MUSTANG BIO, INC. 10-K

Item 9A. Controls and Procedures. ​ Disclosure Controls and Procedures Controls and Procedures Disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) are designed only to provide reasonable assurance that they will meet their objectives. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness, as of December 31, 2020, of the design 68 ​ Table of Contents and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Internal Control over Financial Reporting Management’s Report on Internal Control over Financial Reporting. 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). Internal control over financial reporting refers to the process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles (“GAAP”), and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on the financial statements. Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making the assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013) . Based on our assessment, our management has concluded that, as of December 31, 2020, our internal controls over financial reporting were effective based upon those criteria. Changes in Internal Controls over Financial Reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information ​ None. ​ PART III Item 10. Directors, Executive Officers and Corporate Governance ​ The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2021 Annual Meeting of Stockholders. 69 ​ Table of Contents ​ Item 11. Executive Compensation ​ The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2021 Annual Meeting of Stockholders. ​ Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ​ The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2021 Annual Meeting of Stockholders. ​ Item 13. Certain Relationships and Related Transactions, and Director Independence. ​ The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2021 Annual Meeting of Stockholders. ​ Item 14. Principal Accounting Fees and Services. ​ The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2021 Annual Meeting of Stockholders. ​ PART IV Item 15. Exhibits, Financial Statement Schedules. ​ (a) Financial Statements. The following financial statements are filed as part of this Form 10-K: ​ Report of Independent Registered Public Accounting Firm F-2 Financial Statements: Balance Sheets as of December 31, 2020 and 2019 F-3 Statements of Operations for the Years Ended December 31, 2020 and 2019 F-4 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2020 and 2019 F-5 Statements of Cash Flows for the Years Ended December 31, 2020 and 2019 F-6 Notes to Financial Statements F-7 - F-30 ​ (b) Exhibits. ​ Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation of Mustang Bio, Inc. (formerly Mustang Therapeutics, Inc.), dated July 26, 2016. * Filed as Exhibit 3.1 on the Company’s Form 1012G filed on July 28, 2016. 3.2 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Mustang Bio, Inc., dated June 14, 2018. * Filed as Exhibit 3.1 on the Company’s Form 10-Q filed on August 13, 2018. 3.3 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Mustang Bio, Inc., dated September 30, 2019. * Filed as Exhibit 3.1 on the Company’s Form 8-K filed on September 30, 2019. 70 ​ Table of Contents Exhibit No. Description ​ 3.4 ​ ​ Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Mustang Bio, Inc., dated December 4, 2020. * Filed as Exhibit 3.1 on the Company’s Form 8K filed on December 4, 2020. ​ 3.5 ​ Bylaws of Mustang Bio, Inc. * Filed as Exhibit 3.2 on the Company’s Form 1012G filed on July 28, 2016. 4.1 Specimen certificates evidencing shares of common stock, Class A common stock and Class A preferred stock. * Filed as Exhibit 4.1 on the Company’s Form 1012G filed on July 28, 2016. 4.2 Form of warrant agreement.* Filed as Exhibit 4.2 on the Company’s Form 1012G filed on July 28, 2016. 4.3 Description of Securities of Mustang Bio, Inc. ** 10.1 Second Amended and Restated Founders Agreement between Fortress Biotech, Inc. and Mustang Bio, Inc., dated July 26, 2016. * Filed as Exhibit 10.1 on the Company’s Form 1012G filed on July 28, 2016. 10.2 Management Services Agreement between Fortress Biotech, Inc. and Mustang Bio, Inc., dated March 13, 2015. * Filed as Exhibit 10.2 on the Company’s Form 1012G filed on July 28, 2016. 10.3 Future Advance Promissory Note to Fortress Biotech, Inc., dated May 5, 2016. * Filed as Exhibit 10.3 on the Company’s Form 1012G filed on July 28, 2016. 10.4 Promissory Note to NSC Biotech Venture Fund I, LLC, dated July 5, 2016. * Filed as Exhibit 10.4 on the Company’s Form 1012G filed on July 28, 2016. 10.5 Common Stock Warrant issued by Mustang Bio, Inc. to NSC Biotech Venture Fund I, LLC, dated July 5, 2016. * Filed as Exhibit 10.5 on the Company’s Form 1012G filed on July 28, 2016. 10.6 License Agreement by and between Mustang Bio, Inc. and City of Hope, dated March 17, 2015. # Filed as Exhibit 10.6 on the Company’s Form 1012G filed on July 28, 2016. 10.7 Sponsored Research Agreement by and between Mustang Bio, Inc. and City of Hope, dated March 17, 2015. * Filed as Exhibit 10.7 on the Company’s Form 1012G filed on July 28, 2016. 10.8 Mustang Bio, Inc. 2016 Incentive Plan. †* Filed as Exhibit 10.8 on the Company’s Form 1012G filed on July 28, 2016. 10.9 Non-Employee Directors Compensation Plan. †* Filed as Exhibit 10.9 on the Company’s Form 1012G filed on July 28, 2016. 10.10 Agreement with Chord Advisors, LLC, dated April 8, 2016. * Filed as Exhibit 10.10 on the Company’s Form 1012G filed on July 28, 2016. 10.11 Agreement with Caribe BioAdvisors, LLC, dated January 1, 2017. Filed as Exhibit 10.11 on the Company’s Form 10K filed on March 31, 2017. 71 ​ Table of Contents Exhibit No. Description 10.12 Exclusive License Agreement with The Regents of the University of California, dated March 17, 2017. # Filed as Exhibit 10.4 on the Company’s Form 10Q filed on August 14, 2017. 10.13 Exclusive License Agreement - IV/ICV with City of Hope, dated February 17, 2017. # Filed as Exhibit 10.5 on the Company’s Form 10Q filed on August 14, 2017. 10.14 Amended and Restated Exclusive License Agreement - CD123 with City of Hope, dated February 17, 2017. # Filed as Exhibit 10.14 on the Company’s Form 10K filed on March 31, 2017. 10.15 Amended and Restated Exclusive License Agreement - IL13R a 2 with City of Hope, dated February 17, 2017. # Filed as Exhibit 10.15 on the Company’s Form 10K filed on March 31, 2017. 10.16 Amended and Restated Exclusive License Agreement - Spacer with City of Hope, dated February 17, 2017. # Filed as Exhibit 10.16 on the Company’s Form 10K filed on March 31, 2017. 10.17 Employment Agreement between Manuel Litchman and Mustang Bio, Inc., made effective as of April 24, 2017 Filed as Exhibit 10.1 on the Company’s Form 8K filed on April 24, 2017. 10.18 License Agreement dated May 31, 2017 by and between Mustang Bio, Inc. and City of Hope (CSI). # Filed as Exhibit 10.1 on the Company’s Form 10Q/A filed on November 14, 2017. 10.19 License Agreement dated May 31, 2017 by and between Mustang Bio, Inc. and City of Hope (PSCA). # Filed as Exhibit 10.2 on the Company’s Form 10Q/A filed on November 14, 2017. ​ ​ ​ 10.20 License Agreement dated May 31, 2017 by and between Mustang Bio, Inc. and City of Hope (HER2). # Filed as Exhibit 10.3 on the Company’s Form 10Q/A filed on November 14, 2017. 10.21 Lease Agreement, by and between the Company and WCS - 377 Plantation Street, Inc., dated October 27, 2017. Filed as Exhibit 10.1 on the Company’s Form 10Q filed on November 14, 2017. 10.22 Venture Loan and Security Agreement, dated March 29, 2019, by and between the Company and Horizon Technology Finance Corporation. * Filed as Exhibit 10.1 on the Company’s Form 8K filed on April 4, 2019. 10.23 ​ ​ 23.1 Mustang Bio, Inc. 2019 Employee Stock Purchase Plan†* Filed as Exhibit 10.1 on the Company’s Form 10-Q filed on August 9, 2019. ​ Consent of Independent Registered Public Accounting Firm, BDO USA, LLP 24.1 Power of Attorney (included on signature page). 31.1 Certification of President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 72 ​ Table of Contents Exhibit No. Description 32.1 Certification of President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101 The following financial information from Mustang Bio, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statement of Stockholders’ Equity, (iv) the Statements of Cash Flows, and (v) Notes to the Financial Statements (filed herewith). 104 ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101) # Confidential treatment has been granted with respect to omitted portions of this exhibit. ​ † Indicates management contract or compensatory plan or arrangement. ​ * Previously Filed. ​ ** Filed herewith. ​ Item 16. Form 10-K Summary. ​ None. ​ ​ ​ 73 ​ Table of Contents ​ INDEX TO FINANCIAL STATEMENTS ​ Report of Independent Registered Public Accounting Firm F-2 Balance Sheets as of December 31, 2020 and 2019 F-3 Statements of Operations for the Years Ended December 31, 2020 and 2019 F-4 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2020 and 2019 F-5 Statements of Cash Flows for the Years Ended December 31, 2020 and 2019 F-6 Notes to Financial Statements F-7 – F-30 ​ ​ ​ F-1 ​ Table of Contents ​ Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Mustang Bio, Inc. New York, New York Opinion on the Financial Statements We have audited the accompanying balance sheets of Mustang Bio, Inc. (the “Company”) as of December 31, 2020 and 2019, the related statements of operations, stockholders’ equity, and cash flows for each of the two 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 at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company's auditor since 2016. ​ ​ /s/ BDO USA, LLP ​ Boston, Massachusetts March 24, 2021 ​ ​ ​ F-2 ​ Table of Contents MUSTANG BIO, INC. BALANCE SHEETS (in thousands, except for share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2020 2019 ​ ​ ​ ​ ​ ​ ASSETS ​ ​ Current Assets: ​ ​ Cash and cash equivalents ​ $ 97,804 ​ $ 61,413 Other receivables - related party ​ 15 ​ 19 Prepaid expenses and other current assets ​ 1,715 ​ 1,631 Total current assets ​ 99,534 ​ 63,063 ​ ​ ​ Property, plant and equipment, net ​ 7,529 ​ 6,779 Fixed assets - construction in process ​ 499 ​ 1,157 Restricted cash ​ 1,000 ​ 1,000 Other assets ​ 250 ​ 250 Operating lease right-of-use asset, net ​ ​ 1,088 ​ ​ 1,196 Total Assets ​ $ 109,900 ​ $ 73,445 ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ Current Liabilities: ​ ​ Accounts payable and accrued expenses ​ $ 8,747 ​ $ 5,668 Payables and accrued expenses - related party ​ ​ 490 ​ ​ 596 Short-term notes payable ​ — ​ 1,250 Operating lease liabilities - short-term ​ ​ 278 ​ ​ 257 Total current liabilities ​ 9,515 ​ 7,771 ​ ​ ​ Notes payable ​ ​ — ​ ​ 12,179 Operating lease liabilities - long-term ​ ​ 1,950 ​ ​ 1,843 Total Liabilities ​ 11,465 ​ 21,793 ​ ​ ​ Commitments and Contingencies ​ ​ ​ ​ ​ Stockholders’ Equity ​ ​ Preferred stock ($ 0.0001 par value), 2,000,000 shares authorized, 250,000 shares of Class A preferred stock issued and outstanding as of December 31, 2020 and December 31, 2019, respectively ​ — ​ — Common Stock ($ 0.0001 par value), 125,000,000 shares authorized ​ ​ Class A common shares, 845,385 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively ​ — ​ — Common shares, 70,920,693 and 39,403,519 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively ​ 7 ​ 4 Common stock issuable, 2,103,122 and 1,206,667 shares as of December 31, 2020 and December 31, 2019, respectively ​ 7,939 ​ 4,923 Additional paid-in capital ​ 275,963 ​ 172,184 Accumulated deficit ​ ( 185,474 ) ​ ( 125,459 ) Total Stockholders’ Equity ​ 98,435 ​ 51,652 Total Liabilities and Stockholders’ Equity ​ $ 109,900 ​ $ 73,445 ​ The accompanying notes are an integral part of these financial statements. F-3 Table of Contents MUSTANG BIO, INC. STATEMENTS OF OPERATIONS (in thousands, except for share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2020 2019 Operating expenses: ​ ​ Research and development ​ $ 37,237 ​ $ 30,042 Research and development – licenses acquired ​ 10,064 ​ 6,273 General and administrative ​ 9,505 ​ 9,570 Total operating expenses ​ 56,806 ​ 45,885 Loss from operations ​ ( 56,806 ) ​ ( 45,885 ) ​ ​ ​ Other income (expense) ​ ​ Interest income ​ 708 ​ 1,263 Interest expense ​ ( 3,917 ) ​ ( 1,767 ) Total other income (expense) ​ ( 3,209 ) ​ ( 504 ) Net Loss ​ $ ( 60,015 ) ​ $ ( 46,389 ) ​ ​ ​ ​ Net loss per common share outstanding, basic and diluted ​ $ ( 1.14 ) ​ $ ( 1.29 ) ​ ​ ​ Weighted average number of common shares outstanding, basic and diluted ​ 52,588,781 ​ 36,061,811 ​ The accompanying notes are an integral part of these financial statements. ​ F-4 Table of Contents MUSTANG BIO, INC. STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common ​ Additional ​ ​ ​ ​ Total ​ ​ Class A Preferred Stock ​ Class A Common Shares ​ Common Shares ​ Stock ​ Paid-in ​ Accumulated ​ Stockholders’ ​ Shares Amount Shares Amount Shares Amount Issuable Capital Deficit Equity Balances at December 31, 2018 250,000 ​ $ — 1,000,000 ​ $ — 26,610,183 ​ $ 3 ​ $ 2,085 ​ $ 113,378 ​ $ ( 79,070 ) ​ $ 36,396 Common stock issuable - Founders Agreement — ​ — — ​ — — ​ — ​ 4,923 ​ — ​ — ​ 4,923 Issuance of common shares - Founders Agreement — ​ — — ​ — 709,314 ​ — ​ ( 2,085 ) ​ 2,085 ​ — ​ — Issuance of common shares - Equity fee on Horizon Notes to Fortress Biotech ​ — ​ ​ — ​ — ​ ​ — ​ 108,069 ​ ​ — ​ ​ — ​ ​ 375 ​ ​ — ​ ​ 375 Issuance of warrants - Horizon Notes ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 888 ​ ​ — ​ ​ 888 Conversion of Class A common shares to common shares ​ — ​ ​ — ​ ( 154,615 ) ​ ​ — ​ 154,615 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of common shares, net of offering costs - At-the-Market Offering ​ — ​ ​ — ​ — ​ ​ — ​ 3,506,222 ​ ​ — ​ ​ — ​ ​ 21,972 ​ ​ — ​ ​ 21,972 Issuance of common shares - Equity fee on At-the-Market Offering ​ — ​ ​ — ​ — ​ ​ — ​ 87,656 ​ ​ — ​ ​ — ​ ​ 495 ​ ​ — ​ ​ 495 Issuance of common shares, net of offering costs - Public Offering ​ — ​ ​ — ​ — ​ ​ — ​ 7,906,250 ​ ​ 1 ​ ​ — ​ ​ 29,536 ​ ​ — ​ ​ 29,537 Issuance of common shares - Equity fee on Public Offering ​ — ​ ​ — ​ — ​ ​ — ​ 197,656 ​ ​ — ​ ​ — ​ ​ 791 ​ ​ — ​ ​ 791 Stock-based compensation expenses — ​ — — ​ — 30,341 ​ — ​ — ​ 2,664 ​ — ​ 2,664 Exercise of warrants — ​ — — ​ — 93,213 ​ — ​ — ​ — ​ — ​ — Net loss — ​ — — ​ — — ​ — ​ — ​ — ​ ( 46,389 ) ​ ( 46,389 ) Balances at December 31, 2019 250,000 ​ $ — 845,385 ​ $ — 39,403,519 ​ $ 4 ​ $ 4,923 ​ $ 172,184 ​ $ ( 125,459 ) ​ $ 51,652 Common stock issuable - Founders Agreement — ​ — — ​ — — ​ — ​ 7,577 ​ — ​ — ​ 7,577 Issuance of common shares - Founders Agreement — ​ — — ​ — 1,206,667 ​ — ​ ( 4,923 ) ​ 4,923 ​ — ​ — Issuance of common shares, net of offering costs - At-the-Market Offering ​ — ​ ​ — ​ — ​ ​ — ​ 17,579,097 ​ ​ 2 ​ ​ — ​ ​ 58,595 ​ ​ — ​ ​ 58,597 Issuance of common shares - Equity fee on At-the-Market Offering ​ — ​ ​ — ​ — ​ ​ — ​ 342,773 ​ ​ — ​ ​ 362 ​ ​ 1,152 ​ ​ — ​ ​ 1,514 Issuance of common shares, net of offering costs - Public Offering ​ — ​ ​ — ​ — ​ ​ — ​ 11,455,604 ​ ​ 1 ​ ​ — ​ ​ 34,841 ​ ​ — ​ ​ 34,842 Issuance of common shares - Equity fee on Public Offering ​ — ​ ​ — ​ — ​ ​ — ​ 286,390 ​ ​ — ​ ​ — ​ ​ 932 ​ ​ — ​ ​ 932 Issuance of common shares under ESPP ​ — ​ ​ — ​ — ​ ​ — ​ 140,856 ​ ​ — ​ ​ — ​ ​ 349 ​ ​ — ​ ​ 349 Stock-based compensation expenses — ​ — — ​ — 502,788 ​ — ​ — ​ 2,987 ​ — ​ 2,987 Exercise of warrants — ​ — — ​ — 2,999 ​ — ​ — ​ — ​ — ​ — Net loss — ​ — — ​ — — ​ — ​ — ​ — ​ ( 60,015 ) ​ ( 60,015 ) Balances at December 31, 2020 250,000 ​ $ — 845,385 ​ $ — 70,920,693 ​ $ 7 ​ $ 7,939 ​ $ 275,963 ​ $ ( 185,474 ) ​ $ 98,435 ​ The accompanying notes are an integral part of these financial statements. ​ F-5 Table of Contents MUSTANG BIO, INC. STATEMENTS OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2020 2019 Cash Flows from Operating Activities: ​ ​ Net loss ​ $ ( 60,015 ) ​ $ ( 46,389 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Accretion of debt discount ​ 2,321 ​ 710 Issuance of common shares - Equity fee on At-the-Market Offering to Fortress Biotech ​ 1,514 ​ 495 Issuance of common shares - Equity fee on Public Offering to Fortress Biotech ​ ​ 932 ​ ​ 791 Issuance of common shares - Equity fee on Horizon Notes to Fortress Biotech ​ ​ — ​ ​ 375 Common shares issuable for Founders Agreement ​ 7,577 ​ 4,923 Research and development - licenses acquired ​ ​ 2,487 ​ ​ 1,350 Stock-based compensation expenses ​ 2,987 ​ 2,664 Depreciation expense ​ 1,677 ​ 1,258 Amortization of operating lease right-of-use assets ​ 108 ​ 110 Changes in operating assets and liabilities: ​ ​ ​ Prepaid expenses and other current assets ​ ( 84 ) ​ ( 558 ) Other receivables - related party ​ ​ 4 ​ ​ ( 19 ) Accounts payable and accrued expenses ​ 3,151 ​ 296 Payable and accrued expenses - related party ​ ( 106 ) ​ 360 Lease liabilities ​ ​ 128 ​ ​ 53 Net cash used in operating activities ​ ( 37,319 ) ​ ( 33,581 ) ​ ​ ​ Cash Flows from Investing Activities: ​ ​ Maturity of certificate of deposit ​ — ​ 17,604 Purchase of research and development licenses ​ ( 2,487 ) ​ ( 1,350 ) Purchase of fixed assets ​ ( 1,925 ) ​ ( 2,345 ) Net cash (used in) provided by investing activities ​ ( 4,412 ) ​ 13,909 ​ ​ ​ Cash Flows from Financing Activities: ​ ​ Proceeds from Horizon Notes ​ — ​ 15,000 Debt issuance costs ​ ​ — ​ ​ ( 1,393 ) Proceeds from issuance of common shares - At-the-Market Offering ​ ​ 59,805 ​ ​ 22,515 Offering costs for the issuance of common shares - At-the-Market Offering ​ ​ ( 1,124 ) ​ ​ ( 543 ) Proceeds from issuance of common shares - Public Offering ​ ​ 37,230 ​ ​ 31,625 Offering costs for the issuance of common shares - Public Offering ​ ​ ( 2,388 ) ​ ​ ( 2,088 ) Repayment of notes payable ​ ​ ( 15,750 ) ​ ​ — Proceeds from issuance of common shares under ESPP ​ ​ 349 ​ ​ — Net cash provided by financing activities ​ 78,122 ​ 65,116 ​ ​ ​ Net change in cash, cash equivalents and restricted cash ​ 36,391 ​ 45,444 Cash, cash equivalents and restricted cash, beginning of the period ​ 62,413 ​ 16,969 Cash, cash equivalents and restricted cash, end of the period ​ $ 98,804 ​ $ 62,413 ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ Cash paid for interest ​ $ 1,593 ​ $ 1,057 ​ ​ ​ Supplemental disclosure of noncash investing and financing activities: ​ ​ Fixed assets (acquired but not paid) ​ $ 31 ​ $ 187 Issuance of common shares - Founders Agreement ​ $ 4,923 ​ $ 2,085 Offering costs for the issuance of common shares - At-the-Market Offering, in accounts payable and accrued expenses ​ $ 84 ​ $ — Issuance of warrants - Horizon Notes ​ $ — ​ $ 888 ​ The accompanying notes are an integral part of these financial statements. F-6 Table of Contents Notes to Financial Statements Note 1 - Organization and Description of Business Mustang Bio, Inc. (the “Company” or “Mustang”) was incorporated in Delaware on March 13, 2015. Mustang is as a clinical-stage biopharmaceutical company focused on translating today’s medical breakthroughs in cell and gene therapy into potential cures for hematologic cancers, solid tumors and rare genetic diseases. The Company may acquire rights to these technologies by licensing the rights or otherwise acquiring an ownership interest in the technologies, funding their research and development and eventually either out-licensing or bringing the technologies to market. The Company is a majority-controlled subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”). Liquidity and Capital Resources The Company has incurred substantial operating losses and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of December 31, 2020, the Company had an accumulated deficit of $ 185.5 million. The Company has funded its operations to date primarily through the sale of equity and its venture debt financing agreement (the "Loan Agreement") with Horizon Technology Finance Corporation ("Horizon"), herein referred to as the "Horizon Notes." In September 2020, we repaid the Horizon Notes in full all amounts that were outstanding under the loan agreement, which was comprised of $ 15.0 million face value of the outstanding notes, $ 112,500 accrued and unpaid interest, a $ 750,000 loan termination fee and prepayment penalties of $ 550,000 . The Company expects to continue to use the proceeds from previous financing transactions primarily for general corporate purposes, including financing the Company’s growth, developing new or existing product candidates, and funding capital expenditures, acquisitions and investments. The Company currently anticipates that its cash and cash equivalents balances at December 31, 2020, are sufficient to fund its anticipated operating cash requirements for at least one year from the date of this Form 10-K. The Company will be required to expend significant funds in order to advance the development of its product candidates. The Company will require additional financings through equity and debt offerings, collaborations and licensing arrangements or other sources to fully develop, prepare regulatory filings, obtain regulatory approvals and commercialize its existing and any new product candidates.In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world. ​ Note 2 - Significant Accounting Policies Basis of Presentation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company has no subsidiaries. All inter-company transactions between Fortress and Mustang are classified as due from or due to related party in the financial statements. The Company believes that the assumptions underlying the financial statements are reasonable. Segments Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating and reporting segment. F-7 Table of Contents Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at December 31, 2020 and 2019, consisted of cash and money market funds in institutions in the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation (“FDIC”) insured limits. Other Receivables – Related Party Other receivables includes amounts due to the Company from Fortress and Journey Medical Corporation, both related parties, and is recorded at the invoiced amount. Restricted Cash The Company records cash held in an escrow account as a security deposit for the manufacturing facility in Worcester, Massachusetts, as restricted cash. The Company had $ 1.0 million in restricted cash as of December 31, 2020 and 2019, respectively. The Facility initiated cell processing operations for personalized CAR T and gene therapies in 2018. Property, plant and equipment, net Property and equipment, net, which consists mainly of laboratory equipment, are carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the respective assets, generally five years , using the straight-line method. Property and equipment - Construction in Process In connection with the Company’s cell processing facility, the Company incurred costs for the design and construction of the facility and the purchase of equipment; $ 0.5 million and $ 1.2 million are recorded in fixed assets - construction in process on the balance sheet at December 31, 2020 and 2019, respectively. Upon completion of the facility’s construction, all costs associated with the buildout will be recorded as leasehold improvements and amortized over the shorter of the estimated useful lives or the term of the respective leases, upon the improvement being placed in service. Research and Development Costs Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due to third parties that perform research and development services on the Company’s behalf will be expensed as services are rendered or when the milestone is achieved. Research and development costs primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for license and milestone costs related to in-licensed products and technology, payments made to third party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials, consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory filings, laboratory costs and other supplies. In accordance with Accounting Standards Codification (“ASC”) 730-10-25-1, Research and Development, costs incurred in obtaining technology licenses are charged to research and development expense if the technology licensed has not reached commercial feasibility and has no alternative future use. The licenses purchased by the Company require F-8 Table of Contents substantial completion of research and development, regulatory and marketing approval efforts to reach commercial feasibility and has no alternative future use. Accordingly, the total purchase price for the licenses acquired is reflected as research and development - licenses acquired in the Company’s Statements of Operations. Annual Stock Dividend In July 2016, in connection with the Amended and Restated Articles of Incorporation, the Company issued 250,000 Class A preferred shares to Fortress. The Class A preferred shares entitle the holder to a stock dividend equal to 2.5 % of the fully diluted outstanding equity of the Company (“The Annual Stock Dividend”). The Annual Stock Dividend was part of the consideration payable for formation of the Company and the identification of certain assets, including the license contributed to Mustang by Fortress (see Note 4). In June 2018, in connection with the Amended and Restated Articles of Incorporation, the Company amended the annual stock dividend due date from March 13th to January 1st. Pursuant to the Amended and Restated Articles of Incorporation, the Company issued 1,206,667 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.0 %, on a pro rata basis, of the fully-diluted outstanding equity of Mustang on January 1, 2020. This was shown in the Statement of Stockholders’ Equity at December 31, 2019, as Common stock issuable – Founders Agreement. The Company recorded an expense of approximately $ 4.9 million in research and development - licenses acquired related to these issuable shares during the year ended December 31, 2019. Pursuant to the Amended and Restated Articles of Incorporation, the Company issued 2,001,490 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.5 % of the fully-diluted outstanding equity of Mustang on January 1, 2021. This was shown in the Statement of Stockholders’ Equity at December 31, 2020 as Common stock issuable - Founders Agreement. The Company recorded an expense of approximately $ 7.6 million in research and development – licenses acquired related to these issuable shares during the year ended December 31, 2020. Fair Value Measurement The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories: ​ Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. ​ The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. F-9 Table of Contents Leases Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases . Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company's incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. Stock-Based Compensation The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, prior to the adoption of ASU 2018-07 on January 1, 2019, the Company remeasured the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of these non-employee awards were recognized as compensation expense in the period of change. Subsequent to the adoption of ASU 2018-07, the Company recognizes non-employee compensation costs over the requisite service period based on a measurement of fair value for each stock award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model or 409a valuations, as applicable. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Income Taxes The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit. Net Loss per Share Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period less unvested restricted stock. Since dividends are declared, paid and set aside among the holders of shares of common stock and Class A common shares pro-rata on an as-if-converted basis, the two-class method of computing net loss per share is not required. Diluted net loss per share does not reflect the effect of shares of common stock to be issued upon the exercise of warrants or outstanding Class A preferred shares, as their inclusion would be anti-dilutive. F-10 Table of Contents The table below summarizes potentially dilutive securities that were not considered in the computation of diluted net loss per share because they would be anti-dilutive. ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2020 2019 Warrants 5,402,670 5,405,669 Options 1,141,675 1,241,675 Class A Preferred Shares 250,000 250,000 Unvested restricted stock awards 302,114 299,060 Unvested restricted stock units 1,468,559 1,112,417 Total 8,565,018 8,308,821 ​ Comprehensive Loss The Company has no components of other comprehensive loss, and therefore, comprehensive loss equals net loss. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” , which is intended to simplify various aspects related to accounting for income taxes. The ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company’s adoption of this standard on January 1, 2020, did not have a material impact on its financial statements and related disclosures. ​ In August 2018, the FASB issued ASU 2018-13, “ Fair Value Measurement (Topic 820), - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” , which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company’s adoption of this standard on January 1, 2020, did not have a material impact on its financial statements and related disclosures. In June 2018, the FASB issued ASU 2018-07, “ Improvements to Nonemployee Share-Based Payment Accounting” , which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company adopted ASU No. 2018-07 as of January 1, 2019. The adoption of this update did not have a material impact on the Company’s financial statements. In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” . Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU F-11 Table of Contents is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The adoption of this ASU on January 1, 2019, did not have a material impact on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842)” in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods), using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carry forward accounting conclusions under previous U.S. GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. Based on the analysis, on January 1, 2019, the Company recorded right of use assets of approximately $ 1.2 million, lease liability of approximately $ 2.0 million and eliminated deferred rent of approximately $ 0.7 million. Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” . The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. The Company is currently assessing the impact of the adoption of this ASU on its financial statements. ​ Note 3 - License, Clinical Trial and Sponsored Research Agreements Research and Development Expenses – All Licenses For the years ended December 31, 2020 and 2019, the Company recorded the following expense in research and development for licenses acquired: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ($ in thousands) 2020 2019 City of Hope National Medical Center ​ ​ ​ ​ ​ ​ CD123 ​ $ 334 ​ $ 250 CS1 ​ ​ 200 ​ ​ 200 IL13Rα2 ​ ​ 333 ​ ​ — Spacer ​ ​ 333 ​ ​ — PSCA ​ ​ 200 ​ ​ 200 HER2 ​ ​ 500 ​ ​ — CSL Behring (Calimmune) ​ ​ 170 ​ ​ 200 UCLA ​ ​ — ​ ​ 300 Fred Hutchinson Cancer Research Center - CD20 ​ ​ 300 ​ ​ — Nationwide Children's Hospital - C134 ​ ​ — ​ ​ 200 SIRION Biotech LentiBOOST TM ​ ​ 117 ​ ​ — Fortress PIK Dividend ​ ​ 7,577 ​ ​ 4,923 Total ​ $ 10,064 ​ $ 6,273 ​ F-12 Table of Contents License Agreements City of Hope CD123 License (MB-102) In February 2017, the Company entered into an Amended and Restated Exclusive License Agreement with the City of Hope National Medical Center (“COH”) to acquire intellectual property rights pertaining to CD123 -specific chimeric antigen receptor (“CAR”) engineered T cell (“CAR T”) technology. Pursuant to this agreement, the Company and COH acknowledged that an upfront fee was previously paid. In addition, COH is eligible to receive an annual maintenance fee of $ 25,000 and milestone payments totaling $ 14.5 million upon the achievement of certain milestones. Royalty payments in the mid-single digits are due on net sales of licensed products. For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with our public underwritten offerings. For the year ended December 31, 2019, the Company expensed a non-refundable milestone payment of $ 0.3 million upon the twelfth patient dosed in a Phase 1 clinical study of the CD123-directed CAR T. CS1 License (MB-104) In May 2017, the Company entered into an exclusive license agreement with the COH for the use of CS1-specific CAR T technology. Pursuant to this agreement, the Company paid an upfront fee of $ 0.6 million and pays an annual maintenance fee of $ 50,000 . Additional payments are due for the achievement of ten development milestones totaling $ 14.9 million, and royalty payments in the mid-single digits are due on net sales of licensed products. For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.2 million upon issuance of the first patent related to the CS1 CAR T technology. For the year ended December 31, 2019, the Company expensed a non-refundable milestone payment of $ 0.2 million upon the first patient dosed in a Phase 1 clinical study of the CS1-directed CAR T. I L13Rα2 License (MB-101) In February 2017, the Company entered into an Amended and Restated Exclusive License Agreement with COH to acquire intellectual property rights pertaining to IL13Rα2-specific CAR T technology. Pursuant to this agreement, payments are due for the achievement of eight development milestones totaling $ 14.5 million; additional payments are due upon the occurrence of certain one-time; events and royalty payments as a percentage of revenue in the mid-single digits are due on net sales of licensed products. For the year ended, December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with Mustang’s public underwritten offerings. There was no expense recorded for the year ended December 31, 2019. IV/ICV License On February 17, 2017, the Company entered into an exclusive license agreement (the “IV/ICV Agreement”) with COH to acquire intellectual property rights in patent applications related to the intraventricular and intracerebroventricular methods of delivering T cells that express CARs. Pursuant to the IV/ICV Agreement, we paid COH an upfront fee of $ 0.1 million in March 2017. COH is eligible to receive up to approximately $ 0.1 million in milestone payments upon the achievement of a certain milestone as well as an annual maintenance fee. Royalty payments in the low-single digits are due on net sales of licensed products and services. During the years ended December 31, 2020 and 2019, there was no expense in connection with the IV/ICV Agreement. F-13 Table of Contents Spacer License In February 2017, the Company entered into an Amended and Restated Exclusive License Agreement with COH to acquire intellectual property rights pertaining to Spacer patent rights. Pursuant to this agreement, payments are due upon the occurrence of certain one-time events and royalty payments as a percentage of revenue in the low single digits are due on net sales of licensed products. For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with Mustang’s public underwritten offerings. There was no expense recorded for the year ended December 31, 2019. PSCA License (MB-105) In May 2017, the Company entered into an exclusive license agreement with COH for the use of prostate stem cell antigen (“PSCA”) CAR T technology to be used in the treatment of prostate cancer, pancreatic cancer and other solid tumors. Pursuant to this agreement, the Company paid an upfront fee of $ 0.3 million and pays an annual maintenance fee of $ 50,000 . Additional payments are due for the achievement of ten development milestones totaling $ 14.9 million, and royalty payments in the mid-single digits are due on net sales of licensed products. For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.2 million upon issuance of the first patent related to the PCSA CAR T technology. For the year ended December 31, 2019, the Company expensed a non-refundable milestone payment of $ 0.2 million upon the first patient dosed in a Phase 1 clinical study of PSCA. HER2 License (MB-103) On May 31, 2017, the Company entered into an exclusive license agreement with the COH for the use of human epidermal growth factor receptor 2 (“HER2”) CAR T technology, which will initially be applied in the treatment of glioblastoma multiforme. Pursuant to this agreement, the Company paid an upfront fee of $ 0.6 million and pays an annual maintenance fee of $ 50,000 (which began in 2019). Additional payments are due for the achievement of ten development milestones totaling $ 14.9 million, and royalty payments in the mid-single digits are due on net sales of licensed products. For the year ended, December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.5 million in connection with the 12 th patient treated in the Phase 1 clinical study of HER2 CAR T technology at COH. There was no expense recorded for the year ended December 31, 2019. CSL Behring (Calimmune) License On August 23, 2019, the Company entered into a non-exclusive license agreement with CSL Behring (Calimmune, Inc.) (“Calimmune License”) for the rights to the Cytegrity TM stable producer cell line for the production of viral vector for our lentiviral gene therapy program for the treatment of XSCID (MB-107 and MB-207). We previously licensed the XSCID gene therapy program from St. Jude Children’s Research Hospital, Inc. (“St. Jude”) in August 2018. Pursuant to the terms of the Calimmune License, the Company paid an upfront fee of $ 0.2 million. CSL Behring is eligible to receive additional payments totaling $ 1.2 million upon the achievement of three development and commercialization milestones. Royalty payments in the low-single digits are due on net sales of licensed products. For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.2 million due upon the first anniversary of the Calimmune license. For the year ended December 31, 2019, upon the execution of the Calimmune License, the Company recorded research and development expense of $ 0.2 million. F-14 Table of Contents University of California Los Angeles License On March 17, 2017, the Company entered into an exclusive license agreement with the Regents of the University of California at Los Angeles (“UCLA License”) to acquire intellectual property rights in patent applications related to engineered anti-prostate stem cell antigen antibodies for cancer targeting and detection. In September 2019, COH commenced its Phase 1 clinical trial resulting in the achievement of a development milestone, and the Company recorded an expense of $ 0.3 million in the Statements of Operations for the year ended December 31, 2019. There was no expense recorded for the year ended December 31, 2020. Fred Hutchinson Cancer Research Center - CD20 License (MB-106) On July 3, 2017, the Company entered into an exclusive, worldwide licensing agreement with Fred Hutchinson Cancer Research Center (“Fred Hutch”) for the use of a CAR T therapy related to autologous T cells engineered to express a CD20-specific chimeric antigen receptor (“CD20 Technology License”). Pursuant to the CD20 Technology License, the Company paid Fred Hutch an upfront fee of $ 0.3 million and will owe an annual maintenance fee of $ 50,000 on each anniversary of the license until the achievement by the Company of regulatory approval of a licensed product using CD20 Technology. Additional payments are due for the achievement of eleven development milestones totaling $ 39.1 million and royalty payments in the mid-single digits are due on net sales of licensed products. For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with the twelfth patient treated in the Phase 1 clinical study of CD20 CAR T technology at Fred Hutch. There was no expense recorded for the year ended December 31, 2019. Nationwide Children’s Hospital – C134 License (MB-108) In February 2019, the Company announced that it partnered and entered into an exclusive worldwide license agreement with Nationwide Children’s Hospital (“Nationwide”) to develop their C134 oncolytic virus (MB-108) for the treatment of glioblastoma multiforme (“GBM”). We intend to combine MB-108 with MB-101 (IL13Rα2-specific CAR T) to potentially enhance efficacy in treating GBM. The Company paid $ 0.2 million in consideration for the license to exclusive, worldwide rights to develop and commercialize products that incorporate data, know-how and/or patents related to MB-108 that were developed at Nationwide. Additional payments are due to Nationwide upon achievement of development and commercialization milestones totaling $ 152.8 million. Royalty payments in the low-single digits are due on net sales of licensed products. For the year ended December 31, 2019, the Company recorded an expense of $ 0.2 million in connection with this license. There was no expense recorded for the year ended December 31, 2020. SIRION Biotech GmbH - LentiBOOST TM In October 2020, we announced a licensing agreement with SIRION Biotech (“SIRION”) for the rights to SIRION’s LentiBOOST TM technology for the development of MB-207, our lentiviral gene therapy for the treatment of previously transplanted XSCID patients (the “SIRION Technology License”). Pursuant to the SIRION Technology License, the Company paid SIRION a one-time upfront fee of $ 0.1 million ( € 0.1 million). In addition, five future development milestone payments totaling up to approximately $ 5.6 million ( € 4.7 million) in the aggregate are due upon achievement of certain milestones. Additional milestone payments totaling up to $ 4.1 million ( € 3.5 million) in the aggregate are due in connection with the achievement of three commercial milestones and low- to mid-single digit royalties are due on aggregate cumulative worldwide net sales of licensed products . For the year ended December 31, 2020, the Company expensed an up-front payment of $ 0.1 million. There was no expense recorded for the year ended December 31, 2019. F-15 Table of Contents St. Jude Children’s Research Hospital License (MB-107 and MB-207) On August 2, 2018, the Company entered into an exclusive worldwide license agreement with St. Jude for the development of a first-in-class ex vivo lentiviral gene therapy for the treatment of X-linked severe combined immunodeficiency (“XSCID”). The Company paid $ 1.0 million in consideration for the exclusive license in addition to an annual maintenance fee of $ 0.1 million (which began in 2019). St. Jude is eligible to receive payments totaling $ 13.5 million upon the achievement of five development and commercialization milestones. Royalty payments in the mid-single digits are due on net sales of licensed products. During the years ended December 31, 2020 and 2019, there were no expenses recorded in connection with this license. Harvard College License On November 20, 2017, the Company entered into an exclusive, worldwide license agreement with the President and Fellows of Harvard College (the “Harvard Agreement”) for the use of gene editing, via the use of CRISPR/Cas9, to be used in enhancing the efficacy of CAR T cell therapies for solid tumor indications and to generate universal off the shelf CAR T cell therapies for both liquid and solid tumor indications. Pursuant to the Harvard Agreement, we paid Harvard College an upfront fee of $ 0.3 million and will owe an annual maintenance fee of $ 25,000 and $ 50,000 for calendar years 2018 and 2019, respectively, and $ 100,000 for each subsequent calendar year during the term of the agreement. Additional payments are due for the achievement of seven development milestones totaling $ 16.7 million and royalty payments in the low-single digits are due on the net sales of licensed products. During the years ended December 31, 2020 and 2019, we recorded no expense in connection with the Harvard Agreement. The Harvard Agreement was terminated in January 2020. ​ Research and Development Expenses - Sponsored Research and Clinical Trial Agreements For the year ended December 31, 2020 and 2019, the Company recorded the following expense in research and development for sponsored research and clinical trial agreements: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ($ in thousands) 2020 2019 City of Hope National Medical Center ​ ​ 500 ​ ​ 2,000 CD123 ​ ​ 433 ​ ​ 1,202 IL13Rα2 ​ ​ 530 ​ ​ 876 CS1 ​ ​ 885 ​ ​ — HER2 ​ ​ 1,519 ​ ​ — PSCA ​ ​ 204 ​ ​ — Manufacturing ​ ​ — ​ ​ 457 Fred Hutchinson Cancer Research Center - CD20 ​ ​ 1,804 ​ ​ 762 St. Jude Children's Research Hospital - XSCID ​ ​ 1,842 ​ ​ 777 Beth Israel Deaconess Medical Center - CRISPR ​ ​ — ​ ​ 69 Total ​ ​ 7,717 ​ ​ 6,143 ​ City of Hope Sponsored Research Agreement In March 2015, the Company entered into a Sponsored Research Agreement (“SRA”) with COH in which the Company funded continued research in the amount of $ 2.0 million per year, payable in four equal installments, through the first quarter of 2020. The research covered under this arrangement is for IL13Rα2, CD123 and the Spacer technology. For the years ended December 31, 2020 and 2019, the Company recorded $ 0.5 million and $ 2.0 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. F-16 Table of Contents CD123 (MB-102) Clinical Research Support Agreement In February 2017, the Company entered into a Clinical Research Support Agreement for CD123 (the “CD123 CRA”). Pursuant to the terms of the CD123 CRA the Company made an upfront payment of $ 19,450 and will contribute an additional $ 97,490 per patient in connection with the on-going investigator-initiated study. Further, the Company agreed to fund approximately $ 0.2 million over three years pertaining to the clinical development of CD123. For the years ended December 31, 2020 and 2019, the Company recorded $ 0.4 million and $ 1.2 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. IL13Rα2 (MB-101) Clinical Research Support Agreements In February 2017, the Company entered into a clinical research support agreement for IL13Rα2 (the “IL13Rα2 CRA”). Pursuant to the terms of the IL13Rα2 CRA the Company made an upfront payment of approximately $ 9,300 and will contribute an additional $ 0.1 million related to patient costs in connection with the on-going investigator-initiated study. Further, the Company agreed to fund approximately $ 0.2 million over three years pertaining to the clinical development of IL13Rα2. For the years ended December 31, 2020 and 2019, the Company recorded $ 0.5 million and $ 0.9 million, respectively, in research and development expenses under the IL13Rα2 CRA in the Statements of Operations pursuant to the terms of this agreement. In October 2020, the Company entered into a Clinical Research Support Agreement for the IL13Rα2-directed CAR T program for adult patients with leptomeningeal glioblastoma, ependymoma or medulloblastoma (the “IL13Rα2 Leptomeningeal CRA”). Pursuant to the terms of the IL13Rα2 Leptomeningeal CRA, the Company made an upfront payment of approximately $ 29,000 and will contribute an additional $ 0.1 million per patient in connection with the on-going investigator-initiated study. Further, the Company agreed to fund approximately $ 0.2 million annually pertaining to the clinical development of the IL13Rα2-directed CAR T therapy. CS1 (MB-104) Clinical Research Support Agreement ​ In June 2020, the Company entered into a clinical research support agreement with COH in connection with an Investigator-sponsored study conducted under an Institutional Review Board-approved, investigator-initiated protocol entitled: “Phase I Study to Evaluate Cellular Immunotherapy Using Memory-Enriched T Cells Lentivirally Transduced to Express a CS1-Targeting, Hinge-Optimized, 41BB-Costimulatory Chimeric Antigen Receptor and a Truncated EGFR Following Lymphodepleting Chemotherapy in Adult Patients with CS1+ Multiple Myeloma.” The CAR T being studied under this protocol has been designated as MB-104. Under the terms of the agreement we will reimburse COH for costs associated with this trial not to exceed $ 2.4 million. The agreement will expire upon the delivery of a final study report or earlier. During the year ended December 31, 2020, the Company recorded $ 0.9 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. ​ HER2 (MB-103) Clinical Research Support Agreement In September 2020, the Company entered into a clinical research support agreement with COH in connection with an Investigator-sponsored study conducted under an Institutional Review Board-approved, investigator-initiated protocol entitled: “Phase I Study of Cellular Immunotherapy using Memory-Enriched T Cells Lentivirally Transduced to Express a HER2-Specific, Hinge-Optimized, 41BB-Costimulatory Chimeric Receptor and a Truncated CD19 for Patients with Recurrent/Refractory Malignant Glioma.” The CAR T being studied under this protocol has been designated as MB-103. Under the terms of the agreement the Company will pay COH $ 29,375 upon execution and will reimburse COH for costs associated with this trial not to exceed $ 3.0 million. The agreement will expire upon the delivery of a final study report or earlier. For the year ended December 31, 2020, the Company recorded $ 1.5 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. ​ PSCA (MB-105) Clinical Research Support Agreement ​ In October 2020, the Company entered into a clinical research support agreement with COH in connection with an Investigator-sponsored study conducted under an Institutional Review Board-approved, investigator-initiated protocol entitled: “A Phase 1b study to evaluate PSCA-specific chimeric antigen receptor (CAR)-T cells for patients with metastatic F-17 Table of Contents castration resistant prostate cancer.” The CAR T being studied under this protocol has been designated as MB-105. Under the terms of the agreement the Company will pay COH $ 33,000 upon execution and will reimburse COH for costs associated with this trial not to exceed $ 2.3 million. The agreement will expire upon the delivery of a final study report or earlier. For the year ended December 31, 2020, the Company recorded $ 0.2 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. ​ Sponsored Research Agreement - Manufacturing On January 3, 2018, the Company entered into an SRA with COH to optimize and develop CAR T cell processing procedures. Pursuant to the SRA, the Company will fund continued research in the amount of $ 0.9 million for the program, which has an initial term of two (2) years. For the year ended December 31, 2020 and 2019, the Company recorded nil and $ 0.5 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. Fred Hutchinson Cancer Research Center CD20 Clinical Trial Agreement On July 3, 2017, in conjunction with the CD20 Technology License from Fred Hutch, we entered into an investigator-initiated clinical trial agreement (“CD20 CTA”) to provide partial funding for a Phase 1/2 clinical trial at Fred Hutch evaluating the safety and efficacy of the CD20 Technology in patients with relapsed or refractory B-cell non-Hodgkin lymphomas. In connection with the CD20 CTA, the Company agreed to fund up to $ 5.3 million of costs associated with the clinical trial, which commenced during the fourth quarter of 2017. In November 2020, the CD20 CTA was amended to include additional funding of approximately $ 0.8 million for the treatment of five patients with chronic lymphocytic leukemia. For the years ended December 31, 2020 and 2019, the Company recorded $ 1.8 million and $ 0.6 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. Sponsored Research Agreement - Manufacturing On March 17, 2018, the Company entered into an SRA with Fred Hutch related to developing and optimizing processes and systems associated with CD20 cell processing. Pursuant to the SRA, the Company funded research in the amount of $ 0.6 million during the term of the SRA, which expired in March 2019. For the years ended December 31, 2020 and 2019, the Company recorded expense of nil and $ 0.2 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. XSCID (MB-107) Data Transfer Agreement with St. Jude Children’s Research Hospital In June 2020, the Company entered into a Data Transfer Agreement with St. Jude under which we will reimburse St. Jude for costs associated with St. Jude’s clinical trial for the treatment of infants with XSCID. Pursuant to the terms of this agreement we paid an upfront fee of $ 1.1 million in July 2020, and will continue to reimburse St. Jude for costs incurred in connection with this clinical trial. For the years ended December 31, 2020 and 2019, the Company recorded $ 1.8 million and nil , respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. XSCID (MB-107) Non-Interventional Services Agreement with Children’s CGMP ​ In December 2019, Mustang entered into a Non-Interventional Services Agreement with Children's CGMP, LLC ("Children’s"), an affiliate of St. Jude Children's Research Hospital, pursuant to which Children’s provides lentiviral vector for non-clinical XSCID research purposes, as well as related advisory services. We agreed to fund approximately $ 0.8 million upon execution of the agreement, which was recorded in research and development expenses for the year ended December 31, 2019, in the Company's Statements of Operations pursuant to the terms of this agreement. F-18 Table of Contents CRISPR Sponsored Research Agreement with Beth Israel Deaconess Medical Center, Inc. ​ On November 28, 2017, the Company entered into an SRA with Beth Israel Deaconess Medical Center Inc. (“BIDMC”) to perform research relating to gene editing, via the use of CRISPR/Cas9, to be used in enhancing the efficacy of CAR T cell therapies for solid tumor indications and to generate universal off-the-shelf CAR T cell therapies for both liquid and solid tumor indications. The Company agreed to fund approximately $ 0.8 million over a three-year period. For the year ended December 31, 2020 and 2019, the Company recorded approximately nil and $ 0.1 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. In January 2019, the Company terminated the SRA with BIDMC due to the departure of key personnel from BIDMC. ​ Note 4 - Related Party Agreements Founders Agreement and Management Services Agreement with Fortress Effective March 13, 2015, the Company entered a Founders Agreement with Fortress, which was amended and restated on May 17, 2016, and again on July 26, 2016 (the “Mustang Founders Agreement”). The Mustang Founders Agreement provides that, in exchange for the time and capital expended in the formation of Mustang and the identification of specific assets the acquisition of which result in the formation of a viable emerging growth life science company, Fortress loaned $ 2.0 million, representing the up-front fee required to acquire the Company’s license agreement with COH. The Mustang Founders Agreement has a term of 15 years , which upon expiration automatically renews for successive one-year periods unless terminated by Fortress and the Company or a Change in Control (as defined in the Mustang Founders Agreement) occurs. Concurrently with the second amendment on July 26, 2016, to the Mustang Founders Agreement, Fortress entered into an Exchange Agreement whereby Fortress exchanged its 7.25 million Class B Common shares for 7.0 million common shares and 250,000 Class A Preferred shares. Class A Preferred Stock is identical to common stock other than as to voting rights, conversion rights and the PIK Dividend right (as described below). Each share of Class A Preferred Stock will be entitled to vote the number of votes that is equal to one and one-tenth ( 1.1 ) times a fraction, the numerator of which is the sum of (A) the shares of outstanding Mustang common stock and (B) the whole shares of Mustang common stock into which the shares of outstanding Class A Common Stock and Class A Preferred Stock are convertible and the denominator of which is the number of shares of outstanding Class A Preferred Stock. Thus, the Class A Preferred Stock will at all times constitute a voting majority. Each share of Class A Preferred Stock is convertible, at Fortress’ option, into one fully paid and nonassessable share of Mustang common stock, subject to certain adjustments. As holders of Class A Preferred Stock, Fortress will receive on each January 1 (each a “PIK Dividend Payment Date”) until the date all outstanding Class A Preferred Stock is converted into common stock or redeemed (and the purchase price is paid in full), pro rata per share dividends paid in additional fully paid and nonassessable shares of common stock (“PIK Dividends”) such that the aggregate number of shares of common stock issued pursuant to such PIK Dividend is equal to two and one-half percent ( 2.5 %) of Mustang’s fully-diluted outstanding capitalization on the date that is one (1) business day prior to any PIK Dividend Payment Date. As additional consideration under the Mustang Founders Agreement, Mustang will also: (i) pay an equity fee in shares of common stock, payable within five (5) business days of the closing of any equity or debt financing for Mustang that occurs after the effective date of the Mustang Founders Agreement and ending on the date when Fortress no longer has majority voting control in the Company’s voting equity, equal to two and one-half ( 2.5 %) of the gross amount of any such equity or debt financing; and (ii) pay a cash fee equal to four and one-half percent ( 4.5 %) of the Company’s annual net sales, payable on an annual basis, within ninety (90) days of the end of each calendar year. In the event of a Change in Control, the Company will pay a one-time change in control fee equal to five (5x) times the product of (A) net sales for the twelve (12) months immediately preceding the change in control and (B) four and one-half percent ( 4.5 %) (see Note 9). Effective as of March 13, 2015, the Company entered into a Management Services Agreement (the “MSA”) with Fortress, pursuant to which Fortress renders advisory and consulting services to the Company. The MSA has an initial term of five years and is automatically renewed for successive five-year terms unless terminated in accordance with its provisions. Services provided under the MSA may include, without limitation, (i) advice and assistance concerning any and all aspects of the Company’s operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting relations on behalf of the Company with accountants, attorneys, financial advisors and other professionals (collectively, the “Services”). The Company is obligated to utilize clinical research services, medical education, communication and F-19 Table of Contents marketing services and investor relations/public relation services of companies or individuals designated by Fortress, provided those services are offered at market prices. However, the Company is not obligated to take or act upon any advice rendered from Fortress and Fortress shall not be liable for any of its actions or inactions based upon their advice. Fortress and its affiliates, including all members of the Company’s Board of Directors, have been contractually exempt from fiduciary duties to the Company relating to corporate opportunities. In consideration for the Services, the Company will pay Fortress an annual consulting fee of $ 0.5 million (the “Annual Consulting Fee”), payable in advance in equal quarterly installments on the first business day of each calendar quarter in each year, provided, however, that such Annual Consulting Fee shall be increased to $ 1.0 million for each calendar year in which the Company has net assets in excess of $ 100 million at the beginning of the calendar year. For the years ended December 31, 2020 and 2019, the Company recorded expense of $ 0.5 million and $ 0.5 million, respectively, related to this agreement. For the year ended December 31, 2020, the Company issued 342,773 shares of common stock and recorded 101,632 shares issuable to Fortress, which equaled 2.5 % of the gross proceeds of $ 59.8 million from the sale of shares of common stock under Mustang’s At-the-Market Offering. The Company recorded an expense of approximately $ 1.5 million in general and administrative expenses related to these shares for the year ended December 31, 2020. For the year ended December 31, 2020, the Company issued 286,390 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 37.2 million from the sale of shares of common stock, before deducting underwriting discounts and commissions and offering expenses under Mustang’s Public Offering. The Company recorded an expense of approximately $ 0.9 million in general and administrative expenses related to these shares for the year ended December 31, 2020. ​ Under the terms of the Second Amended and Restated Founders Agreement, which became effective July 22, 2016, Fortress will receive a grant of shares of our common stock equal to two and one-half percent ( 2.5 %) of the gross amount of any equity or debt financing. In March 2019, the Company issued 108,069 shares of common stock to Fortress, which equaled 2.5 % of the gross funded amount of the Horizon Notes. The Company recorded an expense of approximately $ 0.4 million in general and administrative expenses related to these shares during the year ended December 31, 2019. For the year ended December 31, 2019, the Company issued 87,656 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 22.5 million from the sale of shares of common stock under Mustang’s At-the-Market Offering. The Company recorded an expense of approximately $ 0.5 million in general and administrative expenses related to these shares during the year ended December 31, 2019. For the year ended December 31, 2019, the Company issued 197,656 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 31.6 million from the sale of shares of common stock, before deducting underwriting discounts and commissions and offering expenses under Mustang’s Public Offering. The Company recorded an expense of approximately $ 0.8 million in general and administrative expenses related to these shares during the year ended December 31, 2019. Payables and Accrued Expenses Related Party In the normal course of business Fortress pays for certain expenses on behalf of the Company. Such expenses are recorded as Payables and accrued expenses - related party and are reimbursed to Fortress in the normal course of business. Director Compensation Dr. Rosenwald Pursuant to the terms of the Director Compensation Plan, Dr. Rosenwald will receive a cash fee of $ 50,000 per year paid quarterly and an annual stock award of the greater of (i) a number of shares of common stock having a fair market value on the grant date of $ 50,000 or (ii) 10,000 shares of common stock, which shares shall vest and become non-forfeitable on the third anniversary of the grant date, subject to continued service on the Board on such date. For the year ended December 31, 2020, the Company recognized $ 113,000 in expense in its Statements of Operations related to the director compensation, including approximately $ 63,000 in expense related to equity incentive grants of 50,000 restricted shares. For the year ended December 31, 2019, the Company recognized $ 102,000 in expense in its Statements of Operations F-20 Table of Contents related to the director compensation, including approximately $ 52,000 in expense related to equity incentive grants of 34,000 restricted shares. Mr. Weiss - Advisory Agreement with Caribe BioAdvisors, LLC The Board of the Company by unanimous written consent approved and authorized the execution of an advisory agreement dated January 1, 2017 (the “Advisory Agreement”), with Caribe BioAdvisors, LLC (the “Advisor”), owned by Michael S. Weiss, the Chairman of the Board, to provide the board advisory services of Mr. Weiss as Chairman of the Board. Pursuant to the Advisory Agreement, the Advisor will be paid an annual cash fee of $ 60,000 , paid quarterly and an annual stock award of the greater of (i) a number of shares of common stock having a fair market value on the grant date of $ 50,000 or (ii) 10,000 shares of common stock, which shares shall vest and become non-forfeitable on the third anniversary of the grant date, subject to continued service on the Board on such date. For the year ended December 31, 2020, the Company recognized $ 122,000 in expense in its Statements of Operations related to the advisory agreement, including approximately $ 62,000 in expense related to equity incentive grants of 50,000 restricted shares. For the year ended December 31, 2019, the Company recognized $ 105,000 in expense in its Statements of Operations related to the advisory agreement, including approximately $ 45,000 in expense related to equity incentive grants of 34,000 restricted shares. ​ Note 5 - Property and Equipment Mustang’s property and equipment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated Useful December 31, December 31, ($ in thousands) ​ Life (in years) ​ 2020 ​ 2019 Computer equipment 3 ​ $ 68 ​ $ 53 Furniture and fixtures 5 ​ 181 ​ 145 Machinery and equipment 5 ​ 5,748 ​ 4,594 Leasehold improvements 9 ​ 5,099 ​ 3,877 Construction in process N/A ​ 499 ​ 1,157 Total property and equipment ​ ​ ​ 11,595 ​ 9,826 Less: accumulated depreciation ​ ​ ​ ( 3,567 ) ​ ( 1,890 ) Property and equipment, net ​ ​ ​ $ 8,028 ​ $ 7,936 ​ Mustang’s depreciation expense for the years ended December 2020 and 2019 was approximately $ 1.7 million and $ 1.3 million, respectively, and was recorded in research and development expense in the Statements of Operations. ​ Note 6 - Accounts Payable and Accrued Expenses At December 31, 2020 and 2019, accounts payable and accrued expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ($ in thousands) ​ 2020 2019 Accounts payable ​ $ 3,518 ​ $ 1,877 Research and development ​ ​ 2,862 ​ ​ 1,760 Accrued compensation ​ ​ 2,009 ​ ​ 1,496 Other ​ ​ 358 ​ ​ 535 Total accounts payable and accrued expenses ​ $ 8,747 ​ $ 5,668 ​ ​ F-21 Table of Contents Note 7 - Commitments and Contingencies Leases On October 27, 2017, the Company entered into a lease agreement with WCS - 377 Plantation Street, Inc., a Massachusetts nonprofit corporation. Pursuant to the terms of the lease agreement, we agreed to lease 27,043 square feet from the landlord, located at 377 Plantation Street in Worcester, MA (the “Facility”), through November 2026, subject to additional extensions at the Company’s option. Base rent, net of abatements of $ 0.6 million over the lease term, totals approximately $ 3.6 million, on a triple-net basis. The terms of the lease also require that we post an initial security deposit of $ 0.8 million, in the form of $ 0.5 million letter of credit and $ 0.3 million in cash, which increased to $ 1.3 million ($ 1.0 million letter of credit, $ 0.3 million in cash) on November 1, 2019. After the fifth lease year, the letter of credit obligation is subject to reduction. The Facility began operations for the production of personalized CAR T and gene therapies in 2018. The Company leases office space and copiers under agreements classified as operating leases that expire on various dates through 2026. The Company’s lease liabilities result from the lease of its Facility in Massachusetts, which expires in 2026, and its copier, which expires in 2021. Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain to exercise the options. The Company does not act as a lessor or have any leases classified as financing leases. At December 31, 2020, the Company had operating lease liabilities of $ 2.2 million and right of use assets of $ 1.1 million, which were included in the Balance Sheet. The following summarizes quantitative information about the Company’s operating leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ ​ December 31, ​ ​ December 31, ($ in thousands) 2020 2019 Lease cost ​ ​ Operating lease cost $ 330 $ 312 Variable lease cost ​ ​ 470 ​ ​ 684 Total $ 800 $ 996 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ($ in thousands) 2020 2019 Operating cash flows from operating leases $ 76 ​ $ 148 ​ Weighted-average remaining lease term – operating leases ​ ​ 5.8 ​ ​ ​ 4.3 ​ Weighted-average discount rate – operating leases ​ ​ 9.0 % ​ ​ 9.0 % ​ Maturities of our operating leases, excluding short-term leases, are as follows: ​ ​ ​ ​ ​ ($ in thousands) ​ ​ Year ended December 31, 2021 ​ $ 467 Year ended December 31, 2022 ​ ​ 476 Year ended December 31, 2023 ​ 489 Year ended December 31, 2024 ​ 503 Year ended December 31, 2025 ​ 516 Thereafter ​ ​ 439 Total ​ 2,890 Less present value discount ​ ​ ( 662 ) Operating lease liabilities ​ $ 2,228 ​ ​ F-22 Table of Contents Note 8 - Notes Payable On March 29, 2019 (the “Closing Date”), the Company entered into a $ 20.0 million Loan Agreement with Horizon, the proceeds of which provided the Company with additional working capital to continue development of its gene and cell therapies. In accordance with the Loan Agreement, $ 15.0 million of the $ 20.0 million loan was funded on the Closing Date, with the remaining $ 5.0 million fundable upon the Company achieving certain predetermined milestones. Each advance under the Horizon Loan Agreement will mature 42 months from the first day of the month following the funding of the advance. The first three advances will mature on October 1, 2022 (the “Loan Maturity Date”). Each advance accrues interest at a per annum rate of interest equal to 9.00 % plus the amount by which the one-month LIBOR Rate, as reported in the Wall Street Journal, exceeds 2.50 %. The Loan Agreement provides for interest-only payments commencing May 1, 2019, through and including October 1, 2020. The interest-only period may be extended to April 1, 2021, if the Company satisfies the Interest Only Extension Milestone (as defined in the Loan Agreement). Thereafter, commencing May 1, 2021, amortization payments will be payable monthly in eighteen installments of principal and interest. At its option, upon ten business days’ prior written notice to Horizon, the Company may prepay all or any portion greater than or equal to $ 500,000 of each of the outstanding advances by paying the entire principal balance (or portion thereof) and all accrued and unpaid interest, subject to a prepayment charge of 4.0 % of the then outstanding principal balance of each advance if such advance is prepaid on or before the Loan Amortization Date (as defined in the Loan Agreement), 3 % if such advance is prepaid after the Loan Amortization Date applicable to such Loan, but on or prior to twelve months following the Loan Amortization Date, and 2 % thereafter. In addition, a final payment equal to $ 250,000 for each advance (i.e., $ 750,000 in aggregate with respect to the initial $ 15.0 million) is due on the maturity date or other date of payment in full. Amounts outstanding during an event of default shall be payable on demand and shall accrue interest at an additional rate of 5.0 % per annum of the past due amount outstanding. Each advance of the loan is secured by a lien on substantially all of the assets of the Company, other than Intellectual Property and Excluded Collateral (in each case as defined in the Loan Agreement), and contains customary covenants and representations, including a liquidity covenant, financial reporting covenant and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries. The events of default under the Loan Agreement include, among other things, without limitation, and subject to customary grace periods, (1) the Company's failure to make any payments of principal or interest under the Loan Agreement, promissory notes or other loan documents, (2) the Company’s breach or default in the performance of any covenant under the Loan Agreement, (3) the occurrence of a material adverse change, (4) the Company making a false or misleading representation or warranty in any material respect, (5) the Company’s insolvency or bankruptcy, (6) certain attachments or judgments on the Company’s assets, (7) the occurrence of any material default under certain agreements or obligations of the Company involving indebtedness in excess of $ 250,000 , or (8) failing to maintain certain minimum monthly cash balances which range from approximately $ 8 to $ 13 million over the term of the loan ($ 13.0 million as of December 31, 2020). If an event of default occurs, Horizon is entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement. The Loan Agreement also contains warrant coverage of 5 % of the total amount funded. Four warrants (the “Warrants”) were issued by the Company to Horizon to purchase a combined 288,184 shares of the Company’s common stock with an exercise price of $ 3.47 and a fair value of $ 0.9 million. The Warrants are exercisable for ten years from the date of issuance. Horizon may exercise the Warrants either by (a) cash or check or (b) through a net issuance conversion. The shares of the Company’s common stock will, upon request by Horizon, be registered and freely tradable following a period of six months after issuance. The Company paid Horizon an initial commitment fee of $ 0.2 million and reimbursed Horizon for $ 30,000 of legal fees in connection with the Loan Agreement. The Company incurred approximately $ 1.2 million of legal and other direct costs in connection with the Loan Agreement. F-23 Table of Contents All fees, warrants and costs paid to Horizon and all direct costs incurred by the Company are recognized as a debt discount to the funded loans and are amortized to interest expense using the effective interest method over the term of the Loan Agreement. Amortization of the debt discount associated with the funded loans was approximately $ 2.3 million and $ 0.7 million for the years ended December 31, 2020 and 2019, respectively, and was included in interest expense in the Statements of Operations. On September 30, 2020, the Company repaid the amount outstanding under the Horizon Notes in full, which was comprised of $ 15.0 million face value of the outstanding notes, $ 0.1 million in accrued and unpaid interest, a $ 0.8 million final payment fee and prepayment penalties of $ 0.6 million. For the year ended December 31, 2020, the Company recorded interest expense of approximately $ 2.1 million related to the early repayment of the Horizon Notes. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ ($ in thousands) 2020 2019 Interest Rate Maturity Horizon Notes (1)(2) $ — $ 15,750 ​ 9.00 % October - 2022 Discount on notes payable ​ ​ — ​ ​ ( 2,321 ) ​ ​ ​ ​ Total notes payable $ — $ 13,429 ​ ​ ​ ​ Less: current portion ​ ​ — ​ ​ ( 1,250 ) ​ ​ ​ ​ Long-term notes payable $ — $ 12,179 ​ ​ ​ ​ (1) Balance includes $ 0.75 million final payment fee (2) Interest rate is 9.00 % plus one-month LIBOR Rate in excess of 2.5 % ​ Note 9 - Stockholders’ Equity Common Stock The Company, in accordance with its certificate of incorporation, as amended in November 2020, which was retroactively applied, is authorized to issue (i) 125,000,000 common shares with a par value of $ 0.0001 per share, of which 1,000,000 shares are designated as Class A Common Stock and the remainder are undesignated Common Stock, and (ii) 2,000,000 shares of Preferred Stock, 250,000 of which are designated as Class A Preferred Stock and the remainder are undesignated Preferred Stock (see below Stock Issuances to Fortress and Note 4). In connection with the Company’s formation, Fortress subscribed for 7,000,000 shares of the Class B Common Stock and 2,000,000 shares of the Company’s Common Stock, pursuant to the Founders Agreement. Fortress paid the par value of $ 900 in 2016. The fair value of the Company’s common shares approximated par value as no licenses had been transferred at that time. Dividends, if and when declared, are to be distributed pro-rata to the Class A, B and Common Stockholders. The holders of Common Stock are entitled to one vote per share of Common Stock held. The holders of Class A Common Stock are entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Class A Common Stock held by such holder are convertible and for a period of ten years from its issuance, the holders of the Class A Common Stock have the right to appoint one member of the board of directors of Mustang; to date, the holders of Class A Common Stock have not yet appointed such director. The Class B Common Stockholders are entitled, for each share of Class B Common Stock held, to a number of votes equal to 1.1 times a fraction, the numerator of which is the sum of (A) the shares of outstanding Common Stock and (B) the whole shares of Common Stock into which the shares of outstanding Class A Common Stock and the Class B Common Stock are convertible and the denominator of which is the number of shares of outstanding Class B common shares. In April 2019, COH converted 137,608 shares of the Company’s Class A common stock to 137,608 shares of the Company’s common stock. In November 2019, COH converted 17,007 shares of the Company’s Class A common stock to 17,007 shares of the Company’s common stock for a total of 154,615 Class A common stock converted into the Company’s common stock in 2019. F-24 Table of Contents On August 16, 2019, the Company’s Board adopted resolutions of the Board to ratify, approve and recommend stockholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to revise Article IV, Section A thereof in order to effect an increase in the authorized number of shares of the Company’s common stock, par value $ 0.0001 , from 50,000,000 to 85,000,000 (the “Amendment”). On August 16, 2019, the Company received approval of the Amendment by written consent in lieu of a meeting from the holders of a majority of issued and outstanding shares of the Company’s common and preferred stock. The increase in authorized shares to 85,000,000 became effective on September 30, 2019. On November 11, 2020, the Company’s Board adopted resolutions of the Board to ratify, approve and recommend stockholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to revise Article IV, Section A thereof in order to effect an increase in the authorized number of shares of the Company’s common stock, par value $ 0.0001 , from 85,000,000 to 125,000,000 (the “Amendment”). On November 11, 2020, the Company received approval of the Amendment by written consent in lieu of a meeting from the holders of a majority of issued and outstanding shares of the Company’s common and preferred stock. The increase in authorized shares to 125,000,000 became effective on December 4, 2020. At-the-Market Offering of Common Stock On July 13, 2018, the Company filed a shelf registration statement No. 333-226175 on Form S-3 , as amended on July 20, 2018 (the “2018 S-3”), which was declared effective in August 2018. Under the 2018 S-3, the Company may sell up to a total of $ 75.0 million of its securities. In connection with the 2018 S-3, the Company entered into an At-the-Market Issuance Sales Agreement (the “ATM Agreement”) with B. Riley Securities, Inc. (formerly B. Riley FBR, Inc.), Cantor Fitzgerald & Co., National Securities Corporation, and Oppenheimer & Co. Inc. (each an “Agent” and collectively, the “Agents”), relating to the sale of shares of common stock. Under the ATM Agreement, the Company pays the Agents a commission rate of up to 3.0 % of the gross proceeds from the sale of any shares of common stock. On December 31, 2020, the ATM Agreement was amended to add H.C. Wainwright & Co., LLC as an Agent. During the year ended December 31, 2020, the Company issued approximately 17.6 million shares of common stock at an average price of $ 3.40 per share for gross proceeds of $ 59.8 million under the ATM Agreement. In connection with these sales, the Company paid aggregate fees of approximately $ 1.1 million for net proceeds of approximately $ 58.7 million. During the year ended December 31, 2019, the Company issued approximately 3.5 million shares of common stock at an average price of $ 6.42 per share for gross proceeds of $ 22.5 million under the ATM Agreement. In connection with these sales, the Company paid aggregate fees of approximately $ 0.5 million for net proceeds of approximately $ 22.0 million. Public Offering of Common Stock On June 11, 2020, we entered into an underwriting agreement (the “Underwriting Agreement”) with Cantor Fitzgerald & Co., as representative of the underwriters named therein (each, an “Underwriter” and collectively with Cantor Fitzgerald & Co., the “Underwriters”). In connection with the Underwriting Agreement, we issued 10,769,231 shares of common stock (plus a 30-day option to purchase up to an additional 1,615,384 shares of common stock, of which 686,373 were exercised) at a price of $ 3.25 per share for gross proceeds of approximately $ 37.2 million, before deducting underwriting discounts and commissions and offering expenses. In connection with the public offering, we paid aggregate fees of approximately $ 2.4 million for net proceeds of approximately $ 34.8 million. The shares were sold under our S-3 registrations filed with the Securities and Exchange Commission. The offering closed on June 15, 2020, and the over-allotment closed on June 25, 2020. ​ On April 30, 2019, the Company announced the pricing of an underwritten public offering, whereby we sold 6,875,000 shares of common stock, (plus a 30-day option to purchase up to an additional 1,031,250 shares of common stock, which was fully exercised) at a price of $ 4.00 per share for gross proceeds of approximately $ 31.6 million, before deducting underwriting discounts and commissions and offering expenses. In connection with the public offering, the Company paid aggregate fees of approximately $ 2.1 million for net proceeds of approximately $ 29.5 million. The shares were sold under the 2018 S-3, filed with the Securities and Exchange Commission. The offering closed on May 2, 2019, and the over-allotment closing was on May 8, 2019. F-25 Table of Contents Registration Statements On October 23, 2020, the Company filed a shelf registration statement No. 333-249657 on Form S-3 (the “2020 S-3”), which was declared effective on December 4, 2020. Under the 2020 S-3, the Company may sell up to a total of $ 100.0 million of its securities. As of December 31, 2020, approximately $ 85.7 million of the 2020 S-3 remains available for sales of securities. On August 16, 2019, the Company filed a shelf registration statement No. 333-233350 on Form S-3 (the “2019 S-3”), which was declared effective on September 30, 2019. Under the 2019 S-3, the Company may sell up to a total of $ 75.0 million of its securities. As of December 31, 2020, the 2019 S-3 is no longer available for sales of securities. Stock Issuances to Fortress Under the terms of the Second Amended and Restated Founders Agreement, which became effective July 22, 2016, Fortress will receive a grant of shares of our common stock equal to two and one-half percent ( 2.5 %) of the gross amount of any equity or debt financing. For the year ended December 31, 2020, the Company issued 342,773 shares of common stock and recorded 101,632 shares issuable to Fortress, which equaled 2.5 % of the gross proceeds of $ 59.8 million from the sale of shares of common stock under Mustang’s At-the-Market Offering. For the year ended December 31, 2020, the Company issued 286,390 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 37.2 million from the sale of shares of common stock, before deducting underwriting discounts and commissions and offering expenses under Mustang’s Public Offering. ​ For the year ended December 31, 2019, the Company issued 108,069 shares of common stock to Fortress, which equaled 2.5 % of the gross funded amount of the Horizon Notes. For the year ended December 31, 2019, the Company issued 87,656 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 22.5 million from the sale of shares of common stock under Mustang’s At-the-Market Offering. For the year ended December 31, 2019, the Company issued 197,656 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 31.6 million from the sale of shares of common stock under Mustang’s Public Offering. Equity Incentive Plan The Company has in effect the 2016 Incentive Plan (the “Incentive Plan”). The Incentive Plan was adopted in 2016 by our stockholders and the compensation committee of the Company’s board of directors and is authorized to grant stock-based awards to directors, officers, employees and consultants. The plan initially authorized grants to issue up to 2,000,000 shares of authorized but unissued common stock and expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of grant. ​ In June 2018, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 3,000,000 shares, for a total of 5,000,000 shares. Total shares available for the issuance of stock-based awards under the Incentive Plan was 1,180,085 shares at December 31, 2020. ​ F-26 Table of Contents Stock Options The following table summarizes stock option activities for the year ended December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ Weighted Average ​ Contractual Life (in ​ ​ Stock Options ​ Exercise Price ​ years) Outstanding at December 31, 2018 1,241,675 ​ $ 5.73 8.31 Options granted — ​ — — Outstanding at December 31, 2019 1,241,675 ​ ​ 5.73 7.31 Options forfeited ( 100,000 ) ​ 5.73 — Outstanding at December 31, 2020 1,141,675 ​ 5.73 6.31 Options vested and exercisable at December 31, 2020 784,902 ​ $ 5.73 6.31 ​ As of December 31, 2020, the Company had unrecognized stock-based compensation expense related to options of $ 0.1 million, which is expected to be recognized over a weighted average period of approximately 0.8 year . Effective on January 1, 2017, the Company elected to account for forfeited awards as they occur as permitted by ASU 2016-09. Ultimately, the actual expenses recognized over the vesting period will be for those shares that vested. Prior to making this election, the Company estimated a forfeiture rate for awards at 0 %, as the Company did not have a significant history of forfeitures. Restricted Stock Awards Certain employees and directors have been awarded restricted stock. The restricted stock vesting consists of milestone and time-based vesting. The following table summarizes restricted stock award activities for the year ended December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant Date Fair ​ ​ Number of Shares ​ Value Nonvested at December 31, 2018 502,636 ​ $ 5.73 Granted ​ 119,060 ​ ​ 3.83 Vested ​ — ​ ​ — Forfeited ( 322,636 ) ​ 5.14 Nonvested at December 31, 2019 299,060 ​ $ 5.66 Granted ​ 83,055 ​ ​ 3.08 Vested ​ ( 80,001 ) ​ ​ 5.73 Nonvested at December 31, 2020 302,114 ​ $ 4.93 ​ As of December 31, 2020, the Company had unrecognized stock-based compensation expense related to restricted stock of $ 0.3 million, which is expected to be recognized over a weighted average period of approximately 2.2 years. F-27 Table of Contents Restricted Stock Units The following table summarizes restricted stock units’ activities for the year ended December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant Date Fair ​ ​ Number of Units ​ Value Nonvested at December 31, 2018 1,032,084 ​ $ 7.77 Granted 625,000 ​ 3.01 Forfeited ​ ( 344,750 ) ​ ​ 7.67 Vested ​ ( 199,917 ) ​ ​ 7.81 Nonvested at December 31, 2019 1,112,417 ​ $ 5.11 Granted 973,000 ​ 2.95 Forfeited ​ ( 205,125 ) ​ ​ 4.24 Vested ( 411,733 ) ​ 4.87 Nonvested at December 31, 2020 1,468,559 ​ $ 3.87 ​ As of December 31, 2020, the Company had unrecognized stock-based compensation expense related to restricted stock units of approximately $ 2.6 million, which is expected to be recognized over a weighted average period of approximately 1.9 years. The following table summarizes stock-based compensation expense for the years ended December 31, 2020 and 2019 (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2020 2019 General and administrative ​ $ 1,550 ​ $ 1,790 Research and development ​ 1,437 ​ 874 Total stock-based compensation expense ​ $ 2,987 ​ $ 2,664 ​ Stock Warrants In connection with the Company’s offering of shares of common stock in a private placement, each investor received a warrant equal to 25 % of the common shares purchased in connection with the offering. Further, National Securities Corporation received Placement Agent Warrants. A summary of warrant activities for years ended December 31, 2020 and 2019, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ Weighted Average ​ Contractual Life (in ​ ​ Warrants ​ Exercise Price ​ years) Outstanding as of December 31, 2018 5,210,698 ​ $ 8.32 3.10 Granted 288,184 ​ 3.47 9.25 Exercised ( 93,213 ) ​ — — Outstanding as of December 31, 2019 5,405,669 ​ $ 8.20 2.40 Cashless exercised ( 2,999 ) ​ — — Outstanding as of December 31, 2020 5,402,670 ​ $ 8.21 1.39 ​ Upon the exercise of warrants, the Company will issue new shares of Common Stock. ​ Employee Stock Purchase Plan In connection with our Employee Stock Purchase Plan (“ESPP”), eligible employees of Mustang and Fortress can purchase the Company’s Common Stock at the end of a predetermined offering period at 85 % of the lower of the fair market value at the beginning or end of the offering period. F-28 Table of Contents As of December 31, 2020, 140,856 shares have been purchased and 259,144 shares are available for future sale under the Company’s ESPP. ​ Note 10 - Income Taxes The Company has accumulated net losses since inception and has not recorded an income tax provision or benefit during the years ended December 31, 2020 and 2019. ​ A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2020 2019 Statutory federal income tax rate 21 % 21 % State taxes, net of federal tax benefit 16 % 15 % Non-deductible items ( 1 ) % — % Credits 4 % 3 % Federal tax rate change — % — % State tax rate change 1 % 4 % Other — % ( 2 ) % Change in valuation allowance ( 41 ) % ( 41 ) % Income taxes provision (benefit) — — ​ ​ The components of the net deferred tax asset as of December 31, 2020 and 2019 are the following ($ in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2020 2019 Deferred tax assets: ​ ​ Net operating loss carryovers ​ $ 45,090 ​ $ 27,446 Stock compensation and other ​ 2,444 ​ 2,037 Change in fair value of warrant liabilities ​ 59 ​ 57 Amortization of license ​ 12,804 ​ 9,454 Lease liability ​ ​ 825 ​ ​ 746 Accruals and reserves ​ 504 ​ 519 Startup costs ​ 7 ​ 7 Debt issuance costs ​ ​ — ​ ​ 21 Tax credits ​ 5,743 ​ 2,746 Total deferred tax assets ​ ​ 67,476 ​ ​ 43,033 Less: valuation allowance ​ ( 67,073 ) ​ ( 42,608 ) Net deferred tax assets ​ $ 403 ​ $ 425 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Right of use asset ​ ​ ( 403 ) ​ ​ ( 425 ) Total deferred tax assets, net ​ $ — ​ $ — ​ The Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against its net deferred tax assets as of December 31, 2020 and 2019. A valuation allowance of approximately $ 67.1 million and $ 42.6 million, respectively, was recorded for the years ended December 31, 2020 and 2019. As of December 31, 2020, the Company had federal and state net operating loss carryforwards of approximately $ 133.3 million and $ 263.6 million, respectively. Approximately $ 109.6 million and $ 43,000 of the federal and state net operating loss carryforwards, respectively, can be carried forward indefinitely. The remaining $ 23.7 million and $ 263.5 million of federal and state net operating loss carryforwards will begin to expire, if not utilized, by 2035 and 2029 , respectively. As of December 31, 2020, the Company had federal and state income tax credits of approximately $ 4.8 million and $ 1.2 F-29 Table of Contents million, respectively, which will begin to expire in 2033 . Under the provisions of Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change”, as defined therein, is subject to limitations on its use of pre-change NOLs and income tax credits carryforwards to offset future tax liabilities. The Company is currently evaluating the impact of Section 382 on its tax attributes. The Company has recorded a full valuation allowance on all of its deferred tax assets as it believes that it is more likely than not that the deferred tax assets will not be realized regardless of whether an “ownership change” has occurred. There are no significant items determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC 740 “Income Taxes” (“ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s financial statements for the period ended December 31, 2020. The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months. Additionally, ASC 740 provides guidance on the recognition of interest and penalties related to income taxes. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the period ended December 31, 2020. The federal and state tax returns for the years ended December 31, 2017, 2018, and 2019 are currently open for examination under the applicable federal and state income tax statutes of limitations. ​ In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer's social security payments, net operating loss utilization and carryback periods and modifications to the net interest deduction limitations. The CARES Act did not have a material impact on the Company’s income tax provision for 2020. The Company will continue to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows. On December 27, 2020, the President of the United States signed the Consolidated Appropriations Act, 2021 (“Consolidated Appropriations Act”) into law. The Consolidated Appropriations Act is intended to enhance and expand certain provisions of the CARES Act, allows for the deductions of expenses related to the Payroll Protection Program funds received by companies, and provides an update to meals and entertainment expensing for 2021. The Consolidated Appropriations Act did not have a material impact to the Company’s income tax provision for 2020. ​ ​ ​ ​ ​ F-30 Table of Contents SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. ​ Mustang Bio, Inc. By: /s/ Manuel Litchman Name: Manuel Litchman Title: President and Chief Executive Officer March 24, 2021 ​ POWER OF ATTORNEY We, the undersigned directors and/or executive officers of Mustang Bio, Inc., hereby severally constitute and appoint Manuel Litchman, acting singly, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign this Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or appropriate to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby approving, ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. ​ Signature Title Date /s/ Michael S. Weiss Michael S. Weiss Executive Chairman of the Board March 24, 2021 /s/ Manuel Litchman Manuel Litchman, M.D. President and Chief Executive Officer March 24, 2021 /s/ Lindsay A. Rosenwald Lindsay A. Rosenwald, M.D. Director March 24, 2021 /s/ Neil Herskowitz Neil Herskowitz Director March 24, 2021 /s/ Adam Chill Adam Chill Director March 24, 2021 /s/ Michael Zelefsky Michael Zelefsky, M.D. Director March 24, 2021 /s/ Brian Achenbach Brian Achenbach Senior Vice President of Finance & Corporate Controller March 24, 2021 ​ ​ ​ ​ 67