What changed in this filing

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Item 1. Financial Statements

2021-08-13 compared with 2021-05-06 · 555 added, 329 removed, 270 unchanged (77% of the section changed)

1 unchanged sentence

ZIOPHARM Oncology, Inc.

BALANCE SHEET S

BALANCE SHEETS

(in thousands, except share and per share data)

5 unchanged sentences

Right of use asset

Other non-current

LIABILITIES AND STOCKHOLDERS’ EQUITY

Other non-current assets

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

6 unchanged sentences

Commitments and contingencies (Note 7)

Preferred stock, $ 0.001 par value, 30,000,000 shares authorized

Stockholders’ equity:

Stockholders’

Common stock, $ 0.001 par value;

350,000,000 shares authorized;

215,257,674 and 214,591,906 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in

215,559,148 and 214,591,906 shares issued and outstanding at

June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total stockholders’

Total liabilities and stockholders’

The accompanying notes are an integral part of the unaudited interim financial statements.

2 unchanged sentences

(in thousands, except share and per share data)

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Operating expenses:

3 unchanged sentences

Loss from operations

Other income, net

Other income (expense), net

Basic and diluted net loss per share

2 unchanged sentences

ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2021 and 2020

STATEMENTS OF CHANGES IN STOCKHOLDERS’

For the Six Months Ended June 30, 2021 and 2020

(in thousands, except share and per share data)

For the Three Months Ended March 31, 2020

Additional Paid

Total Stockholders’

For the Three Months Ended June 30, 2021

Stockholders’

Balance at March 31, 2021

Stock-based compensation

Exercise of employee stock options

Restricted stock awards

Cancelled restricted common stock

Balance at June 30, 2021

The accompanying notes are an integral part of the unaudited interim financial statements.

For the Six Months Ended June 30, 2021

Stockholders’

Balance at December 31, 2020

1 unchanged sentence

Exercise of employee stock options

Issuance of restricted common stock

Issuance of common stock in connection with a public offering, net of commissions and expenses of $ 5.9 million

Issuance of common stock in connection with an at the market offering, net of commissions and expenses of $ 0.4 million

and expenses of $ 2.7 million

Balance at March 31, 2020

Restricted stock awards

Cancelled restricted common stock

Balance at June 30, 2021

The accompanying notes are an integral part of the unaudited interim financial statements.

ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY…continued

For the Three Months Ended March 31, 2021 and 202 0

STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITYcontinued

For the Six Months Ended June 30, 2021 and 2020

(in thousands, except share and per share data)

For the Three Months Ended March 31, 2021

Additional Paid

Total Stockholders’

For the Three Months Ended June 30, 2020

Stockholders’

Balance at March 31, 2020

Stock-based compensation

Exercise of employee stock options

Balance at June 30, 2020

The accompanying notes are an integral part of the unaudited interim financial statements.

For the Six Months Ended June 30, 2020

Stockholders’

Balance at December 31, 2019

1 unchanged sentence

Exercise of employee stock options

Restricted stock awards

Balance at March 31, 2021

Issuance of restricted common stock

Issuance of common stock in connection with a public offering, net of commissions and expense of $ 5.9 million

Issuance of common stock in connection with an at the market offering, net of commissions of $ 0.4 million

Balance at June 30, 2020

The accompanying notes are an integral part of the unaudited interim financial statements.

2 unchanged sentences

(in thousands)

For the Three Months Ended

For the Six Months Ended June 30,

Cash flows from operating activities:

1 unchanged sentence

Stock-based compensation

Change in operating assets and liabilities

(Increase) decrease in:

16 unchanged sentences

Net increase in cash and cash equivalents, and restricted cash

Cash and cash equivalents, and restricted cash, beginning of period

Cash and cash equivalents, and restricted cash, end of period

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplementary disclosure of cash flow information:

Accounts included in accrued expenses and accounts payable related to property and equipment

Accounts included in accrued expenses and accounts payable related

to property and equipment

The accompanying notes are an integral part of the unaudited interim financial statements.

1 unchanged sentence

NOTES TO FINANCIAL STATEMENTS

ZIOPHARM Oncology, Inc., which is referred to herein as “ZIOPHARM,” or the “Company,” is a biopharmaceutical company seeking to develop, acquire, and commercialize, on its own or with partners, a diverse portfolio of immuno-oncology therapies.

The Company’s operations to date have consisted primarily of conducting research and development and raising capital to fund those efforts.

The Company’s fiscal year ends on December 31.

The Company has operated at a loss since its inception in 2003 and has no recurring revenues from operations.

The Company anticipates that losses will continue for the foreseeable future.

As of March 31, 2021, the Company had approximately $ 100.1 million of cash and cash equivalents and the Company’s accumulated deficit was approximately $ 785.7 million.

Given its current development plans, the Company anticipates cash resources will be sufficient to fund operations into the second quarter of 2022.

The Company’s ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given.

Cash requirements may vary materially from those now planned because of changes in the Company’s focus and direction of its research and development programs, competitive and technical advances, patent developments, regulatory changes or other developments.

ZIOPHARM Oncology, Inc., which is referred to herein as “ZIOPHARM,”

or the “Company,”

is a biopharmaceutical company seeking to develop, acquire, and commercialize, on its own or with partners, a diverse portfolio of immuno-oncology therapies.

The Company’s operations to date have consisted primarily of conducting research and development and raising capital to fund those efforts.

In May 2021, the Company announced that it will be winding down our existing Controlled IL-12 clinical program for the treatment of recurrent glioblastoma multiforme.

The Company will continue to seek a partner for this program and have also begun exploring potential synergies between this technology and our cell therapy programs.

Costs incurred during the three and six months ended June 30, 2021 under the program wind down have been immaterial.

The Company’s fiscal year ends on December 31.

The Company has operated at a loss since its inception in 2003 and has no recurring revenues from operations. The Company anticipates that losses will continue for the foreseeable future.

As of June 30, 2021, the Company had approximately $ 76.7  million of cash and cash equivalents.

The Company’s accumulated deficit at June 30, 2021 was approximately $ 808.3  million. Given its current development plans, the Company anticipates cash resources at June 30, 2021, plus the $ 25.0 million gross debt proceeds raised in August 2021, will be sufficient to fund operations into the fourth quarter of 2022. The Company’s ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given.

If adequate additional funds are not available when required, or if the Company is unsuccessful in entering into partnership agreements for further development of its product candidates, management may need to curtail its development efforts and planned operations to conserve cash.

The Company’s amended and restated certificate of incorporation authorizes it to issue 250,000,000 shares of common stock.

As of April 30, 202 1

, there were 215,525,411 shares of common stock outstanding and an additional 33,965,938 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants .

The Company’s amended and restated certificate of incorporation authorizes it to issue 3 50,000,000 shares of common stock .

As of July 31, 2021, there were 215,559,148 shares of common stock outstanding and an additional 34,088,731 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q

pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC.

The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC.

Certain information and note disclosures required by generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations.

It is management’s opinion that the accompanying unaudited interim financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair statement of the results for the interim periods.

for the fiscal year ended December 31, 2020 filed with the SEC on March 1, 2021, or the Annual Report.

balance sheet data was derived from the audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States.

The results disclosed in the statements of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year 202 1

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Business (Continued)

The unaudited interim financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 1, 2021, or the Annual Report.

The year-end balance sheet data was derived from the audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States.

The results disclosed in the statements of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full fiscal year 2021.

Use of Estimates

2 unchanged sentences

Changes in estimates are recorded in the period in which they become known.

The Company’s most significant estimates and judgments used in the preparation of its financial statements are:

Clinical trial expenses and other research and development expenses;

3 unchanged sentences

Impact of COVID-19 Pandemic

With the ongoing COVID-19

pandemic, the Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19

pandemic on its business and operations.

The Company continues to evaluate the impact of the COVID-19

global pandemic on patients, healthcare providers and its employees, as well as its operations and the operations of its business partners and healthcare communities.

In response to the COVID-19

pandemic, the Company has implemented policies at its locations to mitigate the risk of exposure to COVID-19

by its personnel, including restrictions on the number of staff in any given research and development laboratory and a work-from-home policy applicable to the majority of its personnel, along with encouraging voluntary vaccination and voluntary sharing of vaccination data.

The extent to which the COVID-19

pandemic impacts the Company’s business, clinical development and regulatory efforts and the value of its common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements, and the effectiveness of actions taken globally to contain and treat the disease.

The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the COVID-19

pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects.

With the ongoing COVID-19 pandemic, the Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on its business and operations.

The Company continues to evaluate the impact of the COVID-19 global pandemic on patients, healthcare providers and its employees, as well as its operations and the operations of its business partners and healthcare communities.

In response to the COVID-19 pandemic, the Company has implemented policies at its locations to mitigate the risk of exposure to COVID-19 by its personnel, including restrictions on the number of staff in any given research and development laboratory and a work-from-home policy for non-laboratory functions, along with encouraging voluntary vaccination and voluntary sharing of vaccination data.

The extent to which the COVID-19 pandemic impacts the Company’s business, clinical development and regulatory efforts and the value of its common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements, and the effectiveness of actions taken globally to contain and treat the disease.

The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the COVID-19 pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects.

Subsequent Events

On May 6,2021, the Company announced its commitment to a plan to realign its research and development resources to wind down the clinical trials of its Controlled IL-12 program as part of the Company’s decision to allocate an increasing amount of its resources and capital to its Sleeping Beauty TCR program.

Organizational Changes

On February 25, 2021, the Company announced that Heidi Hagen, formerly Lead Independent Director, was appointed Interim Chief Executive Officer, replacing Dr.

Laurence Cooper, MD., Ph.D.

Hagen is remaining as a member of the Board of Directors.

Cooper also stepped down from his seat on the Board of Directors and will be continuing with the Company in a scientific advisory consulting role to support the Company’s programs.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

The Company has evaluated subsequent events from the balance sheet date through the date on which these financial statements were issued.

Except as disclosed below, the Company did not have any material subsequent events that impacted its financial statements or disclosures.

On August 6, 2021, the Company entered into a credit and security agreement with a lender (the “Term Loan Agreement”).

The Term Loan Agreement provides for an initial term loan of $ 25.0 million funded at the closing, with an additional tranche of $ 25.0 million available if certain funding and clinical milestones are met by August 31, 2022.

Interest on the term loan is payable monthly in arrears at an annual interest rate of the greater of 7.75 % or the prime rate plus a margin of 4.5 %.

The term loan amortization date is April 1, 2022 ;

provided, however, if the Company raises $ 50 M in funding on or prior to March 31, 2022, the term loan first payment date shall automatically be extended to September 1, 2022.

Further, if the Company raised $50M on or prior to March 31, 2022 and an additional $50M on or prior to August 31, 2022, the term loan amortization shall automatically be extended to September 1, 2023 .

The term loan maturity date is March 1, 2023 ;

provided, however, if Company achieves the funding milestones, the term loan maturity date shall automatically be extended to August 1, 2025 .

There is a final payment due of 5.75 %.

The Company granted a warrant at the closing to purchase 432,843 shares at $ 2.22 per share.

The Company will grant a similar warrant if it draws the second $ 25.0 million tranche.

February 2020 Public Offering

1 unchanged sentence

The price to the public in the offering was $ 3.25 per share, and the underwriters agreed to purchase the shares from the Company pursuant to the underwriting agreement at a purchase price of $ 3.055 per share.

The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR

The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (File No.

333-232283) previously filed with the SEC, and a prospectus supplement thereunder.

3 unchanged sentences

The net proceeds were approximately $ 3.9 million after deducting underwriting discounts and offering expenses paid by the Company.

At-the-Market

At-the-Market Facility

In June 2019, the Company entered into an Open Market Sale Agreement, or sales agreement, with Jefferies LLC, as agent, or Jefferies, pursuant to which the Company may offer and sell, from time to time through Jefferies, shares of its common stock having an aggregate offering price of up to $100.0 million.

Shares will be sold pursuant to the Company’s effective registration statement on Form S-3ASR (File No.

333-232283), as previously filed with the SEC.

During the three months ended March 31, 2020, the Company sold an aggregate of 2,814,673 shares of its common stock at an average price of $ 4.77 per share under the ATM program.

The net proceeds from sales under the ATM program

were approximately $ 13.0 million after deducting underwriting discounts.

During the three months ended March 31, 2021, there were no sales under the Company’s ATM program.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

During the six months ended June 3, 2020, the Company sold an aggregate of 2,814,673 shares of its common stock at an average price of $ 4.77 per share under the ATM program.

The net proceeds from sales under the ATM program were approximately $ 13.0 million after deducting underwriting discounts.

During the six months ended June 30, 2021, there were no sales under the Company’s ATM program.

Summary of Significant Accounting Policies

The Company’s significant accounting policies were identified in the Company’s Annual Report.

There have been no material changes in those policies since the filing of its Annual Report except as noted below.

New Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12,

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

, which is intended to simplify various aspects related to accounting for income taxes.

removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for public entities for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years.

The adoption did not have a material impact on the Company’s financial statements.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

The adoption did not have a material impact on the Company’s financial statements.

Fair Value Measurements

9 unchanged sentences

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities, measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 were as follows:

Assets and liabilities, measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 were as follows:

($ in thousands)

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Cash equivalents

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Fair Value Measurements (Continued)

The cash equivalents represent deposits in short-term United States treasury money market mutual funds quoted in an active market and classified as a Level 1 asset.

Net Loss per Share

Basic net loss per share is computed by dividing

net loss by the weighted average

number of shares of common stock outstanding for the period.

The Company’s potentially dilutive shares, which include outstanding common stock options, inducement stock options, unvested restricted stock and warrants, have not been included in the computation of diluted net loss per share for any of the periods presented as the result would be anti-dilutive.

Such potentially dilutive shares of common stock consisted of the following as of March 31, 2021 and 2020, respectively:

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period.

Such potentially dilutive shares of common stock consisted of the following as of June 30, 2021 and 2020, respectively:

Stock options

7 unchanged sentences

On January 13, 2015, the Company, together with Precigen, entered into the MD Anderson License with MD Anderson (which Precigen subsequently assigned to PGEN).

Pursuant to the MD Anderson License, the C

ompany, together with PGEN, hold an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR T-cell

therapies, non-viral

gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs, arising from the laboratory of Laurence Cooper, M.D., Ph.D., who served as the Company’s Chief Executive Officer from May 2015 to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson.

Pursuant to the MD Anderson License, the Company, together with PGEN, hold an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR T-cell therapies, non-viral gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs, arising from the laboratory of Laurence Cooper, M.D., Ph.D., who served as the Company’s Chief Executive Officer from May 2015 to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson.

In partial consideration for entering into the MD Anderson License, the Company issued MD Anderson an aggregate of 11,722,163 shares of common stock for which the Company incurred a $ 67.3 million charge recorded in 2015.

During the three months ended March 31, 2021 and year ending December 31, 2020, the Company did not make any payments to MD Anderson, and the total aggregate payments made in connection with this agreement have been

$ 41.9 million.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $ 5.1 million, which is included in prepaid expenses and other current assets.

The classification is based on management’s current estimate of plans to utilize the prepaid balance and is subject to revision on a quarterly basis.

During the six months ended June 30, 2021 and 2020, the Company did not make any payments to MD Anderson.

The total aggregate payments made in connection with this agreement have been $ 41.9  million since inception.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $ 1.8  million, which is included in prepaid expenses and other current assets.

The classification is based on management’s current estimate of plans to utilize the prepaid balance and is subject to revision on a quarterly basis.

At June 30, 2021 and December 31, 2020, the Company had accounts receivable due from MD Anderson of $ 7.6 million and $ 4.7 million, respectively.

Collaboration with Vineti Inc.

On July 9, 2020, the Company entered into a master service agreement and statement of work with Vineti, Inc., or Vineti.

Pursuant to the agreements, Vineti is developing a software platform to coordinate and orchestrate the order, cell collection and manufacturing process for the Company’s TCR-T

clinical programs.

Heidi Hagen, who became a director of the Company in June 2019 and our Interim Chief Executive Officer on February 25, 2021, is a co-founder

and former officer, of Vineti.

During the three months ended March 31, 2021, the Company recorded expenses of approximately $ 0.2 million for services performed by Vineti.

Pursuant to the agreements, Vineti is developing a software platform to coordinate and orchestrate the order, cell collection and manufacturing process for the Company’s TCR-T clinical programs.

Heidi Hagen, who became a director of the Company in June 2019 and the Interim Chief Executive Officer on February 25, 2021, is a co-founder and former officer, of Vineti.

During the three and six months ended June 30, 2021, the Company recorded expenses of approximately $ 0.1 million and $ 0.3 million for services performed by Vineti, respectively.

Joint Venture with TriArm Therapeutics/Eden Biocell

On December 18, 2018, the Company entered into a Framework Agreement with TriArm Therapeutics, Ltd., or TriArm, pursuant to which the parties agreed to launch Eden BioCell, Ltd., or Eden BioCell, to lead clinical development and

commercialization of certain Sleeping Beauty-

generated CAR-T therapies as set forth in a separate license agreement.

Eden BioCell is a joint venture in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea.

Sleeping Beauty- generated CAR-T therapies as set forth in a separate license agreement.

Eden BioCell is a joint venture in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea.

The Company licensed to Eden BioCell the rights in Greater China for its third-generation Sleeping Beauty-generated CAR-T therapies targeting the CD19 antigen.

Eden BioCell is owned equally by the Company and TriArm and the parties share decision-making authority.

TriArm has contributed $ 10.0 million to Eden BioCell and has committed up to an additional $ 25.0 million to this joint venture.

TriArm has contributed $ 10.0 million to Eden BioCell.

TriArm also manages all clinical development in the territory pursuant to a Master Services Agreement between TriArm and Eden BioCell.

James Huang, who became a director of the Company in July 2020, Chairman of the Board of Directors in January 2021 and Executive Chairman in February 2021, was the founder and serves as managing partner of Panacea Venture, which is an investor in TriArm.

Huang also serves as a member of Eden BioCell’s Board of Directors.

For the three months ended March 31, 2021 and 2020, Eden Biocell incurred a net loss and the Company continues to have no commitment to fund its operations.

Huang also serves as a member of Eden BioCell’s Board of Directors.

For the six months ended June 30, 2021 and 2020, Eden Biocell incurred a net loss and the Company continues to have no commitment to fund its operations.

Commitments and Contingencies

7 unchanged sentences

and (d) that certain Research and Development Agreement between the Company, Precigen and MD Anderson with an effective date of August 17, 2015, or the Research and Development Agreement, and any amendments or statements of work thereto.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Commitments and Contingencies (Continued)

Pursuant to the terms of the License Agreement, PGEN has granted the Company exclusive, worldwide rights to research, develop and commercialize (i) products utilizing PGEN’s RheoSwitch ®

gene switch, or RTS ®

, for the treatment of cancer, referred to as IL-12

Products, (ii) CAR products directed to (A) CD19 for the treatment of cancer, referred to as CD19 Products, and (B) a second target for the treatment of cancer, subject to the rights of Ares Trading to pursue such target under the Ares Trading Agreement, and (iii) T-cell

receptor, or TCR, products designed for neoantigens for the treatment of cancer.

PGEN has also granted the Company an exclusive, worldwide, royalty-bearing, sub-licensable

license for certain patents relating to the Sleeping Beauty

technology to research, develop and commercialize TCR products for both neoantigens and shared antigens for the treatment of cancer, referred to as TCR Products.

Pursuant to the terms of the License Agreement, PGEN has granted the Company exclusive, worldwide rights to research, develop and commercialize (i) products utilizing PGEN’s RheoSwitch ® gene switch, or RTS ® , for the treatment of cancer, referred to as IL-12 Products, (ii) CAR products directed to (A) CD19 for the treatment of cancer, referred to as CD19 Products, and (B) a second target for the treatment of cancer, subject to the rights of Ares Trading to pursue such target under the Ares Trading Agreement, and (iii) T-cell receptor, or TCR, products designed for neoantigens for the treatment of cancer.

PGEN has also granted the Company an exclusive, worldwide, royalty-bearing, sub-licensable license for certain patents relating to the Sleeping Beauty technology to research, develop and commercialize TCR products for both neoantigens and shared antigens for the treatment of cancer, referred to as TCR Products.

The Company is solely responsible for all aspects of the research, development and commercialization of the exclusively licensed products for the treatment of cancer.

The Company is required to use commercially reasonable efforts to develop and commercialize IL-12

Products, CD19 Products and TCR Products.

The Company is required to use commercially reasonable efforts to develop and commercialize IL-12 Products, CD19 Products and TCR Products.

In consideration of the licenses and other rights granted by PGEN, the Company pays PGEN an annual license fee of $ 0.1 million.

The Company did no t have any annual license expenses for the three months ended March 31, 2021 and 2020.

The Company did no t have any annual license expenses for the three and six months ended June 30, 2021 and 2020.

The Company will also make milestone payments totaling up to an additional $ 52.5 million for each exclusively licensed program upon the initiation of later stage clinical trials and upon the approval of exclusively licensed products in various jurisdictions.

In addition, the Company will pay PGEN tiered royalties ranging from low-single

digit to high-single digit on the net sales derived from the sales of any approved IL-12

Products and CAR Products.

The Company will also pay PGEN royalties ranging from low-single

digit to mid-single

digit on the net sales derived from the sales of any approved TCR Products, up to a maximum royalty amount of $ 100.0 million in the aggregate.

In addition, the Company will pay PGEN tiered royalties ranging from low-single digit to high-single digit on the net sales derived from the sales of any approved IL-12 Products and CAR Products.

The Company will also pay PGEN royalties ranging from low-single digit to mid-single digit on the net sales derived from the sales of any approved TCR Products, up to a maximum royalty amount of $ 100.0 million in the aggregate.

The Company will also pay PGEN 20 % of any sublicensing income received by the Company relating to the licensed products.

PGEN will pay the Company royalties ranging from low-single

digits to mid-single

digits on the net sales derived from the sale of PGEN’s CAR products, up to $ 50.0 million .

During the three months ended March 31, 2021 there were $ 0.1 million of expenses for services performed by PGEN and no expenses incurred during the three months ended March 31, 2020.

As of March 31, 2021 and December 31, 2020, the Company had

million, respectively, in accrued expenses related to services for amounts due to PGEN.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Commitments and Contingencies (Continued)

License Agreement—The University of Texas MD Anderson Cancer Center

PGEN will pay the Company royalties ranging from low-single digits to mid-single digits on the net sales derived from the sale of PGEN’s CAR products, up to $ 50.0 million.

During the three months ended June 30, 2021 and June 30, 2020 there were no expenses for services performed by PGEN.

During the six months ended June 30, 2021 there were $ 0.1 million of expenses for services performed by PGEN and no expenses incurred

during the six months ended June 30, 2020.

As of June 30, 2021, the Company did not have any outstanding liabilities related to services performed by PGEN.

As of December 31, 2020, the Company had $ 0.1 million in accrued expenses related to services for amounts due to PGEN.

License Agreement—The University of Texas MD Anderson Cancer Center

On January 13, 2015, the Company, together with Precigen, entered into the MD Anderson License with MD Anderson (which Precigen subsequently assigned to PGEN).

therapies, non-viral

gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs, arising from the laboratory of Laurence Cooper, M.D., Ph.D., who was the Company’s Chief Executive Officer from May 2015 to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson and is now currently a visiting scientist under that institution’s policies.

Pursuant to the MD Anderson License, the Company, together with Precigen, holds an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR T-cell therapies, non-viral gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs, arising from the laboratory of Laurence Cooper, M.D., Ph.D., who was the Company’s Chief Executive Officer from May 2015 to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson.

On February 25, 2021, the Company announced that Dr.

Cooper was stepping down from his role as Chief Executive Officer and as a member of the Board of Directors, but will be remaining with the Company in a scientific advisory consulting role to support the Company's operations.

Under the of a Separation Agreement, in exchange for a release of claims and certain post-employment covenants and in lieu of any severance benefits under his employment agreement, Dr.

Cooper is entitled to receive continuing payments of his base salary and COBRA premiums for a period of 18 months, a cash payment $ 143,250 , representing a pro-rata target amount of his annual performance bonus for 2021, a fully-vested restricted stock award with a grant value of $ 917,000 , equivalent to the 2020 annual bonus Dr.

Cooper would have been entitled to had his employment not terminated, and certain limited reimbursements for legal fees and housing.

Cooper is not entitled to any equity acceleration in connection with his separation, however his equity awards are eligible to continue to vest pursuant to their terms based on his consulting services to the Company .Additionally, under Dr.

Cooper's consulting agreement, he may earn consulting fees in amounts of up to $ 0.6 million for the first year and $ 0.3 million for each of the following two years and is also eligible for reimbursement of reasonable out-of-pocket business expenses.

The term of the MD Anderson License expires on the later of (a) the expiration of all patents licensed thereunder, or (b) the twentieth anniversary of the date of the MD Anderson License;

provided, however, that following the expiration of the term of the MD Anderson License, the Company, together with PGEN, shall have a fully-paid up, royalty free, perpetual, irrevocable and sublicensable license to use the licensed intellectual property thereunder.

After ten years from the date of the MD Anderson License and subject to a 90-day

cure period, MD Anderson will have the right to convert the MD Anderson License into a non-exclusive

license if ZIOPHARM and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on a case-by-case

After five years from the date of the MD Anderson License and subject to a 180-day

cure period, MD Anderson will had the right to terminate the MD Anderson License with respect to specific technology(ies) funded by the government or subject to a third-party contract if the Company and PGEN did not meet the diligence requirements in such funding agreement or contract, as applicable.

After ten years from the date of the MD Anderson License and subject to a 90-day cure period, MD Anderson will have the right to convert the MD Anderson License into a non-exclusive license if ZIOPHARM and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on a case-by-case basis.

After five years from the date of the MD Anderson License and subject to a 180-day cure period, MD Anderson will had the right to terminate the MD Anderson License with respect to specific technology(ies) funded by the government or subject to a third-party contract if the Company and PGEN did not meet the diligence requirements in such funding agreement or contract, as applicable.

MD Anderson may also terminate the agreement with written notice upon material breach by us and PGEN, if such breach has not been cured within 60 days of receiving such notice.

5 unchanged sentences

On October 22, 2019, the Company entered into an amendment to the Research and Development Agreement extending its term until December 31, 2026.

During the three months ended March 31, 2021 and 2020, the Company made no payments to MD Anderson.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $ 5.1 million, which is included in prepaid expenses and other current assets on the Company’s balance sheet at March 31, 2021.

On October 22, 2019, the Company entered into the 2019 Research and Development Agreement, or the 2019 Agreement, with MD Anderson, pursuant to which the parties agreed to collaborate with respect to the Company’s Sleeping Beauty

immunotherapy program, which uses non-viral

gene transfer to stably express and clinically evaluate neoantigen-specific TCRs in T cells.

Under the 2019 Agreement, the parties will, among other things, collaborate on programs to expand the Company’s TCR library and conduct clinical trials.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Commitments and Contingencies (Continued)

The Company will own all intellectual property developed under the 2019 Agreement and will retain all rights to intellectual property for oncology products manufactured using non-viral

gene transfer technologies under the Agreement, including the Company’s Sleeping Beauty

The Company has granted MD Anderson an exclusive license for such intellectual property outside the field of oncology and to develop and commercialize autologous TCR products manufactured using viral gene transfer technologies, and a non-exclusive

license for allogeneic TCR products manufactured using viral-based technologies.

During the three and six months ended June 30, 2021 and 2020, the Company made no payments to MD Anderson.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $ 1.8 million, which is included in prepaid expenses and other current assets on the Company’s balance sheet at June 30, 2021.

There were also accounts receivable of $ 7.6 and $ 4.7 million due from MD Anderson at June 30, 2021 and December 31, 2020, respectively.

program, which uses non-viral gene transfer to stably express and clinically evaluate neoantigen-specific TCRs in T cells.

Under the 2019 Agreement, the parties will, among other things, collaborate on programs to expand the Company’s TCR library and conduct clinical trials.

The Company will own all intellectual property developed under the 2019 Agreement and will retain all rights to intellectual property for oncology products manufactured using non-viral gene transfer technologies under the Agreement, including the Company’s Sleeping Beauty technology.

The Company has agreed, beginning on January 1, 2021, to reimburse MD Anderson up to a total of $ 20.0 million for development costs incurred starting after January 1, 2021 under the 2019 Agreement.

1 unchanged sentence

The Company is required to make performance-based payments upon the successful completion of clinical and regulatory benchmarks relating to its TCR products.

The aggregate potential benchmark payments are $ 36.5 million, of which only $ 3.0 million will be due prior to the first marketing approval of the Company’s TCR products.

The royalty rates and benchmark payments owed to MD Anderson may be reduced upon the occurrence of certain events.

The Company also agreed that it will sell the Company’s TCR products to MD Anderson at preferential prices and will sell its TCR products in Texas exclusively to MD Anderson for a limited period of time following the first commercial sale of the Company’s TCR products.

No costs have been incurred under this agreement as of March 31, 2021.

No costs have been incurred under this agreement as of June 30, 2021.

In connection with the execution of the 2019 Agreement, the Company issued MD Anderson a warrant to purchase 3,333,333 shares of common stock.

Refer to Note 10

for further details .

Refer to Note 10 –

Warrants for further details.

License Agreement with the National Cancer Institute

On May 28, 2019, the Company entered into a patent license agreement, or the Patent License, with the National Cancer Institute, or the NCI.

Pursuant to the Patent License, the Company holds an exclusive, worldwide license to certain intellectual property to develop and commercialize patient-derived (autologous), peripheral blood T-cell

therapy products engineered by transposon-mediated gene transfer to express TCRs reactive to mutated KRAS, TP53 and EGFR.

therapy products engineered by non-viral

gene transfer to express TCRs, as well as a non-exclusive,

worldwide license to certain additional manufacturing technologies.

Pursuant to the terms of the Patent License, the Company is required to pay the NCI a cash payment in the aggregate amount of $ 1.5 million ,

payable in $ 0.5 million installments within sixty days, six-months,

and the twelve-month anniversary of the effective date of the agreement of the Patent License.

Pursuant to the Patent License, the Company holds an exclusive, worldwide license to certain intellectual property to develop and commercialize patient-derived (autologous), peripheral blood T-cell therapy products engineered by transposon-mediated gene transfer to express TCRs reactive to mutated KRAS, TP53 and EGFR.

In addition, pursuant to the Patent License, the Company holds an exclusive, worldwide license to certain intellectual property for manufacturing technologies to develop and commercialize autologous, peripheral blood T-cell therapy products engineered by non-viral gene transfer to express TCRs, as well as a non-exclusive, worldwide license to certain additional manufacturing technologies.

Pursuant to the terms of the Patent License, the Company is required to pay the NCI a cash payment in the aggregate amount of $ 1.5 million, payable in $ 0.5 million installments within sixty days, six-months, and the twelve-month anniversary of the effective date of the agreement of the Patent License.

The $ 1.5 million was paid as of December 31, 2020.

2 unchanged sentences

The first minimum annual royalty payment is payable on the date that is eighteen months following the date of the Patent License .

During the three months ended March 31, 2021, the Company recognized $ 0.3 million related to royalty payments under this agreement.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Commitments and Contingencies (Continued)

This payment was expensed during the first quarter of 2021.

On September 28, 2020, the Company entered into a second amendment to the patent license agreement which expanded the TCR library to include additional TCRs.

On April 16, the Company entered into a third amendment to the patent license agreement which modified the terms governing termination, modification and surrender of rights under the license.

On May 4, 2021, the Company entered into a fourth amendment to the patent license agreement which expanded the TCR library to include additional TCRs.

The Company is also required to make performance-based payments upon successful completion of clinical and regulatory benchmarks relating to the licensed products.

The aggregate potential benchmark payments are $ 4.3 million, of which aggregate payments of $ 3.0 million are due only after marketing approval in the United States or in Europe, Japan, Australia, China or India.

The first benchmark payment of $0.1 million will be due upon the initiation of the Company’s first sponsored Phase 1 clinical trial of a licensed product or licensed process in the field of use licensed under the Patent License, which has not been met at March 31, 2021.

In addition, the Company is required to pay the NCI one-time

benchmark payments following aggregate net sales of licensed products at certain net sales up to $ 1.0 billion.

In addition, the Company is required to pay the NCI one-time benchmark payments following aggregate net sales of licensed products at certain net sales up to $ 1.0 billion.

The aggregate potential amount of these benchmark payments is $ 12.0 million.

The Company must also pay the NCI royalties on net sales of products covered by the Patent License at rates in the low to mid-single

digits depending upon the technology included in a licensed product.

The Company must also pay the NCI royalties on net sales of products covered by the Patent License at rates in the low to mid-single digits depending upon the technology included in a licensed product.

To the extent the Company enters into a sublicensing agreement relating to a licensed product, the Company is required to pay the NCI a percentage of all consideration received from a sublicensee, which percentage will decrease based on the stage of development of the licensed product at the time of the sublicense.

1 unchanged sentence

The NCI may terminate or modify the Patent License in the event of a material breach, including if the Company does not meet certain milestones by certain dates, or upon certain insolvency events that remain uncured following the date that is 90 days following written notice of such breach or insolvency event .

Company may terminate the Patent License, or any portion thereof, in the Company’s sole discretion at any time upon 60 days’ written notice to the

The Company may terminate the Patent License, or any portion thereof, in the Company’s sole discretion at any time upon 60 days’

written notice to the NCI.

In addition, the NCI has the right to:

License, including if the Company is not satisfying requirements for public use as specified by federal regulations.

During the three-month periods ended March 31, 2021, and 2020, the Company expensed

$ 0.1 million related to the patent services under this agreement.

Additionally, the Company recorded

$ 0.3 million in accrued expenses as of March 31, 2021 related to patent services incurred in both the prior and current year.

(i) require the Company to sublicense the rights to the product candidates covered by the Patent License upon certain conditions, including if the Company is not reasonably satisfying required health and safety needs and (ii) terminate or modify the Patent License, including if the Company is not satisfying requirements for public use as specified by federal regulations.

During the three and six month periods ended June 30, 2021, the Company expensed $ 0.1 million and $ 0.3 million related to the patent services under this agreement.

The Company did not incur expenses related to patent services during the three and six month periods ended June 30, 2020.

Additionally, the Company recorded $ 0.3 million in accrued expenses as of June 30, 2021 related to patent services.

Cooperative Research and Development Agreement (CRADA) with the National Cancer Institute

On January 10, 2017, the Company announced the signing of a CRADA, with the NCI for the development of adoptive cell transfer, or ACT,-based immunotherapies genetically modified using the Sleeping Beauty

transposon/transposase system to express TCRs for the treatment of solid tumors.

The principal goal of the CRADA is to develop and evaluate ACT for patients with advanced cancers using autologous peripheral blood lymphocytes, or PBL, genetically modified using the non-viral

Sleeping Beauty

system to express TCRs that recognize neoantigens expressed within a patient’s cancer.

The principal goal of the CRADA is to develop and evaluate ACT for patients with advanced cancers using autologous peripheral blood lymphocytes, or PBL, genetically modified using the non-viral Sleeping Beauty system to express TCRs that recognize neoantigens expressed within a patient’s cancer.

Research conducted under the CRADA will be at the direction of Steven A.

1 unchanged sentence

In February 2019, the Company extended the CRADA with the NCI for two years, committing an additional $ 5.0 million to this program.

The Company recorded $ 0.6

million of expense for both three-month periods ended March 31, 2021 and 2020.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Commitments and Contingencies (Continued)

Patent and Technology License Agreement—The University of Texas MD Anderson Cancer Center and the Texas A&M University System

The Company recorded $ 1.3 million of expense for both six-month periods ended June 30, 2021 and 2020 and $0.6 million of expenses for both three-month periods ended June 30, 2021 and 2020 respectively.

Patent and Technology License Agreement—The University of Texas MD Anderson Cancer Center and the Texas A&M University System

On August 24, 2004, the Company entered into a patent and technology license agreement with MD Anderson and the Texas A&M University System, which the Company refers to, collectively, as the Licensors.

Under this agreement, the Company was granted an exclusive, worldwide license to rights (including rights to U.S.

and foreign patent and patent applications and related improvements and know-how)

for the manufacture and commercialization of two classes of organic arsenicals (water- and lipid-based) for human and animal use.

and foreign patent and patent applications and related improvements and know-how) for the manufacture and commercialization of two classes of organic arsenicals (water- and lipid-based) for human and animal use.

The class of water-based organic arsenicals includes darinaparsin.

1 unchanged sentence

In addition, the Licensors are entitled to receive single digit percentage royalty payments on sales from a licensed product and will also be entitled to receive a portion of any fees that the Company may receive from a possible sublicense under certain circumstances.

No amounts were accrued or paid during the three months ended March 31, 2021 and 2020.

No amounts were accrued or paid during the three or six months ended June 30, 2021 and 2020.

Collaboration Agreement with Solasia Pharma K.K.

3 unchanged sentences

Solasia will be responsible for all costs related to the development, manufacturing and commercialization of darinaparsin.

The Company’s Licensors, as defined in the agreement, will receive a portion of all milestone and royalty payments made by Solasia to the Company in accordance with the terms of the license agreement with the Licensors.

No amounts were accrued or received during the three months ended March 31, 2021 and 2020.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

In June 2012, the Company entered into a master lease for the Company’s corporate office headquarters in Boston, Massachusetts, which

was originally set to expire in August 2016 , but renewed through August 31, 2021 .

As of March 31, 2021 and December 31, 2020, a total security deposit of $ 0.1 million is included in deposits on the Company’s balance sheet.

On January 30, 2018, the Company entered into a lease agreement for office space in Houston, Texas,

at MD Anderson.

Under the terms of the Houston lease agreement, the Company leased approximately 210 square feet and were required to make rental payments at an average monthly rate of approximately

$ 1 thousand.

The Company’s Licensors, as defined in the agreement, will receive a portion of all milestone and royalty payments made by Solasia to the Company in

accordance with the terms of the license agreement with the Licensors.

No amounts were received during the three or six months ended June 30, 2021 and 2020.

Collaboration with KBI

On July 9, 2020, the Company entered into a master service agreement and statement of work with KBI Biopharma, a contract manufacturing organization serving the biotechnology industry, including cell therapy.

Pursuant to the agreements, KBI will provide cGMP cell therapy manufacturing and testing for the Company’s library TCR-T cell clinical program.

Collaboration with Aldevron

On March 3, 2019, the Company entered into a master services agreement with Aldevron, a plasmid DNA manufacturer.

On June 25, 2020 Aldevron announced an agreement for Aldevron to produce DNA plasmids under their neoGMP® service to be utilized in the manufacture of the Company’s TCR-T cell therapies for treatment of solid tumors.

In June 2012, the Company entered into a master lease for the Company’s corporate office headquarters in Boston, Massachusetts, which was originally set to expire in August 2016 , but renewed through August 31, 2021 .

As of June 30, 2021 and December 31, 2020, a total security deposit of $ 0.1 million is included in deposits on the Company’s balance sheet.

On January 30, 2018, the Company entered into a lease agreement for office space in Houston, Texas, at MD Anderson.

Under the terms of the Houston lease agreement, the Company leased approximately 210 square feet and were required to make rental payments at an average monthly rate of approximately $ 1 thousand.

This lease was terminated effective March 31, 2020.

On January 30, 2018, the Company entered into a lease agreement, or the First Houston Lease, for office space in Houston, Texas at MD Anderson through April 2021.

On March 12, 2019, the Company entered into a lease agreement, or the Second Houston Lease, for additional office s

pace in Houston through April 2021.

Under the terms of the First Houston Lease agreement, the Company leases approximately

1,038 square feet and is required to make rental payments at an average monthly rate of approximately $ 2 thousand through April 2021.

Under the terms of the Second Houston Lease, the Company leases from MD Anderson, approximately

8,443 square feet and is initially required to make rental payments of approximately $ 17 thousand per month

through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term.

On March 12, 2019, the Company entered into a lease agreement, or the Second Houston Lease, for additional office space in Houston through April 2021.

Under the terms of the First Houston Lease agreement, the Company leases approximately 1,038 square feet and is required to make rental payments at an average monthly rate of approximately $ 2 thousand through April 2021.

Under the terms of the Second Houston Lease, the Company leases from MD Anderson, approximately 8,443 square feet and is initially required to make rental payments of approximately $ 17 thousand per month through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term.

Effective April 13, 2020, the Company leased an additional 5,584 square feet from MD Anderson.

The Company is initially required to make rental payments of approximately $ 12 thousand per month through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term.

All future rent expense incurred in Houston, will be deducted from the Company’s prepayments to MD Anderson.

Effective December 15, 2020, the Company leased an additional

35,482 square feet from MD Anderson.

The Company is initially required to make rental payments of approximately

$ 37 thousand per month through April 2028, subject to an annual base rent increase of approximately

3.0 % throughout the term beginning in April 2023.

Future rent expense incurred in Houston, will be deducted from the Company’s prepayments to MD Anderson.

All future rent expense incurred in Houston, will be deducted from the Company’s prepayments to MD Anderson.

Effective December 15, 2020, the Company leased an additional 35,482 square feet from MD Anderson.

The Company is initially required to make rental payments of approximately $ 37 thousand per month through April 2028, subject to an annual base rent increase of approximately 3.0 % throughout the term beginning in April 2023.

Future rent expense incurred in Houston, will be deducted from the Company’s prepayments to MD Anderson.

On April 22, 2021, the Company extended its lease for a 9,800 square foot portion of its corporate office headquarters in Boston.

The renewal for its corporate office headquarters was originally set to expire on August 31, 2021, but has now been extended through August 2026.

Under the terms of the renewal, the Company is required to make rental payments of approximately $ 26 thousand per month.

The components of lease expense were as follows:

(in thousands)

Three Months Ended

March 31, 2021

For the Six Months Ended

(in thousands)

Operating lease cost

2 unchanged sentences

Weighted-average discount rate

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Leases (Continued)

Effective June 1, 2020, the Company entered into a noncancelable lease for a period of less than a year with monthly payments of approximately $ 10 thousand that is not subject to right of use asset recognition under ASC 842.

Effective September 1, 2020, the Company added additional space to the noncancelable lease for a period of less than a year with monthly payments now totaling approximately $ 15 thousand.

The Company recorded approximately $ 0.1 million in rent expense under this short-term lease during the three months ended March 31, 2021 .

As of March 31, 2021, the maturities of the Company’s operating lease liabilities for the years ended December 31, were as follows (in thousands):

2021 (excluding the three months ended March 31, 2021)

Effective September 1, 2020, the Company added additional space to the noncancelable lease for a period of less than a year with monthly payments now totaling

approximately $ 15 thousand.

Rent expense during the three and six months ended June 30, 2021 was $ 5 thousand.

As of June 30, 2021, this lease has been terminated and the Company has no further obligation.

As of June 30, 2021, the maturities of the Company’s operating lease liabilities for the years ended December 31, were as follows (in thousands):

2021 (excluding the six months ended June 30, 2021)

Total lease payments

1 unchanged sentence

Present value of lease payments

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Stock-Based Compensation

The Company recognized stock-based compensation expense on all employee and non-employee

awards as follows:

For the three months ended March 31,

The Company recognized stock-based compensation expense on all employee and non-employee awards as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(in thousands)

2 unchanged sentences

Stock-based compensation expense

The Company granted an aggregate of 4,314,438 stock options during the three months ended March 31, 2021 with a weighted-average grant date fair value of $ 2.43 per share.

The Company granted an aggregate of 896,000 stock options during the three months ended March 31, 2020 with a weighted average grant date fair value of $ 2.64 per share.

On March 4, 2021, the Company extended the contractual life of 216,700 fully vested stock options held by a former

director of the Company, in conformity with prior practice.

These extensions resulted in additional stock

compensation expense of approximately $ 82 thousand during

the three months ended March 31, 2021.

For the three months ended March 31, 2021 and 2020, the fair value of stock options was estimated on the date of grant using a Black-Scholes option valuation model with the following assumptions:

For the three months ended March 31,

The Company granted an aggregate of 41,500 and 4,395,438 stock options during the three and six months ended June 30, 2021 with a weighted-average grant date fair value of $ 2.27 and $ 2.44 per share, respectively.

The Company granted an aggregate of 153,000 and 1,049,000 stock options during the three and six months ended June 30, 2020 with a weighted-average grant date fair value of $ 1.99 and $ 2.55 per share, respectively.

On March 4, 2021, the Company extended the contractual life of 216,700 fully vested stock options held by a former director of the Company.

On April 5, 2021, the Company extended the contractual life of 751,371 stock options and accelerated the vesting of 226,889 shares of restricted stock held by a former officer of the Company.

On April 29, 2021, the Company extended the contractual life of 10,417 vested and 167,023 unvested stock options and accelerated the vesting of 4,137 shares of restricted stock held by a former director.

On May 17, 2021, the Company extended the contractual life of 347,267 vested stock options held by a former officer of the Company.

These extensions resulted in additional stock compensation expense of approximately $ 1.9 million and $ 2.0 million during the three and six months ended June 30, 2021, respectively.

For the three months ended June 30, 2021 and 2020, the fair value of stock options was estimated on the date of grant using a Black-Scholes option valuation model with the following assumptions:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Risk-free interest rate

1 unchanged sentence

0.09 - 1.15 %

0.43 - 1.68 %

Expected life in years

Expected volatility

73.10 - 73.90 %

72.92 - 74.80 %

71.11 - 73.74 %

Expected dividend yield

At March 31, 2021, there were 463,333 stock options that had been issued outside the 2012 Equity Incentive Plan, or the 2012 Plan and the 2020 Equity Incentive Plan, or the 2020 Plan.

At June 30, 2021, there were 463,333 stock options that had been issued outside the 2012 Equity Incentive Plan, or the 2012 Plan and the 2020 Equity Incentive Plan, or the 2020 Plan.

These options are excluded from the schedule below.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Stock-Based Compensation (Continued)

Stock option activity under the Company’s stock option plans for the three months ended March 31, 2021 is as follows:

Stock option activity under the Company’s stock option plans for the three months ended June 30, 2021 is as follows:

(in thousands, except share and per share data)

Average Exercise

Intrinsic Value

Outstanding, December 31, 2020

Outstanding, March 31, 2021

Options exercisable, March 31, 2021

Outstanding, June 30, 2021

Options exercisable, June 30, 2021

Options exercisable, December 31, 2020

Options available for future grant

At March 31, 2021, total unrecognized compensation costs related to unvested stock options outstanding amounted to $ 16.0 million.

At June 30, 2021, total unrecognized compensation costs related to unvested stock options outstanding amounted to $ 11.3 million.

The cost is expected to be recognized over a weighted-average period of 1.82 years.

A summary of the status of unvested restricted stock for the three months ended March 31, 2021 is as follows:

A summary of the status of unvested restricted stock for the three months ended June 30, 2021 is as follows:

Number of Shares

2 unchanged sentences

Unvested, December 31, 2020

Unvested, March 31, 2021

At March 31, 2021, total unrecognized compensation costs related to unvested restricted stock outstanding amounted to $ 2.6 million.

Unvested, June 30, 2021

At June 30, 2021, total unrecognized compensation costs related to unvested restricted stock outstanding amounted to $ 2.2 million.

The cost is expected to be recognized over a weighted-average period of 1.68 years.

At the Company’s annual meeting held on June 29, 2020, the shareholders approved the 2020 Equity Incentive Plan, or the 2020 Plan, which is a successor to and continuation of the 2012 Plan.

The 2020 Plan had

21 million shares authorized, plus the shares remaining for issuance under the 2012 Plan.

At the Company’s annual meeting held on June 29, 2020, the shareholders approved the 2020 Equity Incentive Plan, or the 2020 Plan, which is a successor to and continuation of the 2012 Plan.

The 2020 Plan had 21 million shares authorized, plus the shares remaining for issuance under the 2012 Plan.

Our ability to utilize the total shares authorized under the 2020 Plan will be limited by the total number of shares authorized in our certificate of incorporation.

As a result, as of March 31, 2021,

there are 1,287,888 shares available to grant from the 2020 P

No additional awards can be granted from the 2012 Plan or the Company’s 2003 Stock Option Plan.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

In connection with the Company’s November 2018 private placement which provided net proceeds of approximately $ 47.1 million, the Company issued warrants to purchase an aggregate of 18,939,394 shares of common stock, or the 2018 warrants, which became exercisable six months after the closing of the private placement.

As a result, as of June 30, 2021, there are 1,427,152 shares available to grant from the 2020 Plan.

No additional awards can be granted from the 2012 Plan or the Company’s 2003 Stock Option Plan.

The warrants have an exercise price of $ 3.01 per share and have a five-year term.

2 unchanged sentences

The Company assessed whether the warrants require accounting as derivatives.

The Company determined that the warrants were (1) indexed to the Company’s own stock and (2) classified in stockholders’ equity in accordance with Financial Accounting Standards Board, or (FASB) Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging

As such, the Company has concluded the warrants meet the scope exception for determining whether the instruments require accounting as derivatives and should be classified in stockholders’ equity.

The Company determined that the warrants were (1) indexed to the Company’s own stock and (2) classified in stockholders’

equity in accordance with Financial Accounting Standards Board, or (FASB) Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging .

As such, the Company has concluded the warrants meet the scope exception for determining whether the instruments require accounting as derivatives and should be classified in stockholders’

On July 26, 2019 and September 12, 2019, the Company entered into agreements with existing investors for the exercise of previously issued warrants to purchase common stock in the private placement.

2 unchanged sentences

The Company issued participating investors new warrants to purchase up to 17,803,031 additional shares of common stock, or the 2019 warrants, as an inducement for the warrant holders to exercise their 2018 warrants.

The 2019 warrants will expire on the fifth anniversary of the initial exercise date and have an exercise price of $ 7.00 .

The 2019 warrants were valued using a Black-Scholes valuation model and resulted in a $ 60.8 million non-cash

charge to the Company’s statement of operations in 2019.

The 2019 warrants will expire on the fifth

anniversary of the initial exercise date and have an exercise price of $ 7.00 .

The 2019 warrants were valued using a Black-Scholes valuation model and resulted in a $ 60.8 million non-cash charge to the Company’s statement of operations in 2019.

On October 22, 2019, the Company entered into the 2019 Agreement with MD Anderson.

Refer to Note 7

– Commitments and Contingencies

for further details .

Refer to Note 7 –

Commitments and Contingencies for further details.

In connection with the execution of the 2019 Agreement, the Company issued MD Anderson a warrant to purchase 3,333,333 shares of common stock.

2 unchanged sentences

The Company will recognize expense on the warrant in the same manner as if the Company paid cash for services to be rendered.

The Company has not recognized any expense related to the warrant as of March 31, 2021, as no work towards any of the specified clinical milestones has begun.

The Company has not recognized any expense related to the warrant as of June 30, 2021, as no work towards any of the specified clinical milestones has begun.

Joint Venture

On December 18, 2018, the Company entered into a Framework Agreement with TriArm pursuant to which the parties agreed to launch Eden BioCell, to lead clinical development and commercialization of certain Sleeping Beauty-

generated CAR-T

therapies as set forth in a separate license agreement (see Note 6).

On January 3, 2019, Eden BioCell was incorporated in Hong Kong as a private company.

1 unchanged sentence

On the closing date, upon the issuance and subscription of the shares, in respect of the aforementioned consideration, 10,000,000 ordinary shares were issued to the Company and 10,000,000 ordinary shares were issued to TriArm.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS (unaudited)

Joint Venture (Continued)

The closing of the transaction occurred on July 5, 2019.

The Framework Agreement and Share Subscription Agreements were each respectively amended to be effective as of this date.

-generated CAR-T

therapies targeting the CD19 antigen for the territory of China (including Macau and Hong Kong), Taiwan and Korea.

Eden BioCell will be responsible for certain milestone and royalty payments related to the Company’s license agreements with MD Anderson and PGEN (see Note 7

TriArm entered into a m

greement with Eden BioCell and contributed $ 10.0 million of cash on the closing date.

TriArm also committed to contribute an additional $ 25.0 million to Eden BioCell over time through the achievement of certain specified milestones.

Upon consummation of the joint venture, Eden BioCell and the Company also entered into a license agreement, pursuant to which the Company licensed the rights to Eden BioCell for third-generation Sleeping Beauty -generated CAR-T therapies targeting the CD19 antigen for the territory of China (including Macau and Hong Kong), Taiwan and Korea.

Eden BioCell will be responsible for certain milestone and royalty payments related to the Company’s license agreements with MD Anderson and PGEN (see Note 7).

TriArm entered into a master services agreement with Eden BioCell and contributed $ 10.0 million of cash on the closing date.

TriArm and the Company each received a 50 % equity interest in the joint venture in exchange for their contributions to Eden BioCell.

4 unchanged sentences

Due to the de minimis fair value of the intellectual property contributed, the Company did not record a gain or loss on this transaction and recognized no value for its equity-method investment.

For the three months ended March 31, 2021 and 2020, Eden BioCell incurred a net loss and the Company continues to have no commitment to fund its operations.

Subsequent Events

The Company has evaluated subsequent events from the balance sheet date through the date on which these financial statements were issued.

Except as disclosed below, the Company did not have any material subsequent events that impacted its financial statements or disclosures.

On May 6, 2021, the Company announced its commitment to a plan to realign its research and development resources to wind down the clinical trials of its Controlled IL-12 program as part of the Company’s decision to allocate an increasing amount of its resources and capital to its Sleeping Beauty TCR program.

Pursuant to this plan, the Company will eliminate approximately

15 % of its existing workforce on a staggered basis over the remainder of 2021.

Affected employees will be offered separation benefits, including severance payments and, in some cases, retention bonuses, along with temporary healthcare coverage assistance.

Additionally, the Company is evaluating its facilities and vendor relationships utilized in the Controlled IL-12 program and the associated contractual obligations to determine the appropriate course of action and any associated charges to wind down the ongoing clinical trials.

The Company estimates the severance and termination-related costs to be approximately $ 0.8 million and will record these charges in the second quarter of 2021.

On April 5, 2021, the Company entered into a formal separation agreement with Dr.

Laurence Cooper, which resulted in the termination of Dr.

Cooper’s employment as the Company’s Chief Executive Officer, effective April 9, 2021.

As consideration under the separation agreement, Dr.

Cooper is to receive certain severance benefits including severance pay, a restricted stock grant in lieu of Dr.

Cooper’s 2020 discretionary bonus, COBRA coverage and reimbursement of legal fees.

Cooper is also continuing with the Company in a scientific advisory consultant capacity to support the Company’s programs.

During the three months ended March 31, 2021, the Company recorded a charge of approximately

$ 0.6 million related to his separation.

Additional charges related to his separation and continuing consulting costs will be incurred in subsequent quarters.

In March 2021 and as announced by the Company in April 2021, Eden BioCell, the Company’s Joint Venture in Taiwan with Tri-Arm Therapeutics, began treating patients in a clinical trial with the Company’s investigational CD19 RPM CAR-T cell therapy, under the IND cleared by the Taiwan FDA in December.

Two patients have now been treated in this trial.

The lead investigator at National Taiwan University in Taipei, has reported no serious adverse safety events in either of these patients.

Laboratory results continue to support, as previously published, that non-viral Sleeping Beauty gene transfer is effective in genetically modifying autologous T-cells.

Patients were infused two days after gene transfer, thus shortening the turnaround time and demonstrating an advantage over viral methods.

Based on laboratory data from the first two patients generated between March and May 2021, the Tri-Arm/Eden team concluded, in concert with the investigator and the team at Ziopharm, that further process development work is required.

This additional work will optimize and refine the manufacturing process in order to more consistently manufacture product in the desired clinical dose range seeking to be studied.

The Tri-Arm/Eden team, per the terms of the JV agreement, will undertake the necessary process development work before infusing additional patients.

This will take an unspecified amount of time.

Additionally, the ongoing COVID outbreak in Taiwan presents additional uncertainty to the timeline, as the operational activities in the manufacturing suite are currently slowed due to employee restrictions related to the pandemic.

These restrictions are impacting clinical trials broadly in Taiwan.

For the three and six months ended June 30, 2021 and 2020, Eden BioCell incurred a net loss and the Company continues to have no commitment to fund its operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our unaudited condensed financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or the SEC, on March 1, 2021, or the Annual Report.

Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties.

We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.

In this Quarterly Report on Form 10-Q, words such as “may,”

“expect,”

“anticipate,”

“estimate,”

“intend,”

“plan,”

and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.

Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements.

We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report.

In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods.

The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, including those risks identified under Part II, Item 1A.

Risk Factors.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

We are a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing next generation immuno-oncology platforms that leverage cell- and gene-based therapies to treat patients with cancer.

We are developing platform technologies that utilize the immune system by employing innovative cell engineering and novel, controlled gene expression technologies designed to deliver safe and effective cell and gene therapies for the treatment of multiple cancer types.

Our major platform and priority is referred to as Sleeping Beauty and is based on the non-viral genetic engineering of immune cells using a transposon/transposase system that is intended to stably engineer T cells outside of the body for subsequent infusion.

Our second platform is referred to as Controlled IL-12 and is designed to stimulate expression of interleukin 12, or IL-12, a master regulator of the immune system, in a controlled manner to focus the patient’s immune system to more effectively attack cancer cells.

Using our Sleeping Beauty platform, we are developing T cell receptor, or TCR, T cell therapies to target neoantigens in solid tumors using two approaches, which we refer to as our “Library TCR-T Approach”

and our “Personalized TCR-T Approach.”

The Library TCR-T Approach uses TCRs identified from third parties that have been prepared before the patient-recipient has been identified (i.e., as off-the-shelf inventory plasmids).

We then genetically modify the recipient’s own T cells to redirect specificity to public, or shared, neoantigens.

The Personalized TCR-T Approach uses recipient-derived (autologous) TCRs to genetically modify the recipient’s own T cells to redirect specificity to the recipient’s private neoantigens.

In our company-sponsored Phase 1/2 clinical trial, we will evaluate TCRs from our library for the investigational treatment of lung, cholangiocarcinoma, pancreatic, colorectal and gynecological cancers.

Initially, six curated TCRs reactive to mutated KRAS and TP53 will be included in the clinical trial;

however, we expect to expand the number of TCRs to be evaluated in this clinical trial.

This clinical trial is being conducted in collaboration with The University of Texas MD Anderson Cancer Center, or MD Anderson, which will be the first site for the clinical trial.

Under our Cooperative Research and Development Agreement, the National Cancer Institute, or NCI, is conducting a Phase 2 Personalized TCR-T clinical trial to evaluate autologous peripheral blood lymphocytes genetically modified with the Sleeping Beauty system to express private neoantigen-specific TCRs.

The trial is designed to enroll patients with a broad range of solid tumors.

Food and Drug Administration, or the FDA, has cleared the investigational new drug, or IND, application submitted by the NCI for this clinical trial.

However, enrollment in this clinical trial has been temporarily suspended due to issues internal to the NCI and unrelated to our technology.

The progress and timeline for this trial, including the timeline for dosing patients, are under the control of the NCI.

We are developing chimeric antigen receptor, or CAR, T cell, or CAR+ T, therapies targeting CD19 on malignant B cells using our Sleeping Beauty platform.

We are advancing our rapid personalized manufacture, or RPM, technology in Greater China with Eden BioCell, Ltd., or Eden BioCell, our joint venture with TriArm Therapeutics, Ltd.

RPM enables small numbers of T cells to be infused as soon as the day after gene transfer which is made possible by the genetic modification of resting T cells to express CAR and membrane bound IL-15, or mbIL15.

Eden BioCell is conducting a Phase 1 clinical trial in Taiwan to evaluate the safety and efficacy of Sleeping Beauty-generated CD19-specific RPM CAR+ T therapies using patient-derived (autologous) T cells in order to treat patients with relapsed or refractory CD19 + leukemias and lymphomas.

Our Controlled IL-12 platform is based on an engineered replication-incompetent adenovirus, referred to as Ad-RTS-hIL-12, plus veledimex as a gene delivery system to conditionally produce IL-12, a potent, naturally occurring anti-cancer protein, to treat patients with solid tumors.

Our Controlled IL-12 platform allows us to deliver IL-12 in a tunable dose as the cytokine is under transcriptional control of the RheoSwitch Therapeutic System ® (RTS ® ).

We have not generated significant revenue and have incurred significant net losses in each year since our inception.

For the six months ended June 30, 2021, we had a net loss of $44.2 million, and, as of June 30, 2021, we have incurred approximately $808.3 million of accumulated deficit since our inception in 2003.

We expect to continue to incur significant operating expenditures and net losses.

Further development of our product candidates will likely require substantial increases in our expenses as we:

continue to undertake clinical trials for product candidates;

seek regulatory approvals for product candidates;

work with regulatory authorities to identify and address program-related inquiries;

implement additional internal systems and infrastructure;

hire additional personnel;

scale-up the formulation and manufacturing of our product candidates.

We continue to seek additional financial resources to fund the further development of our product candidates.

If we are unable to obtain sufficient additional capital, one or more of these programs could be delayed, and we may be unable to continue our operations at planned levels and be forced to reduce our operations.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.

Recent Developments

The ongoing COVID-19 global pandemic has presented a significant health and economic challenge around the world and is affecting our employees, partners and business operations.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted.

We have implemented work-from-home policies for non-laboratory functions in response to the COVID-19 pandemic.

The effects of our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.

We continue to work with our partners to mitigate the impact the COVID-19 pandemic is having on our business.

Clinical, Manufacturing, Scientific, and Regulatory Developments

In February 2021, the FDA cleared our company-sponsored IND application for a Phase 1/2 clinical trial evaluating TCRs from our library for the investigational treatment of lung, cholangiocarcinoma, pancreatic, colorectal and gynecological cancers.

The screening study is now open and we are actively identifying patients who may be eligible for our sponsored clinical treatment trial.

We anticipate dosing of the first patient in the clinical treatment study in the second half of 2021.

The clinical treatment trial will be opened for enrollment once clinical manufacturing readiness has been established. 

During 2020, we successfully transferred the manufacturing process to KBI, a contract manufacturing organization with cGMP cell therapy manufacturing facilities in The Woodlands, TX.

 TCR-T batch data generated at both KBI and Ziopharm’s own laboratory were the basis of the CMC portion of the IND filing.

KBI is working to complete the process qualification and aseptic process validation to facilitate clinical manufacturing. 

In addition, Ziopharm has been working to build and open its own cGMP clinical production unit (CPU). 

Commissioning of the CPU, as well as aseptic process validation, were completed in the last quarter.

The company is

completing process qualification which will support the opening of the facility in the fourth quarter of 2021 to manufacture TCR-T cells for the clinical trial.

We continue to qualify TCRs in its library and will amend the IND at the appropriate time to include these additional TCRs.

We expect that the additional TCRs will expand the potential utility and applicable patient population for the Library and may include additional KRAS and / or TP53 mutations or other genetic hotspots associated with solid tumors such as EGFR.

The Company plans on providing a comprehensive update on the Library later this year, including plans to expand the number of TCRs in the Library.

During the second quarter of 2021, we presented a poster at the annual American Association of Cancer Research (AACR) meeting, entitled “Hotspot mutations in KRAS and TP53 targeted by TCR-T cells genetically modified with the Sleeping Beauty transposon/transposase system”.

The poster highlighted preclinical work regarding our TCR-T program and demonstrated that multiple TCRs with unique specificities targeting recurrent p53 and KRAS substitutions in frequent HLA haplotypes could be stably expressed using Sleeping Beauty transposition to re-direct peripheral blood T-cells towards tumor cells.

In March 2021 and as announced by in April 2021, Eden BioCell, our Joint Venture in Taiwan with Tri-Arm Therapeutics, began treating patients in a clinical trial with our investigational CD19 RPM CAR-T cell therapy, under the IND cleared by the Taiwan FDA in December.

Two patients have now been treated in this trial.

The lead investigator at National Taiwan University in Taipei, has reported no serious adverse safety events in either of these patients.

Laboratory results continue to support, as previously published, that non-viral Sleeping Beauty gene transfer is effective in genetically modifying autologous T-cells.

Patients were infused two days after gene transfer, thus shortening the turnaround time and demonstrating an advantage over viral methods.

This additional work will optimize and refine the manufacturing process in order to more consistently manufacture product in the desired clinical dose range seeking to be studied.

The Tri-Arm/Eden team, per the terms of the JV agreement, will undertake the necessary process development work before infusing additional patients.

This will take an unspecified amount of time.

These restrictions are impacting clinical trials broadly in Taiwan.

The structure of the Joint Venture, which is 100% financially supported via investment from Tri-Arm, is beneficial, because it allows us to continue to focus all efforts and capital on the TCR program, which is the focus of our strategy and represents much larger potential commercial opportunity.

Our resources continue to be prioritized on our TCR program. 

As previously described, the TCR and CAR-T processes are distinctly different and have followed very different process development pathways.

While both involve Sleeping Beauty gene transfer, the constructs, and manufacturing processes are very distinct.

Additionally, the TCR-T clinical program is investigating treatment of a range of solid tumors whereas the CAR-T program has been focused on hematological malignancies.

MD Anderson has closed the CD19 RPM CAR-T Allogeneic Phase I clinical trial and withdrew the IND as of June 2021.

We are winding down our existing Controlled IL-12 clinical program for the treatment of recurrent glioblastoma multiforme.

These trials examine the effect of Controlled IL-12 as a monotherapy and in combination with blockade of the immune checkpoint protein PD-1.

We will continue seeking a partner for this program and have also begun exploring potential synergies between this technology and our cell therapy programs.

Appointment of Personnel

In March 2021, Kevin Buchi notified the Board of his intention not to stand for re-election as a director when his term expires at our 2021 annual meeting of stockholders on May 19, 2021.

The size of the Board decreased from eight to seven directors effective as of the date of Mr.

Buchi’s resignation.

Financial Overview

Overview of Results of Operations

Three and Six Months Ended June 30, 2021 Compared to Three and Six Months Ended June 30, 2020

Research and development expenses.

Research and development expenses during the three and six months ended June 30, 2021 and 2020 were as follows:

Three months ended

Six months ended

($ in thousands)

Research and development

Research and development expenses for the three months ended June 30, 2021 increased by $1.5 million when compared to the three months ended June 30, 2020.

The increase in research and development expenses for the three months ended June 30, 2021 is primarily due to a $3.0 million increase in headcount, stock compensation, and facilities costs related to the expansion of personnel focused on TCR efforts and commissioning of our cGMP CPU as well as an increase of $2.2 million of Cell Therapy program related costs.

The increase in employee and build-out costs was offset by a reduction of approximately $3.7 million in reduced third party costs as we wind down our Controlled IL-12 program.

Research and development expenses for the six months ended June 30, 2021 increased by $2.1 million when compared to the six months ended June 30, 2020.

The increase in research and development expenses for the six months ended June 30, 2021 is primarily due to a $6.4 million increase in headcount, stock compensation, and facilities costs related to the expansion of personnel focused on TCR efforts and commissioning of our cGMP CPU and an increase of $3.0 million related to Cell Therapy costs.

The $9.4 million dollar increase was offset by approximately $7.3 million of decreased Controlled IL-12 program costs.

Our research and development expense consists primarily of salaries and related expenses for personnel, costs of contract manufacturing services, costs of facilities and equipment, fees paid to professional service providers in conjunction with our clinical trials, fees paid to contract research organizations in conjunction with preclinical animal studies, costs of materials used in research and development, consulting, license and milestone payments and sponsored research fees paid to third parties.

We have not accumulated and tracked our internal historical research and development costs or our personnel and personnel-related costs on a program-by-program basis.

Our employee and infrastructure resources are allocated across several projects, and many of our costs are directed to broadly applicable research endeavors.

As a result, we cannot state the costs incurred for each of our programs on a program-by-program basis related to personnel and personnel related costs.

We do track our accumulated costs by program for costs incurred by outside vendors conducting research for our named clinical candidates.

For the three months ended June 30, 2021, our clinical stage projects included a Phase 1/2 clinical trial evaluating TCRs from our library for the investigational treatment of long cholangiocarinoma, pancreatic, colorectal and gynecological cancers, a Phase 1 clinical trial with Ad-RTS-IL-12 plus veledimex in progressive glioblastoma;

a Phase 1 clinical trial infusing our 2nd generation CD19-specific CAR + T cells in patients with advanced lymphoid malignancies;

a Phase 1/2 clinical trial of Ad-RTS-hIL-12 with veledimex for the treatment of pediatric brain tumors;

and a Phase 2 clinical trial of Ad-RTS-hIL-12 with veledimex in combination with cemiplimab-rwlc in progressive glioblastoma.

The expenses incurred by us to third parties for our Phase 1/2 clinical trial evaluating TCRs from our library for the investigational treatment of long cholangiocarinoma, pancreatic, colorectal and gynecological cancers were $4.4 million for the three months ended June 30, 2021 and $7.0 million from the project’s inception in February 2021 through June 30, 2021.

The expense incurred by us to third parties for our Phase 2 clinical trial of Ad-RTS-hIL-12 with veledimex in combination with cemiplimab-rwlc in progressive glioblastoma were zero for the three months ended June 30, 2021 and $6.7 million from the projects inception in June 2019 through June 30, 2021.

The expenses incurred by us to third parties for our Phase 1/2 clinical trial of Ad-RTS-hIL-12 with veledimex for the treatment of pediatric brain tumors were $0.2 million for the three months ended June 30, 2021 and $2.7 million from the project’s inception in October 2017 through June 30, 2021.

The expenses incurred by us to third parties for our Phase 1 clinical trial with Ad-RTS-IL-12 plus veledimex in progressive glioblastoma were zero for the three months ended June 30, 2021 and $14.6 million from the project’s inception in September 2015 through June 30, 2021.

The expenses incurred by us to third parties for our Phase 1 clinical trial infusing our 2nd generation CD19-specific CAR + T cells in patients with advanced lymphoid malignancies were zero for the three and six months ended June 30, 2021 and $6.2 million from the project’s inception in December 2015 through June 30, 2021.

Our future research and development expenses in support of our current and future programs will be subject to numerous uncertainties in timing and cost to completion.

We test potential products in numerous preclinical studies for safety, toxicology and efficacy.

We may conduct multiple clinical trials for each product.

As we obtain results from trials, we may elect to discontinue or

delay clinical trials for certain products to focus our resources on more promising products or indications.

Completion of clinical trials may take several years or more, and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product.

It is not unusual for preclinical and clinical development of each of these types of products to require the expenditure of substantial resources.

We estimate that clinical trials of the type generally needed to secure new drug approval are typically completed over the following timelines:

Clinical Phase

Estimated Completion Period

The duration and the cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others, the following:

The number of clinical sites included in the trials;

The length of time required to enroll suitable patents;

The number of patients that ultimately participate in the trials;

The length of time and cost to develop and optimize manufacturing processes;

The cost to manufacture the clinical products for patients;

The duration of patient follow-up to ensure the absence of long-term product-related adverse events;

The efficacy and safety profile of the product.

As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our programs or when and to what extent we will receive cash inflows from the commercialization and sale of a product.

Our inability to complete our programs in a timely manner or our failure to enter into appropriate collaborative agreements could significantly increase our capital requirements and could adversely impact our liquidity.

These uncertainties could force us to reduce or eliminate our activities in one or more of our programs or seek additional, external sources of financing from time-to-time in order to continue with our product development strategy.

Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business.

General and administrative expenses.

General and administrative expenses during the three and six months ended June 30, 2021 and 2020 were as follows:

Three months ended

Six months ended

($ in thousands)

General and administrative

General and administrative expenses for the three months ended June 30, 2021 increased by $2.5 million as compared to three months ended June 30, 2020.

The increase during the three months ended June 30, 2021 was primarily due to increases related to employee related expenses including noncash stock compensation expense pursuant to our separation agreement with our former Chief Executive Officer.

General and administrative expenses for the six months ended June 30, 2021 increased by $4.8 million as compared to six months ended June 30, 2020.

The increase during the six months ended June 30, 2021 was primarily due to an increase of $3.6 million related to employee related expenses, $0.9 million related employee-related separation expenses, and $0.2 million expenses incurred related to consulting service costs.

Other income (expense), net.

Other income, net for the three and six months ended June 30, 2021 and 2020 was as follows:

Three months ended

Six months ended

($ in thousands)

Other income (expense), net

Other income (expense) for the three and six months ended June 30, 2021 decreased as compared to the three and six months ended June 30, 2020 due to a decrease in our cash balance and a decline in interest rates due to market fluctuations.

Liquidity and Capital Resources

Source of liquidity

We have not generated any revenue from product sales.

Since inception, we have incurred net losses and negative cash flows from our operations.

To date, we have financed our operations primarily through public offerings of our common stock, private placements of our convertible equity securities, term debt and collaborations.

Through June 30, 2021, we have received an aggregate of $714.1 million from public offerings and through sales under our “at-the market”

offering program.

February 2020 Public Offering

On February 5, 2020, we entered into an underwriting agreement with Jefferies LLC, or Jefferies, as representative of the several underwriters named therein, relating to the issuance and sale of 27,826,086 shares of our common stock.

The price to the public in the offering was $3.25 per share, and the underwriters agreed to purchase the shares from us pursuant to the underwriting agreement at a purchase price of $3.055 per share.

The offering was made pursuant to our effective registration statement on Form S-3ASR (File No.

333-232283) previously filed with the SEC, and a prospectus supplement thereunder.

The net proceeds from the offering were approximately $84.8 million after deducting underwriting discounts and offering expenses paid by us.

On March 10, 2020, the underwriters exercised their option to purchase an additional 1,284,025 shares.

The net proceeds were approximately $3.9 million after deducting underwriting discounts and offering expenses paid by the us.

At-the-Market Facility

In June 2019, we entered into an Open Market Sale Agreement, or Sales Agreement, with Jefferies LLC, or Jefferies, as a sale agent pursuant to which we may offer and sell, from time to time through Jefferies, shares of our common stock having an aggregate offering value of up to $100.0 million.

Shares will be sold pursuant to our effective registration statement on Form S-3ASR (File No.

333-232283), as previously filed with the Securities and Exchange Commission.

Subject to the terms of the sales agreement, we are able to determine, at our sole discretion, the timing and number of shares to be sold under this ATM facility.

The compensation to Jefferies for sales of our common stock pursuant to the sales agreement will be an amount equal to 3% of the gross proceeds of any shares of common stock sold under the sales agreement.

During the six months ended June 30, 2020, we issued and sold an aggregate of 2,814,673 shares of its common stock.

The offering was made pursuant to our effective registration statement on Form S-3ASR (File No.

333-232283) previously filed with the SEC, and a prospectus supplement thereunder.

The net proceeds from the offering were approximately $13.0 million after deducting underwriting discounts and offering expenses payable by us.

We did not sell any shares of its common stock under the at-the-market facility during the three months ended June 30, 2021.

On August 6, 2021, the Company entered into a credit and security agreement with a lender (the “Term Loan Agreement”).

The Term Loan Agreement provides for an initial term loan of $25.0 million funded at the closing, with an additional tranche of $25.0 million available if certain funding and clinical milestones are met by August 31, 2022.

Interest on the term loan is payable monthly in arrears at an annual interest rate of the greater of 7.75% or the prime rate plus a margin of 4.5%.

The term loan amortization date is April 1, 2022;

provided, however, if the Company raises $50M in funding on or prior to March 31, 2022, the term loan first payment date shall automatically be extended to September 1, 2022.

term loan maturity date is March 1, 2023;

provided, however, if Company achieves the funding milestones, the term loan maturity date shall automatically be extended to August 1, 2025.

There is a final payment due of 5.75%.

The Company granted a warrant at the closing to purchase 432,843 shares at $2.22 per share.

The Company will grant a similar warrant if it draws the second $25.0 million tranche.

Funding Requirements

Given our current development plans, we expect that our existing cash and cash equivalents, plus the $25.0 million gross debt proceeds raised in August 2021, will be sufficient to fund our current operations into the fourth quarter of 2022.

We currently do not have any committed sources of additional capital at this time.

The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors.

We have based our estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate.

Management does not know whether additional financing will be on terms favorable or acceptable to us when needed, if at all.

In addition, we have issued or reserved for future issuance shares nearing the maximum number of shares of common stock authorized by our certificate of incorporation.

If we are unable to increase the total number of authorized shares, we may be unable to effectively utilize our common stock to raise capital.

If adequate additional funds are not available when required, or if we are unsuccessful in entering into partnership agreements for further development of our products, management may need to curtail development efforts.

The COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets.

If the disruption persists and deepens, we could experience an inability to access additional capital when and if needed.

If we are unable to obtain funding, we could be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations.

In addition to these factors, our actual cash requirements may vary materially from our current expectations due to a number of other factors that may include, but are not limited to, changes in the focus and direction of our development programs, competitive and technical advances, costs associated with the development of our product candidates, our ability to secure partnering arrangements, and the costs of filing, prosecuting, defending and enforcing our intellectual property rights.

If we exhaust our capital reserves more quickly than anticipated, regardless of the reason, and we are unable to obtain additional financing on terms acceptable to us or at all, we will be unable to proceed with development of some or all of our product candidates on expected timelines and will be forced to prioritize among them.

The following table summarizes our net decrease in cash, cash equivalents, and restricted cash for the three months ended June 30, 2021 and 2020:

Six months ended

($ in thousands)

Net cash provided by (used in):

Operating activities

Investing activities

Financing activities

Net increase in cash, cash equivalents, and restricted cash

Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities.

Operating cash flow is derived by adjusting our net loss for:

Non-cash operating items such as depreciation and stock-based compensation;

Changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations.

Net cash used in operating activities for the six months ended June 30, 2021 was $36.8 million, as compared to net cash used in operating activities of $23.9 million for the six months ended June 30, 2020.

The net cash used in operating activities for the six months ended June 30, 2021 was primarily due to our net loss of $44.2 million, the decrease in prepaid and other current assets of $5.8 million offset by an increase in receivables of $3.0 million related to the use of our funds at MD Anderson, the change in accrued expenses of $4.8 million, the change in non-cash stock-based compensation of $7.5 million, and increase in lease liabilities of $0.8 million.

Net cash used in investing activities was $2.6 million for the six months ended June 30, 2021 compared to $4.0 million for the six months ended June 30, 2020.

Net cash provided by financing activities the six months ended June 30, 2021 was $1.0 million related to proceeds from the exercise of stock options.

Net cash provided by financing activities the six months ended June 30, 2020 was $101.7 million, which included $88.7 million from the issuance of common stock in our public offering, net and $13.0 million from the issuance of common stock in our at the market offerings, net.

Operating capital and capital expenditure requirements

We anticipate that losses will continue for the foreseeable future.

At June 30, 2021, our accumulated deficit was approximately $808.3 million.

Our actual cash requirements will depend on and could increase significantly as a result of a number of factors, including:

the scope, number, initiation, progress, timing, costs, design, duration, any potential delays, and results of clinical trials and nonclinical studies for our current or future product candidates;

changes in the focus, direction and pace of our development programs;

the effect of competitive and technical advances and market developments;

costs associated with the development of our product candidates;

our ability to establish and maintain partnering, collaborations or similar arrangements on favorable terms and whether and to what extent we retain development or commercialization responsibilities under any new licensing, collaboration or similar arrangement;

diversion of healthcare resources away from the conduct of clinical trials as a result of the ongoing COVID-19 pandemic, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel, quarantines or social distancing protocols imposed or recommended by federal or state governments, employers and others in connection with the ongoing COVID-19 pandemic;

our need and ability to hire additional management and scientific and medical personnel;

the costs of acquiring, licensing or investing in businesses, product candidates and technologies;

costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual property rights, or other developments;

other matters identified under Part II, Item 1A.

“Risk Factors.”

Our working capital as of June 30, 2021 was $75.8 million, consisting of $89.4 million in current assets and $13.6 million in current liabilities.

Working capital as of December 31, 2020 was $112.2 million, consisting of $130.6 million in current assets and $18.4 million in current liabilities.

In May 2021, as a result of our review of our research and development portfolio, we announced the realigning of resources behind our Sleeping Beauty program.

Resources currently deployed towards our Controlled IL-12 clinical program are currently being reduced, and we anticipate the realignment of resources will reduce cash expenditures on the Controlled IL-12 program.

Contractual Obligations

The following table summarizes our outstanding obligations as of June 30, 2021 and the effect those obligations are expected to have on our liquidity and cash flows in future periods:

($ in thousands)

Less than 1 year

More than 5 years

Operating leases

Royalty and license fees

Strategic advisory fees

Our commitments for operating leases relate to the lease for our corporate headquarters in Boston, Massachusetts, and laboratory and office space in Houston, Texas.

On December 21, 2015 and April 15, 2016, we renewed the lease for our corporate headquarters in

Boston, MA through August 31, 2021.

On April 22, 2021, we extended our lease for a portion of office space currently held at our corporate office headquarters in Boston.

The renewal of the portion of our corporate office headquarters was originally set to expire on August 31, 2021, but has now been extended through August 31, 2026.

On January 30, 2018, we entered into a lease agreement for office space in Houston, TX at MD Anderson through April 2021.

On March 12, 2019, we entered into a lease agreement for additional office space in Houston through April 2021.

On October 15, 2019, we entered into another lease agreement for additional office and lab space in Houston through February 2027.

On April 13, 2020, we entered into another lease agreement for additional office and laboratory space in Houston through February 2027.

On June 1, 2020, we entered into a short-term lease in Houston for office and laboratory space.

On September 1, 2020, we entered an additional short-term lease in Houston for additional office and laboratory space.

On December 15, 2020, we entered into another lease for additional office and laboratory space in Houston through April 2028.

On January 10, 2017, we announced the signing of a Cooperative Research and Development Agreement, or CRADA with the NCI for the development of ACT-based immunotherapies genetically modified using the Sleeping Beauty transposon/transposase system for the treatment of solid tumors.

In February 2019, we extended the CRADA with the NCI until January 9, 2022.

On May 28, 2019, we entered into a patent license agreement, or the Patent License, with the NCI.

The terms of the Patent License require us to pay the NCI minimum annual royalties in the amount of $0.3 million, which amount will be reduced to $0.1 million once the aggregate minimum annual royalties paid by us equals $1.5 million.

On October 5, 2018, we entered into the License Agreement with PGEN Therapeutics, Inc.

or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation.

Under the License Agreement, we are obligated to pay PGEN an annual licensing fee of $0.1 million expected to be paid through the term of the agreement.

On November 27, 2020, we entered into two agreements for strategic advisory services that require us to pay $1.5 million through the end of the service period, concluding in September 2021.

Off-balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Estimates

In our Annual Report, our most critical accounting policies and estimates upon which our financial status depends were identified as those relating to clinical trial expenses;

collaboration agreements;

fair value measurements for stock-based compensation;

and income taxes.

We reviewed our policies and determined that those policies remain our most critical accounting policies for the six months ended June 30, 2021.

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 1. Financial Statements