Quarterly Report (10-q)

Date : 08/06/2019 @ 8:09PM
Source : Edgar (US Regulatory)
Stock : NantKwest Inc (NK)
Quote : 2.88  0.68 (30.91%) @ 5:00AM
After Hours
Last Trade
Last $ 2.78 ▼ -0.10 (-3.47%)

Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10‑Q

 

(Mark One)

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

For the quarterly period ended June 30, 2019

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: 001-37507

 

NANTKWEST, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

43-1979754

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

3530 John Hopkins Court

San Diego, California

 

92121

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (858) 633-0300 

 

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, $0.0001 par value per share

 

NK

 

The Nasdaq Global Select 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  

As of August 2, 2019 the registrant had 98,307,859 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

-i -


 

PART I FINANCI AL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

NantKwest, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share amounts)

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,279

 

 

$

16,821

 

Restricted cash

 

 

250

 

 

 

 

Prepaid expenses and other current assets

 

 

2,746

 

 

 

13,900

 

Marketable debt securities, available-for-sale

 

 

66,773

 

 

 

57,328

 

Notes receivable, held-to-maturity

 

 

 

 

 

723

 

Total current assets

 

 

87,048

 

 

 

88,772

 

Marketable debt securities, noncurrent

 

 

1,483

 

 

 

5,701

 

Property, plant and equipment, net

 

 

65,089

 

 

 

76,885

 

Operating lease right-of-use assets, net

 

 

12,513

 

 

 

 

Investment in equity securities

 

 

9,253

 

 

 

8,500

 

Intangible assets, net

 

 

 

 

 

565

 

Other assets

 

 

310

 

 

 

1,527

 

Total assets

 

$

175,696

 

 

$

181,950

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,927

 

 

$

2,793

 

Accrued expenses

 

 

6,466

 

 

 

21,104

 

Due to related parties

 

 

957

 

 

 

1,696

 

Other current liabilities

 

 

3,080

 

 

 

1,667

 

Total current liabilities

 

 

12,430

 

 

 

27,260

 

Operating lease liability, less current portion

 

 

11,997

 

 

 

 

Financing obligation, less current portion

 

 

 

 

 

5,945

 

Deferred rent

 

 

 

 

 

2,739

 

Total liabilities

 

 

24,427

 

 

 

35,944

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value per share; 500,000,000 shares authorized;

   98,307,859 and 79,087,734 shares issued and outstanding at June 30, 2019 and

   December 31, 2018, respectively

 

 

10

 

 

 

8

 

Additional paid-in capital

 

 

782,312

 

 

 

741,246

 

Accumulated other comprehensive loss

 

 

(84

)

 

 

(267

)

Accumulated deficit

 

 

(630,969

)

 

 

(594,981

)

Total stockholders’ equity

 

 

151,269

 

 

 

146,006

 

Total liabilities and stockholders’ equity

 

$

175,696

 

 

$

181,950

 

 

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

1


 

NantKwest, Inc.

Condensed Consolidated Statements of Operations

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

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

17

 

 

$

4

 

 

$

22

 

 

$

9

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (including amounts with

   related parties)

 

 

13,131

 

 

 

14,688

 

 

 

25,729

 

 

 

28,679

 

Selling, general and administrative (including amounts

   with related parties)

 

 

4,182

 

 

 

13,594

 

 

 

9,924

 

 

 

27,892

 

Total operating expenses

 

 

17,313

 

 

 

28,282

 

 

 

35,653

 

 

 

56,571

 

Loss from operations

 

 

(17,296

)

 

 

(28,278

)

 

 

(35,631

)

 

 

(56,562

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income, net

 

 

533

 

 

 

490

 

 

 

903

 

 

 

995

 

Interest expense (including amounts with related parties)

 

 

 

 

 

(106

)

 

 

(3

)

 

 

(139

)

Other income, net (including amounts with related parties)

 

 

83

 

 

 

39

 

 

 

130

 

 

 

208

 

Total other income

 

 

616

 

 

 

423

 

 

 

1,030

 

 

 

1,064

 

Loss before income taxes

 

 

(16,680

)

 

 

(27,855

)

 

 

(34,601

)

 

 

(55,498

)

Income tax (expense) benefit

 

 

(2

)

 

 

123

 

 

 

34

 

 

 

247

 

Net loss

 

$

(16,682

)

 

$

(27,732

)

 

$

(34,567

)

 

$

(55,251

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.17

)

 

$

(0.35

)

 

$

(0.38

)

 

$

(0.70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

98,594,355

 

 

 

79,107,208

 

 

 

89,975,707

 

 

 

79,071,824

 

 

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

2


 

NantKwest, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(16,682

)

 

$

(27,732

)

 

$

(34,567

)

 

$

(55,251

)

Other comprehensive income (loss), net of income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on available-for-sale securities

 

 

122

 

 

 

107

 

 

 

183

 

 

 

(67

)

Total other comprehensive income (loss)

 

 

122

 

 

 

107

 

 

 

183

 

 

 

(67

)

Comprehensive loss

 

$

(16,560

)

 

$

(27,625

)

 

$

(34,384

)

 

$

(55,318

)

 

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

3


 

NantKwest, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except for share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

 

 

 

Three months ended June 30, 2019

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

Balance at March 31, 2019

 

 

98,674,153

 

 

$

10

 

 

$

781,790

 

 

$

(206

)

 

$

(613,786

)

 

$

167,808

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

522

 

 

 

 

 

 

 

 

 

522

 

Vesting of restricted stock units (RSUs)

 

 

107,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement for RSU vesting

 

 

(224

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

(473,586

)

 

 

 

 

 

 

 

 

 

 

 

(501

)

 

 

(501

)

Other comprehensive income, net

 

 

 

 

 

 

 

 

 

 

 

122

 

 

 

 

 

 

122

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,682

)

 

 

(16,682

)

Balance at June 30, 2019

 

 

98,307,859

 

 

$

10

 

 

$

782,312

 

 

$

(84

)

 

$

(630,969

)

 

$

151,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

 

 

 

Six months ended June 30, 2019

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

Balance at December 31, 2018

 

 

79,087,734

 

 

$

8

 

 

$

741,246

 

 

$

(267

)

 

$

(594,981

)

 

$

146,006

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,873

 

 

 

 

 

 

 

 

 

1,873

 

Exercise of warrants

 

 

17,589,250

 

 

 

2

 

 

 

35,149

 

 

 

 

 

 

 

 

 

35,151

 

Exercise of stock options

 

 

1,986,300

 

 

 

 

 

 

4,070

 

 

 

 

 

 

 

 

 

4,070

 

Vesting of RSUs

 

 

157,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement for RSU vesting and

   exercise of stock options

 

 

(39,130

)

 

 

 

 

 

(26

)

 

 

 

 

 

 

 

 

(26

)

Repurchase of common stock

 

 

(473,586

)

 

 

 

 

 

 

 

 

 

 

 

(501

)

 

 

(501

)

Cumulative effect of the adoption of the

   new lease standard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(920

)

 

 

(920

)

Other comprehensive income, net

 

 

 

 

 

 

 

 

 

 

 

183

 

 

 

 

 

 

183

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,567

)

 

 

(34,567

)

Balance at June 30, 2019

 

 

98,307,859

 

 

$

10

 

 

$

782,312

 

 

$

(84

)

 

$

(630,969

)

 

$

151,269

 

 

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

4


 

NantKwest, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except for share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

 

 

 

Three months ended June 30, 2018

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

Balance at March 31, 2018

 

 

79,088,200

 

 

$

8

 

 

$

726,953

 

 

$

(555

)

 

$

(526,046

)

 

$

200,360

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

8,934

 

 

 

 

 

 

 

 

 

8,934

 

Exercise of warrants

 

 

7,405

 

 

 

 

 

 

12

 

 

 

 

 

 

 

 

 

12

 

Vesting of RSUs

 

 

83,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement for RSU vesting and

   exercise of warrants

 

 

(13,709

)

 

 

 

 

 

(50

)

 

 

 

 

 

 

 

 

(50

)

Other comprehensive income, net

 

 

 

 

 

 

 

 

 

 

 

107

 

 

 

 

 

 

107

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,732

)

 

 

(27,732

)

Balance at June 30, 2018

 

 

79,165,819

 

 

$

8

 

 

$

735,849

 

 

$

(448

)

 

$

(553,778

)

 

$

181,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

 

 

 

Six months ended June 30, 2018

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

Balance at December 31, 2017

 

 

79,021,878

 

 

$

8

 

 

$

717,930

 

 

$

(381

)

 

$

(498,713

)

 

$

218,844

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

18,007

 

 

 

 

 

 

 

 

 

18,007

 

Exercise of warrants

 

 

21,675

 

 

 

 

 

 

35

 

 

 

 

 

 

 

 

 

35

 

Vesting of RSUs

 

 

154,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement for RSU vesting and

   exercise of warrants

 

 

(31,857

)

 

 

 

 

 

(123

)

 

 

 

 

 

 

 

 

(123

)

Cumulative effect of the adoption of the new

   revenue standard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

186

 

 

 

186

 

Other comprehensive loss, net

 

 

 

 

 

 

 

 

 

 

 

(67

)

 

 

 

 

 

(67

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55,251

)

 

 

(55,251

)

Balance at June 30, 2018

 

 

79,165,819

 

 

$

8

 

 

$

735,849

 

 

$

(448

)

 

$

(553,778

)

 

$

181,631

 

 

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

5


 

NantKwest, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(34,567

)

 

$

(55,251

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,601

 

 

 

3,992

 

Stock-based compensation expense

 

 

1,873

 

 

 

18,007

 

Non-cash lease expense related to operating lease right-of-use assets

 

 

1,266

 

 

 

 

Loss on impairment and loss on disposal of assets

 

 

869

 

 

 

90

 

Non-cash interest items, net

 

 

63

 

 

 

91

 

Amortization of net premiums on marketable debt securities

 

 

1

 

 

 

343

 

Deferred income tax benefit

 

 

 

 

 

(248

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses, other current assets and other assets

 

 

10,857

 

 

 

(532

)

Operating lease right-of-use assets

 

 

(247

)

 

 

 

Accounts payable

 

 

(65

)

 

 

1,875

 

Accrued expenses and other liabilities

 

 

(12,465

)

 

 

603

 

Due to related parties

 

 

(682

)

 

 

(508

)

Operating lease liability, less current portion

 

 

(1,409

)

 

 

 

Deferred rent

 

 

 

 

 

(239

)

Net cash used in operating activities

 

 

(29,905

)

 

 

(31,777

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(3,089

)

 

 

(7,394

)

Purchase of debt securities, held-to-maturity

 

 

 

 

 

(361

)

Purchase of Viracta common stock

 

 

(3

)

 

 

 

Purchases of marketable debt securities, available-for-sale

 

 

(66,789

)

 

 

(53,503

)

Sales/maturities of marketable debt securities

 

 

61,800

 

 

 

85,571

 

Net cash (used in) provided by investing activities

 

 

(8,081

)

 

 

24,313

 

Financing activities:

 

 

 

 

 

 

 

 

Principal payments of financing lease obligations

 

 

 

 

 

(198

)

Proceeds from exercise of stock options and warrants

 

 

39,221

 

 

 

35

 

Repurchase of common stock

 

 

(501

)

 

 

 

Net share settlement for RSU vesting, and option and warrant exercises

 

 

(26

)