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Item 7. Management’s Discussion and Analysis

2023-03-07 compared with 2022-03-30 · 125 added, 119 removed, 237 unchanged (51% of the section changed)

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or in other parts of this Annual Report on Form 10-K.

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

We are leveraging our novel cancer mutation hotspot 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 common tumor-related mutations in key oncogenic genes, including KRAS , TP53 , and EGFR .

In collaboration with 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.

We anticipate treating our first patient in this trial in the second quarter of 2022 and reporting interim data in the second half of 2022.

As of December 31, 2021, we have approximately $76.1 million of cash and cash equivalents.

Given our current development plans, we anticipate our cash resources will be sufficient to fund our operations into the second quarter of 2023, and we have no committed sources of additional capital at this time.

See "Liquidity and Capital Resources."

Our amended and restated certificate of incorporation authorizes us to issue 350,000,000 shares of common stock.

As of December 31, 2021, there were 216,127,443 shares of common stock outstanding and an additional 33,620,711 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants.

We may need additional shares for business and financial purposes in the future.

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 MD Anderson, we are currently enrolling and treating patients for a Phase 1/2 clinical trial evaluating 12 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 cancers, which we refer to as our TCR-T Library Phase 1/2 Trial.

As of December 31, 2022, we had approximately $53.0 million of cash, cash equivalents and restricted cash.

Our restricted cash of $13.9 million relates to the Amended Loan and Security Agreement.

Given our current development plans, we anticipate our cash resources will be sufficient to fund our operations into the fourth quarter of 2023, and we have no committed sources of additional capital at this time.

Liquidity and Capital Resources .”

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

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

Recent Developments

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 anticipate that the cost savings associated with the restructuring will extend our 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 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.

Supply chain disruptions caused by the pandemic may negatively impact productivity, disrupt our business and delay our clinical programs and timelines.

The severity of negative impacts will depend, in part, on the length and magnitude of the disruptions.

These and perhaps more severe

disruptions in our operations could negatively impact our business, operating results and financial condition.

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

2022 Developments

In the fourth quarter of 2022, we submitted an IND amendment to the FDA to add two new TCRs to our clinical trial targeting frequent mutations and HLAs, with the potential to double the addressable market of our TCR-T Library Phase 1/2 Trial.

The addition of these new TCRs highlights our strategy to add both more HLAs to existing mutations (KRAS-G12V and HLA-DRB1*07:01) and new mutations within our targeted gene families (TP53-R273C and HLA-DPB1*04:02).

In 2023, we expect to further expand our library with exclusively owned TCRs targeting recurrent hotspot mutations in KRAS, TP53 and EGFR to include 15 TCRs.

We continue to actively enroll patients in our TCR-T Library Phase 1/2 Trial targeting KRAS, TP53 and EGFR hotspot mutations across six solid tumor indications.

In September 2022, we announced the first objective clinical response from a TCR-T cell therapy using non-viral Sleeping Beauty targeting solid tumors.

We successfully dosed the third patient in the trial in December 2022 and expect to enroll multiple patients in the first half of 2023.

The fourth quarter IND amendment also combined our treatment and screening protocols, streamlining enrollment and potentially making it easier for both patients and physicians.

The amended IND also eliminated the requirement for retesting of the tumor mutation if six months had passed between screening and treatment.

We anticipate providing an interim clinical data update in 2023 as we work toward advancing the TCR-T Library Phase 1/2 Trial into Phase 2 and we expect to be Phase 2 ready by the end of 2023.

We continue to execute on our multi-pronged strategy to expand manufacturing capacity and efficiency.

We doubled our manufacturing capacity in 2022 allowing for production of two products simultaneously.

We also filed an IND amendment to move from fresh to cryopreserved product and expect to begin implementing this change in the first half of 2023.

The use of cryopreserved cell products is

expected to reduce manufacturing process time from 30 days to 26 days, a 13% decrease, while increasing flexibility for patient scheduling and treatment.

We have ongoing initiatives to optimize the process and further reduce the manufacturing time.

We are advancing our TCR-T cell therapy program towards an IND filing anticipated in the second half of 2023.

We believe mbIL-15 has the potential to increase the survival of TCR-T cells in the harsh tumor microenvironment and deepen clinical responses.

In addition, we continue to conduct translational assessments of treated patients to guide next generation TCR-T therapy approaches including potential combination and multiplexed TCR-T cell therapies.

Financial Overview

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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.

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 oncology programs on a program-by-program basis.

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

For the year ended December 31, 2021, 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;

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

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

a Phase 1 clinical trial with Ad-RTS-IL-12 plus veledimex in progressive glioblastoma;

and a Phase 1 clinical trial infusing our second generation CD19-specific CAR-T cells in patients with advanced lymphoid malignancies.

Since December 31, 2021, we have significantly reduced spending on all programs other than our TCR-T Library Phase 1/2 Trial.

Costs incurred by outside vendors conducting research for our named clinical candidates during the year ended December 31, 2021 and through inception are as follows:

Since Inception, Through

(in millions)

December 31, 2021

Direct external expenses by program:

TCR-T Library Phase 1/2 Trial

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 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.

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Other Income (Expense)

Other income (expense) consists primarily of interest expense associated with our Loan and Security Agreement.

Other income (expense) consists primarily of interest expense associated with our Amended Loan and Security Agreement, as defined below, and sublease income, which started accruing on July 1, 2022.

Results of Operations for the Fiscal Years ended December 31, 2022 and 2021

For the Year Ended December 31,

Year Ended December 31,

Collaboration revenue

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General and administrative

Gain on lease modification

Property and equipment and right-of-use assets impairment

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Loss from operations

Other income (expense):

Interest expense

Other income (expense), net

Net loss applicable to common stockholders

Other income (expense), net

Collaboration Revenue

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Collaboration revenue during the year ended December 31, 2022 was $2.9 million compared to $0.4 during the year ended December 31, 2021.

The increase was due to $0.4 million we recognized in the current year from a collaboration agreement.

The increase was primarily due to $2.9 million we recognized under our license and collaboration agreement with Solasia Pharma K.K upon achievement of a milestone.

Research and Development Expenses

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($ in thousands)

Research and development

Research and development expenses for the year ended December 31, 2021 decreased by $3.1 million, or 6%, when compared to the year ended December 31, 2020 primarily due to a decrease in program-related costs of $9.2 million as a result of the winding down of our IL-12 and CAR-T programs.

The decrease was partially offset by an increase of $4.3 million in employee related expenses, including a $2.2 million

severance charge related to our strategic restructuring event in the third quarter of 2021, and a $1.8 million increase in facilities and other related expenses primarily related to our expanded facilities in Houston.

Research and development expenses

Research and development expenses for the year ended December 31, 2022 decreased by $24.6 million when compared to the year ended December 31, 2021 primarily due to a decrease in program-related costs of $9.7 million, mainly related to the winding down of our IL-12 and CAR-T programs, a $15.5 million decrease in employee-related expenses due to our reduced headcount, a $1.4 million decrease in consulting expenses due to our reduced use of outside service providers and a $0.5 million decrease in facilities and other expenses following the reduction of our real estate footprint in 2022.

These decreases were partially offset by a one-time $2.5 million expense to MD Anderson under the terms of our License Agreement resulting from Solasia's achievement of a milestone.

Our strategic restructuring event during the year ended December 31, 2021 resulted in the termination of approximately 60 full-time employees, which led to the decrease in employee-related expenses.

We currently do not anticipate similar events in the future.

General and Administrative Expenses

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($ in thousands)

General and administrative

General and administrative expenses for the year ended December 31, 2021 decreased by $0.1 million as compared to the year ended December 31, 2020, primarily due to a decrease in professional services of $4.4 million, partially offset by a $4.3 million increase in employee related expenses, including a $1.3 million severance charge related to our strategic restructuring event in the third quarter of 2021 and other severance-related charges incurred during 2021.

General and administrative expenses

General and administrative expenses for the year ended December 31, 2022 decreased by $14.4 million as compared to the year ended December 31, 2021, primarily due to a $12.4 million decrease in employee-related expenses as a result of our reduced headcount, a $1.7

million decrease in consulting expenses due to lower legal costs and reduced use of consultants and a $0.3 million decrease in facilities and other expenses following the reduction of our real estate footprint in 2022.

Our strategic restructuring event during the year ended December 31, 2021 resulted in the termination of approximately 60 full-time employees, which led to the decrease in employee-related expenses.

We currently do not anticipate similar events in the future.

Gain on lease modification

Gain on lease modifications during the years ended December 31, 2022 and 2021 was as follows:

Year Ended December 31,

($ in thousands)

Gain on lease modification

Gain on lease modification during the year ended December 31, 2022 was $0.1 million as compared to $0 during the year ended December 31, 2021.

As a result of a real estate lease modification during the second quarter of 2022, the associated lease liability and right-of-use asset were remeasured based on the revised lease payments, resulting in a gain of $0.1 million.

Impairments during the years ended December 31, 2022 and 2021 were as follows:

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Property and equipment and right-of-use assets impairment

Impairments during the year ended December 31, 2021 were $0.7 million compared to $0 during the year ended December 31, 2020.

The increase was due to a change in the intended use of our Boston office, resulting in an impairment charge of $0.6 million to the right-of-use asset and $0.1 million to leasehold improvements and other assets associated with the office.

There were no impairments during the year ended December 31, 2022, compared to $0.7 during the year ended December 31, 2021.

Due to a change in the intended use of our Boston office, an impairment charge of $0.6 million to the right-of-use asset and $0.1 million to leasehold improvements and other assets associated with the office was recognized during the year ended December 31, 2021.

Other Income (Expense)

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($ in thousands)

Interest expense, net

Interest expense

Other income (expense), net

Total other income (expense), net for the year ended December 31, 2021 increased by $1.6 million as compared to the year ended December 31, 2020 due to $1.2 million of interest expense associated with our Loan and Security Agreement, as defined below, and a reduction in other income of $0.4 million.

Total other income (expense), net for the year ended December 31, 2022 increased by $1.4 million as compared to the year ended December 31, 2021 due to additional interest expense associated with our Amended Loan and Security Agreement, as defined below, of $2.0 million, partially offset by increased interest income of $0.5 million recognized during the year ended December 31, 2022 as a result of higher interest rates earned on our cash balances.

Liquidity and Capital Resources

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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 December 31, 2021, we have received an aggregate of $714.1 million from issuances of equity and $25.0 million from our Loan and Security Agreement, as defined below.

Through December 31, 2022, we have received an aggregate of $729.1 million from issuances of equity and $25.0 million from our Amended Loan and Security Agreement.

We follow the guidance of 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 fourth 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.

2022 Public Offering

On November 29, 2022, we entered into an underwriting agreement, or the Underwriting Agreement, with Cantor Fitzgerald & Co., or the Underwriter, as the sole underwriter, relating to the issuance and sale in an underwritten offering, or the Offering, of 24,228,719 shares of our common stock, or the Firm Shares, to the Underwriter at a price of $0.6191 per share.

Our net proceeds from the Offering were $14.7 million (before accounting for the partial exercise of the Underwriter's option as described below) after deducting underwriting discounts and commissions and offering expenses payable by us.

Under the terms of the Underwriting Agreement, we granted the Underwriter an option, exercisable for 30 days, to purchase up to an additional 3,634,307 shares of common stock, or, together with the Firm Shares, the Shares, at the same price per share as the Firm Shares.

On January 5, 2023, the Underwriter partially exercised its option to purchase 216,294 shares of common stock.

All of the Shares sold in the Offering were sold by us.

2022 Equity Distribution Agreement

On August 12, 2022, we entered into an Equity Distribution Agreement, or the Equity Distribution Agreement, with Piper Sandler & Co., or Piper Sandler, pursuant to which we can offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50 million through Piper Sandler as our sales agent in an “at the market offering.”

Piper Sandler will receive a commission of 3.0% of the gross proceeds of any common stock sold under the Equity Distribution Agreement.

During the year ended December 31, 2022, there were no sales of our common stock under the Equity Distribution Agreement.

In connection with entering into the Equity Distribution Agreement, we concurrently terminated, effective August 12, 2022, the Open Market Sale Agreement, dated June 21, 2019, governing our former “at the market offering”

2021 Loan and Security Agreement

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

On December 28, 2021, we entered into a First Amendment, or the Amendment, to the Loan and Security Agreement, or the Amended Loan and Security Agreement.

Under the terms of the Amended Loan and Security Agreement, the SVB Facility was modified to eliminate the additional $25.0 million tranche, which remained unfunded, leaving only the initial $25.0 million as the full amount available under the SVB Facility.

Effective December 28, 2021, we entered into the Amended Loan and Security Agreement, or the Amended Loan and Security Agreement.

Under the terms of the Amended Loan and Security Agreement, the SVB Facility was modified to eliminate the additional tranche, which remained unfunded, leaving only the initial $25.0 million as the full amount available under the SVB Facility.

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

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 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 a final payment fee equal to 5.75% of the original principal amounts borrowed.

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 Loan and Security Agreement required us to cash collateralize half of the sum of the outstanding principal amount of the term loans, plus an amount equal to 5.75% of the original principal amount of any portion of the SVB Facility actually extended, if we failed to achieve to a certain fundraising milestone on or prior to December 31, 2021.

The Amended Loan and Security Agreement revised our cash collateralization obligation to require us to cash collateralize half of the sum of only the then-outstanding principal amount of the SVB Facility, plus an amount equal to 5.75% of the original principal amount of the SVB Facility if 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 and, after subtracting the eighth scheduled payment of principal and interest on the SVB Facility, the sum of the aggregate of outstanding principal and accrued and unpaid interest, plus the final payment, is equal to or less than $9,770,933, then, within ten business days of the date of receipt of the eighth scheduled payment of principal and interest on the SVB Facility, SVB will release $2.5 million from the collateral account, so long as the balance in the collateral account after the release would equal or exceed $10.0 million.

If no event of default has occurred and, after subtracting the tenth scheduled payment of principal and interest on the SVB Facility, the sum of the aggregate of outstanding principal and accrued and unpaid interest, plus the final payment, is equal to or less than $5,604,167, then, within ten business days of the date of receipt of the tenth scheduled payment of principal and interest on the SVB Facility, SVB will release a further $4.0 million from the collateral account, so long as the balance in the collateral account after the release would equal or exceed $6.0 million.

The Amended Loan and Security Agreement provided for an interest-only period through August 31, 2022.

Commencing on September 1, 2022, aggregate outstanding borrowings became repayable in twelve consecutive, equal monthly installments of principal plus accrued interest.

All outstanding obligations under the Amended Loan and Security Agreement are due and payable on August 1, 2023.

We will also owe SVB 5.75% of the original principal amounts borrowed as a final payment.

We are permitted to make up to two prepayments, subject to a prepayment premium of the amount being prepaid, ranging from 1.00% to 2.00%, of the SVB Facility, each such prepayment to be at least $5.0 million plus all accrued and unpaid interest on the portion being prepaid.

As a result of not achieving certain milestones specified in the Amended Loan and Security Agreement on or prior to August 31, 2022, we were required 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.

As of December 31, 2022, we have collateralized $13.9 million, which is classified as restricted cash on our Balance Sheet.

So long as no event of default has occurred and subject to certain other terms related to the remaining

outstanding balance under the SVB Facility being satisfied, $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.

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, par value $0.001 per share, in the aggregate, and (ii) up to an additional 432,842 shares of Common Stock, in the aggregate, in the event we achieve certain clinical milestones, in each case at an exercise price per share of $2.22.

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

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 achieved certain clinical milestones, in each case at an exercise price per share of $2.22.

In connection with our entry into the Amended Loan and Security Agreement, 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.

February 2020 Public Offering

On February 5, 2020, we issued and sold 27,826,086 shares of our common stock at an offering price to the public of $3.25 per share, for aggregate net proceeds of approximately $84.8 million after deducting underwriting discounts and offering expenses paid by us.

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.

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

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

At-the-Market Facility

In June 2019, we entered into an Open Market Sale Agreement, or Sales Agreement, with Jefferies LLC 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 SEC.

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 at-the-market, or 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 year ended December 31, 2020, we issued and sold an aggregate of 2,814,673 shares for aggregate net proceeds of approximately $13.0 million after deducting underwriting discounts and offering expenses payable by us.

We did not sell any shares of our common stock under the ATM facility during the year ended December 31, 2021.

The following table summarizes our net increase (decrease) in cash and cash equivalents for the years ended December 31, 2022 and 2021:

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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.

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

Non-cash operating items such as depreciation and amortization, stock-based compensation, inducement warrant expense, and warrants for common stock issued;

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

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

Net cash used in operating activities for the year ended December 31, 2022 was $29.2 million, as compared to $61.5 million for the year ended December 31, 2021.

The decrease was primarily related to the reduction of our net loss by $41.1 million, partially offset by the extent of non-cash adjustments and working capital impacts.

The net cash used in operating activities for the year ended December 31, 2022 was primarily a result of our net loss of $37.7 million, adjusted for $9.6 million of non-cash items such as depreciation, stock-based compensation and a decrease in the carrying amount of right-of-use assets, a decrease in accounts receivable of $1.1 million and a decrease in prepaid expenses and other assets of $1.0 million, offset by a decrease in accrued expenses of $0.7 million and a decrease in lease liabilities of $2.5 million.

The net cash used in operating activities for the year ended December 31, 2021 was primarily a result of our net loss of $78.8 million, adjusted for $14.5 million of non-cash items such as depreciation and stock-based compensation and a decrease in accrued expenses of $10.5 million, offset by a decrease in receivables of $3.6 million, a decrease in prepaid expenses and other assets of $9.4 million and an increase in accounts payable of $0.3 million.

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

Net cash used in investing activities was $0.2 million for the year ended December 31, 2022 as compared to $3.3 million for the year ended December 31, 2021.

The $6.5 million decrease in net cash used in investing activities for the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily a result of the decision to use available cash to expand our internal cell therapy capabilities in our Houston, Texas facilities during 2020.

The decrease in net cash used in investing activities for the year ended December 31, 2022 compared to the year ended December 31, 2021 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 half of 2021.

Net cash provided by financing activities was $6.4 million for the year ended December 31, 2022 compared to $25.8 million for the year ended December 31, 2021.

The $25.8 million provided by financing activities during the year ended December 31, 2021 related primarily to proceeds from our $25.0 million SVB Facility and the proceeds from the exercise of stock options equal to $1.0 million.

Net cash provided by financing activities was $102.1 million for the year ended December 31, 2020, was primarily a result of net proceeds of $88.7 million from the issuance of common stock in our follow-on public offering and $13.0 million from the issuance of common stock under our ATM facility.

The $6.4 million provided by financing activities during the year ended December 31, 2022 related primarily to $14.7 million in net proceeds from the issuance of common stock (before accounting for the partial exercise of the Underwriter's option), offset by $8.3 million of repayments of long-term debt.

Net cash provided by financing activities was $25.8 million for the year ended December 31, 2021, related primarily to proceeds from our $25.0 million SVB Facility and the proceeds from the exercise of stock options equal to $1.0 million.

Operating Capital and Capital Expenditure Requirements

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

As of December 31, 2021, we had approximately $76.1 million of cash and cash equivalents.

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

As of December 31, 2022, we had approximately $53.0 million of cash, cash equivalents and restricted cash.

Our restricted cash of $13.9 million relates to the Amended Loan and Security Agreement.

Given our current development plans, we anticipate our cash resources will be sufficient to fund our operations into the fourth 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.

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

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.

Working capital, which excludes restricted cash, as of December 31, 2022 was $15.7 million, consisting of $39.9 million in current assets and $24.2 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.

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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 April 22, 2021, we extended our sublease for a portion of office space at our office in Boston 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.

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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.

Refer to Note 8, Leases , for details on the future funding requirements related to our leases.

In April 2022, we modified our real estate lease agreement executed on December 15, 2020 with MD Anderson.

The modification reduced our leased space from 18,111 square feet to 3,228 square feet.

As a result, the associated lease liability and right-of-use asset were remeasured to $0.4 million based on revised lease payments.

In June 2022, we executed an agreement to sub-sublease 4,772 square feet of our subleased office space in Boston.

The term of the sub-sublease is from July 1, 2022 to June 30, 2025 and provides the sub-subtenant with an option to extend through to July 31, 2026.

For the year ended December 31, 2022, we recognized $0.1 million in lease income, which is classified within other income (expense), net in the Statement of Operations.

Royalty and License Fees

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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.

We have made royalty payments to the NCI in accordance with the patent license agreement.

Refer to Note 9, Commitments and Contingencies , for further details.

For the year ended December 31, 2022, we recognized $0.3 million in royalty payments under the Patent License, and we recognized $0.3 million in royalty payments for the year ended December 31, 2021.

As of December 31, 2022, we have paid a total of $0.5 million in minimum annual royalty payments under the Patent License.

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.

The first benchmark payment of $0.1 million was due upon the initiation of our TCR-T Library Phase 1/2 Trial.

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 years ended December 31, 2021 and 2020.

Payments of $0.1 million were made during the year ended December 31, 2022, and no payments were made during the year ended December 31, 2021.

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

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For the years ended December 31, 2022 and 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 will also pay PGEN 20% 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.

In June 2022, Solasia announced that darinaparsin had been approved from relapsed or refractory Peripheral T-Cell Lymphoma by the Ministry of Health, Labor and Welfare in Japan.

During the year ended December 31, 2022, the Company recorded $2.9 million of collaboration revenue under the Solasia License and Collaboration Agreement primarily related to Solasia's achievement of certain sales-based milestones in Japan, compared to $0.4 million during the year ended December 31, 2021.

Critical Accounting Policies and Significant Estimates

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

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in changes to our previous estimates, which we considered reasonably reliable at the time.

estimates, which we considered reasonably reliable at the time.

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

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

Commencing January 1, 2018, we recognized revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) , which replaced ASC 605, Multiple Element Arrangements , as used in historical years.

Commencing January 1, 2018, we recognized revenue in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) , which replaced ASC 605, Multiple Element Arrangements , as used in historical years.

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

To determine the appropriate amount of revenue to be recognized for arrangements that

we determine are within the scope of ASC 606, we perform the following steps:

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

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

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

The terms of our arrangements with customers typically include the payment of one or more of the following:(i) non-refundable, up-front payment, (ii) development, regulatory and commercial milestone payments, (iii) future options and (iv) royalties on net sales of licensed products.

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

(i) non-refundable, up-front payment, (ii) development, regulatory and commercial milestone payments, (iii) future options and (iv) royalties on net sales of licensed products.

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

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

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

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

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

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

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

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

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

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

We evaluate the

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

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

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Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period.

Stock-based compensation expense is based on the number of awards ultimately expected to vest and is

reduced for forfeitures as they occur.

Stock-based compensation expense is based on the number of awards ultimately expected to vest and is reduced for forfeitures as they occur.

Consistent with prior years, the Company uses the Black-Scholes option pricing model, which requires estimates of the expected term option holders will retain their options before exercising them and the estimated volatility of the Company’s common stock price over the expected term.

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the fair market value of our common stock is considered the quoted market price on Nasdaq;

The expected volatility is based on the historical stock volatility of our common stock over a sufficient period of time equal to the expected term of the options.

the expected volatility is based on the historical stock volatility of our common stock over a sufficient period of time equal to the expected term of the option;

the expected term represents the period that our stock options are expected to be outstanding;

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In preparing our financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes.

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

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

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

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Quantitative and Qualitative Disclosures About Market Risk

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

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information under this Item 7A.

Financial Statements and Supplementary Data

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

What changed 10-K

Item 7. Management’s Discussion and Analysis