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, 2021, of the design 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, 2021. 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, 2021, 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. 73 ​ Table of Contents Item 9B. Other Information ​ None. ​ Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevents Inspections. ​ 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 2022 Annual Meeting of Stockholders. ​ Item 11. Executive Compensation ​ The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2022 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 2022 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 2022 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 2022 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 ( KPMG LLP , New York, NY ; PCAOB ID: 185 ) F-2 Report of Independent Registered Public Accounting Firm ( BDO USA, LLP , Boston, MA ; PCAOB ID: 243 ) F-3 Financial Statements: Balance Sheets as of December 31, 2021 and 2020 F-4 Statements of Operations for the Years Ended December 31, 2021 and 2020 F-5 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 2020 F-6 Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 F-7 Notes to Financial Statements F-8 - F-27 ​ 74 ​ Table of Contents (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. 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 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Mustang Bio, Inc., dated June 17, 2021. * Filed as Exhibit 3.1 on the Company’s Form 8-K filed on June 22, 2021. ​ ​ ​ 3.6 ​ 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. 75 ​ Table of Contents Exhibit No. Description 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. 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 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. ​ ​ ​ 10.24 ​ Second Amendment to the Mustang Bio, Inc. 2016 Equity Incentive Plan. †* Filed as Exhibit 10.1 on the Company’s Form 8-K filed on June 22, 2021. ​ ​ ​ 10.25 ​ Amendment to the Mustang Bio, Inc. 2019 Employee Stock Purchase Plan. †* Filed as Exhibit 10.2 on the Company’s Form 8-K filed on June 22, 2021. ​ ​ ​ 76 ​ Table of Contents Exhibit No. Description 16.1 ​ Letter from BDO USA, LLP to the Securities and Exchange Commission dated September 22, 2021, incorporated by reference to the Form 8-K filed on September 24, 2021. * ​ ​ ​ 23.1 ​ Consent of Independent Registered Public Accounting Firm, BDO USA, LLP, Boston, Massachusetts. ​ ​ ​ 23.2 ​ 24.1 Consent of Independent Registered Public Accounting Firm, KPMG, LLP, Hartford, Connecticut. ​ 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. 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, 2021, 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. ​ ​ ​ 77 ​ Table of Contents ​ INDEX TO FINANCIAL STATEMENTS ​ Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY; PCAOB ID: 185) F-2 Report of Independent Registered Public Accounting Firm (BDO USA, LLP, Boston, MA; PCAOB ID: 243) F-3 Balance Sheets as of December 31, 2021 and 2020 F-4 Statements of Operations for the Years Ended December 31, 2021 and 2020 F-5 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 2020 F-6 Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 F-7 Notes to Financial Statements F-8 – F-27 ​ ​ ​ F-1 ​ Table of Contents ​ Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Mustang Bio, Inc. Worcester, Massachusetts ​ Opinion on the Financial Statements We have audited the accompanying balance sheet of Mustang Bio, Inc. (the Company) as of December 31, 2021, the related statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. ​ Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 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 audit 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 audit, 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 audit 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 audit 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 audit provides a reasonable basis for our opinion. ​ ​ /s/ KPMG LLP ​ ​ We have served as the Company’s auditor since 2021. ​ Hartford, Connecticut March 23, 2022 ​ ​ ​ ​ ​ ​ ​ F-2 ​ Table of Contents ​ ​ ​ Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Mustang Bio, Inc. Worcester, Massachusetts ​ Opinion on the Financial Statements We have audited the accompanying balance sheet of Mustang Bio, Inc. (the “Company”) as of December 31, 2020, the related statements of operations, stockholders’ equity, and cash flows for the year 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 the results of its operations and its cash flows for the year 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 audit. 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 audit 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion. ​ /s/ BDO USA, LLP ​ Boston, Massachusetts March 24, 2021 ​ We have served as the Company's auditor from 2016 to 2021. ​ ​ ​ F-3 ​ Table of Contents MUSTANG BIO, INC. BALANCE SHEETS (in thousands, except for share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2021 2020 ​ ​ ​ ​ ​ ASSETS ​ ​ Current Assets: ​ ​ Cash and cash equivalents ​ $ 109,618 ​ $ 97,804 Other receivables - related party ​ 50 ​ 15 Prepaid expenses and other current assets ​ 2,038 ​ 1,715 Total current assets ​ 111,706 ​ 99,534 ​ ​ ​ Property, plant and equipment, net ​ 9,025 ​ 7,529 Fixed assets - construction in process ​ 2,027 ​ 499 Restricted cash ​ 1,000 ​ 1,000 Other assets ​ 362 ​ 250 Operating lease right-of-use asset, net ​ ​ 1,050 ​ ​ 1,088 Total Assets ​ $ 125,170 ​ $ 109,900 ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ Current Liabilities: ​ ​ Accounts payable and accrued expenses ​ $ 9,744 ​ $ 8,747 Payables and accrued expenses - related party ​ ​ 723 ​ ​ 490 Operating lease liabilities - short-term ​ ​ 348 ​ ​ 278 Total current liabilities ​ 10,815 ​ 9,515 ​ ​ ​ Deferred income ​ 270 ​ — Operating lease liabilities - long-term ​ ​ 1,685 ​ ​ 1,950 Total Liabilities ​ 12,770 ​ 11,465 ​ ​ ​ ​ 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, 2021 and 2020, respectively ​ — ​ — Common Stock ($ 0.0001 par value), 150,000,000 and 125,000,000 shares authorized as of December 31, 2021 and 2020, respectively ​ ​ Class A common shares, 845,385 shares issued and outstanding as of December 31, 2021 and 2020, respectively ​ — ​ — Common shares, 93,582,991 and 70,920,693 shares issued and outstanding as of December 31, 2021 and 2020, respectively ​ 9 ​ 7 Common stock issuable, 2,536,607 and 2,103,122 shares as of December 31, 2021 and 2020, respectively ​ 4,329 ​ 7,939 Additional paid-in capital ​ 359,906 ​ 275,963 Accumulated deficit ​ ( 251,844 ) ​ ( 185,474 ) Total Stockholders’ Equity ​ 112,400 ​ 98,435 Total Liabilities and Stockholders’ Equity ​ $ 125,170 ​ $ 109,900 ​ See accompanying notes to financial statements. F-4 Table of Contents MUSTANG BIO, INC. STATEMENTS OF OPERATIONS (in thousands, except for share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 2020 Operating expenses: ​ ​ Research and development ​ $ 49,864 ​ $ 37,237 Research and development – licenses acquired ​ 5,842 ​ 10,064 General and administrative ​ 11,017 ​ 9,505 Total operating expenses ​ 66,723 ​ 56,806 Loss from operations ​ ( 66,723 ) ​ ( 56,806 ) ​ ​ ​ Other income (expense) ​ ​ Interest income ​ 368 ​ 708 Interest expense ​ ( 15 ) ​ ( 3,917 ) Total other income (expense) ​ 353 ​ ( 3,209 ) Net Loss ​ $ ( 66,370 ) ​ $ ( 60,015 ) ​ ​ ​ ​ Net loss per common share outstanding, basic and diluted ​ $ ( 0.76 ) ​ $ ( 1.14 ) ​ ​ ​ Weighted average number of common shares outstanding, basic and diluted ​ 87,885,235 ​ 52,588,781 ​ See accompanying notes to financial statements. ​ ​ F-5 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, 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 Common stock issuable - Founders Agreement — ​ — — ​ — — ​ — ​ 4,212 ​ — ​ — ​ 4,212 Issuance of common shares - Founders Agreement — ​ — — ​ — 2,001,490 ​ — ​ ( 7,577 ) ​ 7,577 ​ — ​ — Issuance of common shares, net of offering costs - At-the-Market Offering ​ — ​ ​ — ​ — ​ ​ — ​ 19,419,944 ​ ​ 2 ​ ​ — ​ ​ 70,620 ​ ​ — ​ ​ 70,622 Issuance of common shares - Equity fee on At-the-Market Offering ​ — ​ ​ — ​ — ​ ​ — ​ 576,157 ​ ​ — ​ ​ ( 245 ) ​ ​ 2,129 ​ ​ — ​ ​ 1,884 Issuance of common shares under ESPP ​ — ​ ​ — ​ — ​ ​ — ​ 114,321 ​ ​ — ​ ​ — ​ ​ 309 ​ ​ — ​ ​ 309 Correction to previously issued shares ​ — ​ ​ — ​ — ​ ​ — ​ 60,999 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expenses — ​ — — ​ — 489,249 ​ — ​ — ​ 3,308 ​ — ​ 3,308 Exercise of warrants — ​ — — ​ — 138 ​ — ​ — ​ — ​ — ​ — Net loss — ​ — — ​ — — ​ — ​ — ​ — ​ ( 66,370 ) ​ ( 66,370 ) Balances at December 31, 2021 250,000 ​ $ — 845,385 ​ $ — 93,582,991 ​ $ 9 ​ $ 4,329 ​ $ 359,906 ​ $ ( 251,844 ) ​ $ 112,400 ​ See accompanying notes to financial statements. ​ ​ F-6 Table of Contents MUSTANG BIO, INC. STATEMENTS OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 2020 Cash Flows from Operating Activities: ​ ​ Net loss ​ $ ( 66,370 ) ​ $ ( 60,015 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Issuance of common shares - Equity fee on At-the-Market Offering to Fortress Biotech ​ 1,884 ​ 1,514 Issuance of common shares - Equity fee on Public Offering to Fortress Biotech ​ ​ — ​ ​ 932 Common shares issuable for Founders Agreement ​ ​ 4,212 ​ ​ 7,577 Research and development - licenses acquired ​ ​ 1,630 ​ ​ 2,487 Stock-based compensation expenses ​ 3,308 ​ 2,987 Depreciation expense ​ 2,167 ​ 1,677 Accretion of debt discount ​ ​ — ​ ​ 2,321 Amortization of operating lease right-of-use assets ​ 139 ​ 108 Changes in operating assets and liabilities: ​ ​ ​ Prepaid expenses and other assets ​ ( 401 ) ​ ( 84 ) Other receivables - related party ​ ​ ( 35 ) ​ ​ 4 Accounts payable and accrued expenses ​ ( 408 ) ​ 3,151 Payable and accrued expenses - related party ​ 233 ​ ( 106 ) Deferred income ​ ​ 270 ​ ​ — Lease liabilities ​ ​ ( 296 ) ​ ​ 128 Net cash used in operating activities ​ ( 53,667 ) ​ ( 37,319 ) ​ ​ ​ Cash Flows from Investing Activities: ​ ​ Purchase of research and development licenses ​ ( 1,380 ) ​ ( 2,487 ) Purchase of fixed assets ​ ( 3,986 ) ​ ( 1,925 ) Net cash used in investing activities ​ ( 5,366 ) ​ ( 4,412 ) ​ ​ ​ Cash Flows from Financing Activities: ​ ​ Proceeds from issuance of common shares - At-the-Market Offering ​ ​ 71,919 ​ ​ 59,805 Offering costs for the issuance of common shares - At-the-Market Offering ​ ​ ( 1,381 ) ​ ​ ( 1,124 ) Proceeds from issuance of common shares - Public Offering ​ ​ — ​ ​ 37,230 Offering costs for the issuance of common shares - Public Offering ​ ​ — ​ ​ ( 2,388 ) Repayment of notes payable ​ ​ — ​ ​ ( 15,750 ) Proceeds from issuance of common shares under ESPP ​ ​ 309 ​ ​ 349 Net cash provided by financing activities ​ 70,847 ​ 78,122 ​ ​ ​ Net change in cash, cash equivalents and restricted cash ​ 11,814 ​ 36,391 Cash, cash equivalents and restricted cash, beginning of the period ​ 98,804 ​ 62,413 Cash, cash equivalents and restricted cash, end of the period ​ $ 110,618 ​ $ 98,804 ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ Cash paid for interest ​ $ — ​ $ 1,593 ​ ​ ​ Supplemental disclosure of noncash investing and financing activities: ​ ​ Fixed assets (acquired but not paid) ​ $ 1,270 ​ $ 31 Issuance of common shares - Founders Agreement ​ $ 7,577 ​ $ 4,923 Research and development licenses included in accounts payable and accrued expenses ​ $ 250 ​ $ — Lease liabilities arising from obtaining right-of-use assets ​ $ 101 ​ $ — Offering costs for the issuance of common shares - Public Offering, in accounts payable and accrued expenses ​ $ — ​ $ 84 ​ See accompanying notes to financial statements. F-7 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, 2021, the Company had an accumulated deficit of $ 251.8 million. The Company has funded its operations to date primarily through the sale of equity, its Loan Agreement with Runway and its venture debt financing agreement (the "Horizon 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 Horizon 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, 2021, 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 impact 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-8 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, 2021 and 2020, consisted of cash and money market funds in institutions in the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation 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, 2021 and 2020, 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; $ 2.0 million and $ 0.5 million are recorded in fixed assets - construction in process on the balance sheet at December 31, 2021 and 2020, 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-9 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 2,536,607 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, 2022. This was shown in the Statement of Stockholders’ Equity at December 31, 2021, as Common stock issuable – Founders Agreement. The Company recorded an expense of approximately $ 4.2 million in research and development - licenses acquired related to these issuable shares during the year ended December 31, 2021. 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-10 Table of Contents Leases 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. 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. 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, ​ 2021 2020 Warrants 3,308,654 5,402,670 Options 1,141,675 1,141,675 Class A Preferred Shares 250,000 250,000 Unvested restricted stock awards 280,983 302,114 Unvested restricted stock units 2,335,557 1,468,559 Total 7,316,869 8,565,018 ​ Comprehensive Loss The Company has no components of other comprehensive loss, and therefore, comprehensive loss equals net loss. F-11 Table of Contents Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption will be permitted. The Company is currently evaluating the impact of this standard on its financial statements. ​ In June 2016, FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” . ASU 2016-13 requires that expected credit losses relating to financial assets are measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. 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, 2021 and 2020, the Company recorded the following expense in research and development for licenses acquired: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ($ in thousands) 2021 2020 City of Hope National Medical Center ​ ​ ​ ​ ​ ​ CD123 ​ $ 250 ​ $ 334 CS1 ​ ​ — ​ ​ 200 IL13Rα2 ​ ​ — ​ ​ 333 Spacer ​ ​ — ​ ​ 333 PSCA ​ ​ 250 ​ ​ 200 HER2 ​ ​ — ​ ​ 500 CSL Behring (Calimmune) ​ ​ 30 ​ ​ 170 Leiden University Medical Centre ​ ​ 350 ​ ​ — Fred Hutchinson Cancer Research Center - CD20 ​ ​ — ​ ​ 300 Mayo Clinic ​ ​ 750 ​ ​ — SIRION Biotech LentiBOOST TM ​ ​ — ​ ​ 117 Fortress PIK Dividend ​ ​ 4,212 ​ ​ 7,577 Total ​ $ 5,842 ​ $ 10,064 ​ 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 F-12 Table of Contents 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, 2021, the Company expensed a non-refundable milestone payment of $ 0.3 million for the 24th patient treated in the Phase 1 clinical study for MB-102 at COH. 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 . 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. 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. 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. 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, 2021, the Company expensed a non-refundable milestone payment of $ 0.3 million for the twelfth patient treated in the Phase 1 clinical study of MB-105 at COH. 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. 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 F-13 Table of Contents 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 twelfth patient treated in the Phase 1 clinical study of HER2 CAR T technology at COH. 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, 2021 and 2020, the Company expensed a non-refundable milestone payments of $ 30,000 and $ 0.2 million, respectively, in connection with the Calimmune license. Leiden University Medical Centre License (MB-110) ​ On September 8, 2021, the Company entered into an exclusive, worldwide licensing agreement with Leiden University Medical Centre (“Leiden”) for the use of a gene therapy under development for the treatment of severe immunodeficiency caused by RAG1 deficiency (the “Leiden License”). Pursuant to the Leiden License, the Company expensed an upfront fee of $ 0.4 million. Additional payments are due for the achievement of certain development milestones totaling up to $ 31 million and royalty payments in the low to mid-single digits as a percentage of revenue are due on net sales of licensed products. For the year ended December 31, 2021, the Company expensed an upfront payment of $ 0.4 million in connection with the Leiden License. ​ 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. Mayo Clinic - CAR T Technology License ​ On April 1, 2021, the Company entered into an exclusive license agreement with the Mayo Foundation for Medical Education and Research (the “Mayo Clinic”) for a novel technology that may be able to transform the administration of CAR T therapies and has the potential to be used as an off-the shelf therapy. Pursuant to this agreement, the Company paid an upfront fee of $ 0.8 million and will pay an annual maintenance fee of $ 25,000 . Additional payments are due for each of two licensed products for the achievement of eleven development and commercial milestones totaling up to $ 92.6 million per product, and royalty payments in the mid-single digits as a percentage of revenue are due on net sales of licensed products. ​ F-14 Table of Contents For the year ended December 31, 2021, the Company expensed an upfront payment of $ 0.8 million pursuant to the terms of the license agreement. ​ 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 $ 5.2 million (€ 4.7 million) in the aggregate are due upon achievement of certain milestones. Additional milestone payments totaling up to $ 3.9 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. ​ In December 2021 this licensing agreement was amended to include CD20-directed CAR Ts. SIRION is eligible to receive additional payments totaling up to approximately $9.1 million upon the achievement of certain development and commercialization milestones for the additional product. For the year ended December 31, 2020, the Company expensed an up-front payment of $ 0.1 million pursuant to the terms of the license agreement. ​ Research and Development Expenses - Sponsored Research and Clinical Trial Agreements For the year ended December 31, 2021 and 2020, 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) 2021 2020 City of Hope National Medical Center ​ $ — ​ $ 500 CD123 ​ ​ 301 ​ ​ 433 IL13Rα2 ​ ​ 1,169 ​ ​ 530 CS1 ​ ​ 608 ​ ​ 885 HER2 ​ ​ 697 ​ ​ 1,519 PSCA ​ ​ 107 ​ ​ 204 Fred Hutchinson Cancer Research Center - CD20 ​ ​ 1,979 ​ ​ 1,804 St. Jude Children's Research Hospital - XSCID ​ ​ 865 ​ ​ 1,842 LUMC - RAGI SCID ​ ​ 170 ​ ​ — Mayo Clinic ​ ​ 695 ​ ​ — Total ​ $ 6,591 ​ $ 7,717 ​ 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 year ended December 31, 2020, the Company recorded $ 0.5 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. 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 F-15 Table of Contents to fund approximately $ 0.2 million over three years pertaining to the clinical development of CD123. For the years ended December 31, 2021 and 2020, the Company recorded $ 0.3 million and $ 0.4 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, 2021 and 2020, the Company recorded $ 1.2 million and $ 0.5 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. In March 2021, the Company entered into a clinical research support agreement for an Institutional Review Board-approved, investigator-initiated protocol entitled: “Single Patient Treatment with Intraventricular Infusions of IL13Rα2-targeting and HER2-targeting Chimeric Antigen Receptor (CAR)-T cells for a Single Patient (UPN 181) with Recurrent Multifocal Malignant Glioma.” Pursuant to the terms of this agreement, the Company will contribute up to $ 0.2 million in connection with the ongoing investigator-initiated study. 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 the Company 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. For the years ended December 31, 2021 and 2020, the Company recorded $ 0.6 million and $ 0.9 million, respectively, 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, 2021 and 2020, the Company recorded $ 0.7 million and $ 1.5 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. ​ F-16 Table of Contents 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 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 years ended December 31, 2021 and 2020, the Company recorded $ 0.1 million and $ 0.2 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 $ 1.8 million for the treatment of five patients with chronic lymphocytic leukemia and other research costs. For the years ended December 31, 2021 and 2020, the Company recorded $ 2.0 million and $ 1.8 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 the Company 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, 2021 and 2020, the Company recorded $ 0.9 million and $ 1.8 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. RAG1-SCID (MB-110) Sponsored Research Support Agreement with Leiden University Medical Centre ​ On September 8, 2021, in connection with the Leiden License, the Company entered into an SRA with Leiden under which the Company will fund research in the amount of approximately $ 0.5 million annually over a period of 5 years . The research performed pursuant to this agreement will support technology the Company has licensed from Leiden for the use of a gene therapy under development for the treatment of severe immunodeficiency caused by RAG1. For the year ended December 31, 2021, 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 Support Agreement with Mayo Clinic In June 2021, the Company entered into an SRA with Mayo Clinic under which the Company will fund research in the amount of $ 2.1 million over a period of two years . The research performed pursuant to this agreement will support technology the Company has licensed from Mayo Clinic for a novel technology that may be able to transform the administration of CAR T therapies and has the potential to be used as an off-the-shelf therapy. For the year ended December 31, 2021, the Company recorded $ 0.7 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement. ​ ​ F-17 Table of Contents 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 is 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, 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 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. Pursuant to the MSA and the Company’s Certificate of Incorporation, Fortress and its affiliates, including all members of the Company’s Board of Directors, will have no fiduciary or other duty to communicate or present any corporate opportunities to the Company or to refrain from engaging in business that is similar to that of the Company. 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. The Company records fifty percent of the Annual Consulting Fee in research and development expense and fifty percent in general and administrative expense in F-18 Table of Contents the Statement of Operations. For the years ended December 31, 2021 and 2020, the Company recorded expense of $ 0.5 million and $ 0.5 million, respectively, related to this agreement. For the year ended December 31, 2021, the Company issued 576,157 shares of common stock and recorded 51,295 shares issuable to Fortress, which equaled 2.5 % of the gross proceeds of $ 71.9 million from the sale of shares of common stock under Mustang’s At-the-Market Offering. The Company recorded an expense of approximately $ 1.9 million in general and administrative expenses related to these shares for the year ended December 31, 2021. 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 during the year ended December 31, 2020. 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, 2021, the Company recognized $ 106,000 in expense in its Statements of Operations related to the director compensation, including approximately $ 56,000 in expense related to equity incentive grants. 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. The company issued Dr. Rosenwald 13,774 and 16,611 restricted stock awards for the years ended December 31, 2021 and 2020, respectively. 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, 2021, the Company recognized $ 116,000 in expense in its Statements of Operations related to the advisory agreement, including approximately $ 56,000 in expense related to equity incentive grants. 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. The company issued Mr. Weiss 13,774 and 16,611 restricted stock awards for the years ended December 31, 2021 and 2020, respectively. F-19 Table of Contents ​ ​ 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) ​ 2021 ​ 2020 Computer equipment 3 ​ $ 145 ​ $ 68 Furniture and fixtures 5 ​ 370 ​ 181 Machinery and equipment 5 ​ 6,550 ​ 5,748 Leasehold improvements 9 ​ 7,694 ​ 5,099 Construction in process N/A ​ 2,027 ​ 499 Total property and equipment ​ ​ ​ 16,786 ​ 11,595 Less: accumulated depreciation ​ ​ ​ ( 5,734 ) ​ ( 3,567 ) Property and equipment, net ​ ​ ​ $ 11,052 ​ $ 8,028 ​ Mustang’s depreciation expense for the years ended December 2021 and 2020 was approximately $ 2.2 million and $ 1.7 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, 2021 and 2020, accounts payable and accrued expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ($ in thousands) ​ 2021 2020 Accounts payable ​ $ 3,512 ​ $ 3,518 Research and development ​ ​ 3,083 ​ ​ 2,862 Accrued compensation ​ ​ 2,595 ​ ​ 2,009 Other ​ ​ 554 ​ ​ 358 Total accounts payable and accrued expenses ​ $ 9,744 ​ $ 8,747 ​ ​ 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, the Company 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 the Company 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 copiers, which expire in 2024. 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 F-20 Table of Contents classified as financing leases. At December 31, 2021, the Company had operating lease liabilities of $ 2.0 million and right of use assets of $ 1.1 million, which were included in the Balance Sheet. 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) 2021 2020 Lease cost ​ ​ Operating lease cost $ 315 $ 330 Variable lease cost ​ ​ 599 ​ ​ 470 Total $ 914 $ 800 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ($ in thousands) 2021 2020 Operating cash flows from operating leases $ 484 ​ $ 76 ​ Weighted-average remaining lease term – operating leases ​ ​ 4.8 ​ ​ ​ 5.8 ​ 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, 2022 ​ $ 516 Year ended December 31, 2023 ​ ​ 529 Year ended December 31, 2024 ​ 513 Year ended December 31, 2025 ​ 516 Year ended December 31, 2026 ​ 439 Thereafter ​ ​ — Total ​ 2,513 Less present value discount ​ ​ ( 481 ) Operating lease liabilities ​ $ 2,033 ​ ​ 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. Amortization of the debt discount associated with the funded loans was approximately $ 2.3 million for the year ended December 31, 2020, 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. F-21 Table of Contents Note 9 - Stockholders’ Equity Common Stock The Company, in accordance with its certificate of incorporation, as amended in November 2020 and June 2021, which was retroactively applied, is authorized to issue (i) 150,000,000 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. There was no Class B Common Stock outstanding as of December 31, 2021. 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. On June 17, 2021, the stockholders of the Company voted at the 2021 Annual Meeting to approve an amendment to Mustang’s Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance by 25,000,000 shares, bringing the total number of authorized shares of common stock to 150,000,000 shares. The increase in authorized shares to 150,000,000 became effective on June 17, 2021. 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, 2021, the Company issued approximately 19.4 million shares of common stock at an average price of $ 3.70 per share for gross proceeds of $ 71.9 million under the ATM Agreement. In connection with these sales, the Company paid aggregate fees of approximately $ 1.3 million for net proceeds of approximately $ 70.6 million. F-22 Table of Contents 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. 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. ​ Registration Statements ​ On April 23, 2021, the Company filed a shelf registration statement No. 333-255476 on Form S-3 (the “2021 S-3”), which was declared effective on May 24, 2021. Under the 2021 S-3, the Company may sell up to a total of $ 200.0 million of its securities. As of December 31, 2021, there have been no sales of securities under the 2021 S-3. ​ 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, 2021, approximately $ 14.6 million of the 2020 S-3 remains 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, 2021, the Company issued 576,157 shares of common stock and recorded 51,295 shares issuable to Fortress, which equaled 2.5 % of the gross proceeds of $ 71.9 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 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. 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. ​ F-23 Table of Contents 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. In June 2021, 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 8,000,000 shares. As of December 31, 2021, 2,823,838 shares are available for issuance of stock-based awards under the Incentive Plan. ​ Stock Options The following table summarizes stock option activities for the year ended December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ Weighted Average ​ Contractual Life (in ​ ​ Stock Options ​ Exercise Price ​ years) 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 Outstanding at December 31, 2021 1,141,675 ​ 5.73 5.31 Options vested and exercisable at December 31, 2021 713,547 ​ $ 5.73 5.31 ​ As of December 31, 2021, the Company had no unrecognized stock-based compensation expense related to options. The Company accounts for forfeited awards as they occur as permitted. 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, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant Date Fair ​ ​ Number of Shares ​ Value 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 Granted 68,870 ​ 3.63 Vested ​ ( 90,001 ) ​ ​ 6.69 Nonvested at December 31, 2021 280,983 ​ $ 4.05 ​ As of December 31, 2021, the Company had unrecognized stock-based compensation expense related to restricted stock of $ 0.4 million, which is expected to be recognized over a weighted average period of approximately 1.8 years. F-24 Table of Contents Restricted Stock Units The following table summarizes restricted stock units’ activities for the year ended December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant Date Fair ​ ​ Number of Units ​ Value 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 Granted 1,660,250 ​ 3.07 Forfeited ​ ( 372,873 ) ​ ​ 3.60 Vested ( 420,379 ) ​ 4.27 Nonvested at December 31, 2021 2,335,557 ​ $ 3.27 ​ As of December 31, 2021, the Company had unrecognized stock-based compensation expense related to restricted stock units of approximately $ 4.1 million, which is expected to be recognized over a weighted average period of approximately 2.0 years. The following table summarizes stock-based compensation expense for the years ended December 31, 2021 and 2020 (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2021 2020 General and administrative ​ $ 1,030 ​ $ 1,550 ​ Research and development ​ 2,278 ​ 1,437 ​ Total stock-based compensation expense ​ $ 3,308 ​ $ 2,987 ​ ​ 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, 2021 and 2020, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ Weighted Average ​ Contractual Life (in ​ ​ Warrants ​ Exercise Price ​ years) 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 Expired ( 2,093,878 ) ​ 8.50 — Cashless exercised ( 138 ) ​ — — Outstanding as of December 31, 2021 3,308,654 ​ $ 8.02 0.73 ​ 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-25 Table of Contents As of December 31, 2021, 255,177 shares have been purchased and 744,823 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, 2021 and 2020. ​ 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, ​ 2021 2020 Statutory federal income tax rate 21 % 21 % State taxes, net of federal tax benefit 16 % 16 % Non-deductible items ( 1 ) % ( 1 ) % Credits 5 % 4 % Federal tax rate change — % — % State tax rate change — % 1 % Other — % — % Change in valuation allowance ( 41 ) % ( 41 ) % Income taxes provision (benefit) — — ​ ​ The components of the net deferred tax asset as of December 31, 2021 and 2020 are the following ($ in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 2020 Deferred tax assets: ​ ​ Net operating loss carryovers ​ $ 66,879 ​ $ 45,090 Stock compensation and other ​ 2,702 ​ 2,444 Change in fair value of warrant liabilities ​ 59 ​ 59 Amortization of license ​ 13,977 ​ 12,804 Lease liability ​ ​ 755 ​ ​ 825 Accruals and reserves ​ 1,035 ​ 504 Startup costs ​ 6 ​ 7 Tax credits ​ 9,728 ​ 5,743 Total deferred tax assets ​ ​ 95,141 ​ ​ 67,476 Less: valuation allowance ​ ( 94,751 ) ​ ( 67,073 ) Net deferred tax assets ​ $ 390 ​ $ 403 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Right of use asset ​ ​ ( 390 ) ​ ​ ( 403 ) 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, 2021 and 2020. A valuation allowance of approximately $ 94.8 million and $ 67.1 million, respectively, was recorded for the years ended December 31, 2021 and 2020. As of December 31, 2021, the Company had federal and state net operating loss carryforwards of approximately $ 191.7 million and $ 410.0 million, respectively. Approximately $ 168.1 million and $ 94,000 of the federal and state net operating loss carryforwards, respectively, can be carried forward indefinitely. As of December 31, 2021, the Company had federal and state income tax credits of approximately $ 8.3 million and $ 1.8 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 F-26 Table of Contents to offset future tax liabilities. Certain tax attributes may be subject to an annual limitation as a result of the Company’s January 2017 capital raise, as it appears to constitute an ownership change under Section 382. 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 periods ended December 31, 2021 and 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 periods ended December 31, 2021 and 2020. The company is subject to U.S. federal and various state taxes. As of December 31, 2021, the earliest federal tax year open for the assessment of income taxes under the applicable statutes of limitations is its 2018 tax year. ​ 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 2021. 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 2021. Note 11 – Subsequent Events On March 8, 2022, the Company announced completion of a $ 75 million long-term debt facility with Runway Growth Capital LLC (“Runway”). Of the $ 75 million, $ 30 million was funded upon closing, and the additional $ 45 million available under the facility may be funded upon Mustang’s achieving certain predetermined milestones. The loan will be repaid in sixty monthly payments consisting of 24 monthly payments of interest only, followed by 36 monthly payments of principal and accrued interest, payable monthly in arrears, with all repayments ending on the same date as the initial tranche. The interest-only period may be extended to 36 months contingent upon Mustang achieving certain milestones. ​ In connection with the debt financing, Mustang issued to Runway warrants to purchase up to 748,036 of its common shares at an exercise price of $ 0.8021 per share. Proceeds from the facility will be used to support the ongoing clinical development of key investigational product candidates within Mustang’s pipeline and for general working capital purposes. ​ ​ ​ ​ ​ ​ ​ F-27 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 23, 2022 ​ 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 23, 2022 /s/ Manuel Litchman Manuel Litchman, M.D. President and Chief Executive Officer March 23, 2022 /s/ Lindsay A. Rosenwald Lindsay A. Rosenwald, M.D. Director March 23, 2022 /s/ Neil Herskowitz Neil Herskowitz Director March 23, 2022 /s/ Adam Chill Adam Chill Director March 23, 2022 /s/ Michael Zelefsky Michael Zelefsky, M.D. Director March 23, 2022 /s/ Brian Achenbach Brian Achenbach Senior Vice President of Finance & Corporate Controller March 23, 2022 ​ ​ ​ ​ 67