Alaunos Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our interim Chief Executive Officer and interim Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Exchange Act, as of December 31, 2020. Based on that evaluation, our interim Chief Executive Officer and our interim Chief Financial Officer have concluded that as of December 31, 2020, our disclosure controls and procedures were effective as described below under “Management’s Report on Internal Control over Financial Reporting.” Remediation of Material Weakness In connection with our audit of the fiscal year 2019 consolidated financial statements, we and our independent registered public accounting firm determined that we had material weaknesses in our internal control over financial reporting. We did not design and maintain effective controls relating to the monitoring and oversight of expensing third party clinical trial costs. Specifically, our internal controls were not designed effectively to provide reasonable assurance regarding the accurate and timely evaluation of the amount of third-party costs to record. There were no changes to any of our previously released financial statements. Based on this material weakness, our management concluded that at December 31, 2019, our internal control over financial reporting was not effective. During the year ended December 31, 2020, we implemented enhanced procedures to remediate the deficiencies in our internal control over financial reporting including implementation of additional in-house meetings across departments to ensure that they have the relevant expertise related to the monitoring and oversight of expensing third party clinical trial costs. We have completed execution of our remediation plan and successfully remediated the material weakness in internal control over financial reporting described above as of December 31, 2020. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13(a)-15(f) and 15(d)-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our interim principal executive and interim principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and 89 Table of Contents • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Under the supervision and with the participation of management, including our interim principal executive and interim financial officers, we assessed our internal control over financial reporting as of December 31, 2020, based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management’s assessment of the effectiveness of our internal control over financial reporting included testing and evaluating the design and operating effectiveness of our internal controls. In management’s opinion, we have maintained effective internal control over financial reporting as of December 31, 2020, based on the criteria discussed above. The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report which is included herein. Inherent Limitations on Internal Controls Our management, including our interim Chief Executive Officer and our interim Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Controls over Financial Reporting Except for the remediation measures discussed above, there were no other changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) that occurred during the fiscal quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Date of 2021 Annual Meeting We intend to hold our annual meeting of stockholders on Wednesday, May 19, 2021 (the “2021 Annual Meeting”). Because the expected date of the 2021 Annual Meeting represents a change of more than 30 calendar days from the date of the anniversary of our 2020 annual meeting of stockholders, we are providing revised deadlines for receipt of stockholder proposals and nominations with respect to the 2021 Annual Meeting. Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), stockholders may present proposals for inclusion in our proxy statement for the 2021 annual meeting of 90 Table of Contents stockholders (“2021 Annual Meeting”) by submitting their proposals to us a reasonable time before we begin to print and send our proxy materials. We will consider any such proposal must be provided not later than the close of business on or prior to Monday, March 8, 2021 to be timely, which is a reasonable time before we begin to distribute the proxy materials for the 2021 Annual Meeting. Any such proposals must comply with the applicable requirements of Rule 14a-8 of the Exchange Act regarding the inclusion of stockholder proposals in company-sponsored proxy materials and other applicable laws and must be received in writing by us at the following address: Ziopharm Oncology, Inc., One First Avenue, Parris Building 34, Navy Yard Plaza, Third Floor, Boston, Massachusetts 02129, Attention: Corporate Secretary. Due to the complexity of the respective rights of the stockholders and us in this area, any stockholder desiring to propose such an action is advised to consult with his or her legal counsel with respect to such rights. We suggest that any such proposal be submitted to us by certified mail, return receipt requested. Rule 14a-4 under the Exchange Act governs our use of our discretionary proxy voting authority with respect to a stockholder proposal that the stockholder has not sought to include in our proxy statement. Rule 14a-4 provides that if a proponent of a proposal fails to notify us at least 45 days prior to the month and day of mailing of the prior year’s proxy statement, management proxyholders will be allowed to use their discretionary voting authority as to whether the proposal is raised at the annual meeting, without any discussion of the matter. If a stockholder wishes to bring a matter before the stockholders at the 2021 Annual Meeting but does not notify us before Monday, March 15, 2021, which is a reasonable time before we begin to distribute the proxy materials for the 2021 Annual Meeting, for all proxies we receive, the management proxyholders will have discretionary authority to vote on the matter, including discretionary authority to vote in opposition to the stockholder’s proposal. Any such notices should be received in writing at the following address: Ziopharm Oncology, Inc., One First Avenue, Parris Building 34, Navy Yard Plaza, Third Floor, Boston, Massachusetts 02129, Attention: Corporate Secretary. 91 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the sections titled Proposal No. 1—Election of Directors, Current Directors, Director Nominees and Executive Officers, Information Regarding the Board of Directors and Corporate Governance , Beneficial Ownership and Delinquent Section 16(a) Reports . Item 11. Executive Compensation Information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the section titled Executive Compensation . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance under Equity Compensation Plans Our 2012 Equity Incentive Plan, or the 2012 Plan and our 2020 Equity Incentive Plan, or the 2020 Plan, are our only equity compensation plans approved by our stockholders. The following table sets forth certain information as of December 31, 2020 with respect to the 2012 Plan and 2020 Plan: Number of Securities to be Issued Upon Exercise of Outstanding Options Weighted-Average Exercise Price of Outstanding Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) Plan Category (A) (B) (C) Equity compensation plans approved by stockholders: 2012 Stock Option Plan 5,659,018 $ 4.01 — 2020 Equity Incentive Plan 1,173,368 2.83 5,714,648 Total: 6,832,386 $ 3.93 5,714,648 Equity compensation plans not approved by stockholders: Inducement Awards 588,333 5.78 — Total: 588,333 $ 5.78 — Additional information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the section titled Beneficial Ownership . Item 13. Certain Relationships and Related Transactions, and Director Independence Information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the sections titled Certain Relationships and Related Transactions and Information Regarding the Board of Directors and Corporate Governance . 92 Table of Contents Item 14. Principal Accountant Fees and Services Information in response to this Item is incorporated herein by reference to the information from our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report under the section titled Independent Registered Public Accounting Firm Fees and Other Matters . 93 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (1) Financial Statements: The Financial Statements required to be filed by Item 8 of this Annual Report, and filed in this Item 15, are as follows: Page Reports of Independent Accounting Firm F-1 – F-4 Balance Sheets as of December 31, 2020 and 2019 F-5 Statements of Operations for the Years Ended December 31, 2020, 2019, and 2018 F-6 Statements of Changes Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020, 2019, and 2018 F-7 – F-9 Statements of Cash Flows for the Years Ended December 31, 2020, 2019, and 2018 F-10 Notes to Financial Statements F-11 (2) Financial Statement Schedules: Schedules are omitted because they are not applicable, or are not required, or because the information is included in the financial statements and notes thereto. (3) Exhibits: Exhibit No. Description of Document 2.1 Agreement and Plan of Merger among the Registrant (formerly “EasyWeb, Inc.”), ZIO Acquisition Corp. and ZIOPHARM, Inc., dated August 3, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, SEC File No. 000-32353, filed August 9, 2005). 3.1 Amended and Restated Certificate of Incorporation, as filed with the Delaware Secretary of State on April 26, 2006 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 000-32353, filed April 26, 2006). 3.2 Certificate of Merger dated September 13, 2005, relating to the merger of ZIO Acquisition Corp. with and into ZIOPHARM, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, SEC File No. 000-32353, filed September 19, 2005). 3.3 Certificate of Ownership of the Registrant (formerly “EasyWeb, Inc.”) dated as of September 14, 2005, relating the merger of ZIOPHARM, Inc. with and into the Registrant, and changing the Registrant’s corporate name from EasyWeb, Inc. to ZIOPHARM Oncology, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K, SEC File No. 000-32353, filed September 19, 2005). 3.4 Amended and Restated Certificate of Designation, Preferences and Rights of Series 1 Preferred Stock, as filed with the Delaware Secretary of State on July 1, 2016 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K/A, SEC File No. 001-33038, filed July 1, 2016). 3.5 Amended and Restated Bylaws of the Registrant, dated as of September 21, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed September 22, 2020). 4.1 Specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form SB-2, SEC File No. 333-129020, filed October 14, 2005). 94 Table of Contents Exhibit No. Description of Document 4.2 Form of Option for the Purchase of Shares of common stock dated August 30, 2004 and issued to The University of Texas M. D. Anderson Cancer Center (incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-KSB, SEC File No. 000-32353, filed March 20, 2006). 4.3 Schedule identifying Material Terms of Options for the Purchase of Shares of Common Stock (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-KSB, SEC File No. 000-32353, filed March 20, 2006). 4.4 Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed November 13, 2018). 4.5# Warrant to Purchase Common Stock issued to The University of Texas M. D. Anderson Cancer Center (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 4.6 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act Of 1934, as amended (incorporated by reference to Exhibit 4.8 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 10.1+ ZIOPHARM Oncology, Inc. Amended and Restated 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K SEC File No. 001-33038 filed March 1, 2011). 10.2+ Form of Incentive Stock Option Agreement granted under the Registrant’s 2003 Stock Option Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-KSB, SEC File No. 000-32353, filed March 20, 2006). 10.3+ ZIOPHARM Oncology, Inc. 2012 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed September 24, 2018). 10.4+ Form of Restricted Stock Agreement Granted Under the ZIOPHARM Oncology, Inc. 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed June 26, 2012). 10.5+ Form of Option Agreement Granted Under the ZIOPHARM Oncology, Inc. 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed June 26, 2012). 10.6+ Inducement Award Agreement between the Registrant and Satyavrat Shukla, dated July 23, 2019 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed July 22, 2019). 10.7+ Form of Inducement Award Grant Notice and Inducement Award Grant Agreement (incorporated by reference to Exhibit 99.3 to the Registrant’s Registration Statement on Form S-8, SEC File No. 333-238090, filed May 8, 2020). 10.8+ ZIOPHARM Oncology, Inc. 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed July 1, 2020). 10.9+* Form of Restricted Stock Agreement Granted Under the ZIOPHARM Oncology, Inc. 2020 Equity Incentive Plan. 10.10+* Form of Stock Option Agreement Granted Under the ZIOPHARM Oncology, Inc. 2020 Equity Incentive Plan. 10.11+ Form of Indemnity Agreement for directors and executive officers (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed January 31, 2013). 95 Table of Contents Exhibit No. Description of Document 10.12+ Employment Agreement by and between the Registrant and Laurence James Neil Cooper, M.D., Ph.D. dated as of May 5, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed May 7, 2015). 10.13+ Employment Agreement, dated as of April 23, 2019, by and between the Registrant and David Mauney, M.D. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed April 29, 2019). 10.14+ Consulting Agreement by and between the Registrant and Dr. David Mauney, dated May 26, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed May 29, 2020). 10.15+ Separation Agreement and Release by and between the Registrant and Dr. David Mauney, effective May 26, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed May 29, 2020). 10.16+ Employment Agreement, dated as of April 23, 2019, by and between the Registrant and Robert Hadfield (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed April 29, 2019). 10.17+* Amendment to the Employment Agreement by and between the Registrant and Robert Hadfield, dated as of November 23, 2020. 10.18+ Employment Agreement, dated as of June 4, 2019, by and between the Registrant and Sath Shukla (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed July 24, 2019). 10.19+* Amendment to the Employment Agreement by and between the Registrant and Sath Shukla, dated as of November 23, 2020. 10.20#* Form of Retention Bonus Agreement. 10.21+ Consulting Agreement by and between Ziopharm Oncology Inc. and Danforth Advisors LLC, effective as of January 21, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed February 23, 2021). 10.22 License Agreement by and among the Registrant, Intrexon Corporation and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center dated as of January 13, 2015 (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed January 28, 2015). 10.23† Exclusive License Agreement by and between the Registrant, Precigen, Inc. and Intrexon Corporation, dated October 5, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed November 9, 2018). 10.24# Amendment No. 1 to the Exclusive License Agreement by and between the Registrant and PGEN Therapeutics, Inc. (formerly known as Precigen, Inc.), dated October 15, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q SEC File No. 001-33038, filed November 5, 2020). 10.25† License and Collaboration Agreement by and among the Registrant, Intrexon Corporation and Ares Trading S.A. dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed April 2, 2015). 10.26 Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of August 17, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed August 21, 2015). 96 Table of Contents Exhibit No. Description of Document 10.27 Amendment #1 to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of August 30, 2016 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 5, 2019). 10.28 Amendment #2 to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of January 17, 2017 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 5, 2019). 10.29 Amendment #3 to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of November 14, 2017 (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 5, 2019). 10.30 Fourth Amendment to Research and Development Agreement, dated September 19, 2019 by and among the Registrant, The University of Texas MD Anderson Cancer Center and Precigen, Inc. (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed November 7, 2019). 10.31# Fifth Amendment to Research and Development Agreement, dated October 22, 2019 by and among the Registrant and The University of Texas MD Anderson Cancer Center (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 10.32# 2019 Research and Development Agreement, dated October 22, 2019, by and between the Registrant and The University of Texas MD Anderson Cancer Center (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 10.33# Patent License Agreement, dated as of May 28, 2019, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed August 8, 2019). 10.34# Amendment to Patent License Agreement, dated as of January 8, 2020, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 10.35# Second Amendment to Patent License Agreement, dated as of September 28, 2020, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 000-33038, filed November 5, 2020). 10.36# Cooperative Research and Development Agreement, dated January 9, 2017, by and among the Registrant, the National Cancer Institute, and Intrexon Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 26, 2019). 10.37 Amendment #1 to the Cooperative Research and Development Agreement, dated March 23, 2018, by and among the Registrant, National Cancer Institute, Intrexon Corporation and Precigen, Inc (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 26, 2019). 10.38# Amendment #2 to the Cooperative Research and Development Agreement, dated February 1, 2019, by and among the National Cancer Institute, the Registrant and Precigen, Inc (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 26, 2019). 97 Table of Contents Exhibit No. Description of Document 10.39* Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center. 10.40* First Amendment, dated as of April 7, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center. 10.41* Second Amendment, dated as of April 7, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center. 10.42* Third Amendment, dated as of December 15, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center. 10.43* Lease Agreement dated as of December 15, 2020, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center. 10.44 Form of Securities Purchase Agreement, dated November 11, 2018, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed November 13, 2018). 10.45 Form of Registration Rights Agreement, dated November 11, 2018, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed November 13, 2018). 10.46 Form of Securities Purchase Agreement, dated July 26, 2019, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed August 1, 2019). 10.47 Form of Registration Rights Agreement, dated July 26, 2019, by and between the Registrant and certain investors (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed August 1, 2019). 10.48 Form of Securities Purchase Agreement, dated September 12, 2019, by and between the Registrant and an investor (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 13, 2019). 10.49 Form of Registration Rights Agreement, dated September 12, 2019, by and between the Registrant and an investor (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 13, 2019). 10.50 Agreement, by and among ZIOPHARM Oncology, Inc., WaterMill Asset Management Corp. Robert W. Postma, Jamie Vieser, and Holger Weis, dated February 4, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed February 5, 2021). 21.1* Subsidiaries of the Registrant. 23.1* Consent of Independent Registered Public Accounting Firm 24.1* Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K). 31.1* Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 98 Table of Contents Exhibit No. Description of Document 32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File—the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments * Filed herewith. ** Furnished herewith. + Indicates management contract or compensatory plan. † Confidential treatment has been granted by the Securities and Exchange Commission as to certain portions of this document. # Portions of this document (indicated by “[***]”) have been omitted because they are not material and would likely cause competitive harm to Ziopharm Oncology, Inc. if disclosed. 99 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ZIOPHARM ONCOLOGY, INC. Date: March 1, 2021 By: /s/ Heidi Hagen Heidi Hagen Interim Chief Executive Officer ( Principal Executive Officer ) Date: March 1, 2021 By: /s/ Timothy Cunningham Timothy Cunningham Interim Chief Financial Officer ( Principal Financial Officer ) KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Heidi Hagen and Robert Hadfield, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her, and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Heidi Hagen Heidi Hagen Interim Chief Executive Officer and Director ( Principal Executive Officer ) March 1, 2021 /s/ Timothy Cunningham Timothy Cunningham Interim Chief Financial Officer ( Principal Financial Officer ) March 1, 2021 /s/ Kevin G. Lafond Kevin G. Lafond Senior Vice President Finance, Chief Accounting Officer and Treasurer ( Principal Accounting Officer ) March 1, 2021 /s/ Christopher Bowden Christopher Bowden Director March 1, 2021 /s/ J. Kevin Buchi J. Kevin Buchi Director March 1, 2021 100 Table of Contents Signature Title Date /s/ James Huang James Huang Director March 1, 2021 /s/ Robert Postma Robert Postma Director March 1, 2021 /s/ Mary Thistle Mary Thistle Director March 1, 2021 /s/ Jaime Vieser Jaime Vieser Director March 1, 2021 /s/ Holger Weis Holger Weis Director March 1, 2021 101 Table of Contents ZIOPHARM Oncology, Inc. INDEX TO FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm F-1–F-4 Balance Sheets as of December 31, 2020 and 2019 F-5 Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018 F-6 Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020, 2019 and 2018 F-7–F-9 Statements of Cash Flows for the Years Ended December 31, 2020, 2019, and 2018 F-10 Notes to Financial Statements F-11 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of ZIOPHARM Oncology, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of ZIOPHARM Oncology, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related statements of operations stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 1, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below arises from the current-period audit of the financial statements that was communicated or required to be communicated to the Company’s Audit Committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the matter or disclosures to which it relates. Description of the Matter: As discussed in Note 3 to the financial statements, the Company records costs for clinical and pre-clinical trial costs based upon estimates of costs incurred through the balance sheet date that have yet to be invoiced by the contract research organizations, clinical study sites, laboratories, consultants, or other vendors. The Company’s accrual for clinical and pre-clinical trial expenses totaled $8.3 million at December 31, 2020. F-1 Table of Contents We identified the accruals for clinical and pre-clinical trial expenses to be a critical audit matter because auditing the Company’s accruals for clinical and pre-clinical trial expenses is complex due to the fact that information necessary to estimate the expense is accumulated from multiple sources. In addition, in certain circumstances, the determination of the nature and level of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing does not correspond to the level of services provided and there may be delays in invoicing from clinical study sites and other vendors. How We Addressed the Matter in our Audit Our audit procedures relating to the accruals of clinical and pre-clinical trial expenses included the following, among others: • We obtained an understanding and tested the design and operating effectiveness of internal controls over the Company’s process for recording accruals for clinical and pre-clinical trial expenses, including those related to accruing for patient enrollments and reviewing work performed by third party vendors in order to ensure expenses are properly accounted for in accordance with the underlying agreements and those related to management’s review of the detail and correspondence with third parties. • To test the completeness and valuation of the accrual for clinical and pre-clinical trial expenses, we performed audit procedures that included, among others: • Reading a selection of contracts with contract research organizations and clinical study sites to evaluate financial and certain other contractual terms; • Comparing the progress of clinical trials completed through the balance sheet date with information provided by the Company’s operations personnel that oversee the clinical and pre-clinical trial activities; • Obtaining information directly from certain third parties which indicate the progress of clinical trials and research and development activities through the balance sheet date and compared that to the Company’s recorded accrued expense balance. /s/ RSM US LLP We have served as the Company’s auditor since 2010. Boston, Massachusetts March 1, 2021 F-2 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of ZIOPHARM Oncology, Inc. Opinion on the Internal Control Over Financial Reporting We have audited ZIOPHARM Oncology, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying balance sheets of the Company as of December 31, 2020 and 2019, the related statements of operations stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes to the financial statements of the Company and our report dated March 1, 2021 expressed an unqualified opinion. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. F-3 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ RSM US LLP Boston, Massachusetts March 1, 2021 F-4 Table of Contents ZIOPHARM Oncology, Inc. BALANCE SHEETS (in thousands, except share and per share data) December 31, 2020 December 31, 2019 ASSETS Current assets: Cash and cash equivalents $ 115,069 $ 79,741 Receivables 4,665 3,330 Prepaid expenses and other current assets 10,855 22,421 Total current assets 130,589 105,492 Property and equipment, net 10,231 1,110 Deposits 130 130 Right-of-use asset 4,650 2,272 Other non-current assets 745 110 Total assets $ 146,345 $ 109,114 LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 960 $ 906 Accrued expenses 16,589 10,846 Lease liability - current portion 819 774 Total current liabilities 18,368 12,526 Lease liability - noncurrent portion 3,995 1,578 Total liabilities 22,363 14,104 Commitments and contingencies (Note 9) Preferred stock, $ 0.001 par value, 30,000,000 shares authorized Series 1 preferred stock, $ 1,200 stated value; 250,000 designated; 0 shares issued and outstanding at December 31, 2020 and 2019; liquidation value of $ 0 million at December 31, 2020 and 2019 — — Stockholders’ equity: Common stock, $ 0.001 par value; 250,000,000 shares authorized; 214,591,906 and 181,803,320 shares issued and outstanding at December 31, 2020 and 2019, respectively 215 182 Additional paid-in capital 887,868 778,953 Accumulated deficit ( 764,101 ) ( 684,125 ) Total stockholders’ equity 123,982 95,010 Total liabilities and stockholders’ equity $ 146,345 $ 109,114 The accompanying notes are an integral part of these financial statements. F-5 Table of Contents ZIOPHARM Oncology, Inc. STATEMENTS OF OPERATIONS (in thousands, except share and per share data) For the Year Ended December 31, 2020 2019 2018 Collaboration revenue $ — $ — $ 146 Operating expenses: Research and development 52,696 38,331 34,134 General and administrative 27,665 19,527 19,918 Total operating expenses 80,361 57,858 54,052 Loss from operations ( 80,361 ) ( 57,858 ) ( 53,906 ) Other income, net 385 813 631 Non-cash inducement warrant expense — ( 60,751 ) — Change in fair value of derivative liabilities — — 158 Net loss $ ( 79,976 ) $ ( 117,796 ) $ ( 53,117 ) Preferred stock dividends $ — $ — $ ( 16,998 ) Settlement of a related party relationship $ — $ — $ 207,361 Net income (loss) applicable to common stockholders $ ( 79,976 ) $ ( 117,796 ) $ 137,246 Net income (loss) per share - basic $ ( 0.38 ) $ ( 0.70 ) $ 0.96 Net income (loss) per share - diluted $ ( 0.38 ) $ ( 0.70 ) $ 0.96 Weighted average common shares outstanding used to compute basic net income (loss) per share 209,636,456 167,952,114 143,508,674 Weighted average common shares outstanding used to compute diluted net income (loss) per share 209,636,456 167,952,114 143,710,160 The accompanying notes are an integral part of these financial statements. F-6 Table of Contents ZIOPHARM Oncology, Inc. STATEMENTS OF CHANGES IN PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (in thousands, except share and per share data) Series 1 Preferred Stock-Mezzanine Common Stock Additional Paid In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Balance at December 31, 2017 119,644 $ 143,992 142,658,037 $ 143 $ 615,493 $ ( 712,442 ) $ ( 96,806 ) Adjustment for implementation of ASU No. 2014-09, Revenue from Contracts with Customers — — — — — ( 8,131 ) ( 8,131 ) Stock-based compensation — — — — 7,534 — 7,534 Issuance of restricted common stock — — 150,321 2 ( 1 ) — 1 Exercise of employee stock options — — 104,166 2 240 — 242 Cancelled restricted common stock — — ( 271,433 ) ( 2 ) 3 — 1 Repurchase of restricted common stock — — ( 514,349 ) ( 3 ) ( 1,621 ) — ( 1,624 ) Issuance of warrants and common stock in a private placement, net of commissions and expenses of $ 2,898 — — 18,939,394 19 47,082 — 47,101 Preferred stock dividends 11,415 16,775 — — ( 16,998 ) — ( 16,998 ) Settlement of a related party relationship (Note 7) ( 131,059 ) ( 160,767 ) — — — 207,361 207,361 Net loss — — — — — ( 53,117 ) ( 53,117 ) Balance at December 31, 2018 — $ — 161,066,136 $ 161 $ 651,732 $ ( 566,329 ) $ 85,564 The accompanying notes are an integral part of these financial statements. F-7 Table of Contents ZIOPHARM Oncology, Inc. STATEMENTS OF CHANGES IN PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.) (in thousands, except share and per share data) Series 1 Preferred Stock-Mezzanine Common Stock Additional Paid In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Balance at December 31, 2018 — $ — 161,066,136 $ 161 $ 651,732 $ ( 566,329 ) $ 85,564 Stock-based compensation — — 6,341 — 6,341 Issuance of restricted common stock 1,519,766 2 998 — 1,000 Exercise of employee stock options 443,051 — 1,219 — 1,219 Cancelled restricted common stock ( 74,599 ) — — — — Repurchase of restricted common stock ( 225,339 ) — ( 653 ) — ( 653 ) Issuance of inducement warrants — — 60,751 — 60,751 Issuance of common stock in connection with at the market offering, net of commssions and expenses of $ 0.1 million 1,271,274 1 6,084 — 6,085 Warrant exercise, net of commissions and expenses of $ 1.1 milliom 17,803,031 18 52,481 — 52,499 Net loss — — — ( 117,796 ) ( 117,796 ) Balance at December 31, 2019 — $ — 181,803,320 $ 182 $ 778,953 $ ( 684,125 ) $ 95,010 The accompanying notes are an integral part of these financial statements. F-8 Table of Contents ZIOPHARM Oncology, Inc. STATEMENTS OF CHANGES IN PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.) (in thousands, except share and per share data) Series 1 Preferred Stock-Mezzanine Common Stock Additional Paid In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Balance at December 31, 2019 — $ — $ 181,803,320 $ 182 $ 778,953 $ ( 684,125 ) $ 95,010 Stock-based compensation — — — — 6,829 — 6,829 Exercise of employee stock options — — 252,799 442 442 Restricted stock awards — — 805,900 1 ( 1 ) — — Cancelled restricted common stock — — ( 194,897 ) — — — — Issuance of common stock in connection with a public offering, net of commissions and expenses of $ 5,900 — — 29,110,111 29 88,632 — 88,661 Issuance of common stock in connection with an at the market offering, net of commissions and expenses of $ 400 — — 2,814,673 3 13,013 — 13,016 Net loss ( 79,976 ) ( 79,976 ) Balance at December 31, 2020 — $ — 214,591,906 $ 215 $ 887,868 $ ( 764,101 ) $ 123,982 The accompanying notes are an integral part of these financial statements. F-9 Table of Contents ZIOPHARM Oncology, Inc. STATEMENTS OF CASH FLOWS (in thousands) For the Year Ended December 31, 2020 2019 2018 Cash flows from operating activities: Net loss $ ( 79,976 ) $ ( 117,796 ) $ ( 53,117 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,128 629 575 Stock-based compensation 6,829 7,341 7,534 Non-cash inducement warrant expense — 60,751 — Change in fair value of derivative liabilities — — ( 158 ) Change in operating assets and liabilities: (Increase) decrease in: Receivables ( 1,335 ) ( 1,466 ) ( 1,845 ) Prepaid expenses and other current assets 11,566 ( 1,729 ) ( 1,263 ) Right of use assets ( 2,378 ) — — Deposits — ( 2 ) — Other noncurrent assets ( 635 ) 9,431 3,942 Increase (decrease) in: Accounts payable 54 199 ( 3,709 ) Accrued expenses 5,272 1,725 ( 1,145 ) Deferred revenue — — ( 146 ) Deferred rent — — ( 125 ) Lease liabilities 2,462 63 — Net cash used in operating activities ( 57,013 ) ( 40,854 ) ( 49,457 ) Cash flows from investing activities: Purchases of property and equipment ( 9,778 ) ( 284 ) ( 459 ) Net cash used in investing activities ( 9,778 ) ( 284 ) ( 459 ) Cash flows from financing activities: Proceeds from exercise of stock options 442 1,219 240 Issuance of restricted common stock — — — Repurchase of common stock — ( 653 ) ( 1,622 ) Proceeds from underwritten financing — — 47,101 Issuance of common stock upon exercise of warrants, net — 52,499 — Issuance of common stock in connection with a public offering, net 88,661 Issuance of common stock in connection with an at the market offering, net 13,016 6,085 — Cash paid for settlement of related party relationship — — ( 5,408 ) Net cash provided by financing activities 102,119 59,150 40,311 Net decrease in cash and cash equivalents, and restricted cash 35,328 18,012 ( 9,605 ) Cash and cash equivalents, and restricted cash, beginning of period 79,741 61,729 71,334 Cash and cash equivalents, and restricted cash, end of period $ 115,069 $ 79,741 $ 61,729 Supplementary disclosure of cash flow information: Bonus paid in common stock $ — $ 1,000 $ — Fixed assets in accrued expenses $ 471 $ 358 $ — Supplementary disclosure of noncash investing and financing activities: Noncash portion of related party relationship settlement $ — $ — $ 212,769 Payment of Series 1 preferred stock dividends in preferred stock $ — $ — $ 16,998 The accompanying notes are an integral part of these financial statements. F-10 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 1. Organization ZIOPHARM Oncology, Inc., which is referred to herein as “ZIOPHARM,” or the “Company,” is a biopharmaceutical company seeking to develop, acquire, and commercialize, on its own or with partners, a diverse portfolio of immuno-oncology therapies. The Company’s operations to date have consisted primarily of raising capital and conducting research and development. The Company’s fiscal year ends on December 31. The Company has operated at a loss since its inception in 2003 and has no recurring revenues from operations. The Company anticipates that losses will continue for the foreseeable future. As of December 31, 2020, the Company has approximately $ 115.1 million of cash and cash equivalents and the Company’s accumulated deficit was approximately $ 764.1 million. Given the Company’s current development plans, the Company anticipates its cash resources will be sufficient to fund its operations into the second quarter of 2022. The Company’s ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given. Cash requirements may vary materially from those now planned because of changes in the Company’s focus and direction of its research and development programs, competitive and technical advances, patent developments, regulatory changes or other developments. If adequate additional funds are not available when required, or if the Company is unsuccessful in entering into partnership agreements for further development of our product candidates, management may need to curtail its development efforts and planned operations to conserve cash. Our amended and restated certificate of incorporation authorizes us to issue 250,000,000 shares of common stock. As of February 24 , 2020, there were 214,667,023 shares of common stock outstanding and an additional 31,115,329 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants. Though we have no immediate plans to issue additional shares of common stock, other than in connection with our 2020 Equity Incentive Plan, we may need additional shares for business and financial purposes in the future. In addition to these factors, our actual cash requirements may vary materially from our current expectations for a number of other factors that may include, but are not limited to, changes in the focus and direction of our development programs, competitive and technical advances, costs associated with the development of our product candidates, our ability to secure partnering arrangements, and the costs of filing, prosecuting, defending and enforcing our intellectual property rights. If we exhaust our capital reserves more quickly than anticipated, regardless of the reason, and we are unable to obtain additional financing on terms acceptable to us or at all, we will be unable to proceed with development of some or all of our product candidates on expected timelines and will be forced to prioritize among them. We expect that we will need additional financing to support our long-term plans for clinical trials and new product development. We expect to finance our cash needs through the sale of equity securities, strategic collaborations and/or debt financings, or through other sources that may be dilutive to existing stockholders. There can be no assurance that we will be able to obtain funding from any of these sources or, if obtained, what the terms of such funding(s) may be, or that any amount that we are able to obtain will be adequate to support our working capital requirements until we achieve profitable operations. 2. Financings February 2020 Public Offering On February 5, 2020, the Company entered into an underwriting agreement with Jefferies, as representative of the several underwriters named therein, relating to the issuance and sale of 27,826,086 shares of its commo n F-11 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 2. Financings (Continued) 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. Under the terms of the underwriting agreement, the Company also granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 4,173,912 shares of common stock at a purchase price of $ 3.055 per share. The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (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 Offering Program During the year ended December 31, 2020, the Company sold an aggregate of 2,814,673 shares of its common stock. The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (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 the Company. During the year ended December 31, 2019, the Company sold an aggregate of 1,271,274 shares of its common stock. The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (File No. 333-232283) previously filed with the SEC, and a prospectus supplement thereunder. The net proceeds from the offering were approximately $ 6.1 million after deducting underwriting discounts and offering expenses payable by the Company. November 2018 Private Placement and 2019 Inducement Warrants On November 11, 2018, the Company entered into a securities purchase agreement with certain institutional and accredited investors pursuant to which it sold an aggregate of 18,939,394 immediately separable units at a price per unit of $ 2.64 to such investors, for net proceeds of approximately $ 47.1 million. Each unit was comprised of (i) one share of the Company’s common stock, par value $ 0.001 per share and (ii) a warrant to purchase one share of common stock. The securities issued by the Company pursuant to the securities purchase agreement and to be issued upon exercise of the warrants were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. When issuing the units, the Company relied on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Registration D, promulgated thereunder and on similar exemptions under applicable state laws and filed a Form D with the SEC on November 19, 2018. On February 7, 2019, the Company filed a registration statement on Form S-3 registering the resale of shares issued pursuant to the securities purchase agreement and the resale of shares that may be issued upon exercise of the warrants. July 2019 and September 2019 Warrant Exercise On July 26, 2019 and September 12, 2019, the Company entered into agreements for the exercise of the warrants issued in November 2018 to purchase common stock in a private placement. Pursuant to the terms of the F-12 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 2. Financings (Continued) a greements, investors exercised warrants for an aggregate of 17,803,031 shares of common stock, at an exercise price of $ 3.01 per share. The Company issued new warrants to purchase up to 17,803,031 additional shares of common stock as an inducement for warrant holders to exercise their 2018 warrants early. The new warrants will become exercisable six months following the date of issuance, will expire on the fifth anniversary of the initial exercise date, and have an exercise price of $ 7.00 (Note 10). Proceeds from the exercise of the warrants, before deducting placement agent fees and other related expenses of $ 1.1 million were approximately $ 52.5 million. For the year ended December 31, 2019, the Company also recorded $ 60.8 million in non-cash inducement warrant expense, which is included in the Company’s statement of operations. 3. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America or U.S. GAAP. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known. The Company’s most significant estimates and judgments used in the preparation of the financial statements are: • Clinical trial expenses and other research and development expenses; • Collaboration agreements; • Fair value measurements of stock-based compensation and; and • Income taxes. Impact of COVID-19 Pandemic With the ongoing COVID-19 pandemic, the Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on its business and operations. The Company continues to evaluate the impact of the COVID-19 global pandemic on patients, healthcare providers and its employees, as well as its operations and the operations of its business partners and healthcare communities. In response to the COVID-19 pandemic, the Company has implemented policies at its locations to mitigate the risk of exposure to COVID-19 by its personnel, including restrictions on the number of staff in any given research and development laboratory and a work-from-home policy applicable to the majority of our personnel. The extent to which the COVID-19 pandemic impacts the Company’s business, clinical development and regulatory efforts and the value of its common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements, and the effectiveness of actions taken globally to contain and treat the disease. The global economic slowdown, the overall disruption of global F-13 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) healthcare systems and the other risks and uncertainties associated with the COVID-19 pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects. Subsequent Events The Company evaluated all events and transactions that occurred after the balance sheet date through the date of the Annual Report. Except as disclosed below, the Company did not have any material subsequent events that impacted its financial statements or disclosures. On February 4, 2021, the Company entered into an agreement with Watermill Asset Management Corp. and Robert W. Postma. Pursuant to the Settlement Agreement, the Company increased the size of the Company’s Board of Directors from eight to nine directors and appointed Mr. Postma to fill the newly created directorship. Mr. Postma will serve an initial term expiring at the Company’s 2021 annual meeting of stockholders. Additionally, the Company agreed to nominate each of Mr. Postma, Jaime Vieser and Holger Weis for election at any stockholder meeting at which directors are to be elected and will recommend, support, and solicit proxies for the election of each of Messrs. Postma, Vieser and Weis. Additionally, the Company agreed to reimburse Watermill for up to $ 400 thousand of its reasonable out-of-pocket fees and expenses. This agreement also resulted in $ 1.0 million in strategic advisory services becoming due. These costs were expensed during the year ended December 31, 202 0 and included in accrued expenses on the balance sheet. Organizational Changes During the year ended December 31, 2020 there were changes in the members of the Board of Directors. The following Directors left during the quarter: Scott Braunstein on November 16, 2020, Elan Ezickson on December 3, 2020, and Scott Tarriff on December 15, 2020. Messers. Braunstein and Ezickson received an extended period to exercise stock options along accelerated vesting of restricted stock. In turn, the following Directors joined the board: Mary Thistle on November 15, 2020, Jaime Vieser on December 15, 2020, and Holger Weis on December 15, 2020. On December 10, 2020, Satyavrat Shukla notified the Company of his decision to resign from the position of Chief Financial Officer of the Company, effective December 31, 2020. Included in his separation agreement, Mr. Shukla was to receive his annual bonus which was accrued at December 31, 2020. Additionally, on February 25, 2021, the Company announced that Heidi Hagen, formerly Lead Independent Director, was appointed Interim Chief Executive Officer, replacing Dr. Laurence Cooper, MD., Ph.D. Ms. Hagen is remaining a member of the Board of Directors. Dr. Cooper is also stepping down from his seat on the Board of Directors and is expected to continue with the Company in a scientific advisory capacity to support the Company’s R&D programs. Cash and Cash Equivalents Cash equivalents consist primarily of demand deposit accounts, certificates of deposit and deposits in short-term U.S. treasury money market mutual funds. Cash equivalents are stated at cost, which approximates fair market value. F-14 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash accounts in commercial banks, which may, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Property and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are capitalized. Depreciation and amortization is calculated on a straight-line basis using the following periods, which represent the estimated useful lives of the assets: ● Office and computer equipment 3 years ● Software 3 years ● Laboratory equipment 5 years ● Leasehold improvements Life of the lease Costs, including certain design, construction and installation costs related to assets that are under construction and are in the process of being readied for their intended use, are recorded as construction in progress and are not depreciated until such time as the subject asset is placed in service. Repairs and maintenance that do not extend the useful life of the asset are expensed as incurred. Upon sale, retirement , or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the disposition is included on our Statements of Operations. Long-Lived Assets Assessments of long-lived assets and the remaining useful lives of such long-lived assets are reviewed for impairment whenever a triggering event occurs or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An asset, or group of assets, are considered to be impaired when the undiscounted estimated net cash flows expected to be generated by the asset, or group of assets, are less than its carrying amount. The impairment recognized is the amount by which the carrying amount exceeds the fair market value of the impaired asset, or group of assets, based on the present value of the expected future cash flows associated with the use of the asset. Operating Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Company’s chief operating decision maker, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program basis. Warrants The Company assesses whether warrants issued require accounting as derivatives. The Company determined that the warrants were (1) indexed to the Company’s own stock and (2) classified in stockholders’ equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging . As such, the Company has concluded the warrants meet the scope exception for determining whether the instruments require accounting as derivatives and should be classified in stockholders’ equity. F-15 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) Fair Value Measurements The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements. • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019 are as follows: ($ in thousands) Fair Value Measurements at Reporting Date Using Description Balance as of December 31, 2020 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 75,990 $ 75,990 $ — $ — ($ in thousands) Fair Value Measurements at Reporting Date Using Description Balance as of December 31, 2019 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 68,031 $ 68,031 $ — $ — 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. Revenue Recognition from Collaboration Agreements The Company adopted Accounting Standards Codification, or ASC Topic 606, Revenue from Contracts with Customers, or ASC 606, using the modified retrospective approach on January 1, 2018. The Company completed its assessment and the implementation resulted in a cumulative effect adjustment to accumulated deficit as of January 1, 2018 of approximately $ 8.1 million and a corresponding increase to the contract liability (formerly deferred revenue). The adjustment to the Company’s financial statements due to the adoption of ASC 606 is related to the Company’s Ares Trading Agreement (Note 6), which was the Company’s sole open revenue contract outstanding at January 1, 2018. There was no revenue for the years ended December 31, 2020 and 2019. F-16 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) The Company primarily generates revenue through collaboration arrangements with strategic partners for the development and commercialization of product candidates. Commencing January 1, 2018, the Company recognized revenue in accordance with ASC 606 which replaced ASC 605, Multiple Element Arrangements , as used in historical years. The 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 the Company determines are within the scope of ASC 606, the Company performs 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. The Company recognizes collaboration revenue under certain of the Company’s license or collaboration agreements that are within the scope of ASC 606. The Company’s contracts with customers typically include promises related to licenses to intellectual property, research and development services and options to purchase additional goods and/or services. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgement to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. Contracts that include an option to acquire additional goods and/or services are evaluated to determine if such option provides a material right to the customer that it would not have received without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer which would be accounted for as a separate contract upon the customer’s election. The terms of the Company’s arrangements with customers typically include the payment of one or more of the following: (i) non-refundable, up-front payment, (ii) development, regulatory and commercial milestone payments, (iii) future options and (iv) royalties on net sales of licensed products. Accordingly, the transaction price is generally comprised of a fixed fee due at contract inception and variable consideration in the form of milestone payments due upon the achievement of specified events and tiered royalties earned when customers recognize net sales of licensed products. The Company measures the transaction price based on the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods and/or services to the customer. The Company utilizes the most likely amount method to estimate the amount of variable consideration, to predict the amount of consideration to which it will be entitled for its one open contract. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. At the inception of each arrangement that includes development and regulatory milestone payments, the Company evaluates whether the associated event is considered probable of achievement and estimates the amount to be included in the transaction price using the most likely amount method. Milestone payments that are not within the control of the Company or the licensee, such as those dependent upon receipt of regulatory approval, are not considered to be probable of achievement until the triggering event occurs. At the end of each reporting period, the Company reevaluates the probability of achievement of each milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment. For arrangements that include sales-based royalties, including milestone F-17 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) payments based upon the achievement of a certain level of product sales, the Company recognizes revenue upon the later of: (i) when the related sales occur or (ii) when the performance obligation to which some or all of the payment has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any development, regulatory or commercial milestones or royalty revenue resulting from any of its collaboration arrangements. Consideration that would be received for optional goods and/or services is excluded from the transaction price at contract inception. The Company allocates the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis. However, certain components of variable consideration are allocated specifically to one or more particular performance obligations in a contact to the extent both of the following criteria are met: (i) the terms of the payment relate specifically to the efforts to satisfy the performance obligation or transfer the distinct good or service and (ii) allocating the variable amount of consideration entirely to the performance obligation or the distinct good or service is consistent with the allocation objective of the standard whereby the amount allocated depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services. The Company develops assumptions that require judgment to determine the standalone selling price for each performance obligation identified in each contract. The key assumptions utilized in determining the standalone selling price for each performance obligation may include forecasted revenues, development timelines, estimated research and development costs, discount rates, likelihood of exercise and probabilities of technical and regulatory success. Revenue is recognized based on the amount of the transaction price that is allocated to each respective performance obligation when or as the performance obligation is satisfied by transferring a promised good and/or service to the customer. For performance obligations that are satisfied over time, the Company recognizes revenue by measuring the progress toward complete satisfaction of the performance obligation using a single method of measuring progress which depicts the performance in transferring control of the associated goods and/or services to the customer. The Company uses input methods to measure the progress toward the complete satisfaction of performance obligations satisfied over time. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment. The Company recognized the upfront payment received in 2015 associated with a former open contract as a contract liability upon receipt of payment as it requires deferral of revenue recognition to a future period until the Company performs its obligations under the arrangement. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date were classified in current liabilities. Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date were classified as contract liabilities, net of current portion. The Company determined that there were three performance obligations; the first performance obligation consists of the license and research development services and the other two performance obligations are material rights as it relates to potential future targets that have not yet been identified. As described above, the transaction price of $ 57.5 million was allocated to the performance obligations based on their relative standalone selling prices. There were multiple distinct performance obligations, including material rights; thus, the Company allocated the transaction price to each distinct performance obligation based on its relative standalone selling price. The standalone selling price is generally determined based on the prices charged to customers or using expected cost-plus margin. Revenue is recognized by measuring the progress toward complete satisfaction of the performance obligations using an input measure. Furthermore, the Company has not capitalized any contract costs under the guidance in ASC 340-40, Other Assets and Deferred Costs: Contracts with Customers . F-18 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) The Company did not believe that any variable consideration should be included in the transaction price at the date of adoption of ASC 606 on January 1, 2018. Such assessment considered the application of the constraint to ensure that estimates of variable consideration would be included in the transaction price only to the extent the Company had a high degree of confidence that revenue would not be reversed in a subsequent reporting period. The Company will re-evaluate the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as other changes in circumstances occur. Impact of Topic 606 Adoption As a result of adopting ASC 606, the Company recorded an $ 8.1 million adjustment to the opening balance of accumulated deficit in the first quarter of 2018 as a result of the treatment of the up-front consideration receive d in July 2015 under ASC 605-25 versus ASC 606. Refer below for a summary of the amount by which each financial statement line item was affected by the impact of the cumulative adjustment: ($ in thousands) Impact of Topic 606 Adoption on the Balance Sheet as of January 1, 2018 Description As reported under Topic 606 Adjustments Balances without adoption of Topic 606 Contract liability, current portion $ 622 $ ( 5,767 ) $ 6,389 Contract liability, net of current portion $ 49,037 $ 13,898 $ 35,139 Accumulated deficit $ ( 720,573 ) $ ( 8,131 ) $ ( 712,442 ) ($ in thousands) Impact of Topic 606 Adoption on the Statement of Operations for the Year Ended December 31, 2018 Description As reported under Topic 606 Adjustments Balances without adoption of Topic 606 Collaboration revenue $ 146 $ ( 4,732 ) $ 4,878 Net loss $ ( 53,117 ) $ ( 4,732 ) $ ( 48,385 ) Net income (loss) applicable to common shareholders $ 137,246 $ ( 4,732 ) $ 141,978 Net income (loss) per share - basic $ 0.96 $ ( 0.03 ) $ 0.99 Net income (loss) per share - diluted $ 0.96 $ ( 0.03 ) $ 0.99 ($ in thousands) Impact of Topic 606 Adoption on the Statement of Cash Flows for the Year Ended December 31, 2018 Description As reported under Topic 606 Adjustments Balances without adoption of Topic 606 Net loss $ ( 53,117 ) $ ( 4,732 ) $ ( 48,385 ) Changes in contract liability $ — $ — $ — The most significant change above relates to the Company’s collaboration revenue, which to date has been exclusively generated from its collaboration arrangement with Ares Trading and PGEN Therapeutics, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation, ( Note 7 ). Under ASC 605, the Company accounted for the up-front payment over the estimated period of performance of F-19 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) the research and development services which was estimated to be 9 years . In connection with the adoption of ASC 606 , the Company uses cost-based input method to measure progress because such method best reflects the satisfaction of the performance obligation. In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to the budgeted costs to complete the research programs. These costs consist primarily of internal full-time equivalent effort and third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs. As a result, although the performance obligations noted above and identified under ASC 606 were generally consistent with the units of account identified under ASC 605 , the timing of the allocation of the transaction price to the identified performance obligations under ASC 606 differed from the allocations of consideration under ASC 605 . Accordingly, the transaction price ultimately allocated to each performance obligation under ASC 606 differed from the amounts allocated under ASC 605 . Additionally, at December 31 , 2018 , the contract liability is $ 0 under both methods of revenue recognition (Note 7) . There is no revenue related to the years ended December 31 , 2020 and 2019 . Research and Development Costs As part of the process of preparing our financial statements , we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a predetermined schedule or when contractual milestones are met; however, a few require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to: • CROs in connection with performing research services on our behalf and clinical trials, • investigative sites or other providers in connection with clinical trials, • vendors in connection with preclinical and clinical development activities, and • vendors related to product manufacturing, development, and distribution of preclinical and clinical supplies. We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses. F-20 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) Income Taxes Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates this tax position on an annual basis. The Company also accrues for potential interest and penalties, related to unrecognized tax benefits in income tax expense (Note 11). Accounting for Stock-Based Compensation Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period. Stock-based compensation expense is based on the number of awards ultimately expected to vest and is therefore reduced for an estimate of the awards that are expected to be forfeited prior to vesting. Consistent with prior years, the Company uses the Black-Scholes option pricing model which requires estimates of the expected term option holders will retain their options before exercising them and the estimated volatility of the Company’s common stock price over the expected term. The Company recognizes the full impact of its share-based employee payment plans in the statements of operations for each of the years ended December 31, 2020, 2019, and 2018 and did not capitalize any such costs on the balance sheets. The Company recognized $ 4.3 million, $ 4.0 million, and $ 3.0 million of compensation expense related to stock options during the years ended December 31, 2020, 2019, and 2018, respectively. In the years ended December 31, 2020, 2019, and 2018, the Company recognized $ 2.5 million, $ 2.3 million, and $ 4.5 million of compensation expense, respectively, related to restricted stock (Note 14). The total compensation expense relating to vesting of stock options and restricted stock awards for the years ended December 31, 2020, 2019, and 2018 was $ 6.8 million, $ 6.3 million, and $ 7.5 million, respectively. The following table presents share-based compensation expense included in the Company’s Statements of Operations: Year ended December 31, (in thousands) 2020 2019 2018 Research and development $ 2,098 $ 1,461 $ 1,683 General and administrative 4,731 4,880 5,851 Share based employee compensation expense before tax 6,829 6,341 7,534 Income tax benefit — — — Net share based employee compensation expense $ 6,829 $ 6,341 $ 7,534 The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model. The estimated weighted-average fair value of stock options granted to employees in 2020, 2019, and 2018 was F-21 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) approximately $ 2.15 , $ 2.47 , and $ 1.64 per share, respectively. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model. The volatility assumption is based on the Company’s historical experience. The risk-free interest rate is based on a U.S. treasury note with a maturity similar to the option award’s expected life. The expected life represents the average period of time that options granted are expected to be outstanding. The Company calculated expected term using the simplified method described in SEC Staff Accounting Bulletin, or SAB, No . 107 and No . 110 as it continues to meet the requirements promulgated in SAB No . 110 . The assumptions for volatility, expected life, dividend yield and risk-free interest rate are presented in the table below: 2020 2019 2018 Weighted average risk-free interest rate 0.36 - 1.68 % 1.39 - 2.53 % 2.55 - 3.06 % Expected life in years 5.75 - 6.25 5.75 - 6.25 6 Expected volatility 71.11 - 74.41 % 71.39 - 85.00 % 80.75 - 84.71 % Expected dividend yield 0 0 0 Net Income (Loss) Per Share Basic net loss per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding options and warrants, using the treasury stock method and the average market price of the Company’s common stock during the applicable period. For the Year Ended December 31, in thousands, except share and per share data 2020 2019 2018 Basic Net loss $ ( 79,976 ) $ ( 117,796 ) $ ( 53,117 ) Preferred stock dividends — — ( 16,998 ) Settlement of a related party relationship — — 207,361 Net income / (loss) applicable to common shareholders $ ( 79,976 ) $ ( 117,796 ) $ 137,246 Weighted-average common shares outstanding 209,636,456 167,952,114 143,508,674 Earnings per share, basic $ ( 0.38 ) $ ( 0.70 ) $ 0.96 Diluted Net Loss $ ( 79,976 ) $ ( 117,796 ) $ ( 53,117 ) Preferred stock dividends — — ( 16,998 ) Precigen license transaction — — 207,361 Net income / (loss) applicable to common shareholders $ ( 79,976 ) $ ( 117,796 ) $ 137,246 Weighted-average common shares outstanding 209,636,456 167,952,114 143,508,674 F-22 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 3. Summary of Significant Accounting Policies (Continued) For the Year Ended December 31, in thousands, except share and per share data 2020 2019 2018 Effect of dilutive securities Stock options — — 201,362 Unvested restricted common stock — — 124 Warrants — — — Dilutive potential common shares — — 201,486 Shares used in calculating diluted earnings per share 209,636,456 167,952,114 143,710,160 Earnings per share, diluted $ ( 0.38 ) $ ( 0.70 ) $ 0.96 Certain shares related to some of the Company’s outstanding common stock options, unvested restricted stock, preferred stock, and warrants have not been included in the computation of diluted net earnings (loss) per share for the years ended December 31 , 2020 , 2019 and 2018 as the result would be antidilutive. Such potential common shares on December 31 , 2020 , 2019 , and 2018 consist of the following: December 31, 2020 2019 2018 Stock options 6,832,386 6,872,879 5,075,723 Inducement stock options 588,333 1,030,000 500,000 Unvested restricted stock 786,280 939,636 681,946 Warrants 22,272,727 22,272,727 18,939,394 30,479,726 31,115,242 25,197,063 During the year ended December 31, 2018, the Company and PGEN entered into a License Agreement to replace all existing agreements between the companies that provides the Company with certain exclusive and non-exclusive rights to technology controlled by PGEN. The License Agreement was dated October 5, 2018. In consideration of the Company entering into the License Agreement, Precigen agreed to forfeit and return to the Company all shares of the Company’s Series 1 Preferred Stock held by or payable to Precigen as of the date of the License Agreement (Note 7). New Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for public entities for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements. F-23 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 4. Property and Equipment, net Property and equipment, net, consists of the following: December 31, (in thousands) 2020 2019 Office and computer equipment $ 869 $ 1,436 Software 1,153 1,030 Leasehold improvements 7,457 1,195 Research and development equipment 5,401 1,892 Construction - in-process 313 389 15,193 5,942 Less: accumulated depreciation ( 4,962 ) ( 4,832 ) Property and equipment, net $ 10,231 $ 1,110 Depreciation expense charged to the statement of operations for the years ended December 31, 2020, 2019, and 2018 was $ 1.1 million, $ 629 thousand, and $ 575 thousand, respectively ( N ote 3) . 5. Accrued Expenses Accrued expenses consist of the following: December 31, (in thousands) 2020 2019 Clinical services $ 4,450 $ 5,247 Employee compensation 3,298 1,910 Preclinical services 749 1,147 Professional services 3,993 991 Manufacturing services 3,159 586 Accrued vacation 725 489 Payroll taxes and benefits 16 284 Other consulting services 199 192 Total $ 16,589 $ 10,846 6. Related Party Transactions Collaborations with Precigen / PGEN During the year ended December 31, 2018 , the Company and PGEN entered into an Exclusive License Agreement (Note 7). During the year ended December 31, 2018, the Company issued an aggregate of 11,415 shares of Series 1 preferred stock to Precigen, the holder of all of the outstanding shares of the Company’s Series 1 preferred stock, as monthly dividend payments. The Company recorded such shares of Series 1 preferred stock at a fair value of $ 18.9 million, which is a component of temporary equity and recorded a loss on the change of the derivative liabilities in the amount of $ 1.3 million. The Series 1 preferred stock was cancelled on October 5, 2018. See Notes 3 and 13 for additional discussion regarding the accounting for and valuation of these derivative financial instruments. F-24 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 6. Related Party Transactions (Continued) During the years ended December 31, 2020, 2019, and 2018, the Company recorded expenses of $ 0.1 million, $ 3.0 million, and $ 8.1 million, respectively, for services performed by Precigen. As of December 31, 2019, the Company recorded $ 0.1 million in current liabilities on its balance sheet for amounts due to Precigen. Collaboration with PGEN and MD Anderson On January 13, 2015, the Company, together with Precigen, entered into the MD Anderson License with MD Anderson (which Precigen subsequently assigned to PGEN). Pursuant to the MD Anderson License, the company, together with PGEN, hold an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR T-cell therapies, non-viral gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs, arising from the laboratory of Laurence Cooper, M.D., Ph.D., who served as the Company’s Chief Executive Officer from May 2015 to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson. In partial consideration for entering into the MD Anderson License, the Company issued MD Anderson an aggregate of 11,722,163 shares of common stock for which the Company incurred a $ 67.3 million charge recorded in 2015. During the years ending December 31, 2020, 2019, and 2018, the Company did not make any payments to MD Anderson, and the total aggregate payments made in connection with this agreement are $ 41.9 million. The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $ 8.1 million, which is included in prepaid expenses and other current assets. The classification is based on management’s current estimate of plans to utilize the prepaid balance and is subject to revision on a quarterly basis. Collaboration with Vineti Inc. On July 9, 2020, the Company entered into a master service agreement and statement of work with Vineti, Inc., or Vineti. Pursuant to the agreements, Vineti is developing a software platform to coordinate and orchestrate the order, cell collection and manufacturing process for the Company’s TCR-T clinical programs. Heidi Hagen, who became a director of the Company in June 2019 and our Interim Chief Executive Officer on February 25, 2021, is a co-founder and former officer, of Vineti. In the year ended December 31, 2020, the Company recorded expenses of approximately $ 29 thousand for services performed by Vineti. Joint Venture with TriArm Therapeutics/Eden Biocell On December 19, 2018, the Company and TriArm launched Eden BioCell as a joint venture to lead commercialization of the Company’s Sleeping Beauty-generated CAR-T therapies in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea. The Company licensed to Eden BioCell the rights in Greater China for its third-generation Sleeping Beauty-generated CAR-T therapies targeting the CD19 antigen. Eden BioCell is owned equally by the Company and TriArm and the parties share decision-making authority. TriArm has contributed $ 10.0 million to Eden BioCell and has committed up to an additional $ 25.0 million to this joint venture. TriArm 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. Mr. Huang also serves as a member of Eden BioCell’s Board of Directors. F-25 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 7. Settlement of a Related Party Relationship Exclusive License Agreement with PGEN Therapeutics On October 5, 2018, the Company entered into the license agreement with PGEN. As between the Company and PGEN, the terms of the License Agreement replace and supersede the terms of: (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 Trading S.A., or Ares Trading, a subsidiary of Merck KGaA, or Merck, as assigned by Precigen to PGEN, or the Ares Trading Agreement; (c) that certain License Agreement between the Company, Precigen, and MD Anderson, with an effective date of January 13, 2015 , or the MD Anderson License, which was subsequently assigned by Precigen and assumed by PGEN effective as of January 1, 2018; and (d) that certain Research and Development Agreement between the Company, Precigen and MD Anderson with an effective date of August 17, 2015, or the Research and Development Agreement, and any amendments or statements of work thereto. Pursuant to the terms of the License Agreement, PGEN has granted the Company exclusive, worldwide rights to research, develop and commercialize (i) products utilizing PGEN’s RheoSwitch ® gene switch, or RTS ® , for the treatment of cancer, referred to as IL-12 Products, (ii) CAR products directed to (A) CD19 for the treatment of cancer, referred to as CD19 Products, and (B) a second target for the treatment of cancer, subject to the rights of Ares Trading to pursue such target under the Ares Trading Agreement, and (iii) T-cell receptor, or TCR, products designed for neoantigens for the treatment of cancer. PGEN has also granted the Company an exclusive, worldwide, royalty-bearing, sub-licensable license for certain patents relating to the Sleeping Beauty technology to research, develop and commercialize TCR products for both neoantigens and shared antigens for the treatment of cancer, referred to as TCR Products. The Company is solely responsible for all aspects of the research, development and commercialization of the exclusively licensed products for the treatment of cancer. The Company is required to use commercially reasonable efforts to develop and commercialize IL-12 Products and CD19 Products and after a two-year period, the TCR Products. In consideration of the licenses and other rights granted by PGEN, the Company pays PGEN an annual license fee of $ 0.1 million. The Company recorded a liability for $ 0.1 million for the years ended December 31, 2019, and has included this amount in accrued expenses on the balance sheet. The Company will also make milestone payments totaling up to an additional $ 52.5 million for each exclusively licensed program upon the initiation of later stage clinical trials and upon the approval of exclusively licensed products in various jurisdictions. In addition, the Company will pay PGEN tiered royalties ranging from low-single digit to high-single digit on the net sales derived from the sales of any approved IL-12 Products and CAR Products. The Company will also pay PGEN royalties ranging from low-single digit to mid-single digit on the net sales derived from the sales of any approved TCR Products, up to a maximum royalty amount of $ 100.0 million in the aggregate. The Company will also pay PGEN 20 % of any sublicensing income received by the Company relating to the licensed products. The Company is responsible for all development costs associated with each of the licensed products . F-26 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 7. Settlement of a Related Party Relationship (Continued) PGEN will pay the Company royalties ranging from low-single digits to mid-single digits on the net sales derived from the sale of PGEN’s CAR products, up to $ 50.0 million. During the years ended December 31, 2020, 2019 and 2018, there were no expenses for services performed by PGEN. As of December 31, 2020 and 2019, the Company had $ 0.1 million in accrued expenses for amounts due to PGEN. In consideration of the Company entering into the License Agreement, Precigen forfeited and returned to the Company all shares of the Company’s Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement. In addition, PGEN is required to transfer all of Ziopharm’s rights and obligations under the Ares Trading Agreement to Precigen (or its’ affiliate). As a result, Ziopharm shall not be responsible for any remaining obligations under the Merck Agreement. Additionally, Precigen forfeited and returned to the Company all shares of the Company’s Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement. The Company determined that this transaction represented a capital transaction between related parties. The Company fair valued the preferred stock and the derivative liability on the date of the transaction, noting a total fair value of $ 163.3 million. The relinquishment of the Ziopharm’s obligation under the Ares Trading Agreement was also considered part of the overall capital transaction. The Company recognized an additional credit to accumulated deficit of $ 49.5 million as a result of the relief of the obligation under the Ares Trading Agreement (Note 7). The total amount of the settlement was $ 212.8 million. The Company incurred approximately $ 7.4 million of transaction advisory costs with third-party vendors, of which $ 5.4 million was considered a direct cost associated with the Series 1 preferred stock extinguishment and is also included as part of the consideration transferred. The remaining $ 2.0 million of transaction costs were recognized as an expense during the year ended December 31, 2018. The Company recognized a net credit to accumulated deficit of $ 207.3 million, calculated as the difference in the carrying value of the Series 1 preferred stock, derivative liability, and contract liability, and the consideration transferred of $ 5.4 million, in connection with the transaction. This amount is included in net income available to common shareholders in the calculation of earnings per share for the year ended December 31, 2018 (Note 3). 8. Leases Operating Leases The Company adopted FASB ASU No. 2016-02, Leases (Topic 842) on January 1, 2019 using the effective date method, in which it did not restate prior periods. Upon adoption, the Company elected the package of practical expedients permitted under the transition guidance within Topic 842 which, among other things, allowed it to carry forward the historical lease classification. The Company does not allocate consideration in its leases to lease and non-lease components and does not record leases on its balance sheets with terms of 12 months or less. The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company’s incremental borrowing rate represents the rate of interest that it would have to pay to borrow over a similar term an amount equal to the lease payments in a similar economic environment. The Company considers publicly available data for instruments with similar terms and characteristics when determining its incremental borrowing rates. F-27 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 8. Leases (Continued) The adoption of Topic 842 resulted in recognition of approximately $ 1.6 million of right-of-use assets and $ 1.6 million of lease liabilities on the Company’s balance sheets on January 1, 2019. The adoption did not have a material impact on the Company’s statements of operations or accumulated deficit. The Company will review the classification of newly entered leases as either an operating or a finance lease and recognize a related right-of-use asset and lease liabilities on its balance sheets upon commencement. In June 2012, the Company entered into a master lease for the Company’s corporate office headquarters in Boston, which was originally set to expire in August 2016 , but renewed through August 31, 2021 . As of December 31, 20 20 , and December 31, 201 9 , a total security deposit of $ 0.1 million is included in deposits on the Company’s balance sheet. On January 30, 2018, the Company entered into a lease agreement for office space in Houston at MD Anderson. Under the terms of the Houston lease agreement, the Company leased approximately two hundred and ten square feet and were required to make rental payments at an average monthly rate of approximately $ 1 thousand. This lease was terminated effective March 31, 2020. On March 12, 2019, the Company entered into a lease agreement for office space in Houston. Under the terms of the First Houston Lease agreement, the Company leases approximately 1,038 square feet and is required to make rental payments at an average monthly rate of approximately $ 2 thousand through April 2021. On October 15, 2019, the Company entered into a lease agreement for additional office space in Houston. Under the terms of the Second Houston Lease, the Company leases from MD Anderson, approximately 8,443 square feet and is initially required to make rental payments of approximately $ 17.0 thousand through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term. Effective April 13, 2020, the Company leased an additional 5,584 square feet from MD Anderson. The Company is initially required to make rental payments of approximately $ 12 thousand per month through February 2027, subject to an annual base rent increase of approximately 3.0 % throughout the term. All future rent expense incurred in Houston, will be deducted from the Company’s prepayments at MD Anderson. Effective June 1, 2020, the Company entered into a noncancelable lease for a period of less than a year with monthly payments of approximately $ 10 thousand. Effective September 1, 2020, the Company added additional space to the noncancelable lease for a period of less than a year with monthly payments now totaling approximately $ 15 thousand. Effective December 15, 2020, the Company leased approximately 35,482 square feet from MD Anderson. The Company is initially required to make rental payments of approximately $ 37 thousand per month through April 2028, subject to an annual base rent increase of approximately 3.0 % throughout the term beginning in April 202 3 . All future rent expense incurred in Houston, will be deducted from the Company’s prepayments at MD Anderson. The components of lease expense were as follows: Years Ended December 31, 2020 2019 Operating lease cost $ 1,054 $ 772 Total lease cost $ 1,054 $ 772 Weighted-average remaining lease term (years) 6.19 4.42 Weighted-average discount rate 8.00 % 8.00 % Cash paid for amounts included in the measurement of the lease liabilities were $ 1.0 million for the year-ended December 31, 2020. The Company recognized new operating lease assets obtained in exchange for operating lease liabilities of $ 3.2 million for the year-ended December 31, 2020. F-28 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 8. Leases (Continued) As of December 31, 2020, the maturities of the Company’s operating lease liabilities were as follows (in thousands): Maturity of Lease Liabilities Operating Leases 2021 $ 1,189 2022 800 2023 820 2024 844 2025 869 Thereafter 1,650 Total lease payments $ 6,172 Less : imputed interest and adjustments ( 1,358 ) Present value of lease payments $ 4,814 9. Commitments and Contingencies License Agreements Exclusive License Agreement with PGEN On October 5, 2018, the Company entered into an exclusive license agreement with PGEN. Refer to Note 7 – Settlement of a Related Party Relationship for further details. License Agreement and Research and Development Agreements —The University of Texas MD Anderson Cancer Center On January 13, 2015, ZIOPHARM, together with Precigen, entered into the MD Anderson License with MD Anderson (which Precigen subsequently assigned to PGEN). 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 to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson. The term of the MD Anderson License expires on the later of (a) the expiration of all patents licensed thereunder, or (b) the twentieth anniversary of the date of the MD Anderson License; provided, however, that following the expiration of the term of the MD Anderson License, the Company, together with PGEN, shall have a fully-paid up, royalty free, perpetual, irrevocable and sublicensable license to use the licensed intellectual property thereunder. After ten years from the date of the MD Anderson License and subject to a 90-day cure period, MD Anderson will have the right to convert the MD Anderson License into a non-exclusive license if ZIOPHARM and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on a case-by-case 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 PGEN are not meeting the diligence requirements in such funding agreement or contract, as applicable. MD Anderson may also terminate the agreement with written notice upon material breach by us and PGEN, if such breach has not been F-29 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 9. Commitments and Contingencies (Continued) cured within 60 days of receiving such notice. In addition, the MD Anderson License will terminate upon the occurrence of certain insolvency events for both the Company and PGEN and may be terminated by the mutual written agreement of the Company, PGEN, and MD Anderson. On August 17, 2015, the Company, PGEN and MD Anderson entered into the Research and Development, or the 2015 Agreement, to formalize the scope and process for the transfer by MD Anderson, pursuant to the terms of the MD Anderson License, of certain existing research programs and related technology rights, as well as the terms and conditions for future collaborative research and development of new and ongoing research programs. Pursuant to the 2015 Agreement, the Company, PGEN and MD Anderson have agreed to form a joint steering committee that will oversee and manage the new and ongoing research programs. Under the License Agreement with PGEN, ZIOPHARM and PGEN agreed that PGEN would no longer participate on the joint steering committee after the date of the License Agreement. As provided under the MD Anderson License, the Company provided funding for research and development activities in support of the research programs under the Research and Development Agreement for a period of three years and in an amount of no less than $ 15.0 million and no greater than $ 20.0 million per year. On October 22, 2019, the Company entered into an amendment to the Research and Development Agreement extending its term until December 31, 2026. On October 22, 2019, the Company entered into the 2019 Research and Development Agreement, or the 2019 Agreement, with MD Anderson, pursuant to which the parties agreed to collaborate with respect to the Company’s Sleeping Beauty immunotherapy program, which uses non-viral gene transfer to stably express and clinically evaluate neoantigen-specific TCRs in T cells. Under the 2019 Agreement, the parties will, among other things, collaborate on programs to expand the Company’s TCR library and conduct clinical trials. The Company will own all intellectual property developed under the 2019 Agreement and will retain all rights to intellectual property for oncology products manufactured using non-viral gene transfer technologies under the Agreement, including the Company’s Sleeping Beauty 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. In connection with the execution of the 2019 Agreement, the Company issued MD Anderson a warrant to purchase 3,333,333 shares of common stock. Refer to Note 10 – Warrants for further details. The Company has agreed, beginning on January 1, 2021, to reimburse MD Anderson up to a total of $ 20.0 million for development costs incurred starting after January 1, 2021 under the 2019 Agreement. 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 royalty rates and benchmark payments owed to MD Anderson may be reduced upon the occurrence of certain events. The Company also agreed that it will sell the Company’s TCR products to MD Anderson at preferential prices and will sell its TCR products in Texas exclusively to MD Anderson for a limited period of time following the first commercial sale of the Company’s TCR products. During the years ended December 31, 2020 and 2019, the Company made no payments to MD Anderson. The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $ 8.1 million, F-30 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 9. Commitments and Contingencies (Continued) which is included in prepaid expenses and other current assets on the Company’s balance sheet on December 31, 2020. The term of the MD Anderson License expires on the last to occur of (a) the expiration of all patents licensed thereunder, or (b) the twentieth anniversary of the date of the MD Anderson License; provided, however, that following the expiration of the term of the MD Anderson License, the Company, together with PGEN, shall then have a fully-paid up, royalty free, perpetual, irrevocable and sublicensable license to use the licensed intellectual property thereunder. After ten years from the date of the MD Anderson License and subject to a 90-day cure period, MD Anderson will have the right to convert the MD Anderson License into a non-exclusive license if ZIOPHARM and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on a case-by-case 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 PGEN are not meeting the diligence requirements in such funding agreement or contract, as applicable. MD Anderson may also terminate the agreement with written notice upon material breach by us and PGEN, if such breach has not been cured within 60 days of receiving such notice. In addition, the MD Anderson License will terminate upon the occurrence of certain insolvency events for both us and PGEN and may be terminated by the mutual written agreement of us, PGEN, and MD Anderson. License Agreement with the National Cancer Institute On May 28, 2019, the Company entered into a patent license agreement, or the Patent License, with the National Cancer Institute, or the NCI. Pursuant to the Patent License, the Company holds an exclusive, worldwide license to certain intellectual property to develop and commercialize patient-derived (autologous), peripheral blood T-cell therapy products engineered by transposon-mediated gene transfer to express TCRs reactive to mutated KRAS, TP53 and EGFR. In addition, pursuant to the Patent License, the Company holds an exclusive, worldwide license to certain intellectual property for manufacturing technologies to develop and commercialize autologous, peripheral blood T-cell therapy products engineered by non-viral gene transfer to express TCRs, as well as a non-exclusive, worldwide license to certain additional manufacturing technologies. Pursuant to the terms of the Patent License, the Company made payments of $ 0.5 and $ 1.0 million during the years ended December 31, 2020 and 2019, respectively. The terms of the Patent License also require the Company to pay the NCI minimum annual royalties in the amount of $ 0.3 million, which amount will be reduced to $ 0.1 million once the aggregate minimum annual royalties paid by the Company equals $ 1.5 million. The first minimum annual royalty payment was paid during the year ending December 31, 2020 . On December 31, 2020 and 2019, the Company included $ 0.3 million related to the Patent License as prepaid expenses and other current assets on the Company’s balance sheet. On December 31 , 2020 and 2019 , the Company included $ 0 and $ 0.5 million, respectively in accrued expenses on the Company’s balance sheet. On January 8 , 2020 , the Company entered into an amendment to the patent license agreement which expanded the TCR library to include additional TCR’s reactive to mutated KRAS and TP 53 . Under the amendment, the Company paid $ 0.6 million during the year ending December 31 , 2020 . On September 28 , 2020 , the Company entered into a second amendment to the patent license agreement which expanded the TCR library to include additional TCR’s receptors. Under the second amendment, the Company paid $ 0.4 million for the year ended December 31 , 2020 . F-31 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 9. Commitments and Contingencies (Continued) The Company is also required to make performance-based payments upon successful completion of clinical and regulatory benchmarks relating to the licensed products. The aggregate potential benchmark payments are $ 4.3 million, of which aggregate payments of $ 3.0 million are due only after marketing approval in the United States or in Europe, Japan, Australia, China or India. The first benchmark payment of $0.1 million will be due upon the initiation of the Company’s first sponsored Phase 1 clinical trial of a licensed product or licensed process in the field of use licensed under the Patent License. There have been no payments as of December 31, 2020. In addition, the Company is required to pay the NCI one-time benchmark payments following aggregate net sales of licensed products at certain net sales up to $ 1.0 billion. The aggregate potential amount of these benchmark payments is $ 12.0 million. The Company must also pay the NCI royalties on net sales of products covered by the Patent License at rates in the low to mid-single digits depending upon the technology included in a lic ensed product. To the extent the Company enters into a sublicensing agreement relating to a licensed product, the Company is required to pay the NCI a percentage of all consideration received from a sublicensee, which percentage will decrease based on the stage of development of the licensed product at the time of the sublicense. The Patent License will expire upon expiration of the last patent contained in the licensed patent rights, unless terminated earlier. The NCI may terminate or modify the Patent License in the event of a material breach, including if the Company does not meet certain milestones by certain dates, or upon certain insolvency events that remain uncured following the date that is 90 days following written notice of such breach or insolvency event. The Company may terminate the Patent License, or any portion thereof, in the Company’s sole discretion at any time upon 60 days’ written notice to the NCI. In addition, the NCI has the right to: (i) require the Company to sublicense the rights to the product candidates covered by the Patent License upon certain conditions, including if the Company is not reasonably satisfying required health and safety needs and (ii) terminate or modify the Patent License, including if the Company is not satisfying requirements for public use as specified by federal regulations. Cooperative Research and Development Agreement (CRADA) with the National Cancer Institute On January 10, 2017, the Company announced the signing of the CRADA with the NCI for the development of adoptive cell transfer, or ACT,-based immunotherapies genetically modified using the Sleeping Beauty transposon/transposase system to express TCRs for the treatment of solid tumors. The principal goal of the CRADA is to develop and evaluate ACT for patients with advanced cancers using autologous peripheral blood lymphocytes, or PBL, genetically modified using the non-viral Sleeping Beauty system to express TCRs that recognize neoantigens expressed within a patient’s cancer. Research conducted under the CRADA will be at the direction of Steven A. Rosenberg, M.D., Ph.D., Chief of the Surgery Branch at the NCI, in collaboration with the Company’s researchers and PGEN researchers. During the year ended December 31, 20 20 and 201 9 , the Company made payments of $ 2.5 million, each year. In February 2019, the Company extended the CRADA with the NCI for two years, committing an additional $ 5.0 million to this program. Exclusive Channel Partner Agreement with PGEN for the Cancer Programs From 2011 to 2018, the Company was party to various arrangements with Precigen (now PGEN) in which the Company used PGEN’s technology to research and develop cancer treatments in return for various future profit sharing and royalty arrangements. These agreements were modified or terminated by the License Agreement described in Note 7. F-32 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 9. Commitments and Contingencies (Continued) Ares Trading License and Collaboration Agreement On March 27, 2015, the Company, together with Precigen (now PGEN), signed the Ares Trading Agreement, with Ares Trading S.A., a subsidiary of the biopharmaceutical business of Merck KGaA, Darmstadt, Germany, through which the parties established a collaboration for the research and development and commercialization of certain products for the prophylactic, therapeutic, palliative or diagnostic use for cancer in humans. PGEN was entitled to receive $ 5.0 million from Ares Trading, payable in equal quarterly installments over two years for each identified product candidate, which will be used to fund discovery work. The Company was responsible for costs exceeding the quarterly installments and all other costs of the preclinical research and development. For the years ended December 31, 2020 and 2019, the Company incurred no expense under the Ares Trading Agreement. For the year ended December 31, 2018, the Company has expensed $ 0.1 million under the Ares Trading Agreement. Ares Trading paid a non-refundable upfront fee of $ 115.0 million to Precigen as consideration for entry into the Ares Trading Agreement. Pursuant to the ECP Amendment, the Company was entitled to receive 50 % of the upfront fee, or $ 57.5 million, which was received from Precigen in July 2015. Under the License Agreement, PGEN agreed to perform all future obligations of the Company under the Ares Trading Agreement other than certain payment obligations. Accordingly, the Company recognized the remaining deferred revenue as part of the settlement of related party relationships as described in Note 7 . Patent and Technology License Agreement—The University of Texas MD Anderson Cancer Center and the Texas A&M University System On August 24, 2004, the Company entered into a patent and technology license agreement with MD Anderson and the Texas A&M University System, which the Company refers to, collectively, as the Licensors. Under this agreement, were granted an exclusive, worldwide license to rights (including rights to U.S. and foreign patent and patent applications and related improvements and know-how) for the manufacture and commercialization of two classes of organic arsenicals (water- and lipid-based) for human and animal use. The class of water-based organic arsenicals includes darinaparsin. The Company issued options to purchase 50,222 shares outside of its stock option plans following the successful completion of certain clinical milestones, of which all have vested.The Licensors are entitled to receive certain milestone payments. In addition, the Company may be required to make additional payments to the Licensors (as defined in the MD Anderson License) upon achievement of certain other milestones in varying amounts which, on a cumulative basis could total up to $ 4.5 million. In addition, the Licensors are entitled to receive single digit percentage royalty payments on sales from a licensed product and will also be entitled to receive a portion of any fees that the Company may receive from a possible sublicense under certain circumstances. Collaboration Agreement with Solasia Pharma K.K. On March 7, 2011, the Company entered into a License and Collaboration Agreement with Solasia which was amended on July 31, 2014 to include an exclusive worldwide license. 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 F-33 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 9. Commitments and Contingencies (Continued) revenues generated by Solasia. Solasia will be responsible for all costs related to the development, manufacturing and commercialization of darinaparsin. The Company’s Licensors, as defined in the agreement, will receive a portion of all milestone and royalty payments made by Solasia to the Company in accordance with the terms of the license agreement with the Licensors. 10. Warrants In connection with the Company’s November 2018 private placement which provided net proceeds of approximately $ 47.1 million, the Company issued warrants to purchase an aggregate of 18,939,394 shares of common stock which became exercisable six months after the closing of the private placement. The warrants have an exercise price of $ 3.01 per share and have a five-year term. The relative fair value of the warrants was estimated at $ 18.4 million using a Black-Scholes model with the following assumptions: expected volatility of 71 %, risk free interest rate of 2.99 %, expected life of five years and no dividends. On July 26, 2019 and September 12, 2019, the Company entered into agreements with existing investors for the exercise of previously issued warrants to purchase common stock in a private placement. Pursuant to the terms of the agreements, investors exercised their 2018 warrants for an aggregate of 17,803,031 shares of common stock, at an exercise price of $ 3.01 per share. The warrants exercised were originally issued by the Company in a private placement that closed in November 2018. Proceeds from the warrant exercise, after deducting placement agent fees and other related expenses of $ 1.1 million were approximately $ 52.5 million. The Company issued participating investors new warrants to purchase up to 17,803,031 additional shares of common stock as an inducement for the warrant holders to exercise their 2018 warrants early. The 2019 warrants will become exercisable six months following the date of issuance, will expire on the fifth anniversary of the initial exercise date, and have an exercise price of $ 7.00 . The 2019 warrants were valued using a Black-Scholes valuation model and resulted in a $ 60.8 million non-cash charge in the Company’s statement of operations during the year ended December 31, 2019 . The Company assessed whether both the 2019 and 2018 warrants required accounting as derivatives. The Company determined that the warrants were (1) indexed to the Company’s own stock and (2) classified in stockholders’ equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging . As such, the Company has concluded the warrants meet the scope exception for determining whether the instruments require accounting as derivatives and should be classified in stockholders’ equity. On October 22, 2019, the Company entered into the 2019 Agreement with MD Anderson. In connection with the execution of the 2019 Agreement, the Company issued MD Anderson a warrant to purchase 3,333,333 shares of common stock. The warrant has an initial exercise price of $ 0.001 per share and grant date fair value of $ 14.5 million. The warrant expires on December 31, 2026 and vests upon the occurrence of certain clinical milestones. The Company will recognize expense on the warrant in the same manner as if the Company paid cash for services to be rendered. For the years ended December 31, 2020 and 2019, the Company did not recognize any expense related to the warrant as no work on the clinical milestones has begun. 11. Income Taxes There is no provision for income taxes because the Company has incurred operating losses since inception. The reported amount of income tax expense for the years differs from the amount that would result from applying F-34 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 11. Income Taxes (Continued) domestic federal statutory tax rates to pretax losses primarily because of the changes in the valuation allowance. Significant components of the Company’s deferred tax assets at December 31, 2020 and 2019 are as follows: ​​​​​​​ December 31, (in thousands) 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 147,004 $ 124,115 Start-up and organizational costs 25,909 30,480 Research and development credit carryforwards 37,183 35,130 Stock compensation 1,478 1,087 Capitalized acquisition costs 3,691 4,501 Lease liability 1,225 626 Depreciation 71 176 Other 135 1,186 216,696 197,301 Less valuation allowance ( 215,513 ) ( 196,696 ) Total deferred tax assets 1,183 605 Deferred tax liabilities: Right of use asset ( 1,183 ) ( 605 ) Total deferred tax liabilities $ ( 1,183 ) $ ( 605 ) Net deferred taxes $ — $ — Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2020 , the Company has aggregate net operating loss carryforwards for federal tax purposes of approximately $ 562 million, of which $ 342 million is available to offset future federal taxable income to the extent permitted under the Internal Revenue Code, or IRC, expiring in varying amounts through 2037 and approximately $ 220 million can be carried forward indefinitely. The Company also has approximately $ 458 million of state net operating loss carryforwards available to offset future state taxable income, expiring at various dates through 2040 . Additionally, the Company has approximately $ 37.0 million of research and development credits at December 31, 2020 , expiring in varying amounts through 2040 , which may be available to reduce future taxes. Under the IRC Section 382, certain substantial changes in the Company’s ownership may limit the amount of net operating loss carryforwards that can be utilized in any one year to offset future taxable income. Section 382 of the IRC provides limits to which a corporation that has undergone a change in ownership (as defined) can utilize any net operating loss, or NOL, and general business tax credit carryforwards it may have. The Company commissioned an analysis to determine whether Section 382 could limit the use of its carryforwards in this manner. After completing the analysis, it was determined an ownership change had occurred in February 2007. As a result of this change, the Company’s NOL’s and general business tax credits from February 23, 2007 and prior would be completely limited under IRC Section 382. The deferred tax assets related to NOL’s and general business credits have been reduced by $ 11.2 million and $ 636 thousand, respectively, as a result of the change. The Company updated the IRC Section 382 analysis through December 31, 2018. There was no change in ownership at this time. F-35 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 11. Income Taxes (Continued) The Company has provided a valuation allowance for the full amount of these net deferred tax assets, since it is more likely than not that these future benefits will not be realized. However, these deferred tax assets may be available to offset future income tax liabilities and expenses. The valuation allowance increased by $ 18.8 million in 2020 primarily due to net operating loss carryforwards and the increase in research and development credits. Income taxes using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to non-deductible expenses related to the Company’s issuance of preferred stock along with the change in the valuation allowance on deferred tax assets. A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows: Year Ended December 31, (in thousands) 2020 2019 2018 Federal income tax at statutory rates 21 % 21 % 21 % State income tax, net of federal tax benefit 3 % 3 % 4 % Non-cash inducement warrant expense 0 % - 11 % 0 % Research and development credits 3 % 1 % 2 % Stock compensation - 1 % 0 % - 1 % Research and development true-up 0 % 0 % 0 % Officers compensation 0 % 0 % - 1 % Other 0 % - 1 % - 2 % Federal rate change - 2 % 0 % 3 % Change in valuation allowance - 24 % - 13 % - 26 % Effective tax rate 0 % 0 % 0 % The Company adopted ASC740, “Accounting for Uncertain Tax Positions” on January 1, 2007. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” ASC 740 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return. The Company did not establish any additional reserves for uncertain tax liabilities upon adoption of ASC 740. There were no adjustments to its uncertain tax positions in the years ended December 31, 2020, 2019, and 2018. The Company has not recognized any interest and penalties in the statement of operations because of the Company’s net operating losses and tax credits that are available to be carried forward. When necessary, the Company will account for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. The Company does not expect the amounts of unrecognized benefits will change significantly within the next twelve months. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state jurisdictions for the years ended December 31, 1999 through 2020. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act into law which was an emergency economic stimulus package in response to the COVID-19 pandemic and its impact on the economy, public health, state and local governments, individuals and businesses. The Company has considered the legislation surrounding the impact of the CARES Act and the potential effects it may have on F-36 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 11. Income Taxes (Continued) the Company. Some of the more significant provisions under the CARES Act include five-year carryback of net operating losses (Section 2303), Refundable AMT credit (Section 2305), relaxation of the limitation of adjusted taxable income (ATI) as determined under IRC Section 163(j) from 30 % to 50 % (Section 2306), and changes to qualified bonus improvement property (QIP) tax life and bonus depreciation eligibility allowing for a 15 -year tax useful life an eligibility for 100 %b bonus depreciation (Section 2307). Due to the Company’s history of US taxable losses, and use of MACRS and/or straight-line depreciation for tax purposes, there is no impact to the tax provision as a result of the enactment of the CARES Act. As of December 31, 2020, the Company has analyzed the provisions of the CARES Act and has recorded no income tax benefit or expense related to it. 12. Preferred Stock and Stockholders’ Equity (Deficit) On April 26, 2006, the date of the Company’s annual stockholders meeting that year, the shareholders approved the adoption of an Amended and Restated Certificate of Incorporation pursuant to which the Company has 280,000,000 shares of authorized capital stock, of which 250,000,000 shares are designated as common stock (par value $ 0.001 per share), and 30,000,000 shares are designated as preferred stock (par value $0.001 per share). Common Stock The Company’s amended and res t ated certificate of incorporation authorizes it to issue 250,000,000 shares of common stock. As of February 24 , 2021, there were 214,667,023 shares of common stock outstanding and an additional 31,115,329 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants. Though the Company has no immediate plans to issue additional shares of common stock, other than in connection with its 2020 Equity Incentive Plan, it may need additional shares for business and financial purposes in the future. February 2020 Public Offering On February 5, 2020, the Company entered into an underwriting agreement with Jefferies, as representative of the several underwriters named therein, relating to the issuance and sale of 27,826,086 shares of 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. Under the terms of the underwriting agreement, the Company also granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 4,173,912 shares of common stock at a purchase price of $ 3.055 per share. The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (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 Offering During the year ended December 31, 2020, the Company sold an aggregate of 2,814,673 shares of common stock. The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (File 333-232283) previously filed with the SEC, and a prospectus supplement thereunder. The net proceeds from the offering were approximately $ 13.0 million after deducting underwriting discounts and offering expenses payable by the Company. F-37 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 12. Preferred Stock and Stockholders’ Equity (Deficit) (Continued) During the year ended De c ember 31, 2019, the Company sold an aggregate of 1,271,274 shares of common stock. The offering was made pursuant to the Company’s effective registration statement on Form S-3ASR (File 333-232283) previously filed with the SEC, and a prospectus supplement thereunder. The net proceeds from the offering were approximately $ 6.1 million after deducting underwriting discounts and offering expenses payable by the Company. November 2018 Private Placement and 2019 Inducement Warrants On November 11, 2018, the Company entered into a securities purchase agreement with certain institutional and accredited investors, pursuant to which the Company agreed to issue and sell to the Investors an aggregate of 18,939,394 immediately separable units, with each unit being composed of (i) one share of the Company’s common stock, par value $ 0.001 per share, and (ii) a warrant to purchase one share of common stock, at a price per unit of $ 2.64 , for net proceeds of approximately $ 47.1 million (Note 10). Preferred Stock The Company’s Board of Directors are authorized to designate any series of Preferred Stock, to fix and determine the variations in relative rights, preferences, privileges and restrictions as between and among such series. On June 29, 2016, the Company entered into amendments to certain agreements with Precigen (now PGEN) (Note 7). In consideration for the execution and delivery of these amendments, the Company issued to Precigen 100,000 shares of its newly designated Series 1 preferred stock. Each share of the Company’s Series 1 preferred stock had a stated value of $ 1,200 , subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other recapitalization. The Series 1 preferred stock had certain rights, preferences, privileges and obligations, including dividend rights, conversion rights, consent rights with respect to certain Company actions, and rights to preferential payments in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or a change of control or sale, lease, tran s fer or exclusive license of all or substantially all of the Company’s assets prior to the conversion of the Series 1 preferred stock. On October 5, 2018, the Company and PGEN entered into the License Agreement to replace all existing agreements between the companies, which provides the Company with certain exclusive and non-exclusive rights to technology controlled by PGEN. In consideration of the Company entering into the License Agreement, Precigen forfeited and returned to the Company all shares of the Company’s Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement (Notes 7 and 9). 13. Derivative Financial Instruments The Company determined that certain embedded features related to the Series 1 preferred stock were derivative financial instruments. The company values the embedded derivative financial instruments related to the Series 1 preferred stock as Level 3 financial liabilities (Note 3). On October 5, 2018, the Company entered into the License Agreement with PGEN. In partial consideration for the termination of the former agreements, the Company and PGEN agreed that Precigen would forfeit all outstanding shares of the Series 1 preferred stock held by Precigen, including any accrued dividends and related financial instruments. Thus, upon closing of the transaction, these derivative financial instruments were no longer outstanding (Note 7). F-38 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 13. Derivative Financial Instruments (Continued) The change in the derivative liability for the years ended December 31, 2020, 2019, and 2018 consists of the following: Fair Value Balance, December 31, 2017 $ 2,424 Dividends 223 Change in fair value ( 158 ) Settlement of a related party relationship ( 2,489 ) Balance, December 31, 2018 $ — Dividends — Change in fair value — Balance, December 31, 2019 $ — Dividends — Change in fair value — Balance, December 31, 2020 $ — The fair value of the Series 1 preferred stock dividends was estimated using a probability-weighted approach and a Monte Carlo simulation model. The fair value of the embedded derivatives was estimated using the “with” and “without” method where the preferred stock was first valued with all of its features (“with” scenario) and then without derivatives subject to the valuation analysis (“without” scenario). The fair value of the derivatives was then estimated as the difference between the fair value of the preferred stock in the “with” scenario and the preferred stock in the “without” scenario. The model also takes into account, management estimates of clinical success/failure based upon market studies and probability of potential conversion and liquidation events. If these estimates were different, the valuations would change , and that change could be material. Inputs to the models included the following: December 31, 2018 Risk-free interest rate 2.50 - 3.13 % Expected dividend rate 0 Expected volatility 77.6 - 82.4 % Preferred stock conversion limit - percentage of outstanding common stock 19.90 % Preferred conversion floor price $ 1.00 14. Stock Option Plan The Company adopted the 2012 Equity Incentive Plan, or the “2012 Plan,” in May 2012. Including subsequent increases, the Company had reserved 14 million shares for issuance. On December 31, 2020, there are 5,659,018 shares reserved for issuance and no shares available for future grant. The Company adopted the 2020 Equity Incentive Plan, or the “2020 Plan,” in June 2020 . The Company reserved 21 million shares for issuance plus a carryover of 1,066,275 shares from the 2012 Plan for a total of 22,066,275 shares. However, only 5,750,000 shares were registered due to due to the proximity to the Company’s authorized limit of 250 million shares. On December 31, 2020, there are 1,173,368 shares reserved for issuance and 5,714,648 shares available for future grant. F-39 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 14. Stock Option Plan (Continued) As of December 31, 2020 the Company had outstanding options to its employees to purchase up to 5,733,1551 shares of the Company’s common stock, to its directors to purchase up to 1,039,231 shares of the Company’s common stock, as well as options to consultants in connection with services rendered to purchase up to 60,000 shares of the Company’s common stock. Stock options to employees generally vest ratably in either quarterly or annual installments over three or four years, commencing on the first anniversary of the grant date and have contractual terms of ten years. Stock options to directors generally vest ratably over one or two years and have contractual terms of ten years. Stock options are valued using the Black-Scholes option pricing model and compensation is recognized based on such fair value over the period of vesting on a straight-line basis. Proceeds from the option exercises during the years ended December 31, 2020, 2019, and 2018 amounted to $ 0.4 million, $ 1.2 million and $ 0.2 million respectively. The intrinsic value of these options amounted to $ 0.3 million, $ 1.1 million and $ 0.1 million for years ended December 31, 2020, 2019 and 2018, respectively. Transactions under the 2012 Plan and the 2020 Plan for the years ending December 31 , 2020 , 2019 , and 2018 were as follows: (in thousands, except share and per share data) Number of Shares Weighted- Average Exercise Price Weighted- Average Contractual Term (Years) Aggregate Intrinsic Value Outstanding, December 31, 2017 3,852,135 $ 5.12 Granted 1,744,950 2.35 Exercised ( 104,167 ) 2.35 Cancelled ( 215,833 ) 5.72 Outstanding, December 31, 2018 5,277,085 4.24 Granted 2,880,691 3.40 Exercised ( 581,105 ) 3.30 Cancelled ( 1,733,792 ) 4.21 Outstanding, December 31, 2019 5,842,879 3.21 Granted 2,222,368 3.39 Exercised ( 338,333 ) 2.01 Cancelled ( 894,528 ) 4.22 Outstanding, December 31, 2020 6,832,386 $ 3.81 7.94 $ 812 Options exercisable, December 31, 2020 3,596,315 $ 4.17 6.90 $ 598 Options exercisable, December 31, 2019 2,765,357 $ 4.39 6.70 $ 3,603 Options available for future grant at December 31, 2020 5,714,648 In September 2017, the Company granted an option for 500,000 inducement stock options, with an exercise price of $ 6.16 per share, which vests ratably in annual installments over three years, commencing on the first anniversary of the grant date and has a contractual term of ten years. The grant date fair value was $ 2.2 million. On July 22, 2019, August 19, 2019, and November 21, 2019, the Company granted 400,000 , 65,000 , and 65,000 inducement stock options, with exercise prices of $ 5.60 , $ 5.18 , and $ 4.59 , respectively. The options vest ratably, F-40 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 14. Stock Option Plan (Continued) over four years, commencing with one quarter on the first anniversary of the grant date and then quarterly thereafter. The options have a contractual term of ten years. These options were granted outside of the 2012 Plan and therefore, are not included in the table above. The grant date fair value was $ 1.5 million, $ 231 thousand, and $ 193 thousand, respectively. As of December 31 , 2020 , 588,333 options are outstanding from all inducement stock options. On December 31 , 2020 , total unrecognized compensation costs related to non-vested stock options outstanding amounted to $ 7.3 million. The cost is expected to be recognized over a weighted-average period of 1.78 years. Restricted Stock In the fiscal years ended December 31, 2020 and 2019, the Company issued 805,900 and 1,519,766 shares of restricted stock, respectively, to employees. and directors. In January 2019 , one of the Company’s executives received 446,428 shares of restricted stock in lieu of their annual cash bonus. The shares were immediately vested. In the year ended December 31 , 2019 , the Company repurchased 225,339 shares at average prices ranging from $ 2.24 to 4.72 to cover payroll taxes. In the year ended December 31 , 2018 , the Company repurchased 514,349 shares at average prices ranging from $ 1.70 to 4.41 to cover payroll taxes. A summary of the status of restricted stock as of December 31 , 2020 , 2019 and 2018 is as follows: Number of Shares Weighted-Average Grant Date Fair Value Non-vested, December 31, 2017 1,808,559 $ 5.74 Granted 150,321 1.87 Vested ( 1,005,337 ) 6.62 Cancelled ( 271,433 ) 5.00 Non-vested, December 31, 2018 682,110 3.47 Granted 1,519,766 2.44 Vested ( 1,187,601 ) 2.82 Cancelled ( 74,599 ) 3.41 Non-vested, December 31, 2019 939,676 2.93 Granted 805,900 3.75 Vested ( 764,360 ) 3.51 Cancelled ( 194,897 ) 3.44 Non-vested, December 31, 2020 786,319 $ 3.08 As of December 31, 2020, there was $ 1.8 million of total unrecognized stock-based compensation expense related to non- vested restricted stock arrangements. The expense is expected to be recognized over a weighted-average period of 1.34 years. 15. Employee Benefit Plan The Company sponsors a qualified 401(k) retirement plan under which employees are allowed to contribute certain percentages of their pay, up to the maximum allowed under Section 401(k) of the IIRC. The Company F-41 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 15. Employee Benefit Plan (Continued) may make contributions to this plan at its discretion. The Company contributed approximately $ 538 thousand, $ 404 thousand, and $ 329 thousand to this plan during the years ended December 31 , 2020 , 2019 , and 2018 , respectively. 16. Joint Venture On December 18 , 2018 , the Company entered into a Framework Agreement with TriArm Therapeutics, Ltd., or TriArm, whereby the parties will launch Eden BioCell, Ltd., or Eden BioCell, to lead clinical development and commercialization of certain Sleeping Beauty-generated CAR-T therapies as set forth in a separate license agreement. On 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. The Framework Agreement and Share Subscription Agreements were each respectively amended to be effective as of this date. Upon consummation of the joint venture, Eden BioCell and the Company also entered into a license agreement, pursuant to which the Company licensed the rights to Eden BioCell for third-generation Sleeping Beauty -generated CAR-T therapies targeting the CD19 antigen for the territory of China (including Macau and Hong Kong), Taiwan and Korea. Eden BioCell will be responsible for certain milestone and royalty payments to related to the Company’s license agreements with MD Anderson and PGEN, Inc. (Note 7). TriArm entered into a Master Services Agreement with Eden BioCell and contributed $ 10.0 million of cash on the closing date. TriArm also committed to contribute an additional $ 25.0 million to Eden BioCell over time through the achievement of specified milestones. 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 a value of $ 0 for the equity-method investment. For the year ended December 31, 2020, Eden Biocell incurred a net loss and the Company continues to have no commitment to fund its operations. F-42 Table of Contents ZIOPHARM Oncology, Inc. NOTES TO FINANCIAL STATEMENTS 17. Selected Quarterly Information (Unaudited) (in thousands, except per share amounts) Year Ended December 31, 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ — $ — $ — $ — Total operating expenses 18,660 18,606 20,321 22,774 Loss from operations ( 18,660 ) ( 18,606 ) ( 20,321 ) ( 22,774 ) Net income (loss) applicable to common shareholders ( 18,293 ) ( 18,596 ) ( 20,315 ) ( 22,772 ) Net income (loss) per share, basic $ ( 0.09 ) $ ( 0.09 ) $ ( 0.10 ) $ ( 0.11 ) Net income (loss) per share, diluted $ ( 0.09 ) $ ( 0.09 ) $ ( 0.10 ) $ ( 0.11 ) Year Ended December 31, 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ — $ — $ — $ — Total operating expenses 13,621 14,753 13,448 16,036 Loss from operations ( 13,621 ) ( 14,753 ) ( 13,448 ) ( 16,036 ) Non-cash inducement warrant expense — — ( 60,751 ) — Net income (loss) applicable to common shareholders ( 13,434 ) ( 14,620 ) ( 73,996 ) ( 15,746 ) Net income (loss) per share, basic $ ( 0.08 ) $ ( 0.09 ) $ ( 0.43 ) $ ( 0.09 ) Net income (loss) per share, diluted $ ( 0.08 ) $ ( 0.09 ) $ ( 0.43 ) $ ( 0.09 ) F-43