Alaunos Therapeutics, Inc. - Quarter Report: 2021 March (Form 10-Q)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware		84-1475642
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		ZIOP		The Nasdaq Stock Market LLC

Large Accelerated Filer		☒		Accelerated Filer		☐
Non-Accelerated Filer		☐		Smaller Reporting Company		☐
				Emerging Growth Company		☐

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our ability to raise substantial additional capital to fund our planned operations in the near term;

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estimates regarding our expenses, use of cash, timing of future cash needs and anticipated capital requirements;

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the development of our product candidates, including statements regarding the initiation, timing, progress and results of our preclinical clinical studies, clinical trials and research and development programs;

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our ability to advance our product candidates through various stages of development, especially through pivotal safety and efficacy trials;

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the risk that final trial data may not support interim analysis of the viability of our product candidates;

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our expectation regarding the safety and efficacy of our product candidates;

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the timing, scope or likelihood of regulatory filings and approvals from the U.S. Food and Drug Administration or equivalent foreign regulatory agencies for our product candidates and for which indications;

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our ability to license additional intellectual property relating to our product candidates from third parties and to comply with our existing license agreements;

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our ability to enter into partnerships or strategic collaboration agreements, our ability to achieve the results contemplated and the potential benefits to be derived from relationships with collaborators;

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our ability to maintain and establish collaborations and licenses; developments and projections relating to competition from other pharmaceutical and biotechnology companies or our industry;

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our estimates regarding the potential market opportunity for our product candidates;

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the anticipated rate and degree of commercial scope and potential, as well as market acceptance of our product candidates for any indication, if approved;

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the anticipated amount, timing and accounting of contract liability (formerly deferred revenue), milestones and other payments under licensing, collaboration or acquisition agreements, research and development costs and other expenses;

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our intellectual property position, including the strength and enforceability of our intellectual property rights;

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our ability to attract, hire, and retain qualified employees and key personnel;

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the impact of government laws and regulations in the United States and foreign countries;

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our expectations regarding the impact of the ongoing coronavirus disease 2019, or COVID-19, pandemic, included the expected duration of disruption and immediate and long-term impact and effect on our business and operations;

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the 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;

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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; and

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other risks and uncertainties, including those listed under Part II, Item 1A, “Risk Factors”.

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Our business, operations and clinical development plans and timelines could be adversely affected by the effects of health epidemics, including the COVID-19 pandemic, on the manufacturing, clinical trial and other business activities performed by us or by third parties with whom we conduct business, including our contract manufacturers, clinical research organizations, or CROs, shippers and others.

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We will require substantial additional financial resources to continue ongoing development of our product candidates and pursue our business objectives; if we are unable to obtain these additional resources when needed, we may be forced to delay or discontinue our planned operations, including clinical testing of our product candidates.

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Our plans to develop and commercialize non-viral and viral adoptive cellular therapies based on engineered cytokines and CAR T-cell as well as TCR therapies can be considered as new approaches to cancer treatment, the successful development of which is subject to significant challenges.

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Our current product candidates are based on novel technologies and are supported by limited clinical data and we cannot assure you that our current and planned clinical trials will produce data that supports regulatory approval of one or more of these product candidates.

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If we are unable to obtain the necessary U.S. or worldwide regulatory approvals to commercialize any product candidate, our business will suffer.

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Our product candidates are in various stages of clinical trials, which are very expensive and time-consuming. We cannot be certain when we will be able to submit a BLA to the FDA and any failure or delay in completing clinical trials for our product candidates could harm our business.

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Our cell-based and gene therapy immuno-oncology products rely on the availability of reagents, specialized equipment, and other specialty materials and infrastructure, which may not be available to us on acceptable terms or at all. For some of these reagents, equipment, and materials, we rely or may rely on sole source vendors or a limited number of vendors, which could impair our ability to manufacture and supply our products.

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Our immuno-oncology product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval. Currently, few gene therapy and cell therapy products have been approved in the United States and Europe.

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Our reliance on third parties to formulate and manufacture our product candidates exposes us to a number of risks that may delay the development, regulatory approval and commercialization of our products or result in higher product costs.

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If we are unable either to create sales, marketing and distribution capabilities or enter into agreements with third parties to perform these functions, we will be unable to commercialize our product candidates successfully.

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Our immuno-oncology product candidates may face competition in the future from biosimilars.

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If we or our licensors fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish and our ability to successfully commercialize our products may be impaired.

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Our stock price has been, and may continue to be, volatile.

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We previously identified a material weakness in our internal control over financial reporting for the year ended December 31, 2019, which we believe has been fully remediated as of December 31, 2020. If we have inadequately remediated this material weakness, or we otherwise fail to develop, implement and maintain an effective system of internal controls in future periods, our ability to report our financial condition or results of operations could be adversely affected and may result in material misstatements of our financial statements or could have a material adverse effect on our business and trading price of our securities.

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Part I - Financial Information
Item 1.		Financial Statements
		Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020			5
		Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)			6
		Statement of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 (unaudited)			7
		Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)			9
		Notes to Financial Statements (unaudited)			10
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3.		Quantitative and Qualitative Disclosures about Market Risk			36
Item 4.		Controls and Procedures			37
Part II - Other Information
Item 1.		Legal Proceedings			38
Item 1A.		Risk Factors			38
Item 2.		Unregistered Sale of Equity Securities and Use of Proceeds			71
Item 3.		Defaults upon Senior Securities			71
Item 4.		Mine Safety Disclosures			71
Item 5.		Other Information			71
Item 6.		Exhibits			72

		March 31, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	100,056			$	115,069
Receivables			5,006				4,665
Prepaid expenses and other current assets			7,648				10,855
Total current assets			112,710				130,589
Property and equipment, net			11,090				10,231
Right of use asset			4,357				4,650
Deposits			130				130
Other non-current assets			185				745
Total assets		$	128,472			$	146,345
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	4,190			$	960
Accrued expenses			14,012				16,589
Lease liability - current portion			759				819
Total current liabilities			18,961				18,368
Lease liability - noncurrent portion			3,870				3,995
Total liabilities			22,831				22,363
Commitments and contingencies (Note 7)
Preferred stock, $0.001 par value, 30,000,000 shares authorized
Stockholders’ equity:
Common stock, $0.001 par value; 250,000,000 shares authorized; 215,257,674 and 214,591,906 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively			215				215
Additional paid-in capital			891,081				887,868
Accumulated deficit			(785,655	)			(764,101	)
Total stockholders’ equity			105,641				123,982
Total liabilities and stockholders’ equity		$	128,472			$	146,345

Table of Contents 

		For the Three Months Ended March 31,
		2021				2020
Operating expenses:
Research and development		$	13,336			$	12,706
General and administrative			8,227				5,954
Total operating expenses			21,563				18,660
Loss from operations			(21,563	)			(18,660	)
Other income, net			9				367
Net loss		$	(21,554	)		$	(18,293	)
Basic and diluted net loss per share		$	(0.10	)		$	(0.09	)
Weighted average common shares outstanding used to compute basic and diluted net loss per share			213,954,665				199,814,768

Table of Contents 

For the Three Months Ended March 31, 2020
		Common Stock								Additional Paid In Capital				Accumulated Deficit				Total Stockholders’ Equity
		Shares				Amount
Balance at December 31, 2019			181,803,320			$	182			$	778,953			$	(684,125	)			95,010
Stock-based compensation			—				—				1,940				—				1,940
Exercise of employee stock options			2,333				—				4				—				4
Issuance of restricted common stock			555,900				1				(1	)			—				—
Issuance of common stock in connection with a public offering, net of commissions and expenses of $5.9 million			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 $0.4 million			2,814,673				2				13,013				—				13,015
and expenses of $2.7 million			—				—				—				—				—
Net loss			—				—				—				(18,293	)			(18,293	)
Balance at March 31, 2020			214,286,337			$	214			$	882,541			$	(702,418	)		$	180,337

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For the Three Months Ended March 31, 2021
		Common Stock								Additional Paid In Capital				Accumulated Deficit				Total Stockholders’ Equity
		Shares				Amount
Balance at December 31, 2020			214,591,906			$	215			$	887,868			$	(764,101	)			123,982
Stock-based compensation			—				—				2,197				—				2,197
Exercise of employee stock options			352,442				—				1,016				—				1,016
Restricted stock awards			313,326				—				—				—				—
Net loss			—				—				—				(21,554	)			(21,554	)
Balance at March 31, 2021			215,257,674			$	215			$	891,081			$	(785,655	)		$	105,641

Table of Contents 

 

		For the Three Months Ended March 31,
		2021				2020
Cash flows from operating activities:
Net loss		$	(21,554	)		$	(18,293	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			540				142
Stock-based compensation			2,197				1,940
Change in operating assets and liabilities
(Increase) decrease in:
Receivables			(340	)			2,548
Prepaid expenses and other current assets			3,207				2,585
Right of use asset			292				193
Other noncurrent assets			559				(556	)
Increase (decrease) in:
Accounts payable			2,654				(510	)
Accrued expenses			(2,684	)			2,206
Lease liabilities			(184	)			(161	)
Net cash used in operating activities			(15,313	)			(9,906	)
Cash flows from investing activities:
Purchases of property and equipment			(717	)			(513	)
Net cash used in investing activities			(717	)			(513	)
Cash flows from financing activities:
Proceeds from exercise of stock options			1,017				4
Issuance of common stock in connection with a public offering, net			—				88,661
Issuance of common stock in connection with at the market offerings, net			—				13,015
Net cash provided by financing activities			1,017				101,680
Net increase in cash and cash equivalents, and restricted cash			(15,013	)			91,261
Cash and cash equivalents, and restricted cash, beginning of period			115,069				79,741
Cash and cash equivalents, and restricted cash, end of period		$	100,056			$	171,002
Supplementary disclosure of cash flow information:
Accounts included in accrued expenses and accounts payable related to property and equipment		$	682			$	2,303

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Clinical trial expenses and other research and development expenses;

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Collaboration agreements;

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Fair value measurements of stock-based compensation; and

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Income taxes.

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Level 1 - Quoted prices in active markets for identical assets or liabilities.

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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.

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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.

($ in thousands)						Fair Value Measurements at Reporting Date Using
Description		Balance as of March 31, 2021				Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents		$	79,775			$	79,775			$	—			$	—

($ 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)
Assets:
Cash equivalents		$	75,990			$	75,990			$	—			$	—

		March 31,
		2021				2020
Stock options			10,738,378				6,676,879
Inducement stock options			463,333				1,030,000
Unvested restricted stock			1,074,606				1,495,536
Warrants			22,272,727				22,272,727
			34,549,044				31,475,142

(in thousands)		Three Months Ended March 31, 2021
Operating lease cost		$	381
Total lease cost		$	381
Weighted-average remaining lease term (years)			6.21
Weighted-average discount rate			8.00	%

2021 (excluding the three months ended March 31, 2021)		$	879
202 2			800
202 3			820
202 4			844
202 5			869
Thereafter			1,519
Total lease payments			5,731
Less: Imputed interest and adjustments			(1,231	)
Present value of lease payments		$	4,500

		For the three months ended March 31,
(in thousands)		2021				2020
Research and development		$	733			$	530
General and administrative			1,464				1,410
Stock-based compensation expense		$	2,197			$	1,940

		For the three months ended March 31,
		2021		2020
Risk-free interest rate		0.09 - 1.05%		0.36 - 0.39%
Expected life in years		5.50 -   6.25		5.75 -   6.25
Expected volatility		72.92 -   74.20%		73.59 -   74.18%
Expected dividend yield		0%		0%

(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, 2020			6,840,719			$	3.81
Granted			4,314,438				3.79
Exercised			(352,442	)			2.89
Cancelled			(84,337	)			3.53
Outstanding, March 31, 2021			10,718,378			$	3.83				13.40			$	4,926
Options exercisable, March 31, 2021			3,562,744			$	4.23				6.68			$	2,176
Options exercisable, December 31, 2020			3,596,315			$	4.17				6.90			$	598
Options available for future grant			1,267,888

		Number of Shares				Weighted-Average Grant Date Fair Value
Unvested, December 31, 202 0			786,280			$	3.08
Granted			313,326				4.31
Vested			—				—
Cancelled			—				—
Unvested, March 31, 2021			1,099,606			$	3.43

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 platform allows us to deliver IL-12 in a tunable dose as the cytokine is under transcriptional control of the RheoSwitch Therapeutic System (RTS ).

Research and development expenses during the three months ended March 31, 2021 and 2020 were as follows:

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 program costs.

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

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 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 during the three months ended March 31, 2021 and 2020 were as follows:

Other income, net for the three months ended March 31, 2021 and 2020 was as follows:

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 market” offering program.

The offering was made pursuant to our effective registration statement on Form (File 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.

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 (File 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 (File 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.

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 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.

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 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.

On January 10, 2017, we announced the signing of a Cooperative Research and Development Agreement, or CRADA with the NCI for the development of 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.

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

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules or under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of March 31, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2021, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

The following important factors could cause our actual business and financial results to differ materially from those contained in forward-looking statements made in this Quarterly Report on or elsewhere by management from time to time. The risk factors in this Quarterly Report have been revised to incorporate changes to our risk factors from those included in our Annual Report on Form for the fiscal year ended December 31, 2020. The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk factors containing changes, which may be material, from the risk factors previously disclosed in Item 1A of our Annual Report on Form for the fiscal year ended December 31, 2020, as filed with the Securities and Exchange Commission. The market price of our common stock could decline if one or more of these risks or uncertainties actually occur, causing you to lose all or part of your investment. The impact of may also exacerbate other risks discussed in this filing, any of which could have a material effect on us. This situation is changing rapidly and additional impacts may arise. Additional risks that we currently do not know about, or that we currently believe to be immaterial, may also impair our business. Certain statements below are forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report.

We depend on a worldwide supply chain to manufacture products used in our preclinical studies and clinical trials. similar government orders, or the expectation that such orders, shutdowns or other restrictions could occur, whether related other infectious diseases, could impact personnel at our own manufacturing facilities or third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which could disrupt our supply chain.

If our relationships with our suppliers or other vendors are terminated or scaled back as a result of or other health epidemics, we may not be able to enter into arrangements with alternative suppliers or vendors or do so on commercially reasonable terms or in a timely manner. Switching or adding additional suppliers or vendors involves substantial cost and requires management time and focus. In addition, there is a natural transition period when a new supplier or vendor commences work. As a result, delays may occur, which could adversely impact our ability to meet our desired clinical development and any future commercialization timelines. Although we carefully manage our relationships with our suppliers and vendors, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not harm our business.

In addition, our preclinical studies and clinical trials have been and may continue to be affected by Clinical site initiation, patient enrollment and activities that require visits to clinical sites, including data monitoring, have been and may continue to be delayed due to prioritization of hospital resources toward or concerns among patients about participating in clinical trials during a pandemic. Some patients may have difficulty following certain aspects of clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, if we are unable to successfully recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure experience additional restrictions by their institutions, city, or state our clinical trial operations could be adversely impacted.

The spread has caused a broad impact globally, may materially affect us economically. While the potential economic impact brought by, and the duration be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread materially affect our business and the value of our common stock.

The global pandemic continues to evolve rapidly. The ultimate impact of or a similar epidemic is highly uncertain and subject to change. We may experience a material impact on our operations, and we continue to monitor closely.

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, slower and/or faster than expected progress of our research and development efforts, changes in governmental regulation, competitive and technical advances, rising costs associated with the development of our product candidates, our ability to secure partnering arrangements, and costs of filing, prosecuting, defending and enforcing our intellectual property rights. The 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, which could in the future negatively affect our operations. 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.

Further, we may elect to prioritize one or more of our programs and reduce or eliminate our activities on our other programs to preserve our capital resources. Any decision to reduce or eliminate activities for a program may negatively impact the potential for the program, which could have a material adverse effect on our business. For instance, we have to wind down the existing clinical programs of our Controlled program in 2021 and to actively explore partnership opportunities for the Controlled program to support its continued development. Some of these changes to our planned Controlled program may impact the prospects and future development of this program, including our ability to pursue later stage development or a partnership for this program.

Until such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings and license and collaboration agreements. We do not have any committed external source of funds. The unpredictability of the capital markets may severely hinder our ability to raise capital within the time periods needed or on terms we consider acceptable, if at all. In addition, the ongoing pandemic continues to disrupt the global financial markets, negatively impacted U.S. market conditions and may reduce opportunities for us to seek out additional funding in the future. In particular, a decline in the market price of our common stock could make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. Moreover, if we fail to advance one or more of our current product candidates into early or later-stage clinical trials, successfully commercialize one or more of our product candidates, or acquire new product candidates for development, we may have difficulty attracting investors that might otherwise be a source of additional financing.

In June 2019, we entered into an Open Market Sale Agreement with Jefferies LLC, as agent, or Jefferies, pursuant to which we may offer and sell, from time to time through Jefferies, shares of our common stock having an aggregate offering price of up to $100.0 million. Shares will be sold pursuant to our effective registration statement on Form (File as previously filed with the Securities and Exchange Commission. During the year ended December 31, 2020, we issued and sold an aggregate of 2,814,673 shares of our common stock under the sales agreement for aggregate net proceeds of $13.0 million after deducting commissions and offering expenses of $0.4 million and may sell and issue approximately $80.9 million in additional shares under the sales agreement. There were no issuances during the three months ended March 31, 2021.

To the extent that we raise additional capital by issuing equity securities such as under our program, our existing stockholders’ ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing that we enter into may involve covenants that restrict our operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our ability to create liens, pay dividends, redeem our stock or make investments. Furthermore, the ongoing impact of on global financial markets could make the terms of any available financing less attractive to use and more dilutive to our existing shareholders. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

We intend to employ technologies such as the technology licensed from MD Anderson pursuant to the MD Anderson License described above, and from PGEN, pursuant to the License Agreement, to pursue the development and commercialization of and viral adoptive cellular therapies based on cytokines, CARs and TCRs, possibly under control of the RTS and other switch technologies targeting both hematologic and solid tumor malignancies. Because this is a new approach to cancer immunotherapy and cancer treatment generally, developing and commercializing product candidates subjects us to a number of challenges, including:

The immuno-oncology effector platform in which we have acquired rights pursuant to our License Agreement with PGEN represents early-stage technology in the field of human oncology biotherapeutics, with plus veledimex having completed trials, in melanoma, breast cancer and rGBM. Similarly, our genetically modified and/ or candidates are supported by limited clinical data, all of which has been generated through trials conducted by MD Anderson, the NCI, and Eden BioCell, not by us. We plan to assume control of the overall clinical and regulatory development of our product candidates, and any failure to obtain, or delays in obtaining, sponsorship of new INDs, or in filing INDs sponsored by us for these or any other product candidates we determine to advance could negatively affect the timing of our potential future clinical trials. Such an impact on timing could increase research and development costs and could delay or prevent obtaining regulatory approval for our product candidates, either of which could have a material adverse effect on our business.

In addition, the results of the limited clinical trials conducted to date may not be replicated in future clinical trials. Our plus veledimex and genetically modified and product candidates, as well as other product candidates, may fail to show the desired safety and efficacy in clinical development, and we cannot assure you that the results of any future trials will demonstrate the value and efficacy of our product candidates. Moreover, there are a number of regulatory requirements that we must satisfy before we can continue clinical trials of CAR+ T, TCRs or other cellular therapy product candidates in the United States. Satisfaction of these requirements will entail substantial time, effort and financial resources. Any time, effort and financial resources we expend on our plus veledimex and genetically modified and product candidates and other early-stage product candidate development programs may adversely affect our ability to continue development and commercialization of our immuno-oncology product candidates.

Our genetically engineering programs face significant competition in the CAR and TCR technology space from multiple companies and their collaborators. Three such companies, Novartis International AG (Kymriah), Kite Pharma Inc./Gilead Sciences, Inc. (Yescarta) and Bristol-Myers Squibb Company (Breyanzi), have now commercialized autologous CAR+ T cells against CD19. Additional companies developing autologous CAR+ T targets include Bristol-Myers Squibb Company, Precigen, Inc., bluebird bio, Inc., in collaboration with Celgene Corporation, Nanjing Legend Biotech and Janssen Biotech, Inc., a subsidiary of Johnson & Johnson, Gracell Biotechnologies Inc., CARsgen Therapeutics Co. Ltd., Bellicum Pharmaceuticals, Inc., Autolus Therapeutics plc, Exuma Biotech Corp., Mustang Bio, Inc., Crispr Therapeutics AG, Precision Biosciences Inc., Protheragen Inc. and Marker Therapeutics, Inc. Several companies are pursuing the development of allogeneic CAR+ T therapies, including Allogene Therapeutics, Inc. (in collaboration with Pfizer Inc.), Atara Biotherapeutics, Inc. and Cellectis SA (in collaboration with Servier) which may compete with our product candidates.

Our TCR program faces competition from several companies, including from Adaptimmune Therapeutics plc in collaboration with GlaxoSmithKline plc, ArsenalBio, Lyell, bluebird bio, Kite Pharma Inc./Gilead Sciences, Inc., Achilles Therapeutics Limited, Iovance Biotherapeutics, Inc., Immatics Biotechnologies GmbH, Tmunity Therapeutics Inc, Medigene AG, Tactiva Therapeutics, LLC, Takara Bio, Inc., TCR2 Therapeutics Inc., Zelluna Immunotherapy AS, PACT Pharma, Inc. and others. Several companies, including Advaxis Inc./Amgen Inc., BioNTech AG and Gritstone Oncology, Inc., are pursuing vaccine platforms to target neoantigens for solid tumors. Other companies are developing gene therapies, including Poseida Therapeutics, Inc. and several companies developing CRISPR technology. We also face competition from companies developing therapies using cells other than T cells such as Takeda Pharmaceutical Company, NantKwest Inc., IN8bio, Inc., Fate Therapeutics Inc., and TC BioPharm Limited. We also face competition from companies developing T cells with cytokines such as Repertoire Immune Medicines and Obsidian Therapeutics, Inc. We also face competition from based treatments offered by other companies such as Amgen Inc., AstraZeneca plc, Bristol-Myers Squibb Company, Incyte Corporation, Merck & Co., Inc., and Roche Holding AG.

We initially developed our Controlled platform for the treatment of rGBM. Companies that sell marketed drugs for rGBM are Genentech Inc. and Roche Holding AG with Avastin (bevacizumab), a vascular endothelial growth factor directed antibody indicated for the treatment of adults with rGBM. Arbor Pharmaceuticals Inc. markets GLIADEL Wafer, which is indicated in patients with newly diagnosed high-grade malignant glioma as an adjunct to surgery and radiation and is also indicated in patients with recurrent glioblastoma multiforme as an adjunct to surgery. Additionally, Novocure has developed Optune (tumor treating fields) for newly diagnosed and recurrent glioblastoma. Several companies have product candidates in Phase 3 development for the treatment of glioblastoma, including, but not limited to, Cordgenics, LLC, Bayer AG, Kazia Therapeutics Limited, and Kintara Therapeutics, Inc. Several companies and institutions have product candidates currently in Phase 2 clinical trials, including, but not limited to, Abbvie Inc., DNAtrix Therapeutics, Istari Oncology, Karyopharm and MedImmune LLC/AstraZeneca plc, and other companies are actively developing additional products to treat brain cancer including Mustang Bio Inc. and Northwest Biotherapeutics, Inc. Other competitors with product candidates currently in Phase 2 clinical trials include AbbVie Inc.’s Depatus-M and a conditionally replicative adenovirus being evaluated in combination with pembrolizumab Phase 2 study of oncolytic polio/rhinovirus recombinant (PVSRIPO) alone or in combination with lomustine in recurrent WHO Grade IV malignant glioma patients. Also, MedImmune, LLC/AstraZeneca plc’s durvalumab was evaluated in a Phase 2 trial in patients with rGBM.

We are dependent on patents, and proprietary technology that are licensed from others, particularly MD Anderson, Precigen and the National Cancer Institute, or the NCI, as well as the contributions by MD Anderson under our research and development agreements. Any termination of these licenses or research and development agreements could result in the loss of significant rights and could harm our ability to commercialize our product candidates. Disputes may also arise between us and these licensors regarding intellectual property subject to a license agreement, including those relating to:

Under the MD Anderson License, we, together with PGEN, received an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR+ T cell and TCR cell therapies arising from the laboratory of Laurence Cooper, M.D., Ph.D., who was then at MD Anderson, as well as either or licenses under certain related technologies. When combined with PGEN’s technology suite and Ziopharm’s clinically tested RTS interleukin 12 modules, the resulting proprietary methods and technologies may help realize the promise of genetically modified CAR+ T cells and TCR therapies by controlling cell expansion and activation in the body, minimizing and unwanted effects and toxicity while maximizing therapeutic efficacy. 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, we and PGEN shall then have a fully-paid up, royalty free, perpetual, irrevocable and sublicensable license to use the licensed intellectual property thereunder.

After 10 years from the date of the MD Anderson License and subject to a cure period, MD Anderson will have the right to convert the MD Anderson License into a license if we and PGEN are not using commercially reasonable efforts to commercialize the licensed intellectual property on a basis. After five years from the date of the MD Anderson License and subject to a 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 we 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 or 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 or PGEN and may be terminated by the mutual written agreement of us, PGEN and MD Anderson.

A portion of our research and development is being conducted by the NCI under the CRADA entered into in January 2017 and amended in February 2019. Under the CRADA, the NCI, with Dr. Steven A. Rosenberg as the principal investigator, is responsible for conducting a clinical trial using the system to express TCRs for the treatment of solid tumors. We have limited control over the nature or timing of the NCI’s clinical trial and limited visibility into their activities, including with respect to how they are providing and administering T cell therapy. For example, the research we are funding constitutes only a small portion of the NCI’s overall research. Additionally, other research being conducted by Dr. Rosenberg may at times receive higher priority than research on our program. Further, in response to the pandemic, the NCI has taken precautionary measures that have delayed the enrollment of the clinical trial using the system to express TCRs for the treatment of solid tumors. In addition, enrollment in this clinical trial has been temporarily suspended due to issues internal to NCI and unrelated to our technology. The progress and timeline, including the timeline for dosing patients, for this trial are under the control of the NCI.

The CRADA terminates on January 9, 2022 unless it is extended in writing by the parties, and either party may terminate the CRADA by providing at least 60 days’ prior written notice to the other party. If the NCI unilaterally terminates the CRADA or the CRADA lapses without any extension, part or all of the research and development of the system conducted at the NCI would be suspended, and the research and development of our TCR program would be impacted.

Human clinical trials are very expensive and difficult to design, initiate and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial and process itself is also time-consuming and results are inherently uncertain. We estimate that clinical trials of our product candidates will take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to delay the start of, abandon or repeat clinical trials. The commencement and completion of clinical trials may be delayed by several factors, including:

See also “Risks Related to the Clinical Testing, Regulatory Approval and Manufacturing of our Product Candidates—

As with many pharmaceutical and biological products, treatment with our product candidates may produce undesirable side effects or adverse reactions or events, including potential adverse side effects related to cytokine release. If our product candidates or similar products or product candidates under development by third parties demonstrate unacceptable AEs, we may be required to halt or delay further clinical development of our product candidates. The FDA or other foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. For instance, plus veledimex may result in local reactions during the time of injection, including severe swelling and bleeding. If a serious adverse event was to occur in any of our clinical trials, including in our trial of plus veledimex for the treatment of DIPG, the FDA may place a hold on the clinical trial for this indication and, potentially, our clinical trials of plus veledimex in other indications.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, including during any long-term observation period recommended or required for patients who receive treatment using our products, a number of potentially significant negative consequences could result, including: