Full Press Release Details
INDEX TO IMMUNITYBIO CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||
| Report of Independent Auditors | 2 | |||
| Consolidated Balance Sheets at December 31, 2020 and 2019 | 3 | |||
| Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020 and 2019 | 4 | |||
| Consolidated Statements of Stockholders Deficit for the years ended December 31, 2020 and 2019 | 5 | |||
| Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 | 6 | |||
| Notes to Consolidated Financial Statements | 7 |
Report of Independent Auditors
To the Board of Directors and Stockholders of
ImmunityBio, Inc. and Subsidiaries
accompanying consolidated financial statements of ImmunityBio, Inc. and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss,
consolidated statements of stockholders deficit and cash flows for the years then ended, and the related notes to the consolidated financial statements.
Management s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting
principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Auditor s Responsibility
Our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the consolidated financial position of ImmunityBio, Inc. and Subsidiaries at December 31, 2020 and 2019, and the consolidated results of their operations and their cash flows for the
years then ended in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Los Angeles, California
ImmunityBio, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except for
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 23,474 | $ | 60,293 | ||||
| Marketable securities | 7,324 | 4,055 | ||||||
| Prepaid expenses and other current assets (including a related party) | 5,084 | 10,411 | ||||||
| Related party receivable | 5,575 | 1,918 | ||||||
| Total current assets | 41,457 | 76,677 | ||||||
| Property and equipment, net | 21,078 | 27,776 | ||||||
| Intangible assets, net | 1,463 | 12,074 | ||||||
| Convertible note receivable | 6,129 | 5,879 | ||||||
| Operating lease right-of-use assets, net | 7,881 | |||||||
| Other assets (including a related party) | 1,477 | 1,132 | ||||||
| Total assets | $ | 79,485 | $ | 123,538 | ||||
| Liabilities and Stockholders Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 7,409 | $ | 7,051 | ||||
| Accrued expenses and other current liabilities (including related parties) | 27,418 | 18,555 | ||||||
| Operating Lease Liability, current portion | 1,486 | |||||||
| Related party payable | 13,402 | 10,909 | ||||||
| Total current liabilities | 49,715 | 36,515 | ||||||
| Related party notes payable, non-current | 254,353 | 181,621 | ||||||
| Deferred income tax liability | 170 | 3,108 | ||||||
| Contingent consideration, net of current portion | 116 | 939 | ||||||
| Operating Lease Liability, net of current portion | 7,601 | 0 | ||||||
| Other non-current liabilities (including a related party) | 1,276 | 4,236 | ||||||
| Total liabilities | 313,231 | 226,419 | ||||||
| Commitments and Contingencies (Note 10) | ||||||||
| Stockholders deficit | ||||||||
| Common stock, $0.001 par value; 1,000,000,000 shares authorized at December 31, 2020 and 2019; 333,964,092 shares issued and outstanding at December 31, 2020 and 2019, respectively; excluding treasury stock, 200,000 shares outstanding at December 31, 2020 and 2019, respectively. | 63 | 63 | ||||||
| Additional paid-in-capital | 623,049 | 623,001 | ||||||
| Accumulated deficit | (858,420 | ) | (729,617 | ) | ||||
| Accumulated other comprehensive income | 244 | 18 | ||||||
| Total ImmunityBio stockholders deficit | (235,064 | ) | (106,535 | ) | ||||
| Non-controlling interests | 1,318 | 3,654 | ||||||
| Total stockholders deficit | (233,746 | ) | (102,881 | ) | ||||
| Total liabilities and stockholders deficit | $ | 79,485 | $ | 123,538 |
ImmunityBio, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Revenue (including $1,201 and $1,352 with a related party for the year ended December 31, 2020 and 2019, respectively) | $ | 1,695 | $ | 2,994 | ||||
| Operating expenses: | ||||||||
| Research and development | 75,762 | 62,253 | ||||||
| General and administrative | 43,666 | 27,505 | ||||||
| Change in loss contingency | 434 | 886 | ||||||
| Impairment of intangible assets | 10,660 | 0 | ||||||
| Total operating expenses | 130,522 | 90,644 | ||||||
| Loss from operations | (128,827 | ) | (87,650 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense, net | (8,612 | ) | (5,143 | ) | ||||
| Other income (expense), net | 4,211 | (1,019 | ) | |||||
| Loss before income taxes and non-controlling interest | (133,228 | ) | (93,812 | ) | ||||
| Income tax benefit | 1,851 | 8 | ||||||
| Net loss | (131,377 | ) | (93,804 | ) | ||||
| Net loss attributable to non-controlling interests, net of tax | (2,336 | ) | (2,381 | ) | ||||
| Net loss attributable to ImmunityBio s common stockholders | $ | (129,041 | ) | $ | (91,423 | ) | ||
| Net loss per ImmunityBio common share- basic and diluted | $ | (0.39 | ) | $ | (0.28 | ) | ||
| Weighted-average number of common shares used in computing net loss per share -basic and diluted | 333,964 | 332,252 | ||||||
| Other comprehensive income (loss): | ||||||||
| Other comprehensive income (loss), net of tax | 226 | (35 | ) | |||||
| Comprehensive loss | (131,151 | ) | (93,839 | ) | ||||
| Comprehensive loss attributable to non-controlling interests | (2,336 | ) | (2,381 | ) | ||||
| Comprehensive loss attributable to ImmunityBio common stockholders | $ | (128,815 | ) | $ | (91,458 | ) |
ImmunityBio, Inc. and Subsidiaries
Consolidated Statements of Stockholders Deficit
| Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total ImmunityBio Stockholders deficit | Non- controlling Interests | Total | |||||||||||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||
| Balance at December 31, 2018 | 329,170 | $ | 59 | $ | 585,482 | $ | (4,088 | ) | $ | (632,053 | ) | $ | (50,600 | ) | $ | (12,318 | ) | $ | (62,918 | ) | ||||||||||||
| Issuance of common stock for equity investment | 2,500 | 2 | 29,998 | 30,000 | 30,000 | |||||||||||||||||||||||||||
| Issuances of common stock under equity incentive plan | 11 | 16 | 16 | 16 | ||||||||||||||||||||||||||||
| Stock-based compensation | 794 | 794 | 794 | |||||||||||||||||||||||||||||
| Warrant exercise | 2,533 | 2 | 6,711 | 6,713 | 6,713 | |||||||||||||||||||||||||||
| Deconsolidation of Precision Biologics | 18,353 | 18,353 | ||||||||||||||||||||||||||||||
| Stock repurchase and cancellation | (250 | ) | (2,000 | ) | (2,000 | ) | (2,000 | ) | ||||||||||||||||||||||||
| Adjustment to beginning accumulated deficit from adoption of ASU2016-01 | 4,141 | (4,141 | ) | |||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | (35 | ) | (35 | ) | (35 | ) | ||||||||||||||||||||||||||
| Net loss | (91,423 | ) | (91,423 | ) | (2,381 | ) | (93,804 | ) | ||||||||||||||||||||||||
| Balance at December 31, 2019 | 333,964 | $ | 63 | $ | 623,001 | $ | 18 | $ | (729,617 | ) | $ | (106,535 | ) | $ | 3,654 | $ | (102,881 | ) | ||||||||||||||
| Stock-based compensation | 48 | 48 | 48 | |||||||||||||||||||||||||||||
| Implementation of Lease Accounting | 238 | 238 | 238 | |||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | 226 | 226 | 226 | |||||||||||||||||||||||||||||
| Net loss | (129,041 | ) | (129,041 | ) | (2,336 | ) | (131,377 | ) | ||||||||||||||||||||||||
| Balance at December 31, 2020 | 333,964 | $ | 63 | $ | 623,049 | $ | 244 | $ | (858,420 | ) | $ | (235,064 | ) | $ | 1,318 | $ | (233,746 | ) |
ImmunityBio, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (131,377 | ) | $ | (93,804 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 4,714 | 5,031 | ||||||
| Impairment of intangible asset | 10,660 | |||||||
| Noncash lease expense | 1,727 | |||||||
| Loss on disposal of assets | 725 | |||||||
| Stock-based compensation | 48 | 794 | ||||||
| Unrealized (gain) or loss on marketable securities | (2,876 | ) | 319 | |||||
| Change in fair value of contingent consideration | (753 | ) | (65 | ) | ||||
| Changes in accrued interest, including related parties | 8,782 | (949 | ) | |||||
| Change in loss contingency | 434 | 886 | ||||||
| Deferred income tax | (2,938 | ) | (8 | ) | ||||
| Other | (1 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | 4,982 | (3,320 | ) | |||||
| Accounts payable | 290 | 1,533 | ||||||
| Accrued expenses and other current liabilities | 9,691 | 2,812 | ||||||
| Operating lease liability, non-current | (518 | ) | ||||||
| Net cash used in operating activities | (97,134 | ) | (86,047 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (1,178 | ) | (3,316 | ) | ||||
| Payment to Precision to facilitate deconsolidation | (2,500 | ) | ||||||
| Purchase of marketable securities | (193 | ) | (571 | ) | ||||
| Proceeds from sales of marketable securities | 72 | |||||||
| Net cash used in investing activities | (1,371 | ) | (6,315 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of related party promissory notes | 63,700 | 47,670 | ||||||
| Repayments of related party payables | (1,991 | ) | (1,287 | ) | ||||
| Proceeds from issuance of common stock | 30,000 | |||||||
| Proceeds from exercise of stock options | 16 | |||||||
| Repurchase of common stock | (2,000 | ) | ||||||
| Net cash provided by financing activities | 61,709 | 74,399 | ||||||
| Effect of currency exchange rate changes on cash | (23 | ) | (23 | ) | ||||
| Net decrease in cash and cash equivalents | (36,819 | ) | (17,986 | ) | ||||
| Cash and cash equivalents, beginning of period | 60,293 | 78,279 | ||||||
| Cash and cash equivalents, end of period | $ | 23,474 | $ | 60,293 | ||||
| Significant non-cash investing and financing activities | ||||||||
| Issuance of equity for warrant exercises via reduction of related party promissory notes | $ | $ | 6,713 |
ImmunityBio, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(fka NantCell, Inc.) (including its subsidiaries, referred to as ImmunityBio or the Company ) was originally formed as a Delaware limited liability company on November 18, 2014, under the name NantBioCell, LLC. On
January 9, 2015, the name of the limited liability company was changed to NantCell, LLC. On April 10, 2015, it was converted to a Delaware corporation under the name NantCell, Inc. On May 31, 2019, its name was changed to ImmunityBio,
Inc. The Company is majority owned by an entity controlled by Dr. Soon-Shiong, chairman and chief executive officer of the Company. The Company is headquartered in Culver City, California.
ImmunityBio is an immunotherapy company with a broad portfolio of biological molecules at various stages of clinical development. The
Company s goal is to employ this portfolio to activate endogenous natural killer and CD8+ T cells for the treatment and prevention of cancer and infectious diseases. Specifically, ImmunityBio s goal is to develop a memory T cell cancer
vaccine to combat multiple tumor types, without the use of high-dose chemotherapy. In the field of infectious disease, ImmunityBio s goal is to develop therapies, including vaccines, for the prevention and treatment of human immunodeficiency
virus, or HIV, influenza, and the novel coronavirus SARS-CoV-2.
ImmunityBio s first-in-human platform of technologies has
enabled it to achieve one of the most comprehensive, late-stage clinical pipelines, activating both the innate (natural killer cell) and adaptive immune systems. The product pipeline includes an antibody cytokine fusion protein (an IL-15 superagonist (N-803) known as Anktiva), an albumin-associated anthracycline synthetic immunomodulator (aldoxorubicin), second-generation adenovirus (hAd5) and yeast
vaccine technology (targeting tumor-associated antigens and neoepitopes), checkpoint inhibitors, macrophage polarizing peptides, bi-specific fusion proteins targeting TGF- and IL-12.
In December 2019, the U.S. Food and Drug Administration, or FDA, granted Breakthrough Therapy
designation to Anktiva for bacillus Calmette-Gu rin, or BCG, unresponsive carcinoma in situ non-muscle invasive bladder cancer. Other indications currently at
registration-potential studies include BCG unresponsive papillary bladder cancer, first- and second-line lung cancer, and metastatic pancreatic cancer.
Liquidity and Capital Resources
The Company has experienced net losses since its inception and had an accumulated deficit of $858.4 million as of December 31, 2020.
The Company expects to continue to incur losses and have negative net cash flows from operating activities, as a result of substantial resources required for expanding its portfolio and engaging in further research and development of immunotherapy
products, particularly for conducting preclinical studies and clinical trials and the lack of sources of revenues until such time as the Company s product candidates are commercialized. These conditions could raise substantial doubt about the
entity s ability to continue as a going concern for a reasonable period.
The accompanying consolidated financial statements have
been prepared assuming the Company will continue as a going concern. This contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and does not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of this uncertainty. As a result of continuing anticipated operating cash outflows, we believe that substantial
doubt exists regarding our ability to continue as a going concern without additional funding or financial support. The Company believes its existing cash, cash equivalents and ability to borrow from affiliated entities will be sufficient to fund
operations through at least 12 months following the issuance date of the consolidated financial statements based upon the intent and ability of the Company s chairman and chief executive officer to support the Company s operations with
additional funds as required, which we believe alleviates such doubt. The Company expects to fund
operating activities through a combination of equity, equity-linked and debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations,
strategic alliances and licensing arrangements, however, the Company may not be able to secure such financing in a timely manner or on favorable terms. Without additional funds, the Company may choose to delay, reduce, or eliminate its product
development or future commercialization efforts. Further, because of the risk and uncertainties associated with the commercialization of the Company s existing product candidates, the Company may need additional funds to meet its needs sooner
than planned. To date, the Company s primary sources of capital have been private placements and debt financing agreements including related party promissory notes with NantCapital, LLC, or NantCapital, California Capital Equity, LLC, or
CalCap, NantCancerStemCell, LLC, or NCSC, NantMobile, LLC, or NantMobile, and NantWorks, LLC, or NantWorks, which are primarily funded and led by the Company s chairman and chief executive officer. See Note 15 for more information regarding
related party transactions.
Basis of Presentation
accompanying consolidated financial statements include the accounts of the Company and its subsidiaries and are prepared in accordance with the U.S. generally accepted accounting principles, or U.S. GAAP. All intercompany amounts have been
eliminated. Certain items in the prior year s consolidated financial statements have been reclassified to conform to the current presentation. These reclassifications had no effect on the reported results of operations.
of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets, liabilities, revenues and
expenses and related disclosures. On an ongoing basis, the Company evaluates its significant accounting policies and estimates. The Company bases its estimates on historical experience and on various other market-specific and relevant assumptions
that it believes to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all unrestricted, liquid investments with an initial maturity of three months or less to be cash
equivalents. These amounts are stated at cost, which approximates fair value. While the Company maintains cash deposits in FDIC-insured financial institutions in excess of federally insured limits, the Company believes that such funds are
subject to minimal credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has not experienced any losses on deposits of cash and cash equivalents to date.
Marketable Securities
classifies all marketable debt securities as available-for-sale at the time of purchase and reevaluates such designation at each balance sheet date. The entire
marketable securities portfolio is considered available for use in current operations and, accordingly, all such investments are considered current assets although the stated maturity of individual investments may be more than one year beyond the
balance sheet date. All marketable debt securities are reported at fair value and unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss), net of tax , on the consolidated statement of
stockholders deficit, with the exception of unrealized losses believed to be other-than-temporary, which are recorded within Other income (expense), net in the current period. Investments in mutual funds and equity securities,
other than equity method investments, are recorded at fair market value, if fair value is readily determinable and, beginning January 1, 2019, any unrealized gains and losses are included in Other income (expense), net on the
consolidated statements of operations and comprehensive loss. Realized gains and losses from the sale of the securities are determined on a specific identification basis and the amounts are included in Other income (expense), net.
The Company regularly reviews all investments for other-than-temporary declines in fair
value. If any adjustment to fair value reflects a decline in value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is other-than-temporary and, if so, marks the investment to
market through a charge to Other income (expense), net.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash
equivalents, marketable securities, and convertible note receivable. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the
United States. Balances at financial institutions within certain foreign countries are not covered by insurance. The Company has not experienced any losses in these financial institution accounts. The Company also monitors the creditworthiness of
the borrower of the convertible promissory note. The Company believes that any concentration of credit risk in its convertible note receivable was mitigated in part by the Company s ability to convert, if necessary, at the qualifying financing
event or upon a payment default into shares of the senior class of equity securities of the borrower.
Property and Equipment, Net
Property and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditures that are directly
attributable to the acquisition of the items. Property and equipment assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. All repairs and maintenance are