Alaunos Therapeutics, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following information should be read in conjunction with our unaudited condensed financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or the SEC, on March 1, 2021, or the Annual Report. Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, words such as “may,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods. The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, including those risks identified under Part II, Item 1A. Risk Factors. We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. 2 7 Table of Contents Overview We are a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing next generation immuno-oncology platforms that leverage cell- and gene-based therapies to treat patients with cancer. We are developing platform technologies that utilize the immune system by employing innovative cell engineering and novel, controlled gene expression technologies designed to deliver safe and effective cell and gene therapies for the treatment of multiple cancer types. Our major platform and priority is referred to as Sleeping Beauty and is based on the non-viral genetic engineering of immune cells using a transposon/transposase system that is intended to stably engineer T cells outside of the body for subsequent infusion. Our second platform is referred to as Controlled IL-12 and is designed to stimulate expression of interleukin 12, or IL-12, a master regulator of the immune system, in a controlled manner to focus the patient’s immune system to more effectively attack cancer cells. Using our Sleeping Beauty platform, we are developing T cell receptor, or TCR, T cell therapies to target neoantigens in solid tumors using two approaches, which we refer to as our “Library TCR-T Approach” and our “Personalized TCR-T Approach.” The Library TCR-T Approach uses TCRs identified from third parties that have been prepared before the patient-recipient has been identified (i.e., as off-the-shelf inventory plasmids). We then genetically modify the recipient’s own T cells to redirect specificity to public, or shared, neoantigens. The Personalized TCR-T Approach uses recipient-derived (autologous) TCRs to genetically modify the recipient’s own T cells to redirect specificity to the recipient’s private neoantigens. In our company-sponsored Phase 1/2 clinical trial, we will evaluate TCRs from our library for the investigational treatment of lung, cholangiocarcinoma, pancreatic, colorectal and gynecological cancers. Initially, six curated TCRs reactive to mutated KRAS and TP53 will be included in the clinical trial; however, we expect to expand the number of TCRs to be evaluated in this clinical trial. This clinical trial is being conducted in collaboration with The University of Texas MD Anderson Cancer Center, or MD Anderson, which will be the first site for the clinical trial. Under our Cooperative Research and Development Agreement, the National Cancer Institute, or NCI, is conducting a Phase 2 Personalized TCR-T clinical trial to evaluate autologous peripheral blood lymphocytes genetically modified with the Sleeping Beauty system to express private neoantigen-specific TCRs. The trial is designed to enroll patients with a broad range of solid tumors. The U.S. Food and Drug Administration, or the FDA, has cleared the investigational new drug, or IND, application submitted by the NCI for this clinical trial. However, enrollment in this clinical trial has been temporarily suspended due to issues internal to the NCI and unrelated to our technology. The progress and timeline for this trial, including the timeline for dosing patients, are under the control of the NCI. We are developing chimeric antigen receptor, or CAR, T cell, or CAR+ T, therapies targeting CD19 on malignant B cells using our Sleeping Beauty platform. We are advancing our rapid personalized manufacture, or RPM, technology in Greater China with Eden BioCell, Ltd., or Eden BioCell, our joint venture with TriArm Therapeutics, Ltd. RPM enables small numbers of T cells to be infused as soon as the day after gene transfer which is made possible by the genetic modification of resting T cells to express CAR and membrane bound IL-15, or mbIL15. Eden BioCell is conducting a Phase 1 clinical trial in Taiwan to evaluate the safety and efficacy of Sleeping Beauty-generated CD19-specific RPM CAR+ T therapies using patient-derived (autologous) T cells in order to treat patients with relapsed or refractory CD19 + leukemias and lymphomas. Our Controlled IL-12 platform is based on an engineered replication-incompetent adenovirus, referred to as Ad-RTS-hIL-12, plus veledimex as a gene delivery system to conditionally produce IL-12, a potent, naturally occurring anti-cancer protein, to treat patients with solid tumors. Our Controlled IL-12 platform allows us to deliver IL-12 in a tunable dose as the cytokine is under transcriptional control of the RheoSwitch Therapeutic System ® (RTS ® ). 28 Table of Contents We have not generated significant revenue and have incurred significant net losses in each year since our inception. For the three months ended March 31, 2021, we had a net loss of $21.6 million, and, as of March 31, 2021, we have incurred approximately $785.7 million of accumulated deficit since our inception in 2003. We expect to continue to incur significant operating expenditures and net losses. Further development of our product candidates will likely require substantial increases in our expenses as we: • continue to undertake clinical trials for product candidates; • seek regulatory approvals for product candidates; • work with regulatory authorities to identify and address program-related inquiries; • implement additional internal systems and infrastructure; • hire additional personnel; and • scale-up the formulation and manufacturing of our product candidates. We continue to seek additional financial resources to fund the further development of our product candidates. If we are unable to obtain sufficient additional capital, one or more of these programs could be delayed, and we may be unable to continue our operations at planned levels and be forced to reduce our operations. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Recent Developments The ongoing COVID-19 global pandemic has presented a significant health and economic challenge around the world and is affecting our employees, partners and business operations. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted. We have implemented work-from-home policies for most of our employees in response to the COVID-19 pandemic. The effects of our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition. We continue to work with our partners, including the NCI and MD Anderson, to mitigate the impact the COVID-19 pandemic is having on our business. Clinical and Regulatory Developments In February 2021, the FDA cleared our company-sponsored IND application for a Phase 1/2 clinical trial evaluating TCRs from our library for the investigational treatment of lung, cholangiocarcinoma, pancreatic, colorectal and gynecological cancers. In April 2021, we announced the infusion of the first patient in the CD19-specific RPM CAR-T Phase 1 clinical trial being conducted in Taiwan by Eden BioCell. We expect to close our CD19 RPM CAR-T Allogeneic Phase I clinical trial in the second or third quarter of 2021. In this trial, we had planned to infuse donor-derived T cells after allogeneic bone marrow transplantation for recipients who have relapsed with CD19+ leukemias and lymphomas. We have begun winding down our existing Controlled IL-12 clinical program for the treatment of recurrent glioblastoma multiforme. These trials examine the effect of Controlled IL-12 as a monotherapy and in combination with blockade of the immune checkpoint protein PD-1. We will continue seeking a partner for this program and have also begun exploring potential synergies between this technology and our cell therapy programs. We anticipate headcount reduction of approximately 15% related to this realignment of resources. Appointment of Personnel In February 2021, Heidi Hagen was appointed our Interim Chief Executive Officer, replacing Dr. Laurence Cooper, MD., Ph.D. Ms. Hagen, formerly the lead independent director on our Board of Directors, or the Board, remains a member of the Board. In connection with his departure as Chief Executive Officer, Dr. Cooper resigned as a director of the Company and remains a consultant to the Company. In connection with Ms. Hagen’s appointment, James Huang was appointed as the executive chair of the Board. In February 2021, Robert W. Postma was appointed to the Board to serve an initial term expiring at our 2021 annual meeting of stockholders. Mr. Postma was added to the Board pursuant to a settlement agreement between us, WaterMill Asset Management Corp. and Mr. Postma. In February 2021, Timothy Cunningham was appointed our Interim Chief Financial Officer and principal financial officer. Mr. Cunningham is a consultant to the Company, providing services pursuant to a consulting agreement between us and Danforth Advisors, LLC, a financial consultancy firm specializing in working with life sciences companies. In March 2021, Kevin Buchi notified the Board of his intention not to stand for re-election as a director when his term expires at our 2021 annual meeting of stockholders. The size of the Board will decrease from eight to seven directors effective as of the date of Mr. Buchi’s resignation. 29 Table of Contents Financial Overview Overview of Results of Operations Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020 Research and development expenses. Research and development expenses during the three months ended March 31, 2021 and 2020 were as follows: Three months ended March 31, 2021 2020 Change ($ in thousands) Research and development $ 13,336 $ 12,706 $ 630 5 % Research and development expenses for the three months ended March 31, 2021 increased by $0.6 million when compared to the three months ended March 31, 2020. The increase in research and development expenses for the three months ended March 31, 2021 is primarily due to a $5.0 million increase in headcount, stock compensation, and facilities costs and $0.9 million in increased cell therapy program costs offset by $5.3 million of decreased Controlled IL-12 program costs. 30 Table of Contents Our research and development expense consists primarily of salaries and related expenses for personnel, costs of contract manufacturing services, costs of facilities and equipment, fees paid to professional service providers in conjunction with our clinical trials, fees paid to contract research organizations in conjunction with preclinical animal studies, costs of materials used in research and development, consulting, license and milestone payments and sponsored research fees paid to third parties. We have not accumulated and tracked our internal historical research and development costs or our personnel and personnel-related costs on a program-by-program basis. Our employee and infrastructure resources are allocated across several projects, and many of our costs are directed to broadly applicable research endeavors. As a result, we cannot state the costs incurred for each of our programs on a program-by-program basis related to personnel and personnel related costs. We do track our accumulated costs by program for costs incurred by outside vendors conducting research for our named clinical candidates. For the three months ended March 31, 2021, our clinical stage projects included a Phase 1 clinical trial with Ad-RTS-IL-12 plus veledimex in progressive glioblastoma; a Phase 1 clinical trial infusing our 2nd generation CD19-specific CAR + T cells in patients with advanced lymphoid malignancies; a Phase 1/2 clinical trial of Ad-RTS-hIL-12 with veledimex for the treatment of pediatric brain tumors; and a Phase 2 clinical trial of Ad-RTS-hIL-12 with veledimex in combination with cemiplimab-rwlc in progressive glioblastoma. The expenses incurred by us to third parties for our Phase 1 clinical trial with Ad-RTS-IL-12 plus veledimex in progressive glioblastoma were $0.9 million for the three months ended March 31, 2021 and $14.7 million from the project’s inception in September 2015 through March 31, 2021. The expenses incurred by us to third parties for our Phase 1 clinical trial infusing our 2nd generation CD19-specific CAR + T cells in patients with advanced lymphoid malignancies were zero for the three months ended March 31, 2021 and $6.2 million from the project’s inception in December 2015 through March 31, 2021. The expenses incurred by us to third parties for our Phase 1/2 clinical trial of Ad-RTS-hIL-12 with veledimex for the treatment of pediatric brain tumors were $0.4 million for the three months ended March 31, 2021 and $2.5 million from the project’s inception in October 2017 through March 31, 2021. The expense incurred by us to third parties for our Phase 2 clinical trial of Ad-RTS-hIL-12 with veledimex in combination with cemiplimab-rwlc in progressive glioblastoma were $1.3 million for the three months ended March 31, 2021 and $6.7 million from the projects inception in June 2019 through March 31, 2021. Our future research and development expenses in support of our current and future programs will be subject to numerous uncertainties in timing and cost to completion. We test potential products in numerous preclinical studies for safety, toxicology and efficacy. We may conduct multiple clinical trials for each product. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain products to focus our resources on more promising products or indications. Completion of clinical trials may take several years or more, and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product. It is not unusual for preclinical and clinical development of each of these types of products to require the expenditure of substantial resources. We estimate that clinical trials of the type generally needed to secure new drug approval are typically completed over the following timelines: Clinical Phase Estimated Completion Period Phase 1 1 - 2 years Phase 2 2 - 3 years Phase 3 2 - 4 years The duration and the cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others, the following: • The number of clinical sites included in the trials; • The length of time required to enroll suitable patents; • The number of patients that ultimately participate in the trials; • The cost to manufacture the clinical products for patients; • The duration of patient follow-up to ensure the absence of long-term product-related adverse events; and • The efficacy and safety profile of the product. 31 Table of Contents As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our programs or when and to what extent we will receive cash inflows from the commercialization and sale of a product. Our inability to complete our programs in a timely manner or our failure to enter into appropriate collaborative agreements could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to reduce or eliminate our activities in one or more of our programs or seek additional, external sources of financing from time-to-time in order to continue with our product development strategy. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business. General and administrative expenses. General and administrative expenses during the three months ended March 31, 2021 and 2020 were as follows: Three months ended March 31, 2021 2020 Change ($ in thousands) General and administrative $ 8,227 $ 5,954 $ 2,273 3 8% General and administrative expenses for the three months ended March 31, 2021 increased by $2.3 million as compared to three months ended March 31, 2020. The increase during the three months ended March 31, 2021 was primarily due to an increase of $0.7 million related to employee related expenses, $0.6 million related to expenses incurred pursuant to our separation agreement with our former Chief Executive Officer., and $1 million expenses incurred related to our expanded patent portfolio and advisory fees. Other income, (net). Other income, net for the three months ended March 31, 2021 and 2020 was as follows: Three months ended March 31, 2021 2020 Change ($ in thousands) Other income, net $ 9 $ 367 $ (358) (98 %) Total $ 9 $ 367 Other income for the three months ended March 31, 2021 decreased by $358 thousand as compared to the three months ended March 31, 2020 due to a decrease in our cash balance and a decline in interest rates due to market fluctuations. 32 Table of Contents Liquidity and Capital Resources Source of liquidity We have not generated any revenue from product sales. Since inception, we have incurred net losses and negative cash flows from our operations. To date, we have financed our operations primarily through public offerings of our common stock, private placements of our convertible equity securities and collaborations. Through March 31, 2021, we have received an aggregate of $714.1 from public offerings and through sales under our “at-the market” offering program. February 2020 Public Offering On February 5, 2020, we entered into an underwriting agreement with Jefferies LLC, or Jefferies, as representative of the several underwriters named therein, relating to the issuance and sale of 27,826,086 shares of our common stock. The price to the public in the offering was $3.25 per share, and the underwriters agreed to purchase the shares from us pursuant to the underwriting agreement at a purchase price of $3.055 per share. The offering was made pursuant to our effective registration statement on Form S-3ASR (File No. 333-232283) previously filed with the SEC, and a prospectus supplement thereunder. The net proceeds from the offering were approximately $84.8 million after deducting underwriting discounts and offering expenses paid by us. On March 10, 2020, the underwriters exercised their option to purchase an additional 1,284,025 shares. The net proceeds were approximately $3.9 million after deducting underwriting discounts and offering expenses paid by the us. At-the-Market Facility In June 2019, we entered into an Open Market Sale Agreement, or Sales Agreement, with Jefferies LLC, or Jefferies, as a sale agent pursuant to which we may offer and sell, from time to time through Jefferies, shares of our common stock having an aggregate offering value of up to $100.0 million. Shares will be sold pursuant to our effective registration statement on Form S-3ASR (File No. 333-232283), as previously filed with the Securities and Exchange Commission. Subject to the terms of the sales agreement, we are able to determine, at our sole discretion, the timing and number of shares to be sold under this ATM facility. The compensation to Jefferies for sales of our common stock pursuant to the sales agreement will be an amount equal to 3% of the gross proceeds of any shares of common stock sold under the sales agreement. During the three months ended March 31, 2020, we 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. We did not sell any shares of its common stock under the at-the-market facility during the three months ended March 31, 2021. Funding Requirements Given our current development plans, we expect that our existing cash and cash equivalents will be sufficient to fund our current operations into the second quarter of 2022. We currently do not have any committed sources of additional capital at this time. The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors. We have based our estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate. Management does not know whether additional financing will be on terms favorable or acceptable to us when needed, if at all. In addition, we have issued or reserved for future issuance shares nearing the maximum number of shares of common stock authorized by our certificate of incorporation. If we are unable to increase the total number of authorized shares, we may be unable to effectively utilize our common stock to raise capital. If adequate additional funds are not available when required, or if we are unsuccessful in entering into partnership agreements for further development of our products, management may need to curtail development efforts. The COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets. If the disruption persists and deepens, we could experience an inability to access additional capital when and if needed. If we are unable to obtain funding, we could be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations. 33 Table of Contents In addition to these factors, our actual cash requirements may vary materially from our current expectations due to a number of other factors that may include, but are not limited to, changes in the focus and direction of our development programs, competitive and technical advances, costs associated with the development of our product candidates, our ability to secure partnering arrangements, and the costs of filing, prosecuting, defending and enforcing our intellectual property rights. If we exhaust our capital reserves more quickly than anticipated, regardless of the reason, and we are unable to obtain additional financing on terms acceptable to us or at all, we will be unable to proceed with development of some or all of our product candidates on expected timelines and will be forced to prioritize among them. Cash flows The following table summarizes our net decrease in cash, cash equivalents, and restricted cash for the three months ended March 31, 2021 and 2020: Three months ended March 31, 2021 2020 ($ in thousands) Net cash provided by (used in): Operating activities $ (15,313) $ (9,906) Investing activities (717) (513) Financing activities 1,017 101,680 Net increase in cash, cash equivalents, and restricted cash $ (15,013) $ 91,261 Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net loss for: • Non-cash operating items such as depreciation and stock-based compensation; and • Changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. Net cash used in operating activities for the three months ended March 31, 2021 was $15.3 million, as compared to net cash used in operating activities of $9.9 million for the three months ended March 31, 2020. The net cash used in operating activities for the three months ended March 31, 2021 was primarily due to our net loss of $21.6 million, the change in prepaid and other current assets of $3.2 million primarily related to the use of our funds at MD Anderson, the change in accounts payable of $2.7 million, the change in non-cash stock-based compensation of $2.2 million, other noncurrent assets of $0.6 million, offset by the change in accrued expenses of $3.1 million and the change in receivables of $0.3 million. Net cash used in investing activities was $0.7 million for the three months ended March 31, 2021 compared to $0.5 million for the three months ended March 31, 2020. 34 Table of Contents Net cash provided by financing activities the three months ended March 31, 2021 was $1.0 million related to proceeds from the exercise of stock options. Net cash provided by financing activities the three months ended March 31, 2020 was $101.7 million, which included $88.7 million from the issuance of common stock in our public offering, net and $13.0 million from the issuance of common stock in our at the market offerings, net. Operating capital and capital expenditure requirements We anticipate that losses will continue for the foreseeable future. At March 31, 2021, our accumulated deficit was approximately $785.7 million. Our actual cash requirements will depend on and could increase significantly as a result of a number of factors, including: • the scope, number, initiation, progress, timing, costs, design, duration, any potential delays, and results of clinical trials and nonclinical studies for our current or future product candidates; • changes in the focus, direction and pace of our development programs; • the effect of competitive and technical advances and market developments; • costs associated with the development of our product candidates; • our ability to establish and maintain partnering, collaborations or similar arrangements on favorable terms and whether and to what extent we retain development or commercialization responsibilities under any new licensing, collaboration or similar arrangement; • diversion of healthcare resources away from the conduct of clinical trials as a result of the ongoing COVID-19 pandemic, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; • the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel, quarantines or social distancing protocols imposed or recommended by federal or state governments, employers and others in connection with the ongoing COVID-19 pandemic; • our need and ability to hire additional management and scientific and medical personnel; • the costs of acquiring, licensing or investing in businesses, product candidates and technologies; • costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual property rights, or other developments; and • other matters identified under Part II, Item 1A. “Risk Factors.” Our working capital as of March 31, 2021 was $93.7 million, consisting of $112.7 million in current assets and $19.0 million in current liabilities. Working capital as of December 31, 2020 was $112.2 million, consisting of $130.6 million in current assets and $18.4 million in current liabilities. In May 2021, as a result of our review of our research and development portfolio, we announced the realigning of resources behind our Sleeping Beauty program. Resources currently deployed towards our Controlled IL-12 clinical program are currently being reduced, and we anticipate the realignment of resources will reduce cash expenditures on the Controlled IL-12 program. Contractual Obligations The following table summarizes our outstanding obligations as of March 31, 2021 and the effect those obligations are expected to have on our liquidity and cash flows in future periods: ($ in thousands) Total Less than 1 year 2 -3 years 4 -5 years More than 5 years Operating leases $ 5,859 $ 1,077 $ 1,628 $ 1,726 $ 1,428 CRADA 2,500 2,500 — — — Royalty and license fees 3,027 350 700 450 1,527 Strategic advisory fees 500 500 — — — Total $ 11,886 $ 4,427 $ 2,328 $ 2,176 $ 2,955 35 Table of Contents Our commitments for operating leases relate to the lease for our corporate headquarters in Boston, Massachusetts, and laboratory and office space in Houston, Texas. On December 21, 2015 and April 15, 2016, we renewed the sublease for our corporate headquarters in Boston, MA through August 31, 2021. On January 30, 2018, we entered into a lease agreement for office space in Houston, TX at MD Anderson through April 2021. On March 12, 2019, we entered into a lease agreement for additional office space in Houston through April 2021. On October 15, 2019, we entered into another lease agreement for additional office space in Houston through February 2027. On April 13, 2020, we entered into another lease agreement for additional office and laboratory space in Houston through February 2027. On June 1, 2020, we entered into a short-term lease in Houston for office and laboratory space. On September 1, 2020, we entered an additional short-term lease in Houston for additional office and laboratory space. On December 15, 2020, we entered into another lease for additional office and laboratory space in Houston through April 2028. On January 10, 2017, we announced the signing of a Cooperative Research and Development Agreement, or CRADA with the NCI for the development of ACT-based immunotherapies genetically modified using the Sleeping Beauty transposon/transposase system for the treatment of solid tumors. In February 2019, we extended the CRADA with the NCI until January 9, 2022. On May 28, 2019, we entered into a patent license agreement, or the Patent License, with the NCI. The terms of the Patent License require us to pay the NCI minimum annual royalties in the amount of $0.3 million, which amount will be reduced to $0.1 million once the aggregate minimum annual royalties paid by us equals $1.5 million. On October 5, 2018, we entered into the License Agreement with PGEN Therapeutics, Inc. or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation. Under the License Agreement, we are obligated to pay PGEN an annual licensing fee of $0.1 million expected to be paid through the term of the agreement. On November 27, 2020, we entered into two agreements for strategic advisory services that require us to pay $1.1 million through September 30, 2021. Off-balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. Critical Accounting Policies and Estimates In our Annual Report, our most critical accounting policies and estimates upon which our financial status depends were identified as those relating to clinical trial expenses; collaboration agreements; fair value measurements for stock-based compensation; and income taxes. We reviewed our policies and determined that those policies remain our most critical accounting policies for the three months ended March 31, 2021.