What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-09 compared with 2020-08-10 · 52 added, 83 removed, 187 unchanged (42% of the section changed)

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and (v) all dollar amounts refer to United States dollars unless otherwise indicated.

The following should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the six months ended June 30, 2020 included in this Quarterly Report.

The following should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the nine months ended September 30, 2020 included in this Quarterly Report.

Company Overview

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In the adjuvant setting, patients will be randomized to either MultiTAA-specific T cell therapy at approximately 90 days post-transplant versus standard of care observation, while the active disease patients will receive MT-401 following relapse post-transplant as part of a single-arm group.

In February 2020, we announced that the FDA has permitted us to initiate our Phase 2 clinical trial beginning with a safety lead-in portion of the trial.

In February 2020, we announced that the FDA has permitted us to initiate our Phase 2 clinical trial beginning with a safety lead-in portion of the trial, and we have begun to enroll patients.

We expect that we will be delayed in initiating this trial per previously communicated timelines due to the COVID-19 pandemic.

See “—Clinical Program Updates.” In April 2020, the FDA granted orphan drug designation to MT-401 for the treatment of AML after receiving an allogenic stem cell transplant.

See “—Clinical Program Updates.” In April 2020, the FDA granted orphan drug designation to MT-401 for the treatment of AML after receiving an allogeneic stem cell transplant.

We reported interim data for an ongoing Phase 1/2 clinical trial of the MultiTAA-specific T cell therapy for the treatment of pancreatic adenocarcinoma being conducted by BCM.

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The FDA placed a partial clinical hold on the trial for the use of the MT-401 product manufactured using one of the reagents supplied by the alternative supplier until the final data and certificate of analysis for the reagent are reviewed and accepted by the FDA.

As a result of the COVID-19 pandemic, we may be delayed in our ability to enroll the first three patients in the safety lead-in portion of the trial, but we continue to work to identify clinical trial sites.

Further, our alternate supplier has notified us that they will also be delayed in providing the new reagent for MT-401, along with the final data and certificate of analysis required by the FDA to satisfy the requirements for lifting the partial hold.

Accordingly, we expect that we will be delayed in initiating the Phase 2 trial per previously communicated timelines.

Interim Results of Phase 1 Trial of MultiTAA-specific T cell Therapy for the Treatment of Pancreatic Adenocarcinoma

In May 2020, we reported additional interim data of a cohort of patients receiving MultiTAA-specific T cell therapy in combination with standard-of-care chemotherapy in the first-line setting (Arm A).

Arm A is evaluating the safety and potential efficacy of using MultiTAA-specific T cells in the first line setting for chemo-responsive patients with locally advanced or metastatic pancreatic adenocarcinoma.

Patients in Arm A receive at least three months of standard-of-care chemotherapy (gemcitabine/nab-paclitaxel or FOLFIRINOX) - the period during which a response to chemotherapy would typically occur - before receiving up to six administrations of MultiTAA-specific T cells in conjunction with chemotherapy.

Between June 2018 and December 2019, 13 patients have been treated, each of whom received up to six monthly infusions of 1x10 7 MultiTAA-specific T cells/m 2 in conjunction with ongoing first-line chemotherapy and without prior lymphodepletion.

For 12 of the 13 patients, sufficient cells for all six planned doses were generated;

two doses were available for the remaining patient.

● Out of the 13 evaluable patients (best overall response):

o 4 patients experienced objective responses after administration of MultiTAA cells;

o 1 patient experienced a radiographic complete response occurring at month 9 after starting chemotherapy;

o 3 patients experienced partial responses per RECIST occurring at 6-9 months after starting chemotherapy;

o 6 patients experienced stable disease;

o 1 patient experienced a mixed response (some lesions increased in size and others decreased for a net zero change in size of tumor lesions);

● Patients had durable cancer control with 9 of the 13 patients exceeding historical control of overall survival;

● 5 patients enrolled in the study were not administered MultiTAA-specific T cells, either because of disease progression (4 patients) which made them ineligible for treatment, or because insufficient starting material from the patient was available for manufacturing (1 patient);

● Evidence of epitope-spreading was observed in all responders, suggesting that the MultiTAA T cell therapy triggered the recruitment of a broader endogenous immune system response for improved anti-tumor activity;

● No infusion-related reactions, cytokine release syndrome or neurotoxicity was observed.

We have begun to enroll patients in the safety lead-in portion of the trial, and we continue to work to identify clinical trial sites.

Additionally, our alternate supplier has provided the new reagent for MT-401.

We continue to work with the vendor to receive the final data and certificate of analysis required by the FDA to satisfy the requirements for lifting the partial hold, but we expect that we will continue to be delayed in initiating this trial per previously communicated timelines due to the COVID-19 pandemic.

Results of Operations

In this discussion of our results of operations and financial condition, amounts, other than per-share amounts, have been rounded to the nearest thousand dollars.

Comparison of the Three Months Ended June 30, 2020 and June 30, 2019

The following table summarizes the results of our operations for the three months ended June 30, 2020 and 2019:

Comparison of the Three Months Ended September 30, 2020 and September 30, 2019

The following table summarizes the results of our operations for the three months ended September 30, 2020 and 2019:

For the Three Months Ended

September 30,

Total revenues

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Weighted average number of common shares outstanding

During the three months ended June 30, 2020, we received $0.5 million of a grant awarded to the Mayo Foundation from the U.S.

Department of Defense to fund the Phase 2 clinical trial of TPIV100 for the treatment of HER2/neu breast cancer.

The portion of the grant we received compensated us for clinical supplies manufactured by us for the clinical trial.

We did not receive any grant income during the three months ended June 30, 2019.

Operating Expenses

Operating expenses incurred during the three months ended June 30, 2020 were $6.8 million compared to $5.9 million during the three months ended June 30, 2019.

Operating expenses incurred during the three months ended September 30, 2020 were $7.4 million compared to $5.7 million during the three months ended September 30, 2019.

Significant changes and expenditures in operating expenses are outlined as follows:

Research and Development Expenses

Research and development expenses increased by 36% to $4.3 million for the three months ended June 30, 2020, compared to $3.2 million for the three months ended June 30, 2019.

Research and development expenses increased by 54% to $4.8 million for the three months ended September 30, 2020, compared to $3.1 million for the three months ended September 30, 2019.

The increase of $1.7 million in 2020 was primarily attributable to the following:

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General and Administrative Expenses

General and administrative expenses were $ 2.5 million and $2.7 million for the three months ended June 30, 2020 and 2019, respectively.

The decrease in general and administrative expenses was mainly comprised of a decrease in legal and professional fees.

General and administrative expenses were $ 2.6 million and $2.5 million for the three months ended September 30, 2020 and 2019, respectively.

The increase in general and administrative expenses was mainly comprised of an increase in rent and insurance expenses offset by a decrease in legal and professional fees.

Other Income (Expense)

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities for the three months ended June 30, 2020 was $0 as compared to $(7,000) for the three months ended June 30, 2019.

Change in fair value of warrant liabilities for the three months ended September 30, 2020 was $0 as compared to $(64,000) for the three months ended September 30, 2019.

Interest Income

Interest income was $16,000 and $0.3 million for the three months ended June 30, 2020 and 2019, respectively, and was attributable to interest income relating to funds that are held in U.S.

Interest income was $5,000 and $0.3 million for the three months ended September 30, 2020 and 2019, respectively, and was attributable to interest income relating to funds that are held in U.S.

Treasury notes and U.S.

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As part of the reaction to the COVID-19 pandemic, the Federal Reserve cut rates in mid-March to a range of 0.0% - 0.25%.

As such, we recorded lower interest income during the three months ended June 30, 2020.

We recorded a net loss of $6.3 million, or a net loss per share, basic and diluted of $(0.14), during the three months ended June 30, 2020, compared to a net loss of $5.6 million, or a net loss per share, basic and diluted of $(0.12), during the three months ended June 30, 2019.

The increase in our net loss during the three months ended June 30, 2020 compared to during the three months ended June 30, 2019 was due to the continued expansion of our research and development activities, increased expenses relating to current and future clinical trials, and the overall growth of our corporate infrastructure.

As such, we recorded lower interest income during the three months ended September 30, 2020.

We recorded a net loss of $7.4 million, or a net loss per share, basic and diluted of $(0.16), during the three months ended September 30, 2020, compared to a net loss of $5.5 million, or a net loss per share, basic and diluted of $(0.12), during the three months ended September 30, 2019.

The increase in our net loss during the three months ended September 30, 2020 compared to during the three months ended September 30, 2019 was due to the continued expansion of our research and development activities, and the overall growth of our corporate infrastructure.

We anticipate that we will continue to incur net losses in the future as we continue to invest in research and development activities, including clinical development of our MultiTAA T cell product candidates.

Comparison of the Six Months Ended June 30, 2020 and June 30, 2019

The following table summarizes the results of our operations for the six months ended June 30, 2020 and 2019:

For the Six Months Ended

Comparison of the Nine months ended September 30, 2020 and September 30, 2019

The following table summarizes the results of our operations for the nine months ended September 30, 2020 and 2019:

For the Nine Months Ended

September 30,

Total revenues

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Weighted average number of common shares outstanding

During the six months ended June 30, 2020, we received $0.5 million of a grant awarded to the Mayo Foundation from the U.S.

During the nine months ended September 30, 2020, we received $0.5 million of a grant awarded to the Mayo Foundation from the U.S.

Department of Defense to fund the Phase 2 clinical trial of TPIV100 for the treatment of HER2/neu breast cancer.

The portion of the grant we received compensated us for clinical supplies manufactured by us for the clinical trial.

We did not receive any grant income during the six months ended June 30, 2019.

We did not receive any grant income during the nine months ended September 30, 2019.

Operating Expenses

Operating expenses incurred during the six months ended June 30, 2020 were $13.5 million compared to $11.5 million during the six months ended June 30, 2019.

Operating expenses incurred during the nine months ended September 30, 2020 were $20.8 million compared to $17.2 million during the nine months ended September 30, 2019.

Significant changes and expenditures in operating expenses are outlined as follows:

Research and Development Expenses

Research and development expenses increased by 35% to $8.1 million for the six months ended June 30, 2020, compared to $6.0 million for the six months ended June 30, 2019.

Research and development expenses increased by 42% to $12.9 million for the nine months ended September 30, 2020, compared to $9.1 million for the nine months ended September 30, 2019.

The increase of $3.8 million in 2020 was primarily attributable to the following:

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General and Administrative Expenses

General and administrative expenses were $5.4 million and $5.5 million for the six months ended June 30, 2020 and 2019, respectively.

General and administrative expenses were $7.9 million and $8.1 million for the nine months ended September 30, 2020 and 2019, respectively.

The decrease in general and administrative expenses was mainly comprised of a decrease in legal and professional fees and other.

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Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities for the six months ended June 30, 2020 was $31,000 as compared to $(16,000) for the six months ended June 30, 2019.

Change in fair value of warrant liabilities for the nine months ended September 30, 2020 was $31,000 as compared to $(80,000) for the nine months ended September 30, 2019.

Interest Income

Interest income was $0.1 million and $0.6 million for the six months ended June 30, 2020 and 2019, respectively, and was attributable to interest income relating to funds that are held in U.S.

Interest income was $0.1 million and $0.9 million for the nine months ended September 30, 2020 and 2019, respectively, and was attributable to interest income relating to funds that are held in U.S.

Treasury notes and U.S.

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As part of the reaction to the COVID-19 pandemic, the Federal Reserve cut rates in mid-March to a range of 0.0% - 0.25%.

As such, we recorded lower interest income during the six months ended June 30, 2020.

We recorded a net loss of $12.8 million, or a net loss per share, basic and diluted of $(0.28), during the six months ended June 30, 2020, compared to a net loss of $10.9 million, or a net loss per share, basic and diluted of $(0.24), during the six months ended June 30, 2019.

The increase in our net loss during the six months ended June 30, 2020 compared to during the six months ended June 30, 2019 was due to the continued expansion of our research and development activities, increased expenses relating to current and future clinical trials, and the overall growth of our corporate infrastructure.

As such, we recorded lower interest income during the nine months ended September 30, 2020.

We recorded a net loss of $20.2 million, or a net loss per share, basic and diluted of $(0.43), during the nine months ended September 30, 2020, compared to a net loss of $16.3 million, or a net loss per share, basic and diluted of $(0.36) , during the nine months ended September 30, 2019.

The increase in our net loss during the nine months ended September 30, 2020 compared to during the nine months ended September 30, 2019 was due to the continued expansion of our research and development activities, increased expenses relating to future clinical trials, and the overall growth of our corporate infrastructure.

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We have financed our operations primarily through public and private offerings of our debt and equity securities.

The following table sets forth our cash and cash equivalents and working capital as of June 30, 2020 and December 31, 2019:

The following table sets forth our cash and cash equivalents and working capital as of September 30, 2020 and December 31, 2019:

September 30,

Cash and cash equivalents

Working capital

The following table summarizes our cash flows for the six months ended June 30, 2020 and 2019:

For the Six Months Ended

The following table summarizes our cash flows for the nine months ended September 30, 2020 and 2019:

For the Nine Months Ended

September 30,

Net Cash provided by (used in):

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Operating Activities

Net cash used in operating activities during the six months ended June 30, 2020 was $8.4 million.

The use of cash primarily related to our net loss of $12.8 million, in addition to the effect of changes in asset and liability accounts, including an increase in prepaid expenses and deposits of $1.1 million, an increase in accounts payable and accrued liabilities of $2.8 million, a decrease in interest receivable of $53,000 and an increase in lease liabilities of $0.3 million.

Net cash used in operating activities during the six months ended June 30, 2019 was $8.1 million.

The use of cash primarily related to our net loss of $10.9 million, in addition to the effect of changes in asset and liability accounts, including an increase in prepaid expenses and deposits of $350,000, an increase in accounts payable and accrued liabilities of $225,000, a decrease in lease liabilities of $90,000 and a decrease in interest receivable of $10,000.

Net cash used in operating activities during the nine months ended September 30, 2020 was $12.6 million.

The use of cash primarily related to our net loss of $20.2 million, in addition to the effect of changes in asset and liability accounts, including an increase in prepaid expenses and deposits of $0.8 million, an increase in accounts payable and accrued liabilities of $4.0 million, a decrease in interest receivable of $0.06 million and a decrease in lease liabilities of $0.2 million.

Net cash used in operating activities during the nine months ended September 30, 2019 was $13.7 million.

The use of cash primarily related to our net loss of $16.3 million, in addition to the effect of changes in asset and liability accounts, including an increase in prepaid expenses and deposits of $1.8 million, an increase in accounts payable and accrued liabilities of $0.1 million, a decrease in lease liabilities of $0.1 million and a decrease in interest receivable of $0.03 million.

Investing Activities

Net cash used in investing activities was $3.9 million and $0.3 million for the purchase of property and equipment during the six months ended June 30, 2020 and 2019, respectively.

The increase relates to $2.6 million in construction in progress towards the new modular cleanrooms in our manufacturing facility, an additional $1.0 million in laboratory equipment and $0.3 million in leasehold improvements at the new research facility.

Net cash used in investing activities was $7.0 million and $0.4 million for the purchase of property and equipment during the nine months ended September 30, 2020 and 2019, respectively.

The increase relates to $4.6 million in construction in progress towards the new modular cleanrooms in our manufacturing facility, an additional $1.3 million in laboratory equipment, $0.5 million in furniture and fixtures and $0.3 million in leasehold improvements at the new research facility.

Financing Activities

Net cash provided by financing activities was $550,000 during the six months ended June 30, 2020, due to the exercise of stock warrants.

Net cash provided by financing activities was $63,000 during the six months ended June 30, 2019, due to the exercise of stock warrants and stock options.

Net cash provided by financing activities was $2.7 million during the nine months ended September 30, 2020, mainly due to the purchase of 1,407,470 shares of stock under the Purchase Agreement with Aspire Capital that provided proceeds to the Company of approximately $2.2 million, along with $0.5 million of proceeds from the exercise of stock warrants.

Net cash provided by financing activities was $0.8 million during the nine months ended September 30, 2019, due to the exercise of stock warrants and stock options.

Future Capital Requirements

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If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

As of June 30, 2020, we had working capital of $29.8 million, compared to working capital of $43.5 million as of December 31, 2019.

Based on our revised clinical and research and development plans and our revised timing expectations related to the progress of our programs, and buildout of manufacturing and research facilities, and expansion of our corporate headquarters, we expect that our cash and cash equivalents as of June 30, 2020 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2021.

As of September 30, 2020, we had working capital of $24.3 million, compared to working capital of $43.5 million as of December 31, 2019.

Based on our revised clinical and research and development plans and our revised timing expectations related to the progress of our programs, and buildout of manufacturing and research facilities, and expansion of our corporate headquarters, we expect that our cash and cash equivalents as of September 30, 2020 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2021.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

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During fiscal 2020, we have entered into agreements to buildout a manufacturing facility, to lease a research lab and to expand our corporate headquarters in Houston, Texas.

A summary of these future capital requirements is below:

● On March 23, 2020, we entered into an agreement to expand our corporate headquarters in Houston, Texas, which is expected to commence in the third quarter of 2020.

The initial lease term is ten years with two five-year renewal options.

Fixed rent payments under the initial term are approximately $5.6 million.

Additionally, we are also responsible for our share of operating expenses.

● On March 26, 2020 we entered into an agreement with a vendor to design, engineer, build and eventually install modular cleanrooms in the manufacturing facility in Houston, Texas.

The total fees for this project to be substantially completed by December 31, 2020 are estimated to be $6.0 million.

● On April 30, 2020, we entered into a lease for a research facility in Houston, Texas.

The lease term is 71 months.

Fixed rent payments under the initial term are approximately $1.1 million.

Additionally, we are also responsible for our share of operating expenses.

● On June 26, 2020, we entered into a lease for a manufacturing facility in Houston, Texas.

The initial lease term is ten years from the expected commencement date in the third quarter 2020, with two five-year renewal options.

Fixed rent payments under the initial term are approximately $11.1 million.

Additionally, we are responsible for our share of operating expenses.

We plan to continue to fund our operations and capital funding needs through equity and/or debt financing.

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In February 2020, we entered into a common stock purchase agreement, or the Purchase Agreement, with Aspire Capital Fund, LLC, or Aspire Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30.0 million of shares of our common stock over the 30-month term of the Purchase Agreement.

As of June 30, 2020, Aspire Capital had not purchased any shares under the Purchase Agreement.

As of September 30, 2020, Aspire Capital had purchased 1,407,470 shares under the Purchase Agreement, providing aggregate proceeds to the Company of approximately $2.2 million.

In consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, we issued to Aspire Capital 345,357 shares of our common stock, or the Commitment Shares.

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There are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of sales of our common stock to Aspire Capital.

Aspire Capital has no right to require any sales by us but is obligated to make purchases from us as directed by us on future fundings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement.

Aspire Capital has no right to require any sales by us but is obligated to make purchases from us as directed by us on future funding, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement.

The Purchase Agreement may be terminated by us at any time, at its discretion, without any cost to us.

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GAAP, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenses in the periods presented.

We believe that the accounting estimates employed are appropriate and resulting balances are reasonable;

We believe that the accounting estimates

employed are appropriate and resulting balances are reasonable;

however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

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Going Concern

The below excludes any potential funding provided by the $30 million Purchase Agreement with Aspire Capital.

The below excludes any potential future funding provided by the Purchase Agreement with Aspire Capital.

We have no sources of revenue to provide incoming cash flows to sustain our future operations.

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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-Q

Item 2. Management’s Discussion and Analysis