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Item 7. Management’s Discussion and Analysis

2024-03-11 compared with 2023-03-30 · 277 added, 263 removed, 86 unchanged (86% of the section changed)

Management’s Discussion and Analysis of the Results of Operations

Statements in the following discussion and throughout this report that are not historical in nature are “forward-looking statements.” You can identify forward-looking statements by the use of words such as “expect,” “anticipate,” “estimate,” “may,” “will,” “should,” “intend,” “believe,” and similar expressions.

Statements in the following discussion and throughout this Form 10-K that are not historical in nature are “forward-looking statements.” You can identify forward-looking statements by the use of words such as “expect,” “anticipate,” “estimate,” “may,” “will,” “should,” “intend,” “believe,” and similar expressions.

Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct.

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We undertake no obligation to update any forward-looking statements in the discussion of our financial condition and results of operations to reflect events or circumstances after the date of this report or to reflect actual outcomes.

Mustang is a clinical-stage biopharmaceutical company focused on translating today’s medical breakthroughs in cell and gene therapies into potential cures for hematologic cancers, solid tumors and rare genetic diseases.

We are a clinical-stage biopharmaceutical company focused on translating today’s medical breakthroughs in cell and gene therapies into potential cures for hematologic cancers, solid tumors and rare genetic diseases.

We aim to acquire rights to these technologies by licensing 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.

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Jude in the development of a first-in-class ex vivo lentiviral treatment of XSCID and with LUMC in the development of a first-in-class ex vivo lentiviral treatment of RAG1-SCID.

The Company expects to incur substantial expenses for the foreseeable future relating to research, development and commercialization of its potential products.

However, there can be no assurance that the Company will be successful in securing additional resources when needed, on terms acceptable to the Company, if at all.

Therefore, there exists substantial doubt about the Company’s ability to continue as a going concern.

We expect to incur substantial expenses for the foreseeable future relating to research, development and commercialization of our potential products.

However, there can be no assurance that we will be successful in securing additional resources when needed, on terms acceptable to us, if at all.

Therefore, there exists substantial doubt about our ability to continue as a going concern.

The consolidated financial statements do not include any adjustments related to the recoverability of assets that might be necessary despite this uncertainty.

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Our pipeline of CAR T therapies is being developed under exclusive licenses from several world class research institutions.

Our strategy is to license these technologies, support preclinical and clinical research activities by our academic partners and transfer the underlying technology to our cell processing facility located in Worcester, Massachusetts, in order to conduct our own clinical trials.

We are developing CAR T therapies for hematologic malignancies in partnership with COH targeting CD123 (MB-102) and CS1 (MB-104) and with Fred Hutch targeting CD20 (MB-106).

Phase 1 clinical trials sponsored by COH for MB-102 and MB-104 and by Fred Hutch for MB-106 are underway.

In the third quarter of 2019 the FDA approved our IND application to initiate a multi-center Phase 1/2 clinical trial of MB-102, and our clinical trial began enrollment in 2020 for the treatment of patients with blastic plasmacytoid dendritic cell neoplasm (“BPDCN”).

In December 2022, we announced that the safety review team (SRT), after thoroughly reviewing the safety data from Dose Level 1 (100 x 10 6 CAR T cells), unanimously recommended dose escalation to Dose Level 2 (300 x 10 6 CAR T cells).

We anticipate initiation of the Does Level 2 cohort in 2023.

In May 2021, we announced that the FDA had approved our IND application allowing for initiation of a multi-center Phase 1/2 clinical study of MB-106 in patients with relapsed or refractory B cell NHL or CLL (Clinicaltrials.gov Identifier:

NCT05360238).

We plan to file an IND for a multicenter Phase 1/2 trial for MB-104 for the treatment of patients with multiple myeloma once COH has established a safe and effective dose.

We are also developing CAR T therapies for solid tumors in partnership with COH targeting IL13Rα2 (MB-101), HER2 (MB-103) and PSCA (MB-105).

In addition, we have partnered with Nationwide for the C134 oncolytic virus (MB-108) in order to enhance the activity of MB-101 for the treatment of patients with glioblastoma (“GBM”).

Phase 1 clinical trials sponsored by COH for MB-101, MB-103 and MB-105 are underway.

A Phase 1 clinical trial sponsored by UAB for MB-108 began during the third quarter of 2019.

In the first half of 2023, we plan to file an IND for the combination of MB-101 and MB-108 – which is referred to as MB-109 – for the treatment of patients with relapsed or refractory GBM and anaplastic astrocytoma.

We also plan to file INDs and initiate our own clinical trials for MB-103 for the treatment of patients with metastatic breast cancer to brain and for MB-105 for the treatment of patients with prostate and pancreatic cancer, once COH has established a safe and effective dose for each therapy.

The Company is also collaborating with the Mayo Clinic to develop a novel technology that may be able to transform the administration of CAR T therapies and potentially be used as an off-the-shelf therapy.

Mustang plans to file an IND application for a multicenter Phase 1 clinical trial once a lead construct has been identified.

Our strategy is to license these technologies, support preclinical and clinical research activities by our academic partners and transfer the underlying technology to our or our contract manufacturer’s cell processing facility, in order to conduct our own clinical trials.

We are developing a CAR T therapy for hematologic malignancies in partnership with Fred Hutch targeting CD20 (MB-106).

On May 18, 2023, we announced a series of changes resulting from a review of our portfolio of product candidates to determine the future strategy of our programs and the proper allocation of our resources.

Following this review, we determined to discontinue development of our MB-102 (CD123), MB-103 (HER2), MB-104 (CS1) and MB-105 (PSCA) programs (such programs, the “Discontinued Programs”), comprising a portion of our portfolio of CAR T therapies being developed by us in partnership with City of Hope.

MB-106 (CD20-targeted CAR T cell therapy for Non-Hodgkin Lymphoma and Chronic Lymphocytic Leukemia)

In August 2023, we announced the first data from the indolent lymphoma cohort of our company-sponsored multicenter clinical trial, demonstrating clinical responses as well as safety and efficacy consistent with the ongoing Phase 1/2 Fred Hutch-sponsored clinical trial.

The multicenter study data showed substantial clinical benefit in four of four patients with relapsed or refractory indolent non-Hodgkin lymphoma (“NHL”) at the starting dose of 3.3 x 10 6 CAR-T cells/kg, a dose comparable to that employed for the majority of the indolent lymphoma patients in the Fred Hutch trial.

The multicenter data also showed persistence of CAR-T cells at 6+ months and favorable safety data, with only Grade 1 cytokine release syndrome reported to date in each of the 4 patients and no immune effector cell-associated neurotoxicity syndrome of any grade reported in any patient.

Two patients with follicular lymphoma had complete response by both PET-CT and bone marrow, one of whom had been previously treated with a CD19-directed CAR-T.

A third patient, with a diagnosis of WM, who had nine prior treatments and high disease burden, achieved a very good partial response characterized by complete metabolic response by PET-CT, morphologic clearance of lymphoma in bone marrow, and resolution of the IgM monoclonal protein.

The fourth patient, with a diagnosis of hairy cell leukemia variant, who had been heavily transfusion dependent, continued to have stable disease with decreased disease in his bone marrow and achieved complete transfusion independence, which was ongoing at six plus months.

Following treatment of these four indolent NHL patients, the Safety Review Committee unanimously approved dose escalation in the indolent lymphoma cohort to the second and final dose level of 1.0 x 10 7 CAR-T cells/kg.

In December 2023, we presented interim Phase 1/2 data from our multicenter clinical trial at the 65 th American Society of Hematology Annual Meeting.

taking place December 8 through 12, 2023.

At this meeting, we presented data for the 9 patients (5 FL, 3 WM and 1 hairy cell leukemia variant) treated in the indolent NHL arm of the multicenter clinical trial.

As planned, 2 dose levels (DL1=3.3×10 6 CAR T-cells/kg [n=4] and DL2=1.0×10 7 CAR T-cells/kg [n=5]) were evaluated.

All patients responded clinically, yielding an overall response rate of 100% among the FL and WM patients.

All 5 FL patients, including 2 who had prior CD19 CAR T-cell therapy, achieved a complete response.

Among the WM patients, 1 achieved a very good partial response and 2 achieved a partial response.

The hairy cell leukemia variant patient experienced stable disease and achieved transfusion independence.

The data demonstrate that MB-106 has a tolerable safety profile, with no occurrence of CRS above grade 1 and no occurrence of ICANS of any grade, despite not using prophylactic tocilizumab or dexamethasone.

MB-106 expansion and persistence was demonstrated in these patients.

Additionally, outpatient administration of MB-106 was allowed and found to be feasible.

In the first quarter of 2024, the Company expects to receive FDA feedback in an End-of-Phase 1 Meeting on its strategy to conduct a non-randomized registrational multicenter trial in relapsed or refractory WM.

In the second half of 2024, the Company expects to treat the first patient in that trial, which could enable top-line results in the second half of 2026.

In order to facilitate interactions with the FDA throughout this process, we anticipate requesting Regenerative Medicine Advanced Therapy (‘RMAT’) designation for indolent lymphoma – which includes WM – from the FDA in the first half of 2024.

We are currently evaluating the extent to which we can continue the development of MB-106 in other NHL subtypes, subject to allocation of resources.

MB-109 (Combination of MB-101 CAR T Therapy with MB-108 Oncolytic Virus Therapy for Malignant Brain Tumors)

In April 2022, we announced interim data from two ongoing investigator-sponsored Phase 1 clinical trials evaluating two clinical candidates, MB‐101 (IL13Rα2‐targeted CAR T cell therapy licensed from City of Hope) and MB-108 (herpes simplex virus type 1 oncolytic virus licensed from Nationwide Children’s Hospital) for the treatment of recurrent glioblastoma.

On October 26, 2023, we announced that the FDA accepted our IND application for MB-109 for the treatment of recurrent glioblastoma (“GBM”) and high-grade astrocytoma.

We are evaluating the timing for initiation of a Phase 1 multicenter clinical trial at City of Hope and the University of Alabama at Birmingham (“UAB”) to assess the safety, tolerability and efficacy of MB-109 in adult patients with recurrent GBM and high-grade astrocytomas that express IL13Rα2 on the surface of the tumor cells, subject to allocation of resources.

In March 2024, we announced the publication of Phase 1 data demonstrating the safety and promising clinical activity of MB-101 in patients with recurrent and refractory malignant glioma, including glioblastoma, in Nature Medicine .

Stable disease or better was achieved in 50% (29/58) of heavily pretreated patients lasting at least 2 months, with 2 partial responses, 1 complete response, and a second complete response in a patient with recurrent glioblastoma who received additional CAR T-cell cycles off-protocol.

Patients with recurrent glioblastoma who received MB-101, manufactured using an optimized process, via dual intratumoral (ICT)/ intraventricular (ICV) delivery exhibited a superior median overall survival of 10.2 months, compared the expected survival rate of 6.0 months in patients with recurrent GBM.

MB-101 delivered via ICT, ICV or dual ICT/ICV delivery was generally well-tolerated, with no dose limiting toxicities observed at doses up to 200×10 6 CAR T-cells.

Higher levels of CD3+ T-cells in the tumor milieu prior to treatment was associated superior median overall survival, suggesting that immunologically “hot” tumors respond better to MB-101.

In Vivo CAR T Platform Technology

We are collaborating with the Mayo Clinic to develop a novel technology that may be able to transform the administration of CAR T therapies and potentially be used as an off-the-shelf therapy.

In 2024, the Mayo Clinic expects to submit in vivo proof-of-concept data in a mouse model of cancer to a major scientific journal.

We are evaluating plans to file an IND application for a multicenter Phase 1 clinical trial once a lead construct has been identified, subject to allocation of resources.

Gene Therapies

MB-117 (previously referred to as MB-107) (Ex vivo LV Gene Therapy for Newly Diagnosed X-linked Severe Combined Immunodeficiency (XSCID)) and MB-217 (previously referred to as MB-207) (Ex vivo LV Gene Therapy for Previously Transplanted XSCID)

In partnership with St.

Jude, our XSCID gene therapy programs (MB-107 and MB-207) are being conducted under an exclusive license to develop a potentially curative treatment for XSCID, a rare genetic immune system condition in which affected patients do not live beyond infancy without treatment.

This first-in-class ex vivo lentiviral gene therapy has been evaluated in two Phase 1/2 clinical trials involving two different autologous cell products:

an ongoing multicenter trial of the MB-107 product in newly diagnosed infants sponsored by St.

Jude and a single-center trial of the MB-207 product in previously transplanted patients sponsored by the NIH.

In January 2021 we received approval to proceed with our IND application with the FDA to initiate a pivotal non-randomized multicenter Phase 2 clinical trial of MB-107 in newly diagnosed infants with XSCID who are under the age of two.

We expect to enroll the first patient in a pivotal multicenter Phase 2 clinical trial in 2023.

Our IND for MB-207 was submitted to the FDA in December 2021.

In January 2022, the FDA issued a clinical hold, pending CMC data.

In order to lift this clinical hold and receive a safe-to-proceed from the FDA for the IND, we believe the most critical activities will be to (1) perform process validation manufacturing runs using healthy donor material and (2) ensure qualification of all assays related to the product release.

Following completion of these activities and the earliest release of the clinical hold, we expect to enroll the first patient in a pivotal multicenter Phase 2 clinical trial 2023.

Jude, our XSCID gene therapy programs are being conducted under an exclusive license to develop a potentially curative treatment for XSCID, a rare genetic immune system condition in which affected patients do not live beyond infancy without treatment.

Jude’s first-in-class ex vivo LV gene therapy has been utilized in two Phase 1/2 clinical trials involving two different autologous cell products produced via transduction of patients’ hematopoietic stem cells using a predecessor LV vector.

These cell products were designated MB-107 and MB-207, and the respective Phase 1/2 clinical trials were:

a multicenter trial of the MB-107 product in newly diagnosed infants sponsored by St.

Jude (ClinicalTrials.gov Identifier:

referred to at St.

Jude as LVXSCID-ND) and a single-center trial of the MB-207 product in previously transplanted patients sponsored by the National Institutes of Health (“NIH”) (ClinicalTrials.gov Identifier:

referred to at the NIH as LVXSCID-OC).

Going forward, this predecessor LV vector will be replaced by a modified LV vector which will be used to produce the MB-117 and MB-217 cell products.

In 2024, following availability of the modified LVV, we expect that St.

Jude will initiate its Phase 1 trial to treat newly diagnosed infants with MB-117 and that the NIH will initiate its Phase 1 trial to treat previously transplanted patients with MB-217.

MB-110, a first-in-class ex vivo treatment for RAG1 SCID, is currently being evaluated at LUMC in a Phase 1/2 multicenter clinical trial in Europe.

In 2022 the first patient was treated without any complications, after which the patient developed a functioning immune system which responded well to the standard vaccinations for newborns.

We are evaluating the extent to which we will progress this program, subject to allocation of resources.

Recent Events

MB-102 (CD123 CAR T Cell Program for BPDCN, AML and High-Risk MDS)

The Company anticipates initiation of the Dose Level 2 cohort in 2023.

MB-106 (CD20-targeted CAR T for Non-Hodgkin Lymphoma and Chronic Lymphocytic Leukemia)

NCT05360238).

The phase 1 portion of the trial will enroll patients in 3 separate arms, with dose escalation planned to establish a recommended phase 2 dose for each arm:

Aggressive non-Hodgkin lymphoma, with a starting dose of 1 x 106 CAR T cells/kg

Indolent non-Hodgkin lymphoma, with a starting dose of 3.3 x 106 CAR T cells/kg

Chronic lymphocytic leukemia/small cell lymphoma, with a starting dose of 1 x 106 CAR T cells/kg

The FDA deferred approval of the phase 2 portion of this trial pending review of the results of each of the 3 phase 1 arms.

Initially we are considering conducting non-randomized phase 2 registration trials in each of the following indications:

Diffuse large B cell lymphoma relapsed from CD19-directed CAR T therapy

Relapsed/refractory Waldenstrom macroglobulinemia

Relapsed/refractory chronic lymphocytic leukemia/small cell lymphoma

In April 2022, we announced that interim Phase 1/2 data on MB-106 were presented at the 2022 Tandem Meetings | Transplantation & Cellular Therapy Meetings of the American Society of Transplantation and Cellular Therapy and Center for International Blood & Marrow Transplant Research.

Data demonstrated high efficacy and a very favorable safety profile in all patients (n=25).

Five dose levels were used

during the study, and complete responses were observed at all dose levels.

Durable responses were observed in a wide range of hematologic malignancies including follicular lymphoma (“FL”), CLL, diffuse large B-cell lymphoma (“DLBCL”) and Waldenstrom macroglobulinemia (“WM”).

An ORR of 96% and a complete response (“CR”) rate of 72% were observed in all patients across all dose levels.

Also in April 2022, MB-106 data focused on CLL were presented at the 4th International Workshop on CAR-T and Immunotherapies.

In June 2022, we announced that MB-106 data were presented in an oral session at the European Hematology Association 2022 Hybrid Congress.

Mazyar Shadman of Fred Hutch presented updated interim data from the ongoing Phase 1/2 clinical trial for B-NHL and CLL.

Data presented include a 94% ORR and 78% CR rate in patients with FL.

Overall, for the 26 patients treated on the trial, there was a 96% ORR and 73% CR, including complete responses in both DLBCL patients, both WM patients, and both patients previously treated with CD19-targeted CAR-T therapy (1 DLBCL patient and 1 FL patient).

Also in June 2022, we announced that the FDA granted Orphan Drug Designation to MB-106 for the treatment of CD20+ Waldenstrom macroglobulinemia.

In October 2022, we announced that the first patient was treated in Mustang’s multicenter, open-label, non-randomized Phase 1/2 clinical trial evaluating the safety and efficacy of MB-106.

Also in October 2022, the Company provided an update on the ongoing Phase 1/2 investigator-sponsored clinical trial at Fred Hutch.

Interim Data from 28 patients treated at Fred Hutch, all with the optimized manufacturing process, continue to support MB-106 as a viable CAR-T cell therapy for B-NHLs and CLL.

As of September 2022, the interim data show:

● An overall response rate of 96% and complete response (“CR”) rate of 75% in a wide range of hematologic malignancies including follicular lymphoma (“FL”), CLL, diffuse large B-cell lymphoma, and Waldenstrom macroglobulinemia.

● Twelve patients have experienced CR for more than 12 months (10 ongoing);

four patients have experienced CR for more than two years, and the longest patient with CR is at 33 months.

● Six patients with partial response (“PR”) at their initial 28-day assessments improved to CR, and all remain in ongoing CR.

● All three patients previously treated with CD19 CAR-T cell therapy have responded to treatment with MB-106.

● A favorable safety profile for MB-106 as an outpatient therapy remains with no cytokine release syndrome (CRS) or immune effector cell-associated neurotoxicity syndrome (ICANS) ≥ Grade 3.

● None of the FL patients experienced ICANS of any Grade.

In December 2022, we announced that six patients had been enrolled in Mustang’s multicenter Phase 1/2 clinical trial, with five patients infused at the starting dose levels of their respective protocol arms.

We have since treated the first WM in the indolent lymphoma arm of the trial, and we expect to provide first safety and efficacy data from that arm in the second quarter of 2023, with a more substantial data set from all 3 arms in the fourth quarter of 2023.

Finally, we anticipate that the indication for the first pivotal Phase 2 trial will be relapsed/refractory WM, with the first patient treated on that trial in the first quarter of 2024.

In Vivo CAR T Platform Technology

In December 2022 we announced that published proof-of-concept data from murine tumor model studies are anticipated in 2023.

MB-107 and MB-207 (Ex vivo Lentiviral Therapy for X-linked Severe Combined Immunodeficiency (XSCID))

Interim Phase 1/2 data on treatment of newly diagnosed infants under the age of two with the same LV vector used in MB-107 were updated at an oral presentation at the American Society of Gene & Cell Therapy (“ASGCT”) 25 th Annual Meeting held from May 16-19, 2022.

The data included 23 infants with XSCID treated with the LV vector at a median age of 3 months (range:

2 months to 14 months) with a median follow-up of 2.4 years (range:

1.4 months to 5.4 years), making it the largest known cohort of infants treated with LV gene therapy with the longest follow-up.

Transduced autologous bone marrow CD34+ cells were generated for all patients with a median vector copy number (VCN) of 0.81/cell (range:

0.16-1.81), and a median CD34+ cell dose of 9.61x10 6 /kg (range 4.40-18.95).

Prior to the infusion of cells, patients received busulfan targeted to a cumulative area-under-the-curve (cAUC) of 22 mg*hr/L.

Severe adverse events occurred in three patients (two patients with pancytopenia and hemolytic anemia, and one patient with delayed neutrophil engraftment, and all resolved.

Seventeen of 18 patients with a follow-up of > 6 months achieved robust immune reconstitution [median CD3+ 2,545/µL, CD4+ 1,568/µL, CD4+/CCR7+/CD45R0- 1,416/µL].

In these 17 patients, T cells matured appropriately as assessed by normal T cell receptor excision circles (TRECs) and TCRvβ repertoire diversity and were functional as judged by phytohemagglutinin activation (“PHA”).

All were alive with

stable vector marking in all cell lineages.

In addition, 15 patients had discontinued intravenous immunoglobulin, and 12 patients had been successfully immunized.

No evidence of clonal expansion or malignant transformation was observed.

The MB-107 timeline has been extended due to unanticipated issues related to the materials used in manufacturing.

These issues were communicated to the FDA and the Company received a written response on August 26, 2022.

The FDA response provided additional direction enabling us to continue to work effectively with our outside suppliers.

We are working towards enrolling the first patient in a pivotal multicenter Phase 2 clinical trial under our IND in 2023.

As a result of the study stopping rules, the NIH single-center trial of the MB-207 product in previously transplanted patients was suspended in 2022 due to the presence of clonal expansion in the myeloid lineage in 10% of the treated patients, although to date there have been no observations of insertional mutagenesis or malignancies.

All patients continue to be followed and remain clinically stable with no significant hematological anomalies.

Upon review of these data, the FDA agreed that the risk-benefit ratio of both MB-107 and MB-207 remains favorable to support moving forward with Mustang-sponsored multicenter clinical trials once Mustang has appropriately addressed other items flagged by the Agency.

The IND for MB-207 was submitted to the FDA in December 2021.

In January 2022, the FDA issued a clinical hold, pending additional CMC data.

In order to lift this clinical hold and receive an FDA safe-to-procced for the IND, we believe the most critical activities will be to (1) perform process validation manufacturing runs using healthy donor material and (2) ensure qualification of all assays related to the product release.

Following completion of these activities and the earliest release of the clinical hold by FDA, we expect to enroll the first patient in a pivotal multicenter Phase 2 clinical trial in 2023.

On July 27, 2022, the Company announced that the first patient successfully received LV-RAG1 ex vivo lentiviral gene therapy to treat RAG1-SCID, in an ongoing Phase 1/2 multicenter clinical trial taking place in Europe at LUMC.

The patient was administered LV-RAG1 without any complications.

LV-RAG1 allowed the patient’s body to create a functioning immune system, and he responded well to the standard vaccinations for newborns.

The same lentiviral vector drug substance produced by LUMC will be used to transduce patients’ cells to create the MB-110 drug product produced at Mustang Bio’s Worcester, MA, cell processing facility for further clinical development and to facilitate eventual commercial launch of the product.

Registration Statements

On October 23, 2020, the Company filed a shelf registration statement No.

333-249657 on Form S-3 (the “2020 S-3”), which was declared effective on December 4, 2020.

Under the 2020 S-3, the Company may sell up to a total of $100.0 million of its securities.

As of December 31, 2022, approximately $8.0 million of the 2020 S-3 remained available for sales of securities.

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, 2022, there have been no sales of securities under the 2021 S-3.

The amount of securities we are able to sell pursuant to the registration statements on Form S-3 is limited.

See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

On March 4, 2022 (the “Closing Date”), the Company entered into a $75.0 million long-term debt facility with Runway Growth Finance Corp.

(the “Term Loan”).

Under the Term Loan, $30.0 million of the $75.0 million loan was funded on the Closing Date, with the remaining $45.0 million fundable if the Company achieves certain predetermined milestones.

The Term Loan matures on April 15, 2027 (the “Maturity Date”).

As of March 15, 2022, the Company began making monthly payments of interest only until April 1, 2024 (the “Amortization Date”).

The Amortization Date may be extended to April 1, 2025, if the Company achieves certain predetermined milestones based on equity raises and the initiation of certain clinical trials.

After that, the Company will make monthly payments of interest and principal.

If the Amortization Date is extended to April 1, 2025, the monthly payments will be recalculated in equal amounts according to the remaining number of payment dates through the Maturity Date.

All unpaid outstanding principal and accrued and unpaid interest will be due and payable in full on the Maturity Date.

The Term Loan accrues interest at a variable annual rate equal to 8.75% plus the greater of (i) 0.50% and (ii) the three month LIBOR Rate for U.S.

dollar deposits or the rate otherwise reasonably determined by the Lender to be the rate at which U.S.

dollar deposits with a term of three months would be offered by banks in London, England to major banks in the London or other offshore interbank market (the “Applicable Rate”);

provided that the Applicable Rate will not be less than 9.25%.

On December 7, 2022, the Company entered into the First Amendment (the “First Amendment”) to the Loan Agreement by and between the Company and Runway.

The First Amendment amended certain definitions and other provisions of the Loan Agreement to replace LIBOR-based benchmark rates applicable to loans outstanding under the Loan Agreement with SOFR-based rates, subject to adjustments as specified in the First Amendment.

The Applicable Rate at December 31, 2022, was 13.40%.

For the year ended December 31, 2022, the Company made interest payments of $2.7 million recorded in interest expense in the Statements of Operations.

Pursuant to the terms of the Term Loan on the Closing Date the Company paid the Lender upfront fees out of proceeds of $0.4 million consisting of a 1% commitment fee and a deposit of $75,000.

In addition, the Company paid other cash fees directly to third parties comprising of an advisory fee and legal fees totaling $2.3 million.

Also, in connection with the Term Loan, on March 4, 2022, the Company issued a warrant to the Lender to purchase 748,036 shares of the Company’s common stock with an exercise price of $0.8021 (the “Warrant”) via a warrant agreement (the “Warrant Agreement”).

The Warrant is exercisable for ten years from the date of issuance.

The Lender may exercise the Warrant with cash or through a net issuance conversion.

The shares of the Company’s common stock will be registered at the Company’s first opportunity after the date of the exercise of the Warrant.

In addition, the provisions of the Warrant Agreement provide for additional warrants to be issued upon funding of the term loan tranches.

The fair value of the warrant at the grant date was determined utilizing a Black Scholes Model with the following assumptions:

risk free rate of return 1.74%, volatility of 57.3%, 10-year life yielding a value of approximately $0.4 million as of March 4, 2022.

The fair value of the warrant was also recorded in debt discount and will be amortized over the life of the Term Loan.

At-the-Market Offering

In July 2018, the Company entered into an At-the-Market Issuance Sales Agreement (the “Mustang ATM”) with B.

Riley Securities, Inc.

Riley FBR, Inc.), Cantor Fitzgerald & Co., National Securities Corporation (now B.

Riley FBR, Inc.), and Oppenheimer & Co.

(each an “Agent” and collectively, the “Agents”), relating to the sale of shares of common stock pursuant to the 2020 S-3.

Under the Mustang ATM, 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 Mustang ATM was amended to add H.C.

Wainwright & Co., LLC as an Agent.

During the year ended December 31, 2022, the Company issued approximately 7.9 million shares of common stock at an average price of $0.84 per share for gross proceeds of $6.6 million under the ATM Agreement.

In connection with these sales, we paid aggregate fees of approximately $0.1 million for net proceeds of approximately $6.5 million.

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, we paid aggregate fees of approximately $1.3 million for net proceeds of approximately $70.6 million.

Pursuant to the Founders Agreement, the Company issued 196,952 shares of common stock to Fortress at a weighted average price of $0.84 per share for the year ended December 31, 2022, and recorded zero shares issuable to Fortress in connection with the shares issued under the Mustang ATM.

Pursuant to the Founders Agreement, Mustang issued 576,157 shares of common stock to Fortress at a weighted average price of $3.70 per share for the year ended December 31, 2021, in connection with the shares issued under the Mustang ATM.

The amount of securities we are able to sell pursuant to the registration statements on Form S-3 is limited.

See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

Authorized Shares

On June 21, 2022, the stockholders of the Company voted at the 2022 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 50 million shares, bringing the total number of authorized shares of common stock to 200 million shares.

We are a majority-controlled subsidiary of Fortress.

As a “Controlled Company” we rely on the exemption provided by Nasdaq Listing Rule 5615(c)(2), which permits us to maintain less than a majority of independent directors on our board.

Sale of Manufacturing Facility – Overview of Transaction

As previously disclosed, on May 18, 2023, we entered into an Asset Purchase Agreement (the “Original Asset Purchase Agreement”) with uBriGene (Boston) Biosciences, Inc., a Delaware corporation (“uBriGene”), pursuant to which we agreed to sell our leasehold interest in our cell processing facility located in Worcester, Massachusetts (the “Facility”), and associated assets relating to the manufacturing and production of cell and gene therapies at the Facility to uBriGene (the “Transaction”).

We and uBriGene subsequently entered into Amendment No.

1, dated as of June 29, 2023, and Amendment No.

2, dated as of July 28, 2023, to the Original Asset Purchase Agreement (the Original Asset Purchase Agreement, as so amended, the “Asset Purchase Agreement”).

On July 28, 2023 (the “Closing Date”), pursuant to the Asset Purchase Agreement, we completed the sale of all of our assets that primarily relate to the manufacturing and production of cell and gene therapies at the Facility (such operations, the “Transferred Operations” and such assets, the “Transferred Assets”) to uBriGene for upfront consideration of $6 million cash (the “Base Amount”).

The Transferred Assets that were transferred to uBriGene on the Closing Date include, but are not limited to:

(i) our leases of equipment and other personal property and all other property, equipment, machinery, tools, supplies, inventory, fixtures and all other personal property primarily related to the Transferred Operations, (ii) the data, information, methods, quality management systems, and intellectual property primarily used for the purposes of the Transferred Operations, (iii) the records and filings, including customer and vendor lists, production data, standard operating procedures and business records relating to, used in or arising under the Transferred Operations and (iv) all transferrable business license, permits and approvals necessary to operate the Transferred Operations.

As described in greater detail below, certain Transferred Assets, including our lease of the Facility and contracts that are primarily used in the Transferred Operations (the “Transferred Contracts”) did not transfer to uBriGene on the Closing Date.

Under the terms of the Asset Purchase Agreement, in addition to the Base Amount, uBriGene will be obligated to pay us a contingent amount (the “Contingent Amount”) if we, within two years from the Closing Date:

(i) complete an issuance of equity securities in an aggregate amount equal to or greater than $10.0 million after the closing (the “Contingent Capital Raise”) and (ii) obtain the consent of the landlord of the Facility to transfer the lease of the Facility to uBriGene (as discussed under “—Transfer of Lease of the Facility” below).

As of December 31, 2023, we had completed issuances of equity securities for proceeds totaling approximately $4.6 million following the Closing Date.

If we are unable to close the full amount of the Contingent Capital Raise and/or do not receive the Landlord’s consent to the transfer the lease of the Facility to uBriGene within two years from the Closing Date, uBriGene will not be obligated to pay the Contingent Amount to us.

The Contingent Amount to be paid to us upon the satisfaction of the conditions listed above will be an amount equal to $5.0 million less (i) any severance payments or other monetary obligations to our employees who support the Transferred Operations and who have accepted offers of employment with uBriGene that arise between the Closing Date and the date the lease transfers to uBriGene and (ii) any payments payable by us under Transferred Contracts in connection with the consummation of the Transaction, including any payments necessary to obtain third party consents.

Voluntary Notice to U.S.

Committee on Foreign Investment in the United States

uBriGene is an indirect, wholly owned subsidiary of UBrigene (Jiangsu) Biosciences Co., Ltd., a Chinese contract development and manufacturing organization.

Under the Asset Purchase Agreement, we and uBriGene agreed to use our reasonable best efforts to obtain clearance for the Transaction from the U.S.

Committee on Foreign Investment in the United States (“CFIUS”), although obtaining such clearance was not a condition to closing the Transaction.

In accordance with the Asset Purchase Agreement, we and uBriGene previously submitted a voluntary notice to CFIUS on August 10, 2023.

Following an initial 45-day review period and subsequent 45-day investigation period, on November 13, 2023, CFIUS requested that we and uBriGene withdraw and re-file our joint voluntary notice to allow more time for review and discussion regarding the nature and extent of national security risk posed by the Transaction.

Upon CFIUS’s request, we and uBriGene submitted a request to withdraw and re-file our joint voluntary notice to CFIUS, and on November 13, 2023, CFIUS granted this request, accepted the joint voluntary notice and commenced a new 45-day review period on November 14, 2023.

CFIUS’s 45-day review ended on December 28, 2023.

Since CFIUS had not concluded its review by December 28, 2023, the proceeding transitioned to a subsequent 45-day investigation period, which ended on February 12, 2024.

Following the 45-day review period and subsequent 45-day investigation period described above, on February 12, 2024, we and uBriGene requested permission to withdraw and re-file their joint voluntary notice to allow more time for review and discussion regarding the nature and extent of national security risk posed by the Transaction.

Upon our and uBriGene’s request to withdraw and re-file their joint voluntary notice to CFIUS, on February 12, 2024, CFIUS granted this request, accepted the joint voluntary notice and commenced a new 45-day review period on February 13, 2024.

The new 45-day review period will conclude no later than March 28, 2024.

If CFIUS does not conclude its review by March 28, 2024, the proceeding will transition to a second 45-day phase as CFIUS further investigates the Transaction.

At the completion of its review and, if applicable, investigation, if CFIUS determines there are no unresolved national security concerns, CFIUS will apprise the parties of its determination and conclude all action on the matter.

Alternatively, CFIUS may identify and impose mitigation measures.

Depending on the nature and severity of perceived national security risks identified, CFIUS may, among other mitigation measures, require suspension of the Transaction, require uBriGene to divest the Facility or other assets relating thereto, forfeit contracts that CFIUS deems to be sensitive, or require appointment of special compliance personnel or a proxy board consisting of U.S.

If CFIUS determines to require mitigating measures with respect to the Transaction, then uBriGene must comply with such measures although the Closing Date has already occurred.

We and uBriGene have been and will continue to be actively engaged with CFIUS, and they remain fully committed to obtaining clearance from CFIUS and completing the full transfer of the Facility to uBriGene.

There can be no assurance, however, that CFIUS will ultimately provide clearance with respect to the Transaction, or what mitigating measures may be required in order to obtain such clearance.

Transfer of Lease of the Facility

The Asset Purchase Agreement contemplates that we will seek to procure the consent and approval of the landlord of the Facility, WCS-377 Plantation Street, Inc.

(the “Landlord”), of either (i) an assignment and assumption agreement to be executed by us and uBriGene pursuant to which uBriGene would assume our lease of the Facility or (ii) a new lease agreement by and between uBriGene and the Landlord with respect to the Facility on terms and conditions acceptable to uBriGene (the “Proposed Lease Transfer”).

Because the Landlord had not consented to the Proposed Lease Transfer as of the Closing Date, our lease of the Facility did not transfer to uBriGene on the Closing Date.

The Landlord has informed us that it will not consider our request for the Proposed Lease Transfer until we receive the final determination letter from CFIUS (the “CFIUS Letter”) with respect to the Transaction and provide the Landlord with a reasonably detailed summary of Mustang and uBriGene’s reaction to such final determination (the “Reaction Summary”).

Upon the Landlord’s receipt of the CFIUS Letter and the Reaction Summary, the Landlord will have an additional thirty business days to make its determination on the Proposed Lease Transfer.

If CFIUS conclude its action with respect to the Transaction by the end of its new 45-day review period ending March 28, 2024, then the landlord would be expected to deliver its decision regarding the Proposed Lease Transfer by April 27, 2024.

Under the Asset Purchase Agreement, the lease of the Facility is to be transferred to uBriGene within three business days following receipt of the Landlord’s consent to the Proposed Lease Transfer, if such consent is received.

Unless and until the lease is transferred to uBriGene, we will retain our facility lease and facility personnel, and will continue to occupy the leasehold premises and manufacture there our lead product candidates, including MB-106, pursuant to the arrangements described below under “Manufacturing Services Agreement and Sub-Contracting CDMO Agreement”.

uBriGene’s Right to Deliver a Repurchase Notice with Respect to the Transferred Assets

Because the Facility was not assigned to uBriGene within 120 days following the Closing Date, so long as the lease has not been so assigned, uBriGene may deliver a notice to us indicating its intention to enter into good faith negotiations (the “Repurchase Notice”) to provide for us to repurchase the Transferred Assets, re-assume the transferred liabilities and resume all Transferred Operations for a repurchase price equal to the purchase price of the Transaction actually paid by uBriGene as of the repurchase date (“Repurchase Transaction”).

Upon receipt of such Repurchase Notice, we and uBriGene have agreed to use our best commercial efforts to negotiate in good faith the terms of any such Repurchase Transaction.

Transferred Employees and Transferred Contracts

Under the Asset Purchase Agreement, uBriGene has agreed to (or cause one of its affiliates to) offer employment to no less than forty Company employees who support operations at the Facility on terms with base salary or hourly wages, target bonus opportunities (excluding equity-based compensation) and retirement and welfare benefits that are no less favorable than those provided by us immediately prior to the closing of the Transaction.

Employees who receive and accept offers of employment from uBriGene are the “Transferred Employees.”

Because the lease of the Facility did not transfer to uBriGene on the Closing Date, the Transferred Employees and our rights in, to and under the Transferred Contracts also did not transfer to uBriGene on the Closing Date.

Under the terms of the Asset Purchase Agreement, the Transferred Employees will become employees of uBriGene effective on the date that is 30 days following the completion of the Proposed Lease Transfer, and the Transferred Contracts will transfer to uBriGene on the date on which Mustang and uBriGene confirm in writing that the Landlord has notified us or uBriGene of its consent to the Proposed Lease Transfer.

Manufacturing Services Agreement and Sub-Contracting CDMO Agreement

As contemplated by the Asset Purchase Agreement, on the Closing Date, we and uBriGene entered into a Manufacturing Services Agreement (the “Manufacturing Services Agreement”).

Under the Manufacturing Services Agreement, we contracted uBriGene to manufacture our lead product candidates, including MB-106, and we committed to spend at least $8.0 million over a period of two years after the closing of the Transaction to purchase manufacturing and related services (the “Manufacturing Services”) from uBriGene (the “Minimum Commitment”).

We paid uBriGene 25% of the Minimum Commitment at the time of signing of the Manufacturing Services Agreement and will pay the remainder of the Minimum Commitment over the following two years.

Subject to our payment of our Minimum Commitment, uBriGene will provide to us a manufacturing rebate, payable in cash at the end of the second year of the Manufacturing Services Agreement term, for any amounts paid for Manufacturing Services in excess of the Minimum Commitment (but in no event will such rebate exceed $3.0 million).

In connection with the Manufacturing Services Agreement, we will provide uBriGene with the customary licenses to use intellectual property rights specific to our cell and gene therapies to the extent reasonably necessary for uBriGene’s performance under the Manufacturing Services Agreement.

In addition, as contemplated by the Asset Purchase Agreement, on the Closing Date, we and uBriGene entered into a sub-contracting Manufacturing Services Agreement (the “Sub-Contracting CDMO Agreement”), pursuant to which uBriGene contracted us to perform the Manufacturing Services to be performed by uBriGene under the Manufacturing Services Agreement and granted us a revocable, non-exclusive, royalty-free license to use the Transferred Assets in connection with the performance of such services.

Under the terms of the Sub-Contracting CDMO Agreement, we will manufacture our lead product candidates, including MB-106 (the “Company CDMO Manufacturing Services”), and may from time to time manufacture other products as requested by uBriGene.

Pursuant to the Sub-Contracting CDMO Agreement, the price to be paid by uBriGene in exchange for the Company CDMO Manufacturing Services will be an amount equal

to the sum of:

(i) the base salary and hourly wages for the Transferred Employees for time spent performing the Company CDMO Manufacturing Services, (ii) the fees, payments, costs and expenses payable by us to third parties under any of the Transferred Contracts used to perform the CDMO Manufacturing Services (so long as such amounts are generally consistent with amounts paid by us under such Transferred Contracts immediately prior to the Closing Date and such amounts did not become payable as a result of a breach of, a default under, a termination, a cancellation or an acceleration of any right or obligation under the Transferred Contracts), and (iii) any other amounts approved in advance in writing by uBriGene.

As of the date hereof, uBriGene has not notified us of any plans to request any manufacturing services under the Sub-Contracting CDMO Agreement, other than the Company CDMO Manufacturing Services.

In addition, under the Sub-Contracting CDMO Agreement, Mustang and uBriGene agreed to establish a joint steering committee comprising two representatives from each of Mustang and uBriGene to review, discuss and decide on operational matters relating to the services to be performed by us under such agreement, including matters relating to expenses.

In addition, we agreed to permit uBriGene to locate up to three of uBriGene’s personnel at the Facility so as to participate in meetings of the joint steering committee and allow for in-person feedback and decision-marking regarding the services to be performed by us.

In addition to other customary termination events, in the event uBriGene delivers the Repurchase Notice, the Manufacturing Services Agreement and the Sub-Contracting CDMO Agreement will terminate upon the earlier of (i) the closing of the Repurchase Transaction or (ii) 60 days after the delivery of the Repurchase Notice.

We intend to expense manufacturing costs under the MSA and Sub-Contracting CDMO Agreement and account for reimbursed costs associated with the agreements as an offset to such expense.

For the year ended December 31, 2023, we expensed $4.1 million of manufacturing costs under the MSA and have a receivable of $3.2 million, net of payments received of $2.4 million, for reimbursed costs associated with the Sub-Contracting CDMO agreement.

Transition Services Agreement and Quality Services Agreement

On the Closing Date, the parties also entered into a Quality Services Agreement, pursuant to which we and uBriGene agreed to specified duties for each party with respect to the contract manufacture by uBriGene of our product candidates.

The Quality Services Agreement sets forth the quality activities associated with the production, analysis, and release of such products and assigns responsibility for each activity to us and/or uBriGene.

The Quality Services Agreement terminates upon the earlier of:

(i) the date of expiration of the MSA or (ii) the date of termination of the MSA.

In addition, as contemplated by the Amended Asset Purchase Agreement, on the Closing Date, we and uBriGene entered into a Transition Services Agreement, which will become effective upon completion of the Proposed Lease Transfer (if such Proposed Lease Transfer is completed).

Pursuant to the Transition Services Agreement, we will provide certain transitional services to uBriGene to ensure the smooth transition of operations and continuity of business for a period of six months after the effective date of the Transition Services Agreement, unless otherwise extended upon the mutual agreement of us and uBriGene.

Impact of Landlord Consent to the Proposed Lease Transfer on the Transaction

In the event the Landlord consents to the Proposed Lease Transfer, it is expected that the lease to the Facility and the Transferred Employees of the Facility will be transferred to uBriGene as described above, in accordance with the terms of the Asset Purchase Agreement.

In addition, following receipt of the Landlord’s consent to the Proposed Lease Transfer (if such consent is received), the Sub-Contracting CDMO Agreement will be terminated no later than 30 days following completion of the Proposed Lease Transfer, following which uBriGene will commence the Manufacturing Services in connection with our lead product candidates, including MB-106, pursuant to the Manufacturing Services Agreement.

If, however, the Landlord does not consent to the Proposed Lease Transfer the parties may mutually agree to extend the term of the Sub-Contracting CDMO Agreement indefinitely and uBriGene may continue to procure manufacturing services (including our CDMO Manufacturing Services) from us.

In the event the Landlord does not consent to the Proposed Lease Transfer within 120 days of closing, uBriGene may deliver the Repurchase Notice to us, following which the parties will negotiate in good faith regarding the Repurchase Transaction.

By their terms, the Manufacturing Services Agreement and the Sub-Contracting CDMO Agreement terminate upon the earlier of (i) the closing of the Repurchase Transaction or (ii) 60 days after the delivery of the Repurchase Notice.

Risks Relating to the Transaction

We are exposed to a number of risks and uncertainties relating to the Transaction.

Please see “Risk Factors—Risks Relating to the Sale of Our Manufacturing Facility” for a discussion of these risks and uncertainties.

Critical Accounting Policies and Use of Estimates

The Company’s financial statements include certain amounts that are based on management’s best estimates and judgments.

The Company’s significant estimates include, but are not limited to, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of stock options and warrants, stock-based compensation, accrued expenses, provisions for income taxes and contingencies.

Our financial statements include certain amounts that are based on management’s best estimates and judgments.

Our significant estimates include, but are not limited to, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of stock options and warrants, stock-based compensation, accrued expenses, provisions for income taxes and contingencies.

Due to the uncertainty inherent in such estimates, actual results may differ from these estimates.

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We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

While our significant accounting policies are described in the notes to our financial statements included elsewhere in this Report, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

While our significant accounting policies are described in the notes to our financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

Research and Development

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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.

Upfront and milestone payments due to third parties that perform research and development services on our 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, and costs associated with regulatory filings, laboratory costs and other supplies.

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In each case, we evaluate if the license agreement results in the acquisition of an asset or a business.

Such licenses purchased by the Company require substantial completion of research and development, regulatory and marketing approval efforts in order to reach commercial feasibility and has no alternative future use.

Such licenses purchased by us require substantial completion of research and development, regulatory and marketing approval efforts in order to reach commercial feasibility and has no alternative future use.

Accordingly, the total purchase price for the licenses acquired during the period was reflected as research and development - licenses acquired on the Statements of Operations for the years ended December 31, 2023, and 2022.

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Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.

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:

Quoted prices in active markets for identical assets or liabilities.

Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

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.

Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities.

Stock-Based Compensation

The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeitures, which are recorded upon occurrence.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model.

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.

We will continue to use judgment in evaluating the expected volatility, expected terms and interest rates utilized for our stock-based compensation expense calculations on a prospective basis.

The assumptions underlying these valuations represent our management’s best estimate, which involve inherent uncertainties and the application of management judgment.

As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different.

We expect to continue to grant options and other stock-based awards in the future, and to the extent that we do, our stock-based compensation expense recognized in future periods will likely increase.

The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”).

ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Our unrecognized tax benefits, if recognized, would not have an impact on our effective tax rate assuming we continue to maintain a full valuation allowance position.

We do not expect our unrecognized tax benefits to change significantly over the next 12 months.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements.

As of December 31, 2022, the earliest federal tax year open for the assessment of income taxes under the applicable statutes of limitations is its 2019 tax year.

The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense.

There were no amounts accrued for penalties or interest as of or during the years ended December 31, 2022 and 2021.

Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Recent Accounting Pronouncements

See Note 2 to the Financial Statements.

See Note 2 to the financial statements included in this Form 10-K.

Smaller Reporting Company Status

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We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million.

As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K , have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our consolidated financial statements located in “Part IV, Item 15., Exhibits and Financial Statement Schedules” in this Annual Report on Form 10-K.

Results of Operations

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Research and development – licenses acquired

Gain on sale of property and equipment

General and administrative

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Research and Development Expenses

Research and development expenses primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for license, sponsored research 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.

Research and development expenses increased by approximately $12.6 million from $49.9 million for the year ended December 31, 2021, to $62.5 million for the year ended December 31, 2022.

The increase in research and development expense for the year ended December 31, 2022 was primarily attributable to the following:

● $4.3 million for increased research and development employee compensation costs, including stock compensation, as we continue to increase research and development headcount to support development of our clinical programs;

● $2.7 million for increased laboratory supply costs;

● $1.7 million for increased vector manufacturing costs;

● $2.6 million for increased clinical trial related costs;

● approximately $1.6 million for increased other costs including depreciation, software licenses, assay development and rent;

● offset by approximately $0.3 million for decreased costs for consulting and sponsored research agreements.

Research and development expenses primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for license, sponsored research 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 manufacturing clinical trial materials, costs associated with regulatory filings and laboratory service costs.

Research and development expenses decreased by approximately $22.0 million from $62.5 million for the year ended December 31, 2022, to $40.5 million for the year ended December 31, 2023.

The decrease in research and development expense for the year ended December 31, 2023, was primarily attributable to the following:

● $7.7 million decreased research and development employee compensation costs, including stock compensation, which includes approximately $3.4 million of costs reimbursed through the subcontracting agreement with uBriGene;

● $8.2 million decreased laboratory supply costs, including vector manufacturing costs, which includes approximately $0.9 million of costs reimbursed through the subcontracting agreement with uBriGene;

● $6.7 million decreased for program related costs, which primarily reflects the reduction of spend on the discontinued programs;

● $2.9 million decreased other costs including facility related costs, depreciation, consulting;

● offset by approximately $3.5 million for increase costs for services provided by uBriGene.

Research and development expenses - licenses acquired decreased by $0.9 million from $1.5 million for the year ended December 31, 2022, to $0.5 million for the year ended December 31, 2023.

The decrease in research and development expenses - licenses acquired for the year ended December 31, 2022 was primarily attributable to the following:

● Approximately $3.1 million for the annual stock dividend to Fortress;

● $0.8 million for increased costs related to our license with Mayo Clinic;

● $0.3 million related to our LUMC license;

● $0.2 million related to our licenses with COH.

We expect our research and development activities to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with the following:

The decrease in research and development expenses - licenses acquired for the year ended December 31, 2023, reflects approximately $0.6 million decrease for the annual stock dividend to Fortress, and $0.3 million decrease in milestone payments related to our licenses with COH in the prior year.

The following table provides a breakout of the components of research and development expenses for the year ended December 31, 2023, and 2022:

For the year ended December 31,

($ in thousands)

R&D program related expenses (1)

Mayo in situ CAR T

All others (2)

Total R&D development expense

R&D personnel related expenses

R&D facility and depreciation expense

R&D consulting expenses

R&D lab supplies

R&D other expense (3)

Total research and development expense

(1) Includes sponsored research, license and clinical trial related costs

(2) Includes the costs for long-term follow-up and programs that were terminated.

(3) Includes services provided by uBriGene under the manufacturing services agreement.

(4) Credits reflect the termination of the programs and refunds from vendors.

Our research and development expenses may vary significantly from period to period depending on where we are in the development plans for our various programs, and the resources we have at the time to commit to those programs.

The more significant costs impacting the level of expense include:

● employee-related expenses, which include salaries and benefits;

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● expenses incurred under agreements with CROs, investigative sites and consultants that conduct our clinical trials and our preclinical activities;

● facility expenses, which include rent, utilities and maintenance costs;

● the cost of acquiring and manufacturing clinical trial materials;

● costs associated with non-clinical activities, and regulatory approvals.

Gain on the Sale of Property and Equipment

Gain on the sale of property and equipment for the year ended December 31, 2023, is attributable to the difference between the base proceeds of $6.0 million received upon the closing of the uBriGene transaction and the relative fair value of the fixed assets sold.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related expenses, including stock-based compensation, for executives and other administrative personnel, recruitment expenses, professional fees and other corporate expenses, including investor relations, legal activities including patent fees, and facilities-related expenses.

General and administrative expense increased by approximately $1.2 million from $11.0 million for the year ended December 31, 2021, to $12.2 million for the year ended December 31, 2022.

The increase in general and administrative expense for the year ended December 31, 2022, was primarily attributable to the following:

● $0.4 million for increased general and administrative employee compensation costs due primarily to additional headcount to support the Company’s continued growth;

● $1.3 million for increased corporate and patent related legal costs;

● $0.4 million for increased third-party consulting;

● $0.6 million for increased other costs, including outside services;

● offset by approximately $1.3 million for decreased stock-based costs;

● $0.2 million decrease in state taxes.

We anticipate general and administrative expenses will increase in future periods, reflecting continued and increasing costs associated with:

● support of our expanded research and development activities, including additional product candidates entering the clinic;

General and administrative expense decreased by approximately $2.5 million from $12.2 million for the year ended December 31, 2022, to $9.7 million for the year ended December 31, 2023.

The decrease in general and administrative expense for the year ended December 31, 2023, was primarily attributable to the following:

● $0.3 million decreased general and administrative employee compensation costs, including stock based;

● $0.7 million decreased third-party consulting;

● $0.6 million decreased outside services, including recruiting fees;

● $0.8 million decreased expense related to equity fees to Fortress,

● $0.5 million decreased other costs, including business insurance and the Management Services Agreement with Fortress;

● offset by $0.4 million increased professional services.

Our general and administrative expenses may vary significantly from period to period depending on the level of effort required to support our research and development group and our ongoing requirements of being a publicly traded company.

The more significant costs contributing to our general and administrative expenses include the following:

● support of our research and development activities, including potential product candidates entering the clinic;

● stock compensation granted to key employees and non-employees;

● support of business development activities;

● increased professional fees and other costs associated with the regulatory requirements and increased compliance associated with being a publicly traded company.

● professional fees and other costs associated with the regulatory requirements and increased compliance associated with being a publicly traded company.

Other Income (Expense)

Other income (expense) consists primarily of funds received from the NIH grant, interest income earned on cash balances and short-term investments and interest expense on the Company’s notes payable.

For the year ended December 31, 2022, and 2021, total other income (expense) was approximately $1.4 million of expense and $0.4 million of income, respectively.

The $1.7 million decrease in other income (expense) for the year ended December 31, 2022 was primarily attributable to increased interest expense of $3.3 million partially offset by $1.3 million of grant income and increased interest income of $0.3 million.

We expect interest expense to remain higher so long as the Term Loan is outstanding.

The amount of our interest expense may increase if interest rates continue to increase because the Term Loan has a variable rate of interest.

Other income (expense) consists primarily of funds received from the NIH grant, interest income earned on cash balances and interest expense on our Term Loan.

For the year ended December 31, 2023, and 2022, total other expense was approximately $2.3 million and $1.3 million, respectively.

The $1.0 million increase in other expense for the year ended December 31, 2023 was primarily attributable to increased interest expense of $0.8 million, which reflects $2.8 million loss on the extinguishment of debt offset by $2.0 million decrease in interest expense related to the repayment of the Term Loan, $0.4 million decrease in other income reflecting the end of the NIH grant in August 2023, partially offset by $0.2 million increase in interest income.

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, 2022, the Company had an accumulated deficit of $329.4 million.

The Company has funded its operations to date primarily through the sale of equity and its Term Loan.

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 will be required to expend significant funds in order to advance the development of its product candidates.

The continuation of our business as a going concern is dependent upon raising additional capital and eventually attaining and maintaining profitable operations.

As of December 31, 2022, there is substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the date of issuance of these financial statements.

The financial statements included in this Annual Report on Form 10-K do not include any adjustments that might be necessary should operations discontinue.

As of the date of this Annual Report on Form 10-K, our public float was less than $75 million.

As a result, we will be limited by the baby shelf rules until such time as our public float exceeds $75 million, which means we only have the capacity to sell shares up to one-third of our public float under shelf registration statements in any twelve-month period.

If our public float decreases, the amount of securities we may sell under our Form S-3 shelf registration statements will also decrease.

We will remain constrained by the baby shelf rules under our Form S-3 registration statements until such time as our public float exceeds $75 million, at which time the amount of securities we may sell under a Form S-3 registration statement will no longer be limited by the baby shelf rules.

Contractual Obligations

We enter into contracts in the normal course of business with licensors, CROs, contract manufacturing organizations (CMOs) and other third parties for the procurement of various products and services, including without limitation biopharmaceutical development, biologic assay development, commercialization, clinical and preclinical development, clinical trials management, pharmacovigilance and manufacturing and supply.

These contracts typically do not contain minimum purchase commitments (although they may) and are generally terminable by us upon written notice.

Payments due upon termination or cancelation/delay consist of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation;

in certain cases, our contractual arrangements with CROs and CMOs include cancelation and/or delay fees and penalties.

Cash Flows for the Years Ended December 31, 2022 and 2021

We have incurred substantial operating losses and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable.

As of December 31, 2023, we had an accumulated deficit of $381.0 million.

We have funded our operations to date primarily through the sale of equity and our Term Loan.

On April 11, 2023, we repaid the Term Loan, see Note 8 to the Financial Statements.

Sources of Liquidity

Registration Statements

On December 12, 2023, we filed registration statement No.

333-275997 on Form S-1, which registered the offer and sale of common stock on behalf of the Selling Stockholders, of up to 2,743,530 shares of our common stock, issuable upon the exercise of certain warrants held by the Selling Stockholders.

On October 23, 2020, we 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, we may sell up to a total of $100.0 million of our securities.

The 2020 S-3 expired on October 23, 2023.

On April 23, 2021, we 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, we may sell up to a total of $200.0 million of our securities.

As of December 31, 2023, approximately $195.6 million of the 2021 S-3 remains available for sale of securities.

The amount of securities we are able to sell pursuant to the registration statements on Form S-3 is limited.

See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

On April 11, 2023, our long-term debt facility with Runway Growth Finance Corp.

(the “Term Loan”) was terminated upon receipt by Runway of a payoff amount of $30.4 million from us comprising principal, interest and the applicable final payment amount.

The loss on extinguishment was recorded in interest expense in the Statements of Operations.

Registered Direct Offering

On October 26, 2023, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single institutional accredited investor (the “Investor”) pursuant to which we agreed to issue and sell, in a registered direct offering priced at-the-market under the rules of The Nasdaq Stock Market (the “Registered Offering”), (i) 920,000 shares of common stock, at a price per share of $1.70 and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 1,668,236 shares of our common stock, at a price per Pre-funded Warrant equal to $1.699, the price per share, less $0.001.

The Pre-funded Warrants were sold, in lieu of shares of common stock, to the Investor whose purchase of shares of common stock in the Registered Offering would otherwise result in such Investor, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at such Investor’s option upon issuance, 9.99%) of our outstanding common stock immediately following the consumption of the Registered Offering.

The Pre-funded Warrants have an exercise price of $0.001 per share, became exercisable upon issuance and remain exercisable until exercised in full.

The Registered Offering closed on October 30, 2023.

We intend to use the net proceeds from the Registered Offering for general corporate purposes and working capital requirements, which may include, among other things, the advancement of our product candidates to obtain regulatory approval from the FDA.

In a concurrent private placement, pursuant to the terms of the Purchase Agreement, we also agreed to issue and sell unregistered warrants (the “Warrants”) to purchase up to 2,588,236 shares of Common Stock, at an offering price of $0.125 per Warrant to purchase one share of common stock (the “Private Placement” and, together with the Registered Offering, the “Registered Direct Offering”) (which offering price is included in the purchase price per Share or Pre-funded warrant).

The Warrants have an exercise price of $1.58 per share (subject to customary adjustments as set forth in the Warrants), are exercisable upon issuance and will expire five and one-half years from the date of issuance.

The Warrants contain customary anti-dilution adjustments to the exercise price, including for share splits, share dividends, rights offering and pro rata distributions.

The Private Placement also closed on October 30, 2023, concurrently with the Registered Offering.

We received approximately $4.4 million in gross proceeds from the Offerings, before deducting placement agency fees and offering expenses of approximately $0.5 million.

Pursuant to the Founders Agreement, we did not issue any shares of common stock to Fortress for the year ended December 31, 2023, and recorded the value of 64,706 shares issuable to Fortress in connection with the shares issued under the Registered Direct Offering.

At-the-Market Offering

In July 2018, we entered into an At-the-Market Issuance Sales Agreement (the “Mustang ATM”) with B.

Riley Securities, Inc.

Riley FBR, Inc.), Cantor Fitzgerald & Co., National Securities Corporation (now B.

Riley FBR, Inc.), and Oppenheimer & Co.

(each an “Agent” and collectively, the “Agents”), relating to the sale of shares of common stock pursuant to the 2021 S-3.

Under the Mustang ATM, we pay the Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock.

31, 2020, the Mustang ATM was amended to add H.C.

Wainwright & Co., LLC as an Agent.

On April 14, 2023, the Mustang ATM was amended to add the limitations imposed by General Instruction I.B.6 to Form S-3 and remove Oppenheimer & Co., Inc.

During the year ended December 31, 2023, we issued approximately 52,000 shares of common stock at an average price of $3.15 per share for gross proceeds of $163,000 under the ATM Agreement.

In connection with these sales, we paid aggregate fees of approximately $3,000 for net proceeds of approximately $160,000.

During the year ended December 31, 2022, we issued approximately 0.5 million shares of common stock at an average price of $12.61 per share for gross proceeds of $6.6 million under the ATM Agreement.

In connection with these sales, we paid aggregate fees of approximately $0.1 million for net proceeds of approximately $6.5 million.

Pursuant to the Founders Agreement, we did not issue any shares of common stock to Fortress for the year ended December 31, 2023, and recorded the value of 1,297 shares issuable to Fortress in connection with the shares issued under the Mustang ATM.

Pursuant to the Founders Agreement, we issued 13,131 shares of common stock to Fortress at a weighted average price of $13.56 per share for the year ended December 31, 2022, in connection with the shares issued under the Mustang ATM.

The number of securities we are able to sell pursuant to the registration statements on Form S-3 is limited.

See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

The following table summarizes our cash flows during the years ended December 31, 2023, and 2022:

For the year ended December 31,

8 unchanged sentences

Net cash used in operating activities was $49.5 million for the year ended December 31, 2023, compared to $65.1 million for the year ended December 31, 2022.

Net cash used in operating activities for the year ended December 31, 2023, was primarily due to approximately $51.6 million in net loss, $3.0 million change in operating assets and liabilities, and $1.5 million gain on the sale of property and equipment, partially offset by $1.9 million of depreciation expense, $0.6 million of non-cash stock compensation expenses, $0.5 million of common shares issuable in connection with our Founders Agreement, $0.1 million equity fee to Fortress related to Mustang ATM and the Registered Direct Offering, $0.1 million of amortization of debt discount, $2.8 million loss on extinguishment of debt due to the repayment of the Term Loan, $0.4 million of amortization of operating lease right-of-use assets, and $0.2 million gain on lease modification.

Net cash used in operating activities for the year ended December 31, 2022, was primarily due to approximately $77.5 million in net loss, partially offset by $4.0 million change in operating assets and liabilities, $2.7 million of depreciation expense, $2.3 million of non-cash stock compensation expenses, $1.1 million of common shares issuable for the Founders Agreement, $0.7 million equity fee to Fortress related to the Term Loan, $0.5 million of amortization of debt discount, $0.4 million of research and development-licenses acquired, $0.2 million loss on disposal of property and equipment, $0.3 million of amortization of operating lease right-of-use assets, and $0.2 million of equity fee on issuance of common shares to Fortress.

Net cash used in operating activities was $53.7 million for the year ended December 31, 2021, compared to $37.3 million for the year ended December 31, 2020.

Net cash used in operating activities for the year ended December 31, 2021, was primarily due to approximately $66.4 million in net loss, partially offset by $4.2 million of common shares issuable for Founders shares, $3.3 million of non-cash stock compensation expenses, $2.2 million of depreciation expense, $1.9 million of equity fee on issuance of common shares to Fortress and $1.6 million of research and development-licenses acquired .

Investing Activities

Net cash provided by investing activities was $5.9 million for the year ended December 31, 2023, representing $6.0 million of proceeds from the sale of property and equipment offset by $0.1 million used in purchases of research and development licenses and fixed assets.

Net cash used in investing activities was $3.0 million for the year ended December 31, 2022, representing $2.7 million in purchases of fixed assets and $0.4 million in purchases of research and development licenses, offset by $0.1 million of proceeds from the sale of fixed assets.

Net cash used in investing activities was $5.4 million for the year ended December 31, 2021, representing $4.0 million in purchases of fixed assets and $1.4 million in purchases of research and development licenses.

Financing Activities

Net cash used in financing activities was $26.1 million during the year ended December 31, 2023, driven by repayment of the Term Loan of $30.4 million offset by $4.4 million of gross proceeds from the Registered Direct Offering, net of offering costs of $0.5 million, $0.2 million of gross proceeds from the Mustang ATM and $0.2 million raised from the issuance of our common stock in connection with our Employee Stock Purchase Plan (the “ESPP”) .

Net cash provided by financing activities was $34.1 million during the year ended December 31, 2022, driven by (i) proceeds from the issuance of the Term Loan of $30.0 million, net of financing costs of $2.7 million;

(ii) gross proceeds of $6.6 million, net of offering costs of $0.1 million, from the Mustang ATM;

and (iii) $0.2 million raised from the issuance of the Company’s common shares in connection with the Employee Stock Purchase Plan (“ESPP”) .

Net cash provided by financing activities was $70.8 million during the year ended December 31, 2021, representing gross proceeds of $71.9 million, net of offering costs of $1.4 million, from the Mustang ATM and $0.3 million raised from the issuance of the Company’s common shares in connection with the ESPP.

and (iii) $0.2 million raised from the issuance of our common stock in connection with our ESPP .

As of December 31, 2023, we had cash and cash equivalents of $6.2 million.

Based on our current operating plan, we currently expect that such cash and cash equivalents will be sufficient to fund our operations and clinical trials through the first quarter of 2024.

In the near term, our liquidity and capital resources will be significantly affected by our ability to raise additional equity capital, including receiving the Contingent Payment pursuant to the Amended Asset Purchase Agreement in connection with the sale of our Facility, as described under “Recent Developments” above.

Receipt of the Contingent Payment is dependent upon our raising an additional $5.4 million through issuances of equity securities in order to complete the Contingent Capital Raise and obtaining the Landlord’s consent to the Proposed Lease transfer.

The lease transfer is subject to review and approval by CFIUS.

The current 45-day review period will conclude no later than March 28, 2024.

If we are not able to secure the Contingent Payment by the end of the first quarter of 2024, we will continue to seek addition funding through corporate partnerships and capital markets fundraising and may face significant difficulty in funding our operations in the short term and will need to pursue other options to reduce expenses.

See “Risk Factors—Risks Related to Our Finances and Capital Requirements.”

The continuation of our business as a going concern is dependent upon raising additional capital and eventually attaining and maintaining profitable operations.

As of December 31, 2023, there is substantial doubt about our ability to continue as a going concern for the next 12 months from the date of issuance of these financial statements.

The financial statements included in this Form 10-K do not include any adjustments that might be necessary should operations discontinue.

As of the date of this Form 10-K, our public float was less than $75 million.

As a result, we are subject to the limitations of General Instruction I.B.6 to Form S-3 until such time as our public float exceeds $75 million, which means we only have the capacity to sell shares up to one-third of our public float under shelf registration statements in any twelve-month period.

If our public float decreases, the number of securities we may sell under our Form S-3 shelf registration statements will also decrease.

We will remain constrained by the limitations of General Instruction I.B.6 to Form S-3 until such time as our public float exceeds $75 million, at which time the number of securities we may sell under a Form S-3 registration statement will no longer be limited by limitations of General Instruction I.B.6 to Form S-3.

Contractual Obligations

We enter into contracts in the normal course of business with licensors, CROs, contract manufacturing organizations (“CMOs”) and other third parties for the procurement of various products and services, including without limitation biopharmaceutical development, biologic assay development, commercialization, clinical and preclinical development, clinical trials management, pharmacovigilance and manufacturing and supply.

These contracts typically do not contain minimum purchase commitments (although they may) and are generally terminable by us upon written notice.

in certain cases, our contractual arrangements with CROs and CMOs include cancelation and/or delay fees and penalties.

Quantitative and Qualitative Disclosures About Market Risks

Financial Statements and Supplementary Data.

The information required by this Item is set forth in the financial statements and notes thereto beginning at page F-1 of this Form 10-K.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis