

Finally, we are investigating the potential for TIL therapy in other oncology indications and treatment settings through academic collaborations with leading cancer research centers.

Our current product candidate pipeline is summarized in the figure below:

TIL Monotherapy in Metastatic Solid Tumor Cancers

We have investigated TIL monotherapy in metastatic melanoma, cervical cancer, NSCLC and HNSCC.

We are conducting a Phase 2 clinical trial, C-144-01, of our lead TIL product candidate, lifileucel, for the treatment of metastatic melanoma.

This multicenter pivotal trial enrolled melanoma patients with disease progression following treatment with at least one systemic therapy, including a PD-1 inhibitor and, if BRAF mutated, a BRAF inhibitor, or a combination of BRAF and MEK inhibitors.

Cohort 4 of the C-144-01 clinical trial is a single-arm cohort intended to support a BLA submission for lifileucel.

Cohort 4 of the C-144-01 clinical trial is a single-arm cohort intended to support the submission of a Biologics License Application, or BLA, to the Food and Drug Administration, or the FDA, for lifileucel.

Cohorts 2 and 4 of the C-144-01 trial use our Gen 2 manufacturing process.

We completed and closed enrollment of patients into Cohort 2 of the C-144-01 trial in 2018.

Results from Cohort 2 of the C-144-01 clinical trial were initially reported at the ASCO annual meeting on June 1, 2019 and subsequently updated at the ASCO annual meeting on May 29, 2020.

In 66 patients with metastatic melanoma, treatment with lifileucel resulted in an ORR of 36%, as assessed by investigator, with 2 complete responses and 22 partial responses.

The DCR was 80.3%.

Patients were heavily pretreated and had a mean of 3.3 prior therapies.

We have reported durable responses across a wide age range of metastatic melanoma patients, and among those who have received prior anti-CTLA-4 and BRAF targeted treatments, regardless of BRAF mutation status, and equally in patients with PD-L1 high and low status.

We have provided several updates on the median DOR for Cohort 2 and most recently, in January 2021, we announced that median DOR in Cohort 2 had still not been reached after 28.1 months of median study follow up, as assessed by investigator.

The adverse event profile was generally consistent with the underlying advanced disease and the profile of the lymphodepletion and IL-2 regimens.

Pivotal Cohort 4 of the C-144-01 trial was enrolled to evaluate ORR as read out by an IRC as the primary endpoint based on our interpretation of discussions with the FDA as part of an EOP2 meeting held with the FDA in the third quarter of 2018.

In October 2018, based on the data provided to the FDA during the EOP2 meeting, we announced that lifileucel had received a RMAT designation from the FDA.

Results from Cohort 2 of the C-144-01 clinical trial were initially reported at the American Society of Clinical Oncology annual meeting, or ASCO, in June 2019 and subsequently updated at ASCO in June 2021.

In addition, detailed Cohort 2 data was published in the Journal of Clinical Oncology in May 2021.

Pivotal Cohort 4 of the C-144-01 trial was enrolled to evaluate ORR as read out by an Independent Review Committee, or IRC, as the primary endpoint based on our interpretation of discussions with the FDA as part of an End of Phase 2, or EOP2, meeting held with the FDA in the third quarter of 2018.

In October 2018, based on the data provided to the FDA during the EOP2 meeting, we announced that lifileucel had received a Regenerative Medicines Advanced Therapy, or RMAT, designation from the FDA.

Enrollment in Cohort 4 of the C-144-01 trial commenced in March 2019 and patient dosing was completed in January 2020.

A total of 87 patients were dosed in Cohort 4.

Initial results from Cohort 4 are available for 68 patients with two radiological assessments, as determined by investigator.

Lifileucel showed a 32.4% ORR, including one complete response and 21 partial responses, two of which were yet to be confirmed with follow up visits at the time of the data cut, and a DCR of 72.1% as of the data cut off of March 16, 2020, corresponding to 5.3 months of median study follow up.

This data is consistent with the Cohort 2 data read out at a similar median duration of study follow up.

The ORR of Cohort 2 at a median study follow up of 6 months was 33%.

In October 2020, after a Type B meeting with the FDA, we announced that we had delayed our BLA submission for lifileucel in metastatic melanoma as a result of FDA feedback, in order to allow us to simultaneously refine existing and develop new potency assays, and we anticipate submitting our BLA in 2021.

At the same time, we also announced that we had reached agreement with the FDA on the minimum duration of follow up for Cohort 4 to support our BLA submission for lifileucel in the treatment of metastatic melanoma.

We are also conducting a Phase 2 clinical trial, C-145-04, which is a multicenter pivotal trial that will assess the safety and efficacy of lifileucel for the treatment of patients with recurrent, metastatic or persistent cervical cancer.

Previously, we reported the submission of additional potency assay data to the FDA, and at the same time, we also announced that we had reached agreement with the FDA on the minimum duration of follow up for Cohort 4 to support our BLA submission for lifileucel in the treatment of metastatic melanoma.

In May 2021, we announced that we had received regulatory feedback from the FDA regarding our potency assays for lifileucel.

Following FDA feedback, we have continued our ongoing work developing and validating our potency assays and have engaged in discussions with the FDA during the second half of 2021.

Our BLA submission for lifileucel in metastatic melanoma is expected to occur during the first half of 2022.

In connection with this BLA submission, the IRC is expected to independently assess responses for Cohort 4 patients through the data cut date, which must be completed prior to BLA submission or disclosure of IRC-read data.

We are also conducting a Phase 2 clinical trial, C-145-04, which is a multicenter pivotal trial to assess the safety and efficacy of our lead product candidate lifileucel for the treatment of patients with recurrent, metastatic, or persistent cervical cancer.

In February 2019, lifileucel received Fast Track designation from the FDA for development in the treatment of cervical cancer with disease progression on or after chemotherapy.

In March 2019, the protocol for this trial was amended to modify the primary endpoint of ORR to be determined by IRC.

In May 2019, lifileucel received BTD from the FDA for development in the treatment of cervical cancer.

Updated results from the C-145-04 clinical trial were reported at the ASCO annual meeting on June 1, 2019.

In 27 patients with metastatic cervical cancer, treatment with lifileucel resulted in an ORR of 44%.

At the time of the study data cut, there were 3 complete responses and 9 partial responses.

The DCR was 85%.

Patients were heavily pretreated and had a mean of 2.4 prior therapies.

The median DOR had not been reached.

The adverse event profile was generally consistent with the underlying advanced disease and the profile of the lymphodepletion and IL-2 regimens.

Based on an EOP2 meeting held with the FDA in June 2019, we believe that results from the C-

145-04 clinical trial may be sufficient to support registration of lifileucel for the treatment of patients with metastatic cervical cancer.

In accordance with the FDA’s recommendations, the protocol was amended to further define the patient population.

In November 2019, in order to evaluate lifileucel in broader lines of therapy in cervical cancer, we have further amended the C-145-04 trial to collect additional data on early-line patients as well as late-line patients by adding additional cohorts, in anticipation of a changing landscape in this indication, including Cohort 2 for patients that had previously received anti-PD-1 therapy.

These additional cohorts also allow access to TIL therapy after completion of the enrollment in the registrational cohorts.

In January 2021, we announced that Cohort 2 of the C-145-04 trial had completed enrollment and that data from this cohort may be supportive of registration because of the expected changing landscape of care for cervical patients.

We intend to initiate a dialog with the FDA in 2021 to discuss BLA submission plans for lifileucel in cervical cancer.

In November 2020, we announced that we had finalized the protocol for our potential registrational clinical trial in NSCLC, IOV-LUN-202, to investigate LN-145 in patients with recurrent or metastatic NSCLC, without driver mutations, who previously received a single line of approved systemic therapy of combined checkpoint inhibitor and chemotherapy.

In May 2019, lifileucel received Breakthrough Therapy Designation, or BTD, from the FDA for development in the treatment of cervical cancer.

Results from the C-145-04 clinical trial were reported at ASCO in June 2019.

In November 2019, we amended the C-145-04 trial to collect additional data on early-line patients as well as late-line patients by adding additional cohorts, in anticipation of a changing landscape in this indication, including Cohort 2 for patients that had previously received chemotherapy and anti-PD-1/anti-PD-L1 therapy.

For example, because of recent regulatory approvals for pembrolizumab, there may be a potential shift from chemotherapy in front-line cervical cancer followed by pembrolizumab in second-line cervical cancer.

We intend to execute our strategy based on dialog and feedback on these cohorts and continue to plan for a potential BLA submission for lifileucel in cervical cancer.

In November 2020, we announced that we had finalized the protocol for our potential registrational clinical trial in NSCLC, IOV-LUN-202, to investigate LN-145 in patients with metastatic NSCLC, without driver mutations, who previously received a single line of approved systemic therapy of combined checkpoint inhibitor and chemotherapy.

The IOV-LUN-202 clinical trial includes three cohorts.

Cohorts 1 and 3 of the IOV-LUN-202 clinical trial will enroll patients with a PD-L1 TPS of less than one percent, and Cohort 2 will enroll patients with a PD-L1 TPS of greater than or equal to one percent.

We intend to enroll patients in the IOV-LUN-202 clinical trial throughout 2021.

C-145-03 is our Phase 2, multicenter trial to assess the safety and efficacy of our product candidate LN-145 for the treatment of patients with recurrent metastatic HNSCC.

In October 2018, we reported that, to date, preliminary data for 13 patients in the C-145-03 clinical trial yielded an ORR of 31% with a DOR ranging from 2.8 to 7.6 months.

The adverse event profile remained consistent with previous reports.

Cohorts 1 and 3 of the IOV-LUN-202 clinical trial are enrolling patients with a PD-L1 TPS of less than one percent at the time they started front-line therapy, and Cohort 2 will enroll patients with a PD-L1 TPS of greater than or equal to one percent at the time they started front-line therapy.

Cohort 3 will also explore manufacturing TIL extracted from core biopsies using our third-generation, or Gen 3, manufacturing process.

In June 2021, we reported that the first patient was dosed in the IOV-LUN-202 clinical trial.

We intend to continue to enroll patients in the IOV-LUN-202 clinical trial throughout 2022.

We are engaged in regulatory discussions with the FDA on IOV-LUN-202 and intend to incorporate FDA feedback to optimize this clinical trial to support further registration in NSCLC.

In June 2021, we reported initial data for LN-145 in Cohort 3B of our IOV-COM-202 clinical trial in metastatic NSCLC.

IOV-COM-202 is a Phase 2, multicenter trial for that is composed of seven cohorts.

Cohort 3B of IOV-COM-202 enrolled patients with metastatic NSCLC that had progressed on prior ICI therapy, including patients with oncogene-driven tumors who received prior tyrosine kinase inhibitor therapy.

Patients were treated with LN-145 monotherapy.

All patients treated in Cohort 3B of the IOV-COM-202 trial received prior anti-PD-1/L1 therapy and all six responding patients also received prior chemotherapy.

We also provided an update on Cohort 3B in November 2021, at the Society for Immunotherapy in Cancer Annual Meeting, or SITC.

C-145-03 is our Phase 2, multicenter trial to assess the safety and efficacy of our product candidate LN-145 for the treatment of patients with metastatic HNSCC.

We redesigned our C-145-03 trial to include multiple cohorts, in order to allow for dosing of TIL therapies produced by multiple manufacturing methods, including our Gen 2 manufacturing process, our Gen 3 manufacturing process, and our PD-1 selected TIL manufacturing process.

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In January 2021, we announced that we are closing the C-145-03 clinical trial after the trial reached its pre-specified enrollment target.

We are also investigating the potential of our TIL therapies in earlier lines of treatment and in combination with pembrolizumab, and are studying LN-145 as a monotherapy in relapsed refractory NSCLC patients.

IOV-COM-202 is a Phase 2, multicenter trial that is composed of seven cohorts that can enroll up to a total of 135 patients.

In May 2019, we reported that the first patient was dosed in the IOV-COM-202 trial.

TIL Combinations in Earlier Treatment Settings for Solid Tumors

We are also investigating the potential of our TIL therapies in earlier lines of treatment in combination with pembrolizumab or other ICIs in cancer patients who are naïve to anti-PD-1 therapy, including in four cohorts in our IOV-COM-202 study in solid tumors

as well as in one cohort in our C-145-04 clinical study in cervical cancer.

In addition to its ongoing enrollment in the U.S., the IOV-COM-202 trial has also received regulatory approval in Canada and in certain European countries.

In Cohort 1A of the IOV-COM-202 trial, we are enrolling advanced unresectable or metastatic melanoma patients who are naïve to anti-PD-1 therapy.

In Cohort 2A of the IOV-COM-202 trial, we are enrolling advanced, recurrent, or metastatic HNSCC patients who are naïve to prior immunotherapy including anti-PD-1/anti-PD-L1 therapy.

The patients receive LN-145 in combination with pembrolizumab.

We reported results from ongoing Cohort 2A of the IOV-COM-202 trial at the SITC meeting in November 2020, as follows.

As of October 16, 2020, nine HNSCC patients have received LN-145 plus pembrolizumab with a median duration of follow up of 8.6 months.

Nine and eight patients were evaluable for safety and efficacy, respectively.

Four patients had a confirmed, objective response with an ORR of 44% including one complete response and three partial responses.

Median DOR was not reached.

The disease control rate at data cutoff was 89% in nine patients, and seven of the eight evaluable patients, or 87.5%, had a reduction in target lesions.

The median number of prior therapies was 1.0 with 89% of the patients having received prior chemotherapy.

Four patients were HPV positive, three patients were HPV negative, and two patients had unknown HPV status.

The TEAE profile was consistent with the underlying advanced disease and the known adverse event profiles of pembrolizumab, lymphodepletion, and IL-2 regimens.

The most common TEAEs, occurring in more than 50% of evaluable subjects, were chills, anemia, hypotension, nausea, pyrexia, and thrombocytopenia.

In November 2019, we announced that our IND for our PBL therapy, IOV-2001, was authorized by the FDA and our sponsored clinical trial using this therapy, IOV-CLL-01, was cleared to proceed.

IOV-2001 is a non-genetically modified, polyclonal T cell product that is manufactured using a nine-day process from 50 mL of patient's blood.

In Cohort 3, which is our C-145-04 cervical cancer study, patients receive TIL plus pembrolizumab.

We reported results from ongoing Cohort 1A of the IOV-COM-202 trial at ASCO in June 2021, as well as provided updated results in November 2021 at SITC.

Our oral presentation at SITC in November 2021 also included initial results for TIL therapy plus pembrolizumab for patients enrolled in Cohort 3 of our C-145-04 cervical cancer study.

The Cohort 1A and Cohort 2A results from the IOV-COM-202 study as well as Cohort 3 from the C-145-04 study demonstrated that lifileucel or LN-145 can be safely combined with pembrolizumab.

The treatment emergent adverse event, or TEAE, profile in all Cohorts was consistent with the underlying advanced disease and the known adverse event profiles of pembrolizumab, lymphodepletion, and IL-2 regimens.

Two additional cohorts, Cohort 3A and 3C in the IOV-COM-202 study, explore LN-145/ICI combination therapies in NSCLC patients.

Cohort 3A is evaluating LN-145 in combination with pembrolizumab in patients with recurrent or metastatic NSCLC who have not received prior immunotherapy, including checkpoint inhibitors.

Cohort 3C is investigating LN-145 therapy in combination with ipilimumab and nivolumab in patients with recurrent or metastatic NSCLC who have previously received one line of approved checkpoint inhibitor monotherapy as the only prior line of systemic therapy.

In September 2021, we announced that our Iovance Cell Therapy Center, or the i CTC, had successfully manufactured and delivered its first clinical batch of LN-145 for the IOV-COM-202 trial, representing our first internally manufactured TIL product.

We continue to supply the IOV-COM-202 trial, and other ongoing trials, with both internally manufactured and externally manufactured TIL products.

Next-Generation and Genetically Modified Product Candidates

Our clinical pipeline also includes next generation TIL product candidates and manufacturing processes, as well as a cytokine-engrafted protein.

Our TIL candidate LN-145-S1, in which TIL are selected for PD-1 expression, is being investigated in post-anti-PD-1 melanoma in Cohort 1B of our IOV-COM-202 basket study as well as in post-anti-PD-1 HNSCC in Cohort 4 of our C-145-03 trial.

We are using our Gen 3 manufacturing process in Cohort 1C of the IOV-COM-202 clinical trial in melanoma and in Cohort 3 of the IOV-LUN-202 clinical trial in NSCLC and have previously used it in the C-145-03 clinical trial in HNSCC.

In November 2019, we announced that our Investigational New Drug, or IND, application for our PBL therapy, IOV-2001, was authorized by the FDA.

Our sponsored clinical trial using this therapy, IOV-CLL-01, was cleared to proceed and patient dosing began in 2020.

IOV-2001 is a non-genetically modified, polyclonal T cell product that is manufactured using a nine-day process starting from 50 mL of patient's blood.

IOV-CLL-01 is a Phase 1/2 clinical trial evaluating the safety and efficacy of IOV-2001 in patients with relapsed or refractory CLL or SLL.

The IOV-CLL-01 trial is expected to enroll up to approximately 70 patients.

As part of our collaboration program with MDACC, two Phase 2 trials were initiated in 2018.

In January 2020, we announced a research collaboration and exclusive worldwide licensing agreement with Cellectis S.A., or Cellectis, a clinical-stage biopharmaceutical company focused on developing immunotherapies based on gene-edited allogeneic chimeric antigen receptor modified T cells.

The worldwide exclusive license enables us to use certain TALEN® technology addressing multiple gene targets to develop TIL that have been genetically modified to create potentially more potent cancer therapeutics for use in several cancer indications.

We are nearing completion of IND-enabling studies under this agreement and expect to initiate our first clinical study in 2022 of a genetically modified TIL product candidate, IOV-4001, in which the gene coding for the PD-1 protein is inactivated.

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

In addition to IOV-4001, we are currently developing additional targets for genetic modification using the TALEN technology, including double-knock out programs in preclinical development.

We continue to explore additional transient and permanent genetic modifications of TILs.

For example, under the amended and restated patent license agreement we entered into May 2021 with National Institutes of Health, or NIH, an agency of the U.S.

Public Health Service within the Department of Health and Human Services, we license a patent family related to cytokine-tethered TILs,

which are intended to potentially expand and activate TILs to achieve better efficacy while avoiding systemic side effects of cytokines.

We are currently developing cytokine-tethered TIL products in preclinical studies.

In addition, in January 2020, we obtained a license from Novartis Pharma AG, or Novartis, to develop and commercialize an antibody cytokine-engrafted protein, which we refer to as IOV-3001.

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

We are currently conducting IND enabling studies of this novel IL-2 analog.

Novartis is also entitled to low-to-mid single digit percentage royalties from commercial sales of IOV-3001.

Investigator-Sponsored Trials

Through our academic collaborators, we are also exploring the potential for TIL therapies in additional indications.

As part of our collaboration program with The University of Texas M.D.

Anderson Cancer Center, or MDACC, two Phase 2 trials were initiated in 2018.

Both trials are sponsored by MDACC.

The first trial, NCT03449108, is intended to allow for investigation of LN-145 manufactured by us using our manufacturing processes to treat patients with soft tissue sarcoma, osteosarcoma, platinum resistant ovarian cancer, and thyroid cancer.

A second trial under the collaboration with MDACC, NCT03610490, is active as well.

This trial is treating patients with platinum resistant ovarian cancer, pancreatic and colorectal cancer.

This trial uses TIL manufactured by MDACC using urelumab, a 4-1BB agonistic antibody, as part of the manufacturing process.

The first trial, NCT03449108, investigates LN-145 manufactured by us, using our manufacturing processes, to treat patients with soft tissue sarcoma, osteosarcoma, platinum resistant ovarian cancer, and thyroid cancer.

A second trial under the collaboration with MDACC, NCT03610490, was previously active.

This trial treated patients with platinum resistant ovarian cancer, pancreatic and colorectal cancer with TIL manufactured by MDACC.

The data obtained using this manufacturing process may not be representative of our data using our Gen 2 manufacturing process.

We are also collaborating with CHUM, Yale University, and Moffitt on investigator-sponsored clinical trials of TIL therapies in other indications.

The clinical trials sponsored by CHUM and Moffitt use, or will use, TIL manufactured by different manufacturing processes, which may not be representative of our data using our Gen 2 manufacturing process.

Our current product candidate pipeline and selected investigator-sponsored proof-of-concept studies are summarized in the figure below:

We have developed a third-generation manufacturing process known as Gen 3.

Gen 3 is a shorter process than Gen 2.

We are using Gen 3 manufacturing in Cohort 1C of the IOV-COM-202 trial in melanoma and in Cohort 3 of the IOV-LUN-202 trial in NSCLC and have previously used it in the C-145-03 trial in HNSCC.

We currently own more than twenty granted or allowed U.S.

and international patents for compositions and methods of treatment in a broad range of cancers relating to our Gen 2 manufacturing process, including U.S.

We also collaborate with many other academic institutions using our TIL therapies.

For example, a trial in collaboration with The Ohio State University, NCT05176470, is expected to start recruiting in 2022, and explores the use of lifileucel in high-risk melanoma in the neoadjuvant setting.

Intellectual Property

We have developed our own patent portfolio based on internal research and development activities.

As a result, we now own a number of pending patent applications and granted patents in the fields of TIL therapy, MIL therapy, and PBL therapy, TIL, MIL, and PBL manufacturing processes, and TIL, MIL, and PBL expansion methods.

For example, we currently own more than 35 U.S.

patents related to TIL therapy, including patents directed to compositions and methods of treatment in a broad range of cancers, such as U.S.

11,141,438 11,168,303;

and 11,241,456.

We anticipate that the terms of these patents related to Gen 2 manufacturing processes will extend to January 2038, not including any patent term extensions or adjustments that may be available.

More than 30 of these patents are related to our Gen 2 TIL manufacturing processes and have terms that we anticipate will extend to January 2038, not including any patent term extensions or adjustments that may be available.

Our owned and licensed intellectual property portfolio also includes patent applications relating to TIL, MIL, and PBL therapies;

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stable and transient genetically-modified TIL therapies;

methods of using immune checkpoint inhibitors in combination with TIL therapies;

methods of using ICIs in combination with TIL therapies;

TIL selection technologies;

and methods of treating patient subpopulations.

In January 2020, we obtained a license from Novartis to develop and commercialize an antibody cytokine engrafted protein, which we refer to as IOV-3001.

Novartis is also entitled to low-to-mid single digit percentage royalties from commercial sales of IOV-3001.

In addition, in January 2020, we announced a research collaboration and exclusive worldwide licensing agreement with Cellectis, a clinical-stage biopharmaceutical company focused on developing immunotherapies based on gene-edited allogeneic chimeric antigen receptor modified T cells, whereby we licensed certain TALEN technology from Cellectis in order to develop TIL that have been genetically edited to create potentially more potent cancer therapeutics.

The worldwide exclusive license enables us to use TALEN technology addressing multiple gene targets to modify TIL for therapeutic use in several cancer indications.

Financial terms of the license include

development, regulatory and sales milestone payments from us to Cellectis, as well as royalty payments based on net sales of TALEN-modified TIL products.

Impact of COVID-19 on our Business

Operations and Liquidity

The full impact of the novel strain of coronavirus, or 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 our liquidity.

In addition, a recession or market volatility resulting from the COVID-19 pandemic could affect our business.

We have taken proactive, aggressive action throughout the COVID-19 pandemic to protect the health and safety of our employees and expect to continue to implement these measures until we determine that the COVID-19 pandemic is adequately contained for purposes of our business.

We may take further actions as government authorities require or recommend or as we determine to be in the best interests of our employees.

We do not believe that the COVID-19 pandemic had a material impact on our liquidity or results of operations for the year ended December 31, 2021.

Further, to date, the COVID-19 pandemic has not had significant effects on our clinical trial enrollment.

Given the nature and type of our short-term investments in U.S.

government securities, we do not believe that the COVID-19 pandemic will have a material impact on our current investment liquidity.

Although there is uncertainty related to the anticipated impact of the recent COVID-19 pandemic on our future results, we believe our current cash reserves leave us well-positioned to manage our business through this crisis as it continues to unfold.

However, the impacts of the COVID-19 pandemic are broad-reaching and continuing and the financial impacts associated with the COVID-19 pandemic are still uncertain.

The COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the pandemic, and actions that would be taken by governmental authorities to contain the pandemic or to treat its impact, makes it difficult to forecast any effects on our results for the fiscal year ending December 31, 2022.

Despite the economic uncertainty resulting from the COVID-19 pandemic, we intend to continue to focus on the development of our product candidates.

We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations.

In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.

As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

Components of Operating Results

We have not yet generated any revenues since our formation, and we currently do not anticipate that we will generate any significant revenues from the sale or licensing of our product candidates during the 12 months from the date these financial statements are issued.

Our ability to generate revenues in the future will depend on our ability to complete the development of our product candidates and to obtain regulatory approval for them.

Operating Expenses

Research and Development

Research and development expenses include personnel and facility-related expenses, outside contracted services including clinical trial costs, manufacturing and process development costs, research costs and other consulting services.

Research and development costs are expensed as incurred.

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.

We have a history of contracting with third parties that perform various clinical trial activities on our behalf in connection with the ongoing development of our product candidates.

The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow.

We accrue and expense costs for clinical trial activities performed by third parties based upon estimates of work completed to date of the individual trial in accordance with agreements established with contract research organizations and clinical trial sites.

The duration, costs and timing of our clinical trials and development of our product candidates will depend on a number of factors that include, but are not limited to, the number of patients that enroll in the trial, per patient trial costs, number of sites included in the trial, discontinuation rates of patients, duration of patient follow-up, efficacy and safety profile of the product candidate, and the length of time required to enroll eligible patients.

We expect our research and development expenses to continue to increase as we prepare for commercial manufacturing of our products and continue to conduct our clinical trials for other indications.

However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates.

General and Administrative

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, legal, investor relations, facilities, business development, marketing, commercial, information technology and human resources functions.

Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to corporate matters and intellectual property, insurance, public company expenses relating to maintaining compliance with Nasdaq listing rules and SEC requirements, investor relations costs, and fees for accounting and consulting services.

General and administrative costs are expensed as incurred, and we accrue for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from its service providers and adjusting its accruals as actual costs become known.

We anticipate general and administrative expenses will increase as we continue to prepare for commercialization and support an expected growth of the internal general and administrative team.

Interest income, net

Interest income, net results from our interest-bearing cash and investment balances.

Results of Operations for the Years Ended December 31, 2021 and 2020

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Since 2017 our primary source of funds has been from the public sale of our common stock.

We did not generate any revenues during the years ended December 31, 2020 and 2019, respectively, and we currently do not anticipate that we will generate any significant revenues from the sale or licensing of our product candidates during the 12 month period from the date these financial statements are issued.

Our ability to generate revenues in the future will depend on our ability to complete the development of our product candidates and to obtain regulatory approval for them.

Costs and expenses

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Increase (Decrease)

Research and development

Research and development expense

Stock-based compensation expense included in research and development expense

Research and development expense for the year ended December 31, 2021 increased by $57.3 million, or 28%, compared to the year ended December 31, 2020.

The increase was primarily attributable to (i) a $20.9 million increase in payroll and related expenses driven by a higher number of full-time research and development employees and outside services, (ii) a $10.0 million increase for the license to further develop IOV-3001 obtained from Novartis, (iii) a $8.3 million increase in stock-based compensation expenses, and (iv) a $6.6 million increase in clinical trial costs due to an increase in enrollment across all the trials and initiation of new clinical trials.

Further, a $0.8 million increase in research consumables cost contributed to the increase.

These increases were partially offset by lower manufacturing costs by $9.1 million due to decreased production runs in 2020 as a result of completion of enrollment in the melanoma pivotal program and a $2.3 million decrease in research alliance expenses due to the COVID-19 pandemic’s impact on patient enrollment in the clinical trials with our research alliance partners.

We expect our research and development expenses to increase over the next several years as we prepare for commercial manufacturing of our products and continue to conduct our clinical trials for other indications.

However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates.

Additionally, the probability of success for our product candidate will depend on a number of factors, including competition, manufacturing capability and cost efficiency, and commercial viability.

The increase was primarily attributable to (i) a $29.2 million increase in payroll and related expenses and a $21.1 million increase in stock-based compensation expenses, both driven by increased hiring of research and development employees to support our on-going and planned clinical development activities, (ii) a $14.9 million increase in facility and related costs associated with the i CTC and the build-out of our new corporate headquarters office, (iii) a $5.1 million increase in clinical trial costs driven by continued enrollment in our IOV-COM-202 and IOV-LUN-202 clinical trials and purchases of study drug used in these clinical trials, and (iv) a $2.2 million increase in travel and others, including allocated costs associated with the expansion of our infrastructure, including information systems, to further support the growth in the organization and operations associated with our clinical trials and pre-commercial efforts.

These increases were partially offset by a $10.0 million decrease in research alliance costs due to a one-time license fee from Novartis to further develop IOV-3001 which was recognized in full in 2020, and a $5.2 million decrease in manufacturing costs driven by completion of our pivotal clinical trials.

General and Administrative Expense (in thousands)

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Increase (Decrease)

General and administrative

Stock-based compensation expense included in general and administrative

General and administrative expense

Stock-based compensation expense included in general and administrative expense

General and administrative expense for the year ended December 31, 2021 increased by $23.5 million, or 39%, compared to the year ended December 31, 2020.

The increase was primarily attributable to (i) a $8.3 million increase in stock-based compensation expenses and a $7.1 million increase in payroll and related expenses driven by a higher number of full-time general and administrative employees and higher average stock price, (ii) a $2.1 million increase in director’s and officer’s insurance premiums, (iii) a $1.1 million increase in intellectual property legal costs, and (iv) a $1.1 million in market research activities as we prepare for commercialization.

These increases were partially offset by a $0.7 million decrease in travel expenses.

General and administrative expenses include personnel costs for our employees engaged in general and administrative activities, legal fees, and expenses related to marketing and commercial activities, audit and tax fees, consultants and professional services, and general corporate expenses.

We anticipate general and administrative expenses will increase in 2021 as we continue to prepare for commercialization, complete our manufacturing facility and support an expected increase in total headcount.

Interest Income (in thousands)

The increase was primarily attributable to (i) a $9.8 million increase in payroll and related expenses and a $7.8 million increase in stock-based compensation expenses, both resulting from increases in headcount to support the growth in the overall business and related corporate infrastructure (ii) a $4.3 million increase in insurance and intellectual property filing related costs, and (iii) a $2.8 million increase in other costs, including professional fees and costs associated with the build-out of our new headquarter office and IT infrastructure to support the continued growth in the overall company.

These costs were partially offset by a $1.2 million decrease in pre-commercial and marketing costs due to reprioritization of corporate initiatives during the year ended December 31, 2021.

Interest income, net (in thousands)

Years Ended December 31,

Increase (Decrease)

Net interest income

Interest income, net

Interest income results from our interest-bearing cash and investment balances.

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Increase (Decrease)

Research and development expenses

Research and development expense

Stock-based compensation expense included in research and development expense

Research and development expense for the year ended December 31, 2020 increased by $35.7 million, or 22%, compared to the year ended December 31, 2019.

The increase was primarily attributable to (i) a $27.4 million increase in manufacturing costs due to increased production runs and additional manufacturing capacity costs to support the ongoing clinical trials, (ii) a $21.4 million increase in clinical trial costs due to an increase in the number of patients in the clinical trials and purchases of clinical trial drugs, and (iii) a $12.6 million increase in payroll and related expenses and $2.1 million increase in share-based compensation expenses driven by a higher number of full-time research and development employees and dedicated consultants as we expanded our internal research and clinical development programs in 2019.

Further, a $0.8 million increase in research consumables cost contributed to the increase.

General and Administrative Expense (in thousands)

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Increase (Decrease)

General and administrative expenses

General and administrative expense

Stock-based compensation expense included in general and administrative expense

General and administrative expense for the year ended December 31, 2020 increased by $19.4 million, or 47%, compared to the year ended December 31, 2019.

The change was primarily attributable to a $3.8 million increase in payroll and related expenses, $2.2 million increase in stock-based compensation expenses driven by a higher number of full-time general and administrative employees, a $3.2 million increase in intellectual property legal costs and a $2.0 million increase in market research activities as we prepare for commercialization.

Interest Income (in thousands)

These increases were partially offset by a $0.7 million decrease in travel expenses.

Interest income, net (in thousands)

Years Ended December 31,

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Interest income results from our interest-bearing cash and investment balances.

Net interest income increased by $4.7 million due to the higher interest income earned from full-year short-term investments for a full-year as compared to the prior year when we started purchasing short-term investments during the second half of 2018.

As our cash, cash equivalents and short term investment balance decrease, we anticipate interest income to decrease.

Net interest income decreased by $7.0 million, or 75%, due primarily to a decrease in interest rates in 2020 as compared to the same period in 2019.

Net Loss (in thousands)

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Net loss for the year ended December 31, 2020 increased by $62.0 million or 31%, compared to the year ended December 31, 2019.

The increase in our net loss was due to the continued expansion of our research and development activities, increased clinical trials and manufacturing activities, and the overall growth of our corporate infrastructure.

The increase in our net loss was due to the continued expansion of our research and development activities, increased clinical trials, and the overall growth of our corporate infrastructure.

Liquidity and Capital Resources

We have incurred losses and generated negative cash flows from operations since inception.

We expect to continue to incur significant losses in 2021 and may incur significant losses and negative cash flows from operations for the foreseeable future.

Historically, we have funded our operations from various public and private offerings of our equity securities (both common stock and preferred stock), from option and warrant exercises, and from interest income.

Since 2017, our primary source of funds has been from the public sale of our common stock.

We currently do not anticipate that we will generate any significant revenues from the sale or licensing of any products during the 12 months from the date these financial statements are issued.

We expect to further increase our research and development activities, especially continuing pre-commercial activities and completing the construction of our tenant improvements to the i CTC facility and new corporate headquarters office, which will increase the amount of cash we will use during 2022 and beyond.

Specifically, we expect increased spending on clinical trials, research and development activities, higher payroll expenses as we increase our professional and scientific staff and continue our expansion of manufacturing activities including completion of i CTC

facility as well as completing the construction of the tenant improvement to our new corporate headquarters office in San Carlos, California.

We currently anticipate making aggregate capital expenditures between approximately $10.0 million and $11.0 million during the next 12 months, which is expected to primarily include equipment to be used for clinical trials, research and manufacturing at i CTC, as well as spending associated with the expansion of our manufacturing facilities of offices.

As of December 31, 2021, we had $602.1 million in cash, cash equivalents, investments, and restricted cash ($78.2 million of cash and cash equivalents, $426.2 million in short-term investments, $91.6 million in long-term investments and $6.1 million in restricted cash).

Based on the funds we have available as of the date of the filing of this Annual Report on Form 10-K, we believe that we have sufficient capital to fund our anticipated operating expenses and capital expenditure for at least 12 months from the date of filing this report.

Corporate Capitalization

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The shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock do not have voting rights or accrue dividends.

On December 28, 2017, we filed a shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $250 million, which we refer to as the 2017 Shelf Registration Statement.

The 2017 Shelf Registration Statement was declared effective on January 19, 2018.

On January 29, 2018, we sold 15,000,000 shares of our common stock at a public offering price of $11.50 per share pursuant to the 2017 Shelf Registration Statement.

We received gross proceeds of approximately $172.5 million and net proceeds of approximately $162.0 million, after deducting underwriting discounts and offering expenses.

The 2017 Shelf Registration Statement was terminated upon effectiveness of the 2018 Shelf Registration Statement (as discussed below).

On September 7, 2018, we filed a shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $250 million, which we refer to as the 2018 Shelf Registration Statement.

The 2018 Shelf Registration Statement was declared effective on October 3, 2018 and the aggregate amount of securities we could issue thereunder was subsequently increased by $50 million through a post-effective amendment that we filed on October 11, 2018, pursuant to Rule 462(b) of the Securities Act.

On October 17, 2018, we sold 25,300,000 shares of our common stock at a public offering price of $9.97 per share pursuant to the 2018 Shelf Registration Statement.

We received gross proceeds of approximately $252.2 million and net proceeds of $236.7 million, after deducting underwriting discounts and offering expenses.

The 2018 Shelf Registration Statement is no longer available for future offerings.

On September 17, 2019, we filed a shelf registration statement with the SEC for the issuance up to an aggregate amount of $400 million, which we refer to as the 2019 Shelf Registration Statement.

The 2019 Shelf Registration Statement was declared effective on September 24, 2019.

On September 17, 2019, we filed a shelf registration statement with the SEC for the issuance up to an aggregate amount of $400 million (the “2019 Shelf Registration Statement”), which was declared effective on September 24, 2019.

The 2019 Shelf Registration Statement was terminated upon effectiveness of the 2020 Automatic Shelf Registration Statement (as discussed below).

No shares were sold under the 2019 Shelf Registration Statement prior to its termination.

On May 27, 2020, we filed an automatic shelf registration statement with the SEC for the issuance of an indeterminate amount of Shelf Securities, which we refer to as the 2020 Automatic Shelf Registration Statement.

The 2020 Automatic Shelf Registration Statement was immediately effective upon filing with the SEC, and the 2019 Shelf Registration Statement was simultaneously terminated.

On June 2, 2020, we sold 19,475,806 shares of our common stock at a public offering price of $31.00 per share pursuant to the 2020 Automatic Shelf Registration Statement.

On May 27, 2020, we filed an automatic shelf registration statement with the SEC for the issuance of an indeterminate amount of Shelf Securities (the “2020 Automatic Shelf Registration Statement”), which was immediately effective upon filing with the SEC.

Upon filing of the 2020 Automatic Shelf Registration Statement, the 2019 Shelf Registration Statement was terminated.

On June 2, 2020, we sold 19,475,806 shares of our common stock at a public offering price of $31.00 per share pursuant to the 2020 Automatic Shelf Registration Statement (the “June 2020 Public Offering”).

We received gross proceeds of $603.7 million and net proceeds of $567.0 million, after deducting underwriting discounts and offering expenses.

Following the public offering, the 2020 Automatic Shelf Registration Statement remains available for the future issuance of an indeterminate amount of Shelf Securities.

On February 8, 2021, we 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 we may, from time to time, in our sole discretion, issue and sell through Jefferies, acting as sales agent, up to $350.0 million of shares of our common stock.

The issuance and sale, if any, of shares of our common stock under the Sales Agreement will be made pursuant to a prospectus supplement, dated February 8, 2021, to the 2020 Automatic Shelf Registration Statement.

During the year ended December 31, 2021, we received $203.2 million in net proceeds through the sale of 6,474,099 shares of our common stock.

In the future, we may periodically offer one or more of these securities in amounts, prices and terms to be announced when and if the securities are offered.

If any of the securities covered by the 2020 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of such offering at that time.

We are currently engaged in the development of therapeutics to fight cancer.

We do not have any commercial products and have not yet generated any revenues from our biopharmaceutical business.

We currently do not anticipate that we will generate any

significant revenues from the sale or licensing of any products during the 12 months from the date these financial statements are issued.

We have incurred a net loss of $259.6 million for the year ended December 31, 2020 and used $205.1 million of cash in our operating activities for the year ended December 31, 2020.

As of December 31, 2020, we had $629.4 million of cash, cash equivalents, and short-term investments ($67.3 million of cash and cash equivalents and $562.1 million of short-term investments), $656.5 million of stockholders’ equity and had working capital of $581.2 million.

We expect to further increase our research and development activities, especially continuing pre-commercial activities and completing the construction of our tenant improvements to our new commercial manufacturing facility, which will increase the amount of cash we will use during 2021 and beyond.

Cash flows from operating, investing and financing activities (in thousands):

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Operating cash flow is derived by adjusting our net loss for non-cash items and changes in operating assets and liabilities.

Net cash used in operating activities for the year ended December 31, 2020 increased by $46.2 million to $205.1 million in 2020 from $158.9 million for the same period in 2019.

The increase was primarily attributable to (i) a $62.0 million increase in net loss due to increased costs in research and development activities and growth of our corporate infrastructure, which was adjusted by (ii) a $16.6 million increase in stock-based compensation costs.

Included in $46.2 million of the increase in cash used in operating activities was the $10.0 million upfront payment we made to Novartis in connection with the license for IOV-3001.

Net cash used in operating activities for the year ended December 31, 2019 increased by $57.6 million to $158.9 million in 2019 from of $101.2 million for the same period in 2018.

The increase was primarily attributable to (i) a $73.4 million increase in net loss, which was adjusted by (ii) a $4.2 million increase in stock-based compensation expense, (iii) a $7.0 million increase in noncash lease expense.

Further, it was adjusted for a $11.2 million increase in accounts payable primarily due to increases in activities by our company and the timing of payments, which were offset by a $6.1 million increase in right-of-use assets due to the adoption of the new lease accounting standard.

Net cash used in operating activities for the year ended December 31, 2018 increased by $22.5 million to $101.2 million from $78.8 million in 2017.

The increase was primarily attributable to a $31.5 million increase in net loss, which was adjusted by a $8.1 million increase in stock-based compensation costs.

Net cash used in operating activities for the year ended December 31, 2021 was $227.9 million compared to $205.1 million for the same period in 2020.

The increase of $22.8 million in cash used in operating activities was primarily due to an increase in net loss driven by increased costs in research and development and pre-commercial activities, which was partially offset by an increase in non-cash charges of $38.3 million primarily driven by higher stock-based compensation expenses, amortization of premiums on investments and operating right-of-use assets associated with our office and manufacturing facility as well as embedded leases, and depreciation expenses.

In addition, it reflects a reduction in our operating lease liabilities associated with payments on lease arrangements, offset by an increase in accruals and accounts payable primarily related to our increased workforce, overall growth in the business and operations, and the timing of vendor invoicing and related payments.

Net cash used in operating activities for the year ended December 31, 2020 was $205.1 million compared to $158.9 million for the same period in 2019.

The increase of $46.2 million in cash used in operating activities was primarily attributable to an increase in net loss and increase in accruals primarily related to our research and development activities, which were partially offset by an increase in non-cash charges of $22.8 million, primarily driven by higher-stock-based compensation expenses and amortization of premiums on investments.

Net cash used in operating activities for the year ended December 31, 2019 was $158.9 million compared to $101.2 million for the same period in 2018.

The increase of $57.7 million in cash used in operating activities was due to an increase in net loss and an increase in operating lease payments, which were partially offset by an increase in non-cash charges of $9.0 million, primarily driven by higher-stock-based compensation expenses and amortization of right-of-use assets, and an increase in accruals due to the timing of vendor invoicing and related payments.

Investing Activities

Net cash (used in) / provided by investing activities primarily consists of purchases, maturities of our short-term investments and capital expenditures.

Net cash (used in) / provided by investing activities primarily consists of purchases, maturities of our investments and capital expenditures.

Net cash provided by investing activities for the year ended December 31, 2021 was $0.1 million compared to net cash used in investing activities of $317.9 million.

The increase in cash provided by investing activities of $318.0 million was primarily due to the timing of maturities and purchases of investments and lower capital expenditures in 2021.

Net cash used in investing activities for the year ended December 31, 2020 was $317.9 million compared to net cash provided by $90.0 million for the same period in 2019.

The increase in net cash used in investing activities was due primarily to a $368.0 million increase in net purchases of short-term investments from our June 2020 public offering and a $39.9 million increase in the purchase of property and equipment for the commercial manufacturing facility.

The increase in net cash used in investing activities of $407.9 million was due primarily to purchases of investments with the proceeds received from the June 2020 Public Offering and an increase in capital expenditures to support the i CTC build-out.

Net cash provided by investing activities for the year ended December 31, 2019 was $90.0 million compared to net cash used in investing activities of $386.3 million for the same period in 2018.

The increase in net cash provided in 2019 was due primarily to $482.0 million increase in net maturities of short-term investments, which was partially offset by a $5.7 million increase in the purchases of property and equipment.

Net cash used in investing activities for the year ended December 31, 2018 was $386.3 million compared to net cash provided in investing activities of $58.7 million for the same period in 2017.

The increase in net cash used in 2018 was due to our reinvestment of the proceeds from January 2018 public offering.

The increase in net cash provided in 2019 was due primarily to the timing of maturities and purchases of investments.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2021 was $239.3 million compared to net cash provided of $576.4 million.

The net cash provided by financing activities during the year ended December 30, 2021 related to $203.2 million cash proceeds from our “at the market” offering and $33.5 million of cash receipts from the issuance of common stock upon the exercise of stock options.

The net cash provided by financing activities during the year ended December 31, 2020 primarily related to $567.0 million cash proceeds received in the June 2020 public offering and $9.7 million cash proceeds from issuance of common stock upon exercise of stock options in 2021.

Net cash provided by financing activities for the year ended December 31, 2020 was $576.4 million compared to net cash provided of $6.1 million for the same period in 2019.

The increase in net cash provided was primarily due to the cash proceeds of $567.0 million from the June 2020 public offering and a $3.2 million increase in proceeds from the exercise of stock options.

The net cash provided in financing activities during the year ended December 31, 2020 primarily related to $567.0 million received from the June 2020 Public Offering and $9.7 million cash proceeds received in issuing common stock upon exercise of stock options.

Net cash provided by financing activities for the year ended December 31, 2019 related to cash proceeds received in issuing common stock upon exercise of stock options.

Net cash provided by financing activities for the year ended December 31, 2019 was $6.1 million compared to net cash provided of $424.3 million for the same period in 2018.

The decrease in net cash provided was due primarily to higher proceeds in 2018 obtained from the January 2018 public offering and exercise of warrants.

Net cash provided by financing activities of for the year ended December 31, 2018 was $424.3 million compared to $58.7 million for the same period in 2017.

The increase was primarily due to a $345.2 million increase in cash proceeds from the public offering in January 2018 as compared to the October 2017 public offering, and a $19.4 million increase in cash proceeds from the exercise of warrants and stock options.

Significant Accounting Policies and Recent Accounting Standards

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures.

On an ongoing basis, we evaluate our significant accounting policies and estimates.

We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Estimates are assessed each period and updated to reflect current information.

Actual results may differ from these estimates.

See Note 2 of the financial statements for a discussion of our significant accounting policies.

Net cash provided by financing activities for the year ended December 31, 2019 related to cash proceeds received in issuing common stock upon exercise of stock options.

The net cash provided by financing activities of $424.3 million for the year ended December 31, 2018 primarily related to $398.8 million of cash proceeds received from January and October 2018 public offerings, $15.8 million cash proceeds from exercise of warrants, and $10.0 million cash proceeds from issuing common stock upon exercise of stock options.

Contractual Obligations

The following table summarizes our non-cancellable contractual obligations as of December 31, 2021 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

Payments due by period

Operating lease obligations - facilities (1)

Total (2), (3)

Our operating lease obligations consist of obligations under non-cancellable operating leases for our facilities in San Carlos, CA, Philadelphia, PA, and Tampa, FL.

Excluded from the above are contractual obligations with certain Contract Manufacturing Organizations, or CMO, for the manufacturing facilities and minimum fixed commitment fees included in our manufacturing contracts, such as personnel, general support fee, and minimum production or material fees.

These obligations met the conditions of embedded leases under Topic ASC 842 and were included in the Operating lease liabilities in the Consolidated Balance Sheets.

However, these contracts are cancellable upon prior notice and as a result, are not included in the above table.

We acquire assets still in development and enter into research and development arrangements with third parties that often require milestone and royalty payments to the third-party contingent upon the occurrence of certain future events linked to the success of the asset in development.

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In addition, these arrangements often give us the discretion to unilaterally terminate development of the product, which would allow us to avoid making the contingent payments.

Our current non-cancellable contractual obligations as of December 31, 2020 that will require future cash payments are as follows (in thousands):

Payments due by period

Contractual Obligations

Operating lease obligations

CMO contractual obligations

Operating lease obligations consist of obligations under non-cancelable operating leases for our facilities in San Carlos, CA, Philadelphia, PA, Tampa, FL, and New York, NY.

Contract Manufacturing Organization, or CMO, contractual obligations consist of embedded lease obligations for the manufacturing facilities and minimum fixed commitment fees included in our manufacturing contracts, such as personnel, general support fee, and minimum production or material fees.

See Note 10 of the financial statements.

The contractual obligations table above excludes approximately $40 million over the next year for equipment and construction costs for our commercial-scale production facility in Philadelphia, PA.

Impact of COVID-19 on our Business

Operations and Liquidity

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

In addition, a recession or market volatility resulting from the COVID-19 pandemic could affect our business.

We have taken proactive, aggressive action throughout the COVID-19 pandemic to protect the health and safety of our employees, and expect to continue to implement these measures until we determine that the COVID-19 pandemic is adequately contained for purposes of our business.

We may take further actions as government authorities require or recommend or as we determine to be in the best interests of our employees.

We do not believe that the COVID-19 pandemic had a material impact on our liquidity or results of operations for the year ended December 31, 2020.

Further, to date, the COVID-19 pandemic has not had significant effects on our clinical trial enrollment.

Given the nature and type of our short-term investments in U.S.

government securities, we do not believe that the COVID-19 pandemic will have a material impact on our current investment liquidity.

However, the impacts of the COVID-19 pandemic are broad-reaching and continuing and the financial impacts associated with the COVID-19 pandemic are still uncertain.

Despite the economic uncertainty resulting from the COVID-19 pandemic, we intend to continue to focus on the development of our product candidates.

In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.

As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

The contractual obligations table above excludes estimated equipment and construction costs of approximately $10.0 million to $11.0 million over the next year for the i CTC facility in Philadelphia, PA and our new corporate headquarters’ office in San Carlos, CA.

Off-Balance Sheet Arrangements

At December 31, 2020, we had no obligations that would require disclosure as off-balance sheet arrangements.

As of December 31, 2021, we did not have, and currently do not have, any off-balance sheet arrangements.

Critical Accounting Estimates

Our accounting policies are more fully described in Note 2 of the consolidated financial statements included in this Annual Report on Form 10-K.

As described in Note 2, the preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures.

On an ongoing basis, we evaluate our significant accounting policies and estimates.

Estimates are assessed each period and updated to reflect current information.

Actual results may differ from these estimates.

We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

Accrued Research and Development Costs

Research and development costs are expensed as incurred.

Clinical development costs compose a significant component of research and development costs.

We have a history of contracting with third parties, including contract research organizations (“CROs”), independent clinical investigators, and contract manufacturing organizations (“CMOs”) that perform various clinical trial activities on our behalf in connection with the ongoing development of our product candidates.

The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow.

We accrue and expense costs for clinical trial activities performed by third parties based upon estimates of work completed to date for each clinical trial in accordance with agreements established with CROs, hospitals, and clinical investigators.

Accruals for CROs and CMOs are recorded based on estimates of services received and efforts expended pursuant to agreements established with CROs, CMOs and other outside service providers.

We determine our estimates through discussions with internal clinical stakeholders and outside service providers as to the progress or stage of completion of clinical trials or services and the contracted fee to be paid for such services.

Included in our clinical development costs are investigator costs, which are costs associated with treatments administered at clinical sites as required under each clinical study protocol.

Our estimates for clinical investigator costs and timing of expense recognition will depend on a number of factors that include, but are not limited to, (i) the overall number of patients that enroll in the trial at each individual site, (ii) the length of study enrollment period, (iii) discontinuation and completion rates of patients, (iv) duration of patient safety follow-ups, (v) the number of sites included in the clinical trial, and (vi) the contracted fee of each participating site for patient treatment while on study, which can vary greatly for several reasons including, but not limited to, geographic region, medical center or physician costs, and overhead costs.

In addition, our estimates for per patient trial costs will vary based on a number of factors that include, but are not limited to, the extent of additional treatments that may be administered by investigators as a result of patient health status, recoverability of patient costs through insurance carriers of patients, and unanticipated cost of injuries incurred as a result of the study treatment.

We accrue for estimated expenses resulting from obligations under investigator site agreements as the timing of payments does not always timely align with the periods over which the treatments are administered by the clinical investigators.

These estimates are typically based on contracted amounts, patient visit data, discussions with internal clinical stakeholders and outside service providers, and historical look-back analysis of actual payments made to date.

We make judgements and estimates in determining the accrual balance in each reporting period.

In the event advance payments are made to a CRO, CMO or other outside service provider, the payments are recorded within prepaid expenses and other current assets and subsequently recognized as research and development expense when the associated services have been performed.

As actual costs become known, we adjust our estimates, liabilities and assets.

Inputs used in our determination of estimates discussed above may vary from actual, which will result in adjustments to research and development expense in future periods.

Changes in these estimates that result in material changes to our accruals could materially affect our results of operations.

Our historical estimates have not been materially different from actual amounts recorded.

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 7. Management’s Discussion and Analysis