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Item 5. Market for Registrant’s Common Equity

2022-03-30 compared with 2021-03-01 · 8 added, 424 removed, 4 unchanged (99% of the section changed)

Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities

Market for Common Stock

Our common stock trades on the Nasdaq Global Select Market under the symbol “ZIOP.”

Our common stock trades on the Nasdaq Global Select Market under the symbol “TCRT.”

Record Holders

As of February 18, 2021, we had approximately 260 holders of record of our common stock, one of which was Cede & Co., a nominee for Depository Trust Company, or DTC.

Shares of common stock that are held by financial institutions as nominees for beneficial owners or in “street name” are deposited into participant accounts at DTC and are considered to be held of record by Cede & Co.

As of March 15, 2022, we had approximately 246 holders of record of our common stock, one of which was Cede & Co., a nominee for Depository Trust Company, or DTC.

Shares of common stock that are held by financial institutions as nominees for beneficial owners or in “street name”

are deposited into participant accounts at DTC and are considered to be held of record by Cede & Co.

as one stockholder.

As of February 18, 2021, we had approximately 29,049 beneficial holders of our common stock.

We have never declared or paid a cash dividend on our common stock and do not anticipate paying any cash dividends in the foreseeable future.

Stockholder Return Comparison

The following shall not be deemed incorporated by reference into any of our other filings under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except to the extent we specifically incorporate it by reference into such filings.

The graph below matches the cumulative 5-year

total return of holders of our common stock with the cumulative total returns of the Nasdaq Composite index and the Nasdaq Biotechnology index.

The graph assumes that the value of the investment in our common stock and in each of the indexes (including reinvestment of dividends) was $100 on December 31, 2015 and tracks it through December 31, 2020.

The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.

Selected Financial Data

We have elected to comply with Item 301 of Regulation S-K, as amended February 10, 2021 and are omitting this disclosure in reliance thereon.

Management Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.

addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those contained in or implied by any forward-looking statements.

Factors that could cause or contribute to these differences include those under “Risk Factors” included in Part I, Item 1A and under “Special Note Regarding Forward-Looking Statements” or in other parts of this Annual Report on Form 10-K.

We are a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing next generation immunooncology 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 third party (allogeneic) TCRs that have

been prepared before the recipient has been identified to genetically modify patient-derived T cells to redirect specificity to public, or shared neoantigens.

The Personalized TCR-T Approach uses patient-derived (autologous) TCRs that are prepared from the recipient to genetically modify patient-derived T cells to redirect specificity to private neoantigens.

It is anticipated that more than one TCR-T product with more than one specificity will be administered in the Personalized TCR-T Approach.

In February 2021, the U.S.

Food and Drug Administration, or the FDA, cleared our company-sponsored investigational new drug, or IND, application submitted for a Phase 1/2 clinical trial evaluating 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 our 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.

The FDA has cleared the 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 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 so-called 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 leading the clinical development and commercialization 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.

In the fourth quarter of 2020, an IND was cleared by the Taiwan FDA for a Phase 1 clinical trial designed to evaluate safety and efficacy in this patient group.

In our Phase 1 clinical trial being conducted in the United States, we plan to infuse donor-derived T cells after allogeneic bone marrow transplantation, or BMT, for recipients who have relapsed with CD19+ leukemias and lymphomas with our CD19- specific CAR+ T therapies manufactured using our technology.

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 ®

We have completed enrollment to all our Phase 1 and 2 clinical trials of patients with recurrent glioblastoma multiforme, or rGBM.

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

Dosing is ongoing in a Phase 2 clinical trial evaluating Ad-RTS-hIL-12 plus veledimex in combination with PD1 antibody Libtayo ®

(cemiplimab-rwlc) for the treatment of recurrent or progressive glioblastoma multiforme in adults.

Data from our monotherapy and combination studies have been presented at major scientific conferences.

As of December 31, 2020, we have approximately $115.1 million of cash and cash equivalents.

Given our current development plans, we anticipate our cash resources will be sufficient to fund our operations into the second quarter of 2022, and we have no 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.

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

Our amended and restated certificate of incorporation authorizes us to issue 250,000,000 shares of common stock.

As of February 24, 2020, there were 214,667,023 shares of common stock outstanding and an additional 31,115,329 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants.

Though we have no immediate plans to issue additional shares of common stock, other than in connection with our 2020 Equity Incentive Plan, we may need additional shares for business and financial purposes in the future.

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

For the year ended December 31, 2020, we had a net loss of $80.0 million, and through December 31, 2020, we have incurred approximately $764.1 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;

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.

At-the-Market Offering Program

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

During the year ended December 31, 2020, we issued and sold an aggregate of 2,814,673 shares of our common stock under the sales agreement for aggregate net proceeds of $13.0 million after deducting commissions and offering expenses of $0.4 million and may sell and issue approximately $80.9 million in additional shares under the sales agreement.

Financial Overview

Collaboration Revenue

We recognize research and development funding revenue over the estimated period of performance.

We have not generated product revenues since our inception.

Unless and until we receive approval from the FDA and/or other regulatory authorities for our product candidates, we cannot sell our products and will not have product revenues.

Research and Development Expenses

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

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 oncology programs on a program-by-program

For the year ended December 31, 2020, our clinical stage projects included 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;

and a Phase 1/2 clinical trial of Ad-RTS-hIL-12

with veledimex for the treatment of pediatric brain tumors.

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 $3.0 million for the year ended December 31, 2020 and $14.3 million from the project’s inception in September 2015 through December 31, 2020.

There were minimal 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 for the year ended December 31, 2020 and $6.1 million from the project’s inception in December 2015 through December 31, 2020.

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 year ended December 31, 2020 and $2.2 million from the project’s inception in October 2017 through December 31, 2020.

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 $4.2 million for the year ended December 31, 2020 and $5.8 million from the projects inception in June 2019 through December 31, 2020.

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 in order 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 patients;

The number of patients that ultimately participate in the trials;

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 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 consist primarily of salaries, benefits and stock-based compensation, consulting and professional fees, including patent related costs, general corporate costs and facility costs not otherwise included in research and development expenses or cost of product revenue.

Other Income (Expense)

Other income (expense) consists primarily of interest income and changes in the fair value of our Series 1 preferred stock.

All of the Series 1 preferred stock was forfeited on October 5, 2018 in conjunction with entering the License Agreement with PGEN Therapeutics, or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation.

Results of Operations for the Fiscal Year ended December 31, 2020 and 2019

Collaboration Revenues

There was no revenue for the years end December 31, 2020 and 2019.

Research and Development Expenses

Research and development expenses during the years ended December 31, 2020 and 2019 were as follows:

Year Ended December 31,

($ in thousands)

Research and development

Research and development expenses for the year ended December 31, 2020 increased by $14.4 million when compared to the year ended December 31, 2019.

The increase in expense during the year ended December 31, 2020 was due to an increase of $6.3 million in employee related expenses, driven primarily by increased headcount in 2020 compared to 2019, an increase of $6.1 million in gene therapy expenses driven by increased manufacturing and trial cost to support our ongoing clinical initiatives, $1.2 million of facility related services due to the buildout of the Houston facility on the MD Anderson campus, $1.2 million of cell therapy expenses driven by increased manufacturing to support our upcoming clinical initiatives, offset by a $0.4 million decrease in travel and contracted outside service.

General and Administrative Expenses

General and administrative expenses during the years ended December 31, 2020 and 2019 were as follows:

Year ended December 31,

($ in thousands)

General and administrative

General and administrative expenses for the year ended December 31, 2020 increased by $8.1 million as compared to the year ended December 31, 2019.

The change was primarily due to increased contracted outside professional services of $5.6 million related to advisory services, an increase of $2.0 million in employee related expenses, driven primarily by increased headcount in 2020 compared to 2019, and increase of $0.9 million in facility related services, offset by a decrease of $0.4 million in travel related expenses.

Other Income (Expense)

Other income (expense) during the years ended December 31, 2020 and 2019 were as follows:

Year ended December 31,

($ in thousands)

Non-cash inducement warrant expense

During the year ended December 31, 2019, we recorded a non-cash

inducement warrant expense of $60.8 million relating to the issuance of new warrants as an inducement for warrant holders to exercise their 2018 warrants early.

There was no inducement warrant expense incurred for the year ended December 31, 2020.

Additionally, we recorded $385 thousand in other income for the year ended December 31, 2020, compared to $813 thousand in other income for the year ended December 31, 2019, due to market fluctuations.

Results of Operations for the Fiscal Year ended December 31, 2019 and 2018

Collaboration Revenues

Revenues for the years ended December 31, 2019 and 2018 were as follows:

Year ended December 31,

($ in thousands)

Collaboration revenue

Revenue for the year ended December 31, 2019 decreased by $146 thousand in comparison to revenue for the year ended December 31, 2018.

During the year ended December 31, 2019, there was no recognized revenue.

During the year ended December 31, 2018, we recognized $146 thousand of revenue related to the Ares Trading Agreement under ASC 606 (Note 3).

Research and Development Expenses

Research and development expenses during the years ended December 31, 2019 and 2018 were as follows:

Year ended December 31,

($ in thousands)

Research and development

Research and development expenses for the year ended December 31, 2019 increased by $4.2 million when compared to the year ended December 31, 2018.

The increase in expense during the year ended December 31, 2019 was due to an increase of $1.5 million in T cell therapy expenses, driven primarily by manufacturing costs and costs associated with our Patent License with the NCI, an increase of $1.2 million in employee related expenses, driven primarily by increased headcount in 2019 compared to 2018, $1.1 million of Gorilla IL-12

expenses driven by increased manufacturing and trial cost to support our ongoing clinical initiatives and $0.4 million of contracted outside services due to the buildout of the Houston facility at MD Anderson (Note 8).

General and Administrative Expenses

General and administrative expenses during the years ended December 31, 2019 and 2018 were as follows:

Year ended December 31,

($ in thousands)

General and administrative

General and administrative expenses for the year ended December 31, 2019 decreased by $0.4 million as compared to the prior year.

The change was primarily due to decreased stock compensation of $0.9 million and decreased contracted outside services and advisory fees related to our License Agreement with PGEN in 2018 (Note 7) of $0.9 million.

The decreased costs in 2019 were offset by an increase of employee related costs of $0.8 million, an increase of facilities related costs of $0.4 million, and an increase of travel related costs due to international travel by executives of $0.2 million.

Other Income (Expense)

Other income (expense) during the years ended December 31, 2019 and 2018 were as follows:

Year ended December 31,

($ in thousands)

Other income (expense), net

inducement warrant expense

Change in fair value of derivative liabilities

During the year ended December 31, 2019, we recorded a non-cash

inducement warrant expense of $60.8 million relating to the issuance of new warrants as an inducement for warrant holders to exercise their 2018 warrants early.

During the year ended December 31, 2018 we recorded a gain on the change in fair value of the derivative liabilities of $158 thousand, which was derived from the number of previously outstanding shares of Series 1 preferred stock and their respective valuations.

Additionally, we recorded $813 thousand in other income for the year ended December 31, 2019, compared to $631 thousand earned in the prior year, due to increases in our cash equivalent accounts.

Sources of Liquidity

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

Through December 31, 2020, we have received an aggregate of $[●] from public offerings and through our “at-the-market” offering program.

Liquidity and Capital Resources

As of December 31, 2020, we have approximately $115.1 million of cash and cash equivalents.

Given our current development plans, in addition to our recent financing, we anticipate cash resources will be sufficient to fund our operations into the second quarter of 2022, and we have no committed sources of additional capital at this time.

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.

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.

In addition to these factors, our actual cash requirements may vary materially from our current expectations for 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.

We expect that we will need additional financing to support our long-term plans for clinical trials and new product development.

We expect to finance our cash needs through the sale of equity securities, strategic collaborations and/or debt financings, or through other sources that may be dilutive to existing stockholders.

There can be no assurance that we will be able to obtain funding from any of these sources or, if obtained, what the terms of such funding(s) may be, or that any amount that we are able to obtain will be adequate to support our working capital requirements until we achieve profitable operations.

We have no current committed sources of additional capital.

Recently, capital markets have experienced a period of instability that may severely hinder our ability to raise capital within the time periods needed or on terms we consider acceptable, if at all.

If we are unable to raise additional funds when needed, we may not be able to continue development and regulatory approval of our products, or we could be required to delay, scale back or eliminate some or all our research and development programs.

Our amended and restated certificate of incorporation authorizes us to issue 250,000,000 shares of common stock.

Recent Financing Transactions

February 2020 Public Offering

On February 5, 2020, we entered into an underwriting agreement with 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.

Under the terms of the underwriting agreement, we also granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 4,173,912 shares of common stock at a purchase price of $3.055 per share.

The offering, which closed on February 7, 2020, was made pursuant to our effective registration statement on Form S-3ASR

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 our offering expenses.

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 us.

At-the-Market

During the year ended December 31, 2020, we sold an aggregate of 2,814,673 shares of our common stock.

The offering was made pursuant to our effective registration statement on Form S-3ASR

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 our offering expenses.

During the year ended December 31, 2019, we sold an aggregate of 1,271,274 shares of our common stock.

The offering was made pursuant to our effective registration statement on Form S-3ASR

previously filed with the SEC, and a prospectus supplement thereunder.

The net proceeds from the offering were approximately $6.1 million after deducting underwriting discounts and our offering expenses.

July 2019 and September 2019 Warrant Exercise

On July 26, 2019 and September 12, 2019, we entered into agreements for the exercise of the warrants issued in November 2018 to purchase common stock in a private placement.

Pursuant to the terms of the agreements, investors exercised warrants for an aggregate of 17,803,031 shares of common stock, at an exercise price of $3.01 per share.

We issued new warrants to purchase up to 17,803,031 additional shares of common stock as an inducement for warrant holders to exercise their 2018 warrants early.

The new warrants will become exercisable six months following the date of issuance, will expire on the fifth anniversary of the initial exercise date, and have an exercise price of $7.00 (Note 10).

Proceeds from the exercise of the warrants, before deducting placement agent fees and other related expenses of $1.1 million were approximately $52.5 million.

For the year ended December 31, 2019, we also recorded $60.8 million in non-cash

inducement warrant expense, which is included in our statement of operations.

November 2018 Private Placement

On November 11, 2018, we entered into a securities purchase agreement with certain institutional and accredited investors pursuant to which we agreed to issue and sell to the investors an aggregate of 18,939,394 immediately separable units at a price per unit of $2.64, for net proceeds of approximately $47.1 million.

Each unit was comprised of (i) one share of our common stock, par value $0.001 per share and (ii) a warrant to purchase one share of common stock.

The securities issued by us pursuant to the securities purchase agreement and to be issued upon exercise of the warrants were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

When issuing the units, we relied on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Registration D, promulgated thereunder and on similar exemptions under applicable state laws and filed a Form D with the SEC on November 19, 2018.

On February 7, 2019, we filed a registration statement on Form S-3

registering the resale of shares issued pursuant to the securities purchase agreement and the resale of shares that may be issued upon exercise of the warrants.

The following table summarizes our net increase (decrease) in cash and cash equivalents for the years ended December 31, 2020, 2019, and 2018:

Year ended December 31,

($ in thousands)

Net cash provided by (used in):

Operating activities

Investing activities

Financing activities

Net increase (decrease) in cash and cash equivalents

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:

operating items such as depreciation and amortization, stock-based compensation, inducement warrant expense and preferred stock and warrants for common stock issued in connection with license agreements;

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;

Changes associated with the fair value of our derivative liabilities.

Net cash used in operating activities for the year ended December 31, 2020 was $57.0 million, as compared to net cash used in operating activities of $40.9 million and $49.5 million for the years ended December 31, 2019 and 2018, respectively.

The net cash used in operating activities for the year ended December 31, 2020 was primarily a result of our net loss of $80.0 million, an increase in receivables of $1.3 million, an increase in other noncurrent assets of $0.6 million, offset by an decrease in prepaid expenses and other current assets of $11.6 million primarily related to the use of funds at MD Anderson and an increase in accounts payable and accrued expenses of $5.3 million.

The net cash used in operating activities for the year ended December 31, 2019 was primarily a result of our net loss of $117.8 million, an increase in receivables of $1.5 million, an increase in prepaid expenses and other current assets of $1.7 million, offset by a decrease in other noncurrent assets of $9.4 million, and an increase in accounts payable and accrued expenses of $1.9 million.

Net cash used in operating activities for the year ended December 31, 2018 was primarily a result of our net loss of $53.1 million, an increase in receivables of $1.9 million, an increase of prepaid expenses and other current assets of $1.3 million, and a decrease in accounts payable and accrued expenses of $4.8 million, offset by a decrease of other noncurrent assets of $4.0 million.

Net cash used in investing activities was $9.8 million for the year ended December 31, 2020 compared to $284 thousand and $459 thousand for the years ended December 31, 2019 and December 31, 2018, respectively.

The change was due primarily to increases in equipment purchases and leasehold improvements under our agreement with MD Anderson to build out space in Houston, Texas during the year ended December 31, 2020.

Net cash provided by financing activities was $102.1 million for the year ended December 31, 2020 compared to net cash provided by financing activities of $59.2 million and $40.3 million provided by financing activities for the years ended December 31, 2019 and 2018, respectively.

The $102.1 million provided by financing activities during the year ended December 31, 2020, is a result of net proceeds of $88.7 million from the issuance of common stock in our follow-on public

offering, net and $13.0 million from the issuance of common stock pursuant to our ATM facility.

The $59.2 million provided by financing activities during the year ended December 31, 2019 is a result of net proceeds from the issuance of common stock upon exercise of warrants of $52.5 million, net proceeds from the issuance in connection with an at the market offering of $6.1 million, proceeds from the exercise of stock options of $1.2 million, offset by $0.7 million used to repurchase common stock.

The $40.3 million provided by financing activities during the year ended December 31, 2018 is a result of net proceeds of $47.1 million from our November 2018 financing which were offset by cash paid of $5.4 million from our License Agreement and $1.6 million paid for the repurchase of common stock.

Operating Capital and Capital Expenditure Requirements

We anticipate that losses will continue for the foreseeable future.

At December 31, 2020, our accumulated deficit was approximately $764.1 million.

Our actual cash requirements may vary materially from those planned because of a number of factors including:

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

competitive and technical advances;

costs associated with the development of our product candidates;

our ability to secure partnering arrangements;

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

other matters identified under Part I – Item 1A.

“Risk Factors.”

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.

Working capital as of December 31, 2019 was $93.0 million, consisting of $105.5 million in current assets and $12.5 million in current liabilities.

Contractual Obligations

The following table summarizes our outstanding obligations as of December 31, 2020 and the effect those obligations are expected to have on our liquidity and cash flows in future periods:

($ in thousands)

Operating leases

Royalty and license fees

Strategic advisory services

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 sublease for our corporate headquarters in Boston, MA through August 31, 2021.

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 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 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 Precigen.

Under the License Agreement, we are obligated to pay PGEN an annual licensing fee of $100 thousand 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 $1.1 million through September 30, 2021.

Critical Accounting Policies and Significant Estimates

Our Management’s Discussion and Analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at

the date of the financial statements as well as the reported expenses during the reporting periods.

We evaluate our estimates and judgments on an ongoing basis.

Actual results may differ materially from these estimates under different assumptions or conditions.

We believe the following are our more significant estimates and judgments used in the preparation of our financial statements:

Research and Development Costs / Clinical trial expenses;

Revenue recognition from collaboration agreements;

Fair value measurements of stock-based compensation;

Income taxes.

Research and Development Costs / Clinical Trial Expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses.

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs.

The majority of our service providers invoice us in arrears for services performed, on a predetermined schedule or when contractual milestones are met;

however, a few require advanced payments.

We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.

Examples of estimated accrued research and development expenses include fees paid to:

CROs in connection with performing research services on our behalf and clinical trials,

investigative sites or other providers in connection with clinical trials,

vendors in connection with preclinical and clinical development activities, and

vendors related to product manufacturing, development, and distribution of preclinical and clinical supplies.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage clinical trials on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense.

Payments under some of these contracts depend on factors such as the completion of clinical trial milestones.

In accruing service fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly.

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

To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.

Revenue Recognition from Collaboration Agreements

We primarily generate revenue through collaboration arrangements with strategic partners for the development and commercialization of product candidates.

Commencing January 1, 2018, we recognized revenue in accordance with ASC 606 which replaced ASC 605, Multiple Element Arrangements

, as used in historical years.

The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods and/or services to customers in an amount that reflects the consideration to which the entity expects to be entitled

in exchange for those goods and/or services.

To determine the appropriate amount of revenue to be recognized for arrangements that we determine are within the scope of ASC 606, we perform the following steps:

(i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) each performance obligation is satisfied.

We recognize collaboration revenue under certain of our license or collaboration agreements that are within the scope of ASC 606.

Our contracts with customers typically include promises related to licenses to intellectual property, research and development services and options to purchase additional goods and/or services.

If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenue from non-refundable,

fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license.

For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable,

Contracts that include an option to acquire additional goods and/or services are evaluated to determine if such option provides a material right to the customer that it would not have received without entering into the contract.

If so, the option is accounted for as a separate performance obligation.

If not, the option is considered a marketing offer which would be accounted for as a separate contract upon the customer’s election.

The terms of our arrangements with customers typically include the payment of one or more of the following:

(i) non-refundable,

payment, (ii) development, regulatory and commercial milestone payments, (iii) future options and (iv) royalties on net sales of licensed products.

Accordingly, the transaction price is generally comprised of a fixed fee due at contract inception and variable consideration in the form of milestone payments due upon the achievement of specified events and tiered royalties earned when customers recognize net sales of licensed products.

We measure the transaction price based on the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods and/or services to the customer.

We utilize the most likely amount method to estimate the amount of variable consideration, to predict the amount of consideration to which we will be entitled for our one open contract.

Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

At the inception of each arrangement that includes development and regulatory milestone payments, we evaluate whether the associated event is considered probable of achievement and estimates the amount to be included in the transaction price using the most likely amount method.

Milestone payments that are not within the control of us or the licensee, such as those dependent upon receipt of regulatory approval, are not considered to be probable of achievement until the triggering event occurs.

At the end of each reporting period, we reevaluate the probability of achievement of each milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up

basis, which would affect revenue and net loss in the period of adjustment.

For arrangements that include sales-based royalties, including milestone payments based upon the achievement of a certain level of product sales, we recognize revenue upon the later of:

(i) when the related sales occur or (ii) when the performance obligation to which some or all of the payment has been allocated has been satisfied (or partially satisfied).

To date, we have not recognized any development, regulatory or commercial milestones or royalty revenue resulting from any of our collaboration arrangements.

Consideration that would be received for optional goods and/or services is excluded from the transaction price at contract inception.

We allocate the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis.

However, certain components of variable consideration are allocated specifically to one or more particular performance obligations in a contact to the extent both of the following criteria are met:

(i) the terms of the payment relate specifically to the efforts to satisfy the performance obligation or transfer the distinct good or service and (ii) allocating the variable amount of consideration entirely to the performance

obligation or the distinct good or service is consistent with the allocation objective of the standard whereby the amount allocated depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services.

We develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in each contract.

The key assumptions utilized in determining the standalone selling price for each performance obligation may include forecasted revenues, development timelines, estimated research and development costs, discount rates, likelihood of exercise and probabilities of technical and regulatory success.

Revenue is recognized based on the amount of the transaction price that is allocated to each respective performance obligation when or as the performance obligation is satisfied by transferring a promised good and/or service to the customer.

For performance obligations that are satisfied over time, we recognize revenue by measuring the progress toward complete satisfaction of the performance obligation using a single method of measuring progress which depicts the performance in transferring control of the associated goods and/or services to the customer.

We use input methods to measure the progress toward the complete satisfaction of performance obligations satisfied over time.

We evaluate the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Any such adjustments are recorded on a cumulative catch-up

basis, which would affect revenue and net loss in the period of adjustment.

Fair Value Measurements of Stock Based Compensation and Series 1 Preferred Stock (including related dividends)

Accounting standards define fair value, establish a framework for measuring fair value under generally accepted accounting principles and enhance disclosures about fair value measurements.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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.

We make certain assumptions to value and expense our share-based compensation awards, as well as our Series 1 preferred stock (including related dividends), which as of October 2018 is no longer outstanding.

In connection with valuing stock options we use the Black-Scholes valuation model, which requires us to estimate certain subjective assumptions.

The key assumptions we make are:

the expected volatility of our stock and the expected term of the award.

We review our valuation assumptions periodically and, as a result, we may change our valuation assumptions used to value share-based awards granted in future periods.

Such changes may lead to a significant change in the expense we recognize in connection with share-based payments.

In preparing our financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting

from differing treatment of items for tax and financial reporting purposes.

These differences result in deferred tax assets and liabilities, which, prior to the consideration for the need for a valuation allowance, are included on the balance sheet.

Significant management judgment is required in assessing the realizability of our deferred tax assets.

In performing this assessment, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

In making this determination, under the applicable financial accounting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and the effects of tax planning strategies.

Our estimates of future taxable income include, among other items, our estimates of future income tax deductions related to the exercise of stock options.

In the event that actual results differ from our estimates, we adjust our estimates in future periods and we may need to establish a valuation allowance, which could materially impact our financial position and results of operations.

We account for uncertain tax positions using a “more-likely-than-not”

threshold for recognizing and resolving uncertain tax positions.

The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position.

We evaluate uncertain tax positions on an annual basis and adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions.

Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the “more-likely-than-not”

threshold or the liability becomes effectively settled through the examination process.

We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals and administrative reviews;

we have no plans to appeal or litigate any aspect of the tax position;

and we believe that it is highly unlikely that the taxing authority would examine or re-examine

the related tax position.

We also accrue for potential interest and penalties, related to unrecognized tax benefits in income tax expense.

Recent Accounting Pronouncements

For a discussion of new accounting standards, please read Note 3 to the accompanying financial statements, Summary of Significant Accounting Principles

included in this report.

Sheet Arrangements

We have not entered into, nor do we currently have any special purpose entities or off-balance

sheet financing arrangements as defined under SEC rules.

Unregistered Sales of Securities

Except as previously disclosed in Current Reports on Form 8-K (File No.

001-33038) that we filed with the SEC on August 12, 2021 and January 4, 2022, we did not sell or issue any equity securities during the twelve months ended December 31, 2021 that were not registered under the Securities Act.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity