SEC Filing | Nantkwest, Inc.

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nk-10q_20200630.htm

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, 2020

☐	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, par value $0.0001 per share

The Nasdaq Stock Market LLC

(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, a 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 ☒

The number of shares of the Registrant’s common stock outstanding as of August 5, 2020 was 107,970,463.

TABLE OF CONTENTS

		Page

Part I—FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets – As of June 30, 2020 and December 31, 2019	1
	Condensed Consolidated Statements of Operations – For the three and six months ended June 30, 2020 and 2019	2
	Condensed Consolidated Statements of Comprehensive Loss – For the three and six months ended June 30, 2020 and 2019	3
	Condensed Consolidated Statements of Stockholders’ Equity – For the three and six months ended June 30, 2020 and 2019	4
	Condensed Consolidated Statements of Cash Flows – For the six months ended June 30, 2020 and 2019	6
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	53
Item 4.	Controls and Procedures	53

Part II—OTHER INFORMATION

Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	98
Item 3.	Defaults Upon Senior Securities	98
Item 4.	Mine Safety Disclosures	98
Item 5.	Other Information	98
Item 6.	Exhibits	98
Signatures		99

-i-

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

NantKwest, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	June 30, 2020			December 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	102,698		$	15,508
Prepaid expenses and other current assets (including related parties)		4,664			4,105
Marketable debt securities, available-for-sale		7,925			36,144
Total current assets		115,287			55,757
Marketable debt securities, noncurrent		—			1,497
Property, plant and equipment, net		58,615			60,501
Operating lease right-of-use assets, net (including related parties)		10,407			11,729
Equity investment		9,253			9,253
Other assets (including related parties)		2,602			4,386
Total assets	$	196,164		$	143,123
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,971		$	1,749
Accrued expenses		7,449			5,343
Due to related parties		2,228			486
Other current liabilities (including related parties)		3,401			3,981
Total current liabilities		17,049			11,559
Operating lease liability, less current portion (including related parties)		9,462			10,885
Total liabilities		26,511			22,444
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.0001 par value; 500,000,000 shares authorized; 107,764,158 and 98,460,404 issued and outstanding as of June 30, 2020 and December 31, 2019		11			10
Additional paid-in capital		870,408			782,965
Accumulated other comprehensive loss		(100	)		(105	)
Accumulated deficit		(700,666	)		(662,191	)
Total stockholders’ equity		169,653			120,679
Total liabilities and stockholders’ equity	$	196,164		$	143,123

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

NantKwest, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenue	$	1		$	17		$	22		$	22
Operating expenses:
Research and development (including amounts with related parties)		13,709			13,131			26,943			25,729
Selling, general and administrative (including amounts with related parties)		6,519			4,182			11,892			9,924
Total operating expenses		20,228			17,313			38,835			35,653
Loss from operations		(20,227	)		(17,296	)		(38,813	)		(35,631	)
Other income (expense):
Investment income, net		75			533			253			903
Interest expense		(3	)		—			(10	)		(3	)
Other income, net (including amounts with related parties)		67			83			99			130
Total other income		139			616			342			1,030
Loss before income taxes		(20,088	)		(16,680	)		(38,471	)		(34,601	)
Income tax (expense) benefit		(4	)		(2	)		(4	)		34
Net loss	$	(20,092	)	$	(16,682	)	$	(38,475	)	$	(34,567	)

Net loss per share:
Basic and diluted	$	(0.20	)	$	(0.17	)	$	(0.39	)	$	(0.38	)

Weighted-average number of shares during the period:
Basic and diluted		98,769,687			98,594,355			98,621,161			89,975,707

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

NantKwest, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net loss	$	(20,092	)	$	(16,682	)	$	(38,475	)	$	(34,567	)
Other comprehensive income, net of income taxes:
Net unrealized gains on available-for-sale securities		29			122			5			183
Reclassification of net realized gains on available-for-sale securities included in net loss		(1	)		—			—			—
Total other comprehensive income		28			122			5			183
Comprehensive loss	$	(20,064	)	$	(16,560	)	$	(38,470	)	$	(34,384	)

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

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, 2020	Shares			Amount		Capital			Loss			Deficit			Total
Balance at March 31, 2020		98,498,432			10		783,287			(128	)		(680,574	)		102,595
Issuance of common stock, net of $4,392 in offering costs		8,521,500			1		86,281			—			—			86,282
Stock-based compensation expense		—			—		316			—			—			316
Exercise of stock options		259,017			—		564			—			—			564
Vesting of restricted stock units (RSUs)		495,226			—		—			—			—			—
Employee payroll taxes withheld related to vesting of RSUs		(10,017	)		—		(40	)		—			—			(40	)
Other comprehensive income, net		—			—		—			28			—			28
Net loss		—			—		—			—			(20,092	)		(20,092	)
Balance at June 30, 2020		107,764,158		$	11	$	870,408		$	(100	)	$	(700,666	)	$	169,653

									Accumulated
						Additional			Other
	Common Stock					Paid-in			Comprehensive			Accumulated
Six Months Ended June 30, 2020	Shares			Amount		Capital			Loss			Deficit			Total
Balance at December 31, 2019		98,460,404		$	10	$	782,965		$	(105	)	$	(662,191	)	$	120,679
Issuance of common stock, net of $4,392 in offering costs		8,521,500			1		86,281			—			—			86,282
Stock-based compensation expense		—			—		761			—			—			761
Exercise of stock options		259,017			—		564			—			—			564
Vesting of RSUs		558,976			—		—			—			—			—
Employee payroll taxes withheld related to vesting of RSUs		(35,739	)		—		(163	)		—			—			(163	)
Other comprehensive income, net		—			—		—			5			—			5
Net loss		—			—		—			—			(38,475	)		(38,475	)
Balance at June 30, 2020		107,764,158		$	11	$	870,408		$	(100	)	$	(700,666	)	$	169,653

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

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 RSUs		107,516			—		—		—			—			—
Employee payroll taxes withheld related to vesting of RSUs		(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