NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share
amounts)
(Unaudited)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
764
|
|
|
$
|
372
|
|
Prepaid expenses and other current assets
|
|
|
2,844
|
|
|
|
2,828
|
|
Total current assets
|
|
|
3,608
|
|
|
|
3,200
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
317
|
|
|
|
281
|
|
Construction in progress
|
|
|
171
|
|
|
|
171
|
|
Right-of-use asset, net
|
|
|
4,334
|
|
|
|
4,679
|
|
Other assets
|
|
|
753
|
|
|
|
798
|
|
Total non-current assets
|
|
|
5,575
|
|
|
|
5,929
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
9,183
|
|
|
$
|
9,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
7,173
|
|
|
$
|
6,348
|
|
Accounts payable and accrued expenses to related parties and affiliates
|
|
|
823
|
|
|
|
842
|
|
Convertible notes, net
|
|
|
1,563
|
|
|
|
568
|
|
Convertible notes to related party, net
|
|
|
252
|
|
|
|
-
|
|
Notes payable, net
|
|
|
10,501
|
|
|
|
5,501
|
|
Notes payable to related party
|
|
|
-
|
|
|
|
66
|
|
Contingent payable derivative liability
|
|
|
6,679
|
|
|
|
7,261
|
|
Warrant liability
|
|
|
12,106
|
|
|
|
20,213
|
|
Shares payable
|
|
|
178
|
|
|
|
-
|
|
Lease liabilities
|
|
|
384
|
|
|
|
395
|
|
Total current liabilities
|
|
|
39,659
|
|
|
|
41,194
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
Note payable, net of current portion, net
|
|
|
-
|
|
|
|
6,588
|
|
Lease liabilities, net of current portion
|
|
|
4,516
|
|
|
|
4,914
|
|
Total non-current liabilities
|
|
|
4,516
|
|
|
|
11,502
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
44,175
|
|
|
|
52,696
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES (Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit:
|
|
|
|
|
|
|
|
|
Preferred stock ($0.001 par value); 100,000,000 shares authorized as of March 31, 2020 and December 31, 2019, respectively
|
|
|
-
|
|
|
|
-
|
|
Common stock ($0.001 par value); 1,200,000,000 shares authorized; 662.1 million and 614.3 million shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
|
|
662
|
|
|
|
614
|
|
Additional paid-in capital
|
|
|
799,660
|
|
|
|
794,900
|
|
Stock subscription receivable
|
|
|
(10
|
)
|
|
|
(10
|
)
|
Accumulated deficit
|
|
|
(837,181
|
)
|
|
|
(839,907
|
)
|
Accumulated other comprehensive income
|
|
|
1,877
|
|
|
|
836
|
|
Total stockholders' deficit
|
|
|
(34,992
|
)
|
|
|
(43,567
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
9,183
|
|
|
$
|
9,129
|
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts)
(Unaudited)
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
Research and other
|
|
$
|
570
|
|
|
$
|
339
|
|
Total revenues
|
|
|
570
|
|
|
|
339
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
3,757
|
|
|
|
3,004
|
|
General and administrative
|
|
|
4,171
|
|
|
|
3,562
|
|
Legal expenses
|
|
|
375
|
|
|
|
1,539
|
|
Total operating costs and expenses
|
|
|
8,303
|
|
|
|
8,105
|
|
Loss from operations
|
|
|
(7,733
|
)
|
|
|
(7,766
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Change in fair value of derivative liabilities
|
|
|
12,927
|
|
|
|
(12,021
|
)
|
Loss from extinguishment of debt
|
|
|
(715
|
)
|
|
|
(788
|
)
|
Interest expense
|
|
|
(625
|
)
|
|
|
(756
|
)
|
Foreign currency transaction gain (loss)
|
|
|
(1,128
|
)
|
|
|
385
|
|
Total other income (expense)
|
|
|
10,459
|
|
|
|
(13,180
|
)
|
Net income (loss)
|
|
$
|
2,726
|
|
|
$
|
(20,946
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
1,041
|
|
|
|
56
|
|
Total comprehensive income (loss)
|
|
$
|
3,767
|
|
|
$
|
(20,890
|
)
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share applicable to common stockholders
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.00
|
|
|
$
|
(0.04
|
)
|
Diluted
|
|
$
|
0.00
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing basic earnings (loss) per share
|
|
|
640,390
|
|
|
|
529,133
|
|
Weighted average shares used in computing diluted earnings (loss) per share
|
|
|
648,858
|
|
|
|
529,133
|
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Par
value
|
|
|
Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Income
|
|
|
Equity
(Deficit)
|
|
Balance at January 1, 2020
|
|
|
614,292
|
|
|
$
|
614
|
|
|
$
|
794,900
|
|
|
$
|
(10
|
)
|
|
$
|
(839,907
|
)
|
|
$
|
836
|
|
|
$
|
(43,567
|
)
|
Issuance of common stock
and warrants for cash in a registered direct
offering (net of $3.6 million warrant liability and $0.4 million cash
offering cost)
|
|
|
34,466
|
|
|
|
34
|
|
|
|
2,011
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,045
|
|
Issuance of common stock
and warrants for conversion of debt and
accrued interest
|
|
|
12,417
|
|
|
|
13
|
|
|
|
2,386
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,399
|
|
Stock-based compensation
|
|
|
973
|
|
|
|
1
|
|
|
|
363
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
364
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,726
|
|
|
|
-
|
|
|
|
2,726
|
|
Cumulative
translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,041
|
|
|
|
1,041
|
|
Balance at March
31, 2020
|
|
|
662,148
|
|
|
$
|
662
|
|
|
$
|
799,660
|
|
|
$
|
(10
|
)
|
|
$
|
(837,181
|
)
|
|
$
|
1,877
|
|
|
$
|
(34,992
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
|
Par
value
|
|
|
|
Capital
|
|
|
|
Receivable
|
|
|
|
Deficit
|
|
|
|
Income
|
|
|
|
Equity
(Deficit)
|
|
Balance
at January 1, 2019
|
|
|
523,232
|
|
|
$
|
523
|
|
|
$
|
775,741
|
|
|
$
|
(10
|
)
|
|
$
|
(824,413
|
)
|
|
$
|
1,000
|
|
|
$
|
(47,159
|
)
|
Warrants
exercised for cash
|
|
|
2,986
|
|
|
|
3
|
|
|
|
685
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
688
|
|
Reclassification
of warrant liabilities related to warrants exercised for
cash
|
|
|
-
|
|
|
|
-
|
|
|
|
509
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
509
|
|
Issuance
of common stock and warrants for conversion of debt and
accrued interest
|
|
|
10,873
|
|
|
|
11
|
|
|
|
2,990
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,001
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
553
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
553
|
|
Cumulative
effect of adopting new accounting standard
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,802
|
|
|
|
-
|
|
|
|
4,802
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,946
|
)
|
|
|
-
|
|
|
|
(20,946
|
)
|
Cumulative
translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56
|
|
|
|
56
|
|
Balance at March
31, 2019
|
|
|
537,091
|
|
|
$
|
537
|
|
|
$
|
780,478
|
|
|
$
|
(10
|
)
|
|
$
|
(840,557
|
)
|
|
$
|
1,056
|
|
|
$
|
(58,496
|
)
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
`
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
2,726
|
|
|
$
|
(20,946
|
)
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
14
|
|
|
|
2
|
|
Amortization of debt discount
|
|
|
343
|
|
|
|
296
|
|
Change in fair value of derivatives
|
|
|
(12,927
|
)
|
|
|
12,021
|
|
Loss from extinguishment of debt
|
|
|
715
|
|
|
|
788
|
|
Amortization of operating lease right-of-use asset
|
|
|
80
|
|
|
|
26
|
|
Stock-based compensation for services
|
|
|
364
|
|
|
|
553
|
|
Subtotal of non-cash charges
|
|
|
(11,411
|
)
|
|
|
13,686
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(78
|
)
|
|
|
(705
|
)
|
Other non-current assets
|
|
|
-
|
|
|
|
9
|
|
Accounts payable and accrued expenses
|
|
|
1,208
|
|
|
|
(65
|
)
|
Related party accounts payable and accrued expenses
|
|
|
(19
|
)
|
|
|
(1,859
|
)
|
Lease liabilities
|
|
|
35
|
|
|
|
129
|
|
Net cash used in operating activities
|
|
|
(7,539
|
)
|
|
|
(9,751
|
)
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Additional cost of leasehold improvement related to UK construction
|
|
|
-
|
|
|
|
(164
|
)
|
Purchase of equipment
|
|
|
(62
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(62
|
)
|
|
|
(164
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock and warrants in a registered direct offering, net
|
|
|
5,671
|
|
|
|
-
|
|
Proceeds from exercise of warrants
|
|
|
-
|
|
|
|
688
|
|
Proceeds from issuance of notes payable, net
|
|
|
-
|
|
|
|
4,000
|
|
Proceeds from issuance of convertible notes payable, net
|
|
|
1,000
|
|
|
|
-
|
|
Proceeds from issuance of convertible notes payable to related party
|
|
|
240
|
|
|
|
-
|
|
Proceeds from investor advance
|
|
|
178
|
|
|
|
-
|
|
Repayment of notes payable
|
|
|
-
|
|
|
|
(420
|
)
|
Repayment of notes payable to related parties
|
|
|
(64
|
)
|
|
|
(329
|
)
|
Net cash provided by financing activities
|
|
|
7,025
|
|
|
|
3,939
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
968
|
|
|
|
40
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
392
|
|
|
|
(5,936
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of the year
|
|
|
372
|
|
|
|
22,224
|
|
Cash and cash equivalents, end of the year
|
|
$
|
764
|
|
|
$
|
16,288
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Interest payments on notes payable
|
|
$
|
-
|
|
|
$
|
(43
|
)
|
Interest payments on notes payable to related party
|
|
$
|
(9
|
)
|
|
$
|
(131
|
)
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Reclassification of warrant liabilities related to warrants exercised for cash
|
|
$
|
-
|
|
|
$
|
509
|
|
Issuance of common stock and warrants for conversion of debt and accrued interest
|
|
$
|
1,789
|
|
|
$
|
2,213
|
|
Offering cost related to warrant liability
|
|
$
|
2,606
|
|
|
$
|
-
|
|
Issuance of warrants in conjunction with convertible note payable
|
|
$
|
79
|
|
|
$
|
-
|
|
Issuance of warrants in conjunction with convertible note payable to related party
|
|
$
|
-
|
|
|
$
|
-
|
|
Issuance of warrants in connection with debt modification
|
|
$
|
315
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
1. Organization and Description
of Business
Northwest Biotherapeutics, Inc. and its
wholly owned subsidiaries NW Bio GmbH, Aracaris Ltd, Aracaris Capital, Ltd, and Northwest Biotherapeutics B.V. (collectively, the
“Company”, “we”, “us” and “our”) were organized to discover and develop innovative
immunotherapies for cancer. The Company has developed DCVax® platform technologies for both operable and inoperable solid tumor
cancers.
The Company relies upon contract manufacturers
for production of its DCVax products, research and development services, distribution and logistics, and related services, in compliance
with the Company’s specifications and the applicable regulatory requirements. The companies are Cognate BioServices in the
U.S. and Advent BioServices (a related party) in the U.K. Both of these companies specialize in the production of living cell products.
2. Financial Condition, Going Concern
and Management Plans
The Company has incurred annual net operating losses since its
inception. Management believes that the Company has access to capital resources through the sale of equity and debt financing arrangements.
However, the Company has not secured any commitments for new financing for this specific purpose at this time.
The Company does not expect to generate material revenue in
the near future from the sale of products and is subject to all of the risks and uncertainties that are typically faced by biotechnology
companies that devote substantially all of their efforts to R&D and clinical trials and do not yet have commercial products.
The Company expects to continue incurring annual losses for the foreseeable future. The Company’s existing liquidity is not
sufficient to fund its operations, anticipated capital expenditures, working capital and other financing requirements until the
Company reaches significant revenues. Until that time, the Company will need to obtain additional equity and/or debt
financing, especially if the Company experiences downturns in its business that are more severe or longer than anticipated, or
if the Company experiences significant increases in expense levels resulting from being a publicly-traded company or from expansion
of operations. If the Company attempts to obtain additional equity or debt financing, the Company cannot assume that
such financing will be available to the Company on favorable terms, or at all.
Because of recurring operating losses
and operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern
within one year from the date of this filing. The condensed consolidated financial statements have been prepared assuming that
the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome
of this uncertainty.
The COVID-19 situation, and related restrictions
and lockdowns, have adversely affected the Company’s programs and may continue to adversely affect them. However, despite
these difficulties, the Company believes that it is still substantially on track with the milestone timelines announced at the
Annual Meeting. Examples of effects of the COVID-19 situation include the following: the process for completion of
the final data collection from trial sites for the Phase 3 trial has been materially slowed by the inability to perform in-person
monitoring visits by the contract research organization, by very limited availability of investigators and staff at trial sites
(many of whom have been reassigned to treating COVID-19 patients), and substantially longer timeframes for Institutional Review
Board or Ethics Committee meetings and regulatory processes for matters other than COVID-19. The Company has been unable to undertake
compassionate use cases during part of March and during Q2, due to lockdowns, travel restrictions and hospitals focusing most
of their personnel and resources on COVID-19 patients. In addition, manufacturing of DCVax products is impeded by personnel being
under lockdown, and the buildout of the Sawston facility has been delayed by the construction sector shutdown and restrictions.
The Company anticipates that such effects of the COVID-19 situation may continue for an extended period of time. However,
the Company is exploring possible ways of mitigating these effects, such as employing double shifts for some of the Sawston facility
buildout.
3. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated
interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions
have been eliminated. Certain immaterial reclassifications have been made to prior period amounts to conform to the current period
presentation.
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
The accompanying unaudited condensed consolidated financial
statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States
of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article
8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares
its annual audited consolidated financial statements. The condensed consolidated balance sheet as of March 31, 2020, condensed
consolidated statements of operations and comprehensive loss, condensed consolidated statement of stockholders’ equity (deficit),
and the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 are unaudited, but include
all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation
of the financial position, operating results and cash flows for the periods presented. The results for the three months ended March
31, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020 or for any future interim
period. The condensed consolidated balance sheet at March 31, 2020 has been derived from audited financial statements; however,
it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying
unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements
for the year ended December 31, 2019 and notes thereto included in the Company’s annual report on Form 10-K, which was filed
with the SEC on March 16, 2020.
Use of Estimates
In preparing condensed consolidated financial statements in
conformity with U.S. GAAP, management is required 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, as well as the reported
amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported
in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions.
These estimates and assumptions include valuing equity securities in share-based payment arrangements, estimating the fair value
of financial instruments recorded as derivative liabilities, useful lives of depreciable assets and whether impairment charges
may apply.
Significant Accounting Policies
There have been no material changes in
the Company’s significant accounting policies to those previously disclosed in the 2019 Annual Report.
Recent Accounting Standards Not Yet
Adopted
Income
Taxes
In
December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU
2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain
exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.
This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020,
with early adoption permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial
statements and related disclosures
4. Fair Value Measurements
In accordance with ASC 820 (Fair Value
Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants and certain embedded conversion
feature associated with convertible debt on a recurring basis to determine the fair value of the liability. ASC 820 also establishes
a hierarchy categorizing inputs into three levels used to measure and disclose fair value. The hierarchy gives the highest priority
to quoted prices available in active markets and the lowest priority to unobservable inputs. An explanation of each level in the
hierarchy is described below:
Level 1 - Unadjusted quoted prices in active
markets for identical instruments that are accessible by the Company on the measurement date
Level 2 - Quoted prices in markets that
are not active or inputs which are either directly or indirectly observable
Level 3 - Unobservable inputs for the instrument
requiring the development of assumptions by the Company
The following table classifies the Company’s
liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2020 and December 31, 2019
(in thousands):
|
|
Fair value measured at March 31, 2020
|
|
|
|
Fair value at
|
|
|
Quoted prices in
active markets
|
|
|
Significant other
observable inputs
|
|
|
Significant
unobservable inputs
|
|
|
|
March 31, 2020
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Warrant liability
|
|
$
|
12,106
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
12,106
|
|
Embedded conversion option
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
Contingent payable derivative liability
|
|
|
6,679
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,679
|
|
Total fair value
|
|
$
|
18,797
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
18,797
|
|
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
|
|
Fair value measured at December 31, 2019
|
|
|
|
Fair value at
|
|
|
Quoted prices in
active markets
|
|
|
Significant other
observable inputs
|
|
|
Significant
unobservable inputs
|
|
|
|
December 31, 2019
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Warrant liability
|
|
$
|
20,213
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,213
|
|
Contingent payable derivative liability
|
|
|
7,261
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,261
|
|
Total fair value
|
|
$
|
27,474
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
27,474
|
|
There were no transfers between Level 1,
2 or 3 during the three-month period ended March 31, 2020.
The following table presents changes in
Level 3 liabilities measured at fair value for the three-month period ended March 31, 2020. Both observable and unobservable
inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category.
Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair
value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable
long- dated volatilities) inputs (in thousands).
|
|
Warrant
Liability
|
|
|
Embedded
Conversion Option
|
|
|
Contingent Payable
Derivative Liability
|
|
|
Total
|
|
Balance – January 1, 2020
|
|
$
|
20,213
|
|
|
$
|
-
|
|
|
$
|
7,261
|
|
|
$
|
27,474
|
|
Additional warrant liability
|
|
|
4,239
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,239
|
|
Additional embedded conversion option
|
|
|
-
|
|
|
|
11
|
|
|
|
-
|
|
|
|
11
|
|
Change in fair value
|
|
|
(12,346
|
)
|
|
|
1
|
|
|
|
(582
|
)
|
|
|
(12,927
|
)
|
Balance – March 31, 2020
|
|
$
|
12,106
|
|
|
$
|
12
|
|
|
$
|
6,679
|
|
|
$
|
18,797
|
|
A summary of the weighted average (in aggregate)
significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion
feature that are categorized within Level 3 of the fair value hierarchy as of March 31, 2020 and December 31, 2019 is as follows:
|
|
As of March 31, 2020
|
|
|
|
Warrant
Liability
|
|
|
Embedded
Conversion Option
|
|
|
Contingent Payable
Derivative Liability
|
|
Strike price
|
|
$
|
0.26
|
|
|
$
|
0.25
|
|
|
$
|
0.16
|
*
|
Remaining contractual term (years)
|
|
|
1.3
|
|
|
|
5.0
|
|
|
|
1.5
|
|
Volatility (annual)
|
|
|
81
|
%
|
|
|
95
|
%
|
|
|
73
|
%
|
Risk-free rate
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Dividend yield (per share)
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
As of December 31 2019
|
|
|
|
Warrant
Liability
|
|
|
Contingent Payable
Derivative Liability
|
|
Strike price
|
|
$
|
0.21
|
|
|
$
|
0.21
|
*
|
Remaining contractual term (years)
|
|
|
1.4
|
|
|
|
1.0
|
|
Volatility (annual)
|
|
|
74
|
%
|
|
|
62
|
%
|
Risk-free rate
|
|
|
2
|
%
|
|
|
2
|
%
|
Dividend yield (per share)
|
|
|
0
|
%
|
|
|
0
|
%
|
* contingent payable derivative liability
based on stock price as of March 31, 2020 and December 31, 2019
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
5. Stock-based Compensation
During the three months ended March 31,
2020, the Company issued approximately 1.0 million shares of its common stock to a third-party consultant performing media and
investor relations services. The Company recorded approximately $0.2 million of stock-based compensation expense based on the fair
value on the grant date.
The following table summarizes stock option
activity for the Company’s option plans during the three months ended March 31, 2020 (amount in thousands, except per share
number):
|
|
Number of Shares
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Remaining Contractual Life (in years)
|
|
|
Total Intrinsic Value
|
|
Outstanding as of January 1, 2020
|
|
|
104,659
|
|
|
$
|
0.24
|
|
|
|
8.4
|
|
|
$
|
-
|
|
Forfeited/expired
|
|
|
(1,250
|
)
|
|
|
0.21
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of March 31, 2020
|
|
|
103,409
|
|
|
$
|
0.24
|
|
|
|
8.1
|
|
|
$
|
-
|
|
Options vested and exercisable
|
|
|
99,167
|
|
|
$
|
0.24
|
|
|
|
8.1
|
|
|
$
|
-
|
|
The following table summarizes stock-based
compensation expense related to stock options for the three months ended March 31, 2020 and 2019 (in thousands):
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Research and development
|
|
$
|
(23
|
)
|
|
$
|
104
|
|
General and administrative (1)
|
|
|
387
|
|
|
|
449
|
|
Total stock-based compensation expense
|
|
$
|
364
|
|
|
$
|
553
|
|
|
(1)
|
The general and administrative expense during the three months ended March 31, 2020 and 2019 is related to the applicable vesting portion of stock options awards made in the past to directors and employees.
|
The total unrecognized compensation cost
was approximately $0.3 million as of March 31, 2020, and will be recognized over the next 2.8 years.
6. Property & Equipment
Property and equipment consist of the following
at March 31, 2020 and December 31, 2019 (in thousands):
|
|
March 31,
|
|
|
December 31,
|
|
|
Estimated
|
|
|
2020
|
|
|
2019
|
|
|
Useful Life
|
Leasehold improvements
|
|
$
|
230
|
|
|
$
|
186
|
|
|
Lesser of lease term or estimated useful life
|
Office furniture and equipment
|
|
|
63
|
|
|
|
59
|
|
|
3 years
|
Computer equipment and software
|
|
|
610
|
|
|
|
611
|
|
|
3 years
|
Land in the United Kingdom
|
|
|
84
|
|
|
|
90
|
|
|
NA
|
|
|
|
987
|
|
|
|
946
|
|
|
|
Less: accumulated depreciation
|
|
|
(670
|
)
|
|
|
(665
|
)
|
|
|
Total property, plant and equipment, net
|
|
$
|
317
|
|
|
$
|
281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction in progress
|
|
$
|
171
|
|
|
$
|
171
|
|
|
|
Depreciation expenses were approximately
$14,000 and $2,000 for the three months ended March 31, 2020 and 2019.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES
TO CONDENSED CONSOLIDATED STATEMENTS
7. Outstanding Debt
The following two tables summarize outstanding
debt as of March 31, 2020 and December 31, 2019, respectively (amount in thousands):
|
|
Maturity
Date
|
|
Stated
Interest
Rate
|
|
|
Conversion
Price
|
|
|
Face Value
|
|
|
Remaining
Debt Discount
|
|
|
Embedded
Conversion
Option
|
|
|
Carrying
Value5
|
|
Short term convertible
notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6% unsecured (1)
|
|
Due
|
|
|
6
|
%
|
|
$
|
3.09
|
|
|
$
|
135
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
135
|
|
10% unsecured (2)
|
|
Various
|
|
|
10
|
%
|
|
$
|
0.21
|
|
|
|
1,500
|
|
|
|
(72
|
)
|
|
|
-
|
|
|
|
1,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,635
|
|
|
|
(72
|
)
|
|
|
-
|
|
|
|
1,563
|
|
Short term convertible notes payable - related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10% unsecured - Related Parties (3)
|
|
On Demand
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
240
|
|
|
|
-
|
|
|
|
12
|
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240
|
|
|
|
-
|
|
|
|
12
|
|
|
|
252
|
|
Short term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8% unsecured (4)
|
|
Various
|
|
|
8
|
%
|
|
|
N/A
|
|
|
|
6,146
|
|
|
|
(357
|
)
|
|
|
-
|
|
|
|
5,789
|
|
10% unsecured (5)
|
|
Various
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
3,551
|
|
|
|
(386
|
)
|
|
|
-
|
|
|
|
3,165
|
|
12% unsecured (6)
|
|
On Demand
|
|
|
12
|
%
|
|
|
N/A
|
|
|
|
440
|
|
|
|
-
|
|
|
|
-
|
|
|
|
440
|
|
0% unsecured (7)
|
|
8/1/2020
|
|
|
0
|
%
|
|
|
N/A
|
|
|
|
1,156
|
|
|
|
(49
|
)
|
|
|
-
|
|
|
|
1,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,293
|
|
|
|
(792
|
)
|
|
|
-
|
|
|
|
10,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance as of March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,168
|
|
|
$
|
(864
|
)
|
|
$
|
12
|
|
|
$
|
12,316
|
|
|
|
Maturity
Date
|
|
Stated
Interest
Rate
|
|
|
Conversion
Price
|
|
|
Face
Value
|
|
|
Remaining
Debt Discount
|
|
|
Carrying
Value
|
|
Short
term convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6%
unsecured (1)
|
|
Due
|
|
|
6
|
%
|
|
$
|
3.09
|
|
|
$
|
135
|
|
|
$
|
-
|
|
|
$
|
135
|
|
10%
unsecured (2)
|
|
4/18/2020
|
|
|
10
|
%
|
|
$
|
0.22
|
|
|
|
500
|
|
|
|
(67
|
)
|
|
|
433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
635
|
|
|
|
(67
|
)
|
|
|
568
|
|
Short
term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8%
unsecured (4)
|
|
Various
|
|
|
8
|
%
|
|
|
N/A
|
|
|
|
555
|
|
|
|
(43
|
)
|
|
|
512
|
|
10%
unsecured (5)
|
|
Various
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
3,551
|
|
|
|
(73
|
)
|
|
|
3,478
|
|
12%
unsecured (6)
|
|
On
Demand
|
|
|
12
|
%
|
|
|
N/A
|
|
|
|
440
|
|
|
|
-
|
|
|
|
440
|
|
0%
unsecured (7)
|
|
8/1/2020
|
|
|
0
|
%
|
|
|
N/A
|
|
|
|
1,156
|
|
|
|
(85
|
)
|
|
|
1,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,702
|
|
|
|
(201
|
)
|
|
|
5,501
|
|
Short
term notes payable - related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10%
unsecured - Related Parties (8)
|
|
On
Demand
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
66
|
|
|
|
-
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
-
|
|
|
|
66
|
|
Long
term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8%
unsecured (4)
|
|
Various
|
|
|
8
|
%
|
|
|
N/A
|
|
|
|
7,008
|
|
|
|
(420
|
)
|
|
|
6,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,008
|
|
|
|
(420
|
)
|
|
|
6,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance as of December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,411
|
|
|
$
|
(688
|
)
|
|
$
|
12,723
|
|
(1)
|
This $135,000 note as of March 31, 2020 and December 31, 2019 consists of two separate 6% notes in the amounts of $110,000 and $25,000. In regard to the $110,000 note, the Company has made ongoing attempts to locate the creditor to repay or convert this note, but has been unable to locate the creditor to date. In regard to the $25,000 note, the holder has elected to convert these notes into equity, the Company has delivered the applicable conversion documents to the holder, and the Company is waiting for the holder to execute and return the documents.
|
(2)
|
In February 2020, the Company entered into multiple one-year convertible notes (the “Notes”) with multiple holders (the “Holders”) for an aggregate principal amount of $1.0 million. The Notes are convertible at $0.21 and bear interest at the rate of 10% per annum. Upon issuance of the Notes, the Holders also received a 2-year warrant to purchase a total of 1.4 million common shares at an exercise price of $0.35 per share. The fair value of the warrants was approximately $79,000 on the grant date.
|
(3)
|
On February 13, 2020, the Company’s
Senior Vice President, General Counsel, Leslie Goldman, loaned the Company $240,000, and the Company entered into a convertible
note agreement for this amount (the “Goldman Note”). The Goldman Note bears interest rate at 10% per annum, and is
repayable upon 15 days' notice from the holder.
The principal and interest of the Goldman Note is convertible at $0.25 per share.
Additionally, the Company agreed to issue 0.5 million warrants (the “Warrants”) in conjunction with the Goldman Note.
The Goldman Note also contains 50% warrants coverage upon conversion. The warrants have five-year term and have an exercise price
of $0.25.
|
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
|
The fair value of the Warrants was approximately
$48,000, which were recorded as debt discount at the issuance date. Additionally, the Goldman Note contains embedded conversion
options, that were determined to require bifurcation. The fair value of the conversion option was approximately $11,000 on the
issuance date, which was recorded as additional debt discount. The Company recorded $59,000 interest expenses as amortization
of this debt discount immediately as the term is on demand.
|
(4)
|
During the three months ended March 31, 2020, the Company converted
approximately $1.4 million of principal and $0.4 million of accrued interest into approximately 12.4 million shares of the Company’s
common stock at a fair value of $2.4 million. The Company recorded approximately $0.6 million in debt extinguishment loss from
this conversion.
|
|
|
(5)
|
The approximate $3.6 million as of March
31, 2020 and December 31, 2019 consists of various promissory notes that were issued between October 1, 2018 and November 7, 2018.
On March 30, 2020, the Company entered
into a Note Extension Agreement (the “Agreement”) with multiple holders with the following major adjustments:
- Extended
existing $3.0 million promissory notes’ maturity dates to November 24, 2020;
- Issued
a new 2-year warrant for up to 9.7 million shares of the Company’s common stock at an exercise price of $0.20 per share valued
at $487,000 on the amendment date;
The amended promissory note Agreements total were approximately
$3.0 million. Approximately $2.0 million in notes were treated as a debt modification and the remaining $1.0 million note was treated
as a debt extinguishment for accounting purposes. The Company recorded approximately $0.1 million loss on debt extinguishment.
|
|
|
(6)
|
The $440,000 balance as of March 31, 2020 and December 31, 2019 consists of two separate 12% demand notes in the amounts of $300,000 and $140,000.
|
|
|
(7)
|
On May 28, 2019, the Company issued a deferred
note to a third-party vendor pursuant to a settlement agreement resolving past matters and providing for the restart of DCVax®-Direct
Production.
As of March 31, 2020, the deferred note
had $1.2 million principal outstanding.
|
|
|
(8)
|
On September 26, 2018, Advent BioServices (“Advent”), a related party of the Company, provided a short-term loan in the amount of $65,000. The loan bears interest at 10% per annum, and is payable upon demand, with 7 days’ prior written notice to the Company. During the three months ended March 31, 2020, the Company made full repayment to Advent, including all outstanding interest.
|
The following table summarizes total interest
expenses related to outstanding notes for the three months ended March 31, 2020 and 2019, respectively (in thousands):
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Interest expenses related to outstanding notes:
|
|
|
|
|
|
|
|
|
Contractual interest
|
|
$
|
275
|
|
|
$
|
268
|
|
Amortization of debt discount
|
|
|
284
|
|
|
|
296
|
|
Total interest expenses related to outstanding notes
|
|
|
559
|
|
|
|
564
|
|
Interest expenses related to outstanding notes to related parties:
|
|
|
|
|
|
|
|
|
Contractual interest
|
|
|
4
|
|
|
|
191
|
|
Amortization of debt discount
|
|
|
59
|
|
|
|
-
|
|
Total interest expenses related to outstanding notes to related parties
|
|
|
63
|
|
|
|
191
|
|
Other interest expenses
|
|
|
3
|
|
|
|
1
|
|
Total interest expense
|
|
$
|
625
|
|
|
$
|
756
|
|
8. Net Earnings (Loss) per Share Applicable
to Common Stockholders
Basic earnings (loss) per common share
is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the reporting period.
Diluted earnings (loss) per common share is computed similar to basic earnings (loss) per common share except that it reflects
the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted
into common stock. Diluted weighted average common shares include common stock potentially issuable under the Company’s convertible
notes, warrants and vested and unvested stock options.
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
The following table sets forth the computation
of earnings (loss) per share (amounts in thousands except per share data):
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net earnings (loss) - basic
|
|
$
|
2,726
|
|
|
$
|
(20,946
|
)
|
Interest on convertible notes
|
|
|
173
|
|
|
|
-
|
|
Net earnings (loss) - diluted
|
|
$
|
2,899
|
|
|
$
|
(20,946
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
|
640,390
|
|
|
|
529,133
|
|
Convertible notes and accrued interest
|
|
|
8,468
|
|
|
|
-
|
|
Weighted average shares outstanding - diluted
|
|
|
648,858
|
|
|
|
529,133
|
|
The following securities were not included
in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented (in thousands):
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Common stock options
|
|
|
103,409
|
|
|
|
100,159
|
|
Common stock warrants
|
|
|
365,706
|
|
|
|
357,428
|
|
Contingently issuable warrants
|
|
|
11,739
|
|
|
|
11,739
|
|
Convertible notes and accrued interest
|
|
|
-
|
|
|
|
29,516
|
|
Potentially dilutive securities
|
|
|
480,854
|
|
|
|
498,842
|
|
9. Related Party Transactions
Advent BioServices Agreement
The Company has a Manufacturing Services Agreement with Advent
BioServices for manufacture of DCVax-L products at an existing facility in London, as previously reported. The Company also
has an Ancillary Services Agreement with Advent, which establishes a structure under which Advent will submit Statements of Work
(“SOWs”) for activities related to the development of the Sawston facility and the compassionate use activities in
the UK, as previously reported. To date, Advent has not yet submitted SOWs and the Company has not yet made any payments.
Related Party Expenses and Accounts
Payable
The following table summarizes expenses
incurred to related parties (i.e., amounts invoiced) during the three months ended March 31, 2020 and 2019 (amount in thousands)
(some of which remain unpaid as noted in the second table below):
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Advent BioServices
|
|
$
|
1,324
|
|
|
$
|
1,450
|
|
The following table summarizes outstanding
unpaid accounts payable held by related parties as of March 31, 2020 and December 31, 2019 (amount in thousands). These
unpaid amounts include part of the expenses reported in the table above and also certain expenses incurred in prior periods.
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Advent BioServices
|
|
$
|
820
|
|
|
$
|
834
|
|
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
Related Parties Loans
Advent BioServices Note
Advent BioServices provided a short-term
loan to the Company in the amount of $65,000 on September 26, 2018. The loan bears interest at 10% per annum, and is payable upon
demand, with 7 days’ prior written notice to the Company.
During the three months ended March 31,
2020, the Company made full repayment of $73,000 to Advent, including all outstanding interest.
Leslie Goldman - Demand Loan
During the three months ended March 31,
2020, the Company’s Senior Vice President, General Counsel, Leslie Goldman, loaned the Company $240,000 pursuant to a convertible
note. The note bears interest rate at 10% per annum and fifty percent warrant coverage, and is repayable upon 15 days' notice from
the holder. The note is convertible, in whole or in part, into stock together with warrants. This note is still outstanding as
of March 31, 2020.
The following table summarizes total interest
expenses related to outstanding notes to related parties for the three months ended March 31, 2020 and 2019, respectively (in thousands):
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Interest expenses related to outstanding notes to related parties:
|
|
|
|
|
|
|
|
|
Contractual interest
|
|
$
|
4
|
|
|
$
|
191
|
|
Amortization of debt discount
|
|
|
59
|
|
|
|
-
|
|
Total interest expense
|
|
$
|
63
|
|
|
$
|
191
|
|
10. Stockholders’ Deficit
Common Stock
Registered Direct Offering
During the three months ended March
31, 2020, the Company issued an aggregate of 34.5 million shares of its common stock in a registered
direct offering (the “Offering”). The net proceeds from the Offering were approximately $5.7
million, after deducting offering costs of $0.4 million paid by the Company.
In connection with the Offering, the Company also issued approximately
8.5 million 2-year term warrants with an exercise price of $0.25 per share to the investors and approximately 0.8 million 2-year
term warrants with an exercise price between $0.17 and $0.21 per share to placement agent in this direct offering. The fair value
of these new issued warrants was approximately $1.0 million. Additionally, the Company agreed to extend by twelve months the maturity
date of certain existing warrants already held by some of those investors. The Company recorded an incremental change of approximately
$2.5 million on the fair value of warrants due to the modifications, which was recorded as part of offering cost during the three
months ended March 31, 2020.
Debt Conversion
During the three months ended March 31,
2020, the Company converted approximately $1.8 million outstanding debt and interest into 12.4 million shares of common stock.
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
Stock Purchase Warrants
The following is a summary of warrant activity
for the three months ended March 31, 2020 (dollars in thousands, except per share data):
|
|
Number of
Warrants
|
|
|
Weighted Average
Exercise Price
|
|
|
Remaining
Contractual Term
|
|
Outstanding as of January 1, 2020
|
|
|
359,473
|
|
|
$
|
0.27
|
|
|
|
1.42
|
|
Warrants granted
|
|
|
20,965
|
|
|
|
0.23
|
|
|
|
|
|
Warrants expired and cancellation
|
|
|
(2,993
|
)
|
|
|
-
|
|
|
|
|
|
Outstanding as of March 31, 2020
|
|
|
377,445
|
|
|
$
|
0.26
|
|
|
|
1.32
|
|
11. Commitments and Contingencies
Operating Lease
The Company adopted ASC Topic 842 - Leases
as of January 1, 2019, using the transition method wherein entities were allowed to initially apply the new leases standard at
adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
The Company has operating leases for corporate
offices in the U.S., U.K., Germany and the Netherlands, and for manufacturing facilities in the U.K. Leases with an initial term
of 12 months or less are not recorded in the balance sheet. The Company has elected the practical expedient to account for each
separate lease component of a contract and its associated non-lease components as a single lease component,
thus causing all fixed payments to be capitalized. The Company also elected the package of practical expedients permitted within
the new standard, which among other things, allows the Company to carry forward historical lease classification. The
renewal options have not been included in the calculation of the lease liabilities and right-of-use (“ROU”) assets
as the Company is not reasonably certain to exercise the options. Variable lease payment amounts that cannot be determined
at the commencement of the lease such as increases in lease payments based on changes in index rates or usage,
are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense.
At March 31, 2020, the Company had operating
lease liabilities of approximately $4.9 million for both the 20-year lease of the building for the manufacturing facility in Sawston,
U.K., and the current office lease in the U.S. ROU assets of approximately $4.3 million for the Sawston lease and US office lease
were included in the consolidated balance sheet.
The following summarizes quantitative information about the
Company’s operating leases:
|
|
For the Three Months ended
|
|
|
|
March 31, 2020
|
|
|
|
U.K
|
|
|
U.S
|
|
|
Total
|
|
Lease cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
152
|
|
|
$
|
82
|
|
|
$
|
234
|
|
Short-term lease cost
|
|
|
12
|
|
|
|
-
|
|
|
|
12
|
|
Variable lease cost
|
|
|
45
|
|
|
|
4
|
|
|
|
49
|
|
Total
|
|
$
|
209
|
|
|
$
|
86
|
|
|
$
|
295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
-
|
|
|
$
|
(244
|
)
|
|
$
|
(244
|
)
|
Weighted-average remaining lease term – operating leases
|
|
|
10.0
|
|
|
|
0.9
|
|
|
|
|
|
Weighted-average discount rate – operating leases
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
|
|
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
|
|
For the Three Months Ended
|
|
|
|
March 31, 2019
|
|
|
|
U.K
|
|
|
U.S
|
|
|
Total
|
|
Lease cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
155
|
|
|
$
|
-
|
|
|
$
|
155
|
|
Short-term lease cost
|
|
|
14
|
|
|
|
81
|
|
|
|
95
|
|
Variable lease cost
|
|
|
-
|
|
|
|
2
|
|
|
|
2
|
|
Total
|
|
$
|
169
|
|
|
$
|
83
|
|
|
$
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Weighted-average remaining lease term – operating leases
|
|
|
10.7
|
|
|
|
1.4
|
|
|
|
|
|
Weighted-average discount rate – operating leases
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
|
|
The Company recorded lease costs as a component of general and
administrative expense during the three months ended March 31, 2020 and 2019, respectively.
Maturities of the operating leases, excluding short-term leases,
are as follows:
|
|
U.K
|
|
|
U.S
|
|
|
Total
|
|
Remaining nine months ended December 31, 2020
|
|
$
|
464
|
|
|
$
|
251
|
|
|
$
|
715
|
|
Year ended December 31, 2021
|
|
|
619
|
|
|
|
84
|
|
|
|
703
|
|
Year ended December 31, 2022
|
|
|
619
|
|
|
|
-
|
|
|
|
619
|
|
Year ended December 31, 2023
|
|
|
619
|
|
|
|
-
|
|
|
|
619
|
|
Year ended December 31, 2024
|
|
|
619
|
|
|
|
-
|
|
|
|
619
|
|
Thereafter
|
|
|
8,642
|
|
|
|
-
|
|
|
|
8,642
|
|
Total
|
|
|
11,582
|
|
|
|
335
|
|
|
|
11,917
|
|
Less present value discount
|
|
|
(6,996
|
)
|
|
|
(21
|
)
|
|
|
(7,017
|
)
|
Operating lease liabilities included in the Condensed Consolidated Balance Sheet at March 31, 2020
|
|
$
|
4,586
|
|
|
$
|
314
|
|
|
$
|
4,900
|
|
German Tax Authorities
The German Tax authorities have contacted our subsidiary, NW
Bio GmbH, and have asserted that funding provided by NW Bio, Inc., to its wholly owned subsidiary in Germany, NW Bio GmbH, during
2013 through 2015 may be deemed to be a “profit distribution” even though neither NW Bio, Inc. nor NW Bio GmbH made
any profit during the period in question, and even though the funds provided by NW Bio, Inc. were used by NW Bio GmbH entirely
for operating expenses and clinical trial costs. The German Tax authorities are seeking to tax this deemed “profit distribution.”
We are in the process of working to resolve this matter and it is too early at this point to determine the outcome. There
can be no assurance that the German tax authority will agree with our position, even if they appear to be open to discussions
and approaches taken under the German-US tax treaty and OECD Transfer pricing that would result in our calculations that there
is no tax liability. The Company currently anticipates that the amount that NW Bio GmbH may ultimately have to pay for this
matter is estimated to be between $0 to $800,000 after further proceedings (including application of the US-German tax treaty),
however, under ASC 740 it is in the view of the Company that it is not more likely than not that the resolution of these tax matters
will result in a net material charge.
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
12. Subsequent Events
Registered Offering
On April 8, 2020, the Company entered into
financings totaling $3.8 million. The financings were comprised of $3.1 million from the offering of 19.9 million shares of common
stock and 11.3 million new issued warrants, and $750,000 from a convertible note (the “April Note”). The common stock
was offered at a price of $0.153 per share. The April Note is convertible at $0.17 per share and carries 50% warrant coverage of
the number of conversion shares issued. The warrants are exercisable at $0.20 per share.
During May 2020, the Company entered into
financings totaling $3.3 million (the “May Financings”). The financings were comprised of $3.1 million from the offering
of 15.7 million shares of common stock and 5.6 million warrants. The common stock was offered at a price between $0.17 and $0.225
per share. The warrants have an exercise price between $0.22 and $0.23 per share and an exercise period between 1.5-2.5 years.
All of the warrants issued in these financings
are suspended until November 1, 2020. In addition, as part of these agreements, the investors who have existing outstanding warrants
that have not already been suspended until November 1 are suspending approximately 14.6 million existing warrants until November
1, 2020.
Cambridge Loan
On March 26, 2020, the Company entered
into a Loan Agreement (the “Loan Agreement”) with Cambridge & Peterborough Combined Authority (the “Lender”)
for a loan of £1.35 million (approximately $1.7 million) (the “Loan”) for the next phase of buildout of the Sawston
facility. The Company received funds on April 6, 2020. The Lender provides funding for selected economic development projects
in the Cambridge region through a competitive selection process.
Under the Loan Agreement, there will be
no repayments during the first year of the Loan term, although interest will accrue. Following the first anniversary, repayment
of the Loan principal and interest will take place over 4 years, for a total term of 5 years. The interest rate on the Loan
is 6.25% per annum.
In conjunction with the Loan, the Company
entered into a Security Agreement with the Lender granting a security interest in the Company’s 17-acre property in Sawston,
U.K. to secure the Loan. No other tangible or intangible assets of the Company or its subsidiaries are subject to any security
interest. The security interest on the 17-acre property will be released upon completion of repayment.
Debt Offering
On May 20, 2020, the Company entered into
a note purchase agreement (the “Note”) with an individual investor for an aggregate principal amount of $1,655,000.
The Note bears interest at 8% per annum with a 21-month term. There are no repayments during the first 7 months of the term. The
note is amortized in 14 installments starting in month 8. The note carries an original issue discount of $150,000 and $5,000 legal
costs that were reimbursable to the investor.
The May Financings also included $500,000
from a convertible note (the “May Note”). The May Note is convertible at $0.25 per share and contains 40% warrant coverage
of the number of conversion shares issued. The warrants are exercisable at $0.25 per share and an exercise period of 2.5 years.
Debt Conversion
During April and May, 2020, the Company
converted approximately $0.9 million outstanding debt and interest into 7.1 million shares of common stock.
NORTHWEST BIOTHERAPEUTICS,
INC.
NOTES TO CONDENSED
CONSOLIDATED STATEMENTS
Warrant Adjustments and Expirations
During May and June, 2020, approximately
62 million warrants have expired or are scheduled to expire, in addition to the warrants suspended under the arrangements described
below.
During April and May 2020, the Company
has been undertaking negotiations related to certain warrant adjustments, including suspending certain warrants, making them unexercisable
for a defined period, and extensions of the warrants suspended.
As previously reported, on May 10, 2020,
for a number of unrelated warrant holders, the Company agreed to issue 17.5% new warrants and extend the investors’ current
warrant terms by six months, in consideration of the investor’s suspension of the current and newly issued warrants until
November 1, 2020. The unrelated investors suspended a total of approximately 81 million warrants. The Company agreed to issue
14.2 million new warrants to these investors under the suspension agreements, and these additional warrants were also suspended
until November 1, 2020.
As also previously reported, on April 30,
2020, the Company’ entered into an agreement with its CEO, Linda Powers, in regard to approximately 90 million warrants and
options held by Ms.Powers. She agreed to suspend approximately 60 million existing warrants and options held or due to her until
November 1, 2020, making them unexercisable during this period. In consideration, the Company extended the exercise period
of a separate 29 million existing warrants held by Ms. Powers (not part of the 60 million warrants and options), and Ms. Powers
also agreed to suspend those 29 million warrants until November 1, 2020. The extension of the 29 million warrants provides
an exercise period of 2-1/2 years after the suspension period.
Total expirations and suspensions through
the end of June, 2020, equal approximately 268 million exercise shares. Of this total, approximately 248 million represent existing
warrants or options and approximately 20 million were newly issued warrant shares.
Warrants Exercised for Cash
During May 2020, the Company received aggregate
proceeds of $2.3 million from the exercise of warrants with an exercise price between $0.24 and $0.27. The Company issued approximately
9.4 million shares of common stock upon these warrant exercises.
Equity Compensation Plan
On May 29, 2020 the Company approved establishing a new equity
compensation plan.