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Item 1. Financial Statements

2022-05-16 compared with 2021-11-08 · 418 added, 621 removed, 266 unchanged (80% of the section changed)

Financial Statements

ZIOPHARM Oncology, Inc.

Alaunos Therapeutics, Inc.

BALANCE SHEETS

(in thousands, except share and per share data)

September 30,

Current assets:

5 unchanged sentences

Other non-current assets

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

8 unchanged sentences

Commitments and contingencies (Note 8)

Stockholders’

Stockholders' equity

Common stock $ 0.001 par value;

350,000,000 shares authorized;

216,145,804 and 214,591,906 shares issued and outstanding at

September 30, 2021 and December 31, 2020, respectively

350,000,000 shares authorized, 215,950,561 shares issued and outstanding at March 31, 2022 and 350,000,000 shares authorized, 216,127,443 shares issued and outstanding at December 31, 2021

Additional paid-in capital

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

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

ZIOPHARM Oncology, Inc.

Total stockholders' equity

Total liabilities and stockholders' equity

The accompanying notes are an integral part of these financial statements.

Alaunos Therapeutics, Inc.

STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Collaboration revenue

For the Three Months Ended March 31,

Operating expenses:

3 unchanged sentences

Loss from operations

Other income (expense):

Interest income (expense), net

Other income (expense), net

Net loss applicable to common stockholders

Basic and diluted net loss per share

Weighted average common shares outstanding, basic and diluted

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

ZIOPHARM Oncology, Inc.

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.

Alaunos Therapeutics, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’

For the Three and Nine Months Ended September 30, 2021 and 2020

(in thousands)

For the Three Months Ended September 30, 2021

Stockholders’

Balance at June 30, 2021

Stock-based compensation

Restricted stock awards

Cancelled restricted common stock

Issuance of warrants

Balance at September 30, 2021

For the Nine Months Ended September 30, 2021

Stockholders’

(in thousands, except share and per share data)

Additional Paid in Capital

Accumulated Deficit

Total Stockholders' Equity

Balance at December 31, 2020

2 unchanged sentences

Restricted stock awards

Cancelled restricted common stock

Issuance of warrants

Balance at September 30, 2021

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

ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY (continued)

For the Three and Nine Months Ended September 30, 2021 and 2020

(in thousands)

For the Three Months Ended September 30, 2020

Stockholders’

Balance at June 30, 2020

Stock-based compensation

Exercise of employee stock options

Balance at September 30, 2020

For the Nine Months Ended September 30, 2020

Stockholders’

Balance at March 31, 2021

Balance at December 31, 2021

Stock-based compensation

Exercise of employee stock options

Issuance of restricted common stock

Cancelled restricted common stock

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

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

Balance at September 30, 2020

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

ZIOPHARM Oncology, Inc.

Balance at March 31, 2022

The accompanying notes are an integral part of these financial statements.

Alaunos Therapeutics, Inc.

STATEMENTS OF CASH FLOWS

(in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

15 unchanged sentences

Cash flows from financing activities:

Proceeds from long-term debt borrowing

Debt issuance costs

Proceeds from exercise of stock options

Issuance of common stock in connection with a public offering, net

Issuance of common stock in connection with at the market offerings, net

Proceeds from the exercise of stock options

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

2 unchanged sentences

Cash paid for interest

Amounts included in accrued expenses and accounts payable related

to property and equipment

Issuance costs in accounts payable and accrued expenses

Supplementary disclosure of noncash investing and financing activities

Warrants issued in a term loan

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

ZIOPHARM Oncology, Inc.

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

The accompanying notes are an integral part of these financial statements.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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

Alaunos Therapeutics, Inc., which is referred to herein as “Alaunos,”

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 is a clinical stage biopharmaceutical company focused on discovering, developing and commercializing next generation immuno-oncology platforms that leverage cell therapies to treat patients with cancers.

The Company is developing technologies that utilize the immune system by employing innovative cell engineering to deliver safe and effective cell therapies for the treatment of multiple cancer types.

Specifically, the Company is focused on developing T-cell receptor, or TCR, T cell therapies to target neoantigens in solid tumors, or TCR-T.

A part of the Company's platform is referred to as “

Sleeping Beauty ”

and is based on the non-viral genetic engineering of immune cells using a transposon/transposase system that is intended to stably engineer T cells outside of the body for subsequent infusion.

is a clinical-stage oncology-focused cell therapy company developing adoptive TCR-T cell 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 cancer hotspot mutation TCR library to design and manufacture personalized cell therapies that target neoantigens arising from shared tumor-specific 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 our existing Controlled IL-12 clinical program for the treatment of recurrent glioblastoma multiforme.

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

Costs incurred during the three and nine months ended September 30, 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 revenues from operations. The Company anticipates that losses will continue for the foreseeable future.

As of September 30, 2021, the Company had approximately $ 91.7  million of cash and cash equivalents.

The Company’s accumulated deficit at September 30, 2021 was approximately $ 831.1  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 exhaust ed depends on its ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given.

In May 2021, the Company announced that it will be winding down its existing Controlled IL-12 clinical program.

The Company continues to seek a partner for this program.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

The Company follows the guidance of Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements - Going Concern, in order to determine whether there is substantial doubt about its ability to continue as a going concern for one year after the date its financial statements are issued.

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 March 31, 2022, the Company had approximately $ 68.3  million of cash and cash equivalents.

The Company’s accumulated deficit at March 31, 2022 was approximately $ 852.6  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.

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 its product candidates, management may need to curtail its development efforts and planned operations to conserve cash.

The Company’s amende d and restated certificate of incorporation authorizes it to issue 350,000,000 shares of common stock .

As of October 29, 2021, there were 216,145,826 shares of common stock outstanding and an additional 33,778,465 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants.

If adequate additional funds are not available when required, management may need to curtail its development efforts and planned operations to conserve cash.

Based on the current cash forecast, management has determined that the Company's present capital resources will not be sufficient to fund its planned operations for at least one year from the issuance date of the financial statements, which raises substantial doubt as to the Company's ability to continue as a going concern.

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

As of March 31, 2022, there were 215,950,561 shares of common stock outstanding and an additional 33,891,996 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants.

Basis of Presentation

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

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

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

It is management’s opinion that the accompanying unaudited interim financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair presentation of the financial position of the Company and its results of operations and cash flows for the periods presented.

The unaudited interim financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 30, 2022, or the Annual Report.

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

The results disclosed in the statements of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full fiscal year 2022.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

Although the Company regularly assesses these estimates, actual results could differ from those estimates.

The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period.

Although the Company regularly assesses

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

these estimates, actual results could differ from those estimates.

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

10 unchanged sentences

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.

August 2021 Term Loan

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 “Term Loan Agreement”).

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

Please refer to Note 4, Debt , for further discussion of the Company's Term Loan Agreement with SVB.

February 2020 Public Offering

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

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

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

333-232283) 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 (ATM) Facility

In June 2019, the Company entered into an Open Market Sale Agreement, or 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.

During the nine months ended September 30, 2020, the Company sold an aggregate of 2,814,673 shares of its common stock at an average price of $ 4.77 per share under the Sales Agreement.

The net proceeds from sales were approximately $ 13.0 million after deducting underwriting discounts.

During the nine months ended September 30, 2021, there were no sales under the Sales Agreement.

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 (as so amended, 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 the Amended Milestones (as defined below) are met by August 31, 2022.

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.

Summary of Significant Accounting Policies

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

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

New Accounting Pronouncements

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

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

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

T he Company adopted this standard effective January 1, 2021, with no material impact upon adoption .

The carrying values of our debt obligation were as follows:

September 30,

Term Loan Agreement

Unamortized discount on Term Loan Agreement

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

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 $ 50.0 million Term Loan Agreement with SVB, with an initial borrowing of $ 25.0 million ("Term A Tranche").

Loans under the Term Loan Agreement are secured by a first lien of substantially all the assets of the Company, other than the Company's intellectual property.

Proceeds from intellectual property are available as security for amounts borrowed.

The Term Loan Agreement requires the Company to meet certain funding and clinical milestones in order to either:

(i) extend the maturity date of the initial loan ("Equity Milestone") or (ii) to utilize the Term Loan Agreement's remaining $ 25.0 million available borrowing capacity (“Term B Tranche”).

Principal repayments for the Term A Tranche will start on April 1, 2022, with a maturity date of March 1, 2023;

however, if an Equity Milestone is achieved on or before March 31, 2022, principal repayments for the Term A Tranche will start on September 1, 2022, with a maturity date of August 1, 2025 .

Upon achievement of certain funding and clinical milestones associated with the Term B Tranche on or before August 31, 2022, the Company may borrow the remaining $ 25.0 million available under the Term Loan Agreement with principal repayments for the Term Loan Agreement starting on September 1, 2023 and a maturity date of August 1, 2025.

Outstanding loans bear interest, payable monthly, at the greater of (a) 7.75 % and (b) the current published U.S.

As of March 31, 2022, the SVB Facility was fully drawn in the amount of $ 25.0 million.

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 September 30, 2021, interest on outstanding loans was 7.75 %.

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 ("Final Payment").

The Final Payment will be accreted over the term of the loan using the effective interest method.

The Company may, at its option, make up to two prepayments, each prepayment consisting of no less than $ 5,000,000 of any outstanding borrowings under the Term Loan Agreement, plus accrued and unpaid interest, subject to a prepayment premium.

In addition to any outstanding principal plus accrued interest selected for prepayment, the Company would also prepay a pro-rata portion of the prepayment premium and the Final Payment associated with the principal amount being repaid.

The Company cannot re-borrow any amounts previously paid.

Should the Company fail to achieve the Equity Milestone on or before December 31, 2021, cash and cash equivalents equal to 50 % of the then outstanding principal plus associated Final Payment must be deposited into an account pledged to SVB as additional cash collateral.

The Term Loan Agreement restricts the Company, apart from conducting its operations in the normal course of business and certain other permitted exceptions, from entering into mergers or acquisitions, incurring additional indebtedness, paying dividends, delisting its stock from the Nasdaq stock exchange or disposing of assets or making changes to its business operations without the consent of SVB.

The Term Loan Agreement also contains standard conditions, as well as insolvency and delisting of the Company’s common stock from Nasdaq, as deemed events of default.

Should the debt become mandatorily repayable upon an event of default, a default interest rate of 3 % above otherwise applicable rates would be due on any balances outstanding.

In connection with the Term Loan Agreement, the Company also issued warrants to SVB providing for the purchase of a total of 432,844 shares of its common stock at an exercise price of $ 2.22 per share.

The warrants are exercisable in whole or in part any time prior to August 6, 2031, and were recorded at their relative fair value amount of $ 0.8 million in additional paid-in capital upon issuance (with an offsetting reduction to the carrying value of outstanding debt).

Should the Company achieve the Term B Milestone and borrow the remaining $ 25.0 million available under the Term Loan Agreement, an additional 432,842 warrants will be issued and recorded at that time to SVB with similar terms to the initial issuance described above.

The Term Loan Agreement issuance costs were approximately $ 1.0 million and primarily related to the warrants issued to SVB, which will be amortized into interest expense over the period to March 1, 2023 .

Interest expense, including the amortization of issuance costs, was $ 0.4 million for the third quarter of 2021.

The fair value of the Term Loan Agreement as of September 30, 2021 approximates its face value due to proximity to the transaction.

As of March 31, 2022, interest on the outstanding loans was 8.00 %.

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 .

The Company is 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 Amended Loan and Security Agreement requires the Company to cash collateralize half of the sum of 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, $ 2.5 million will be released from the collateral account following the eighth scheduled payment of principal and interest, and a further $ 4.0 million will be released following the tenth scheduled payment of principal and interest on the SVB Facility, in each case, so long as (i) after subtracting such scheduled payment, the sum of (a) the aggregate outstanding principal, (b) accrued and unpaid interest and (c) the Final Payment is less than $ 9,770,933 and $ 5,604,167 , respectively and (ii) the balance in the collateral account after the release would equal or exceed $ 10.0 million and $ 6.0 million, respectively.

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.

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, 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 its 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 SVB warrants, which will be amortized into interest expense over the period to August 1, 2023 .

Interest expense was $ 0.7 million for the three months ended March 31, 2022.

The fair value of the Amended Loan and Security Agreement as of March 31, 2022 approximates its face value due to proximity to the transaction.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Fair Value Measurements

The Company accounts for its financial assets and liabilities using fair value measurements.

The authoritative accounting guidance defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements.

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

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

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

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;

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;

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 September 30, 2021 and December 31, 2020 were 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 March 31, 2022 and 2021 are as follows:

($ in thousands)

1 unchanged sentence

Balance as of

September 30,

Quoted Prices in

Active Markets for

Identical Assets/

Liabilities (Level 1)

Significant Other

Inputs (Level 2)

Inputs (Level 3)

Active Markets

for Identical

Assets/Liabilities

Cash equivalents

3 unchanged sentences

Quoted Prices in

Active Markets for

Identical Assets/

Liabilities (Level 1)

Significant Other

Inputs (Level 2)

Inputs (Level 3)

Active Markets

for Identical

Assets/Liabilities

Cash equivalents

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

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.

Net loss per share

1 unchanged sentence

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

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

September 30,

Stock options

Such potentially dilutive shares of common stock consisted of the following as of March 31, 2022 and 2021, respectively:

Common stock options

Inducement stock options

1 unchanged sentence

Related Party Transactions

Collaborations with Precigen/ PGEN

During the year ended December 31, 2018, the Company and PGEN Therapeutics, Inc., or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation, entered into an Exclusive License Agreement (Note 8).

Collaboration with PGEN and MD Anderson

On January 13, 2015, the Company, together with Precigen, entered into a License with the MD Anderson Cancer Center, or 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 nine months ended September 30, 2021 and 2020, the Company did not make any payments to MD Anderson.

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

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs was zero at September 30, 2021 as the outstanding balance has been fully utilized.

At September 30, 2021 and December 31, 2020, the Company had accounts receivable due from MD Anderson of $ 1.1 million and $ 4.7 million, respectively.

Additionally, the Company recorded approximately $ 2.1 million and $ 1.4 million of accrued expenses due to MD Anderson for research and other activities at September 30, 2021 and December 31, 2020, respectively.

Collaboration with Vineti Inc.

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

Pursuant to the agreements, Vineti is developing a software platform to coordinate and orchestrate the order, cell collection and manufacturing

process for the Company’s TCR-T clinical programs.

Heidi Hagen, who previously served as a member of our Board of Directors and served as Interim Chief Executive Officer of the Company from February 2021 through August 2021 , is a co-founder and former officer, of Vineti.

During the three and nine months ended September 30, 2021, the Company recorded expenses of approximately $ 0.1 million and $ 0.4 million for services performed by Vineti, respectively.

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 has been 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 three months ended March 31, 2022, the Company recorded no expenses for Vineti, compared to $ 0.2 million of expenses for the three months ended March 31, 2021.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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, the Company agreed to reimburse the WaterMill Parties for up to $ 0.4 million of their reasonable out-of-pocket expenses out of a total of approximately $ 0.7 million in fees and expenses actually incurred by the WaterMill Parties in connection with (i) the WaterMill Parties' solicitation of written consents from the Company's 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, the Company has fully reimbursed the WaterMill Parties an aggregate amount of $ 0.4 million.

Joint Venture with TriArm Therapeutics/Eden BioCell

On December 18, 2018, the Company entered into a Framework Agreement with TriArm Therapeutics, Ltd., or TriArm, pursuant to which the parties agreed to launch Eden BioCell, Ltd., or Eden BioCell, to lead clinical development and commercialization of certain Sleeping Beauty- generated CAR-T therapies as set forth in a separate license agreement.

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

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.

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

TriArm has contributed $ 10.0 million to Eden BioCell.

TriArm has contributed $ 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.

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

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

For the three and nine months ended September 30, 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 Ziopharm mutually agreed to dissolve the joint venture.

James Huang was the founder and serves as managing partner of Panacea Venture, which is an investor in TriArm.

Huang is the Chair of the Company's board of directors and has been a director since July 2020.

He also serves as a member of Eden BioCell’s board of directors.

For the three months ended March 31, 2022, 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 11 - Joint Venture , for further details.

Commitments and Contingencies

1 unchanged sentence

Exclusive License Agreement with PGEN Therapeutics

On October 5, 2018, the Company entered into an exclusive license agreement, or the License Agreement, with PGEN.

As between the Company and PGEN, the terms of the License Agreement replace and supersede 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 Ziopharm, 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 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.

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.

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 to develop and commercialize IL-12 Products, CD19 Products and TCR Products.

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

The Company did no t have any annual license payments for the three and nine months ended September 30, 2021 and 2020.

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

In addition, the Company will pay PGEN tiered royalties ranging from low-single digits to high-single digits on the net sales derived

from the sales of any approved IL-12 Products and CAR Products.

The Company is required to use commercially reasonable efforts, as defined in the License Agreement, to develop and commercialize IL-12 products, CD19 products, BCMA 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 $ 0.1 million 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 20 % of any sublicensing income received by the Company relating to the licensed products.

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

During the three and nine months ended September 30, 2021, there were zero and $ 0.1 million, respectively, of expenses for services performed by PGEN.

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

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

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

License Agreement—The University of Texas MD Anderson Cancer Center

The Company will also pay PGEN twenty percent of any sublicensing

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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.

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

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

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

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 basis.

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

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

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, Precigen 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, Precigen and MD Anderson formed a joint steering committee to oversee and manage the new and ongoing research programs.

Under the License Agreement with PGEN, the Company 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.

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

The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs was zero at September 30, 2021 as the outstanding balance has been fully utilized.

At September 30, 2021 and December 31, 2020, the Company had accounts receivable due from MD Anderson of $ 1.1 million and $ 4.7 million, respectively.

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 technology.

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.

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.

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.

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.

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 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.

2019 Research and Development Agreement—The University of Texas MD Anderson Cancer Center

On October 22, 2019, the Company 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 the Company's 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 the Company and one member from MD Anderson.

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

The Company has granted MD Anderson an exclusive license for such intellectual property outside the field of oncology and to develop and commercialize TCR products manufactured

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

using viral gene transfer technologies limited to autologous products if used for cancer treatment or prevention, and a non-exclusive license for allogenic anti-tumor TCR products manufactured using viral-based technologies.

Under the 2019 R&D Agreement, the Company agreed, beginning on January 1, 2021, to reimburse MD Anderson up to a total of $ 20.0 million for development costs under the 2019 R&D Agreement, after the funds from the 2015 R&D Agreement are exhausted.

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

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

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

No costs have been incurred or paid under this agreement as of September 30, 2021.

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

Refer to Note 11 –

Warrants for further details.

License Agreement with the National Cancer Institute

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

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

The Company also agreed to sell its TCR products to MD Anderson at preferential prices and will sell the Company's 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.

For the three months ended March 31, 2022, the Company incurred expenses of $ 0.4 million related to this agreement compared to $ 0 for the three months ended March 31, 2021.

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.

Please refer to Note 10 - Warrants, for further discussion of the MD Anderson Warrant.

The MD Anderson Warrant has an initial exercise price of $ 0.001 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.

License Agreement with the NCI

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

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

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

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

On January 8, 2020, the Company entered into an amendment to the Patent License which expanded the TCR library to include additional TCRs reactive to mutated KRAS and TP53.

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 is payable on the date that is eighteen months following the date of the Patent License .

This payment of $ 0.1 million was expensed during the first quarter of 2021.

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

On April 16, 2021, the Company entered into a third amendment to the patent license agreement which modified the terms governing termination, modification and surrender of rights under the license.

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

On August 13, 2021, the Company entered into a fifth amendment to the patent licensing agreement which expanded the TCR library to include an additional TCR.

On May 29, 2019, January 8, 2020, September 28, 2020, April 16, 2021, May 4, 2021, and August 13, 2021 the Company amended the Patent License to expand its TCR library to include additional TCRs reactive to mutated KRAS and TP53 neoantigens licensed from the NCI.

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

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

The first benchmark payment of $ 0.1 million will be due upon the initiation of the Company’s first sponsored Phase 1 clinical trial of

a licensed product or licensed process in the field of use licensed under the Patent License, which has not been met at September 30, 2021.

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

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 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.

In addition, the Company is 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.

3 unchanged sentences

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’

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

written notice to the NCI.

In addition, the NCI has the right to:

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

During the three and nine month periods ended September 30, 2021, the Company expensed $ 0.3 million and $ 0.5 million related to patent prosecution services under this agreement.

The Company did no t incur expenses related to patent services during the three and nine month periods ended September 30, 2020.

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

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

On January 10, 2017, the Company announced the signing of a CRADA, with the NCI for the development of adoptive cell transfer, or ACT, based immunotherapies genetically modified using the Sleeping Beauty transposon/transposase system to express TCRs for the treatment of solid tumors.

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

(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

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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.

For the three months ended March 31, 2022 and March 31, 2021, the Company recognized $ 0.3 million in license payments to the NCI under this agreement.

Cooperative Research and Development Agreement (CRADA) with the NCI

On January 9, 2017, the Company 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 the Company's 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 the Company's 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.

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

The Company recorded $ 1.3 million of expense for both nine month periods ended September 30, 2021 and 2020, and for the three month period ended September 30, 2021 and 2020, the Company recorded expense of zero and $ 0.6 million, respectively.

Rosenberg, M.D., Ph.D., Chief of the Surgery Branch at the NCI, in collaboration with the Company's researchers.

The Company is 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, the Company will have the first opportunity to file a patent covering the invention.

If the Company fails to provide timely notice of its 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 the Company for which a patent application was filed, the U.S.

Public Health service grants the Company an exclusive option to elect an exclusive or non-exclusive commercialization license.

For inventions owned solely by NCI or jointly owned by NCI and the Company, which are licensed according to the terms described above, the Company 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.

The Company is 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 the Company's solely owned inventions.

The agreement may be terminated by any of the parties upon 60 days prior written consent.

The NCI has a cleared Investigational New Drug Application, or IND, that would permit them to begin this trial.

To the Company's knowledge, the trial has not yet enrolled due to matters internal to the NCI and unrelated to the Company's technology.

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

In February 2019, the Company extended the CRADA with the NCI until January 9, 2022, committing an additional $ 5.0 million to this program.

In March 2022, the Company 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.

The Company did no t record expenses under the CRADA for the three months ended March 31, 2022, as compared to $ 0.6 million for the three months ended March 31, 2021.

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

4 unchanged sentences

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 possi ble sublicense under certain circumstances.

During the three and nine months ended September 30, 2021 the Company accrued $ 80,000 of fees under the terms of the license agreement.

No amounts were accrued or paid during the three or nine months ended September 30, 2020.

During the three months ended March 31, 2022 and March 31, 2021, no amounts were expensed or paid under the terms of the agreement.

Collaboration Agreement with Solasia Pharma K.K.

On March 7, 2011, the Company entered into a License and Collaboration Agreement with Solasia Pharma K.K., or 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 revenues generated by Solasia.

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

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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.

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.

During the three and nine months ended September 30, 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 .

No amounts were recorded or received during the three or nine months ended September 30, 2020.

Collaboration with KBI

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

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

Collaboration with Aldevron

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

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

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

As of September 30, 2021 and December 31, 2020, a total security depos it of $ 0.1 millio n is included in deposits on the Company’s balance sheet.

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

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

Under the terms of the renewal, the Company is required to make rental payments of approximately $ 26,000 per month.

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

Under the terms of the Houston lease agreement, the Company leased approximately 210 square feet and were required to make rental payments at an average monthly rate of approximately $ 1,000 .

This lease was terminated effective March 31, 2020.

On March 12, 2019, the Company entered into a lease agreement, or the First Houston Lease, for office and lab space in Houston, Texas at MD Anderson through April 2021.

Under the terms of the First Houston Lease agreement, the Company leased 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, or the Second Houston Lease, for additional office space in Houston through February 2027.

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 $ 17,000 per month through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term.

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

The Company is initially required to make rental payments of approximately $ 12,000 per month through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term.

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

The Company is initially required to make rental payments of approximately $ 37,000 per month through April 2028, subject to an annual base rent increase of approximately 3.0 % throughout the term beginning in April 2023.

The components of lease expense were as follows:

Three Months Ended

September 30,

For the Nine Months Ended

September 30,

(in thousands)

Operating lease cost

Total lease cost

Weighted-average remaining lease term (years)

Weighted-average discount rate

Effective June 1, 2020, the Company entered into a noncancelable lease for a period of less than a year with monthly payments of approximately $ 10,000 that is not subject to right of use asset recognition under ASC 842.

Effective September 1, 2020, the Company added additional space to the noncancelable lease for a period of less than a year with monthly payments now totaling approximately $ 15,000 .

Rent expense was zero and $ 5,000 during the three and nine months ended September 30, 2021, respectively.

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

As of September 30, 2021, the future minimum lease payments of the Company’s operating lease obligations for the years ended December 31, were as follows (in thousands):

2021 (excluding the nine months ended September 30, 2021)

Total lease payments

Imputed interest and adjustments

Present value of lease payments

During the three months ended March 31, 2022 and March 31, 2021, the Company did no t record collaboration revenue under the collaboration agreement with Solasia.

Stock-Based Compensation

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in thousands)

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Stock-based compensation expense

The Company granted an aggregate of 2,755,000 and 7,150,438 stock options during the three and nine months ended September 30, 2021, with a weighted-average grant date fair value of $ 1.08 and $ 1.91 per share, respectively.

The Company granted an aggregate of 203,178 and 1,252,178 stock options during the three and nine months ended September 30, 2020, with a weighted-average grant date fair value of $ 1.96 and $ 2.45 per share, respectively.

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

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

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

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

These extensions resulted in additional stock compensation expense of approximately $ 2.0 million during the nine months ended September 30, 2021.

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

The Company granted an aggregate of 2,690,000 stock options during the three months ended March 31, 2022, with a weighted-average grant date fair value of $ 0.47 per share.

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

For the three months ended March 31, 2022 and 2021, the fair value of stock options was estimated on the date of grant using a Black-Scholes option valuation model with the following assumptions:

For the Three Months Ended March 31,

Risk-free interest rate

0.89 - 0.96 %

0.36 - 0.39 %

0.50 - 1.15 %

0.36 - 1.68 %

1.63 –

0.09 –

Expected life in years

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72.92 - 74.20 %

72.53 - 74.80 %

71.11 - 74.18 %

Expected dividend yield

At September 30, 2021, there were 97,500 stock options that had been issued outside the 2012 Equity Incentive Plan, or the 2012 Plan and the 2020 Equity Incentive Plan, or the 2020 Plan.

These options are excluded from the schedule below.

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

Stock option activity under the Company’s stock option plans for the three months ended March 31, 2022 is as follows:

(in thousands, except share and per share data)

Average Exercise

Number of Shares

Weighted- Average Exercise Price

Weighted- Average Contractual Term (Years)

Aggregate Intrinsic Value

Outstanding, December 31, 2021

Outstanding, September 30, 2021

Options exercisable, September 30, 2021

Outstanding, March 31, 2022

Options exercisable, March 31, 2022

Options exercisable, December 31, 2021

Options available for future grant

At September 30, 2021, total unrecognized compensation costs related to unvested stock options outstanding amounted to $ 8.0 million.

At March 31, 2022, total unrecognized compensation costs related to unvested stock options outstanding amounted to $ 7.5 million.

The cost is expected to be recognized over a weighted-average period of 2.08 years.

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

A summary of the status of unvested restricted stock for the three months ended March 31, 2022 is as follows:

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

Number of Shares

Weighted-Average

Grant Date Fair Value

Weighted-Average Grant Date Fair Value

Unvested, December 31, 2021

Unvested, September 30, 2021

At September 30, 2021, total unrecognized compensation costs related to unvested restricted stock outstanding amounted to $ 2.4 million.

Unvested, March 31, 2022

At March 31, 2022, total unrecognized compensation costs related to unvested restricted stock outstanding amounted to $ 1.5 million.

The cost is expected to be recognized over a weighted-average period of 2.15 years.

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

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

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

As a result, as of September 30, 2021, there are 2,224,159 shares available to grant from the 2020 Plan.

Additionally, 2,625,000 stock options with an exercise price of $ 1.64 were granted on August 30, 2021 to the Company's Chief Executive Officer, as part of his compensation package.

These options are subject to a vesting schedule.

No ne of these options have vested and do not currently impact the shares available to grant from the 2020 Plan.

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

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

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:

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 "November 2018 Warrants").

The November 2018 Warrants had an exercise price of $ 3.01 per share and have a five-year term.

The 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.

The Company assessed whether the warrants require accounting as derivatives.

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

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

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

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

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.

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.

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

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

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

Refer to Note 8 –

Commitments and Contingencies for further details.

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

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 milestones.

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

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

On August 6, 2021, the Company entered into a Loan and Security Agreement with Silicon Valley Bank and affiliates, collectively, SVB.

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 R&D Agreement with MD Anderson.

In connection with the execution of the 2019 R&D Agreement, the Company issued the MD Anderson Warrant to purchase 3,333,333 shares of common stock.

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 three months ended March 31, 2022 and March 31, 2021, the Company did not recognize any expense related to the MD Anderson Warrant as no clinical milestones had been achieved.

On August 6, 2021, the Company entered into the Loan and Security Agreement with SVB.

Refer to Note 4 - Debt .

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The warrants have a ten-year life and are fully vested upon issuance.

The fair value of the warrants was estim ated 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 year s and no dividends.

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, will be paid during the fourth quarter of 2021.

T he Company expensed the following costs associated with these future termination benefit payments resulting from the strategic reduction in force:

September 30,

Research and Development

General and Administrative

Total Severance Expense

Amounts remaining to be expensed after September 30, 2021, for a limited number of employees continuing to render service through November 30, 2021, are di minimis.

At September 30, 2021, the accrued liability balance associated with the strategic reduction in force announced in the third quarter of 2021 is $ 3.5 million and is expected to be paid in the fourth quarter of 2021.

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, in connection with which, 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 were 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.

The Company assessed whether the warrants require accounting as derivatives.

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

equity in accordance with 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’

Joint Venture

On December 18, 2018, the Company entered into a Framework Agreement with TriArm pursuant to which the parties agreed to launch Eden BioCell, to lead clinical development and commercialization of certain Sleeping Beauty- generated CAR-T therapies as set forth in a separate license agreement (see Note 7).

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.

Alaunos Therapeutics, Inc.

NOTES TO FINANCIAL STATEMENTS

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 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.

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

1 unchanged sentence

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

Eden BioCell will be responsible for certain milestone and royalty payments related to the Company’s license agreements with MD Anderson and PGEN (see Note 8).

TriArm entered into a master services agreement with Eden BioCell and contributed

$ 10.0 million of cash on the closing date.

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

As of July 5, 2019, as a result of the design and purpose of Eden BioCell, the Company determined that Eden BioCell was considered a variable interest entity, or VIE, and concluded that it is not the primary beneficiary of the VIE as it did not have the power to direct the activities of the VIE that most significantly impact its performance.

Rather, the Company accounts for the equity interest in Eden BioCell under the equity method of accounting as it has the ability to exercise significant influence over the operations of Eden BioCell.

The Company determined that Eden BioCell was not a customer and therefore, accounted for the transaction as the transfer of nonfinancial assets to be recognized at their fair value on the contribution date.

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 no value for its equity-method investment.

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

Two patients have now been treated in this trial.

The Company determined that Eden BioCell was considered a variable interest entity, or VIE, and concluded that it is not the primary beneficiary of the VIE as it did not have the power to direct the activities of the VIE.

As a result, the Company accounts for the equity interest in Eden BioCell under the equity method of accounting as it has the ability to exercise significant influence.

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 2020.

In the first half of 2021, two patients were 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.

1 unchanged sentence

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 team at Ziopharm, that further process development work is required.

In September 2021, TriArm and Ziopharm mutually agreed to dissolve the joint venture.

For the three and nine months ended September 30, 2021 and 2020, Eden BioCell incurred a net loss.

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 three months ended March 31, 2022 and 2021, Eden BioCell incurred a net loss.

The Company continues to have no commitment to fund its operations.

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

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

We are developing technologies that utilize the immune system by employing innovative cell engineering to deliver safe and effective cell therapies for the treatment of multiple cancer types.

Specifically, we are focused on developing T-cell receptor, or TCR, T cell therapies to target neoantigens in solid tumors, or TCR-T.

A part of our platform is referred to as “

Sleeping Beauty ”

and is based on the non-viral genetic engineering of immune cells using a transposon/transposase system that is intended to stably engineer T cells outside of the body for subsequent infusion.

We have identified specific hotspot mutations and have correspondingly prepared TCRs which, when engineered to the T cells of the patient, will redirect these T cells to target these shared neoantigen hotspots in solid tumors.

These distinct TCRs, which we refer to as our “Library TCR-T Approach”, have been prepared before the patient-recipient has been identified.

We then screen potential patients for the hotspot mutations for which we have corresponding TCRs, and when we find a match, we will genetically modify the recipient’s own T cells to redirect specificity to shared neoantigens.

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

Initially, six curated TCRs reactive to mutated KRAS and TP53 were included in the clinical trial.

The clinical trial design, however, allows for and we expect to expand the number of TCRs to be evaluated in this trial.

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

Other clinical trial sites may be added at a later time.

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

Enrollment in this clinical trial has not yet begun.

We anticipate treating the first patient under this trial during the first half of 2022.

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

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

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

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

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

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

For the nine months ended September 30, 2021, we had a net loss of $67.0 million, and, as of September 30, 2021, we have incurred approximately $831.1 million of accumulated deficit since our inception in 2003.

We are a clinical-stage oncology-focused cell therapy company developing adoptive TCR-T cell therapy, designed to treat multiple solid tumor types in large cancer patient populations with unmet clinical needs.

We are leveraging our cancer hotspot mutation TCR library and our proprietary, non-viral Sleeping Beauty gene transfer platform to design and manufacture patient-specific cell therapies that target neoantigens arising from shared tumor-specific mutations in key oncogenic genes, including KRAS , TP53 , and EGFR .

In collaboration with the MD Anderson Cancer Center, or MD Anderson, we are currently enrolling patients for a Phase 1/2 clinical trial evaluating ten TCRs reactive to mutated KRAS, TP53 , and EGFR from our TCR library for the investigational treatment of non-small cell lung, colorectal, endometrial, pancreatic, ovarian, and bile duct, which we refer to as our TCR-T Library Phase 1/2 Trial.

On May 2, 2022, we announced that we treated our first patient in this trial;

we anticipate reporting interim data in the second half of 2022.

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

For the three months ended March 31, 2022, we had a net loss of $9.8 million, and as of March 31, 2022, we have incurred approximately $852.6 million of accumulated deficit since our inception in 2003.

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

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Recent Developments

On September 27, 2021, we announced a restructuring enabling us to advance our TCR program.

As a result of the restructuring, approximately 60 positions were eliminated, where the anticipated cost savings associated with the restructuring extend our cash runway.

On September 27, 2021, we announced a restructuring designed to enable us to focus on and advance our TCR program.

As a result of the restructuring, approximately 60 positions were eliminated, and we were able to extend our anticipated cash runway.

Given our current development plans and cash management efforts, we anticipate cash resources will be sufficient to fund operations into the second quarter of 2023.

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

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

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

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

Clinical, Manufacturing, Scientific, and Regulatory Developments

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

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

We anticipate dosing of the first patient in the clinical treatment study in the first half of 2022.

The clinical treatment study will be opened for enrollment once clinical manufacturing readiness has been established. We have built and will be opening our own cGMP clinical production unit ("CPU"). 

Commissioning of the facility, as well as aseptic process validation, were completed in the second quarter of 2021.

In October we completed engineering and process qualification runs in the CPU.

We are committed to having our internal manufacturing capabilities operational to support the first patient dosing in the first half of 2022.

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

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

KBI must complete the process qualification and aseptic process validation to facilitate clinical manufacturing at their site. 

We have built and will be opening our own cGMP clinical production unit ("CPU"). 

Commissioning of the facility, as well as aseptic process validation, were completed in the second quarter of 2021.

In October we completed engineering and process qualification runs in the CPU.

We are committed to having our internal manufacturing capabilities operational to support the first patient dosing in the first half of 2022.

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

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

During the second quarter of 2021, we presented a poster at the annual American Association of Cancer Research (AACR) meeting.

The poster highlighted preclinical work regarding our TCR-T program and demonstrated that multiple TCRs with unique specificities targeting recurrent TP53 and KRAS substitutions in frequent HLA haplotypes could be stably expressed using Sleeping Beauty transposition to re-direct peripheral blood T-cells towards tumor cells.

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

Two patients were 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.

In September 2021, TriArm and Ziopharm mutually agreed to dissolve the Eden Biocell Joint Venture.

We will continue seeking a partner for this program.

The decision to dissolve the Eden Biocell Joint Venture further allows us to prioritize our efforts and capital on the TCR-T program, which is the focus of our strategy and represents a much larger potential commercial opportunity.

MD Anderson has closed the CD19 RPM CAR-T Allogeneic Phase 1 clinical trial and withdrew the IND as of June 2021.

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

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

On May 2, 2022, we announced dosing of the first patient in our TCR-T Library Phase 1/2 trial being conducted at MD Anderson.

The TCR-T cell product was successfully manufactured in Alaunos’

cGMP facility in Houston, Texas.

We continue to enroll patients in the trial at dose levels according to the clinical protocol.

We expect to present interim data at an appropriate scientific or medical conference in the second half of 2022.

On May 16, 2022, we presented preclinical data in poster M-234 on Stem-cell memory TCR-T cells targeting hotspot EGFR , KRAS and TP53 neoantigens generated through co-expression of membrane-bound Interleukin-15, or mbIL-15, at the 25th Annual Meeting of the American Society of Gene and Cell Therapy.

Our mbIL-15 program is designed to augment the function of TCR-T cells by co-expression of a proprietary potentially more potent mbIL-15.

In this preclinical study, we observed that mbIL-15 TCR-T cells specifically targeted and killed tumors expressing matching neoantigen and HLAs with negligible off-target effects.

Importantly, mbIL-15 seems to enhance the survival and persistence of TCR-T cells cultured in the absence of exogenous cytokine support.

The persisting mbIL-15 TCR-T cells were observed to exhibit a preponderance of long-lived T stem-cell memory cells that were capable to giving rise to effector T cell subsets upon in vitro restimulation.

These preclinical observations suggest that our proprietary mbIL-15 technology has the potential to establish long-lived tumor-specific TCR-T cells that may have the potential to survive in circulation and in the suppressive tumor microenvironment.

Financial Overview

Overview of Results of Operations

Three and Nine Months Ended September 30, 2021 Compared to Three and Nine Months Ended September 30, 2020

License Income.

License income during the three and nine months ended September 30, 2021 and 2020 were as follows:

Three months ended

September 30,

Nine months ended

September 30,

($ in thousands)

Collaboration Revenue

Collaboration revenue during the three and nine months ended September 30, 2021 was $0.4 million compared to zero during the three and nine months ended September 30, 2020.

In the current year, we received $0.4 million under our Collaboration Agreement.

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

To date we have not generated product revenue.

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

Research and Development Expenses

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

Three months ended

September 30,

Nine months ended

September 30,

($ in thousands)

Research and development

Research and development expenses for the three months ended September 30, 2021 increased by $0.6 million when compared to the three months ended September 30, 2020 primarily due to a $2.2 million charge recognized during the third quarter related to our strategic restructuring event announced on September 27, 2021.

The increase was primarily offset by $1.6 million in reduced trial and consulting costs.

Research and development expenses for the nine months ended September 30, 2021 increased by $2.7 million when compared to the nine months ended September 30, 2020 primarily due to a $2.2 million charge recognized during the third quarter related to our strategic restructuring event announced on September 27, 2021, an increase of $4.8 million related to salary and employee related expenses and a $1.5 million increase in facilities and other related expenses.

The increase during the period was offset by reduced program related costs of $5.8 million in program and consulting costs in comparison to the nine months ended September 30, 2020.

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

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

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

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

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

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

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

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

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

Costs incurred by outside vendors conducting research for our named clinical candidates during the three months ended September 30, 2021 and through inception is as follows:

Three Months Ended

Since Inception, Through

September 30, 2021

Direct external expenses by program:

Ad-RTS-hIL-12 with veledimex in combination with cemiplimab-rwlc

Ad-RTS-hIL-12 with veledimex for the treatment of pediatric brain tumors

Ad-RTS-IL-12 plus veledimex in progressive glioblastoma

CD19-specific CAR+ T cells in patients with advanced lymphoid malignancies

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

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

1 unchanged sentence

We may conduct multiple clinical trials for each product.

As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain products to focus our resources on more promising products or indications.

As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources on more promising products or indications.

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

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

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

Clinical Phase

Estimated Completion Period

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

The number of clinical sites included in the trials;

The length of time required to enroll suitable patents;

The length of time required to enroll suitable patients;

The number of patients that ultimately participate in the trials;

8 unchanged sentences

General and Administrative Expenses

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

Three months ended

September 30,

Nine months ended

September 30,

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

Other Income (Expense)

Other income (expense) consists primarily of interest expense associated with our Amended Loan and Security Agreement, as defined below.

Overview of Results of Operations

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Research and Development Expenses

Research and development expenses during the three months ended March 31, 2022 and 2021 were as follows:

Three Months Ended March 31,

($ in thousands)

General and administrative

General and administrative expenses for the three months ended September 30, 2021 increased by $1.8 million as compared to three months ended September 30, 2020 primarily related to $1.3 million in employee related severance charges in association with our September 2021 strategic reduction in force recognized during the quarter and an increase of $0.8 million related to consulting service costs.

The increases were offset by a $0.3 million decrease in salary and employee related costs.

General and administrative expenses for the nine months ended September 30, 2021 increased by $6.6 million as compared to nine months ended September 30, 2020 primarily due to an increase of $1.3 million in employee related severance charges associated with our September 2021 strategic reduction in force, $4.2 million related to employee related expenses, and $1.1 million related to consulting service costs.

Research and development expenses

Research and development expenses for the three months ended March 31, 2022 decreased by $7.8 million, or 58%, when compared to the three months ended March 31, 2021 primarily due to a decrease in program-related costs of $2.8 million as a result of the winding down of our IL-12 and CAR-T programs, a $4.7 million decrease in employee related expenses due to our reduced headcount following our restructuring in the third quarter of 2021, and a $0.3 million decrease in consulting expenses due to a decreased reliance on consultants.

For the three months ended March 31, 2022, our clinical stage projects included our TCR-T Library Phase 1/2 trial evaluating TCRs from our library for the investigational treatment of non-small cell lung, colorectal, endometrial, pancreatic, ovarian, and bile duct cancers.

General and administrative expenses

General and administrative expenses during the three months ended March 31, 2022 and 2021 were as follows:

Three Months Ended March 31,

($ in thousands)

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2022 decreased by $4.7 million as compared to the three months ended March 31, 2021, primarily due to a $3.6 million decrease in employee related expenses due to our reduced headcount following our restructuring in the third quarter of 2021, a $0.8 million decrease in consulting and professional services expenses due to lower legal costs and a decreased use of consultants, and a $0.2 million decrease in facilities and other expenses .

Other income (expense), net

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

Three months ended

September 30,

Nine months ended

September 30,

Other income (expense), net during the three months ended March 31, 2022 and 2021 was as follows:

Three Months Ended March 31,

($ in thousands)

Interest expense, net

Other expense, net

Interest expense

Other income (expense), net

Other expense, net for the three and nine months ended September 30, 2021 increased as compared to the three and nine months ended September 30, 2020 due to interest expense associated with our Term Loan with Silicon Valley Bank.

Other expense, net for the three months ended March 31, 2022 increased by $0.7 million as compared to the three months ended March 31, 2021, primarily due to $0.7 million of interest expense associated with our Amended Loan and Security Agreement, as defined below.

Liquidity and Capital Resources

Source of liquidity

Sources of Liquidity

We have not generated any revenue from product sales.

1 unchanged sentence

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

Through September 30, 2021, we have received an aggregate of $739.1 million from issuances of equity and with our term loan with Silicon Valley Bank.

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 “Term Loan Agreement”).

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

Principal repayments will start on April 1, 2022, unless certain milestones are reached prior to that date.

February 2020 Public Offering

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

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

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

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

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

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

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

At-the-Market Facility

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

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

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

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

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

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

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

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

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

We did not sell any shares of our common stock under the at-the-market facility during the three or nine months ended September 30, 2021.

Funding Requirements

Given our current development plans and cash management efforts, we anticipate cash resources will be sufficient to fund operations into the second quarter of 2023.

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

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

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

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

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

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

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

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

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

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

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

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

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

Nine months ended

September 30,

Through March 31, 2022, we have received an aggregate of $714.1 million from issuances of equity and $25.0 million from our Amended Loan and Security Agreement, as defined below.

We follow the guidance of Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements - Going Concern, in order to determine whether there is substantial doubt about our ability to continue as a going concern for one year after the date our financial statements are issued.

Given our current development plans and cash management efforts, we anticipate that our cash resources will be sufficient to fund operations into the second quarter of 2023. Our ability to continue operations after our current cash resources are exhausted depends on our ability to obtain additional financing, as to which no assurances can be given.

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

If adequate additional funds are not available when required, management may need to curtail its development efforts and planned operations to conserve cash.

Based on the current cash forecast, management has determined that our present capital resources will not be sufficient to fund our planned operations for at least one year from the issuance date of the financial statements, which raises substantial doubt as to our ability to continue as a going concern.

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

2021 Loan and Security Agreement

On August 6, 2021, we 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, we entered into a First Amendment (the "Amendment") to the Loan and Security Agreement (as so amended, the "Amended Loan and Security Agreement").

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 we achieve the Amended Milestones on or prior to August 31, 2022, then the maturity will automatically extend to August 1, 2024.

As of March 31, 2022, the SVB Facility was fully drawn in the amount of $25.0 million.

The SVB Facility bears interest at a floating rate per annum on the 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%.

The Amended Loan and Security Agreement provides for an interest-only period which extends through August 31, 2022, as compared to March 31, 2022 in the Loan and Security Agreement, 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 we have (i) received at least $50.0 million in net cash proceeds from the sale of our 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 TCR-T Library Phase 1/2 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 repayable in twelve consecutive, equal monthly installments of principal plus accrued interest.

however, if we achieve 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, we will also owe SVB 5.75% of the original principal amounts borrowed as a final payment (the "Final Payment").

We are permitted to make up to two prepayments, each payment of at least $5.0 million, subject to the prepayment premium of the SVB Facility.

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 maturity date.

No amount that has been repaid may be reborrowed.

The Amended Loan and Security Agreement requires us to cash collateralize half of the sum of 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 we do 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, $2.5 million will be released from the collateral account following the eighth scheduled payment of principal and interest, and a further $4.0 million will be released following the tenth scheduled payment of principal and interest on the SVB facility, in each case, so long as (i) after subtracting such scheduled payment, the sum of (a) the aggregate outstanding principal, (b) accrued and unpaid interest and (c) the Final Payment is less than $9,770,933 and $5,604,167, respectively and (ii) the balance in the collateral account after the release would equal or exceed $10.0 million and $6.0 million, respectively.

The SVB Facility and related obligations under the Amended Loan and Security Agreement are secured by substantially all of our 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.

In connection with our entry into the Loan and Security Agreement, we issued to SVB warrants to purchase (i) up to 432,844 shares of our common stock, in the aggregate, and (ii) up to an additional 432,842 shares of Common Stock, in the aggregate, in the event we achieve certain clinical milestones, in each case at an exercise price per share of $2.22.

In connection with our entry into the Amendment, we amended and restated the warrants issued to SVB.

As amended and restated, the warrants are for up to 649,615 shares of our 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 SVB Warrants, which will be amortized into interest expense over the period to August 1, 2023.

Interest expense was $0.7 million for the three months ended March 31, 2022.

The fair value of the Amended Loan and Security Agreement as of March 31, 2022 approximates its face value due to proximity to the transaction.

The following table summarizes our net decrease in cash and cash equivalents for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in thousands)

3 unchanged sentences

Financing activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

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

2 unchanged sentences

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

Net cash used in operating activities for the nine months ended September 30, 2021 was $46.3 million, as compared to net cash used in operating activities of $40.0 million for the nine months ended September 30, 2020.

The net cash used in operating activities for the nine months ended September 30, 2021 was primarily due to our net loss of $66.0 million, the decrease in prepaid and other current assets of $7.5 million, a decrease in receivables of $3.2 million related to the collection of our outstanding receivables and use of funds at MD Anderson, a change in accrued expenses of $3.2 million, non-cash stock-based compensation of $9.9 million, and an increase in lease liabilities of $0.6 million.

Net cash used in investing activities was $3.0 million for the nine months ended September 30, 2021 compared to $6.0 million for the nine months ended September 30, 2020.

The change of $3.1 million is a result of cash used to expand our internal cell therapy capabilities in our Houston, Texas facilities during the nine months ended September 30, 2020 in comparison to the nine months ended September 30, 2021.

Net cash provided by financing activities for the nine months ended September 30, 2021 was $26.0 million related to proceeds from our Term Loan with Silicon Valley bank and the exercise of stock options.

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

Net cash used in operating activities for the three months ended March 31, 2022 was $7.8 million, as compared to net cash used in operating activities of $15.3 million for the three months ended March 31, 2021.

The net cash used in operating activities for the three months ended March 31, 2022 was primarily due to our net loss of $9.8 million, adjusted for $1.7 million of non-cash items such as depreciation and stock-based compensation, and a decrease in accounts payable of $0.8 million and a $0.2 million decrease in accrued expenses, offset by a decrease in receivables of $1.1 million due to cash receipts and a decrease to prepaid expenses and other assets of $0.2 million.

Net cash used in investing activities was $29 thousand for the three months ended March 31, 2022, compared to $0.7 million for the three months ended March 31, 2021.

The decrease of $0.7 million in net cash used in investing activities was primarily a result of the decision to use available cash to expand our internal cell therapy capabilities in our Houston, Texas facilities during the first quarter of 2021.

There were no financing activities for the three months ended March 31, 2022.

Net cash provided by financing activities during the three months ended March 31, 2021 was $1.0 million, related primarily to proceeds from the exercise of stock options.

Operating Capital and Capital Expenditure Requirements

We anticipate that losses will continue for the foreseeable future.

At September 30, 2021, our accumulated deficit was approximately $831.1 million.

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

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

As of March 31, 2022, our accumulated deficit was approximately $852.6 million.

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

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

the effect of competitive and technical advances and market developments;

costs associated with the development of our product candidates;

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

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

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

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

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

the effect of competing technologies and market developments;

the scope, progress, timing, costs and results of our TCR-T Library Phase 1/2 Trial for the treatment of certain solid tumors and costs associated with the development of our product candidates;

our headcount growth focused on our TCR program and scaling our manufacturing capabilities;

our ability to secure partnering arrangements;

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

other matters identified under Part II, Item 1A.

“Risk Factors.”

Our working capital as of September 30, 2021 was $68.5 million, consisting of $96.6 million in current assets and $28.1 million in current liabilities.

As of March 31, 2022, we had approximately $68.3 million of cash and cash equivalents.

Given our current development plans, we anticipate our cash resources will be sufficient to fund our operations into the second quarter of 2023.

In order to continue our operations beyond our forecasted runway we will need to raise additional capital, and we have no committed sources of additional capital at this time.

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

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

If adequate additional funds are not available when required, management may need to curtail its development efforts and planned operations.

Working capital as of March 31, 2022 was $48.6 million, consisting of $69.8 million in current assets and $21.2 million in current liabilities.

Working capital as of December 31, 2021 was $62.8 million, consisting of $78.8 million in current assets and $16.0 million in current liabilities.

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

The Company announced that it will be winding down our existing Controlled IL-12 clinical program, and we anticipate the realignment of resources will reduce cash expenditures on the Controlled IL-12 program.

On September 27, 2021, in order to lower our existing cost structure, we also announced a strategic reduction in force and notified approximately 60 full-time employees of our intention to terminate their employment services.

Contractual Obligations

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

($ in thousands)

Less than 1 year

More than 5 years

Operating Leases

Royalty and license fees

Operating Leases

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

On December 21, 2015 and April 15, 2016, we renewed the lease for our office space in Boston, MA through August 31, 2021.

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

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

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

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

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

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

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

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

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

Our commitments for operating leases relate to laboratory and office space in Houston, Texas and office space in Boston, Massachusetts.

On December 21, 2015 and April 15, 2016, we renewed the sublease for our office space in Boston through August 31, 2021.

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

The renewal of the portion of our office space was originally set to expire on August 31, 2021 but was extended through August 31, 2026.

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

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

On April 7, 2020, we entered into amendments to our existing lease to lease additional office and laboratory space in Houston through February 2027.

In June and September 2020, we entered into short-term leases in Houston for additional office and laboratory space.

On December 15, 2020, we entered into a second lease in Houston with MD Anderson which provided us additional office and laboratory space through April 2028.

Royalty and License Fees

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

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

As of September 30, 2021, we do not expect to incur any further fees associated with the CRADA.

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

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

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

Off-balance Sheet Arrangements

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

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

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

For the three months ended March 31, 2022 and 2021, we recognized $0.3 million related to royalty payments under this agreement.

As of March 31, 2022, we have paid a total of $0.8 million in minimum annual royalty payments under this agreement.

Pursuant to the Patent License, we are also required to make performance-based payments contingent upon the 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.

No payments were made during the three months ended March 31, 2022 and March 31, 2021.

On October 5, 2018, we entered into an exclusive license agreement, or the License Agreement, with PGEN Therapeutics, Inc., or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen.

Under the License Agreement, we are obligated to pay PGEN an annual licensing fee of $0.1 million expected to be paid through the term of the agreement and we have also agreed to reimburse certain historical costs of PGEN up to $1.0 million.

For the three months ended March 31, 2022 and March 31, 2021, we have made licensing fee payments in accordance with the terms of the agreement.

Pursuant to the terms of the License Agreement, we are responsible for contingent 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, we 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.

We 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.

We will also pay PGEN twenty percent of any sublicensing income received by us relating to the licensed products.

We are responsible for all development costs associated with each of the licensed products.

PGEN will pay us 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.

Critical Accounting Policies and Estimates

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

In our Annual Report on Form 10-K for the year ended December 31, 2021, our most critical accounting policies and estimates upon which our financial status depends were identified as those relating to clinical trial expenses and other research and development expenses;

collaboration agreements;

1 unchanged sentence

and income taxes.

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

We reviewed our policies and determined that those policies remain our most critical accounting policies for the three months ended March 31, 2022.

Quantitative and Qualitative Disclosures about Market Risk.

As a smaller reporting company, as defined by Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, we are not required to provide the information under this item.

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

What changed 10-Q

Item 1. Financial Statements