ImmunityBio, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report; it does not provide a standalone fourth-quarter income statement. The March 2021 merger with NantCell was accounted for as a common-control transaction, and prior periods were recast.
Business context
ImmunityBio is a clinical-stage biotechnology company developing immunotherapies, cell therapies and vaccines for cancer and infectious diseases. Its lead candidate, Anktiva (N-803), is being studied in combination with BCG for BCG-unresponsive non-muscle invasive bladder cancer. The company reported 26 actively recruiting trials across 13 indications, including 17 trials in Phase 2 or 3. It had no approved products and generated no product-sales revenue.
Financial results and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $0.9 million | $0.6 million |
| Research and development expense | $196.0 million | $139.5 million |
| Selling, general and administrative expense | $135.3 million | $71.3 million |
| Operating loss | $330.3 million | $220.9 million |
| Net loss | $349.8 million | $224.2 million |
| Net loss attributable to ImmunityBio common stockholders | $346.8 million | $221.9 million |
| Net cash used in operating activities | $274.4 million | $171.7 million |
Revenue increased 54%, but remained immaterial relative to operating expenses; operating margins are not meaningful at this revenue level. R&D expense rose 40.5% and SG&A rose 89.7%. Stock-based compensation increased to $57.2 million from $2.2 million, contributing substantially to expense growth. Interest expense was $14.8 million, versus $9.1 million.
At year-end, cash and cash equivalents were $181.1 million and marketable securities were $136.8 million, totaling $317.9 million. Current assets were $334.3 million and current liabilities were $369.0 million. Total assets were $468.9 million; total liabilities were $712.8 million, and total stockholders’ deficit was $243.9 million. Accumulated deficit was $2.0 billion.
Related-party notes and accrued interest totaled $605.6 million, including a $300.0 million variable-rate note due December 17, 2022, bearing Term SOFR plus 5.4% (5.47% at year-end). The balance is convertible into common stock at $5.67 per share in specified default circumstances. The other $306.3 million was due September 30, 2025. Financing activities provided $505.4 million, including $338.5 million of related-party borrowing and $164.5 million net proceeds from the ATM offering.
Material changes and unusual items
- Net loss increased 56% year over year, while operating cash use increased by $102.7 million.
- The March 2021 merger broadened the company’s pipeline and operations. Merger-related costs were $13.0 million in 2021; $23.3 million was recorded across 2020 and 2021.
- The company wrote down $4.4 million of prepaid balances under agreements with the related-party Immuno-Oncology Clinic during 2021, including $2.5 million in the fourth quarter.
- In February 2022, the company acquired a leasehold interest in a New York manufacturing facility for approximately $40 million. The arrangement includes a $1.52 billion operating-expense commitment over the initial 10-year term, employee-hiring commitments and potential tax benefits, subject to conditions.
- In February 2022, authorized common shares increased from 500 million to 900 million. The ATM program had $330.8 million available for future issuance at year-end.
Outlook, commentary and risks
Management said it expected to discuss and pursue a BLA filing for Anktiva plus BCG for BCG-unresponsive bladder CIS, then anticipated in the first quarter of 2022. Anktiva had FDA Breakthrough Therapy and Fast Track designations for this use; those designations do not guarantee approval. The company reported that trial results met the primary endpoints for CIS and papillary cohorts. These are company-reported clinical findings, not regulatory approval or established commercial outcomes.
Management expects substantial operating losses, R&D spending and capital needs to continue. The filing states that substantial doubt existed about the company’s ability to continue as a going concern without additional funding or support, but management believed cash, potential equity issuance and potential affiliated-party borrowing would fund operations for at least 12 months after issuance of the financial statements. This assessment depended in part on the Executive Chairman’s stated intent and ability to provide support; no committed source of additional capital was disclosed.
Key risks include clinical and regulatory failure or delay, manufacturing scale-up and supply constraints, continuing cash burn and refinancing the 2022 note, potential dilution, and reliance on related parties. Potential Anktiva contingent value right payments include approximately $304 million upon qualifying regulatory approval and approximately $304 million upon the specified sales milestone; some holders may elect cash, while the Executive Chairman and related party elected stock. Litigation and arbitration include disputes involving Sorrento, Beike and former Altor stockholders. The company reported effective internal control over financial reporting and received unqualified audit opinions on its financial statements and internal controls.
Investor verification priorities
- Confirm the status and terms of any Anktiva BLA submission, FDA review and confirmatory or additional clinical requirements.
- Assess cash runway against operating cash burn, the $300 million December 2022 maturity, and the assumptions underlying management’s going-concern assessment.
- Review the related-party debt, interest terms, conversion provisions, financing support expectations and potential equity dilution.
- Evaluate the conditions, timing and potential cash-versus-stock settlement of Anktiva CVRs, as well as other milestone and contractual commitments.
- Verify the operational, hiring and spending obligations associated with the Dunkirk facility and the company’s ability to realize the stated manufacturing and tax benefits.
- Track final clinical data and regulatory interpretation of reported Anktiva results, and the status and potential exposure of material disputes.