10-Q 1 iova-20240331x10q.htm 10-Q
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+-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

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 001-36860

IOVANCE BIOTHERAPEUTICS, INC.

(Exact name of issuer as specified in its charter)

Delaware

75-3254381

(State or other jurisdiction of

(I.R.S. employer

incorporation or organization)

identification number)

825 Industrial Road, Suite 400, San Carlos, CA 94070

(Address of principal executive offices and zip code)

(650) 260-7120

(Registrant’s telephone number, including area code)

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 þ 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 þ 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  þ

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 þ

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 $0.000041666

 

IOVA

 

The Nasdaq Global Market

As of May 2, 2024, the issuer had 279,832,722 shares of common stock, par value $0.000041666 per share, outstanding.

Forward-Looking Statements and Market Data

This Quarterly Report on Form 10-Q contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements other than statements of historical facts contained in this report are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “might,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “aim,” “potential,” “continue,” “ongoing,” “goal,” “forecast,” “guidance,” “outlook,” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

the success, cost, enrollment, and timing of our clinical trials;
the success, cost and timing of our product development activities;
the ability of us or our third-party contract manufacturers to continue to manufacture tumor infiltrating lymphocytes, or TIL, in accordance with our selected process;
our ability to design, construct and staff our own manufacturing facility on a timely basis and within the estimated expenses;
the success of competing therapies that are or may become available;
regulatory developments in the United States of America, or U.S., and foreign countries;
the timing of and our ability to obtain and maintain U.S. Food and Drug Administration, or the FDA, European Medicines Agency, or the EMA, or other regulatory authority approval of, or other action with respect to, our products and/or product candidates;
our ability to attract and retain key scientific or management personnel;
the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our ability to obtain funding for our operations, including funding necessary to complete further development of our product candidates and commercialization of our products;
our ability to successfully commercialize Amtagvi™ (lifileucel) and Proleukin® (aldesleukin), and any other products and/or product candidates for which we obtain or have obtained FDA, EMA, or other regulatory approvals;
the ability and willingness of our third-party research institution collaborators to continue research and development activities relating to our product candidates;
the potential of our other research and development and strategic collaborations;
our expectations regarding our ability to obtain and maintain intellectual property protection for our manufacturing methods and products and/or product candidates;
our plans to research, develop and commercialize our products and/or product candidates;
the size and growth potential of the markets for our products and/or product candidates, and our ability to serve those markets;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
fluctuations in the trading price of our common stock; and
our use of cash and other resources.

2

Actual results may differ from those set forth in this Quarterly Report on Form 10-Q due to the risks and uncertainties inherent in our business, including those provided in the foregoing list of forward-looking statements and also including, without limitation: the FDA may not agree with our interpretation of the results of our clinical trials; later developments with the FDA that may be inconsistent with already completed FDA meetings; the preliminary clinical results, including efficacy and safety results, from ongoing Phase 2 and Phase 3 clinical trials may not be reflected in the final analyses of these clinical trials including new cohorts within these clinical trials; the results obtained in our ongoing clinical trials, such as the studies and clinical trials referred to in this Quarterly Report on Form 10-Q, may not be indicative of results obtained in future clinical trials or supportive of product approval; regulatory authorities may potentially delay the timing of FDA or other regulatory authority approval of, or other action with respect to, our product candidates, specifically, our description of FDA interactions are subject to FDA’s interpretation, as well as FDA’s authority to request new or additional information; we may not be able to obtain or maintain FDA or other regulatory authority approval of its product candidates; our ability to address FDA or other regulatory authority requirements relating to our clinical programs and registrational plans, such requirements including, but not limited to, clinical and safety requirements as well as manufacturing and control requirements; risks related to our accelerated FDA review designations; our ability to obtain and maintain intellectual property rights relating to our product pipeline; and the acceptance by the market of our product candidates and their potential reimbursement by payors, if approved.

We caution you that the risks, uncertainties and other factors referenced above may not contain all the risks, uncertainties and other factors that are important to you. In addition, we cannot guarantee future results, level of activity, performance or achievements. Any forward-looking statement made by us in this Quarterly Report on Form 10-Q speaks only as of the date of this Quarterly Report on Form 10-Q or as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether because of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

Unless the context requires otherwise, in this report the terms “Iovance,” the “Company,” “we,” “us” and “our” refer to Iovance Biotherapeutics, Inc.

3

PART I. FINANCIAL INFORMATION

Item 1.Condensed Consolidated Financial Statements (Unaudited)

IOVANCE BIOTHERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(unaudited; in thousands, except share and per share information)

    

March 31, 

December 31, 

    

2024

    

2023

ASSETS

  

 

  

  

 

  

Current Assets

  

 

  

Cash and cash equivalents

$

134,188

$

114,888

Trade accounts receivable

234

151

Short-term investments

 

222,007

 

164,979

Inventory

17,617

10,372

Prepaid expenses and other assets

 

11,487

 

17,458

Total Current Assets

 

385,533

 

307,848

 

  

 

  

Property and equipment, net

111,789

114,030

Intangible assets, net

294,303

229,258

Operating lease right-of-use assets

71,516

62,515

Restricted cash

6,430

66,430

Long-term assets

 

259

 

270

Total Assets

$

869,830

$

780,351

 

  

 

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

 

  

 

  

Current Liabilities

 

  

 

  

Accounts payable

$

25,700

$

33,123

Accrued expenses

 

46,436

 

69,406

Operating lease liabilities

11,078

7,777

Total Current Liabilities

 

83,214

 

110,306

 

  

 

  

Non-Current Liabilities

 

  

 

  

Operating lease liabilities – non-current

 

72,291

 

67,085

Deferred tax liabilities

33,301

17,347

Long-term note payable

1,000

1,000

Total Non-Current Liabilities

 

106,592

 

85,432

Total Liabilities

 

189,806

 

195,738

 

  

 

  

Commitments and contingencies

 

  

 

  

 

  

 

  

Stockholders’ Equity

 

  

 

  

Series A Convertible Preferred stock, $0.001 par value; 17,000 shares designated, 194 shares issued and outstanding as of March 31, 2024 and December 31, 2023

 

 

Series B Convertible Preferred stock, $0.001 par value; 11,500,000 shares designated, 2,842,158 shares issued and outstanding as of March 31, 2024 and December 31, 2023

 

3

 

3

Common stock, $0.000041666 par value; 500,000,000 shares authorized, 279,756,339 and 256,135,715 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

12

 

11

Accumulated other comprehensive loss

 

116

 

2,526

Additional paid-in capital

 

2,805,244

 

2,594,448

Accumulated deficit

 

(2,125,351)

 

(2,012,375)

Total Stockholders’ Equity

 

680,024

 

584,613

Total Liabilities and Stockholders’ Equity

$

869,830

$

780,351

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

IOVANCE BIOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Operations

(unaudited; in thousands, except per share information)

Three Months Ended

March 31, 

2024

    

2023

Revenue

Product revenue

$

715

$

Total revenue

715

Costs and expenses

 

 

Cost of sales

$

7,261

$

Research and development

79,783

82,734

Selling, general and administrative

 

31,393

 

28,122

Total costs and expenses

 

118,437

 

110,856

Loss from operations

 

(117,722)

 

(110,856)

Other income

 

 

Interest income, net

 

3,338

 

3,486

Net Loss before income taxes

$

(114,384)

$

(107,370)

Income tax benefit

1,408

Net Loss

$

(112,976)

$

(107,370)

Net Loss Per Share of Common Stock, Basic and Diluted

$

(0.42)

$

(0.50)

Weighted Average Shares of Common Stock Outstanding, Basic and Diluted

 

266,220

 

213,694

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

IOVANCE BIOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited; in thousands)

Three Months Ended

March 31, 

2024

    

2023

Net Loss

$

(112,976)

$

(107,370)

Other comprehensive loss:

 

 

Unrealized (loss)/gain on investments

 

(69)

 

776

Foreign currency translation adjustment

(2,341)

Comprehensive Loss

$

(115,386)

$

(106,594)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

IOVANCE BIOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2024 and 2023

(unaudited; in thousands, except share information)

Series A 

Series B

Convertible

Convertible

Additional

Accumulated other

Total

Preferred Sock

Preferred Stock

Common Stock

Paid-In

Comprehensive

Accumulated

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Income (Loss)

    

Deficit

    

Equity

Balance - December 31, 2023

 

194

$

 

2,842,158

$

3

 

256,135,715

$

11

$

2,594,448

$

2,526

$

(2,012,375)

$

584,613

Stock-based compensation expense

 

17,773

 

17,773

Vesting of restricted shares issued for services

 

880,242

 

 

 

Tax payments related to shares retired for vested restricted stock units

(315,371)

 

(4,701)

 

(4,701)

Common stock sold in public offering, net of offering costs

23,014,000

1

 

197,360

 

197,361

Common stock issued upon exercise of stock options

41,753

364

-

 

364

Unrealized loss on investments

 

(69)

 

(69)

Foreign currency cumulative adjustments

 

(2,341)

 

(2,341)

Net loss

 

(112,976)

 

(112,976)

Balance - March 31, 2024

 

194

$

 

2,842,158

$

3

 

279,756,339

$

12

$

2,805,244

$

116

$

(2,125,351)

$

680,024

Balance - December 31, 2022

 

194

$

 

2,842,158

$

3

 

187,812,072

$

8

$

2,068,867

$

(902)

$

(1,568,338)

$

499,638

Stock-based compensation expense

15,665

 

15,665

Vesting of restricted shares issued for services

770,257

 

Tax payments related to shares retired for vested restricted stock units

(303,576)

(1,929)

 

(1,929)

Unrealized gain on investments

776

776

Common stock sold in public offering, net of offering costs

36,080,226

1

260,100

 

260,101

Net loss

 

(107,370)

 

(107,370)

Balance - March 31, 2023

 

194

$

 

2,842,158

$

3

 

224,358,979

$

9

$

2,342,703

$

(126)

$

(1,675,708)

$

666,881

7

IOVANCE BIOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited; in thousands)

Three Months Ended

March 31, 

    

2024

    

2023

Cash Flows from Operating Activities

Net loss

$

(112,976)

$

(107,370)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Stock-based compensation expense

17,178

15,665

Unrealized foreign exchange gains

(96)

Amortization of intangible assets

4,633

Amortization of right of use asset

2,296

2,933

Depreciation and amortization of property and equipment

2,978

 

2,764

Deferred tax benefit

(1,408)

 

Accretion of discounts and premiums on investments

(2,335)

(978)

Changes in assets and liabilities:

Prepaid expenses, other assets and long-term assets

Prepaid expenses

Other assets

5,888

 

(4,231)

Inventory

(6,735)

Trade accounts receivable

(83)

Operating lease liabilities

(2,789)

 

(2,569)

Accounts payable

(5,815)

 

3,025

Accrued expenses

 

(23,015)

 

(9,054)

Net cash used in operating activities

 

(122,279)

 

(99,815)

Cash Flows from Investing Activities

Maturities of investments

 

87,000

 

164,383

Purchase of investments

 

(141,762)

 

(5,323)

Contingent consideration paid for acquisition

(52,573)

Purchase of property and equipment

 

(4,171)

 

(5,664)

Net cash (used in) provided by investing activities

 

(111,506)

 

153,396

Cash Flows from Financing Activities

Tax payments related to shares withheld for vested restricted stock units

 

(4,701)

 

(1,929)

Proceeds from the issuance of common stock upon exercise of options

364

Proceeds from the issuance of common stock, net

197,913

260,101

Net cash provided by financing activities

 

193,576

 

258,172

Effect of foreign exchange rate changes

(491)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(40,700)

 

311,753

Cash, Cash Equivalents and Restricted Cash Beginning of Period

 

181,318

 

238,161

Cash, Cash Equivalents and Restricted Cash End of Period

$

140,618

$

549,914

Supplemental disclosure of non-cash investing and financing activities:

Net unrealized (loss) /gain on investments

$

(69)

$

776

Intangible asset and deferred tax liability arising from contingent consideration

17,495

Purchase of property and equipment included in accounts payable and accrued expenses

 

683

 

7,777

Accrued offering costs in accounts payable and accrued expenses

 

552

 

Lease liabilities arising from obtaining right-of-use asset from lease modifications

11,297

349

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

IOVANCE BIOTHERAPEUTICS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. GENERAL ORGANIZATION, BUSINESS AND LIQUIDITY

General Organization and Business

Iovance Biotherapeutics, Inc. (the “Company”) is a commercial-stage biopharmaceutical company pioneering a transformational approach to treating cancer by harnessing the human immune system’s ability to recognize and destroy diverse cancer cells using therapies personalized for each patient. The Company’s mission is to be the global leader in innovating, developing and delivering tumor infiltrating lymphocyte (“TIL”) cell therapies for patients with solid tumor cancers. With the recent approval of the biologics license application (the “BLA”), the Company is executing the U.S. launch of Amtagvi™ (lifileucel), the first product within its autologous TIL cell therapy platform, and Proleukin® (aldesleukin), an interleukin-2 (“IL-2”) product used in the Amtagvi™ treatment regimen. Amtagvi™ is a tumor-derived autologous T cell immunotherapy indicated for the treatment of adult patients with unresectable or metastatic melanoma previously treated with a PD-1 blocking antibody, and if BRAF V600 mutation positive, a BRAF inhibitor with or without a MEK inhibitor. This indication is approved under accelerated approval based on overall response rate (“ORR”). Continued approval for this indication may be contingent upon verification and description of clinical benefit in future confirmatory trials. Amtagvi™ is the first and the only one-time, individualized T cell therapy to receive FDA approval for a solid tumor cancer. Amtagvi™ and Proleukin® are part of a treatment regimen that includes lymphodepletion.

The Company was founded to build upon the promise of TIL cell therapy that was previously demonstrated in single-center clinical trials at academic centers, including the National Cancer Institute (“NCI”). The Company’s multi-center trials, novel TIL products, manufacturing processes, facilities, and bioanalytical platforms have transformed TIL cell therapy into a commercially viable treatment which many more patients with cancer can access.

The Company manufactures Amtagvi™ and its investigational TIL cell therapies using a centralized, scalable and proprietary 22-day manufacturing process which rejuvenates and multiplies polyclonal T cells unique to each patient into the billions and yields a cryopreserved, individualized therapy.

The Company’s development pipeline includes multicenter trials of TIL cell therapies in additional treatment settings for solid tumor cancers. The Company is investigating TIL monotherapies for patients with later stage disease who were previously treated with standard of care therapies and TIL combinations with standard of care therapies to potentially improve outcomes in patients who are earlier in their disease. These trials two ongoing registrational trials to support a supplementary BLA (“sBLA”), of its TIL cell therapies in frontline advanced melanoma and in advanced non-small cell lung cancer following standard of care chemo-immunotherapy. The Company is also developing next generation therapies using TIL, such as genetically modified TIL cell therapy.

Basis of Presentation of Unaudited Condensed Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements of the Company for the three months ended March 31, 2024 and 2023 have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for audited financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company's financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2024 or for any other period. The condensed consolidated balance sheet as of December 31, 2023 was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2024. These interim financial statements should be read in conjunction with that report. Certain prior period amounts reported in the Company’s condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.

9

Liquidity

As of March 31, 2024, the Company had $362.6 million in cash, cash equivalents, short term-investments, and restricted cash ($134.2 million of cash and cash equivalents, $222.0 million in short-term investments, and $6.4 million in restricted cash). The Company has recently launched its first internally developed commercial product and continues to be engaged in the development of therapeutics to fight cancer, specifically solid tumors. With the recent approval of the BLA, the Company expects to generate revenue from the sale of its product Amtagvi™, starting in the second quarter of 2024. Furthermore, following the acquisition of the worldwide rights to Proleukin® (as discussed below in Note 4 - Proleukin® Acquisition) in the second quarter of 2023, the Company began to generate revenue from the sales of Proleukin®. However, such revenues for Amtagvi™ and Proleukin® may not be material enough to generate positive operational cash flows during the 12 months from the date the condensed consolidated financial statements are issued and this Form 10-Q is filed. The Company has incurred a net loss of $113.0 million for the three months ended March 31, 2024 and used $122.3 million of cash in its operating activities during the first quarter ended March 31, 2024.

The Company expects to continue to incur significant expenses to support its execution of the commercial launch of Amtagvi™, fund ongoing clinical programs, including its NSCLC registration study, IOV-LUN-202, and its frontline advanced melanoma Phase 3 confirmatory trial, TILVANCE-301, continue the development of its pipeline candidates, and for other general corporate purposes. Based on the funds the Company has available as of the date these condensed consolidated financial statements are issued, the Company believes that it has sufficient capital to fund its anticipated operating expenses and capital expenditures as planned for at least the next twelve months from the date these condensed consolidated financial statements are issued.

Concentrations of Risk

The Company is subject to credit risk from its portfolio of cash, cash equivalents, trade accounts receivable and investments. Under its investment policy, the Company limits amounts invested in securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company does not believe it is exposed to any significant concentrations of credit risk from these financial instruments. The goals of its investment policy are safety and preservation of principal, diversification of risk, and liquidity of investments sufficient to meet cash flow requirements.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash, Cash Equivalents, and Investments

The Company’s cash and cash equivalents include short-term investments with original maturities of three months or less when purchased. The Company's investments are classified as “available-for-sale.” The Company includes these investments in current assets or non-current assets in the condensed consolidated balance sheets based on the length of maturity from the reporting date and carries them at fair value. Unrealized gains and losses on available-for-sale securities are recorded in the condensed consolidated statements of comprehensive loss. Impairment losses related to credit losses (if any) are recorded as an allowance for credit losses with an offsetting entry to Interest income, net. No impairment losses related to credit losses were recognized for the three months ended March 31, 2024 and 2023. The cost of debt securities is adjusted for the amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in Interest income, net in the condensed consolidated statements of operations. Gains and losses on securities sold are recorded based on the specific identification method and are included in Interest income, net in the condensed consolidated statements of operations. The Company has not incurred any realized gains or losses from sales of securities to date. The Company’s investment policy limits investments to certain types of instruments such as certificates of deposit, money market instruments, obligations issued by the U.S. government and U.S. government agencies as well as corporate debt securities and commercial paper, and places restrictions on maturities and concentration by type and issuer, except for securities issued by the U.S. government.

Restricted Cash

The Company maintains a required minimum balance in a segregated bank account in connection with its letters of credit for which amounts are restricted as to their use by the Company. As of March 31, 2024, the Company’s letters of credit were primarily comprised of a letter of credit for the benefit of the landlord for the Iovance Cell Therapy Center (the “iCTC”) used as a security deposit for the lease in the amount of $5.45 million and a letter of credit for $0.6 million for the benefit of the landlord for the Company’s current headquarters’ lease (See Note 12 - Leases). The letter of credit for $5.45 million originally expired on May 28, 2020, however, it automatically extends for additional one-year periods, without written agreement, to May 28 in each succeeding calendar year, through at least 60 days after the lease expiration date. Further, on the expiration of the seventh year of the lease, and

10

each anniversary date thereafter, the letter of credit may be decreased by $1.0 million, with a minimum security deposit of $1.5 million maintained through the end of the lease term. The letter of credit with the landlord for the Company’s current headquarters’ lease expires on February 1, 2032, however, it will be automatically extended, without written agreement, for one-year periods to February in each succeeding calendar year.

A letter of credit in the amount of $60.0 million for the regulatory approval milestone payment as required by the terms of the Option Agreement for the Proleukin® acquisition (See Note 4 – Proleukin® Acquisition) was cancelled in March 2024 following the milestone payment of $52.6 million (£41.7 million) during the first quarter of 2024. As of March 31, 2024 and December 31, 2023, restricted cash totaled $6.4 million and $66.4 million, respectively. This amount has been classified as a non-current asset in the Company’s condensed consolidated balance sheets.

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

    

March 31, 

2024

2023

Cash and cash equivalents

$

134,188

$

543,484

Restricted cash

 

6,430

 

6,430

Total cash, cash equivalents and restricted cash

$

140,618

$

549,914

Asset Acquisitions

The Company evaluates acquisitions of assets using the guidance in Accounting Standard Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), to determine whether the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to assess if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, further assessment is required to determine whether the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business.

If the assets acquired do not constitute a business, the Company accounts for asset acquisitions using the cost accumulation and allocation method. Under this method the cost of the acquisition, including direct acquisition-related costs, is allocated to the assets acquired on a relative fair value basis. Goodwill is not recognized in an asset acquisition and any difference between consideration transferred and the fair value of the net assets acquired is allocated to the identifiable assets acquired based on their relative fair values.

Deferred tax liabilities arising from basis differences in assets acquired are calculated using the simultaneous equations method under ASC Topic 740, Income Taxes (“ASC 740”), and based on the effective tax rate. The resulting deferred tax liability is recorded in the condensed consolidated balance sheet as of March 31, 2024.

Contingent consideration in the scope of ASC Topic 815, Derivatives and Hedging (“ASC 815”), is included in the cost of the asset acquisition at its acquisition date fair value. Contingent consideration in the scope of ASC Topic 450, Contingencies (“ASC 450”), is recognized when it is both probable and reasonably estimable.

Inventory and Cost of Sales

Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Cost includes amounts related to materials, internal labor, costs of external manufacturing, and allocable depreciation of manufacturing facilities, equipment and overhead. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. Inventoriable costs incurred, such as manufacturing costs incurred prior to regulatory approval that did not qualify for capitalization and clinical manufacturing costs, are expensed as incurred as research and development expenses.

11

Upon the recent approval of the BLA of Amtagvi™, the Company began capitalizing inventory and manufacturing costs for the commercial manufacturing of Amtagvi™ qualified for capitalization.  Additionally, inventory that initially qualifies for capitalization but that may ultimately be used for the production of clinical drug product or utilized in research and development programs is expensed as research and development expense when it has been designated for the manufacture of clinical drug product or use in research and development activities.

Proleukin® inventories presented in the condensed consolidated balance sheet as of March 31, 2024 include a step-up of the fair value of inventories as a result of the acquisition of the worldwide rights to Proleukin®.

The Company periodically reviews inventory for excess and obsolescence, considering factors such as its most recent sales forecast compared to quantities on hand and expiration date of the product and materials. The Company writes-down its inventory that is obsolete or otherwise unmarketable to its estimated net realizable value in the period in which the impairment is first identified. Any such adjustments are included as a component of cost of sales within the Company’s condensed consolidated statements of operations and comprehensive loss.

Cost of sales includes the cost of inventories and other costs that are directly associated with the purchase and sales of Proleukin®. In addition, amortization expense for the fair value step-up of Proleukin® inventories and the acquired intangible assets related to the developed technology and intellectual property intangible assets, as well as period costs associated with excess overhead and manufacturing costs of Amtagvi™ incurred during a ramp-up period, are included in cost of sales in the Company’s condensed consolidated statement of operations.

Trade Accounts Receivable

Trade accounts receivable are recorded net of allowances for product returns and estimated credit losses. The estimate of allowance for credit losses considers factors, including existing contractual payment and the aging of receivable from its customers. To date, the Company has determined that an allowance for doubtful accounts is not required.  

Intangible Assets

The Company’s acquired intangible assets are initially measured based on an allocation of the cost of the acquisition to the assets acquired on a relative fair value basis and are recorded net of accumulated amortization, while intangible assets recorded as the result of milestone or license payments are recorded at the amount paid. The Company amortizes its intangible assets on a straight-line basis over their estimated useful lives.

When contingent consideration is a component of the cost of an asset acquisition, the Company capitalizes the amount of incremental cost from the contingent consideration related to the intangible asset acquired in the period the underlying contingency is resolved. When this occurs, the Company will recognize amortization expense on the incremental cost prospectively from the date the incremental costs are capitalized.

The Company reviews intangible assets for impairment at least annually and whenever events or changes in circumstances have occurred which could indicate that the carrying value of the assets are not recoverable. If such indicators are present, the Company assesses the recoverability of affected assets by determining if the carrying value of the assets is less than the sum of the undiscounted future cash flows of the assets. If the assets are found to not be recoverable, the Company measures the amount of impairment by comparing the carrying value of the assets to their fair values. The Company determined that no indicators of impairment existed as of March 31, 2024.

Leases

The Company determines if an arrangement includes a lease at inception and thereafter, if modified. Operating leases are included in its condensed consolidated balance sheets as Operating lease right-of-use assets and Operating lease liabilities as of March 31, 2024 and December 31, 2023. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date or modification date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses an estimated incremental borrowing rate that is applicable to the Company based on the information available at the later of the lease commencement or modification date.

12

The operating lease right-of-use assets also include any lease payments made less lease incentives. The Company’s leases may include options to extend or terminate the lease, which is considered in the lease term when it is reasonably certain that the Company will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term and recorded in costs and expenses in the condensed consolidated statements of operations. The Company has elected not to apply the recognition requirements of Accounting Standards Update (“ASU”) No. 2016-02 and No. 2018-10 (together “Topic 842”) for short-term leases.

For lease agreements entered into by the Company that include lease and non-lease components, such components are generally accounted for separately.

Revenue Recognition

The Company recognizes revenue from product sales in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using the most likely method based on historical experience as well as applicable information currently available.

Products are sold principally to distributors and wholesalers and to a lesser extent outside of the U.S. to hospitals and clinics. Contractual performance obligations are usually limited to transfer of control of the product to the customer. The transfer occurs either upon shipment, upon receipt of the product after considering when the customer obtains legal title to the product, or in the case of Amtagvi™, upon infusion. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring it products and is generally based on a list of fixed price less allowances for product returns, rebates and discounts. The Company’s payment terms to customers range from 45 to 105 days; payment terms differ by customer and by product. Discounts, rebates, returns and certain other adjustments are accounted for as variable consideration.

Indirect taxes collected from customers and remitted to government authorities that are related to sales of the Company’s products, primarily in Europe, are excluded from revenues.

The Company did not recognize any revenue for Amtagvi™ sales during the three months ended March 31, 2024. Product sales for the three months ended March 31, 2024 pertains to the sales of Proleukin® in licensed markets outside of the U.S. To date, there have been no product sales from Proleukin® in the U.S. market. Reserves for variable consideration for the market outside of the U.S. were immaterial.

Stock-Based Compensation

The Company periodically grants stock options to employees and non-employees as compensation for services rendered. The Company accounts for all stock-based payment awards made to employees, including the employee stock purchase plans, and non-employees in accordance with the authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) where the value of the award is measured on the date of grant and recognized over the vesting period. Forfeitures are recognized in the period in which they occur. The Company accounts for stock option grants to non-employees in a similar manner as stock option grants to employees except for the term used in the grant date fair value, therefore no longer requiring a re-measurement at the then-current fair values at each reporting date until the shares underlying the options have vested. The non-employee awards that contain a performance condition that affects the quantity or other terms of the award are measured based on the outcome that is probable.

The fair value of the Company's common stock option grants is estimated using a Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected term of the common stock options, and future dividends. The stock-based compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model. The assumptions used in the Black-Scholes option pricing model could affect compensation expense recorded in future periods.

The Company issues restricted stock units (“RSUs”) from time to time as part of its equity incentive plans. The Company measures the compensation cost with respect to RSUs issued to employees based upon the estimated fair value of the equity instruments at the date of the grant, which is recognized as an expense over the period during which an employee is required to provide services in exchange for the awards. The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. In addition to RSUs that have time-based vesting requirements, from time to time the Company may issue RSUs that include certain performance vesting criteria based upon the satisfaction of stated objectives (“PRSUs”). The Company measures the

13

compensation cost with respect to PRSUs issued to employees based upon the estimated fair value of the equity instruments at the date of grant, which is recognized as an expense over the period that achievement is determined to be probable through the stated service period associated with the award.

Accrued Research and Development Costs

Research and development costs are expensed as incurred. Clinical development costs compose a significant component of research and development costs. The Company has a history of contracting with third parties, including contract research organizations (“CROs”), independent clinical investigators, and contract manufacturing organizations (“CMOs”) that perform various clinical trial activities on the Company’s behalf in connection with the ongoing development of the Company’s product candidates. The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow. The Company accrues and expenses costs for clinical trial activities performed by third parties based upon the work completed to date for each clinical trial in accordance with agreements established with CROs, hospitals, and clinical investigators. Accruals for CROs and CMOs are recorded based on services received and efforts expended pursuant to agreements established with CROs, CMOs and other outside service providers. The Company determines its costs through discussions with internal clinical stakeholders and outside service providers as to the progress or stage of completion of clinical trials or services and the contracted fee to be paid for such services.

Included in the Company’s clinical development costs are investigator costs, which are costs associated with treatments administered at clinical sites as required under each clinical trial protocol. The Company’s determination of clinical investigator costs and related timing of expense recognition will depend on a number of factors that include, but are not limited to, (i) the overall number of patients that enroll in the trial at each individual site, (ii) the length of clinical trial enrollment period, (iii) discontinuation and completion rates of patients, (iv) duration of patient safety follow-ups, (v) the number of sites included in the clinical trial, and (vi) the contracted fee of each participating site for patient treatment while on clinical trial, which can vary greatly for several reasons including, but not limited to, geographic region, medical center or physician costs, and overhead costs. In addition, the Company’s estimates for per patient trial costs will vary based on a number of factors that include, but are not limited to, the extent of additional procedures that may be administered by investigators as a result of patient health status, recoverability of patient costs through insurance carriers of patients, and unanticipated cost of injuries incurred as a result of the clinical trial treatment. The Company accrues estimated expenses resulting from obligations under investigator site agreements as the timing of payments does not always timely align with the periods over which the treatments are administered by the clinical investigators. These estimates are typically based on contracted amounts, patient visit data, discussions with internal clinical stakeholders and outside service providers, and historical look-back analysis of actual payments made to date.

The Company makes judgments and estimates in determining the accrual balance in each reporting period.

In the event advance payments are made to a CRO, CMO or other outside service provider, the payments are recorded within prepaid expenses and other current assets in the condensed consolidated balance sheets and subsequently recognized as research and development expense in the condensed consolidated statements of operations when the associated services have been performed. As actual costs become known, the Company adjusts its estimates, liabilities and assets. Inputs used in the determination of estimates discussed above may vary from actual, which will result in adjustments to research and development expense in future periods.

Selling, general and administrative expense

Selling, general and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, procurement, legal, investor relations, facilities, business development, marketing, commercial, information technology and human resources functions. Other significant costs include facility costs not otherwise capitalized in inventory or included in research and development expenses. Selling, general and administrative costs are expensed as incurred, and the Company accrues for services provided by third parties related to such expenses by monitoring the status of services provided and receiving estimates from its service providers and adjusting its accruals as actual costs become known.

Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common shares outstanding during the period.

Diluted net loss per share is computed by dividing the net loss by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent outstanding during the period. The Company’s potentially

14

dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options, (ii) shares issued as a result of purchases though the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), (iii) vesting of restricted stock units, and (vi) conversion of preferred stock, are only included in the calculation of diluted net loss per share when their effect is dilutive.

As of March 31, 2024 and 2023, the following outstanding common stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive:

March 31, 

    

2024

    

2023

Stock options

18,697,395

19,264,017

Restricted stock units

12,080,735

3,910,457

Employee Stock Purchase Plan

296,751

247,284

Series A Convertible Preferred Stock*

97,000

97,000

Series B Convertible Preferred Stock*

2,842,158

2,842,158

34,014,039

26,360,916

* on an as-converted basis. (See Note 10 – Stockholders’ Equity)

The dilutive effect of potentially dilutive securities would be reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock could result in a greater dilutive effect from potentially dilutive securities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include assumptions made in the fair value of intangible assets, inventories acquired as part of the acquisition of Proleukin®, equity awards and related stock-based compensation, assumptions used in measuring operating right-of-use assets and operating lease liabilities, accounting for potential liabilities, including estimates inherent in accruals related to clinical trials, and the realizability of the Company’s deferred tax assets.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Iovance Biotherapeutics, Inc. and its wholly-owned subsidiaries, Iovance Biotherapeutics Manufacturing LLC, Iovance Biotherapeutics GmbH, Iovance Biotherapeutics B.V., Iovance Biotherapeutics UK Ltd and Iovance Biotherapeutics UK SP Ltd (together, the “UK subsidiaries”), and Iovance Biotherapeutics Canada, Inc. All intercompany accounts and transactions have been eliminated.

Foreign Currency Translation

The assets and liabilities of the Company’s subsidiaries whose functional currencies are not in U.S. dollars are translated into U.S. dollars at the related period-end exchange rate. The U.S. dollar effects that arise from translation of net assets of these subsidiaries at changing rates are recognized in Accumulated Other Comprehensive Income (Loss) in the condensed consolidated balance sheets. The subsidiaries’ net loss is translated into U.S. dollars by using the average exchange rate for the applicable period. The condensed consolidated financial statements are presented in U.S. dollars, which is the Company’s reporting currency.

Segment Reporting

The Company operates in one segment, focused on innovating, developing and commercializing therapies using autologous TIL for the treatment of metastatic melanoma and other solid tumor cancers.

15

NOTE 3. CASH EQUIVALENTS AND INVESTMENTS

The amortized cost and fair value of cash equivalents and investments as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

Gross

Gross

Amortized

Unrealized

Unrealized

As of March 31, 2024

    

Cost

    

Gains

    

Losses

    

Fair Value

U.S. treasury securities

$

222,037

$

$

(30)

$

222,007

Money market funds

45,724

45,724

Total investments

$

267,761

$

$

(30)

$

267,731

Gross

Gross

Amortized

Unrealized

Unrealized

As of December 31, 2023

    

Cost

    

Gains

    

Losses

    

Fair Value

U.S. treasury securities

$

164,940

$

39

$

$

164,979

Money market funds

34,053

34,053

Total investments

$

198,993

$

39

$

$

199,032

The fair value of cash equivalents and investments as of March 31, 2024 and December 31, 2023, are classified as follows in the Company’s condensed consolidated balance sheets (in thousands):

March 31, 

December 31, 

Classified as:

2024

    

2023

Cash equivalents

$

45,724

$

34,053

Short-term investments

222,007

164,979

Total investments

$

267,731

$

199,032

Cash equivalents in the tables above exclude cash demand deposits of $88.5 million and $80.8 million as of March 31, 2024 and December 31, 2023, respectively. Unrealized gains and losses are included in accumulated other comprehensive (loss) income, and as of March 31, 2024 and December 31, 2023, no unrealized losses on available-for-sale securities have resulted from credit risk. All available-for-sale securities held as of March 31, 2024 and December 31, 2023, had contractual maturities of less than one year. No significant available-for-sale securities held as of the periods presented have been in a continuous unrealized loss position for more than 12 months. To date, the Company has not recorded any impairment charges on its investments.

Recurring Fair Value Measurements

As of March 31, 2024, and December 31, 2023, the fair value of the Company’s financial assets that are measured at fair value on a recurring basis, which consist of cash equivalents and short-term and long-term investments classified as available-for-sale securities, are categorized in the table below based upon the lowest level of significant input to the valuations (in thousands):

Assets at Fair Value as of March 31, 2024

    

Level 1

    

Level 2

    

Level 3

    

Total

U.S. treasury securities

$

222,007

$

$

$

222,007

Money market funds

45,724

45,724

Total investments

$

267,731

$

$

$

267,731

Assets at Fair Value as of December 31, 2023

    

Level 1

    

Level 2

    

Level 3

    

Total

U.S. treasury securities

$

164,979

$

$

$

164,979

Money market funds

34,053

34,053

Total

$

199,032

$

$

$

199,032

Level 2 assets consist of commercial paper and government agency securities. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset.

16

NOTE 4. PROLEUKIN® ACQUISITION

On January 23, 2023, the Company and its newly formed, wholly owned subsidiary, Iovance Biotherapeutics UK Ltd (the “Purchaser”) entered into an Option Agreement (the “Option Agreement”) with Clinigen Holdings Limited, Clinigen Healthcare Limited, and Clinigen, Inc. (collectively “Clinigen”), a global pharmaceutical services company, pursuant to which the Purchaser would acquire the worldwide rights for the manufacturing, supply, commercialization and sale of Proleukin® (aldesleukin) (the “Acquisition”).

On May 18, 2023, the Company completed the Acquisition and specifically acquired (i) all issued and outstanding shares of Clinigen SP Limited (the “Target”), (ii) the business of the Target and Clinigen (the “Proleukin® Business”) comprising the manufacturing, supply, commercialization and the generation of income from the Product rights and the undertaking of an active role in the development, maintenance and exploitation of those rights, and (iii) certain specified assets identified in the Option Agreement. Pursuant to the Option Agreement, the Company paid to Clinigen (i) an upfront payment of £166.9 million (or approximately $207.2 million), including the applicable stamp-tax payment, and (ii) a payment for certain inventory of £2.4 million (or approximately $3.0 million) using existing cash on hand. The Option Agreement includes potential future contingent payments, as discussed below.

The Acquisition was accounted for as an asset acquisition because substantially all of the fair value of the acquired assets was concentrated in the acquired developed technology related to the intellectual property rights of Proleukin® and therefore the Acquisition does not meet the definition of a business in accordance with ASC 805. The Proleukin® Business operations have been included in the Company’s condensed consolidated financial statements commencing from the acquisition date.

The following table summarizes the total cash consideration and allocated acquisition date fair values of assets acquired and liabilities assumed at the time of the acquisition (in thousands):

Amounts

Cash

$

35

Inventory

9,688

Developed technology

232,665

Assembled workforce

636

Deferred tax liability

(20,352)

Total cost of acquisition

$

222,672

The $222.7 million of total cost of the Acquisition consisted of (i) a $210.2 million of cash payment to Clinigen and (ii) $12.5 million of direct transaction costs incurred by the Company. The Option Agreement additionally provides for contingent cash payments consisting of (i) a milestone payment of £41.7 million, or approximately $50.0 million, upon first approval of lifileucel in advanced melanoma, (ii) deferred consideration based on double digit rates on global net sales (as defined in the Option Agreement) payable from the Company to the sellers following the completion of the Acquisition over a deferred consideration term of twelve years, and (iii) after the deferred consideration term, earnout payments payable from the Company to sellers following the completion of the transaction if deferred consideration payments are equal or greater than the deferred consideration amount provided for in the Option Agreement. These contingent payments were determined to be within the scope of ASC 450 and will be recognized when they are both probable and estimable. During the first quarter of 2024, the Company made the required milestone payment of $52.6 million (£41.7 million) upon the approval of our BLA of Amtagvi™, which was capitalized as an intangible asset and is being amortized over the remaining useful life of such asset. Additionally, $17.5 million (£13.9 million) was added to the carrying value of the acquired developed technology intangible asset, which reflects the deferred tax liability recognized on the temporary differences related to the book and tax basis of the acquired intangible assets. The recognition criteria have not been met for the remaining contingent consideration targets as of the acquisition date or as of March 31, 2024.

The net assets acquired in the Acquisition were recorded by allocating the total cost of the Acquisition to the assets acquired on a relative fair value basis based on their estimated fair values as of May 18, 2023, which is the date that the Acquisition was completed.

17

The fair value of the developed technology was estimated using a multi-period excess earnings income approach that discounts expected cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets. The fair value of the developed technology is being amortized over an expected useful life of 15 years and is recorded as Cost of Sales in the Company’s condensed consolidated statement of operations.

The fair value of the assembled workforce was estimated using a replacement cost less depreciation method. The fair value of the assembled workforce is being amortized over an expected useful life of 3 years and is recorded as Selling, General and Administrative expense in the Company’s condensed consolidated statement of operations.

The fair value of the acquired inventory was determined using the comparative sales method of the market approach, which uses historical and expected average selling prices of inventory as the base amount to which adjustment for costs to complete for work-in-process, cost of disposal and reasonable profit allowance are applied. The inventory fair value adjustment is being amortized as cost of sales as the acquired inventories are sold.

A deferred tax liability was recognized on the temporary differences related to the book and tax basis of the acquired intangible assets. The deferred tax liability and resulting adjustment to the carrying amount of the acquired intangibles was calculated using the simultaneous equations method under ASC 740. The tax rate used is based on the estimated statutory rates in the United Kingdom as this is where the intangible assets are domiciled.

NOTE 5. INTANGIBLE ASSETS, NET

The gross carrying amounts and net book value of intangible assets as of March 31, 2024 and December 31, 2023, are as follows (in thousands):

March 31, 

December 31, 

2024

2023

Developed technology

$

306,698

$

238,612

Assembled workforce

647

652

Intellectual property license

1,500

Total intangible assets

308,845

239,264

Less: accumulated amortization

(14,542)

(10,006)

Intangible assets, net

$

294,303

$

229,258

The Company recognized amortization expense of $4.6 million during the three months ended March 31, 2024. Amortization expense for the developed technology and the intellectual property license is recorded in cost of sales, and amortization expense for the assembled workforce is recorded in selling, general and administrative expense in the condensed consolidated statement of operations for the three months ended March 31, 2024. There was no such expense recorded in the three months ended March 31, 2023.

The total estimated amortization of the Company’s intangible assets for the remaining nine months ending December 31, 2024, and the years ending December 31, 2025, 2026, 2027, and 2028 are $15.8 million, $21.1 million, $20.9 million, $20.8 million, and $20.8 million, respectively.

NOTE 6. INVENTORY

As of March 31, 2024 and December 31, 2023, inventory consists of the following (in thousands):

March 31, 

December 31, 

2024

2023

Raw materials

$

5,566

$

Work in process

5,914

5,749

Finished goods

6,137

4,623

Total inventory

$

17,617

$

10,372

18

NOTE 7. REVENUE

Product sales for the three months ended March 31, 2024 was $0.7 million, and represented sales of Proleukin® made in licensed markets outside of the U.S. To date, there have been no product sales from Proleukin® in the U.S. market, nor have we recognized any revenue from sales of Amtagvi™ to date.

NOTE 8. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following (in thousands):

March 31, 

December 31, 

    

2024

    

2023

Leasehold improvements

$

76,847

$

76,804

Lab, process, and validation equipment

23,197

23,131

Utility equipment

 

5,990

 

5,990

Office furniture and equipment

 

3,298

 

3,297

Computer software

8,485

7,772

Computer equipment

 

595

 

542

Machinery and equipment

306

306

Construction in progress

 

23,962

 

24,101

Total property and equipment, cost

 

142,680

 

141,943

Less: Accumulated depreciation and amortization

 

(30,891)

 

(27,913)

Property and equipment, net

$

111,789

$

114,030

Depreciation and amortization expense for the three months ended March 31, 2024 and 2023, was $3.0 million and $2.8 million, respectively.

NOTE 9. ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

March 31, 

December 31, 

2024

    

2023

Accrued payroll and employee related expenses

$

21,363

$

34,814

Clinical related

7,180

10,911

Manufacturing related

 

8,569

 

10,893

Facilities related

1,661

2,437

Legal and related services

 

2,431

 

1,610

Inventory related

1,253

2,148

Other accrued expenses

 

3,979

 

6,593

Total accrued expenses

$

46,436

$