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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, 2021

or

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: 000-29089

Agenus Inc.

(exact name of registrant as specified in its charter)

 

 

Delaware

 

06-1562417

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

3 Forbes Road, Lexington, Massachusetts 02421

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(781) 674-4400

 

Securities registered or to be 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

AGEN

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, 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  

 

Number of shares outstanding of the issuer’s Common Stock as of May 4, 2021: 222,441,009 shares

 

 

 

 


 

 

Agenus Inc.

Three Months Ended March 31, 2021

Table of Contents

 

 

 

 

 

Page

PART I

 

 

ITEM 1.

 

Financial Statements:

 

2

 

 

Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020

 

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2021 and 2020 (Unaudited)

 

3

 

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the three months ended March 31, 2021 and 2020 (Unaudited)

 

4

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (Unaudited)

 

6

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

7

ITEM 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

17

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

21

ITEM 4.

 

Controls and Procedures

 

22

 

 

 

PART II

 

 

ITEM 1A.

 

Risk Factors

 

23

ITEM 6.

 

Exhibits

 

78

 

 

Signatures

 

79

 

 

 

 


 

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

 

 

 

March 31, 2021

(unaudited)

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

119,366

 

 

$

99,871

 

Accounts receivable

 

 

2,173

 

 

 

1,157

 

Prepaid expenses

 

 

10,678

 

 

 

10,746

 

Other current assets

 

 

3,446

 

 

 

2,009

 

Total current assets

 

 

135,663

 

 

 

113,783

 

Property, plant and equipment, net of accumulated amortization and depreciation of

   $48,354 and $47,201 at March 31, 2021 and December 31, 2020, respectively

 

 

27,149

 

 

 

26,790

 

Operating lease right-of-use assets

 

 

33,585

 

 

 

33,480

 

Goodwill

 

 

24,334

 

 

 

25,452

 

Acquired intangible assets, net of accumulated amortization of $12,176 and

   $11,841 at March 31, 2021 and December 31, 2020, respectively

 

 

9,994

 

 

 

10,886

 

Other long-term assets

 

 

4,190

 

 

 

4,123

 

Total assets

 

$

234,915

 

 

$

214,514

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current portion, long-term debt

 

$

1,463

 

 

$

833

 

Current portion, liability related to sale of future royalties and milestones

 

 

55,286

 

 

 

57,362

 

Current portion, deferred revenue

 

 

22,826

 

 

 

17,186

 

Current portion, operating lease liabilities

 

 

2,058

 

 

 

1,950

 

Accounts payable

 

 

19,477

 

 

 

17,015

 

Accrued liabilities

 

 

31,048

 

 

 

29,057

 

Other current liabilities

 

 

6,216

 

 

 

6,481

 

Total current liabilities

 

 

138,374

 

 

 

129,884

 

Long-term debt, net of current portion

 

 

18,913

 

 

 

18,879

 

Liability related to sale of future royalties and milestones, net of current portion

 

 

185,432

 

 

 

176,263

 

Deferred revenue, net of current portion

 

 

21,555

 

 

 

28,282

 

Operating lease liabilities, net of current portion

 

 

35,187

 

 

 

34,065

 

Contingent purchase price considerations

 

 

9,164

 

 

 

10,208

 

Other long-term liabilities

 

 

1,643

 

 

 

1,514

 

Commitments and contingencies

 

 

 

 

 

 

 

 

CONVERTIBLE PREFERRED STOCK

 

 

 

 

 

 

 

 

Preferred stock, par value $0.01 per share; 5,000,000 shares authorized:

 

 

 

 

 

 

 

 

Series C-1 convertible preferred stock; 10,459 and 12,459 shares designated, issued,

   and outstanding at March 31, 2021 and December 31, 2020, respectively

 

 

22,596

 

 

 

26,917

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Series A-1 convertible preferred stock; 31,620 shares designated, issued, and

   outstanding at March 31, 2021 and December 31, 2020; liquidation value

   of $33,302 at March 31, 2021

 

 

0

 

 

 

0

 

Common stock, par value $0.01 per share; 400,000,000 shares authorized;

   217,861,586 and 196,090,980 shares issued at March 31, 2021 and

   December 31, 2020, respectively

 

 

2,179

 

 

 

1,961

 

Additional paid-in capital

 

 

1,328,747

 

 

 

1,257,502

 

Accumulated other comprehensive income (loss)

 

 

(1,002

)

 

 

2,772

 

Accumulated deficit

 

 

(1,519,584

)

 

 

(1,465,907

)

Total stockholders’ deficit attributable to Agenus Inc.

 

 

(189,660

)

 

 

(203,672

)

Non-controlling interest

 

 

(8,289

)

 

 

(7,826

)

Total stockholders’ deficit

 

 

(197,949

)

 

 

(211,498

)

Total liabilities, convertible preferred stock and stockholders’ deficit

 

$

234,915

 

 

$

214,514

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

2


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Amounts in thousands, except per share amounts)

 

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Research and development

 

$

1,571

 

 

$

1,928

 

Service revenue

 

 

1,629

 

 

 

 

Other revenue

 

 

35

 

 

 

44

 

Non-cash royalty revenue related to the sale of future royalties

 

 

8,484

 

 

 

13,156

 

Total revenues

 

 

11,719

 

 

 

15,128

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of service revenue

 

 

(1,105

)

 

 

 

Research and development

 

 

(36,677

)

 

 

(36,363

)

General and administrative

 

 

(16,352

)

 

 

(10,613

)

Contingent purchase price consideration fair value adjustment

 

 

1,044

 

 

 

4,384

 

Operating loss

 

 

(41,371

)

 

 

(27,464

)

Other income (expense):

 

 

 

 

 

 

 

 

Loss on modification of debt

 

 

 

 

 

(2,720

)

Non-operating income (expense)

 

 

2,858

 

 

 

(1,052

)

Interest expense, net

 

 

(15,890

)

 

 

(14,035

)

Net loss

 

 

(54,403

)

 

 

(45,271

)

Dividends on Series A-1 convertible preferred stock

 

 

(53

)

 

 

(52

)

Less: net loss attributable to non-controlling interest

 

 

(726

)

 

 

(597

)

Net loss attributable to Agenus Inc. common stockholders

 

$

(53,730

)

 

$

(44,726

)

Per common share data:

 

 

 

 

 

 

 

 

Basic and diluted net loss attributable to Agenus Inc. common stockholders

 

$

(0.27

)

 

$

(0.31

)

Weighted average number of Agenus Inc. common shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

200,331

 

 

 

145,061

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

(3,774

)

 

$

1,227

 

Other comprehensive income (loss)

 

 

(3,774

)

 

 

1,227

 

Comprehensive loss

 

$

(57,504

)

 

$

(43,499

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

 

3


 

AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

(Amounts in thousands)

 

 

 

 

Series C-1

 

 

 

Series A-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

 

Number of

Shares

 

 

Par

Value

 

 

Number of

Shares

 

 

Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Non-controlling

Interest

 

 

Accumulated

Deficit

 

 

Total

 

Balance at December 31, 2020

 

 

12

 

 

$

26,917

 

 

 

 

32

 

 

$

0

 

 

 

196,093

 

 

$

1,961

 

 

$

1,257,502

 

 

$

2,772

 

 

$

(7,826

)

 

$

(1,465,907

)

 

$

(211,498

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(726

)

 

 

(53,677

)

 

 

(54,403

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,774

)

 

 

 

 

 

 

 

 

(3,774

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,669

 

 

 

 

 

 

263

 

 

 

 

 

 

3,932

 

Shares sold at the market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,950

 

 

 

190

 

 

 

60,669

 

 

 

 

 

 

 

 

 

 

 

 

60,859

 

Payment of CEO payroll in shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

68

 

Issuance of shares for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

20

 

Conversion of series C-1 convertible preferred stock

 

 

(2

)

 

 

(4,321

)

 

 

 

 

 

 

 

 

 

2,000

 

 

 

20

 

 

 

4,301

 

 

 

 

 

 

 

 

 

 

 

 

4,321

 

Exercise of stock options and employee share purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

796

 

 

 

8

 

 

 

2,518

 

 

 

 

 

 

 

 

 

 

 

 

2,526

 

Balance at March 31, 2021

 

 

10

 

 

$

22,596

 

 

 

 

32

 

 

$

0

 

 

 

217,863

 

 

$

2,179

 

 

$

1,328,747

 

 

$

(1,002

)

 

$

(8,289

)

 

$

(1,519,584

)

 

$

(197,949

)

 

 

 

4


 

AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

(Amounts in thousands)

 

 

 

 

 

Series C-1

 

 

 

Series A-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

 

Number of

Shares

 

 

Par

Value

 

 

Number of

Shares

 

 

Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Non-controlling

Interest

 

 

Accumulated

Deficit

 

 

Total

 

Balance at December 31, 2019

 

 

12

 

 

$

26,917

 

 

 

 

32

 

 

$

0

 

 

 

137,819

 

 

$

1,378

 

 

$

1,059,583

 

 

$

(1,324

)

 

$

(5,981

)

 

$

(1,284,993

)

 

$

(231,337

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(597

)

 

 

(44,674

)

 

 

(45,271

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,227

 

 

 

 

 

 

 

 

 

1,227

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,397

 

 

 

 

 

 

 

 

 

 

 

 

2,397

 

Shares sold at the market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,716

 

 

 

247

 

 

 

64,876

 

 

 

 

 

 

 

 

 

 

 

 

65,123

 

Amendment of 2015 warrants and issuance of 2020 warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,145

 

 

 

 

 

 

 

 

 

 

 

 

3,145

 

Payment of consultant in shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

0

 

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

12

 

Exercise of stock options and employee share purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

765

 

 

 

8

 

 

 

2,196

 

 

 

 

 

 

 

 

 

 

 

 

2,204

 

Balance at March 31, 2020

 

 

12

 

 

$

26,917

 

 

 

 

32

 

 

$

0

 

 

 

163,304

 

 

$

1,633

 

 

$

1,132,209

 

 

$

(97

)

 

$

(6,578

)

 

$

(1,329,667

)

 

$

(202,500

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

5


 

AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(54,403

)

 

$

(45,271

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,729

 

 

 

1,700

 

Share-based compensation

 

 

4,001

 

 

 

2,397

 

Non-cash royalty revenue

 

 

(8,484

)

 

 

(13,156

)

Non-cash interest expense

 

 

15,611

 

 

 

13,844

 

Change in fair value of contingent obligations

 

 

(1,044

)

 

 

(4,384

)

Loss on modification of debt

 

 

 

 

 

2,720

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,039

)

 

 

13,649

 

Prepaid expenses

 

 

53

 

 

 

465

 

Accounts payable

 

 

1,646

 

 

 

1,190

 

Deferred revenue

 

 

(1,087

)

 

 

(1,875

)

Accrued liabilities and other current liabilities

 

 

2,255

 

 

 

(8,471

)

Other operating assets and liabilities

 

 

(1,982

)

 

 

2,687

 

Net cash used in operating activities

 

 

(42,744

)

 

 

(34,505

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of plant and equipment

 

 

(196

)

 

 

(644

)

Net cash used in investing activities

 

 

(196

)

 

 

(644

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from sale of equity

 

 

60,859

 

 

 

65,123

 

Proceeds from employee stock purchases and option exercises

 

 

2,526

 

 

 

2,204

 

Repayments of debt

 

 

(232

)

 

 

(500

)

Payment of finance lease obligation

 

 

(191

)

 

 

(1,214

)

Net cash provided by financing activities

 

 

62,962

 

 

 

65,613

 

Effect of exchange rate changes on cash

 

 

(492

)

 

 

12

 

Net increase in cash, cash equivalents and restricted cash

 

 

19,530

 

 

 

30,476

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

102,505

 

 

 

61,808

 

Cash, cash equivalents and restricted cash, end of period

 

$

122,035

 

 

$

92,284

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

278

 

 

$

204

 

Supplemental disclosures - non-cash activities:

 

 

 

 

 

 

 

 

Purchases of plant and equipment in accounts payable and

   accrued liabilities

 

 

991

 

 

 

246

 

Issuance of common stock, $0.01 par value, in connection with payment for services

 

 

20

 

 

 

12

 

Conversion of series C-1 convertible preferred stock to common stock, $0.01 par value

 

 

4,321

 

 

 

 

Insurance financing agreement

 

 

987

 

 

 

 

Lease right-of-use assets obtained in exchange for new operating lease liabilities

 

 

1,116

 

 

 

7,467

 

Lease right-of-use assets obtained in exchange for new finance lease liabilities

 

 

156

 

 

 

2,434

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

6


AGENUS INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

 

Note A - Business, Liquidity and Basis of Presentation

Agenus Inc. (including its subsidiaries, collectively referred to as “Agenus,” the “Company,” “we,” “us,” and “our”) is a clinical-stage immuno-oncology (“I-O”) company advancing an extensive pipeline of immune checkpoint antibodies, adoptive cell therapies and neoantigen vaccines, to fight cancer and infections. Our business is designed to drive success in I-O through speed, innovation and effective combination therapies. We believe that combination therapies and a deep understanding of each patient’s cancer will drive substantial expansion of the patient population benefiting from current I-O therapies. In addition to a diverse pipeline, we have assembled fully integrated end-to-end capabilities including novel target discovery, antibody generation, cell line development and current good manufacturing practice manufacturing. We believe that these fully integrated capabilities enable us to produce novel candidates on timelines that are shorter than the industry standard. Leveraging our science and capabilities, we have forged important partnerships to advance our innovation.

We are developing a comprehensive I-O portfolio driven by the following platforms and programs, which we intend to utilize individually and in combination:

 

our multiple antibody discovery platforms, including our proprietary display technologies, designed to drive the discovery of future CPM antibody candidates;

 

our antibody candidate programs, including our CPM programs;

 

our vaccine programs, including Prophage™, AutoSynVax™ and PhosPhoSynVax ™;  

 

our saponin-based vaccine adjuvants, principally our QS-21 Stimulon™ adjuvant, or QS-21 Stimulon; and

 

our cell therapy subsidiary, AgenTus Therapeutics, Inc., which is designed to drive the discovery of future adoptive cell therapy, or “living drugs” programs.

Our business activities include product research and development, intellectual property prosecution, manufacturing, regulatory and clinical affairs, corporate finance and development activities, and support of our collaborations. Our product candidates require clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace. Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing arrangements with academic and corporate collaborators and licensees and by entering into new collaborations.

Our cash and cash equivalents at March 31, 2021 were $119.4 million, an increase of $19.5 million from December 31, 2020.

          We have incurred losses since our inception. As of March 31, 2021, we had an accumulated deficit of $1.5 billion.

During the past five years, we have successfully financed our operations through corporate partnerships, advance royalty sales and the sale of equity. Based on our current plans and projections, we believe that our cash resources of $119.4 million as of March 31, 2021, plus additional funding we anticipate from corporate events, will be sufficient to satisfy our liquidity requirements through the end of the year and into 2022. We are presently in financing, partnership, and out licensing discussions which, if consummated, could extend our cash resources further into and beyond 2022. Until we are successful in our efforts for capital infusion through these transactions or other financing options, and because the completion of such transactions is not entirely within our control, in accordance with accounting guidance we are required to disclose that substantial doubt exists about our ability to continue as a going concern for a period of one year after the date of filing of this Quarterly Report on Form 10-Q.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the financial statements have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Management continues to address the Company’s liquidity position and has the flexibility to adjust spending as needed in order to preserve liquidity. In March 2020, in response to the COVID-19 pandemic, we streamlined our organization, which included a headcount reduction, and our CEO, Dr. Garo Armen, elected to receive his base salary in stock rather than cash for the remainder of 2020 and through the first half of 2021. We continuously evaluate the likelihood of success of our programs. As such, our decisions to continue to fund or eliminate funding of each of our programs are predicated on these determinations, on an ongoing basis. We expect our potential sources of funding to include: (1) collaborations, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties (2) renegotiating third party agreements, (3) selling assets, (4) securing additional debt financing and/or (5) selling equity securities.

7


The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual consolidated financial statements. In the opinion of our management, the condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of our financial position and operating results. All significant intercompany transactions and accounts have been eliminated in consolidation. Operating results for the three months ended March 31, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. For further information, refer to our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 16, 2021.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

For our foreign subsidiaries, the local currency is the functional currency. Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates during the period. The cumulative translation adjustment resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive loss in total stockholders’ deficit.

 

 

Note B - Net Loss Per Share

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our Amended and Restated Directors’ Deferred Compensation Plan, or “DDCP”). Diluted loss per common share is calculated by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our DDCP) plus the dilutive effect of outstanding instruments such as warrants, stock options, non-vested shares and convertible preferred stock. Because we reported a net loss attributable to common stockholders for all periods presented, diluted loss per common share is the same as basic loss per common share, as the effect of utilizing the fully diluted share count would have reduced the net loss per common share. The following securities (listed on an as-if-converted-to-Common-Stock basis) have been excluded from the computation of diluted weighted average shares outstanding as of March 31, 2021 and 2020, as they would be anti-dilutive (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Warrants

 

 

1,950

 

 

 

2,025

 

Stock options

 

 

29,960

 

 

 

27,707

 

Non-vested shares

 

 

1,142

 

 

 

888

 

Series A-1 convertible preferred stock

 

 

333

 

 

 

333

 

Series C-1 convertible preferred stock

 

 

10,459

 

 

 

12,459

 

 

Note C - Investments

Cash equivalents consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Cost

 

 

Estimated

Fair Value

 

 

Cost

 

 

Estimated

Fair Value

 

Institutional money market funds

 

$

94,928

 

 

$

94,928

 

 

$

64,256

 

 

$

64,256

 

U.S. Treasury Bills

 

 

10,003

 

 

 

10,003

 

 

 

20,000

 

 

 

20,000

 

Total