BELLICUM PHARMACEUTICALS, INC [BLCM] Filings

10-Q 1 blcm-20220930.htm 10-Q blcm-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2022


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

For the transition period from ____ to ____

Commission File Number: 001-36783

BELLICUM PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-1450200
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

3730 Kirby Drive, Suite 1200, Houston, TX 77098

(Address of principal executive offices) (Zip code)

(281) 454-3424

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BLCM	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”

and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 4, 2022, there were 8,613,527 outstanding shares of Bellicum’s common stock, par value, $0.01 per share.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of Septem ber 30, 2022 (Unaudited) and December 31, 2021	3
	Condensed Consolidated Statements of Operations and Comprehensive (Loss ) Income for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	4
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders ’ Equity (Deficit) for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25

PART II. OTHER INFORMATION		26

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58



Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60

SIGNATURES		62

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Bellicum Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share data)


	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	28,756	$	46,156
Restricted cash	—		1,501
Accounts receivable, interest and other receivables	1,000		205
Prepaid expenses and other current assets	1,510		1,269
Total current assets	31,266		49,131
Property and equipment, net	17		12
Total assets	$	31,283	$	49,143
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	714	$	90
Accrued expenses and other current liabilities	3,088		3,849
Warrant derivative liability	1,946		2,773
Total liabilities	5,748		6,712
Commitments and contingencies
Redeemable preferred stock: $0.01 par value; 10,000,000 shares authorized
Series 1 redeemable convertible preferred stock, $0.01 par value, 1,517,500 shares authorized at September 30, 2022 and December 31, 2021, 452,000 shares issued and outstanding at September 30, 2022 and December 31, 2021	18,036		18,036
Stockholders’ equity:
Common stock, $0.01 par value; 80,000,000 shares authorized at September 30, 2022 and December 31, 2021, 8,680,687 shares issued and 8,612,941 shares outstanding at September 30, 2022; 8,497,025 shares issued and 8,429,279 shares outstanding at December 31, 2021	87		85
Treasury stock: 67,746 shares held at September 30, 2022 and December 31, 2021	(5,056)		(5,056)
Additional paid-in capital	582,049		580,156
Accumulated other comprehensive loss	(353)		(338)
Accumulated deficit	(569,228)		(550,452)
Total stockholders’ equity	7,499		24,395
Total liabilities, redeemable preferred stock and stockholders' equity	$	31,283	$	49,143

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

Bellicum Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Revenues
Supply agreement	$	—	$	—	$	—	$	700
License revenue	1,000		5,000		1,000		5,000
Total revenues	1,000		5,000		1,000		5,700
Operating expenses
Research and development	6,850		6,348		16,425		19,531
General and administrative	1,315		1,681		4,216		5,458
Total operating expenses	8,165		8,029		20,641		24,989
Other operating expense
Loss on dispositions, net	—		14		—		478
Loss from operations	(7,165)		(3,043)		(19,641)		(19,767)
Other income (expense):
Interest income	11		6		38		24
Interest expense	—		—		—		(4)
Change in fair value of warrant derivative and private placement option liabilities	(59)		4,264		827		7,506
Other income	—		6		—		5
Total other income (expense)	(48)		4,276		865		7,531
Net (loss) income	$	(7,213)	$	1,233	$	(18,776)	$	(12,236)
Less: undistributed earnings to participating securities	—		(469)		—		—
Net (loss) income attributable to common shareholders	(7,213)		764		(18,776)		(12,236)

Net (loss) income per common share attributable to common stockholders, basic	$	(0.23)	$	0.08	$	(0.61)	$	(1.21)
Net (loss) income per common share attributable to common stockholders, diluted	$	(0.23)	$	0.07	$	(0.61)	$	(1.21)

Weighted-average shares outstanding, basic	30,831,161		10,108,388		30,826,683		10,086,246
Weighted-average shares outstanding,diluted	30,831,161		10,194,668		30,826,683		10,086,246

Net (loss) income	$	(7,213)	$	1,233	$	(18,776)	$	(12,236)
Other comprehensive loss:
Foreign currency translation adjustment	(10)		(9)		(15)		(9)
Comprehensive (loss) income	$	(7,223)	$	1,224	$	(18,791)	$	(12,245)

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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Bellicum Pharmaceuticals, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(amounts in thousands, except share data)


Nine Months Ended September 30, 2022
	Series 1 Preferred			Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2021	452,000	$	18,036	8,497,025	$	85	(67,746)	$	(5,056)	$	580,156	$	(550,452)	$	(338)	$	24,395
Share-based compensation	—	$	—	—	$	—	—	$	—	$	599	$	—	$	—	$	599
Issuance of common stock upon vesting of restricted stock units	—	—		122,928	1		—	—		(1)		—		—		—
Issuance of common stock upon exercise of pre-funded warrants	—	—		56,950	1		—	—		(1)		—		—		—
Comprehensive loss	—	—		—	—		—	—		—		(7,562)		(3)		(7,565)
Balance, March 31, 2022	452,000	$	18,036	8,676,903	$	87	(67,746)	$	(5,056)	$	580,753	$	(558,014)	$	(341)	$	17,429
Share-based compensation	—	$	—	—	$	—	—	$	—	$	611	$	—	$	—	$	611
Issuance of common stock upon vesting of restricted stock units	—	—		2,116	—		—	—		—		—		—		—
Comprehensive loss	—	—		—	—		—	—		—		(4,001)		(2)		(4,003)
Balance, June 30, 2022	452,000	$	18,036	8,679,019	$	87	(67,746)	$	(5,056)	$	581,364	$	(562,015)	$	(343)	$	14,037
Share-based compensation	—	$	—	—	$	—	—	$	—	$	685	$	—	$	—	$	685
Issuance of common stock upon vesting of restricted stock units	—	—		1,668	—		—	—		—		—		—		—

Comprehensive loss	—	—		—	—		—	—		—		(7,213)		(10)		(7,223)
Balance, September 30, 2022	452,000	$	18,036	8,680,687	$	87	(67,746)	$	(5,056)	$	582,049	$	(569,228)	$	(353)	$	7,499

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Nine Months Ended September 30, 2021
	Series 1 Preferred			Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2020	452,000	$	18,036	8,385,650	$	84	(67,746)	$	(5,056)	$	543,561	$	(540,747)	$	(339)	$	(2,497)
Share-based compensation	—	—		—	—		—	—		903		—		—		903
Issuance of common stock upon vesting of restricted stock units	—	—		369	—		—	—		—		—		—		—
Comprehensive loss	—	—		—	—		—	—		—		(11,267)		—		(11,267)
Balance, March 31, 2021	452,000	$	18,036	8,386,019	$	84	(67,746)	$	(5,056)	$	544,464	$	(552,014)	$	(339)	$	(12,861)
Share-based compensation	—	—		—	—		—	—		821		—		—		821
Issuance of common stock upon vesting of restricted stock units	—	—		79,530	—		—	—		—		—		—		—
Comprehensive loss	—	—		—	—		—	—		—		(2,202)		—		(2,202)
Balance, June 30, 2021	452,000	$	18,036	8,465,549	$	84	(67,746)	$	(5,056)	$	545,285	$	(554,216)	$	(339)	$	(14,242)
Share-based compensation	—	$	—	—	$	—	—	$	—	$	853	$	—	$	—	$	853
Comprehensive income (loss)	—	$	—	—	$	—	—	$	—	$	—	$	1,233	$	(9)	$	1,224
Balance, September 30, 2021	452,000	$	18,036	8,465,549	$	84	(67,746)	$	(5,056)	$	546,138	$	(552,983)	$	(348)	$	(12,165)

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

Bellicum Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(18,776)	$	(12,236)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation	1,895		2,577
Depreciation and amortization expense	9		90
Change in fair value of warrant derivative and private placement option liabilities	(827)		(7,506)
Amortization of right-of-use assets	—		33
Accretion of lease liability	—		23
Loss on dispositions, net	—		478
Changes in operating assets and liabilities:
Accounts receivable, interest and other receivables	(795)		(181)
Prepaid expenses and other assets	(241)		(216)
Accounts payable	624		(370)
Accrued liabilities and other	(761)		230
Net cash used in operating activities	(18,872)		(17,078)
Cash flows from investing activities:
Proceeds from sale of property and equipment	—		900
Purchases of property and equipment	(14)		(7)
Net cash (used in) provided by investing activities	(14)		893
Cash flows from financing activities:
Payment on financing lease obligations	—		(35)
Net cash used in financing activities	—		(35)
Effect of exchange rate changes on cash	(15)		(9)
Net change in cash, cash equivalents, and restricted cash	(18,901)		(16,229)
Cash, cash equivalents and restricted cash at beginning of period	47,657		36,996
Cash, cash equivalents and restricted cash at end of period	$	28,756	$	20,767

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

Bellicum Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Bellicum Pharmaceuticals, Inc. (“Bellicum”) is a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for various forms of cancer. Bellicum is devoting substantially all of its present efforts to developing next-generation CAR-T product candidates in cellular immunotherapy.

Bellicum has two wholly-owned subsidiaries, Bellicum Pharma Limited, a private limited company organized under the laws of the United Kingdom, and Bellicum Pharma GmbH, a private limited liability company organized under German law. Both were formed for the purpose of developing product candidates in Europe. Bellicum, Bellicum Pharma Limited and Bellicum Pharma GmbH are collectively referred to herein as the “Company.” All intercompany balances and transactions among the consolidated entities have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in conformity with the authoritative U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The unaudited interim financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. All such adjustments are of a normal and recurring nature. The operating results presented in these unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for any future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2021, as filed with the SEC on March 24, 2022.

The accompanying interim condensed financial statements have been prepared on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. However, as of September 30, 2022 and December 31, 2021, the Company had an accumulated deficit of $569.2 million and $550.5 million, respectively, and at September 30, 2022, the Company had cash and cash equivalents of approximately $28.8 million. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of the Company’s liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company has recorded losses from operations since its inception and if the Company does not successfully obtain regulatory approval and commercialize any of its product candidates, the Company will not be able to achieve profitability. Based on the Company’s current business plan, management believes that existing cash and cash equivalents, revenues and other cash inflows will be insufficient to fund its operating expenses and capital expenditure requirements for twelve months from the date the accompanying consolidated financial statements are issued, and therefore, substantial doubt about the entity’s ability to continue as a going concern exists.

The Company is subject to risks common to companies in the biotechnology industry and the future success of the Company is dependent on its ability to successfully complete the development of, and obtain regulatory approval for, its product candidates, manage the growth of the organization, obtain additional financing necessary in order to develop, launch and commercialize its product candidates, and compete successfully with other companies in its industry.

The Company believes that there is substantial doubt that its current capital resources, which consist of cash and cash equivalents, are sufficient to fund operations through at least the next twelve months from the date the accompanying financial statements are issued based on the expected cash burn rate. The Company may be required to raise additional capital to fund future operations through the sale of additional equity, incurrence of debt, the entry into licensing or collaboration agreements with partners, grants or other sources of financing. Sufficient funds may not be available to the Company at all or on attractive terms when needed from equity or debt financings. If the Company is unable to obtain additional funding from these or other sources when needed, or to the extent needed, it may be necessary to significantly reduce its controllable and variable expenditures and current rate of spending through reductions in staff and delaying, scaling back, or suspending certain research and development, sales and marketing programs and other operational goals.

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Use of Estimates

The preparation of the interim condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. Actual results could differ from those estimates.

Revenue Recognition

The Company’s only source of revenue during the nine months ended September 30, 2022 was from its licensing agreement with The University of Texas MD Anderson Cancer Center (“MD Anderson”).

MD Anderson License Agreements

On January 22, 2019, the Company entered into a licensing and commercialization agreement with MD Anderson (the "2019 MD Anderson License Agreement"). Under the 2019 MD Anderson License Agreement, the Company granted MD Anderson non-exclusive rights in certain Caspase-9 and related technologies and use of a small molecule known as rimiducid in a certain cell therapy program. During the fourth quarter of 2019, and under the terms of the 2019 MD Anderson License Agreement, MD Anderson exercised an option to grant a non-exclusive sublicense of the rights licensed by the Company to MD Anderson. MD Anderson, as a result of this exercise, granted a sublicense that entitled the Company to receive as consideration an upfront license fee as well as additional future annual maintenance fees, milestone payments related to the achievement of pre-specified development, regulatory, and commercialization events, and royalties on net sales of licensed products.

On August 31, 2021, the Company entered into a second licensing and commercialization agreement with MD Anderson (the “2021 MD Anderson Option and License Agreement”). Under the 2021 MD Anderson Option and License Agreement, MD Anderson has certain rights to the use of CaspaCIDe and rimiducid in product candidates nominated under the agreement, and receives an option to a non-exclusive license to the technology in these candidates. Upon exercise of an option and sublicense of a product candidate to a third party, the Company is entitled to a sublicense execution fee, a percentage of certain consideration received by MD Anderson for the sublicense, an annual maintenance fee, and a percentage royalty on net sales of licensed products. During the three months ended September 30, 2022, the Company earned an annual license maintenance fee of $1.0 million for two nominated programs.

Significant Accounting Policies

There have been no significant changes to the accounting policies during the nine months ended September 30, 2022, as compared to the significant accounting policies described in Note 1 of the “Notes to Consolidated Financial Statements” in the Company’s audited financial statements included in its Annual Report for the fiscal year ended December 31, 2021.

Cash, Cash Equivalents and Restricted Cash

The Company considers all short-term, highly liquid investments with maturity of three months or less from the date of purchase and that can be liquidated without prior notice or penalty, to be cash equivalents.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same such amounts shown in the statements of cash flows.


(in thousands)	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	28,756	$	46,156
Restricted cash	—		1,501
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	28,756	$	47,657

In April 2020, the Company sold its U.S. manufacturing facility to The University of Texas M.D. Anderson Cancer Center (“M.D. Anderson”). Pursuant to the Company’s asset purchase agreement with M.D. Anderson, $1.5 million of the cash proceeds received are subject to certain escrow provisions and recorded as restricted cash. The claims against the escrow have been resolved and the funds were released and transferred to the Company in July 2022.

Disposition of Assets and Liabilities Held for Sale and Held for Use

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In the fourth quarter of 2020, in connection with the Company's restructuring plan, Management elected to seek an exit to its leased R&D facility in Houston, Texas. The lease termination and disposal of the assets and liabilities associated with the facility was completed on February 26, 2021. Under the terms of the agreement, a third party assumed the lease for the facility. In addition, the third party paid $1.1 million to the Company for substantially all of the property, and equipment associated with the location. The consideration included $0.9 million in cash and an unsecured promissory note for $0.2 million.

On March 15, 2021, the Company entered an agreement to terminate its sub-lease of the South San Francisco office space contingent upon consent of the prime lessor. Under the terms of the agreement, the Company agreed to pay a lease termination fee of $0.9 million while the security deposit of $0.2 million will be returned to the Company. The decision to exit this lease reflects the ability of the Company to carry on administrative functions remotely. On March 26, 2021, the Company met all of the conditions of the agreement and disposed of substantially all of the assets and liabilities associated with the lease including the right-of-use asset of $0.6 million, leased equipment with net book value less than $0.1 million, and the related lease liability of $1 million. The Company recognized a loss on termination of $0.5 million during the first quarter of 2021.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other liabilities consist of the following:


(in thousands)	September 30, 2022		December 31, 2021
Accrued payroll	$	366	$	320
Accrued patient treatment costs	754		2,086
Accrued clinical research costs	951		479
Accrued manufacturing costs	592		328
Accrued professional services	224		305
Accrued other	201		331
Total accrued expenses and other current liabilities	$	3,088	$	3,849

Net (Loss) Income and Net (Loss) Income per Share of Common Stock Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period without consideration for common stock equivalents. Diluted earnings per share is based on the more dilutive method between the two-class method and the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the conversion of preferred stock to common stock, exercise of warrants to purchase common stock, exercise of stock options, and vesting of restricted stock units. For periods of net loss, diluted net loss per share is calculated similarly to basic net loss per share.

For warrants that are recorded as a liability in the accompanying condensed consolidated balance sheets, the calculation of diluted loss per share requires that, to the extent the average market price of the underlying shares for the reporting period exceeds the exercise price of the warrants and the presumed exercise of the warrants is dilutive to loss per share for the period, an adjustment is made to net loss used in the calculation to remove the change in fair value of the warrants from the numerator for the period. Likewise, an adjustment to the denominator is required to reflect the related dilutive shares, if any, under the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share:

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(in thousands, except share and per share amounts)	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net (loss) income per share - basic:
Net (loss) income	$	(7,213)	$	1,233	$	(18,776)	$	(12,236)
Less: undistributed earnings to participating securities	—		(469)		—		—
Net (loss) income attributable to common shareholders	$	(7,213)	$	764	$	(18,776)	$	(12,236)

Weighted-average shares outstanding, basic	30,831,161		10,108,388		30,826,683		10,086,246
Basic net (loss) income per share	$	(0.23)	$	0.08	$	(0.61)	$	(1.21)

Net (loss) income per share - diluted:
Net (loss) income attributable to common shareholders, basic	$	(7,213)	$	764	$	(18,776)	$	(12,236)

Weighted-average shares outstanding, basic	30,831,161		10,108,388		30,826,683		10,086,246
Effect of dilutive securities:
Stock Options and restricted units	—		86,280		—		—
Weighted-average shares outstanding, diluted	30,831,161		10,194,668		30,826,683		10,086,246
Diluted net (loss) income per share	$	(0.23)	$	0.07	$	(0.61)	$	(1.21)

The following outstanding shares of common stock equivalents were excluded from the computations of diluted loss per share of common stock attributable to common stockholders for the periods presented as the effect of including such securities would be anti-dilutive.


	September 30, 2022	September 30, 2021
Anti-dilutive common stock equivalents:	Number of Shares
Redeemable convertible series 1 preferred stock	4,520,000	4,520,000
Warrants to purchase common stock	5,750,000	11,616,080
Private placement option	—	9,675,000
Options to purchase common stock	3,658,489	1,985,277
Unvested shares of restricted stock units	225,633	168,980
Total anti-dilutive common stock equivalents	14,154,122	27,965,337

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NOTE 2 - FAIR VALUE MEASUREMENTS AND INVESTMENT SECURITIES

Fair Value of Financial Instruments

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy has been established that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

These inputs are classified into the following hierarchy:

Level 1 Inputs - quoted prices (unadjusted) for identical assets in active markets that the reporting entity has the ability to access at the measurement date;

Level 2 Inputs - inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly; and

Level 3 Inputs - unobservable inputs for the assets.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company believes the recorded values of its financial instruments, including cash and cash equivalents, accounts payable, and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

Investment Securities

The following table presents the Company’s investment securities (including, if applicable, those classified on the Company’s balance sheet as cash equivalents) that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:


	Fair Value at September 30, 2022						Fair Value at December 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	28,017	$	—	$	—	$	42,487	$	—	$	—
Total cash equivalents	$	28,017	$	—	$	—	$	42,487	$	—	$	—

As of December 31, 2021, an additional $1.5 million of restricted cash on the Company's balance sheet is held in a money market fund and would be considered a level 1 measurement. The restricted cash was released in July 2022.

Money market funds are valued based on various observable inputs such as benchmark yields, reported trades, broker/dealer quotes, benchmark securities and bids.

Warrant Derivative Liability and Private Placement Option Liability

The Company's financial liabilities recorded at fair value on a recurring basis include the fair values of the warrant derivative liability and the private placement option liability prior to its derecognition in December 2021. Inputs used to determine estimated fair value (Level 3) of the warrants include the fair value of the underlying stock relative to the warrant exercise price at the valuation measurement date, volatility of the price of the underlying stock, the expected term of the warrants, and risk-free interest rates.

The fair values of the warrant derivative liability and the private placement option liability, prior to its derecognition in December 2021, are classified as current liabilities in the accompanying condensed consolidated balance sheets. These liabilities will be shown as current liabilities on the balance sheet when it is deemed more probable than not by management to be exercised within one year. On December 4, 2021, the Company entered into a Securities Purchase Agreement (the “2021 Securities Purchase Agreement”), pursuant to which certain of the investors irrevocably waived the right to cause the Company

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to conduct the “First Closing” and “Second Closing” under the private placement option contained in the 2019 Securities Purchase Agreement (each term as defined in the 2019 Securities Purchase Agreement). The Company derecognized the private placement option liability of $2.8 million during the fourth quarter of 2021, out of which $2.6 million was recorded as gain on change in the fair value in the accompanying statements of operations and comprehensive loss, and $0.2 million was recorded as additional paid-in capital in the accompanying balance sheets.

The fair value of the warrants has been estimated with the following weighted-average assumptions, including the most sensitive input, volatility:


	September 30, 2022	December 31, 2021
Risk-free interest rate	4.20%	1.22%
Volatility	100.00%	94.00%
Expected term (years)	3.88	4.64

The following table provides the warrant derivative liability reported at fair value and measured on a recurring basis:


	Fair Value at September 30, 2022						Fair Value at December 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Warrant derivative liability	$	—	$	—	$	1,946	$	—	$	—	$	2,773
Total fair value	$	—	$	—	$	1,946	$	—	$	—	$	2,773

The ending balance of the Level 3 financial instruments presented above represents the Company's best estimate of valuation and may not be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments.

NOTE 3 - LEASES

The Company entered into two agreements and exited its Houston and South San Francisco office locations during the first quarter of 2021 and, therefore, did not have any lease liabilities as of September 30, 2022. In connection with the lease termination and exit of the Houston office, a third party also acquired all of the property and equipment associated with the location. The consideration included an unsecured promissory note of $0.2 million with a simple interest of 4% per annum, which was due and payable on or before June 30, 2022. The payment, including accrued interest, was received in full in July 2022.

Components of lease cost are as follows:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Finance lease cost:
Amortization of leased asset	$	—	$	—	$	—	$	16
Interest on lease liabilities	—		—		—		5
Operating lease cost	—		1		—		56
Short-term lease cost	—		—		—		53
Total lease cost	$	—	$	1	$	—	$	130

NOTE 4 - PUBLIC OFFERING AND PRIVATE PLACEMENT

December 2021 Private Placement

On December 4, 2021, the Company entered into a Securities Purchase Agreement (the “2021 Securities Purchase Agreement”) with certain institutional investors, pursuant to which the Company issued pre-funded warrants to purchase an aggregate of 20,559,210 shares of its common stock and accompanying common warrants to purchase an aggregate of 2,055,920 shares of its common stock. Each pre-funded warrant to purchase one share of common stock was sold together with one warrant to purchase one-tenth of one share of common stock at a combined unit price of $1.7024. The pre-funded warrants were immediately exercisable at an exercise price of $0.0001 per share of common stock. The accompanying common warrants were immediately exercisable at an exercise price of $1.69 per share of common stock and will expire seven years from the date of issuance.

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The gross proceeds to the Company from the private placement were approximately $35.0 million before deducting placement agent commissions and offering expenses payable by the Company, excluding any proceeds that may be received upon exercise of the accompanying warrants.

In addition, pursuant to the 2021 Securities Purchase Agreement, certain purchasers who entered into the 2019 Securities Purchase Agreement (defined below) irrevocably waived the right to cause the Company to conduct the “First Closing” and “Second Closing” under the 2019 Securities Purchase Agreement (each term as defined in the 2019 Securities Purchase Agreement), which releases the Company of potential cash or equity obligations.

November 2020 Underwritten Offering

On November 2, 2020, the Company closed an underwritten offering of 1,040,000 shares of its common stock, pre-funded warrants to purchase 3,109,378 shares of its common stock, and accompanying common warrants to purchase up to an aggregate of 4,149,378 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock. The public offering price of each share of common stock and accompanying common warrant was $6.025 and $6.024 for each pre-funded warrant. The pre-funded warrants were immediately exercisable at a price of $0.001 per share of common stock. The common warrants were immediately exercisable at an exercise price of $6.50 per share of common stock and will expire five years from the date of issuance. The shares of common stock and pre-funded warrants, and the accompanying common warrants, were issued separately and were immediately separable upon issuance. The gross proceeds to the Company were approximately $25.0 million before deducting underwriting discounts and commissions and other offering expenses.

August 2019 Public Offering

On August 16, 2019, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein (the “Underwriters”), relating to an underwritten public offering (the “Offering”) of 575,000 shares of the Series 1 Redeemable Convertible Non-Voting Preferred Stock of the Company (the “Series 1 Preferred Stock”) and warrants (the “Public Warrants”) to purchase up to 5,750,000 shares of its common stock. Each share of Series 1 Preferred Stock was being sold together with a warrant to purchase 10 shares of common stock at a combined price to the public of $100.00. Under certain circumstances, each warrant to purchase 10 shares of common stock will be exercisable, at the irrevocable election of the holder, for one share of Series 1 Preferred Stock. The offering closed on August 21, 2019, and the net proceeds to the Company from the Offering were approximately $53.8 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, and excluding any proceeds that the Company may receive upon exercise of the Public Warrants.

All of the Public Warrants sold in the Offering have an exercise price of $13.00 per share of common stock or, in certain circumstances, for $130.00 per share of Series 1 Preferred Stock, subject to proportional adjustments in the event of stock splits or combinations or similar events. The Public Warrants were immediately exercisable upon issuance, provided that the holder is prohibited, subject to certain exceptions, from exercising a warrant for shares of common stock to the extent that immediately prior to or after giving effect to such exercise, the holder, together with its affiliates and other attribution parties, would own more than 9.99% of the total number of shares of common stock then issued and outstanding, which percentage may be changed at the holder’s election to a lower percentage at any time or to a higher percentage not to exceed 19.99% upon 61 days’ notice to the Company. The Public Warrants will expire on August 21, 2026, unless exercised prior to that date.

The following table reflects the fair value roll forward reconciliation of the warrant derivative liabilities for the period ended September 30, 2022:


(in thousands)	Warrant Derivative Liability
Balance, December 31, 2021	$	2,773
Change in fair value	(827)
Balance, September 30, 2022	$	1,946

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Private Placement

On August 16, 2019, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional investors named therein (the “Purchasers”), pursuant to which the Company agreed to issue in a private placement (i) 350,000 shares of its Series 2 Redeemable Convertible Non-Voting Preferred Stock (the “Series 2 Preferred Stock”), at a purchase price of $100.00 per share, and related warrants (the “Private Warrants”) to purchase up to 2,800,000 shares of common stock at an exercise price of $10.00 per share, and (ii) 250,000 shares of its Series 3 Redeemable Convertible Non-Voting Preferred Stock (the “Series 3 Preferred Stock” and, together with the Series 1 Preferred Stock and Series 2 Preferred Stock, the “Preferred Stock”), at a purchase price of $140.00 per share, and related warrants (also, “Private Warrants”) to purchase up to 875,000 shares of common stock at an exercise price of $14.00 per share. The Company received $11.2 million in net option fee proceeds, net of offering costs, upon the execution of the 2019 Securities Purchase Agreement.

Pursuant to the 2021 Securities Purchase Agreement entered into on December 4, 2021, the Purchasers irrevocably waived the right to purchase such securities, and the Company derecognized the private placement option liability for the year ended December 31, 2021. The Company is no longer obligated to issue the Series 2 Preferred Stock, Series 3 Preferred Stock, or any associated Private Warrants.

A summary of warrants outstanding and exercisable as of September 30, 2022 is as follows:


Year Issued	Warrants Outstanding and Exercisable	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
		(in years)	(per share)
2019	5,750,000	3.88	$	13.00
2020	4,149,378	3.10	$	6.50
20201	1,659,752	—	$	—
2021	2,055,920	6.19	$	1.69
20212	20,559,210	—	$	—
	34,174,260

NOTE 5 - REDEEMABLE CONVERTIBLE PREFERRED STOCK

In August 2019, the Company sold Series 1 Preferred Stock pursuant to the Offering. The Company has 10,000,000 authorized shares of preferred stock with a par value of $0.01 per share, of which the Company has designated 1,517,500 shares as Series 1 Preferred Stock, 350,000 shares as Series 2 Preferred Stock and 250,000 shares as Series 3 Preferred Stock. There were 452,000 shares of Series 1 Preferred Stock and no shares of Series 2 or Series 3 Preferred Stock issued and outstanding as of September 30, 2022.

As of September 30, 2022, the Company classified the Series 1 Preferred Stock as mezzanine equity, because the Series 1 Preferred Stock is redeemable at the option of the holders upon passage of time, which is outside of the Company’s control to prevent. Subsequent adjustment of the amount presented in mezzanine equity to its redemption amount is necessary unless it is probable that the instrument will not become redeemable.

The Series 1 Preferred Stock is not redeemable at September 30, 2022, and is only currently redeemable upon a fundamental change in a redemption price. The Company does not believe a fundamental change is considered probable until it occurs. As (i) a fundamental change is not probable, and (ii) the occurrence of Transition Date (defined below) is probable, the Company did not accrete the Series 1 Preferred Stock to its redemption amount because it is probable the instrument will not become redeemable.

Optional Conversion

Each share of Preferred Stock is initially convertible into 10 shares of Common Stock. The conversion price at which Preferred Stock may be converted into shares of common stock, is subject to adjustment in connection with certain specified events.

Redemption

1 The pre-funded warrants issued on November 2, 2020 do not have an expiration date.

2 The pre-funded warrants issued on December 7, 2021 do not have an expiration date.

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Until the applicable Transition Date (defined below), at any time on or after the date that is the fifth (5th) anniversary of the initial issue date of the applicable series of preferred stock, all or any portion of the preferred stock is redeemable at the option of the holder at a redemption price of $100.00 per share (for Series 1 Preferred Stock). The “Transition Date” means the first date following August 21, 2021, on which each of the Conditions (as defined below) is met.

The “Conditions” mean: (1) the closing price of the Company’s common stock has been equal to or exceeded $25.00 per share for 180 calendar days (for determining if the Conditions are met for the Series 1 preferred stock) for 180 calendar days; (2) the 50-day average trading volume of the Company’s common stock on the Nasdaq stock market is greater than 50,000 shares; and (3) a Phase 3 or Phase 2 pivotal clinical trial for one of the Company’s CAR-T product candidates has been initiated, meaning that at least one clinical trial site has been activated.

Dividends

Shares of Preferred Stock will be entitled to receive dividends equal to (on an as-if-converted-to-common stock basis), and in the same form and manner as, dividends actually paid on shares of common stock.

Liquidation

Until the applicable Transition Date, in the event of a liquidation, dissolution, winding up or deemed liquidation, holders of the Preferred Stock will receive a payment equal to the applicable per share purchase price of their Preferred Stock before any proceeds are distributed to the holders of Common Stock. The liquidation preferences, protective voting provisions and redemption rights of the Preferred Stock will terminate upon the occurrence of certain events.

Voting

Shares of Preferred Stock will generally have no voting rights, except to the extent expressly provided in the Company’s certificate of incorporation or as otherwise required by law.

NOTE 6- SHARE-BASED COMPENSATION PLANS

Share-Based Compensation Plans

The Company has five share-based compensation plans, including the 2019 Equity Incentive Plan (the “2019 Plan”), which was adopted in June 2019. Each plan authorizes the granting of shares of common stock and/or options to purchase common stock to employees and directors of the Company, as well as non-employee consultants, and allows the holder of the option to purchase common stock at a stated exercise price. The only plan under which the Company may currently grant equity awards is the 2019 Equity Incentive Plan although there remain outstanding awards under the other four plans. Options vest according to the terms of the grant, which may be immediately or based on the passage of time, generally over two to four years, and have a term of up to 10 years. Unexercised stock options terminate on the expiration date of the grant. The Company recognizes the share-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

Share-Based Compensation Expense

Share-based compensation expense by classification for the three and nine months ended September 30, 2022 and 2021 are as follows:


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Research and development	$	334	$	296	$	921	$	829
General and administrative	351		557		974		1,748
Total	$	685	$	853	$	1,895	$	2,577

At September 30, 2022, total compensation cost not yet recognized was $3.0 million and the weighted-average period over which this amount is expected to be recognized is 1.7 years.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Co-Development and Co-Commercialization Agreement - Adaptimmune Therapeutics plc

On December 16, 2016, the Company entered into a Co-Development and Co-Commercialization Agreement with and Adaptimmune Therapeutics plc (Adaptimmune) in order to facilitate a staged collaboration to evaluate, develop and commercialize next generation T cell therapies. Under the Agreement, the parties agreed to evaluate the Company’s GoTCR technology (inducible MyD88/CD40 co-stimulation, or iMC) with Adaptimmune’s affinity-optimized SPEAR® T cells for the potential to create enhanced TCR product candidates. Depending on results of the preclinical proof-of-concept phase, the parties expect to progress to a two-target co-development and co-commercialization phase. To the extent necessary, and in furtherance of the parties’ proof-of-concept and co-development efforts, the parties granted each other a royalty-free, non-transferable, non-exclusive license covering their respective technologies for purposes of facilitating such proof-of-concept and co-development efforts. In addition, as to covered therapies developed under the agreement, the parties granted each other a reciprocal exclusive license for the commercialization of such therapies. With respect to any joint commercialization of a covered therapy, the parties agreed to negotiate in good faith the commercially reasonable terms of a co-commercialization agreement. The parties also agreed that any such agreement shall provide for, among other things, equal sharing of the costs of any such joint commercialization and the calculation of profit shares as set forth in the Agreement. The Agreement will expire on a country-by-country basis once the parties cease commercialization of the T cell therapies covered by the Agreement, unless earlier terminated by either party for material breach, non-performance or cessation of development, bankruptcy/insolvency, or failure to progress to co-development phase.

License Agreement - Baylor

In 2008, 2010, 2014 and 2016, the Company and Baylor College of Medicine (“BCM”) entered into license agreements pursuant to which the Company obtained exclusive rights to certain technologies and patent rights owned by BCM.

Under the 2014 license agreement, the Company is required to pay BCM a low annual maintenance fee on each anniversary of the agreement date. The Company is also required to make royalty payments in the low single digits, subject to certain annual minimums, on net sales of products covered by the license and, to the extent the Company enters into a sublicensing agreement relating to a licensed product, the Company is also required to pay BCM a percentage in the low double-digits on all non-royalty income received from sublicensing revenue.

License Agreement - Agensys, Inc.

On December 10, 2015, the Company and Agensys, Inc. (“Agensys”), entered into a license agreement (the “Agensys Agreement”), pursuant to which (i) Agensys granted the Company, within the field of cell and gene therapy of diseases in humans, an exclusive, worldwide license and sublicense to its patent rights directed to prostate stem cell antigen 1 (“PSCA”) and related antibodies, and (ii) the Company granted Agensys a non-exclusive, fully paid license to the Company’s patents directed to inventions that were made by the Company in the course of developing the Company’s licensed products, solely for use with Agensys therapeutic products containing a soluble antibody that binds to PSCA or, to the extent not based upon the Company’s other proprietary technology, to non-therapeutic applications of antibodies not used within the field. As consideration for the rights granted to the Company under the Agreement, the Company agreed to pay to Agensys a non-refundable upfront fee of $3.0 million, which was included in license fee expense. The Company is also required to make aggregate milestone payments to Agensys of up to (i) $5.0 million upon the first achievement of certain specified clinical milestones for its licensed products, (ii) $50.0 million upon the achievement of certain specified clinical milestones for each licensed product, and (iii) $75.0 million upon the achievement of certain sales milestones for each licensed product. The Agreement additionally provides that the Company will pay to Agensys a royalty that ranges from the mid to high single digits based on the level of annual net sales of licensed products by the Company, its affiliates or permitted sublicensees. The royalty payments are subject to reduction under specified circumstances. These milestone and royalty payments will be expensed as incurred. Under the Agreement, Agensys also was granted the option to obtain an exclusive license, on a product-by-product basis, from the Company to commercialize in Japan each licensed product developed under the Agensys Agreement that has completed a phase 2 clinical trial. As to each such licensed product, if Agensys or its affiliate, Astellas Pharma, Inc., exercises the option, the Agensys Agreement provides that the Company will be paid an option exercise fee of $5.0 million. In addition, the Agensys Agreement provides that the Company will be paid a royalty that ranges from the mid to high single digits based on the level of annual net sales in Japan of each such licensed product. If the option is exercised, the aggregate milestone payments payable by the Company to Agensys, described above with respect to each licensed product, would be reduced by up to an aggregate of $65.0 million upon the achievement of certain specified clinical and sales milestones. The Agensys

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Agreement will terminate upon the expiration of the last royalty term for the products covered by the Agensys Agreement, which is the earlier of (i) the date of expiration or abandonment of the last valid claim within the licensed patent rights covering any licensed products under the Agreement, (ii) the expiration of regulatory exclusivity as to a licensed product, and (iii) 10 years after the first commercial sale of a licensed product. Either party may terminate the Agensys Agreement upon a material breach by the other party that remains uncured following 60 days after the date of written notice of such breach (or 30 days if such material breach is related to failure to make payment of amounts due under the Agensys Agreement) or upon certain insolvency events. In addition, Agensys may terminate the Agensys Agreement immediately upon written notice to the Company if the Company or any of its affiliates or permitted sublicensees commences an interference proceeding or challenges the validity or enforceability of any of Agensys’ patent rights.

License Agreement - BioVec

On June 10, 2015, the Company and BioVec Pharma, Inc. (“BioVec”) entered into a license agreement (the “BioVec Agreement”) pursuant to which BioVec agreed to supply the Company with certain proprietary cell lines and granted to the Company a non-exclusive, worldwide license to certain of its patent rights and related know-how related to such proprietary cell lines. As consideration for the products supplied and rights granted to the Company under the BioVec Agreement, the Company agreed to pay to BioVec an upfront fee of $100,000 within ten business days of the effective date of the BioVec Agreement and a fee of $300,000 within ten business days of its receipt of the first release of GMP lot of the products licensed under the BioVec Agreement. In addition, the Company agreed to pay to BioVec an annual fee of $150,000, commencing 30 days following the first filing of an Investigational New Drug Application (an IND filing), or its foreign equivalent, for a product covered by the license; with such annual fees being creditable against any royalties payable by the Company to BioVec under the BioVec Agreement. The Company also is required to make a $250,000 milestone payment to BioVec for each of the first three licensed products to enter into a clinical phase trial and one-time milestone payments of $2.0 million upon receipt of a registration granted by the Federal Drug Administration or European Medicines Agency on each of the Company’s first three licensed products. The BioVec Agreement additionally provides that the Company will pay to BioVec a royalty in the low single digits on net sales of products covered by the BioVec Agreement. The Company may also grant sublicensees under the licensed patent rights and know-how to third parties for limited purposes related to the use, sale and other exploitation of the products licensed under the BioVec Agreement. The BioVec Agreement will continue until terminated. The BioVec Agreement may be terminated by the Company, in its sole discretion, at any time upon 90 days written notice to BioVec. Either party may terminate the BioVec Agreement in the event of a breach by the other party of any material provision of the BioVec Agreement that remains uncured on the date that is 60 days after written notice of such failure or upon certain insolvency events that remain uncured following the date that is 30 days after the date of written notice to a party regarding such insolvency event.

Litigation

On May 29, 2019, Bellicum was served with a second amended complaint indicating that the Company had been added as an additional defendant in an ongoing civil tort lawsuit, captioned Kelly v. Children’s Hospital of Los Angeles et al., filed in the Los Angeles County Superior Court, Case No. BC681477. On July 10, 2019, plaintiffs filed a third amended complaint seeking unspecified monetary damages including punitive damages and alleging claims for wrongful death, negligence, breach of fiduciary duty, fraud, medical battery on decedent, medical battery on individual plaintiffs, products liability - failure to warn, breach of express warranty and products liability design or manufacturing defect. Bellicum filed a demurrer and motion to strike plaintiffs’ third amended complaint, which were granted in part on August 5, 2020, with the Court dismissing (without prejudice) all claims against Bellicum with the exception of the breach of express warranty and products liability design or manufacturing defect causes of action. The Court also granted Bellicum’s motion to strike plaintiffs’ claim for punitive damages. On September 15, 2020, plaintiffs filed a fourth amended complaint alleging the same causes of action and damages against Bellicum as were pled in the third amended complaint. On November 3, 2020, Bellicum filed a demurrer and motion to strike the fourth amended complaint, which was heard by the Court on May 19, 2022. The Court sustained the demurrer without leave to amend as to the causes of action for wrongful death, negligence, fraud, battery, and products liability-failure to warn, and overruled the demurrer as to products liability-design/manufacturing defect. The Court also granted Bellicum’s motion to strike punitive damages. The parties are now engaged in discovery. Trial is set for March 13, 2023.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 24, 2022, or our Annual Report, as well as our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q, or this Quarterly Report.

Forward-Looking Statements

This report contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipate,” “believe,” “could,” “designed,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, Part I, Item 1A, “Risk Factors” in our Annual Report and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

Overview

We are a clinical stage biopharmaceutical company focused on discovering and developing novel, controllable cellular immunotherapies for various forms of cancer, including both hematological cancers and solid tumors. We are advancing CAR-T cell therapies which are an innovative approach in which a patient’s or donor’s T cells are genetically modified to carry chimeric antigen receptors, or CARs. We are using our proprietary Chemical Induction of Dimerization, or CID, technology platform to engineer our product candidates with switch technologies that are designed to control components of the immune system in real time. By incorporating our CID platform, our product candidates may offer better efficacy and safety outcomes than are seen with current cellular immunotherapies.

Cell behavior is controlled by cascades of specialized signaling proteins. CID consists of molecular switches, modified forms of these signaling proteins, which are triggered inside the patient by infusion of a small molecule, instead of by natural upstream signals. We genetically introduce these molecular switches into the appropriate immune cells and deliver the cells to the patient in the manner of conventional cellular immunotherapy. We have developed two such switches: an “activation switch,” designed to stimulate activation, proliferation and persistence of the immunotherapy cells and provide other immunomodulatory benefits, and a “safety switch,” designed to initiate programmed cell death, or apoptosis, of the immunotherapy cells. Each of our product candidates incorporates one or both switches, for enhanced, real time control of efficacy and safety:

•The inducible MyD88/CD40 (iMC) activation switch that is incorporated into our GoCAR product candidates is designed to enhance CAR-based cell therapies by augmenting multiple mechanisms of action, including: 1) boosting effector cell proliferation; 2) enhancing functional persistence by resisting exhaustion and inhibitory signals found in the tumor microenvironment; and 3) stimulating the cancer patient’s own immune system to intensify tumor killing. Unlike other CAR therapies that can behave unpredictably due to their autonomous activity, GoCAR antitumor effects are controlled through scheduled administration of rimiducid. In the event of severe side effects, GoCAR activity can be attenuated by extending the interval between rimiducid doses or suspending further rimiducid administration.

•Our CaspaCIDe™ safety switch (also known as inducible Caspase-9, or iC9) is designed to be inactive unless the patient experiences a serious side effect (e.g., cytokine release syndrome, or CRS, neurologic toxicities or off-tumor / on-target toxicities). In that event, rimiducid or temsirolimus is administered to induce Caspase-9 and eliminate the cells, with the goal of attenuating the therapy and resolving the serious side effect.

•Some of our product candidates are “dual-switch” GoCARs that are designed to provide a user-controlled system for managing proliferation, persistence and safety of tumor antigen-specific CAR cells by incorporating both our iMC and CaspaCIDe switches. We also have an active research effort to further develop and enhance these molecular switch approaches.

By incorporating our novel switch technologies, we are developing product candidates with the potential to elicit positive clinical outcomes and ultimately change the treatment paradigm in various areas of cellular immunotherapy. Our most advanced programs are described below.

•BPX-601 is an autologous GoCAR-T product candidate containing our proprietary iMC activation switch, designed to treat solid tumors expressing prostate stem cell antigen, or PSCA. We believe iMC enhances T cell proliferation and persistence, enhances host immune activity, and modulates the tumor microenvironment to improve the potential to treat solid tumors compared to traditional CAR-T therapies. A Phase 1/2 clinical trial called BP-012 in patients with metastatic castration-resistant prostate cancer and metastatic pancreatic cancer expressing PSCA is ongoing.

•BPX-603 is an autologous dual-switch GoCAR-T product candidate containing both the iMC activation and CaspaCIDe safety switches. BPX-603 is our first dual-switch GoCAR-T product candidate and is designed to target solid tumors that express the human epidermal growth factor receptor 2 antigen, or HER2. A Phase 1/2 clinical trial, called BPX603-201A, in patients with metastatic HER2+ solid tumors is ongoing.

We have developed efficient and scalable processes to manufacture genetically modified T cells of high quality, which are currently being used to generate products for our clinical trials. We are leveraging this know how in combination with our proprietary cellular control technologies, resources, capabilities and expertise for the manufacture of CAR-T product candidates to create and develop first and best-in-class product candidates.

Impact of COVID-19

We have experienced limited impact to date, and do not anticipate experiencing a substantial impact in the future to our operations as a result of the ongoing COVID-19 pandemic. However, depending the duration and severity of the pandemic, we could experience impacts in the future, including with respect to the operations of our manufacturing partners, clinical trial sites and regulatory agencies, all of which we are substantially dependent upon for our business. In particular, as we seek to pursue clinical trial enrollment and site activation for BPX-601 and BPX-603, it is possible that we may experience challenges in site enrollment due to factors related to the COVID-19 pandemic. For example, over the past three quarters, we experienced delays related to COVID-19 in patient screening and enrollment and site activation activities, delaying anticipated data presentations from our studies from 2022 to the first half of 2023. We are continuing to closely monitor the impact and potential future of the COVID-19 pandemic on our business.

Impact of Fludarabine Shortage

In May 2022, the FDA announced a shortage of fludarabine in the U.S. that is affecting the company’s clinical trial sites. Fludarabine is a chemotherapeutic agent used as part of a lymphodepletion regimen administered to patients prior to receiving CAR-T cells and is required as part of the protocols in the BPX-601 and BPX-603 Phase 1/2 trials. Some of the BPX-601 and BPX-603 trial sites have been unable to procure fludarabine, or have had restrictions placed on fludarabine use, which has affected enrollment and patient dosing at these trial sites. The company has begun to procure a fludarabine supply for patients at these sites and expects to receive fludarabine and resume dosing of patients at these sites in the fourth quarter of 2022.

Results of Operations

The following table sets forth a summary of our statement of operations for the periods indicated:


	Three Months Ended				Change		Nine Months Ended				Change
(in thousands)	September 30, 2022		September 30, 2021				September 30, 2022		September 30, 2021
Revenues
Supply agreement	—		—		—		—		700		(700)
License revenue	$	1,000	$	5,000	$	(4,000)	$	1,000	$	5,000	$	(4,000)
Revenues	1,000		5,000		(4,000)		1,000		5,700		(4,700)
Operating expenses:
Research and development	6,850		6,348		502		16,425		19,531		(3,106)
General and administrative	1,315		1,681		(366)		4,216		5,458		(1,242)
Total operating expenses	8,165		8,029		136		20,641		24,989		(4,348)
Other operating expense:
Loss on dispositions, net	—		14		(14)		—		478		(478)
Loss from operations	(7,165)		(3,043)		(4,122)		(19,641)		(19,767)		126
Other income (expense):
Interest income	11		6		5		38		24		14
Interest expense	—		—		—		—		(4)		4
Change in fair value of warrant derivative and private placement option liabilities	(59)		4,264		(4,323)		827		7,506		(6,679)
Other income (expense)	—		6		(6)		—		5		(5)
Total other income (expense)	(48)		4,276

BELLICUM PHARMACEUTICALS, INC [BLCM] Filings
10-Q	[2022-11-10]
10-Q	[2022-08-11]
10-Q	[2022-05-12]
10-K	[2022-03-24]
10-Q	[2021-11-04]
10-Q	[2021-08-12]
10-Q	[2021-05-14]
10-K	[2021-03-31]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-03-12]
10-Q	[2019-11-06]
10-Q	[2019-08-05]
10-Q	[2019-05-07]
10-K	[2019-03-12]
10-Q	[2018-11-06]
10-Q	[2018-08-07]
10-Q	[2018-05-08]
10-K	[2018-03-13]
10-Q	[2017-11-07]
10-Q	[2017-08-08]
10-Q	[2017-05-08]
10-K	[2017-03-13]
10-Q	[2016-11-09]
10-Q	[2016-08-08]
10-Q	[2016-05-09]
10-K	[2016-03-14]
10-Q	[2015-11-09]
10-Q	[2015-08-13]
10-Q	[2015-05-12]
10-K	[2015-03-20]
S-1	[2014-11-18]