ImmunityBio, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Financial statements are unaudited. ImmunityBio is a clinical-stage biotechnology company focused on immunotherapies, vaccines and cell therapies; ANKTIVA was its lead product.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $0.04 million | $0.36 million |
| Research and development | $53.4 million | $79.3 million |
| Selling, general and administrative | $41.9 million | $32.7 million |
| Operating loss | $95.2 million | $111.6 million |
| Net loss | $134.1 million | $116.6 million |
| Net loss per share, basic and diluted | $0.20 | $0.27 |
| Net cash used in operating activities | $107.0 million | $84.3 million |
Revenue remained negligible and was primarily from non-product sources. Gross margin is not a meaningful indicator given the minimal revenue and pre-commercial status during the quarter.
Research and development expense fell 33%, mainly due to lower contract manufacturing, materials, regulatory and clinical-trial spending. SG&A rose 28%, primarily from higher legal and commercial-readiness costs. Operating loss narrowed, but net loss increased 15%, largely reflecting year-over-year changes in warrant fair value, new derivative and revenue-interest liability expenses, and other non-operating items. These fair-value and financing expenses make reported results more volatile.
At March 31, cash, cash equivalents and marketable securities were $170.5 million, down from $267.4 million at year-end; total assets were $400.7 million. Current assets were $195.7 million and current liabilities $53.8 million. Total liabilities were $1.092 billion, and stockholders’ deficit was $691.0 million. Related-party notes had $735 million of principal outstanding, bearing a weighted-average rate of 13.05%; the notes mature mainly in 2025, with $200 million due in 2026. The RIPA liability was $163.4 million on the balance sheet.
Management reported a $3.1 billion accumulated deficit and stated that substantial doubt about the company’s ability to continue as a going concern exists without additional funding or support. Management believes available resources, anticipated product sales, financing capacity and potential support from affiliated entities will fund operations for at least 12 months after the financial statements’ issuance; that assessment depends in part on the Executive Chairman’s stated intent and ability to provide support. Q1 financing cash inflow was $10.2 million, mainly from warrant exercises, while cash, cash equivalents and restricted cash fell by $132.4 million.
Material developments and outlook
- FDA approval after quarter-end: On April 22, 2024, the FDA approved ANKTIVA with BCG for adults with BCG-unresponsive non-muscle invasive bladder cancer with carcinoma in situ, with or without papillary tumors. The company said commercial distribution began in early May. The label reported a 62% complete response rate among 77 evaluable patients; median duration of response remained undetermined. Post-marketing commitments include completion of QUILT 3032 and annual reporting, with a final report due by the end of 2029.
- Additional financing after quarter-end: Following approval, the company requested a $100 million second payment under the Oberland revenue-interest agreement and expected it in mid-May; the filing does not confirm receipt. Oberland also exercised approximately $5 million of its stock option. Institutional holders exercised warrants after quarter-end for $43.5 million in proceeds through May 9, issuing 13.2 million shares. The ATM capacity increased to $300.8 million in April.
- Commercial and development plans: Management expects significant operating expenses to continue and R&D spending to increase as programs and trials advance; SG&A is also expected to rise to support commercialization. The company cautioned that ANKTIVA revenue may take time to develop and that future sales, market acceptance, reimbursement and profitability are uncertain. A May 2024 collaboration with Serum Institute of India is intended to support BCG supply. The company also announced positive overall-survival results from an NSCLC trial and planned an FDA discussion in June 2024; these are post-quarter developments, not Q1 financial results.
- RIPA obligations: Oberland is entitled to tiered payments based on worldwide net sales excluding China—initially 3%–7%, rising to 4.5%–10% if the second payment is funded. The arrangement includes covenants, security interests, put/call provisions, and potential true-up or other substantial payments. The company reported compliance with covenants at March 31.
Risks, contingencies and other notable items
- Execution of the ANKTIVA launch is a key business dependency. Risks include commercial uptake, pricing and reimbursement, manufacturing capacity, and availability of BCG, which is used with ANKTIVA and has faced supply constraints.
- Funding needs remain significant. Equity issuance, warrant exercises and conversion of related-party debt may dilute shareholders; debt service and RIPA payments may constrain cash and financing flexibility.
- Related-party exposure is substantial: the Executive Chairman and affiliates control approximately 78.7% of shares and hold the company’s related-party notes. The company also has service, facility and clinical-trial arrangements with affiliates.
- Legal matters include a securities class action concerning prior ANKTIVA manufacturing and regulatory disclosures, Beike arbitration relating to ANKTIVA rights in China, and an arbitration involving former Altor/NantCell executives and HCW. The company says it intends to defend the matters; potential losses for the securities action and Beike arbitration were not estimable in the filing.
- The Dunkirk manufacturing facility has construction and employee-count obligations. The company disclosed that it had not met the initial employee-count requirement and that the agreements may permit termination or recoupment of certain benefits; no such remedies had been exercised as of the filing.
- Warrant and derivative liabilities are measured using significant estimates and can cause material non-cash earnings fluctuations. Management reported disclosure controls effective as of March 31, 2024.
Key facts investors should verify
- Whether Oberland funded the requested $100 million second payment, and the resulting revenue-interest liability, payment rate and covenant implications.
- Early ANKTIVA launch performance: prescriptions, net sales, supply availability, reimbursement access and commercial costs.
- Cash burn and financing runway, including any use of the ATM or shelf capacity and any support actually provided by affiliated entities.
- BCG supply and manufacturing readiness, including the status and cost of the Dunkirk build-out and obligations tied to the facility.
- Progress and outcomes in post-marketing commitments, other clinical programs and the planned FDA discussion on NSCLC.
- Updates on the disclosed litigation and arbitrations, and any changes in potential exposure or estimated losses.
- Potential dilution from warrant exercises, convertible related-party notes, equity awards and contingent value rights.