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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

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: (858633-0300

 

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

 

NK

 

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.

1


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.

2


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.

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, 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.

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, 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