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Item 9A. Controls and Procedures

2022-03-30 compared with 2021-03-01 · 1548 added, 1184 removed, 467 unchanged (85% of the section changed)

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Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including our interim Chief Executive Officer and interim Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e)

promulgated under the Exchange Act, as of December 31, 2020.

Based on that evaluation, our interim Chief Executive Officer and our interim Chief Financial Officer have concluded that as of December 31, 2020, our disclosure controls and procedures were effective as described below under “Management’s Report on Internal Control over Financial Reporting.”

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Exchange Act, as of December 31, 2021.

Based on that evaluation, our principal executive officer and principal financial officer has concluded that as of December 31, 2021, our disclosure controls and procedures were effective as described below under “

Management’s Report on Internal Control over Financial Reporting .”

Remediation of Material Weakness

In connection with our audit of the fiscal year 2019 consolidated financial statements, we and our independent registered public accounting firm determined that we had material weaknesses in our internal control over financial reporting.

We did not design and maintain effective controls relating to the monitoring and oversight of expensing third party clinical trial costs.

Specifically, our internal controls were not designed effectively to provide reasonable assurance regarding the accurate and timely evaluation of the amount of third-party costs to record.

There were no changes to any of our previously released financial statements.

Based on this material weakness, our management concluded that at December 31, 2019, our internal control over financial reporting was not effective.

During the year ended December 31, 2020, we implemented enhanced procedures to remediate the deficiencies in our internal control over financial reporting including implementation of additional in-house meetings across departments to ensure that they have the relevant expertise related to the monitoring and oversight of expensing third party clinical trial costs.

We have completed execution of our remediation plan and successfully remediated the material weakness in internal control over financial reporting described above as of December 31, 2020.

Management’s Report on Internal Control over Financial Reporting

In connection with the review of our financial statements as of and for the quarter ended June 30, 2021, we identified a material weakness in our internal control over financial reporting.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

Our identified material weakness existing in our financial reporting process relates to the lack of sufficient accounting resources to execute certain controls related to the reconciliation and review of accounts in a timely manner.

Following the identification of the material weakness in our internal controls over financial reporting as of June 30, 2021, we prepared a remediation action plan and implemented that plan to improve the controls related to the reconciliation and review of accounts in a timely manner.

We enhanced and revised the design of related existing internal controls, implemented incremental controls over our financial statement close process and hired new accounting staff.

During the fourth quarter of 2021, we successfully completed the testing necessary to conclude that the material weakness has been remediated.

The material weakness had no impact on any amounts reported in the financial statement for the fiscal year ended December 31, 2021 or for any previous period.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rules 13(a)-15(f) and 15(d)-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our interim principal executive and interim principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Internal control over financial reporting is defined in Rules 13(a)-15(f) and 15(d)-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer, principal financial officer, and principal accounting officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

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Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of management, including our interim principal executive and interim financial officers, we assessed our internal control over financial reporting as of December 31, 2020, based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Our management’s assessment of the effectiveness of our internal control over financial reporting included testing and evaluating the design and operating effectiveness of our internal controls.

In management’s opinion, we have maintained effective internal control over financial reporting as of December 31, 2020, based on the criteria discussed above.

The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Under the supervision and with the participation of management, including our principal executive officer, principal financial officer, and principal accounting officer, we assessed our internal control over financial reporting as of December 31, 2021, based on criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Our management’s assessment of the effectiveness of our internal control over financial reporting included testing and evaluating the design and operating effectiveness of our internal controls.

In management’s opinion, we have maintained effective internal control over financial reporting as of December 31, 2021, based on the criteria discussed above.

Inherent Limitations on Internal Controls

Our management, including our interim Chief Executive Officer and our interim Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud.

Our management, including our principal executive officer, principal financial officer, and principal accounting officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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Additionally, controls can be circumvented by individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

The design of any system of controls also is

based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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Changes in Internal Controls over Financial Reporting

Except for the remediation measures discussed above, there were no other changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) that occurred during the fiscal quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than the changes described above, there were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) that occurred during the fiscal year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

Date of 2021 Annual Meeting

We intend to hold our annual meeting of stockholders on Wednesday, May 19, 2021 (the “2021 Annual Meeting”).

Because the expected date of the 2021 Annual Meeting represents a change of more than 30 calendar days from the date of the anniversary of our 2020 annual meeting of stockholders, we are providing revised deadlines for receipt of stockholder proposals and nominations with respect to the 2021 Annual Meeting.

Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), stockholders may present proposals for inclusion in our proxy statement for the 2021 annual meeting of

stockholders (“2021 Annual Meeting”) by submitting their proposals to us a reasonable time before we begin to print and send our proxy materials.

We will consider any such proposal must be provided not later than the close of business on or prior to Monday, March 8, 2021 to be timely, which is a reasonable time before we begin to distribute the proxy materials for the 2021 Annual Meeting.

Any such proposals must comply with the applicable requirements of Rule 14a-8 of the Exchange Act regarding the inclusion of stockholder proposals in company-sponsored proxy materials and other applicable laws and must be received in writing by us at the following address:

Ziopharm Oncology, Inc., One First Avenue, Parris Building 34, Navy Yard Plaza, Third Floor, Boston, Massachusetts 02129, Attention:

Corporate Secretary.

Due to the complexity of the respective rights of the stockholders and us in this area, any stockholder desiring to propose such an action is advised to consult with his or her legal counsel with respect to such rights.

We suggest that any such proposal be submitted to us by certified mail, return receipt requested.

Rule 14a-4 under the Exchange Act governs our use of our discretionary proxy voting authority with respect to a stockholder proposal that the stockholder has not sought to include in our proxy statement.

Rule 14a-4 provides that if a proponent of a proposal fails to notify us at least 45 days prior to the month and day of mailing of the prior year’s proxy statement, management proxyholders will be allowed to use their discretionary voting authority as to whether the proposal is raised at the annual meeting, without any discussion of the matter.

If a stockholder wishes to bring a matter before the stockholders at the 2021 Annual Meeting but does not notify us before Monday, March 15, 2021, which is a reasonable time before we begin to distribute the proxy materials for the 2021 Annual Meeting, for all proxies we receive, the management proxyholders will have discretionary authority to vote on the matter, including discretionary authority to vote in opposition to the stockholder’s proposal.

Any such notices should be received in writing at the following address:

Ziopharm Oncology, Inc., One First Avenue, Parris Building 34, Navy Yard Plaza, Third Floor, Boston, Massachusetts 02129, Attention:

Corporate Secretary.

Departure of Directors or Certain Officers;

Election of Directors;

Appointment of Certain Officers;

Compensatory Arrangements of Certain Officers.

On March 28, 2022, Dr.

Baffa notified us of his decision to resign from his position as our Chief Medical Officer, effective March 31, 2022, in order to pursue other opportunities.

In connection with Dr.

Baffa’s resignation, we entered into a letter agreement, or the Baffa Separation Agreement, to govern the terms of his separation.

Under the Baffa Separation Agreement, subject to its due execution, in exchange for a release of claims and certain post-employment covenants, Dr.

Baffa is entitled to receive a $155,000 lump sum cash payment and we have waived our right to recover half of his $160,000 sign-on bonus which we would otherwise be entitled to since he is departing after the first anniversary but before the second anniversary of his employment start date.

Regardless of whether or not Dr.

Baffa executes the Baffa Separation Agreement, we will continue paying Dr.

Baffa’s COBRA premiums for four months following the separation date.

The Baffa Separation Agreement supersedes all prior agreements between the parties.

In addition, the Baffa Separation Agreement includes confidentiality and intellectual property provisions which continue after Dr.

Baffa’s departure.

Baffa has seven business days following execution in which he may rescind his resignation and revoke the Baffa Separation Agreement.

The Baffa Separation Agreement will become effective upon the expiration of the seven business day revocation period.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

Information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the sections titled Proposal No.

1—Election of Directors, Current Directors, Director Nominees and Executive Officers, Information Regarding the Board of Directors and Corporate Governance

, Beneficial Ownership and Delinquent Section 16(a) Reports

Current Directors, Director Nominees And Executive Officers

Our Board of Directors

Set forth below are the names and certain information about each of our directors as of March 15, 2022.

The information presented includes each director’s age, principal occupation and business experience for the past five years and the names of other public companies of which he or she has served as a director during the past five years.

In addition, the table contains information about the specific and particular experience, qualifications, attributes or skills of each current director and each nominee for director at the annual meeting that led the corporate governance and nominating committee to believe that such current director was appropriate for nomination at a previous annual meeting of stockholders and, in the case of each nominee for director at the annual meeting, that such nominee should serve on our board of directors following election at the annual meeting.

Each of our directors serves for a one-year term until re-elected at our next annual meeting.

Positions and Offices Held

Christopher Bowden M.D.

Chief Executive Officer and Director

Executive Chair

Christopher Bowden, M.D.

Bowden, an oncology drug development executive with more than 20 years of leadership experience including the approval of several cancer medicines, has served as a member of our board of directors since October 2019.

He was the Chief Medical Officer of Agios Pharmaceuticals from May 2014 to September 2021.

Previously, Dr.

Bowden was Vice President Product Development Oncology, at Genentech for eight years.

From 2003 to 2006, he was the Executive Director for EMEA regions for Bristol-Myers Squibb.

Bowden held positions of increasing responsibility in oncology clinical development, at Pharmacia Corporation and Janssen Pharmaceutical.

Prior to industry, Dr.

Bowden was on the oncology faculty at the University of Virginia Health Science Center.

From September 2017 to October 2020, Dr.

Bowden served as a member of the board of directors of miRagen Therapeutics, Inc., a publicly traded biopharmaceutical company discovering and developing proprietary RNA-targeted therapies with a specific focus on microRNAs.

Bowden received his M.D.

from Hahnemann University School of Medicine followed by internal medicine training at Roger Williams Medical Center and the Providence VA Medical Center, Rhode Island.

He completed his medical oncology fellowship at the National Cancer Institute Medicine Branch.

Bowden is board certified in internal medicine and medical oncology.

Our board of directors believes that Dr.

Bowden’s extensive background in drug development and leadership experience at several leading life science and pharmaceutical companies qualifies him to serve on the board of directors.

Boyle, Sr., was appointed our Chief Executive Officer and a member of our board of directors in August 2021.

Boyle has over 20 years of experience in leading businesses in competitive and transformative situations and has a strong track record of delivering shareholder value.

He is also an accomplished capital markets professional with strong banking relationships cultivated by raising over $2.0 billion in equity and debt capital over his career.

Prior to joining the Company, Mr.

Boyle served in various roles at Kuur Therapeutics, Inc.

(formerly known as Cell Medica Ltd.).

Boyle first served as Kuur’s chief financial officer from February 2018 until January 2020.

From January 2020 until May 2021, Mr.

Boyle served as Kuur’s chief executive officer where he led the company through a successful transformation, culminating in a $185 million acquisition in May 2021 by Athenex, Inc.

Following the acquisition, Athenex engaged Mr.

Boyle as a consultant to assist in the integration of Kuur.

Prior to joining Kuur, Mr.

Boyle served as the chief financial officer of FloWorks International, LLC, Sigma3 Integrated Reservoir Solutions, Recover Care, and SPT Inc.

Boyle graduated with a B.S.

from Carnegie Mellon University and a J.D.

from the University of Pennsylvania Carey Law School.

Our board of directors believes that Mr.

Boyle’s prior experience as a chief executive officer in the life sciences industry and significant fundraising experience qualifies him to serve on the board of directors.

Huang has served as a member of our board of directors since July 2020, our Chair from January 2021 until February 2021, and our Executive Chair since February 2021.

Huang joined Kleiner Perkins Caufield & Byers China, or KPCB China, as a managing partner in 2011 and focuses on the firm’s life sciences practice.

Prior to joining KPCB China, Mr.

Huang was a managing partner at Vivo Ventures, a venture capital firm specializing in life sciences investments.

Before joining Vivo in 2007, Mr.

Huang was president of Anesiva, a biopharmaceutical company focused on pain-management treatments.

During his 20-year career in the pharmaceutical and biotech industry, he also held senior roles in business development, sales, marketing and R&D with Tularik Inc.

(acquired by Amgen), GlaxoSmithKline LLC, Bristol-Myers Squibb and ALZA Corp.

(acquired by Johnson & Johnson).

Huang is also founding and managing partner of Panacea Venture, a global venture fund focusing on investments in innovative and transformative early and growth stage healthcare and life science companies.

Huang is Chairman of the board at Kindstar Global (Beijing) Technology, Inc., Windtree Therapeutics, Inc., JHL Biotech, Inc., Tactiva Therapeutics, LLC, and Chime Biologics Limited and Director at CASI Pharmaceuticals Inc.

and XW Laboratories Inc.

Huang received an M.B.A.

from the Stanford Graduate School of Business and a B.S.

degree in chemical engineering from the University of California, Berkeley.

Our board of directors believes that Mr.

Huang’s extensive experience in life science investments and serving on the boards of directors of a number of life sciences and pharmaceutical companies qualifies him to serve on the board of directors.

Postma has served as a member of our board of directors since February 2021.

Postma has also served as the president of WaterMill Asset Management Corp.

(“WaterMill”), a company which he founded in July 1999.

WaterMill actively trades in municipal bonds and equities, using the funds of Mr.

Postma has over 44 years of trading experience and received a B.A.

in Business and Economics from Lafayette College.

Our board of directors believes that Mr.

Postma’s management and trading experience allows Mr.

Postma to provide financial guidance to us and qualifies him to serve on the board of directors.

Thistle has served as a member of our board of directors since November 2020.

Thistle has served as Special Advisor to the Bill & Melinda Gates Medical Research Institute, a non-profit biotech organization, since October 2020, and was its Chief of Staff from January 2018 until October 2020.

Prior to then, she held senior leadership positions at Dimension Therapeutics, Inc., a gene therapy company, including serving as its Chief Operating Officer from 2016 to 2017 and Chief Business Officer from 2015 to 2016.

Prior to joining Dimension Therapeutics, Inc., she spent six years at Cubist Pharmaceuticals, Inc., a biopharmaceutical company, where she held various leadership positions, including serving as its Senior Vice President, Business Development from 2014 to 2015, Vice President, Business Development from 2012 to 2013 and Senior Director, Business Development from 2009 to 2012.

Prior to then, she held various positions at ViaCell, Inc.

and PerkinElmer Inc.

Thistle serves as a member of the boards of directors of Homology Medicines, Inc.

FIXX), Entrada Therapeutics, Inc.

TRDA) and the board of directors of private companies, Enterome SA and Cocoon Biotech Inc.

Thistle holds a B.S.

in Accounting from the University of Massachusetts, Boston.

Our board of directors believes that Ms.

Thistle’s perspective, financial expertise, business development and leadership experience at several biopharmaceutical companies provides her with the qualifications and skills to serve on the board of directors.

Vieser has served as a member of our board of directors since December 2020.

Vieser currently manages Brushwood LLC, a private investment firm.

From 2010-2017, he was a Managing Partner and co-principal of Castle Hill Asset Management LLC, a $2.7 billion asset manager and hedge fund focusing on high yield and distressed debt.

Prior to founding Castle Hill, Mr.

Vieser was responsible for Deutsche Bank’s High Yield Sales and Trading Group in London from 1998 to 2008.

Vieser originally joined Bankers Trust in New York in 1994 and worked in the Investment Banking/Leveraged Finance division.

Vieser graduated from the University of Michigan with a degree in Economics and from the Cox School of Business at Southern Methodist University with a Master’s in Business Administration.

Our board of directors believes that Mr.

Vieser’s financial expertise and investment experience allows Mr.

Vieser to provide business to us and qualifies him to serve on the board of directors.

Weis has served as a member of our board of directors since December 2020.

Weis continues to serve as the principal of Weis Advisors, Inc., a company that provides consulting services to life science companies, since founding the company in April 2018.

Prior to that, he served in a number of roles at DemeRx, Inc., a clinical stage pharmaceutical company developing non-addictive treatments for drug addiction, including serving as Chief Operating Officer and Chief Financial Officer from December 2011 to July 2017, and also as President from September 2014 to July 2017, and as a Consultant from July 2017 to April 2018.

Earlier in his career, Mr.

Weis served as the Chief Financial Officer of EnSA Holdings, LLC, a company that focuses on environmentally sustainable agriculture techniques and technologies for the production of rice, from August 2010 to November 2011.

From 2006 to 2010, he served as the Vice President & Chief Financial Officer, Secretary and Treasurer of NovaVision, Inc., a therapeutic and diagnostic vision restoration company.

Prior to that, he served as the Chief Financial Officer & Treasurer of GMP Companies, Inc., a company that develops and commercializes pharmaceutical, medical device and diagnostic technologies, from 2000 to 2005.

Weis served as a Senior Manager at Ernst & Young, a multinational professional services company, from 1986 to 2000.

Weis has co-authored a number of scientific papers and presentations and is an inventor on a number of patents and patent applications.

Weis also serves on the board of directors of Jupiter NeuroSciences, Inc.

Weis received a Bachelor of Business Administration in Accounting from the University of Georgia and is a Certified Public Accountant.

Our board of directors believes that Mr.

Weis’s management and industry experience, as well as his financial expertise, qualify him to serve on the board of directors.

Agreement to Appoint a Director

Vieser and Mr.

Weis were all nominated for election as directors at our last annual meeting pursuant to a certain settlement agreement we entered into with WaterMill and Mr.

See Item 13 “

Certain Relationships and Related Transactions, and Director Independence—Certain Related-Party Transaction—WaterMill Settlement Agreement ”

for more information.

Our Executive Officers

The following table sets forth certain information concerning our executive officers as of March 15, 2021.

Chief Executive Officer and Director

Vice President, Finance

Raffaele Baffa, M.D., Ph.D.

Chief Medical Officer

Eleanor de Groot, Ph.D.

Executive Vice President, Operations

Melinda Lackey

Senior Vice President, Legal

Chief Executive Officer and Director

Boyle’s biography is included above under the section titled “Our Board of Directors.”

Vice President, Finance

Michael Wong was appointed to be our Vice President, Finance in September 2021.

Wong has more than 17 years of experience leading teams and has had numerous management roles on complex finance projects.

Previously, from February 2019 to September 2021, Mr.

Wong was Director, Technical Accounting at McDermott International, Ltd., where he also served as Interim Head, Audit Services.

Prior to joining McDermott, Mr.

Wong was an Audit Senior Manager at Ernst & Young LLP.

Wong was most recently based in Houston, but also spent 14 years, from 2005 to 2019, with Ernst & Young in both the London, U.K.

and Toronto, Canada offices.

Wong is a licensed CPA in Texas and Canada and has a Bachelor of Commerce from Queen’s University, Canada.

Raffaele Baffa, M.D., Ph.D.

Chief Medical Officer

Baffa has served as our Chief Medical Officer since November 2020.

Prior to joining us, Dr.

Baffa served as the chief medical officer of Medisix Therapeutics, an immune engineering company developing novel cellular therapies to address T cell malignancies, from March 2020 to November 2020.

From September 2018 until March 2020, Dr.

Baffa served as the chief medical officer of Servier Pharmaceuticals.

Prior to that, Dr.

Baffa was Vice President and Therapeutic Area Head of Oncology, Global Clinical Development for Shire from February 2018 to September 2018 before its acquisition by Servier.

Baffa has also held industry leadership positions as Executive Director, Early Oncology Development and Clinical Research at Pfizer from May 2015 to February 2018 and at Sanofi, where he was Head of Translational Sciences –

External Science & Innovation, Global Biotherapeutics from November 2013 to May 2015 and Senior Director –

Translational and Experimental Medicine, Early Development, Oncology from November 2010 to October 2013.

Baffa earned an M.D.

from University of Padova, School of Medicine, and a Ph.D.

from University of Parma, both in Italy.

As an associate professor at the Kimmel Cancer Center, Thomas Jefferson University in Philadelphia, he also served as Director of Urology Research and as Co-Director of the Genito-Urinary Cancer Program.

Baffa has authored more than 100 peer-reviewed articles, invited articles and book chapters.

Eleanor de Groot, Ph.D.

Executive Vice President, Operations

de Groot has served as our Executive Vice President, Operations since September 2021.

She previously served as our Executive Vice President, GM Cell Therapy beginning in January 2019 and oversaw our TCR-T cell therapy platform, including the collaboration with MD Anderson.

She initially joined us in July 2015 as our Senior Vice President, Program Management and Business Development.

Prior to joining us, Dr.

de Groot was Vice President of Technical Operations and Project Planning and Management at Helsinn Therapeutics US, Inc.

While at Helsinn and its predecessor companies, Sapphire Therapeutics and Rejuvenon Corporation, Dr.

de Groot held multiple roles of increasing responsibility, leading technical operations, in particular chemistry, manufacturing, and controls development for its drug candidates from preclinical through Phase III, from April 2002 to July 2015.

Prior to Helsinn, Dr.

de Groot was a staff engineer at Guilford Pharmaceuticals (now Eisai) and a process engineer at Shell Chemical Company.

She earned Ph.D.

degrees in chemical engineering from Stanford University in 1995 and 1991, respectively, and a B.S.

in chemical engineering from Massachusetts Institute of Technology in 1990.

de Groot received an M.B.A.

degree from Rice University in 2014.

Melinda Lackey,

Senior Vice President, Legal

Lackey joined as our Senior Vice President, Legal in November 2021.

She previously served as Counsel for Hogan Lovells from August 2021 until November 2021, where she supported life sciences companies at all stages with a focus on licensing and intellectual property.

Lackey previously served as legal counsel Kuur Therapeutics, Inc.

(and after its acquisition by Athenex, Inc., Athenex) from June 2018 until August 2021.

Before industry, Ms.

Lackey practiced law for 10 years focusing on intellectual property strategy and patent litigation from March 2008 until June 2018.

Lackey has a J.D.

from University of Houston Law Center (2007) and graduated from Texas Tech Health Sciences Center with an M.S.

in medical microbiology and immunology (2003), focusing on molecular biology and immunology and a B.S.

in Microbiology from Texas Tech University (1998).

There are no family relationships among any of our directors, director nominees or executive officers.

None of our executive officers is related by blood, marriage or adoption to any of our directors, director nominees or executive officers.

Delinquent Section 16(A) Reports

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC reports of beneficial ownership and reports of changes in beneficial ownership in our securities.

Based solely on a review of such reports filed electronically with the SEC, we believe that during 2021, all Section 16(a) filings applicable to our directors, officers, and 10% stockholders were filed on a timely basis, except as described in this section.

One Form 3 that was filed by Michael Wong in connection with his appointment as an officer of our Company was not filed on a timely basis.

One Form 3 that was filed by Raffaele Baffa in connection with his appointment as an officer of our Company was not filed on a timely basis.

Due to an administrative oversight, a Form 4 reporting grants of restricted stock and options to purchase our common stock awarded to Christopher Bowden, James Huang, Robert W.

Postma, Mary Thistle, Jaime Vieser, Holger Weis and Kevin Buchi on March 4, 2021, were not filed until May 6, 2021.

Code of Ethics and Business Conduct

Our board of directors has adopted a Code of Ethics and Business Conduct which is applicable to all officers, directors and employees.

The Code of Ethics and Business Conduct is intended to be designed to deter wrongdoing and promote honest and ethical behavior, full, fair, timely, accurate and understandable disclosure, compliance with applicable laws, rules and regulations, and prompt internal reporting of violations of this code.

In addition to provisions that are applicable to officers, directors and employees generally, the Code of Ethics and Business Conduct contains provisions that are specifically applicable to our principal executive officer, principal financial officer and other senior financial officer(s).

The Code of Ethics and Business Conduct is available on our website at www.alaunos.com and a copy may be obtained without charge upon written request to our legal department at our principal executive offices at 8030 El Rio Street, Houston, Texas 77054.

Our website and its contents are not incorporated into this annual report.

Audit Committee

We have a separately designated standing audit committee.

The current members of the committee are Mary Thistle, Jaime Vieser and Holger Weis.

Each member of the audit committee is an “independent director,”

as such term is defined in Nasdaq Rule 5605(a)(2) and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act.

The board of directors has also determined that each of the audit committee members is able to read and understand fundamental financial statements and that at least one member of the audit committee has past employment experience in finance or accounting.

The board of directors has determined that at least one member of the audit committee, Holger Weis, is an “audit committee financial expert,”

as that term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Exchange Act.

Executive Compensation

Executive Compensation Table

Summary Compensation Table

The following table sets forth information regarding compensation awarded to or earned by our named executive officers.

Name of Principal Position

Awards ($)(1)

Chief Executive Officer

Heidi Hagen (4)

Former Interim Chief Executive Officer

Laurence James Neil Cooper (7)

Former Chief Executive Officer

Jill Buck (11)

Former EVP, GM Gene Therapy

Eleanor de Groot (15)

EVP, Operations

Raffaele Baffa

Chief Medical Officer

(1) These amounts have been calculated in accordance with ASC Topic 718.

Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

For a discussion of the assumptions relating to our valuations of these restricted stock awards and stock options, please see Note 3 to the financial statements included in this Annual Report on Form 10-K.

These amounts reflect our accounting expense for these restricted stock awards and stock options and do not correspond to the actual value that may be recognized by our named executive officer.

Boyle joined as our Chief Executive Officer in August 2021.

(3) Represents the dollar value of group term life insurance premiums we paid for the benefit of Mr.

Boyle during 2021.

We did not contribute to Mr.

Boyle’s 401(k) plan account pursuant to our matching program in 2021.

Hagen resigned as our interim Chief Executive Officer in August 2021.

(5) $19,447 represents the amount we paid Ms.

Hagen for her services as a member of our board of directors in 2021, and the remaining amount represents $287,500 in salary while serving as interim Chief Executive Officer.

(6) Of such amount, (i) $448 represents the dollar value of group term life insurance premiums we paid for the benefit of Ms.

Hagen during 2021 and (ii) $20,359 represents accrued vacation paid at departure.

We did not contribute to Ms.

Hagen’s 401(k) plan account pursuant to our matching program in 2021.

Cooper resigned as our Chief Executive Officer, effective February 25, 2021 and left his position as a scientific advisor employee on April 9, 2021, at which time he became a consultant to us.

(8) Of such amount, (i) $774 represents the dollar value of group term life insurance premiums we paid for the benefit of Dr.

Cooper during 2021, (ii) $11,600 represents the amount we contributed to Dr.

Cooper’s 401(k) plan account pursuant to our matching program, (iii) $44,625 represents accrued vacation paid at departure, (iv) $859,500 represents how much we paid Dr.

Cooper in severance related to his resignation from his position as Chief Executive Officer and (v) $26,204 represents taxable perquisites for housing expenses, and (vi) $286,500 represents consulting fees paid to Dr.

Cooper during 2021.

(9) Represents a fully vested restricted stock award with a grant value of $917,000 awarded to Dr.

Cooper in connection with his separation.

See the section titled “

Narrative to the Summary Compensation Table—

Employment and Change in Control Agreements—

Separation Agreement and Consulting Agreement with Laurence James Neil Cooper, M.D., Ph.D.”

for additional information.

(10) Of such amount, (i) $1,548 represents the dollar value of group term life insurance premiums we paid for the benefit of Dr.

Cooper during 2020, (ii) $78,462 represents taxable perquisites, including $77,848 for housing expenses and $614 for commuting expenses and (iii) $11,200 represents the amount we contributed to Dr.

Cooper’s 401(k) plan account pursuant to our matching program.

Buck ceased being our Executive Vice President, GM Gene Therapy, effective September 15, 2021.

Buck was paid $375,000 pursuant to her November 23, 2020 retention agreement under which she was paid the first two tranches which equaled 75% of her annual base compensation.

(13) Of such amount, (i) $383 represents the dollar value of group term life insurance premiums we paid for the benefit of Ms.

Buck during 2021, (ii) $11,600 represents the amount we contributed to Ms.

Buck’s 401(k) plan account pursuant to our matching program, (iii) $26,891 represents accrued vacation paid at departure and (iv) $385,000 represents how much we paid Ms.

Buck in severance related to her resignation from her position as Executive Vice President, GM Gene Therapy.

(14) Of such amount, (i) $540 represents the dollar value of group term life insurance premiums we paid for the benefit of Ms.

Buck during 2020, (ii) $11,400 represents the amount we contributed to Ms.

Buck’s 401(k) plan account pursuant to our matching program, and (iii) $375 represents the amount paid for Ms.

Buck’s consulting services.

de Groot was promoted from Executive Vice President, GM Cell Therapy, to Executive Vice President, Operations, effective August 30, 2021.

(16) Of such amount, Dr.

de Groot was paid $375,000 pursuant to her November 23, 2020 retention agreement under which she was paid the first two tranches which equaled 75% of her annual base compensation.

(17) Of such amount, (i) $828 represents the dollar value of group term life insurance premiums we paid for the benefit of Dr.

de Groot during 2021 and (ii) $11,600 represents the amount we contributed to Dr.

de Groot’s 401(k) plan account pursuant to our matching program.

(18) Of such amount, (i) $828 represents the dollar value of group term life insurance premiums we paid for the benefit of Dr.

de Groot during 2020 and (ii) $11,200 represents the amount we contributed to Dr.

de Groot’s 401(k) plan account pursuant to our matching program.

(19) Of such amount, Dr.

Baffa was paid $175,000 pursuant to his November 23, 2020 retention agreement under which he was paid the first two tranches which equaled 75% of his annual base compensation.

(20) Of such amount, (i) $2,376 represents the dollar value of group term life insurance premiums we paid for the benefit of Dr.

Baffa during 2021 and (ii) $11,600 represents the amount we contributed to Dr.

Baffa’s 401(k) plan account pursuant to our matching program.

(21) Of such amount, (i) $297 represents the dollar value of group term life insurance premiums we paid for the benefit of Dr.

Baffa during 2020 and (ii) $4,775 represents the amount we contributed to Dr.

Baffa’s 401(k) plan account pursuant to our matching program.

Narrative to Summary Compensation Table

We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers.

Base salaries are reviewed annually, typically in connection with our annual performance review process, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience.

Formal bonus plan goals were not set for 2021 because our CEO was not hired until August 2021.

2021 bonuses were paid out between 69% and 100% of target based on the Committee’s assessment of performance.

Our employment arrangements with our named executive officers provide that the executive may be eligible to earn an annual performance bonus of up to a target percentage of the executive’s base salary, as described further below under the section titled “Employment and Change in Control Agreements.”

Boyle was granted an option to purchase 2,625,000 shares of our common stock, which option has an exercise price of $1.64 per share, and 875,000 shares of restricted common stock in connection with his appointment as our Chief Executive Officer.

The new hire award was intended as an inducement for Mr.

Boyle to join the Company.

Executive Retention

In the fourth quarter of 2020, our board of directors, following the recommendation of the compensation committee, granted certain of our named executive officers, including Drs.

Baffa and de Groot and Ms.

Buck, each a cash retention award, a portion of which was contingent upon achievement of certain patient dosing milestones in our TCR-T program.

de Groot and Ms.

Buck were each provided an award for $500,000, with 40% of the award payable if such individual remains employed with us on April 1, 2021, 35% of the retention award payable if such individual remains employed with us on September 1, 2021, and 25% of the retention award payable if such individual remains employed with us on December 1, 2021.

Baffa was provided an award for $250,000, with 40% of the award payable if Dr.

Baffa remains employed with us on April 1, 2021, 30% of the award payable if Dr.

Baffa remains employed with us on September 1, 2021, and 30% of the award payable if Dr.

Baffa remains employed with us on December 1, 2021.

The final payment of the awards for each of Drs.

Baffa and de Groot was contingent upon achievement of certain patient dosing milestones in our TCR-T program which were not achieved and therefore not paid.

de Groot and Ms.

Buck each received an amount equal to $375,000 and Dr.

Baffa received $175,000.

Buck was not employed with us on December 1, 2021 and so was not paid the third tranche of the retention award program.

Employment and Change in Control Agreements

We have the following employment agreements in place with our named executive officers.

Employment Agreement with Kevin S.

Boyle has served as our Chief Executive Officer since August 2021 pursuant to an employment agreement entered into in August 2021.

Boyle has an at-will employment relationship with us.

Boyle’s annual base salary in 2021 was $600,000, pro-rated based on the number of days worked.

Under his employment agreement, Mr.

Boyle’s annual base salary is subject to review by the board of directors or the compensation committee at least annually.

Annual Performance Bonus;

Sign-on Bonus.

Under his employment agreement, Mr.

Boyle is eligible to receive an annual bonus based on his performance as determined by the board of directors or the compensation committee.

The target amount of the annual performance bonus is 60% of his base salary, with the actual amount to be received determined by the board of directors or the compensation committee.

Boyle also received a one-time sign-on bonus of $50,000, referred to as the Boyle Signing Bonus;

provided that, in the event that his employment is terminated for cause or he resigns without good reason (as defined in the employment agreement) on or prior to August 30, 2022, Mr.

Boyle shall be required to repay the Boyle Signing Bonus in full, subject to certain deductions and withholding obligations.

Equity Incentive Grants.

In connection with his appointment as our Chief Executive Officer and pursuant to his employment agreement, effective as of August 24, 2021, the board of directors granted to Mr.

Boyle an option to purchase 2,625,000 shares of our common stock, which option has an exercise price of $1.64 per share and the Company issued Mr.

Boyle 875,000 shares of restricted common stock.

Boyle is also eligible to receive equity awards as determined by the board of directors in its sole discretion.

Severance Provisions.

If (i) we terminate Mr.

Boyle for a reason other than death, disability or “Cause”

(as that term is defined in his employment agreement), or (ii) Mr.

Boyle resigns for “Good Reason”

(as that term is defined in his employment agreement), Mr.

Boyle will be entitled to receive a severance payment equal to the sum of (x) his then-current base salary and (y) the target amount of his annual performance bonus for the calendar year in which such termination occurs, which is hereinafter referred to as the Boyle Severance Payment Amount, payment of a one-time severance bonus in an amount equal to a pro-rata portion of the target amount of his annual performance bonus for the calendar year in which such termination occurs, plus payment of our portion of the contributions for medical and dental insurance coverage for twelve months, subject to Mr.

Boyle’s execution and delivery of a general release in favor of the Company.

Boyle will also receive accelerated vesting of his equity incentive awards through, with respect to time-based equity incentive awards, the next twelve-month period immediately following the effective date of his termination and, with respect to performance-based equity incentive awards, the next applicable performance period immediately following the effective date of his termination.

The accelerated time-based equity awards will be deemed fully exercisable or non-forfeitable, as applicable, as of the later of the termination date or the effective date of the separation agreement.

Any vested equity incentive awards held by Mr.

Boyle shall remain exercisable until the earlier of (x) the date that is three years following the termination of his employment and (y) the expiration of the applicable term of the award.

In the case of either (i) a termination by us for a reason other than death, disability or “Cause,”

or (ii) a resignation for “Good Reason,”

in each case that occurs within 90 days prior to and in connection with a “Change of Control”

(as that term is defined in his employment agreement), or within 18 months after the occurrence of a “Change of Control,”

Boyle will be entitled to receive a lump sum payment in an amount equal to the product of the Boyle Severance Payment Amount multiplied by two, payment of a one-time severance bonus in an amount equal to a pro-rata portion of the target amount of his annual performance bonus for the calendar year in which such termination occurs, payment of the Company’s portion of the contributions for health insurance coverage for eighteen months.

In addition, all unvested time-based stock options and unvested awards of restricted stock held by Mr.

Boyle will be accelerated and deemed to have vested as of the later of the termination date and the effective date of the separation.

In addition, all performance-based equity awards will vest as if the applicable target performance goals were achieved as of the later of (x) the termination date and (y) the effective date of the separation.

Additionally, all outstanding equity awards held by Mr.

Boyle will remain exercisable until the earlier of (v) the date that is three years following the termination of employment and (w) the expiration of the applicable option term.

Non-competition and Non-solicitation.

Boyle has entered into an invention, non-disclosure and non-competition agreement, which provides that he will not compete with us or solicit our clients or customers for a year after the termination or cessation of his employment with us, and further provides that he will not solicit our employees for one year after the termination or cessation of his employment with us.

Employment Agreement with Eleanor de Groot, Ph.D.

de Groot has served as our Executive Vice President, Cell Therapy since January 1, 2019, and previously as our SVP, Program Management & Business Development from July 13, 2015 to December 31, 2018.

In April 2019, we entered into an employment agreement with Dr.

de Groot, which was amended in November 2020.

de Groot has an at-will employment relationship with us.

de Groot received a base salary of $385,000.

Under her employment agreement, Dr.

de Groot’s annual base salary is subject to review by the board of directors or the compensation committee at least annually.

Annual Performance Bonus.

Under her employment agreement, Dr.de Groot is eligible to receive an annual bonus based on her performance as determined by the board of directors or the compensation committee.

The target amount of the annual performance bonus is 40% of her base salary, with the actual amount to be received determined by the board of directors or the compensation committee.

Equity Incentive Grants.

de Groot is eligible to receive equity awards as determined by the board of directors in its sole discretion from time to time.

Severance Provisions.

If (i) we terminate Dr.

de Groot for a reason other than death, disability or “Cause”

(as that term is defined in her employment agreement), or (ii) Dr.

de Groot resigns for “Good Reason”

(as that term is defined in her employment agreement), Dr.

de Groot will be entitled to receive a severance payment equal to twelve months of her then-current base salary, plus payment of our portion of the contributions for medical and dental insurance coverage for twelve months, subject to Dr.

de Groot’s execution and delivery of a general release in favor of the Company.

In the case of either (i) a termination by us for a reason other than death, disability or “Cause,”

or (ii) a resignation for “Good Reason,”

in each case that occurs within 90 days prior to and in connection with a “Change in Control”

(as that term is defined in her employment agreement), or within 18 months after the occurrence of a “Change in Control,”

the, in addition to the foregoing severance provisions, all unvested stock options and unvested awards of restricted stock held by Dr.

de Groot at the time that such termination

occurs will be accelerated and deemed to have vested as of her employment termination date, and Dr.

de Groot will be entitled to full target amount of her annual performance bonus for the calendar year in which such termination occurs.

Non-competition and Non-solicitation.

de Groot has entered into an invention, non-disclosure and non-competition agreement, which provides that she will not compete with us or solicit our clients or customers for a year after the termination or cessation of her employment with us, and further provides that she will not solicit our employees for one year after the termination or cessation of her employment with us .

Employment Agreement with Raffaele Baffa, M.D., Ph.D.

Baffa has served as our Chief Medical Officer since November of 2020 pursuant to an employment agreement Baffa entered into in September 2020, which we subsequently amended in November 2020.

Baffa has an at-will employment relationship with us.

Baffa’s annual base salary in 2021 was $465,000.

Under his employment agreement, Dr.

Baffa’s annual base salary is subject to review by the board of directors or the compensation committee at least annually.

Annual Performance Bonus.

Under his employment agreement, Dr.

Baffa is eligible to receive an annual bonus based on his performance as determined by the board of directors or the compensation committee.

The target amount of the annual performance bonus is 40% of his base salary, with the actual amount to be received determined by the board of directors or the compensation committee.

Equity Incentive Grants.

Baffa is also eligible to receive equity awards as determined by the board of directors in its sole discretion from time to time.

Severance Provisions.

If (i) we terminate Dr.

Baffa for a reason other than death, disability or “Cause”

(as that term is defined in his employment agreement), or (ii) Dr.

Baffa resigns for “Good Reason”

(as that term is defined in his employment agreement), Dr.

Baffa will be entitled to receive a severance payment equal to twelve months of his then-current base salary, plus payment of our portion of the contributions for medical and dental insurance coverage for twelve months, subject to Dr.

Baffa’s execution and delivery of a general release in favor of the Company.

In the case of either (i) a termination by us for a reason other than death, disability or “Cause,”

or (ii) a resignation for “Good Reason,”

in each case that occurs within 90 days prior to and in connection with a “Change of Control”

(as that term is defined in his employment agreement), or within 18 months after the occurrence of a “Change of Control,”

then, in addition to the foregoing severance provisions, all unvested stock options and unvested awards of restricted stock held by Dr.

Baffa at the time that such termination occurs will be accelerated and deemed to have vested as of his employment termination date, and Dr.

Baffa will be entitled to full target amount of his annual performance bonus for the calendar year in which such termination occurs.

Non-competition and Non-solicitation.

Baffa has entered into an invention, non-disclosure, non-solicitation and non-competition agreement, which provides that he will not compete with us or solicit our clients or customers for a year after the termination or cessation of his employment with us, and further provides that he will not solicit our employees for one year after the termination or cessation of his employment with us.

Employment Agreement with Laurence James Neil Cooper, M.D., Ph.D.

Cooper served as our Chief Executive Officer from May 2015 until February 2021, at which point Dr.

Cooper served as a scientific advisor employee of the Company.

As a scientific advisor employee, Dr.

Cooper continued receiving his base salary and remained eligible for our employee benefit programs pursuant to the terms of his employment agreement.

On April 5, 2021, we entered into a separation agreement with Dr.

Cooper, or the Cooper Separation Agreement, providing for his cessation of employment effective April 9, 2021 and a consulting agreement, or the Cooper Consulting Agreement, providing his continued consulting thereafter.

For a description of the material terms of the Cooper Separation Agreement and the Cooper Consulting Agreement see below under “

Consulting Agreement with Laurence James Neil Cooper, M.D., Ph.D.

Below is a summary of the material terms of Dr.

Cooper’s employment agreement in place during 2021 when he served as our Chief Executive Officer.

Cooper received a base salary of $573,000.

Under his employment agreement, his base salary was subject to review by the board of directors or the compensation committee at least annually.

Annual Performance Bonus.

Under his employment agreement, Dr.

Cooper was eligible to receive an annual bonus based on his performance as determined by the board of directors or the compensation committee.

The target amount of the annual performance bonus was 200% of his base salary, with the actual amount to be received determined by the board of directors or the compensation committee.

Equity Incentive Grants.

Cooper was eligible under his employment agreement to receive equity awards as determined by the board of directors in its discretion from time to time.

Under certain circumstances, the vesting of Dr.

Cooper’s equity awards could have been accelerated in the event of a change in control or if Dr.

Cooper’s employment with us is terminated.

Expense Reimbursement.

Under his employment agreement, Dr.

Cooper was eligible for reimbursement of normal, usual and necessary expenses incurred by him in furtherance of our business and affairs, including reasonable travel and entertainment expenses and the ordinary and necessary expenses incurred in connection with his commute.

Non-competition and Non-solicitation.

Cooper has entered into an invention, non-disclosure and non-competition agreement, which provides that he will not compete with us or solicit our clients or customers for a year after the termination or cessation of his employment with us, and further provides that he will not solicit our employees for one year after the termination or cessation of his employment with us.

Separation Agreement and Consulting Agreement with Laurence James Neil Cooper, M.D., Ph.D.

On April 5, 2021, we entered into the Cooper Separation Agreement, and the Cooper Consulting Agreement.

Under the Cooper 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 of $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, which represented Dr.

Cooper’s 2020 annual bonus, 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 us.

The board of directors determined these severance benefits were appropriate to provide Dr.

Cooper, considering the severance benefits provided under the terms of his employment agreement and his contributions to our Company.

The term of the Cooper Consulting Agreement commenced on Dr.

Cooper’s employment separation and continues for up to three years, subject to earlier termination by either Dr.

Cooper or the Company, provided that if Dr.

Cooper terminates the agreement within the first year of the term, our sole remedy will be the right to cause Dr.

Cooper to reimburse us certain of his cash severance described in the Separation Agreement.

If we terminate the Cooper Consulting Agreement before the first anniversary of the effective date without cause (as defined in the Cooper Consulting Agreement) or Dr.

Cooper terminates the agreement within the first year for good reason (as defined in the Cooper Consulting Agreement), the non-competition and non-solicitation provisions described above will be deemed waived by us.

Unless the Cooper Consulting Agreement is terminated by us with cause or by Dr.

Cooper before the first anniversary of the effective date and without good reason, all unvested restricted stock or options will immediately vest as of the effective date of the termination.

Under the Cooper Consulting Agreement, Dr.

Cooper may earn consulting fees in amounts of up to $573,000 for the first year and $300,000 for each of the following two years and is also eligible for reimbursement of reasonable out-of-pocket business expenses.

In addition, the Cooper Consulting Agreement includes confidentiality and intellectual property provisions.

Cooper received $286,500 in fees under the Cooper Consulting Agreement in 2021.

Employment Agreement with Heidi Hagen

On February 24, 2021, the board of directors appointed Heidi Hagen as our Interim Chief Executive Officer, effective February 25, 2021.

Effective February 25, 2021, we entered into an employment agreement with Ms.

Hagen, governing the terms of her employment as our Interim Chief Executive Officer.

The majority of the equity value was provided as stock options to require an increase in the stock price and to allow the timeframe required for the long-term price improvement as a reflection of the long drug development cycle from discovery to commercial product.

Hagen stepped down as Interim Chief Executive Officer on August 30, 2021 in connection with Mr.

Boyle’s employment as our Chief Executive officer.

Sign on Bonus.

Hagen’s employment agreement provided for an annual base salary of $575,000, pro-rated for service, and a one-time sign-on bonus of $50,000.

Performance Bonus.

Hagen was entitled to receive certain performance bonuses if she remained employed as our Interim Chief Executive Officer after September 1, 2021, these were not paid as a result of the appointment of Mr.

Boyle as our new Chief Executive Officer effective August 31, 2021.

Hagen received a bonus in the amount of $150,000.

Equity Incentive Grants.

In connection with her appointment as our Interim Chief Executive Officer and pursuant to her employment agreement, on March 4, 2021, the board of directors granted Ms.

Hagen 90,000 restricted shares of our common stock, which were scheduled to vest on the one-year anniversary of the date of grant, subject to Ms.

Hagen’s continued employment with us through such vesting date.

In addition, pursuant to her employment agreement, on March 4, 2021, the board of directors granted to Ms.

Hagen an option to purchase 675,000 shares of our common stock, which option has an exercise price of $4.31 per share.

The option was scheduled to vest in twelve equal monthly installments over the term of one year, subject to Ms.

Hagen’s continued employment with us through each such vesting date.

Hagen’s employment agreement provided that if Ms.

Hagen’s employment terminates either because a replacement, full-time chief executive officer has been hired, or because we terminate her employment without “Cause”

(as defined in her employment agreement), then upon termination of her employment, Ms.

Hagen’s shares of restricted stock shall vest in full, and any unvested portion of Ms.

Hagen’s option grant shall vest in full and become exercisable immediately.

Hagen’s resignation as the Company’s Interim Chief Executive Officer on August 29, 2021, Ms.

Hagen’s 90,000 restricted stock and option grant of 675,000 shares vested in full.

Severance Provisions.

Hagen’s employment agreement provided that if she was terminated by us for any reason other than death, disability or Cause, then we would be obligated to pay to Ms.

Hagen her base salary through the date of termination, any accrued vacation, and any expense reimbursement amounts for expenses incurred through the date of termination.

If, within 30 days after the effective date of termination, Ms.

Hagen executes a written general release, she will also be entitled to receive continuing payments of her base salary for a period of four months.

In addition, unless her employment is terminated for Cause, we may be required to pay 100% of applicable COBRA premiums for Ms.

Hagen for up to 12 months.

Employment Agreement with Jill Buck

Buck most recently served as our Executive Vice President, GM Gene Therapy, joining Alaunos in September 2015, and being promoted to Executive Vice President, Strategy and Operations in early 2021.

Buck left the Company on September 15, 2021.

Buck entered into an employment agreement dated April 23, 2019, which we subsequently amended in November 2020, as Executive Vice President, GM Gene Therapy.

Buck had an at-will employment relationship with us.

Buck received a base salary of $385,000.

Under her employment agreement, Ms.

Buck’s annual base salary was subject to review by the board of directors or the compensation committee at least annually.

Annual Performance Bonus.

Under her employment agreement, Ms.

Buck was eligible to receive an annual bonus based on her performance as determined by the board of directors or the compensation committee.

The target amount of the annual performance bonus is 40% of her base salary, with the actual amount to be received determined by the board of directors or the compensation committee.

Equity Incentive Grants.

Buck was eligible to receive equity awards as determined by the board of directors in its sole discretion from time to time.

Severance Provisions.

Buck’s employment agreement provided that if (i) we terminated Ms.

Buck for a reason other than death, disability or “Cause”

(as that term is defined in her employment agreement), or (ii) Ms.

Buck resigned for “Good Reason”

(as that term is defined in her employment agreement), Ms.

Buck was entitled to receive a severance payment equal to twelve months of her then-current base salary, plus payment of our portion of the contributions for medical and dental insurance coverage for twelve months, subject to Ms.

Buck’s execution and delivery of a general release in favor of the Company.

In the case of either (i) a termination by us for a reason other than death, disability or “Cause,”

or (ii) a resignation for “Good Reason,”

in each case that occurs within 90 days prior to and in connection with a “Change in Control”

(as that term is defined in her employment agreement), or within 18 months after the occurrence of a “Change in Control,”

all unvested stock options and unvested awards of restricted stock held by Ms.

Buck at the time that such termination occurs would have been accelerated and deemed to have vested as of her employment termination date, and Ms.

Buck would have been entitled to full target amount of her annual performance bonus for the calendar year in which such termination occurs.

In connection with her departure, Ms.

Buck received $385,000, pursuant to the terms of her separation agreement.

Non-competition and Non-solicitation.

Buck has entered into an invention, non-disclosure and non-competition agreement, which provided that she would not compete with us or solicit our clients or customers for a year after the termination or cessation of her employment with us, and further provides that she would not solicit our employees for one year after the termination or cessation of her employment with us .

Health and Benefits

All of our full-time employees and certain of our part-time employees are eligible to participate in our health and welfare benefit plans, including our medical, dental, life and long-term disability insurance plans.

Our health and welfare benefit plans do not discriminate in scope, terms or operation in favor of our executive officers.

Our employees, including our named executive officers, are eligible to participate in our 401(k) plan.

Our 401(k) plan is intended to qualify as a tax qualified plan under Section 401 of the Internal Revenue Code of 1986, as amended (the “Code”).

Our 401(k) plan provides that each participant may contribute a portion of his or her pretax compensation, up to a statutory limit, which for most employees was $19,500 in 2021, with an additional “catch up”

contribution of up to $6,500 permitted for employees age 50 and older, to the 401(k) plan.

Employee contributions are held and invested by the 401(k) plan’s trustee.

In 2021, we matched employee contributions at a rate of 100% up to 4% of an employee’s base salary contributed to the plan.

We believe that this benefit is consistent with the practices of our peer companies, and therefore helps us to recruit and retain key talent at a minimal cost to us.

Outstanding Equity Awards at 2021 Fiscal Year-End

The following table sets forth information regarding option awards and restricted stock awards held as of December 31, 2021 by our named executive officers.

Option Awards

Number of Securities

Underlying Unexercised Options

Exercise Price

Shares or Units of Stock That Have Not Vested

Exercisable (#)

Unexercisable (#)

Market Value ($)(2)

Laurence James Neil Cooper

Eleanor de Groot

Raffaele Baffa

(1) Each stock option was granted with an exercise price equal to the fair market value of our common stock on the grant date.

(2) Market values are calculated based on the closing market price of our common stock as reported on the Nasdaq Global Select Market on December 31, 2021, which was $1.09 per share.

(3) Vests with respect to 22,017 shares on March 31, 2022, June 30, 2022, and December 31, 2022, and with respect to 22,016 on September 30, 2022.

(4) Vests with respect to 57,233 shares on December 31, 2022.

(5) Options expired on February 2, 2022.

(6) Vests with respect to 164,063 shares on February 28, 2022, August 30, 2022, February 28, 2023, August 30, 2023, February 28, 2024, August 30, 2024, February 28, 2025, and August 30, 2025 and with respect to 164,062 shares on May 30, 2022, November 30, 2022, May 30, 2023, November 30, 2023, May 30, 2024, November 30, 2024, and May 30, 2025.

(7) Such shares are subject to transfer and forfeiture restrictions that lapse with respect to 218,750 shares on each of August 30, 2022, August 30, 2023, August 30, 2024, and August 30, 2025.

(8) Vests with respect to 6,883 shares on each of March 31, 2022, June 30, 2022, and December 31, 2022 and with respect to 6,884 shares on September 30, 2022.

(9) Vests with respect to 23,824 shares on each of March 31, 2022, June 30, 2022, September 30, 2022, March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024, and September 30, 2024 and with respect to 23,825 shares on December 31, 2022, December 31, 2023, and December 31, 2024.

(10) Such shares are subject to transfer and forfeiture restrictions that lapse with respect to 17,900 shares on December 31, 2022.

(11) Such shares are subject to transfer and forfeiture restrictions that lapse with respect to 12,706 shares on December 31, 2022, December 31, 2023 and December 31, 2024.

(12) Vests with respect to 31,250 shares on February 16, 2022.

The remaining unvested shares will be forfeited on March 31, 2022 and vested options will expire on June 30, 2022.

(13) Such shares will be forfeited on March 31, 2022.

(14) Such shares will be forfeited on March 31, 2022.

Payments Upon Separation

Severance and Change in Control Benefits

We have agreements with each of our named executive officers providing them with severance benefits, including double trigger cash and equity severance for termination in connection with a change-in-control, as further described in “

Employment and Change in Control Agreements ”

The amounts and terms and conditions of these severance rights reflect the negotiations between each of our named executive officers and us at the time these documents were entered into, the benefits provided by our peer companies to similarly situated executives at the time they were negotiated, as well as our desire for internal pay equity among our executive officers.

We believe that these

existing arrangements are consistent with market practices and are critical to attracting and retaining high quality executives.

We also believe the involuntary termination benefits allow our executives to focus on normal business operations rather than worrying about how business decisions that may be in our best interest will impact their own financial security.

We do not provide golden parachute excise tax gross ups.

Director Compensation Table

The following table sets forth information regarding the compensation earned for service on our board of directors by our non-employee directors during the year ended December 31, 2021.

We reimburse members of our board of directors for reasonable travel and out-of-pocket expenses incurred in connection with attending board of directors and committee meetings.

Fees Earned or

Paid in Cash ($)

Option Awards (1) ($)

Stock Awards (1) ($)

Christopher Bowden

Heidi Hagen (3)

Kevin Buchi (4)

(1) The amounts reported in the “Option Awards”

and “Stock Awards”

columns represent compensation expense recognized for financial statement purposes under ASC Topic 718.

In the case of each of our directors, the option award and/or stock award was granted on March 4, 2021.

For a discussion of the assumptions relating to our valuations of these stock options, please see Note 13 to the financial statements included in elsewhere in this Annual Report on Form 10-K.

These costs reflect our accounting expense for these stock options and do not correspond to the actual value that may be recognized by the directors.

Postma was appointed to the board of directors effective February 4, 2021.

Hagen left the board of directors effective February 24, 2021, rejoined the board of directors effective August 30, 2021, and finally resigned from the board of directors effective November 2, 2021.

Buchi resigned from the board of directors effective May 19, 2021.

Non-Employee Director Compensation

In 2021, each of our non-employee directors was compensated as described below:

an annual cash retainer fee of $50,000 for service on the board of directors;

additional annual cash retainer fees for board committee service as follows:

Audit Committee

Compensation Committee

Corporate Governance and Nominating Committee

The executive chair of our board of directors also receives further annualized cash compensation of $40,000.

All cash retainers were paid on a quarterly basis in arrears to non-employee directors who continue to serve as members of the board of directors on the last business day of each calendar quarter.

In 2021, the non-employee director equity compensation program was modified to provide an annual equity award for 75,000 options and 10,000 RSUs to be granted on the date of each of our annual shareholder meetings (our prior practice was to grant annual awards in December each year, with the last annual award under our historical director compensation program made in December 2019).

The executive chair also receives an additional 75,000 annual options and an additional 10,000 annual RSUs to recognize his leadership and workload.

The annual options vest in equal monthly installments over one year and the annual RSUs vest in full on the earlier of one-year from grant or the next annual shareholder meeting.

The foregoing grants to non-employee directors joining our Board of Directors other than at an annual stockholder meeting will be prorated for the number of months remaining until our next annual stockholder meeting.

In addition, in connection with a director’s initial election of the board of directors, he or she receives options to purchase 150,000 shares of our comment stock on the date of each new non-employee director’s appointment to our board of directors.

The directors who received this award in 2021 included Ms.

One-thirty-sixths of the shares underlying these awards will vest in equal monthly installments commencing, in the case of Ms.

Thistle on December 15, 2021, in the case of Mr.

Postma on March 4, 2021 and in the

Vieser, on January 15, 2021.

We also granted to all of our directors awards of options and restricted stock to reflect the stub period between January and May 2021, when the date of our annual meeting would become the new grant date of director awards.

We agreed to provide directors an award equal to an annual grant of 75,000 options and 10,000 shares of restricted stock.

These annual amounts were prorated to only cover the 5 months between January and May, and further pro-rated for those who spent less time on the board.

In the case of Ms.

Thistle, we provided her an award assuming six months of service, to recognize that she had not yet received any awards since her joining the board in November 2020.

Each director was entitled elect to receive their equity grant in the form of restricted shares of our common stock, options to purchase shares of our common stock, or half restricted stock units and half options.

As set forth in its written charter, the compensation committee annually reviews director compensation practices in consultation with our compensation consultant and recommends any changes for adoption by the full board of directors.

As such, the director compensation described above is subject to change at the discretion of the board of directors.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

2 unchanged sentences

The following table sets forth certain information as of December 31, 2021 with respect to the 2012 Plan and 2020 Plan:

Number of Securities to

be Issued Upon Exercise

of Outstanding Options

Weighted-Average

Securities to

be Issued Upon

of Outstanding

Exercise Price of

Outstanding Options

Number of Securities

Remaining Available for

Future Issuance Under

Equity Compensation

Available for

Future Issuance

Plans (Excluding

Securities Reflected in

Plan Category

4 unchanged sentences

Inducement Awards

Additional information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the section titled Beneficial Ownership

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information with respect to the beneficial ownership of common stock as of March 15 for:

each person, or group of affiliated persons, who is known by us to be the beneficial owner of greater than five percent of our outstanding common stock;

each of our directors and director nominees;

each of our named executive officers named in the “Executive Compensation - Executive Compensation Table”

section above;

all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC.

These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities, or have the right to acquire such powers within 60 days.

Common stock subject to options that are currently exercisable or exercisable within 60 days of March 15 are deemed to be outstanding and beneficially owned by the person holding the options.

These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws.

ownership calculations are based on 216,127,443 shares outstanding as of March 15, 2022.

Except as otherwise noted below, the addresses for persons listed in the table is c/o Alaunos Therapeutics, Inc., 8030 El Rio Street, Houston, Texas 77054.

Number of Shares Beneficially Owned

Percentage of Common Stock Beneficially Owned (%)

Name of Beneficial Owner

5% Stockholders:

MSD Credit Opportunity Master Fund, L.P.

The Vanguard Group (2)

BlackRock, Inc.

Discovery Capital Management (4)

Level One Parties (5)

State Street Corporation (6)

Named Executive Officers and Directors:

Heidi Hagen (8)

Laurence James Neil Cooper (9)

Eleanor de Groot (10)

Raffaele Baffa (11)

Jill Buck (12)

Christopher Bowden (13)

James Huang (14)

Mary Thistle (16)

Jaime Vieser (17)

Holger Weis (18)

All executive officers and directors as a group (12 persons)

*Represents ownership of less than one percent.

(1) Based in part on a Schedule 13G/A filed with the SEC on February 14, 2020 by MSD Partners, L.P., or MSD Partners.

MSD Partners has shared voting power with respect to 15,151,516 shares of our common stock, and may be deemed to beneficially own 15,151,516 shares of our common stock.

MSD Partners is the investment manager of, and may be deemed to beneficially own securities beneficially owned by, MSD Credit Opportunity Master Fund, L.P.

MSD Partners (GP), LLC (“MSD GP”) is the general partner of, and may be deemed to beneficially own securities beneficially owned by, MSD Partners.

Each of Glenn R.

Fuhrman, John C.

Phelan and Marc R.

Lisker is a manager of, and may be deemed to beneficially own securities beneficially owned by, MSD GP.

The 22,101,509 shares includes 6,949,993 out of the 7,575,758 shares of common stock issuable upon the full exercise of a warrant, which is the number of shares issuable upon exercise as limited by the Beneficial Ownership Limitation (as defined below) as of March 15, 2022.

Such warrant is only exercisable to the extent that the holder thereof, together with its affiliates, would beneficially own no more than 9.99% of the outstanding shares of our common stock after giving effect to such exercise (the “Beneficial Ownership Limitation”).

As a result of the Beneficial Ownership Limitation, the number of shares that may be issued to the holder upon exercise of the warrant may change depending upon changes in the outstanding shares of our common stock.

Upon 61 days’

prior notice to the Company, the holder may increase, decrease or terminate the Beneficial Ownership Limitation.

The address of MSD Credit Opportunity Master Fund, L.P.

is c/o Maples Corporate Services Limited, P.O.

Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

(2) Based solely on a Schedule 13G/A filed with the SEC on February 10, 2022 by The Vanguard Group, or Vanguard.

Vanguard is the beneficial owner of 11,633,700 shares and has shared voting power with respect to 395,047 shares, sole dispositive power with respect to 11,076,829 shares and shared dispositive power with respect to 556,871 shares.

Aggregate beneficial ownership reported by Vanguard includes beneficial ownership of its subsidiaries, Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited.

The address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.

(3) Based solely on a Schedule 13G/A filed with the SEC on February 3, 2022 by Blackrock, Inc., or BlackRock.

BlackRock, as a parent holding company, is the beneficial owner of 16,764,972 shares and has sole voting power with respect to 16,427,610 shares and sole dispositive power with respect to 16,764,972 shares.

Aggregate beneficial ownership reported by BlackRock is on a consolidated basis and includes beneficial ownership of its subsidiaries, BlackRock Life Limited, Aperio Group, LLC, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited,

BlackRock Investment Management (Australia) Limited, BlackRock Fund Advisors and BlackRock Fund Managers Ltd.

The address of BlackRock.

is 55 East 52nd Street, New York, New York 10055.

(4) Based solely on a Schedule 13G filed with the SEC on February 14, 2022 by Discovery Capital Management, LLC, or Discovery.

Discovery is the beneficial owner of 13,346,493 shares and has shared voting power with respect to 13,346,493 shares and shared dispositive power with respect to 13,346,493 shares.

Citrone, the control person of Discovery, may be deemed to exercise voting and/or dispositive power over the shares held for the account of Discovery.

Aggregate beneficial ownership reported by Discovery includes beneficial ownership of Discovery Global Opportunity Master Fund, Ltd., a Cayman Islands limited company.

The address of Discovery is 20 Marshall Street, Suite 310, South Norwalk, CT 06854.

(5) Based solely on a Schedule 13G jointly filed with the SEC on February 11, 2022 by Robert D.

Hardie, Mollie G.

Hardie and Level One Partners, LLC (collectively, the “Level One Parties”).

The Level One Parties beneficially own 24,178,873 shares.

Hardie is the beneficial owner of 10,226,937, and has shared voting and dispositive power with respect to 7,406,823 shares, and sole dispositive and voting power with respect 2,860,114.

Hardie is the beneficial owner of 7,675,213, and has shared voting and dispositive power with respect to 7,276,723 shares, and sole dispositive and voting power with respect 398,490.

Level One Partners, LLC is the beneficial owner of 6,236,723 shares, and has shared voting and dispositive power with respect to all 6,236,723 shares.

The address of the Level One Parties is 210 Ridge McIntire Road, Suite 350, Charlottesville, Virginia 22903.

(6) Based solely on a Schedule 13G filed with the SEC on February 11, 2022 by State Street Corporation.

State Street Corporation is the beneficial owner of 13,318,734 shares and has shared voting power with respect to 12,875,132 shares and shared dispositive power with respect to 13,318,734 shares.

Aggregate beneficial ownership reported by State Street Corporation includes beneficial ownership of its subsidiaries, SSGA Funds Management, Inc., State Street Global Advisors Limited, State Street Global Advisors, Australia, Limited, State Street Global Advisors Europe Limited, and State Street Global Advisors Trust Company.

The address of State Greet Corporation is State Street Financial Center, 1 Lincoln Street, Boston, MA 02111.

(7) Consists of (i) 885,000 shares of common stock held by Mr.

Boyle and (ii) 328,125 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(8) To the best of our knowledge, consists of (i) 145,889 shares of common stock held by Ms.

(9) To the best of our knowledge, consists of (i) 2,067,017 shares of common stock held by Dr.

Cooper and (ii) 685,321 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(10) Consists of (i) 237,106 shares of common stock held by Dr.

de Groot and (ii) 453,742 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(11) Consists of (i) 280,645 shares of common stock held by Dr.

Baffa and (ii) 156,250 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(12) To the best of our knowledge, consists of 127,214 shares of common stock held by Ms.

(13) Consists of (i) 4,167 shares of common stock held by Mr.

Bowden and (ii) 175,843 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(14) Consists of (i) 108,333 shares of common stock held by Mr.

Huang and (ii) 62,500 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(15) Consists of (i) 1,201,870 shares of common stock held by Mr.

Postma, (ii) 4,250,000 shares of common stock held by Water Mill Asset Management Corp., where Mr.

Postma serves as the principal, (iii) 3,574 shares of common stock held by the IRA of Mr.

Postma’s spouse, (iv) 946,970 shares of common stock issuable upon the exercise of warrants exercisable within 60 days of March 15, 2022 and (v) 81,250 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(16) Consists of (i) 5,000 shares of common stock held by Ms.

Thistle and (ii) 108,333 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(17) Consists of (i) 705,321 shares of common stock held by Mr.

Vieser, (ii) 325,000 shares of common stock held in Uniform Transfer to Minors Act accounts by Mr.

Vieser’s children, and (iii) 97,916 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

(18) Consists of (i) 120,167 shares of common stock held by Mr.

Weis, (ii) 19,000 shares of common stock held by Mr.

spouse, (iii) 2,440 shares of common stock held by Mr.

children, and (iv) 97,916 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 15, 2022.

Certain Relationships and Related Transactions, and Director Independence

The following discussion relates to certain transactions that involve both the Company and one of our executive officers, directors, director nominees or five-percent stockholders, or any member of their immediate family, each of whom we refer to as a “related party.”

For purposes of this discussion, a “related-party transaction”

is a transaction, arrangement or relationship:

in which we participate;

that involves an amount in excess of $120,000;

in which a related party has a direct or indirect material interest.

Related-Person Transaction Policy

We have a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions.

For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person, directly or indirectly, are, were or will be participants in which the amount involved will or may reasonably be expected to exceed $120,000 in any calendar year.

Transactions involving compensation for services provided to us as an employee or director are not covered by this policy.

A related person is any person who is, or at any time since the beginning of the Company’s last fiscal year was, an executive officer, director, or nominee to become a director of the Company or a beneficial owner of more than 5% of any class of our voting securities, including any of such persons’

immediate family members and any entity that such persons owned, controlled, held a control position in or held a 5% or greater beneficial ownership interest in.

Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our board of directors, for review, consideration and approval or ratification.

The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally.

Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related person transactions and to effectuate the terms of the policy.

In considering related person transactions, our audit committee, or other independent body of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to:

the risks, costs and benefits to us;

the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

the availability of other sources for comparable services or products;

and the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.

The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of its discretion.

Certain Related-Party Transactions

Except as described below, there have been no transactions since January 1, 2021 in which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our common stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described elsewhere in this filing under the sections titled “—

Executive Compensation ”

and “—

Director Compensation .”

Collaboration with PGEN and MD Anderson

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 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 year ended December 31, 2021, the Company made payments of $0.1 million to MD Anderson compared to $0 during the year ended December 31, 2020.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs for the year ended December 31, 2021 was $0 and for the year ended December 31, 2020 was $8.1 million, which is included in other current assets on the Company’s balance sheet.

WaterMill Settlement Agreement

On February 4, 2021, we entered into an agreement, or the Settlement Agreement, with WaterMill and Robert W.

Postma (collectively, the “WaterMill Parties”).

Pursuant to the Settlement Agreement, we increased the size of our board of directors from eight to nine directors and appointed Mr.

Postma to fill the newly created directorship.

The Settlement Agreement included certain customary standstill restrictions applicable from February 4, 2021 until the date that was the earlier of (i) January 1, 2022 and (ii) thirty (30) calendar days prior to the nomination deadline for our 2022 annual meeting of stockholders, or the Standstill Period.

During the Standstill Period, the WaterMill Parties were, among other things, restricted from engaging in any solicitation of proxies or written consents with respect to the election or removal of directors or, with certain exceptions, any other matter or proposal, or acquiring voting stock that would result in the WaterMill Parties having beneficial ownership of more than 9.9% of our outstanding voting stock.

Under the Settlement Agreement, we agreed that during the Standstill Period, we would nominate each of Mr.

Postma, Jaime Vieser and Holger Weis for election at any stockholder meeting at which directors are to be elected and will recommend, support and solicit proxies for the election of each of Messrs.

Postma, Vieser and Weis.

The Settlement Agreement also provided that at any meeting of our stockholders held prior to the expiration of the Standstill Period, the WaterMill Parties would vote all of their shares of our securities in accordance with the recommendation of our board of directors, with respect to the election, removal and/or replacement of directors.

The WaterMill Parties retained the right to vote in their sole discretion with respect to any other publicly announced proposal not made in breach of the Settlement Agreement.

Further, pursuant to the Settlement Agreement, we agreed to reimburse the WaterMill Parties for up to $400,000 of their reasonable out-of-pocket fees and expenses out of a total of approximately $650,000 in fees and expenses actually incurred by the WaterMill Parties in connection with (i) the WaterMill Parties’

solicitation of written consents from our stockholders to vote in favor of certain proposals, as set forth in the definitive consent statement filed by the WaterMill Parties on October 30, 2020, and (ii) the negotiation, execution and effectuation of the Settlement Agreement.

As of February 19, 2021, we have fully reimbursed the WaterMill Parties an aggregate amount of $400,000.

During the year ended December 31, 2021, we received $250,000 in insurance recoveries associated with legal expenses incurred on this matter.

Joint Venture with TriArm Therapeutics Ltd.

On December 18, 2018, we launched Eden BioCell, a joint venture with TriArm, to lead the commercialization of our Sleeping Beauty -generated CAR-T therapies in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea.

Under our agreements with TriArm, we 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 us and TriArm and the parties share decision-making authority.

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

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

In March 2021 and as announced by the Company in April 2021, Eden BioCell 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.

In September 2021, it was mutually agreed between the parties to dissolve the joint venture.

The dissolution of the joint venture and the related entity is in progress.

James Huang, who became a director of our Company in July 2020, and was appointed Chair of our board of directors in January 2021 and then Executive Chair of our board of directors 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.

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 resigned November 2, 2021 and served as the Company's Interim Chief Executive Officer on February 25, 2021 through her resignation on August 30, 2021, is a co-founder and former officer, of Vineti.

The Company recorded expenses of approximately $0.4 million during the year ended December 31, 2021 and $29,000 during the year ended December 31, 2020, for services performed by Vineti.

Indemnification Agreements

We have entered into an indemnification agreement with each of our directors.

These indemnification agreements and our charter and our bylaws indemnify each of our directors and officers to the fullest extent permitted by the Delaware General Corporation Law.

Independence of the Board of Directors

Our board of directors has undertaken a review of the independence of our directors and considered whether any director has a relationship that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a member of our board of directors.

Based upon information requested from and provided by each director concerning such director’s background, employment and affiliations, including family relationships, the board of directors has determined that all of our directors, other than Mr.

Boyle and Mr.

Huang are “independent directors,”

as such term is defined in Nasdaq Rule 5605(a)(2).

In making these determinations,

our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

Board Committees

The board of directors has established three standing committees:

an audit committee, a compensation committee and a corporate governance and nominating committee.

Each committee operates under a charter that has been approved by the board of directors.

Current copies of each committee’s charter are posted on the “Investors—Corporate Governance”

section of our website, www.alaunos.com .

Our website and its contents are not incorporated into this Annual Report on Form 10-K.

The current members of the committees are as follows:

Christopher Bowden, M.D.

* Committee Chairperson

Audit Committee

The current members of the audit committee are Mr.

Holger Weis, who serves as the committee’s Chair, Ms.

Mary Thistle and Mr.

Jaime Vieser.

As set forth in the audit committee charter, the primary responsibility of the audit committee is to oversee our financial reporting processes and internal control system on behalf of the board of directors.

In that regard, the audit committee is responsible for, among other things, the appointment, compensation, retention and oversight of the work performed by the independent registered public accounting firm employed by us.

Each member of the audit committee is an “independent director,”

as such term is defined in Nasdaq Rule 5605(a)(2) and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act.

The board of directors has determined that at least one member of the audit committee, Holger Weis, is an “audit committee financial expert,”

as that term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Exchange Act.

The audit committee held seven meetings during 2021.

Compensation Committee

The current members of the compensation committee are Ms.

Thistle, who serves as the committee’s Chair, Dr.

Christopher Bowden, Mr.

Postma and Mr.

As set forth in the compensation committee charter, the compensation committee reviews our compensation policies and practices and makes recommendations to the board of directors in connection with all compensation matters affecting our executive officers.

Each member of the compensation committee is an “independent director,”

as such term is defined in Nasdaq Rule 5605(a)(2) and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act.

The compensation committee held ten meetings during 2021.

Corporate Governance and Nominating Committee

The current members of the corporate governance and nominating committee are Mr.

Postma, who serves as the committee’s Chair, Dr.

Christopher Bowden and Mr.

Jaime Vieser.

As set forth in the corporate governance and nominating committee charter, the primary responsibility of the corporate governance and nominating committee is to consider and make recommendations to the board of directors concerning the appropriate size, function and needs of the board of directors and its committees.

In that regard, the corporate governance and nominating committee is, among other things, responsible for establishing criteria for membership on board of directors, recruiting and recommending candidates to fill newly created or vacant positions on the board of directors and reviewing any candidates recommended by stockholders.

In addition, the corporate governance and nominating committee evaluates and assesses the performance of the board of directors as a whole and its committees.

Each member of the corporate governance and nominating committee is an “independent director,”

as such term is defined in Nasdaq Rule 5605(a)(2), and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act.

The corporate governance and nominating committee held two meetings during 2021.

Principal Accountant Fees and Services

The following table presents the aggregate fees billed by RSM US LLP for the years ended December 31, 2021 and 2020.

Audit Fees (1)

Audit-Related Fees

All Other Fees

(1) Represents fees billed for professional services provided to us in connection with the annual audit of our financial statements, the review of our quarterly condensed financial statements, the audit of the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (2020 only), as well as audit services that are normally provided by an independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years, such as statutory audits, and administrative fees and out-of-pocket costs.

Other than as discussed above, we did not incur any fees of RSM US LLP for audit-related, tax or other services in 2021 or 2020.

All fees described above were pre-approved by the audit committee.

Pre-Approval Policy and Procedures

The audit committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm, RSM US LLP.

The policy generally authorizes pre-approval by the audit committee of specified services in the defined categories of audit services, audit-related services and tax services up to specified amounts.

Pre-approval may also be given as part of the audit committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual, explicit, case-by-case basis before the independent registered public accounting firm is engaged to provide each service.

The pre-approval of services may be delegated to one or more of the audit committee’s members, but the decision must be reported to the full audit committee at its next scheduled meeting.

Exhibits, Financial Statement Schedules

1 unchanged sentence

The Financial Statements required to be filed by Item 8 of this Annual Report, and filed in this Item 15, are as follows:

Reports of Independent Accounting Firm

Report of Independent Accounting Firm

Balance Sheets as of December 31, 2021 and 2020

Statements of Operations for the Years Ended December 31, 2021 and 2020

Statements of Changes Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020,

2019, and 2018

Statements of Changes Stockholders’

Equity for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

4 unchanged sentences

Description of Document

Agreement and Plan of Merger among the Registrant (formerly “EasyWeb, Inc.”), ZIO Acquisition Corp.

and ZIOPHARM, Inc., dated August 3, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, SEC File No.

Agreement and Plan of Merger among the Registrant (formerly “EasyWeb, Inc.”), ZIO Acquisition Corp.

and ZIOPHARM, Inc., dated August 3, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, SEC File No.

000-32353, filed August 9, 2005).

Amended and Restated Certificate of Incorporation, as filed with the Delaware Secretary of State on April 26, 2006 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

000-32353, filed April 26, 2006).

Amended and Restated Certificate of Incorporation, and all amendments thereto.

Certificate of Merger dated September 13, 2005, relating to the merger of ZIO Acquisition Corp.

with and into ZIOPHARM, Inc.

(incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, SEC File No.

000-32353, filed September 19, 2005).

Certificate of Ownership of the Registrant (formerly “EasyWeb, Inc.”) dated as of September 14, 2005, relating the merger of ZIOPHARM, Inc.

with and into the Registrant, and changing the Registrant’s corporate name from EasyWeb, Inc.

Certificate of Ownership of the Registrant (formerly “EasyWeb, Inc.”) dated as of September 14, 2005, relating the merger of ZIOPHARM, Inc.

with and into the Registrant, and changing the Registrant’s corporate name from EasyWeb, Inc.

to ZIOPHARM Oncology, Inc.

(incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K, SEC File No.

000-32353, filed September 19, 2005).

Amended and Restated Certificate of Designation, Preferences and Rights of Series 1 Preferred Stock, as filed with the Delaware Secretary of State on July 1, 2016 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K/A, SEC File No.

001-33038, filed July 1, 2016).

Amended and Restated Bylaws of the Registrant, dated as of September 21, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed September 22, 2020).

Specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form SB-2, SEC File No.

333-129020, filed October 14, 2005).

Description of Document

Form of Option for the Purchase of Shares of common stock dated August 30, 2004 and issued to The University of Texas M.

Anderson Cancer Center (incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-KSB, SEC File No.

000-32353, filed March 20, 2006).

Schedule identifying Material Terms of Options for the Purchase of Shares of Common Stock (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-KSB, SEC File No.

000-32353, filed March 20, 2006).

Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038 filed November 13, 2018).

Warrant to Purchase Common Stock issued to The University of Texas M.

Anderson Cancer Center (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 2, 2020).

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act Of 1934, as amended (incorporated by reference to Exhibit 4.8 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 2, 2020).

ZIOPHARM Oncology, Inc.

Amended and Restated 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K SEC File No.

001-33038 filed March 1, 2011).

Form of Incentive Stock Option Agreement granted under the Registrant’s 2003 Stock Option Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-KSB, SEC File No.

Anderson Cancer Center (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 2, 2020).

Form of Warrant to Purchase Shares of Common Stock issued to SVB and certain of its Affiliates, dated December 28, 2021.

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

ZIOPHARM Oncology, Inc.

2012 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038 filed September 24, 2018).

Form of Restricted Stock Agreement Granted Under the ZIOPHARM Oncology, Inc.

2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038 filed June 26, 2012).

Form of Option Agreement Granted Under the ZIOPHARM Oncology, Inc.

2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038 filed June 26, 2012).

Inducement Award Agreement between the Registrant and Satyavrat Shukla, dated July 23, 2019 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed July 22, 2019).

Form of Inducement Award Grant Notice and Inducement Award Grant Agreement (incorporated by reference to Exhibit 99.3 to the Registrant’s Registration Statement on Form S-8, SEC File No.

333-238090, filed May 8, 2020).

ZIOPHARM Oncology, Inc.

2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038 filed July 1, 2020).

Form of Restricted Stock Agreement Granted Under the ZIOPHARM Oncology, Inc.

2020 Equity Incentive Plan.

2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021 ).

Form of Stock Option Agreement Granted Under the ZIOPHARM Oncology, Inc.

2020 Equity Incentive Plan.

Form of Indemnity Agreement for directors and executive officers (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021 ).

Form of Indemnity Agreement for directors and executive officers (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed January 31, 2013).

Description of Document

Employment Agreement by and between the Registrant and Laurence James Neil Cooper, M.D., Ph.D.

dated as of May 5, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed May 7, 2015).

Employment Agreement, dated as of April 23, 2019, by and between the Registrant and David Mauney, M.D.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

Separation Agreement, dated April 5, 2021, by and between the Registrant and Dr.

Laurence Cooper (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed April 9, 2021)

Consulting Agreement by and between the Registrant and Dr.

David Mauney, dated May 26, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed May 29, 2020).

Separation Agreement and Release by and between the Registrant and Dr.

David Mauney, effective May 26, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed May 29, 2020).

Employment Agreement, dated as of April 23, 2019, by and between the Registrant and Robert Hadfield (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, SEC File No.

Consulting Agreement, dated April 5, 2021, by and between the Registrant and Dr.

Laurence Cooper (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed April 9, 2021).

Amendment to the Employment Agreement by and between the Registrant and Robert Hadfield, dated as of November 23, 2020.

Employment Agreement, dated as of June 4, 2019, by and between the Registrant and Sath Shukla (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed July 24, 2019).

Amendment to the Employment Agreement by and between the Registrant and Sath Shukla, dated as of November 23, 2020.

Form of Retention Bonus Agreement.

Consulting Agreement by and between Ziopharm Oncology Inc.

and Danforth Advisors LLC, effective as of January 21, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed February 23, 2021).

Employment Agreement, dated February 25, 2021, by and between the Registrant and Heidi Hagen (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed March 2, 2021).

Employment Agreement, dated August 24, 2021, by and between the Registrant and Kevin S.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed August 30, 2021).

Employment Agreement, dated April 23, 2019, by and between the Registrant and Jill Buck.

Amendment to Employment Agreement, dated November 23, 2020, by and between the Registrant and Jill Buck.

Employment Agreement, dated April 23, 2019, by and between the Registrant and Eleanor de Groot.

Amendment to Employment Agreement, dated November 23, 2020, by and between the Registrant and Eleanor de Groot.

Employment Agreement, dated September 30, 2020, by and between the Registrant and Raffaele Baffa.

Amendment to Employment Agreement, dated November 23, 2020, by and between the Registrant and Raffaele Baffa.

Form of Retention Bonus Agreement (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021).

License Agreement by and among the Registrant, Intrexon Corporation and The University of Texas System Board of Regents on behalf of The University of Texas M.D.

Anderson Cancer Center dated as of January 13, 2015 (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed January 28, 2015).

Exclusive License Agreement by and between the Registrant, Precigen, Inc.

and Intrexon Corporation, dated October 5, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No.

001-33038, filed November 9, 2018).

1 unchanged sentence

1 to the Exclusive License Agreement by and between the Registrant and PGEN Therapeutics, Inc.

(formerly known as Precigen, Inc.), dated October 15, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q SEC File No.

001-33038, filed November 5, 2020).

License and Collaboration Agreement by and among the Registrant, Intrexon Corporation and Ares Trading S.A.

dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed April 2, 2015).

Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D.

Anderson Cancer Center dated as of August 17, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed August 21, 2015).

Description of Document

Amendment #1 to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D.

Anderson Cancer Center dated as of August 30, 2016 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No.

First Amendment to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D.

Anderson Cancer Center dated as of August 30, 2016 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 5, 2019).

Amendment #2 to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D.

Anderson Cancer Center dated as of January 17, 2017 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No.

Second Amendment to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D.

Anderson Cancer Center dated as of January 17, 2017 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 5, 2019).

Amendment #3 to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D.

Anderson Cancer Center dated as of November 14, 2017 (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No.

Third Amendment to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D.

Anderson Cancer Center dated as of November 14, 2017 (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 5, 2019).

Fourth Amendment to Research and Development Agreement, dated September 19, 2019 by and among the Registrant, The University of Texas MD Anderson Cancer Center and Precigen, Inc.

(incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No.

001-33038, filed November 7, 2019).

Fifth Amendment to Research and Development Agreement, dated October 22, 2019 by and among the Registrant and The University of Texas MD Anderson Cancer Center (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 2, 2020).

2019 Research and Development Agreement, dated October 22, 2019, by and between the Registrant and The University of Texas MD Anderson Cancer Center (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 2, 2020).

Patent License Agreement, dated as of May 28, 2019, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No.

001-33038, filed August 8, 2019).

Amendment to Patent License Agreement, dated as of January 8, 2020, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No.

First Amendment to Patent License Agreement, dated as of January 8, 2020, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 2, 2020).

Second Amendment to Patent License Agreement, dated as of September 28, 2020, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No.

000-33038, filed November 5, 2020).

Cooperative Research and Development Agreement, dated January 9, 2017, by and among the Registrant, the National Cancer Institute, and Intrexon Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No.

Third Amendment to Patent License Agreement, dated as of April 16, 2021, by and between the Registrant and the National Cancer Institute.

Fourth Amendment to Patent License Agreement, dated as of May 4, 2021, by and between the Registrant and the National Cancer Institute.

Fifth Amendment to Patent License Agreement, dated as of August 13, 2021, by and between the Registrant and the National Cancer Institute.

001-33038, filed September 26, 2019).

Amendment #1 to the Cooperative Research and Development Agreement, dated March 23, 2018, by and among the Registrant, National Cancer Institute, Intrexon Corporation and Precigen, Inc (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No.

First Amendment to the Cooperative Research and Development Agreement, dated March 23, 2018, by and among the Registrant, National Cancer Institute, Intrexon Corporation and Precigen, Inc.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed September 26, 2019).

Amendment #2 to the Cooperative Research and Development Agreement, dated February 1, 2019, by and among the National Cancer Institute, the Registrant and Precigen, Inc (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K SEC File No.

Second Amendment to the Cooperative Research and Development Agreement, dated February 1, 2019, by and among the National Cancer Institute, the Registrant and Precigen, Inc.

(incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed September 26, 2019).

Description of Document

Third Amendment to the Cooperative Research and Development Agreement, dated March 15, 2022, by and among the National Cancer Institute and the Registrant.

Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D.

Anderson Cancer Center.

Anderson Cancer Center (incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021).

First Amendment, dated as of April 7, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D.

Anderson Cancer Center.

Anderson Cancer Center (incorporated by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021).

Second Amendment, dated as of April 7, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D.

Anderson Cancer Center.

Anderson Cancer Center (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021).

Third Amendment, dated as of December 15, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D.

Anderson Cancer Center.

Anderson Cancer Center (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021).

Lease Agreement dated as of December 15, 2020, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D.

Anderson Cancer Center.

Form of Securities Purchase Agreement, dated November 11, 2018, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed November 13, 2018).

Form of Registration Rights Agreement, dated November 11, 2018, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed November 13, 2018).

Form of Securities Purchase Agreement, dated July 26, 2019, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed August 1, 2019).

Form of Registration Rights Agreement, dated July 26, 2019, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed August 1, 2019).

Form of Securities Purchase Agreement, dated September 12, 2019, by and between the Registrant and an investor (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed September 13, 2019).

Form of Registration Rights Agreement, dated September 12, 2019, by and between the Registrant and an investor (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No.

001-33038, filed September 13, 2019).

Agreement, by and among ZIOPHARM Oncology, Inc., WaterMill Asset Management Corp.

Postma, Jamie Vieser, and Holger Weis, dated February 4, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

Anderson Cancer Center (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K, SEC File No.

001-33038, filed March 1, 2021).

Agreement dated February 4, 2021, by and among the Registrant, WaterMill Asset Management Corp.

and Robert W.

Postma (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No.

001-33038, filed February 5, 2021).

Loan and Security Agreement by and among the Registrant, the lenders party thereto and Silicon Valley Bank, as administrative agent and collateral agent, dated August 6, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No.

001-33038, filed November 8, 2021).

First Amendment to the Loan and Security Agreement by and among the Registrant, the lenders party thereto and Silicon Valley Bank, as administrative agent and collateral agent, dated December 28, 2021.

Separation Agreement, dated March 28, 2022, by and between the Registrant and Dr.

Raffaele Baffa.

Subsidiaries of the Registrant.

2 unchanged sentences

Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Description of Document

Certification of Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to 18 U.S.C.

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

10 unchanged sentences

Confidential treatment has been granted by the Securities and Exchange Commission as to certain portions of this document.

Portions of this document (indicated by “[***]”) have been omitted because they are not material and would likely cause competitive harm to Ziopharm Oncology, Inc.

Portions of this document (indicated by “[***]”) have been omitted because they are not material and would likely cause competitive harm to Alaunos Therapeutics, Inc.

if disclosed.

Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ZIOPHARM ONCOLOGY, INC.

ALAUNOS THERAPEUTICS, INC.

March 30, 2022

/s/ Heidi Hagen

Interim Chief Executive Officer

( Principal Executive Officer

Chief Executive Officer and Director

(Principal Executive Officer and Principal Financial Officer)

March 30, 2022

/s/ Timothy Cunningham

Timothy Cunningham

Interim Chief Financial Officer

( Principal Financial Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Heidi Hagen and Robert Hadfield, jointly and severally, as his or her true and lawful attorneys-in-fact

and agents, with full power of substitution and resubstitution, for him or her, and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact

and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact

and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

/s/Michael Wong

Vice President, Finance

(Principal Accounting Officer)

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin S.

and Michael Wong, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her, and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Heidi Hagen

Interim Chief Executive Officer and Director ( Principal Executive Officer

March 1, 2021

/s/ Timothy Cunningham

Timothy Cunningham

Interim Chief Financial Officer ( Principal Financial Officer

Chief Executive Officer and Director (Principal Executive Officer and Principal Financial Officer)

March 30, 2022

Senior Vice President Finance, Chief Accounting Officer and Treasurer ( Principal

Accounting Officer

/s/ Michael Wong

Vice President, Finance (Principal Accounting Officer)

March 30, 2022

2 unchanged sentences

March 30, 2022

March 1, 2021

/s/James Huang

March 30, 2022

/s/ Robert Postma

Robert Postma

/s/ Robert W.

March 30, 2022

5 unchanged sentences

March 30, 2022

ZIOPHARM Oncology, Inc.

Alaunos Therapeutics, Inc.

INDEX TO FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( RSM US LLP ;

Balance Sheets as of December 31, 2021 and 2020

Statements of Operations for the Years Ended December 31, 2021 and 2020

Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020, 2019 and 2018

Statements of Changes in Stockholders’

Equity for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

1 unchanged sentence

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

ZIOPHARM Oncology, Inc.

To the Stockholders and the Board of Directors of Alaunos Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of ZIOPHARM Oncology, Inc.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related statements of operations stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes to the financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 1, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We have audited the accompanying balance sheets of Alaunos Therapeutics, Inc.

and its subsidiaries (collectively, the Company) as of December 31, 2021 and 2020, the related statements of operations, stockholders’

equity and cash flows for the years then ended, and the related notes to the financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

3 unchanged sentences

Critical Audit Matters

The critical audit matter communicated below arises from the current-period audit of the financial statements that was communicated or required to be communicated to the Company’s Audit Committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the matter or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Description of the Matter

As discussed in Note 3 to the financial statements, the Company records costs for clinical and pre-clinical trial costs based upon estimates of costs incurred through the balance sheet date that have yet to be invoiced by the contract research organizations, clinical study sites, laboratories, consultants, or other vendors.

The Company’s accrual for clinical and pre-clinical trial expenses totaled $8.3 million at December 31, 2020.

We identified the accruals for clinical and pre-clinical trial expenses to be a critical audit matter because auditing the Company’s accruals for clinical and pre-clinical trial expenses is complex due to the fact that information necessary to estimate the expense is accumulated from multiple sources.

In addition, in certain circumstances, the determination of the nature and level of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing does not correspond to the level of services provided and there may be delays in invoicing from clinical study sites and other vendors.

As discussed in Note 3 to the financial statements, the Company accrues costs for clinical trials and preclinical studies based upon estimates of costs incurred through the balance sheet date that have yet to be invoiced by the contract research organizations, clinical study sites, laboratories, consultants, or other vendors.

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

The Company's accrual for clinical trial and preclinical study expenses totaled $2.0 million at December 31, 2021 as disclosed in Note 6.

We identified the accruals for clinical trial and preclinical study expenses to be a critical audit matter because auditing the Company’s accruals for clinical trial and preclinical study expenses is complex due to the fact that information necessary to estimate the expense is accumulated from multiple sources.

In addition, in certain circumstances, the determination of the nature and level of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing may not correspond to the level of services provided and there may be delays in invoicing from clinical study sites and other vendors.

How We Addressed the Matter in our Audit

Our audit procedures relating to the accruals of clinical and pre-clinical trial expenses included the following, among others:

We obtained an understanding and tested the design and operating effectiveness of internal controls over the Company’s process for recording accruals for clinical and pre-clinical trial expenses, including those related to accruing for patient enrollments and reviewing work performed by third party vendors in order to ensure expenses are properly accounted for in accordance with the underlying agreements and those related to management’s review of the detail and correspondence with third parties.

To test the completeness and valuation of the accrual for clinical and pre-clinical trial expenses, we performed audit procedures that included, among others:

Reading a selection of contracts with contract research organizations and clinical study sites to evaluate financial and certain other contractual terms;

Comparing the progress of clinical trials completed through the balance sheet date with information provided by the Company’s operations personnel that oversee the clinical and pre-clinical trial activities;

Obtaining information directly from certain third parties which indicate the progress of clinical trials and research and development activities through the balance sheet date and compared that to the Company’s recorded accrued expense balance.

Our audit procedures to test the accruals for clinical trial and preclinical studies expenses included, among others:

We tested the accuracy and completeness of the underlying data used in the estimates and evaluated the reasonableness of assumptions used by management.

We inspected certain contracts with third parties and reviewed information received by the Company to test proper recording of costs incurred to date.

We corroborated the progress of research and development activities through discussion with the Company’s research and development personnel, specifically those who oversee the projects.

We performed analytical procedures over fluctuations in accruals by clinical trial and preclinical studies or other significant work orders throughout the year and inspected subsequent invoices received from third parties to assess the impact to the accrual.

/s/ RSM US LLP

2 unchanged sentences

March 30, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

ZIOPHARM Oncology, Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited ZIOPHARM Oncology, Inc.

and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying balance sheets of the Company as of December 31, 2020 and 2019, the related statements of operations stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes to the financial statements of the Company and our report dated March 1, 2021 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Boston, Massachusetts

March 1, 2021

ZIOPHARM Oncology, Inc.

A launos Therapeutics, Inc.

BALANCE SHEETS

5 unchanged sentences

Property and equipment, net

Other non-current

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

Right-of-use asset

Other non-current assets

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

Current portion of long-term debt

Accrued expenses

1 unchanged sentence

Total current liabilities

Lease liability - noncurrent portion

Long-term debt

Lease liability - non-current portion

Total liabilities

Commitments and contingencies (Note 9)

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

Series 1 preferred stock, $ 1,200 stated value;

250,000 designated;

0 shares issued and outstanding at December 31, 2020 and 2019;

liquidation value of $ 0 million at December 31, 2020 and 2019

Stockholders' equity

1 unchanged sentence

350,000,000 shares authorized,

214,591,906 and 181,803,320 shares issued and outstanding at December 31, 2020 and 2019, respectively

Additional paid-in

216,127,443 shares issued and outstanding at December 31, 2021 and 250,000,000 shares authorized, 214,591,906 shares issued and outstanding at December 31, 2020

Additional paid-in capital

Accumulated deficit

2 unchanged sentences

The accompanying notes are an integral part of these financial statements.

ZIOPHARM Oncology, Inc.

A launos Therapeutics, Inc.

STATEMENTS OF OPERATIONS

5 unchanged sentences

General and administrative

Property and equipment and right-of-use asset impairment

Total operating expenses

Loss from operations

Other income, net

inducement warrant expense

Change in fair value of derivative liabilities

Preferred stock dividends

Settlement of a related party relationship

Net income (loss) applicable to common stockholders

Net income (loss) per share - basic

Net income (loss) per share - diluted

Weighted average common shares outstanding used to compute basic net income (loss) per share

Weighted average common shares outstanding used to compute diluted net income (loss) per share

The accompanying notes are an integral part of these financial statements.

ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share and per share data)

Series 1 Preferred

Stock-Mezzanine

Stockholders’

Equity (Deficit)

Balance at December 31, 2017

Adjustment for implementation of ASU No.

Revenue from Contracts with Customers

Stock-based compensation

Issuance of restricted common stock

Exercise of employee stock options

Cancelled restricted common stock

Repurchase of restricted common stock

Issuance of warrants and common stock in a private placement, net of commissions and expenses of $ 2,898

Preferred stock dividends

Settlement of a related party relationship (Note 7)

Balance at December 31, 2018

Other income (expense), net

Net loss applicable to common stockholders

Basic and diluted net loss per share

Weighted average number of common shares outstanding used to compute basic and diluted net loss per share

The accompanying notes are an integral part of these financial statements.

ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

A launos Therapeutics, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’

(in thousands, except share and per share data)

Series 1 Preferred

Stock-Mezzanine

Stockholders’

Equity (Deficit)

Additional Paid in Capital

Deficit Accumulated During the Development Stage

Total Stockholders' Equity

Balance at December 31, 2019

Stock-based compensation

Issuance of restricted common stock

Exercise of employee stock options

Restricted stock awards

Cancelled restricted common stock

Repurchase of restricted common stock

Issuance of inducement warrants

Issuance of common stock in connection with at the market offering, net of commssions and expenses of $ 0.1 million

Warrant exercise, net of commissions and expenses of $ 1.1 milliom

Balance at December 31, 2019

The accompanying notes are an integral part of these financial statements.

ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

(in thousands, except share and per share data)

Series 1 Preferred

Stock-Mezzanine

Stockholders’

Equity (Deficit)

Issuance of common stock in connection with a public offering, net of commissions and expenses of $ 5,900

Issuance of common stock in connection with an at the market offering, net of commissions and expenses of $ 400

Balance at December 31, 2020

$ 181,803,320

$ ( 684,125 )

Stock-based compensation

Exercise of employee stock options

Common stock issuance

Restricted stock awards

Cancelled restricted common stock

Issuance of common stock in connection with a public offering, net of commissions and expenses of $ 5,900

Issuance of common stock in connection with an at the market

offering, net of commissions and expenses of $ 400

Issuance of warrants

Balance at December 31, 2021

The accompanying notes are an integral part of these financial statements.

ZIOPHARM Oncology, Inc.

A launos Therapeutics, Inc.

STATEMENTS OF CASH FLOWS

(in thousands)

For the Year Ended December 31,

For the Twelve Months Ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash

used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Property and equipment and right-of-use asset impairment

Amortization of financing costs

Stock-based compensation

inducement warrant expense

Change in fair value of derivative liabilities

Change in operating assets and liabilities:

(Increase) decrease in:

Prepaid expenses and other current assets

Right of use assets

Right-of-use asset

Other noncurrent assets

2 unchanged sentences

Accrued expenses

Deferred revenue

Deferred rent

Lease liabilities

4 unchanged sentences

Cash flows from financing activities:

Proceeds from exercise of stock options

Issuance of restricted common stock

Repurchase of common stock

Proceeds from underwritten financing

Issuance of common stock upon exercise of warrants, net

Proceeds from long-term debt

Payment of debt issuance costs

Proceeds from the exercise of stock options

Issuance of common stock in connection with a public offering, net

Issuance of common stock in connection with an at the market offering, net

Cash paid for settlement of related party relationship

Issuance of common stock in connection with at the market offerings, net

Net cash provided by financing activities

Net decrease 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

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplementary disclosure of cash flow information:

Bonus paid in common stock

Fixed assets in accrued expenses

Cash paid for interest

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

Supplementary disclosure of noncash investing and financing activities

Noncash portion of related party relationship settlement

Payment of Series 1 preferred stock dividends in preferred stock

Warrants issued with long-term debt

The accompanying notes are an integral part of these financial statements.

ZIOPHARM Oncology, Inc.

Alaunos Therapeutics, Inc.

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 raising capital and conducting research and development.

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 December 31, 2020, the Company has approximately $ 115.1 million of cash and cash equivalents and the Company’s accumulated deficit was approximately $ 764.1 million.

Given the Company’s current development plans, the Company anticipates its cash resources will be sufficient to fund its 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.

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

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.

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.

February 2020 Public Offering

On February 5, 2020, the Company 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

ZIOPHARM Oncology, Inc.

Alaunos Therapeutics, Inc., which is referred to herein as “Alaunos,”

or the “Company,”

is a clinical-stage oncology-focused cell therapy company developing adoptive TCR therapies, designed to treat multiple solid tumor types in large cancer patient populations with unmet clinical needs.

On January 25, 2022, the Company changed its corporate name from Ziopharm Oncology, Inc.

to Alaunos Therapeutics, Inc.

The Company is leveraging its proprietary, non-viral Sleeping Beauty gene transfer platform and its novel cancer mutation hotspot TCR library to design and manufacture personalized cell therapies that target neoantigens arising from common tumor-related mutations in key oncogenic genes, including KRAS, TP53, and EGFR.

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 its 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 has also begun exploring potential synergies between this technology and its cell therapy programs.

Costs incurred during the year ended December 31, 2021 under the program wind-down have not been material.

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

As of December 31, 2021, the Company had approximately $ 76.1  million of cash and cash equivalents.

The Company’s accumulated deficit at December 31, 2021 was approximately $ 842.9  million. Given its current development plans and cash management efforts, the Company anticipates cash resources will be sufficient to fund operations into the second quarter of 2023. 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 350,000,000 shares of common stock.

As of December 31, 2021, there were 216,127,443 shares of common stock outstanding and an additional 33,620,711 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Financings (Continued)

price to the public in the offering was $

3.25 per share, and the underwriters agreed to purchase the

from the Company pursuant to the underwriting agreement at a purchase price of $

Under the terms of the underwriting agreement, the Company also granted the underwriters an option, exercisable for 30 days, to purchase up to an additional

shares of common stock at a purchase price of $

The offering was made pursuant to the Company’s

effective registration statement on Form S-3ASR

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

The underwriters purchased the 27,826,086 shares on February 5, 2020.

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

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 Company.

2021 Loan and Security Agreement

On August 6, 2021, the Company entered into a Loan and Security Agreement with Silicon Valley Bank and affiliates of Silicon Valley Bank (collectively, "SVB") (the "Loan and Security Agreement").

The Loan and Security Agreement provided for an initial term loan of $ 25.0 million funded at the closing ("Term A Tranche"), with an additional tranche of $ 25.0 million available if certain funding and clinical milestones were met by August 31, 2022 ("Term B Tranche").

Effective December 28, 2021, the Company, entered into a First Amendment (the “Amendment”) to the Loan and Security Agreement (the "Amended Loan and Security Agreement").

The Amended Loan and Security Agreement extends the interest-only period through August 31, 2022, and provides for an automatic extension through August 31, 2023, if certain funding and clinical milestones are met by August 31, 2022 (the “Amended Milestones”).

The Amendment eliminated the Term B Tranche, which remained unfunded, leaving only the Term A Tranche (the "SVB Facility").

Under the Amended Loan and Security Agreement, the SVB Facility will mature on August 1, 2023;

however, if the Company achieves the Amended Milestones on or prior to August 31, 2022, then the maturity will automatically extend to August 1, 2024.

Please refer to Note 4, Debt, for further discussion of the Loan and Security Agreement and the Amended Loan and Security Agreement.

February 2020 Public Offering

On February 5, 2020, the Company issued and sold 27,826,086 shares of its common stock at an offering price to the public of $ 3.25 per share, for aggregate net proceeds of approximately $ 84.8 million after deducting underwriting discounts and offering expenses paid by the Company.

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

333-232283) previously filed with the Securities and Exchange Commission (the “SEC”) and a prospectus supplement thereunder.

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 Offering Program

During the year ended

December 31, 2020, the Company sold an aggregate of 2,814,673 shares of its common stock.

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

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 the Company.

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

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

333-232283) 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 offering expenses payable by the Company.

November 2018 Private Placement and 2019 Inducement Warrants

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

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

The securities issued by the Company 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, the Company 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, the Company 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.

July 2019 and September 2019 Warrant Exercise

On July 26, 2019 and September 12, 2019, the Company 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

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Financings (Continued)

greements, investors

exercised warrants for an aggregate of

17,803,031 shares of common stock, at an exercise price of $

3.01 per share.

The Company 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, the Company also recorded $

60.8 million in

inducement warrant expense, which is included in the Company’s statement of operations.

In June 2019, the Company entered into an Open Market Sale Agreement (the "Sales Agreement") with 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.

There were no sales under the Sales Agreement during the year ended December 31, 2021.

D uring the year ended December 31, 2020, the Company issued and sold an aggregate of 2,814,673 shares for aggregate net proceeds of approximately $ 13.0 million after deducting underwriting discounts and offering expenses payable by us.

Summary of Significant Accounting Policies

2 unchanged sentences

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management 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 and the reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity with U.S.

GAAP requires management 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 and the reported amounts of revenue and expenses during the reporting period.

Although the Company regularly assesses these estimates, actual results could differ from those estimates.

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 the financial statements are:

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Clinical trial expenses and other research and development expenses;

Collaboration agreements;

Fair value measurements of stock-based compensation and;

Fair value measurements of stock-based compensation;

Income taxes.

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.

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 our personnel.

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

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

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.

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

The Company evaluated all events and transactions that occurred after the balance sheet date through the date of the Annual Report.

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

On February 4, 2021, the Company entered into an agreement with Watermill Asset Management Corp.

and Robert W.

Pursuant to the Settlement Agreement, the Company increased the size of the Company’s Board of Directors from eight to nine directors and appointed Mr.

Postma to fill the newly created directorship.

Postma will serve an initial term expiring at the Company’s 2021 annual meeting of stockholders.

Additionally, the Company agreed to nominate each of Mr.

Postma, Jaime Vieser and Holger Weis for election at any stockholder meeting at which directors are to be elected and will recommend, support, and solicit proxies for the election of each of Messrs.

Postma, Vieser and Weis.

Additionally, the Company agreed to reimburse Watermill for up to

$ 400 thousand of its reasonable out-of-pocket fees and expenses.

This agreement also resulted in $ 1.0 million in strategic advisory services becoming due.

These costs were expensed during the year ended

December 31, 202 0 and included in accrued expenses on the balance sheet.

The Company did not have any material subsequent events that impacted its financial statements or disclosures.

Organizational Changes

During the year ended December 31, 2020 there were changes in the members of the Board of Directors.

The following Directors left during the quarter:

Scott Braunstein on November 16, 2020, Elan Ezickson on December 3, 2020, and Scott Tarriff on December 15, 2020.

Braunstein and Ezickson received an extended period to exercise stock options along accelerated vesting of restricted stock.

In turn, the following Directors joined the board:

Mary Thistle on November 15, 2020, Jaime Vieser on December 15, 2020, and Holger Weis on December 15, 2020.

On December 10, 2020, Satyavrat Shukla notified the Company of his decision to resign from the position of Chief Financial Officer of the Company, effective December 31, 2020.

Included in his separation agreement, Mr.

Shukla was to receive his annual bonus which was accrued at December 31, 2020.

Additionally, 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 a member of the Board of Directors.

Cooper is also stepping down from his seat on the Board of Directors and is expected to continue with the Company in a scientific advisory capacity to support the Company’s R&D programs.

On February 25, 2021, the Company announced that Heidi Hagen, formerly the Lead Independent Director, was appointed Interim Chief Executive Officer, replacing Laurence Cooper, M.D., Ph.D.

Hagen also remained a member of the board of directors.

Cooper also stepped down from his seat on the board of directors and has continued to support the Company’s research and development, or “R&D,”

programs as a consultant.

On August 22, 2021, the board of directors appointed Kevin S.

Boyle, Sr., as Chief Executive Officer of the Company, effective August 30, 2021.

Effective upon Mr.

Boyle's employment, Ms.

Hagen resigned as the Company's Interim Chief Executive Officer but continued to serve as a member of the board of directors.

Hagen resigned as member of the board of directors effective November 2, 2021.

On November 4, 2021, the Company provided written notice of termination of the consulting agreement by and between the Company and Danforth Advisors, LLC, a financial consultancy firm specializing in working with life sciences companies (the “Cunningham Consulting Agreement”).

Pursuant to the terms of the Cunningham Consulting Agreement, Tim Cunningham, the Company’s interim Chief Financial Officer and principal financial officer, provided services to the Company.

Cash and Cash Equivalents

2 unchanged sentences

Cash equivalents are stated at cost, which approximates fair market value.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist

principally of cash and cash equivalents.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.

The Company maintains cash accounts in commercial banks, which may, at times, exceed federally insured limits.

2 unchanged sentences

Property and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Property and equipment are stated at cost, less accumulated depreciation and amortization.

Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are capitalized.

6 unchanged sentences

Repairs and maintenance that do not extend the useful life of the asset are expensed as incurred.

Upon sale, retirement

, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the disposition is included on our Statements of Operations.

Upon sale, retirement, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the disposition is included on its Statements of Operations.

Long-Lived Assets

of long-lived assets and the remaining useful lives of such long-lived assets are reviewed for impairment whenever a triggering event occurs or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Assessments of long-lived assets and the remaining useful lives of such long-lived assets are reviewed for impairment whenever a triggering event occurs or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

An asset, or group of assets, are considered to be impaired when the undiscounted estimated net cash flows expected to be generated by the asset, or group of assets, are less than its carrying amount.

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Operating Segments

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Company’s chief operating decision maker, in making decisions regarding resource allocation and assessing performance.

The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program

The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program basis.

The Company assesses whether warrants issued 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 (“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.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

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 (“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’

Fair Value Measurements

The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

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;

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.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019 are as follows:

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 and nonrecurring basis as of December 31, 2021 and 2020 are as follows:

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

($ in thousands)

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Quoted Prices in

Active Markets for

Active Markets

for Identical

Assets/Liabilities

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Quoted Prices in

Active Markets for

Active Markets

for Identical

Assets/Liabilities

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

Fair value of non-financial instruments

The Company evaluates its assets for impairment whenever events or changes in circumstances indicate that indicators of impairment exist.

In those evaluations, the Company compares estimated future undiscounted cash flows generated by each asset (or asset group) to the carrying value of the asset (or asset group) to determine if an impairment charge is required.

If the undiscounted cash flows test fails, the Company estimates the fair value of the asset (or asset group) to determine the impairment.

During 2021, following the Company's strategic restructuring and further cost reduction initiatives, the Company determined that changes in the intended use of its Boston office represented an indicator of impairment, resulting in an impairment charge of $ 0.6 million to the right-of-use asset.

In addition, the Company impaired approximately $ 0.1 million of leasehold improvements and various other assets associated with its decision to close the Company's Boston office.

Refer to Note 8 for further details.

Revenue Recognition from Collaboration Agreements

The Company adopted Accounting Standards Codification, or ASC Topic 606, Revenue from Contracts with Customers,

or ASC 606, using the modified retrospective approach on January 1, 2018.

The Company completed its assessment and the implementation resulted in a cumulative effect adjustment to accumulated deficit as of January 1, 2018 of approximately $ 8.1 million and a corresponding increase to the contract liability (formerly deferred revenue).

The adjustment to the Company’s financial statements due to the adoption of ASC 606 is related to the Company’s Ares Trading Agreement (Note 6), which was the Company’s sole open revenue contract outstanding at January 1, 2018.

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

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

Revenue for the year ended December 31, 2021 consisted of $0.4 million and for the year ended December 31, 2020 consisted of $ 0 .

For the year ended December 31, 2021, the Company recognized revenue through its Collaboration Agreement with Solasia Pharma K.K.

due to the achievement of a milestone, as further described in Note 9, Commitments and Contingencies.

The Company primarily generates revenue through collaboration arrangements with strategic partners for the development and commercialization of product candidates.

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

, as used in historical years.

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

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.

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(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.

The Company recognizes collaboration revenue under certain of the Company’s license or collaboration agreements that are within the scope of ASC 606.

The Company’s 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.

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, the Company utilizes judgement 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,

The Company recognizes collaboration revenue under certain of the Company’s license or collaboration agreements that are within the scope of ASC 606.

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front 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.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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 the Company’s 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.

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 the Company’s arrangements with customers typically include the payment of one or more of the following:(i) non-refundable, up-front 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.

The Company measures 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.

The Company utilizes the most likely amount method to estimate the amount of variable consideration, to predict the amount of consideration to which it will be entitled for its one open contract.

The Company utilizes the most likely amount method to estimate the amount of variable consideration, to predict the amount of consideration to which it will be entitled.

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.

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At the end of each reporting period, the Company reevaluates 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

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

payments based upon the achievement of a certain level of product sales, the Company recognizes revenue upon the later of:

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, the Company recognizes 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, the Company has not recognized any development, regulatory or commercial milestones or royalty revenue resulting from any of its collaboration arrangements.

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

The Company allocates 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:

However, certain components of variable consideration are allocated specifically to one or more particular performance obligations in a contract 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.

The Company develops 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.

The Company develops assumptions that require the use of 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 revenue, 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.

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The Company evaluates 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.

The Company recognized the upfront payment received in 2015 associated with a former open contract as a contract liability upon receipt of payment as it requires deferral of revenue recognition to a future period until the Company performs its obligations under the arrangement.

Amounts expected to be recognized as revenue within the twelve months following the balance sheet date were classified in current liabilities.

Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date were classified as contract liabilities, net of current portion.

The Company determined that there were three performance obligations;

the first performance obligation consists of the license and research development services and the other two performance obligations are material rights as it relates to potential future targets that have not yet been identified.

As described above, the transaction price of $ 57.5 million was allocated to the performance obligations based on their relative standalone selling prices.

There were multiple distinct performance obligations, including material rights;

thus, the Company allocated the transaction price to each distinct performance obligation based on its relative standalone selling price.

The standalone selling price is generally determined based on the prices charged to customers or using expected cost-plus margin.

Revenue is recognized by measuring the progress toward complete satisfaction of the performance obligations using an input measure.

Furthermore, the Company has not capitalized any contract costs under the guidance in ASC 340-40,

Other Assets and Deferred Costs:

Contracts with Customers

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

The Company did not believe

that any variable

consideration

should be included in the transaction

price at the date of adoption

of ASC 606 on January 1, 2018.

Such assessment considered the application of the constraint to ensure that estimates of variable consideration would be included in the transaction price only to the extent the Company had a high degree of confidence that revenue would not be reversed in a subsequent reporting period.

The Company will re-evaluate the transaction price, including the estimated variable consideration

included in the transaction price and all constrained amounts, in each reporting period and as other changes in circumstances

Impact of Topic 606 Adoption

As a result of adopting ASC 606, the Company recorded an $ 8.1 million adjustment to the opening balance of accumulated deficit in the first quarter of 2018 as a result of the treatment of the up-front

consideration receive d

under ASC 605-25

versus ASC 606.

Refer below for a summary of the amount by which each financial statement line item was affected by the impact of the cumulative adjustment:

($ in thousands)

Impact of Topic 606 Adoption

on the Balance Sheet

as of January 1, 2018

As reported under

Balances without

Contract liability, current portion

Contract liability, net of current portion

Accumulated deficit

($ in thousands)

Impact of Topic 606 Adoption

on the Statement of Operations

for the Year Ended December 31, 2018

As reported under

Balances without

Collaboration revenue

Net income (loss) applicable to common shareholders

Net income (loss) per share - basic

Net income (loss) per share - diluted

($ in thousands)

Impact of Topic 606 Adoption

on the Statement of Cash Flows

for the Year Ended December 31, 2018

As reported under

Balances without

Changes in contract liability

The most significant change above relates to the Company’s collaboration revenue, which to date has been exclusively generated from its collaboration arrangement with Ares Trading and PGEN Therapeutics, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation, ( Note 7

Under ASC 605, the Company accounted for the up-front payment over the estimated period of performance of

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

the research and development services which

was estimated to be 9 years .

In connection

with the adoption of ASC 606

, the Company uses cost-based input method to measure

progress because such method best reflects the satisfaction of the performance obligation.

In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to the budgeted costs to complete the research programs.

These costs consist primarily of internal full-time equivalent effort and third-party contract costs.

Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs.

As a result, although the performance obligations noted above and identified under ASC 606

were generally consistent with the units of account identified under ASC 605

, the timing of the allocation of the transaction price to the identified performance obligations under ASC 606

differed from the allocations of consideration under ASC 605

Accordingly, the transaction price ultimately allocated to each performance obligation under ASC 606

differed from the amounts allocated under ASC 605

Additionally, at December 31

, the contract liability is $ 0 under both methods of revenue recognition (Note 7)

revenue related to the years ended December 31

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

Research and Development Costs

As part of the process of preparing our financial

, 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;

As part of the process of preparing the Company's financial statements, the Company is required to estimate its accrued research and development expenses.

The majority of the Company's service providers invoice the Company 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.

The Company makes estimates of its accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known to it 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,

clinical research organizations, or CROs, in connection with performing research services on its behalf and clinical trials,

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

investigative sites or other providers in connection with clinical trials,

1 unchanged sentence

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 Company bases its expenses related to preclinical studies and clinical trials on its estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage clinical trials on its 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.

There may be instances in which payments made to the Company's 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.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

In accruing service fees, the Company estimates 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 its estimate, the Company adjusts the accrual or amount of prepaid expense accordingly.

Although the Company does not expect its estimates to be materially different from amounts actually incurred, its 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 it reporting amounts that are too high or too low in any particular period.

To date, the Company has not made any material adjustments to its prior estimates of accrued research and development expenses.

Income taxes are accounted for under the liability method.

2 unchanged sentences

The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.

The Company accounts for uncertain tax positions using a “more-likely-than-not”

threshold for recognizing and resolving uncertain tax positions.

3 unchanged sentences

Accounting for Stock-Based Compensation

Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period.

Stock-based compensation expense is based on the number of awards ultimately expected to vest and is therefore reduced for an estimate of the awards that are expected to be forfeited prior to vesting.

Consistent with prior years, the Company uses the Black-Scholes option pricing model which requires estimates of the expected term option holders will retain their options before exercising them and the estimated volatility of the Company’s common stock price over the expected term.

Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period.

Stock-based compensation expense is based on the number of awards ultimately expected to vest and is reduced for forfeitures as they occur.

The Company recognizes the full impact of its share-based employee payment plans in the statements of operations for each of the years ended December 31, 2021 and 2020 and did not capitalize any such costs on the balance sheets.

The Company recognized $ 4.3 million, $ 4.0 million, and $ 3.0 million of compensation expense related to stock options during the years ended December 31, 2020, 2019, and 2018, respectively.

In the years ended December 31, 2020, 2019, and 2018, the Company recognized $ 2.5 million, $ 2.3 million, and $ 4.5 million of compensation expense, respectively, related to restricted stock (Note 14).

The total compensation expense relating to vesting of stock options and restricted stock awards for the years ended December 31, 2020, 2019, and 2018 was $ 6.8 million, $ 6.3 million, and $ 7.5 million, respectively.

The following table presents share-based compensation expense included in the Company’s Statements of Operations:

The Company recognized $ 7.4 million of compensation expense related to stock options for the year ended December 31, 2021 and $ 4.3 million of compensation expense related to stock options for the year ended December 31, 2020.

The Company recognized $ 3.4 million of compensation expense, related to restricted stock for the year ended December 31, 2021 and $ 2.5 million for the year ended December 31, 2020 (Note 13).

The total compensation expense relating to vesting of stock options and restricted stock awards for the year ended December 31, 2021 was $ 10.8 million and $ 6.8 million for the year ended December 31, 2020.

The following table presents share-based compensation expense included in the Company’s Statements of Operations:

Year ended December 31,

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General and administrative

Share based employee compensation expense before tax

Income tax benefit

Net share based employee compensation expense

The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model.

The estimated weighted-average fair value of stock options granted to employees in 2020, 2019, and 2018 was

ZIOPHARM Oncology, Inc.

Share based employee compensation expense

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

approximately

$ 2.15 , $ 2.47 , and $ 1.64 per share, respectively.

Assumptions regarding

volatility, expected

term, dividend yield and risk-free interest rate are required for the Black-Scholes model.

The volatility assumption is based on the Company’s historical experience.

The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model.

The estimated weighted-average fair value of stock options granted to employees in 2021 was approximately $ 2.62 per share and was approximately $ 2.15 per share for the year ended December 31, 2020.

Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model.

The volatility assumption is based on the Company’s historical experience.

The risk-free interest rate is based on a U.S.

treasury note with a maturity similar to the option award’s expected life.

The expected life represents the average period of time that options granted are expected to be outstanding.

2 unchanged sentences

The assumptions for volatility, expected life, dividend yield and risk-free interest rate are presented in the table below:

Weighted average risk-free interest rate

0.36 - 1.68 %

Risk-free interest rate

0.50 - 1.36 %

4 unchanged sentences

71.11 - 74.41 %

80.75 - 84.71 %

Expected dividend yield

Net Income (Loss) Per Share

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

Diluted earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding options and warrants, using the treasury stock method and the average market price of the Company’s common stock during the applicable period.

For the Year Ended December 31,

in thousands, except share and per share data

Preferred stock dividends

Settlement of a related party relationship

Net income / (loss) applicable to common shareholders

Weighted-average common shares outstanding

Earnings per share, basic

Preferred stock dividends

Precigen license transaction

Net income / (loss) applicable to common shareholders

Weighted-average common shares outstanding

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Continued)

Net Loss per Share

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

Diluted net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period, plus the dilutive effect of outstanding options and warrants, using the treasury stock method and the average market price of the Company’s common stock during the applicable period, unless their effect on net loss per share is antidilutive.

The effect of computing diluted net loss per common share was antidilutive for any potentially issuable shares of common stock from the conversion of stock options, unvested restricted stock and warrants and, as such, have been excluded from the calculation.

The computation of basic and diluted net loss per share consists of the following:

For the Year Ended December 31,

in thousands, except share and per share data

Effect of dilutive securities

Stock options

Unvested restricted common stock

Dilutive potential common shares

Shares used in calculating diluted earnings per share

Earnings per share, diluted

Certain shares related to some of the Company’s outstanding common stock options, unvested restricted stock, preferred stock, and warrants have not been included in the computation of diluted net earnings (loss) per share for the years ended December

2018 as the result would be

antidilutive.

Such potential common shares on December 31 ,

2018 consist of the following:

Weighted-average common shares outstanding, basic and diluted

Net loss per share, basic and diluted

Certain shares related to some of the Company’s outstanding common stock options, unvested restricted stock and warrants have not been included in the computation of diluted net loss per share for the years ended December 31, 2021 and 2020 as the result would be antidilutive.

Such potential common shares on December 31, 2021 and 2020 consist of the following:

Stock options

1 unchanged sentence

Unvested restricted stock

During the year ended December 31, 2018, the Company and PGEN entered into a License Agreement to replace all existing agreements between the companies that provides the Company with certain exclusive and non-exclusive

rights to technology controlled by PGEN.

The License Agreement was dated October 5, 2018.

In consideration of the Company entering into the License Agreement, Precigen agreed to forfeit and return to the Company all shares of the Company’s Series 1 Preferred Stock held by or payable to Precigen as of the date of the License Agreement (Note 7).

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.

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

The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.

ZIOPHARM Oncology, Inc.

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.

The Company adopted this standard effective January 1, 2021, with no material impact upon adoptio n.

The carrying values of the Company's debt obligation were as follows:

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

($ in thousands)

Loan and Security Agreement

Unamortized discount on Loan and Security Agreement

current portion of long-term debt

Long-term debt

On August 6, 2021, the Company entered into a Loan and Security Agreement with SVB, or the Loan and Security Agreement.

The Loan and Security Agreement provided 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 were met by August 31, 2022.

On December 28, 2021, the Company entered into a First Amendment, (the “Amendment”) to the Loan and Security Agreement (the “Amended Loan and Security Agreement”).

Under the terms of the Amended Loan and Security Agreement, the SVB Facility was modified to eliminate the additional $25.0 million tranche, which remained unfunded, leaving only the initial $25.0 million as the full amount available under the SVB Facility.

The SVB Facility bears interest at a floating rate per annum on outstanding loans, payable monthly, at the greater of (a) 7.75 % and (b) the current published U.S.

prime rate, plus a margin of 4.5 % .

As of December 31, 2021, interest on the outstanding loans was 7.75 %.

The Amended Loan and Security Agreement provides for an interest-only period which extends through August 31, 2022 and may be automatically extended through August 31, 2023 if, on or prior to August 31, 2022, SVB receives evidence satisfactory to it, confirming that the Company has (i) received at least $ 50.0 million in net cash proceeds from the sale of the Company’s equity securities after the date of the Amended Loan and Security Agreement, on terms and conditions acceptable to SVB, and (ii) achieved positive data in the first cohort of the Library TCR-T Trial endorsed by an independent safety monitoring committee as a safe dose to proceed (together, the “Amended Milestones”).

After the interest-only payment period, aggregate outstanding borrowings are payable in twelve consecutive, equal monthly installments of principal plus accrued interest.

All outstanding principal and accrued and unpaid interest under the SVB Facility and all other outstanding obligations under the Amended Loan and Security Agreement are due and payable on August 1, 2023 ;

however, if the Company achieves the Amended Milestones on or prior to August 31, 2022, then the maturity will be automatically extended to August 1, 2024 .

In addition to the payment of the outstanding principal plus accrued interest due, the Company will also owe SVB 5.75 % of the original principal amounts borrowed as a final payment.

We are permitted to make up to two prepayments, subject to the prepayment premium, of the SVB Facility, each payment of at least $ 5.0 million.

Such prepayment premium would be 3.00 % of the principal amount of the SVB Facility if prepaid prior to the first anniversary of the effective date, 2.00 % of the principal amount of the SVB Facility if prepaid on or after the first anniversary of the effective date but prior to the second anniversary of the effective date and 1.00 % of the principal amount of the SVB Facility if prepaid on or after the second anniversary of the effective date but prior to the maturity date.

No amount that has been repaid may be reborrowed.

The Loan and Security Agreement required the Company to cash collateralize half of the sum of the outstanding principal amount of the term loans, plus an amount equal to 5.75 % of the original principal amount of any portion of the SVB Facility actually extended, if the Company failed to achieve certain fundraising milestones on or prior to December 31, 2021.

The Amended Loan and Security Agreement revised the Company's cash collateralization obligation to require the Company to cash collateralize half of the sum of only the then-outstanding principal amount of the SVB Facility, plus an amount equal to 5.75 % of the original principal amount of the SVB Facility if the Company does not achieve the Amended Milestones on or prior to August 31, 2022.

In the event a cash collateralization were to occur, so long as no event of default has occurred and, after subtracting the eighth scheduled payment of principal and interest on the SVB Facility, the sum of the aggregate of outstanding principal and accrued and unpaid interest, plus the final payment, is equal to or less than $ 9,770,933 , then, within ten business days of the date of receipt of the eighth scheduled payment of principal and interest on the SVB Facility, SVB will release $ 2.5 million from the collateral account, so long as the balance in the collateral account after the release would equal or exceed $ 10.0 million.

If no event of default has occurred and, after subtracting the tenth scheduled payment of principal and interest on the SVB Facility, the sum of the aggregate of outstanding principal and accrued and unpaid interest, plus the final payment, is equal to or less than $ 5,604,167 , then, within ten business days of the date of receipt of the tenth scheduled payment of principal and interest on the SVB Facility, SVB will release a further $ 4.0 million from the collateral account, so long as the balance in the collateral account after the release would equal or exceed $ 6.0 million.

The SVB Facility and related obligations under the Amended Loan and Security Agreement are secured by substantially all of the Company’s properties, rights and assets, except for its intellectual property (which is subject to a negative pledge under the Amended Loan and Security Agreement).

In addition, the Amended Loan and Security Agreement contains customary representations, warranties, events of default and covenants.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

In connection with its entry into the Loan and Security Agreement, the Company issued to SVB warrants to purchase (i) up to 432,844 shares of the Company’s common stock, par value $ 0.001 per share in the aggregate, and (ii) up to an additional 432,842 shares of common stock, in the aggregate, in the event the Company achieves certain clinical milestones, in each case at an exercise price per share of $ 2.22 .

In connection with the entry into the Amendment, the Company amended and restated the warrants issued to SVB.

As amended and restated, the warrants are for up to 649,615 shares of the Company's common stock, in the aggregate, at an exercise price per share of $ 1.16 , or the SVB Warrants.

The SVB Warrants expire on August 6, 2031 .

The issuance costs for the Loan and Security Agreement, including the Amended Loan and Security Agreement, were approximately $ 1.2 million and primarily related to the warrants issued to SVB, which will be amortized into interest expense over the period to August 1, 2023 .

Interest expense, including the amortization of issuance costs, was $ 1.2 million for the year ended December 31, 2021.

The fair value of the Amended Loan and Security Agreement as of December 31, 2021 approximates its face value due to proximity to the transaction.

Property and Equipment, net

3 unchanged sentences

Leasehold improvements

Research and development equipment

Construction -

Laboratory equipment

Construction-in-progress

accumulated depreciation

Property and equipment, net

Depreciation expense charged to the statement of operations for the years ended December 31, 2020, 2019, and 2018 was $ 1.1 million, $ 629 thousand, and $ 575 thousand, respectively (

Depreciation expense charged to the statement of operations for the year ended December 31, 2021 was $ 2.6 million and was $ 1.1 million for the year ended December 31, 2020.

During the year ended December 31, 2021, the Company impaired property and equipment by $ 0.1 million.

Refer to Note 3, Summary of Significant Accounting Policies , for further details.

Accrued Expenses

1 unchanged sentence

($ in thousands)

Clinical services

Employee compensation

Preclinical services

Professional services

Preclinical services

Manufacturing services

2 unchanged sentences

Other consulting services

Related Party Transactions

Collaborations

During the year ended December 31, 2018

, the Company

and PGEN entered into an Exclusive License Agreement

During the year ended December 31, 2018, the Company issued an aggregate of 11,415 shares of Series 1 preferred stock to Precigen, the holder of all of the outstanding shares of the Company’s Series 1 preferred stock, as monthly dividend payments.

The Company recorded such shares of Series 1 preferred stock at a fair value of $ 18.9 million, which is a component of temporary equity and recorded a loss on the change of the derivative liabilities in the amount of $ 1.3 million.

The Series 1 preferred stock was cancelled on October 5, 2018.

See Notes 3 and 13 for additional discussion regarding the accounting for and valuation of these derivative financial

ZIOPHARM Oncology, Inc.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Related Party Transactions (Continued)

During the years ended December 31, 2020, 2019, and 2018, the Company recorded expenses of $ 0.1 million, $ 3.0 million, and $ 8.1 million, respectively, for services performed by Precigen.

December 31, 2019, the Company

recorded $ 0.1 million in current liabilities on its balance sheet for amounts due to Precigen.

Related Party Transactions

Collaboration with PGEN and MD Anderson

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 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 years ending December 31, 2020, 2019, and 2018, the Company did not make any payments to MD Anderson, and the total aggregate payments made in connection with this agreement are $ 41.9 million.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $ 8.1 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 year ended December 31, 2021, the Company made payments of $ 0.1 million to MD Anderson compared to $ 0 during the year ended December 31, 2020.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs for the year ended December 31, 2021 was $ 0 and for the year ended December 31, 2020 was $ 8.1 million, which is included in other current assets on the Company’s balance sheet.

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.

In the year ended

December 31, 2020, the Company recorded expenses of approximately $ 29 thousand for services performed by Vineti.

On July 9, 2020, the Company entered into a master service agreement and statement of work with Vineti, Inc., ("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 T-cell therapy, or TCR-T, clinical programs.

Heidi Hagen, who became a director of the Company in June 2019 and resigned November 2, 2021 and the Company's Interim Chief Executive Officer on February 25, 2021 and resigned on August 30, 2021, is a co-founder and former officer, of Vineti.

During the year ended December 31, 2021, the Company recorded expenses of approximately $ 0.4 million and during the year ended December 31, 2020, the Company recorded expenses of approximately $ 29,000 , for services performed by Vineti.

WaterMill Settlement Agreement

On February 4, 2021, the Company entered into an agreement, or the Settlement Agreement, with WaterMill Asset Management Corp.

and Robert W.

Postma (collectively, the "WaterMill Parties").

Pursuant to the Settlement Agreement, the Company increased the size of its board of directors from eight to nine directors and appointed Mr.

Postma to fill the newly created directorship.

In accordance with the Settlement Agreement, we agreed to reimburse the WaterMill Parties for up to $400,000 of their reasonable out-of-pocket expenses out of a total of approximately $ 650,000 in fees and expenses actually incurred by the WaterMill Parties in connection with (i) the WaterMill Parties' solicitation of written consents from our stockholders to vote in favor of certain proposals, as set forth in the definitive consent statement filed by the WaterMill Parties on October 30, 2020, and (ii) the negotiation, execution, and effectuation of the Settlement Agreement.

As of February 19, 2021, we have fully reimbursed the WaterMill Parties an aggregate amount of $ 400,000 .

Joint Venture with TriArm Therapeutics/Eden BioCell

On December 19, 2018, the Company and TriArm launched Eden BioCell as a joint venture to lead commercialization of the Company’s Sleeping Beauty-generated CAR-T therapies in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea.

On December 18, 2018, the Company and TriArm Therapeutics, Ltd.

(“TriArm”) launched Eden BioCell, Ltd.

(“Eden BioCell”) as a joint venture to lead commercialization of the Company’s Sleeping Beauty -generated CAR-T therapies 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.

3 unchanged sentences

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.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Settlement of a Related Party Relationship

Exclusive License Agreement with PGEN Therapeutics

On October 5, 2018, the Company entered into the license agreement with PGEN.

As between the Company and PGEN, the terms of the License Agreement replace and supersede the terms of:

, and the Third Amendment to Exclusive Channel Partner Agreement effective June 29, 2016, which was subsequently assigned by Precigen to PGEN;

(b) certain rights and obligations pursuant to that certain License and Collaboration Agreement effective March 27,

between ZIOPHARM, Precigen and ARES TRADING Trading S.A., or Ares Trading, a subsidiary of Merck KGaA, or Merck, as assigned by Precigen to PGEN, or the Ares Trading Agreement;

(c) that certain License Agreement between the Company, Precigen, and MD Anderson, with an effective date of January 13, 2015

, or the MD Anderson License, which was subsequently assigned by Precigen and assumed by PGEN effective as of January 1, 2018;

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.

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 and CD19 Products and after a two-year

period, the TCR Products.

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

The Company recorded a liability for $ 0.1 million for the years ended December 31, 2019, and has included this amount in accrued expenses on the balance sheet.

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.

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

The Company is responsible for all development costs associated with each of the licensed products .

ZIOPHARM Oncology, Inc.

Huang also serves as a member of Eden BioCell’s board of directors.

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

In September 2021, TriArm and Alaunos mutually agreed to dissolve the Eden BioCell joint venture.

Refer to Note 15, Joint Venture , for further details.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Settlement of a Related Party Relationship (Continued)

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 years ended December 31, 2020, 2019 and 2018, there were no expenses for services performed by PGEN.

As of December 31, 2020 and 2019, the Company had $ 0.1 million in accrued expenses for amounts due to PGEN.

In consideration of the Company

entering into the License Agreement, Precigen forfeited and returned to the Company all shares of the Company’s Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement.

In addition, PGEN is required to transfer all of Ziopharm’s rights and obligations under the Ares Trading Agreement to Precigen (or its’ affiliate).

As a result, Ziopharm shall not be responsible for any remaining obligations under the Merck Agreement.

Additionally, Precigen forfeited and returned to the Company all shares of the Company’s Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement.

The Company determined that this transaction represented a capital transaction between related parties.

The Company fair valued the preferred stock and the derivative liability on the date of the transaction, noting a total fair value of $ 163.3 million.

The relinquishment of the Ziopharm’s obligation under the Ares Trading Agreement was also considered part of the overall capital transaction.

The Company recognized an additional credit to accumulated deficit of $ 49.5 million as a result of the relief of the obligation under the Ares Trading Agreement (Note 7).

The total amount of the settlement was $ 212.8 million.

The Company incurred approximately $ 7.4 million of transaction advisory costs with third-party vendors, of which $ 5.4 million was considered a direct cost associated with the Series 1 preferred stock extinguishment and is also included as part of the consideration transferred.

The remaining $ 2.0 million of transaction costs were recognized as an expense during the year ended December 31, 2018.

The Company recognized a net credit to accumulated deficit of $ 207.3 million, calculated as the difference in the carrying value of the Series 1 preferred stock, derivative liability, and contract liability, and the consideration transferred of $ 5.4 million, in connection with the transaction.

This amount is included in net income available to common shareholders in the calculation of earnings per share for the year ended December 31, 2018 (Note 3).

Operating Leases

The Company adopted FASB ASU No.

on January 1, 2019 using the effective date method, in which it did not restate prior periods.

Upon adoption, the Company elected the package of practical

expedients permitted under the transition guidance within Topic 842 which, among other things, allowed it to carry forward the historical lease classification.

The Company does not allocate consideration in its leases to lease and non-lease

components and does not record leases on its balance sheets with terms of 12 months or less.

The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments.

The Company’s incremental borrowing rate represents the rate of interest that it would have to pay to borrow over a similar term an amount equal to the lease payments in a similar economic environment.

The Company considers publicly available data for instruments with similar terms and characteristics when determining its incremental borrowing rates.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Leases (Continued)

The adoption of Topic 842 resulted in recognition of approximately $ 1.6 million of right-of-use

assets and $ 1.6 million of lease liabilities on the Company’s balance sheets on January 1, 2019.

The adoption did not have a material impact on the Company’s statements of operations or accumulated deficit.

The Company will review the classification of newly entered leases as either an operating or a finance lease and recognize a related right-of-use

asset and lease liabilities on its balance sheets upon commencement.

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

As of December 31, 20 20

, and December 31, 201 9

, 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 at MD Anderson.

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

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

On April 22, 2021, the Company extended its lease for a portion of office space currently held at the Company's office space in Boston.

The renewal of the portion of the Company's office space was originally set to expire on August 31, 2021, but has now been extended through August 31, 2026 .

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

In December 2021, the Company made the decision to move its operations away from its former corporate office in Boston.

As described in Note 3, Summary of Significant Accounting Policies, the Company's change in the intended use of the Boston office represented an indicator of impairment.

We determined the aggregate carrying value of the asset group (approximately $ 1.4 million) was in excess of the aggregate estimated fair value and recorded an impairment charge of $ 0.6 million to the right-of-use asset and approximately $ 0.1 million to associated property and equipment.

The fair value was determined based on the amount and timing of estimated net future cash flows, discounted at a risk-adjusted rate of 10 %.

The Boston office has been fully vacated as of December 31, 2021.

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 was required to make rental payments at an average monthly rate of approximately $ 1,000 .

This lease was terminated effective March 31, 2020.

On March 12, 2019, the Company entered into a lease agreement for office space in Houston.

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.

On October 15, 2019, the Company entered into a lease agreement for additional office space in Houston.

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 $ 17.0 thousand 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

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 at MD Anderson.

Effective June 1, 2020, the Company entered into a noncancelable lease for a period of less than a year with monthly payments of approximately $

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 $

Effective December 15, 2020, the Company leased approximately 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 202 3

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

On March 12, 2019, the Company entered into a lease agreement for office and lab space in Houston, Texas at MD Anderson through April 2021 .

Under the terms of the lease agreement, the Company leases approximately 1,038 square feet and was required to make rental payments at an average monthly rate of approximately $ 2,000 through April 2021.

On October 15, 2019, the Company entered into a lease agreement for additional office and laboratory space in Houston through February 2027 .

Under the terms of the lease, the Company leases from MD Anderson, approximately 8,443 square feet and is initially required to make rental payments of approximately $ 17,000 per month through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term.

Effective April 7, 2020, the Company leased an additional 5,594 square feet from MD Anderson.

The Company is initially required to make rental payments of approximately $ 12,000 per month through February 2027 , subject to an annual base rent increase of approximately 3.0 % throughout the term.

On December 15, 2020, we entered into a second agreement with MD Anderson to lease additional space on MD Anderson’s campus (the “2020 Lease”).

As of December 31, 2021, the Company has approximately 32,148 square feet under lease from MD Anderson.

The Company is initially required to make rental payments of approximately $ 37,000 per month through April 2028, subject to an annual base rent increase of approximately 3.0 % throughout the term beginning in April 2023.

The 2020 Lease may be extended for one additional five-year term at our election.

The components of lease expense were as follows:

Years Ended December 31,

Year Ended December 31,

($ in thousands)

Operating lease cost

3 unchanged sentences

Cash paid for amounts included in the measurement of the lease liabilities were $ 1.3 million for the year-ended December 31, 2021.

The Company recognized new operating lease assets obtained in exchange for operating

lease liabilities of $ 3.2 million for

the year-ended December 31, 2020.

ZIOPHARM Oncology, Inc.

The Company recognized new operating lease assets obtained in exchange for operating lease liabilities of $ 1.4 million for the year-ended December 31, 2021.

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

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Leases (Continued)

As of December 31, 2020, the maturities of the Company’s operating lease liabilities were as follows (in thousands):

Maturity of Lease Liabilities

1 unchanged sentence

Total lease payments

imputed interest and adjustments

imputed interest

Present value of lease payments

1 unchanged sentence

License Agreements

Exclusive License Agreement with PGEN

On October 5, 2018, the Company entered into an exclusive license agreement with PGEN.

Refer to Note 7 – Settlement of a Related Party Relationship

for further details.

License Agreement and Research and Development Agreements —The University of Texas MD Anderson Cancer Center

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

therapies, non-viral

to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson.

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 have 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 are not meeting 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

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Commitments and Contingencies (Continued)

cured within 60 days of receiving such notice.

In addition, the MD Anderson License will terminate upon the occurrence of certain insolvency events for both the Company and PGEN and may be terminated by the mutual written agreement of the Company, PGEN, and MD Anderson.

On August 17, 2015, the Company, PGEN and MD Anderson entered into the Research and Development, or the 2015 Agreement, to formalize the scope and process for the transfer by MD Anderson, pursuant to the terms of the MD Anderson License, of certain existing research programs and related technology rights, as well as the terms and conditions for future collaborative research and development of new and ongoing research programs.

Pursuant to the 2015 Agreement, the Company, PGEN and MD Anderson have agreed to form a joint steering committee that will oversee and manage the new and ongoing research programs.

Under the License Agreement with PGEN, ZIOPHARM and PGEN agreed that PGEN would no longer participate on the joint steering committee after the date of the License Agreement.

As provided under the MD Anderson License, the Company provided funding for research and development activities in support of the research programs under the Research and Development Agreement for a period of three years and in an amount of no less than $ 15.0 million and no greater than $ 20.0 million per year.

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

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.

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.

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 – Warrants

for further details.

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.

addition, the Company will pay MD Anderson royalties on net sales of its TCR products at rates in the low single digits.

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.

During the years ended December 31, 2020 and 2019, 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 $ 8.1 million,

ZIOPHARM Oncology, Inc.

Exclusive License Agreement with PGEN Therapeutics

On October 5, 2018, the Company entered into an exclusive license agreement, or License Agreement, with PGEN Therapeutics, or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation.

As between the Company and PGEN, the terms of the License Agreement replaced and superseded the terms of:

(a) that certain Exclusive Channel Partner Agreement by and between the Company and Precigen, dated January 6, 2011, as amended by the First Amendment to Exclusive Channel Partner Agreement effective September 13, 2011, the Second Amendment to the Exclusive Channel Partner Agreement effective March 27, 2015, and the Third Amendment to Exclusive Channel Partner Agreement effective June 29, 2016, which was subsequently assigned by Precigen to PGEN;

(b) certain rights and obligations pursuant to that certain License and Collaboration Agreement effective March 27, 2015 between the Company, Precigen and ARES TRADING S.A., or Ares Trading, a subsidiary of Merck KGaA, or Merck, as assigned by Precigen to PGEN, or the Ares Trading Agreement;

(c) that certain License Agreement between the Company, Precigen, and MD Anderson, with an effective date of January 13, 2015, or the MD Anderson License, which was subsequently assigned by Precigen and assumed by PGEN effective as of January 1, 2018;

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 2015 R&D Agreement, and any amendments or statements of work thereto.

Pursuant to the terms of the License Agreement, the Company has exclusive, worldwide rights to research, develop and commercialize (i) TCR products designed for neoantigens for the treatment of cancer, (ii) products utilizing Precigen’s RheoSwitch® gene switch, or RTS, for the treatment of cancer, referred to as IL-12 Products and (iii) CAR products directed to (A) CD19 for the treatment of cancer, referred to as CD19 Products, and (B) BCMA for the treatment of cancer, subject to certain obligations to pursue such target under the Ares Trading Agreement.

Under the License Agreement, the Company also has exclusive, worldwide rights 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, as defined in the License Agreement, 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 will pay PGEN an annual license fee of $ 100,000 and the Company has agreed to reimburse PGEN for certain historical costs of the licensed programs up to $ 1.0 million, which was fully paid during the year ended December 31, 2019.

The Company will 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.

The Company will also pay PGEN twenty percent of any sublicensing income received by us relating to the licensed products.

The Company is responsible for all development costs associated with each of 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 a maximum royalty amount of $ 100.0 million.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Commitments and Contingencies (Continued)

which is included in prepaid expenses and other current assets on the Company’s balance sheet on December 31, 2020.

In consideration of the Company's entry into the License Agreement, Precigen has forfeited and returned to the Company all shares of the Company's Series 1 preferred stock held by or payable to Precigen.

The transaction represented a capital transaction between related parties and the date of settlement was accounted for during the License Agreement year ended December 31, 2018.

In October 2020, the Company entered into an amendment to the License Agreement relating to the transfer of certain materials and PGEN’s obligations to provide transition assistance relating to the IL-12 products.

License Agreement and 2015 Research and Development 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).

Pursuant to the MD Anderson License, the Company, together with PGEN, 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 served as the Company’s Chief Executive Officer from May 2015 until February 2021 and was formerly a tenured professor of pediatrics at MD Anderson.

On August 17, 2015, the Company, Precigen and MD Anderson entered into the 2015 R&D Agreement, to formalize the scope and process for the transfer by MD Anderson, pursuant to the terms of the MD Anderson License, of certain existing research programs and related technology rights, as well as the terms and conditions for future collaborative research and development of new and ongoing research programs.

The rights and obligations of Precigen under the 2015 R&D Agreement were assigned to the Company pursuant to the Fourth Amendment to 2015 R&D Agreement which was entered into on September 19, 2019 (the “Fourth Amendment”) with an effective date of October 5, 2018.

The activities under the 2015 R&D Agreement are directed by a joint steering committee comprised of two members from the Company and one member from MD Anderson.

As provided under the MD Anderson License, the Company provided funding for research and development activities in support of the research programs under the 2015 R&D Agreement for a period of three years and in an amount of no less than $ 15.0 million and no greater than $ 20.0 million per year.

On November 14, 2017, the Company entered into an amendment to the 2015 R&D Agreement, extending its term until April 15, 2021 and on October 22, 2019, the Company entered into another amendment to the 2015 R&D Agreement, extending its term until December 31, 2026.

During the year ended December 31, 2021, the Company made payments of $ 0.1 million to MD Anderson compared to $ 0 during the year ended December 31, 2020.

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs for the year ended December 31, 2021 was $ 0 and for the year ended December 31, 2020 was $ 8.1 million, which is included in other current assets on the Company’s balance sheet.

For the year ended December 31, 2021, we recognized $ 8.1 million in expenses related to the 2015 R&D Agreement and for the year ended December 31, 2020, we recognized $ 12.2 million in expenses related to the 2015 R&D Agreement.

The term of the MD Anderson License expires on the last to occur 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 then 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

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.

In addition, the MD Anderson License will terminate upon the occurrence of certain insolvency events for both us and PGEN and may be terminated by the mutual written agreement of us, PGEN, and MD Anderson.

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.

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 made payments of $ 0.5 and $ 1.0 million during the years ended December 31, 2020 and 2019, respectively.

The terms of the Patent License also require the Company 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 the Company equals $ 1.5 million.

The first minimum annual royalty payment was paid during the year ending December 31, 2020 .

On December 31, 2020 and 2019, the Company included $ 0.3 million related to the Patent License as prepaid expenses and other current

assets on the Company’s balance sheet.

2019 , the Company included $

0.5 million, respectively in accrued expenses on the Company’s balance sheet.

2020 , the Company entered into an amendment to the patent license agreement which expanded the TCR library to include additional TCR’s reactive to mutated KRAS and TP

Under the amendment, the Company paid $

0.6 million during the year ending December

2020 , the Company entered into a second amendment to the patent license agreement which expanded the TCR library to include additional TCR’s receptors.

Under the second amendment, the Company paid $

0.4 million for the year ended December

ZIOPHARM Oncology, Inc.

provided, however, that following the expiration of the term of the MD Anderson License, the Company, together with Precigen, shall then 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 the Company and Precigen 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 have 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 Precigen are not meeting 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 the Company and Precigen, if such breach has not been cured within 60 days of receiving such notice.

In addition, the MD Anderson License will terminate upon the occurrence of certain insolvency events for both the Company and Precigen and may be terminated by the mutual written agreement of the Company, PGEN, and MD Anderson.

In connection with the execution of the 2019 R&D Agreement described below, on October 22, 2019, the Company amended the 2015 R&D Agreement to extend the term of the 2015 R&D Agreement until December 31, 2026 and to allow cash resources on hand at MD Anderson under the 2015 R&D Agreement to be used for development costs under the 2019 R&D Agreement.

2019 Research and Development Agreement—The University of Texas MD Anderson Cancer Center

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Commitments and Contingencies (Continued)

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.

There have been no payments as of December 31, 2020.

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.

On October 22, 2019, we entered into the 2019 Research and Development Agreement, or the 2019 R&D Agreement, with MD Anderson, pursuant to which the parties agreed to collaborate with respect to the TCR program.

Under the 2019 R&D Agreement, the parties will, among other things, collaborate on programs to expand our TCR library and conduct clinical trials.

The activities under the 2019 R&D Agreement are directed by a joint steering committee comprised of two members from our company and one member from MD Anderson.

We will own all inventions and intellectual property developed under the 2019 R&D Agreement and we will retain all rights to intellectual property for oncology products manufactured using non-viral gene transfer technologies under the 2019 R&D Agreement, including our Sleeping Beauty technology.

We have granted MD Anderson an exclusive license for such intellectual property outside the field of oncology and to develop and commercialize TCR products manufactured using viral gene transfer technologies, and a non-exclusive license for TCR products manufactured using viral-based technologies.

Under the 2019 R&D Agreement, we agreed, beginning on January 1, 2021, to reimburse MD Anderson up to a total of $ 20 million for development costs under the 2019 R&D Agreement, after the funds from the 2015 R&D Agreement are exhausted.

In addition, we will pay MD Anderson royalties on net sales of its TCR products at rates in the low single digits.

We are 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 our TCR products.

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

We also agreed to sell our TCR products to MD Anderson at preferential prices and will sell our TCR products in Texas exclusively to MD Anderson for a limited period of time following the first commercial sale of our TCR products.

For the year ended December 31, 2021, the Company incurred expenses of $ 0.5 million related to this agreement compared to $ 0 for the year ended December 31, 2020.

The 2019 R&D Agreement will terminate on December 31, 2026 and either party may terminate the 2019 R&D Agreement following written notice of a material breach.

The 2019 R&D Agreement also contains customary provisions related to indemnification obligations, confidentiality and other matters.

In connection with the execution of the 2019 R&D Agreement, on October 22, 2019, the Company issued MD Anderson a warrant to purchase 3,333,333 shares of the Company's common stock, which is referred to as the MD Anderson Warrant.

The MD Anderson Warrant has an initial exercise price of $ 0.00 1 per share, expires on December 31, 2026 , and vests upon the occurrence of certain clinical milestones.

As of December 31, 2021, none of the milestones have been met.

The MD Anderson Warrant and the shares of the Company's common stock to be issued upon exercise of the MD Anderson Warrant have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

License Agreement with the NCI

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

Pursuant to the Patent License, we hold 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 neoantigens.

In addition, pursuant to the Patent License, we hold 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.

On May 29, 2019, January 8, 2020, September 28, 2020, April 16, 2021, May 4, 2021, and August 13, 2021 we amended the Patent License to expand our TCR library to include additional TCRs reactive to mutated KRAS and TP53 neoantigens licensed from the NCI.

Pursuant to the terms of the Patent License, we are 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 for the Patent License.

We also reimbursed the NCI for past patent expenses in the aggregate amount of approximately $ 46,000 .

Under the amendment to the patent license signed in January 2020, we agreed to pay the NCI a cash payment of $ 600,000 within sixty days of the amendment and under the amendment to the patent license signed in September 2020, we agreed to pay the NCI a cash payment of $ 411,000 within sixty days of the amendment.

The terms of the Patent License also 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.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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

Of such payments, 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 our first sponsored Phase 1 clinical trial of a licensed product or licensed process in the field of use licensed under the Patent License .

In addition, we are required to pay the NCI one-time benchmark payments following aggregate net sales of licensed products at certain aggregate net sales ranging from $ 250.0 million 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 lic ensed

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.

We 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 we enter into a sublicensing agreement relating to a licensed product, we are 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.

The Patent License will expire upon expiration of the last patent contained in the licensed patent rights, unless terminated earlier.

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.

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.

The NCI may terminate or modify the Patent License in the event of a material breach, including if we do 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.

We may terminate the Patent License, or any portion thereof, in our sole discretion at any time upon 60 days’

written notice to the NCI.

In addition, the NCI has the right to:

(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.

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

On January 10, 2017, the Company announced the signing of the 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.

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

For the year ended December 31, 2021 we expensed and made payments of $ 0.5 million and for the year ended December 31, 2020 we expensed and made payments of $ 1.5 million.

Cooperative Research and Development Agreement (CRADA) with the NCI

On January 9, 2017, we entered into a Cooperative Research and Development Agreement (the “CRADA”) with the NCI.

The purpose of this collaboration was to advance a personalized TCR-T approach for the treatment of solid tumors.

Using our Sleeping Beauty technology, NCI would analyze a patient’s own cancer cells, identify their unique neoantigens and TCRs reactive against those neoantigens and then use our Sleeping Beauty technology to transpose one or more TCRs into T cells for re-infusion.

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

Rosenberg, M.D., Ph.D., Chief of the Surgery Branch at the NCI, in collaboration with the Company’s researchers and PGEN researchers.

During the year ended December 31, 20 20

Company made payments of $

2.5 million, each year.

In February 2019, the Company extended the CRADA with the NCI for two years, committing an additional $

5.0 million to this program.

Exclusive Channel Partner Agreement with PGEN for the Cancer Programs

From 2011 to 2018, the Company was party to various arrangements with Precigen (now PGEN) in which the Company used PGEN’s technology to research and develop cancer treatments in return for various future profit sharing and royalty arrangements.

These agreements were modified or terminated by the License Agreement described in Note 7.

ZIOPHARM Oncology, Inc.

Rosenberg, M.D., Ph.D., Chief of the Surgery Branch at the NCI, in collaboration with our researchers and PGEN researchers.

We are responsible for providing NCI with the test materials necessary for them to conduct their studies, and eventually, clinical trials pursuant to the CRADA.

Inventions, data and materials discovered or produced in connection with performance of the research plan under the CRADA will remain the sole property of the party who produced the discovery.

The parties will jointly own all inventions jointly discovered under the research plan.

The owner of any invention under the CRADA will make the decision to file a patent covering the invention, or in the case of a jointly owned invention, we will have the first opportunity to file a patent covering the invention.

If we fail to provide timely notice of our decision to NCI or decide not to file a patent covering the joint invention, NCI has the right to make the filing.

For any invention solely owned by NCI or jointly made by NCI and us for which a patent application was filed, the U.S.

Public Health service grants us an exclusive option to elect an exclusive or non-exclusive commercialization license.

For inventions owned solely by NCI or jointly owned by NCI and us, which are licensed according to the terms described above, we agreed to grant to the U.S.

government a non-exclusive, non-transferable, irrevocable and paid up license to practice the invention or have the invention practiced on its behalf throughout the world.

We are also required to grant the U.S.

government a non-exclusive, non-transferable, irrevocable and paid up license to practice the invention or have the invention practiced on its behalf throughout the world for any of our solely owned inventions.

The agreement may be terminated by any of the parties upon 60 days prior written consent.

The NCI has a cleared IND that would permit them to begin this trial.

To our knowledge, the trial has not yet enrolled due to matters internal to the NCI and unrelated to our technology.

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

In February 2019, we extended the CRADA with the NCI until January 9, 2022, committing an additional $ 5.0 million to this program.

During the year ended December 31, 2021 we made payments of $ 1.25 million and during the year ended December 31, 2020 we made payments of $ 2.5 million, pursuant to the CRADA.

For the third and fourth quarters of 2021, we were not required to make payments towards the program

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Commitments and Contingencies (Continued)

Ares Trading License and Collaboration Agreement

On March 27, 2015, the Company, together with Precigen (now PGEN), signed the Ares Trading Agreement, with Ares Trading S.A., a subsidiary of the biopharmaceutical business of Merck KGaA, Darmstadt, Germany, through which the parties established a collaboration for the research and development and commercialization of certain products for the prophylactic, therapeutic, palliative or diagnostic use for cancer in humans.

PGEN was entitled to receive $ 5.0 million from Ares Trading, payable in equal quarterly installments over two years for each identified product candidate, which will be used to fund discovery work.

The Company was responsible for costs exceeding the quarterly installments and all other costs of the preclinical research and development.

For the years ended December 31, 2020 and 2019, the Company incurred no expense under the Ares Trading Agreement.

For the year ended December 31, 2018, the Company has expensed $ 0.1 million under the Ares Trading Agreement.

Ares Trading paid a non-refundable

upfront fee of $ 115.0 million to Precigen as consideration for entry into the Ares Trading Agreement.

Pursuant to the ECP Amendment, the Company was entitled to receive 50 % of the upfront fee, or $ 57.5 million, which was received from Precigen in July 2015.

Under the License Agreement, PGEN agreed to perform all future obligations of the Company under the Ares Trading Agreement other than certain payment obligations.

Accordingly, the Company recognized the remaining deferred revenue as part of the settlement of related party relationships as described in Note

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

as agreed with the NCI.

In March 2022, we entered into an amendment to the CRADA that is retroactive, effective January 9, 2022 to extend the term of the CRADA until January 9, 2023.

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, were 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.

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.

The class of water-based organic arsenicals includes darinaparsin.

The Company issued options to purchase 50,222 shares outside of its stock option plans following the successful completion of certain clinical milestones, of which all have vested.The Licensors are entitled to receive certain milestone payments.

In addition, the Company may be required to make additional payments to the Licensors (as defined in the MD Anderson License) upon achievement of certain other milestones in varying amounts which, on a cumulative basis could total up to $ 4.5 million.

Under the terms of the agreement, the Company may be required to make additional payments to the Licensors upon achievement of certain other milestones in varying amounts which, on a cumulative basis could total up to an additional $ 4.5 million.

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.

During the year ended December 31, 2021, the Company paid fees under the terms of the license agreement of $ 0.1 million.

No amounts were accrued or paid during the year ended December 31, 2020.

Collaboration Agreement with Solasia Pharma K.K.

On March 7, 2011, the Company entered into a License and Collaboration Agreement with Solasia which was amended on July 31, 2014 to include an exclusive worldwide license.

On March 7, 2011, the Company entered into a License and Collaboration Agreement with Solasia Pharma K.

("Solasia"), which was amended on July 31, 2014 to include an exclusive worldwide license.

Pursuant to the License and Collaboration Agreement, the Company granted Solasia an exclusive license to develop and commercialize darinaparsin in both intravenous and oral forms and related organic arsenic molecules, in all indications for human use.

As consideration for the license, the Company is eligible to receive from Solasia development- and sales-based milestones, a royalty on net sales of darinaparsin, once commercialized, and a percentage of any sublicense

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Commitments and Contingencies (Continued)

revenues generated by Solasia.

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.

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 which became exercisable six months after the closing of the private placement.

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

The relative fair value of the warrants was estimated at $ 18.4 million using a Black-Scholes model with the following assumptions:

During the year ended December 31, 2021, the Company recorded $ 0.4 million of collaboration revenue under the collaboration agreement with Solasia in accordance with variable consideration guidance within ASC Topic 606, Revenue from Contracts with Customers .

The collaboration revenue for the year ended December 31, 2021 related to a milestone event, which was met by Solasia related to a submission of approval application in Japan.

No amounts were recorded or received during the year ended December 31, 2020.

The November 2018 Warrants had an exercise price of $ 3.01 per share and have a five-year term.

The relative fair value of the November 2018 Warrants was estimated at $ 18.4 million using a Black-Scholes model with the following assumptions:

expected volatility of 71 %, risk free interest rate of 2.99 %, expected life of five years and no dividends.

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 a private placement.

Pursuant to the terms of the agreements, investors exercised their 2018 warrants for an aggregate of

17,803,031 shares of common stock, at an exercise price of $

3.01 per share.

The warrants exercised were originally issued by the Company in a private placement that closed

in November 2018.

Proceeds from

the warrant exercise, after deducting placement agent fees and other related expenses of $

1.1 million were approximately $

52.5 million.

The Company issued participating investors new warrants to purchase up to

17,803,031 additional shares of common stock as an inducement for the warrant holders to exercise their 2018 warrants early.

The 2019 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 $

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

charge in the Company’s statement of operations

during the year ended December 31, 2019

The Company assessed whether both the 2019 and 2018 warrants required accounting as derivatives.

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 assessed whether the November 2018 Warrants require accounting as derivatives.

The Company determined that the November 2018 Warrants were (1) indexed to the Company’s own stock and (2) classified in stockholders’

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

As such, the Company has concluded the November 2018 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 whereby the investors exercised the November 2018 Warrants for an aggregate of 17,803,031 shares of common stock, at an exercise price of $ 3.01 per share.

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

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

The Company issued participating investors new warrants to purchase up to 17,803,031 additional shares of common stock (the "2019 Warrants") as consideration for the warrant holders to exercise their November 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 in the Company’s statement of operations in 2019.

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

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.

The warrant has an initial exercise price of $ 0.001 per share and grant date fair value of $ 14.5 million.

The warrant expires on December 31, 2026 and vests upon the occurrence of certain clinical

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

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 (the "MD Anderson Warrant").

The MD Anderson Warrant has an initial exercise price of $ 0.001 per share and grant date fair value of $ 14.5 million.

The MD Anderson Warrant expires on December 31, 2026 and vests upon the occurrence of certain clinical milestones.

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

For the years ended December 31, 2021 and 2020, the Company did not recognize any expense related to the warrant as no work on the clinical milestones has begun.

On August 6, 2021, the Company entered into the Loan and Security Agreement with SVB.

Refer to Note 4 - Debt .

In connection with the Loan and Security Agreement, the Company issued SVB warrants to purchase 432,844 shares of common stock with an exercise price of $ 2.22 per share.

The warrants have a ten-year life and are fully vested upon issuance.

The fair value of the warrants was estimated at $ 0.8 million using a Black-Scholes model with the following assumptions:

expected volatility of 79 %, risk free interest rate of 1.31 %, expected life of ten years and no dividends.

On December 28, 2021, the Company entered into the Amendment, as described in Note 4, Debt, where the original warrants issued to SVB were amended and restated.

As amended and restated, the warrants are for up to 649,615 shares of common stock, in the aggregate, at an exercise price per share of $ 1.16 .

The amended and restated warrants expire on August 6, 2031 and are fully vested upon issuance.

Using a Black-Scholes model with an expected volatility of 81 %, risk free interest rate of 1.49 %, expected life of 10 years and no dividends, the Company recorded a $ 0.2 million increase in the fair value of the warrants due to the modification of the warrants.

Restructuring

On September 27, 2021, in order to lower its existing cost structure in connection with the realignment of its business strategy, the Company announced a strategic reduction in force and notified approximately 60 full-time employees of its intention to terminate their services on or, in most cases, before November 30, 2021.

Certain of the notified employees had employment agreements that provided for enhanced severance benefits.

The severance benefits, apart from certain continuing Company-paid health care benefits for up to twelve months, were paid in 2021.

The Company expensed the following costs associated with termination benefit payments resulting from the strategic reduction in force:

($ in thousands)

Research and development

General and administrative

Total severance expense

There is no provision for income taxes because the Company has incurred operating losses since inception.

The reported amount of income tax expense for the years differs from the amount that would result from applying

ZIOPHARM Oncology, Inc.

The reported amounts of income tax expense for the years ended December 31, 2021 and 2020 differ from the amounts that would result from applying domestic federal statutory

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Income Taxes (Continued)

domestic federal statutory tax rates to pretax losses primarily because of the changes in the valuation allowance.

Significant components of the Company’s deferred tax assets at December 31, 2020

are as follows:

tax rates to pretax losses primarily because of the changes in the valuation allowance.

Significant components of the Company’s deferred tax assets at December 31, 2021 and 2020 are as follows:

(in thousands)

1 unchanged sentence

Net operating loss carryforwards

and organizational costs

Start-up and organizational costs

Research and development credit carryforwards

4 unchanged sentences

Total deferred tax assets

Deferred tax liabilities:

Right-of-use asset

2 unchanged sentences

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

At December 31, 2020

, the Company has aggregate net operating loss carryforwards for federal tax purposes of approximately $ 562 million, of which $ 342 million is available to offset future federal taxable income to the extent permitted under the Internal Revenue Code, or IRC, expiring in varying amounts through 2037 and approximately $ 220 million can be carried forward indefinitely.

At December 31, 2021, the Company has aggregate net operating loss carryforwards for federal tax purposes of approximately $ 639 million, of which approximately $ 342 million expires at various dates through December 31, 2037 and approximately $ 297 million can be carried forward indefinitely.

The Company also has approximately $ 480 million of state net operating loss carryforwards available to offset future state taxable income, expiring at various dates through 2041.

Additionally, the Company has approximately $ 37.0 million of research and development credits at December 31, 2020

, expiring in varying amounts through 2040 , which may be available to reduce future taxes.

Under the IRC Section 382, certain substantial changes in the Company’s ownership may limit the amount of net operating loss carryforwards that can be utilized in any one year to offset future taxable income.

Section 382 of the IRC provides limits to which a corporation that has undergone a change in ownership (as defined) can utilize any net operating loss, or NOL, and general business tax credit carryforwards it may have.

The Company commissioned an analysis to determine whether Section 382 could limit the use of its carryforwards in this manner.

After completing the analysis, it was determined an ownership change had occurred in February 2007.

As a result of this change, the Company’s NOL’s and general business tax credits from February 23, 2007 and prior would be completely limited under IRC Section 382.

The deferred tax assets related to NOL’s and general business credits have been reduced by $ 11.2 million and $ 636 thousand, respectively, as a result of the change.

The Company updated the IRC Section 382 analysis through December 31, 2018.

There was no change in ownership at this time.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Income Taxes (Continued)

Additionally, the Company has approximately $ 40 million of federal and state research and development credits at December 31, 2021, expiring in varying amounts through 2041 , which may be available to reduce future taxes.

The Company has provided a valuation allowance for the full amount of these net deferred tax assets since it is more likely than not that these future benefits will not be realized.

However, these deferred tax assets may be available to offset future income tax liabilities and expenses.

The valuation allowance increased by $ 18.8 million in 2020

primarily due to net operating loss carryforwards and the increase in research and development credits.

Income taxes using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to non-deductible

expenses related to the Company’s issuance of preferred stock along with the change in the valuation allowance on deferred tax assets.

The valuation allowance increased by $ 14.6 million in 2021 due primarily to net operating loss carryforwards and the increase in research and development credits.

Income taxes using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to non-deductible expenses related to the Company’s issuance of warrants along with the change in the valuation allowance on deferred tax assets.

A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

3 unchanged sentences

State income tax, net of federal tax benefit

inducement warrant expense

Research and development credits

Stock compensation

Research and development true-up

Officers compensation

Federal rate change

Federal/state rate change

Change in valuation allowance

Effective tax rate

The Company adopted ASC740, “Accounting for Uncertain Tax Positions” on January 1, 2007.

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No.

109, “Accounting for Income Taxes.” ASC 740 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return.

The Company adopted ASC 740, Accounting for Uncertain Tax Positions on January 1, 2007 (“ASC 740”).

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No.

109, “Accounting for Income Taxes.”

ASC 740 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

The Company did not establish any additional reserves for uncertain tax liabilities upon adoption of ASC 740.

There were no

adjustments to its uncertain tax positions in the years ended December 31, 2020, 2019, and 2018.

The Company has not recognized any interest and penalties in the statement of operations because of the Company’s net operating losses and tax credits that are available to be carried forward.

There were no adjustments to its uncertain tax positions in the years ended December 31, 2021 and 2020.

The Company has not recognized any interest and penalties in the statement of operations because of the Company’s net operating losses and tax credits that are available to be carried forward.

When necessary, the Company will account for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes.

1 unchanged sentence

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state jurisdictions for the years ended December 31, 1999 through 2021.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act into law which was an emergency economic stimulus package in response to the COVID-19 pandemic and its impact on the economy, public health, state and local governments, individuals and businesses.

The Company has considered the legislation surrounding the impact of the CARES Act and the potential effects it may have on

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Income Taxes (Continued)

Some of the more significant provisions under the CARES Act include five-year carryback of net operating losses (Section 2303), Refundable AMT credit (Section 2305), relaxation of the limitation of adjusted taxable income (ATI) as determined under IRC Section 163(j) from 30 % to 50 % (Section 2306), and changes to qualified bonus improvement property (QIP) tax life and bonus depreciation eligibility allowing for a 15

-year tax useful life an eligibility for 100 %b bonus depreciation (Section 2307).

Due to the Company’s history of US taxable losses, and use of MACRS and/or straight-line depreciation for tax purposes, there is no impact to the tax provision as a result of the enactment of the CARES Act.

The Company has considered the legislation surrounding the impact of the CARES Act and the potential effects it may have on the Company.

As of December 31, 2020, the Company has analyzed the provisions of the CARES Act and has recorded no income tax benefit or expense related to it.

Preferred Stock and Stockholders’ Equity (Deficit)

On April 26, 2006, the date of the Company’s annual stockholders meeting that year, the shareholders approved the adoption of an Amended and Restated Certificate of Incorporation pursuant to which the Company has 280,000,000 shares of authorized capital stock, of which 250,000,000 shares are designated as common stock (par value $ 0.001 per share), and 30,000,000 shares are designated as preferred stock (par value $0.001 per share).

The Company’s amended and res t

ated certificate of incorporation authorizes it to issue 250,000,000 shares of common stock.

As of February 24

, 2021, 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 the Company has no immediate plans to issue additional shares of common stock, other than in connection with its 2020 Equity Incentive Plan, it may need additional shares for business and financial purposes in the future.

February 2020 Public Offering

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.

Under the terms of the underwriting agreement, the Company 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 was made pursuant to the Company’s effective registration statement on Form S-3ASR

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

The underwriters purchased the 27,826,086 shares on February 5, 2020.

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

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 Company.

At-the-Market Offering

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

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

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Preferred Stock and Stockholders’ Equity (Deficit) (Continued)

During the year ended De c

ember 31, 2019, the Company sold an aggregate of 1,271,274 shares of common stock.

The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (File 333-232283) 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 offering expenses payable by the Company.

November 2018 Private Placement and 2019 Inducement Warrants

On November 11, 2018, the Company entered into a securities purchase agreement with certain institutional and accredited investors, pursuant to which the Company agreed to issue and sell to the Investors an aggregate of 18,939,394 immediately separable units, with each unit being composed of (i) one share of the Company’s common stock, par value $ 0.001 per share, and (ii) a warrant to purchase one share of common stock, at a price per unit of $ 2.64 , for net proceeds of approximately $ 47.1 million (Note 10).

Preferred Stock

The Company’s Board of Directors are authorized to designate any series of Preferred Stock, to fix and determine the variations in relative rights, preferences, privileges and restrictions as between and among such series.

On June 29, 2016, the Company entered into amendments to certain agreements with Precigen (now PGEN) (Note 7).

In consideration for the execution and delivery of these amendments, the Company issued to Precigen 100,000 shares of its newly designated Series 1 preferred stock.

Each share of the Company’s Series 1 preferred stock had a stated value of $ 1,200 , subject to appropriate adjustment in the event of any stock dividend, stock

split, combination or other recapitalization.

The Series 1 preferred stock had certain rights, preferences, privileges and obligations, including dividend rights, conversion rights, consent rights with respect to certain Company actions, and rights to preferential payments in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or a change of control or sale, lease, tran s

fer or exclusive license of all or substantially all of the Company’s assets prior to the conversion of the Series 1 preferred stock.

On October 5, 2018, the Company and PGEN entered into the License Agreement to replace all existing agreements between the companies, which provides the Company with certain exclusive and non-exclusive

rights to technology controlled by PGEN.

In consideration of the Company entering into the License Agreement, Precigen forfeited and returned to the Company all shares of the Company’s Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement (Notes 7 and 9).

Derivative Financial Instruments

The Company determined that certain embedded features related to the Series 1 preferred stock were derivative financial instruments.

The company values the embedded derivative financial instruments related to the Series 1 preferred stock as Level 3 financial liabilities (Note 3).

On October 5, 2018, the Company entered into the License Agreement with PGEN.

In partial consideration for the termination of the former agreements, the Company and PGEN agreed that Precigen would forfeit all outstanding shares of the Series 1 preferred stock held by Precigen, including any accrued dividends and related financial instruments.

Thus, upon closing of the transaction, these derivative financial instruments were no longer outstanding (Note 7).

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Derivative Financial Instruments (Continued)

The change in the derivative liability for the years ended December 31, 2020, 2019, and 2018 consists of the following:

Balance, December 31, 2017

Change in fair value

Settlement of a related party relationship

Balance, December 31, 2018

Change in fair value

Balance, December 31, 2019

Change in fair value

Balance, December 31, 2020

The fair value of the Series 1 preferred stock dividends was estimated using a probability-weighted approach and a Monte Carlo simulation model.

The fair value of the embedded derivatives was estimated using the “with” and “without” method where the preferred stock was first valued with all of its features (“with” scenario) and

then without derivatives subject to the valuation analysis (“without” scenario).

The fair value of the derivatives was then estimated as the difference between the fair value of the preferred stock

in the “with” scenario and the preferred stock in the “without” scenario.

The model also takes into account, management estimates of clinical success/failure based upon market studies and probability of potential conversion and liquidation events.

If these estimates were different, the valuations would change

, and that change could be material.

Inputs to the models included the following:

Risk-free interest rate

2.50 - 3.13 %

Expected dividend rate

Expected volatility

77.6 - 82.4 %

Preferred stock conversion limit - percentage of outstanding common stock

Preferred conversion floor

Stock Option Plan

The Company adopted the 2012 Equity Incentive Plan, or the “2012 Plan,” in May 2012.

Including subsequent increases, the Company had reserved 14 million shares for issuance.

The Company adopted the 2012 Equity Incentive Plan (the “2012 Plan”) in May 2012.

Including subsequent increases, the Company had reserved 14,000,000 shares for issuance.

On December 31, 2021, there are 2,847,190 shares reserved for issuance and no shares available for future grant.

The Company adopted the 2020 Equity Incentive Plan, or the “2020 Plan,” in June 2020

The Company reserved 21 million shares for issuance plus a carryover of 1,066,275 shares from the 2012 Plan for a total of 22,066,275 shares.

However, only 5,750,000 shares were registered

due to due to the proximity to the Company’s authorized limit of 250 million shares.

On December 31, 2020, there are 1,173,368 shares reserved for issuance and 5,714,648 shares available for future grant.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Stock Option Plan (Continued)

As of December 31, 2020

the Company had outstanding options to its employees to purchase up to 5,733,1551 shares of the Company’s common stock, to its directors to purchase up to 1,039,231 shares of the Company’s common stock, as well as options to consultants in connection with services rendered to purchase up to 60,000 shares of the Company’s common stock.

The Company adopted the 2020 Equity Incentive Plan (the “2020 Plan”) in June 2020.

The Company reserved 21,000,000 shares for issuance plus a carryover of 1,066,275 shares from the 2012 Plan for a total of 22,066,275 shares.

In addition, returning shares from the 2012 Plan are available for issuance under the 2020 Plan.

As of December 31, 2021, 5,750,000 shares were registered, 7,818,679 shares reserved for issuance and 30,564 shares available for future grant.

As of December 31, 2021 the Company had outstanding options to its employees to purchase up to 9,208,236 shares of the Company’s common stock, to its directors to purchase up to 1,397,633 shares of the Company’s common stock, as well as options to consultants in connection with services rendered to purchase up to 60,000 shares of the Company’s common stock.

Stock options to employees generally vest ratably in either quarterly or annual installments over three or four years, commencing on the first anniversary of the grant date and have contractual terms of ten years.

Stock options to directors generally vest ratably over one or two years and have contractual terms of ten years.

Stock options are valued using the Black-Scholes option pricing model and compensation is recognized based

on such fair value over the period of vesting on a straight-line basis.

Proceeds from the option exercises during the years ended December 31, 2020, 2019, and 2018 amounted to $ 0.4 million, $ 1.2 million and $ 0.2 million respectively.

The intrinsic value of these options amounted to $ 0.3 million, $ 1.1 million and $ 0.1 million for years ended December 31, 2020, 2019 and 2018, respectively.

Transactions under the 2012

Plan and the 2020

Plan for the years ending December

2018 were as follows:

Stock options are valued using the Black-Scholes option pricing model and compensation is recognized based on such fair value over the period of vesting on a straight-line basis.

Proceeds from the option exercises during the year ended December 31, 2021 amounted to $ 1.0 million and during the year ended December 31, 2020 amounted to $ 0.4 million.

The intrinsic value of these options amounted to $ 0.8 million for the year ended December 31, 2021 and $ 0.3 million for the year ended December 31, 2020.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Stock option activity under the Company's stock options plans for the years ending December 31, 2021 and 2020 were as follows:

(in thousands, except share and per share data)

Number of Shares

Average Exercise

3 unchanged sentences

Outstanding, December 31, 2021

Outstanding, December 31, 2020

Options exercisable, December 31, 2021

1 unchanged sentence

Options available for future grant at December 31, 2021

In September 2017, the Company granted an option for 500,000 inducement stock options, with an exercise price of $ 6.16 per share, which vests ratably in annual installments over three years, commencing on the first anniversary of the grant date and has a contractual term of ten years.

The grant date fair value was $ 2.2 million.

On July 22, 2019, August 19, 2019, and November 21, 2019, the Company granted 400,000 , 65,000 , and 65,000 inducement stock options, with exercise prices of $ 5.60 , $ 5.18 , and $ 4.59 , respectively.

The options vest ratably,

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Stock Option Plan (Continued)

over four years, commencing with one quarter on the first anniversary of the grant date and then quarterly thereafter.

The Company granted 400,000 inducement stock options on July 22, 2019 with exercise prices of $ 5.60 , 65,000 on August 19, 2019 with exercise prices of $ 5.18 , and 65,000 on November 21, 2019 with exercise prices of $ 4.59 .

The options vest ratably, over four years, commencing with one quarter on the first anniversary of the grant date and then quarterly thereafter.

The options have a contractual term of ten years.

These options were granted outside of the 2012

Plan and therefore, are not included in the table above.

The grant date fair value was $ 1.5 million, $ 231 thousand, and $ 193 thousand, respectively.

As of December 31

, 588,333 options are outstanding from all inducement stock options.

On December 31

, total unrecognized compensation costs related to non-vested

stock options outstanding amounted to $ 7.3 million.

The cost is expected to be recognized over a weighted-average period of 1.78

These options were granted outside of the 2012 Plan and therefore, are not included in the table above.

The grant date fair values were $ 1.5 million for the July 22, 2019 options, $ 231,000 for the August 19, 2019 options, and $ 193,000 for the November 21, 2019 options.

As of December 31, 2021, 32,500 options are outstanding from all inducement stock options.

On December 31, 2021, total unrecognized compensation costs related to non-vested stock options outstanding amounted to $ 8.1 million.

The cost is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock

In the fiscal years ended December 31, 2020 and 2019, the Company issued 805,900

and 1,519,766

shares of restricted stock, respectively, to employees.

and directors.

In January 2019

, one of the Company’s executives received 446,428 shares of restricted stock in lieu of their annual cash bonus.

The shares were immediately vested.

In the year ended December 31

, the Company repurchased 225,339 shares at

average prices ranging from $ 2.24 to 4.72 to cover payroll taxes.

In the year ended December 31

, the Company repurchased 514,349 shares at average prices ranging from $ 1.70

to cover payroll taxes.

A summary of the status of restricted stock as of December 31

is as follows:

For the year ended December 31, 2021 the Company issued 1,601,224 shares of restricted stock and 805,900 in the year ended December 31, 2020 to employees and directors.

A summary of the status of restricted stock as of December 31, 2021 and 2020 is as follows:

Number of Shares

Weighted-Average

Grant Date Fair Value

December 31, 2017

December 31, 2018

December 31, 2019

December 31, 2020

As of December 31, 2020, there was $ 1.8 million of total unrecognized stock-based compensation expense related to non-

restricted stock arrangements.

Grant Date Fair

Non-vested, December 31, 2019

Non-vested, December 31, 2020

Non-vested, December 31, 2021

As of December 31, 2021, there was $ 2.1 million of total unrecognized stock-based compensation expense related to non-vested restricted stock arrangements.

The expense is expected to be recognized over a weighted-average period of 2.15 years.

Employee Benefit Plan

The Company sponsors a qualified 401(k) retirement plan under which employees are allowed to contribute certain percentages of their pay, up to the maximum allowed under Section 401(k) of the IIRC.

ZIOPHARM Oncology, Inc.

The Company sponsors a qualified 401(k) retirement plan under which employees are allowed to contribute certain percentages of their pay, up to the maximum allowed under Section 401(k) of the IRC, or the 401(k) Plan.

The Company may make contributions to the 401(k) Plan at its

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Employee Benefit Plan (Continued)

may make contributions to this plan at its discretion.

The Company contributed approximately $ 538 thousand, $ 404 thousand, and $ 329 thousand to this plan during the years ended December 31

, respectively.

The Company contributed approximately $ 0.7 million to the 401(k) Plan during the year ended December 31, 2021 and $ 0.5 million during the year ended December 31, 2020.

Joint Venture

On December 18

, the Company entered into a Framework Agreement with TriArm Therapeutics, Ltd., or TriArm, whereby the parties will 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.

On December 18, 2018, the Company entered into a Framework Agreement with TriArm whereby the parties will 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.

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

Eden BioCell, the Company and TriArm entered into a Share Subscription Agreement on January 23, 2019

, where the Company and TriArm agreed to contribute certain intellectual property, services and cash (only with respect to TriArm) to Eden BioCell to subscribe for a certain number of newly issued ordinary shares in the share capital of Eden

Eden BioCell, the Company and TriArm entered into a Share Subscription Agreement on January 23, 2019, where the Company and TriArm agreed to contribute certain intellectual property, services and cash (only with respect to TriArm) to Eden BioCell to subscribe for a certain number of newly issued ordinary shares in the share capital of Eden BioCell.

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.

1 unchanged sentence

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

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 to related to the Company’s license agreements with MD Anderson and PGEN, Inc.

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 to related to the Company’s license agreements with MD Anderson and PGEN.

TriArm entered into a Master Services Agreement with Eden BioCell and contributed $ 10.0 million of cash on the closing date.

5 unchanged sentences

The fair value of the intellectual property contributed to Eden BioCell had a de minimis value due to the early stage of the technology and the likelihood of clinical success.

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 a value of $ 0 for the equity-method investment.

For the year ended December 31, 2020, Eden Biocell incurred a net loss and the Company continues to have no commitment to fund its operations.

ZIOPHARM Oncology, Inc.

NOTES TO FINANCIAL STATEMENTS

Selected Quarterly Information (Unaudited)

(in thousands, except per share amounts)

Year Ended December 31, 2020

Total operating expenses

Loss from operations

Net income (loss) applicable to common shareholders

Net income (loss) per share, basic

Net income (loss) per share, diluted

Year Ended December 31, 2019

Total operating expenses

Loss from operations

inducement warrant expense

Net income (loss) applicable to common shareholders

Net income (loss) per share, basic

Net income (loss) per share, diluted

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.

In March 2021, Eden BioCell 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 TriArm/Eden team concluded, in concert with the investigator and the Company, that further process development work is required.

In September 2021, TriArm and the Company mutually agreed to dissolve the joint venture.

For the years ended December 31, 2021 and 2020, Eden BioCell incurred a net loss.

The Company continues to have no commitment to fund its operations.

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 9A. Controls and Procedures