10-K
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
10-K
☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
For the transition period from _______ to _______
Commission File Number
001-33038
ZIOPHARM Oncology, Inc.
(Exact Name of Registrant as Specified in Its Charter)
One First Avenue, Parris Building 34, Navy Yard PlazaBoston, Massachusetts 02129
(Address of Principal Executive Offices) (Zip Code)
(617)
259-1970
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on whichregistered
Common Stock ZIOP The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑
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 past 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
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 or a smaller reporting company. See definition of “large accelerated filer,” “accelerate filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act. (Check one):
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Act). Yes ☐ No ☑
The aggregate market value of the registrant’s common stock held by
non-affiliates
was $687,342,598 as of June 30, 2020 (the last business day of the registrant’s most recently completed second fiscal quarter), based on a total of
209,555,670
shares of common stock held by
non-affiliates
and a closing price of $3.28 as
reported on the Nasdaq Global Select on June
30, 2020. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors or 10% beneficial owners are, in fact, affiliates of the registrant.
As of February
24
, 2021, there were 214,667,023 shares of the registrant’s common stock, $0.001 par value per share,
outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the definitive proxy statement for the registrant’s 2021 annual meeting of stockholders, which is to be filed within 120 days after the end of the fiscal year ended December 31, 2020, are incorporated by reference into Part III of this Form
10-K,
to the extent described in Part III.
Table of Contents
ZIOPHARM Oncology, Inc.
ANNUAL REPORT ON FORM
10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018
TABLE OF CONTENTS
Page
PART I
Item 1. Business 7
Item 1A. Risk Factors 36
Item 1B. Unresolved Staff Comments 71
Item 2. Properties 71
Item 3. Legal Proceedings 71
Item 4. Mine Safety Disclosures 72
PART II
Item 6. Selected Financial Data 74
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 88
Item 8. Financial Statements and Supplementary Data 89
Item 9A. Controls and Procedures 89
Item 9B. Other Information 90
PART III
Item 10. Directors, Executive Officers and Corporate Governance 92
Item 11. Executive Compensation 92
Item 14. Principal Accountant Fees and Services 93
PART IV
Item 15. Exhibits and Financial Statement Schedules 94
Financial Statements F-1
All trademarks, trade names and service marks appearing in this Annual Report on
Form 10-K
are the property of their respective owners
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Special Note Regarding Forward-Looking Statements
This Annual Report on Form
10-K,
or Annual Report, contains forward-looking statements that are based on management’s current beliefs and assumptions and on information currently available to management. All statements other than statements of historical facts contained in this Annual Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as: “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “target,” “will” and other words and terms of similar meaning.
These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Annual Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this Annual Report include, but are not limited to, statements about:
• our expectation regarding the safety and efficacy of our product candidates;
• our ability to maintain and establish collaborations and licenses;
• our ability to attract and retain qualified employees and key personnel;
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Any forward-looking statements in this Annual Report on Form
10-K
reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part I, Item 1A, “Risk Factors” and elsewhere in this Annual Report on Form
10-K.
Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
Unless the context requires otherwise, references in this Annual Report to “Ziopharm,” the “Company,” “we,” “us” and “our” refer to Ziopharm Oncology, Inc., and its subsidiaries.
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SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS
Our business faces significant risks and uncertainties. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. You should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors” in Part I, Item 1A of this Annual Report. Some of the more significant risks include the following:
• Our stock price has been, and may continue to be, volatile.
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PART I
Item 1. Business
BUSINESS OVERVIEW
We are a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing next generation immuno-oncology platforms that leverage cell- and gene-based therapies to treat patients with cancer. We are developing platform technologies that utilize the immune system by employing innovative cell engineering and novel, controlled gene expression technologies designed to deliver safe and effective, cell and gene therapies for the treatment of multiple cancer types. Our major platform and priority is referred to as
Sleeping Beauty
and is based on the non-viral genetic engineering of immune cells using a transposon/transposase system that is intended to stably engineer T cells outside of the body for subsequent infusion. Our second platform is referred to
as Controlled IL-12 and
is designed to stimulate expression of interleukin
12, or IL-12, a master
regulator of the immune system, in a controlled manner to focus the patient’s immune system to more effectively attack cancer cells.
Using our
Sleeping Beauty
platform, we are developing T cell receptor, or TCR, T cell therapies to target neoantigens in solid tumors using two approaches, which we refer to as our “Library TCR-T Approach” and “our Personalized TCR-T Approach.” The Library TCR-T Approach uses third-party (allogeneic) TCRs that have been prepared before the recipient has been identified to genetically modify patient-derived T cells to redirect specificity to public, or shared neoantigens. The Personalized TCR-T Approach uses patient-derived (autologous) TCRs that are prepared from the recipient to genetically modify patient-derived T cells to redirect specificity to private neoantigens. It is anticipated that more than one TCR-T product with more than one specificity will be administered in the Personalized TCR-T Approach. In February 2021, the U.S. Food and Drug Administration, or the FDA, cleared our company-sponsored investigational new drug, or IND, application submitted for a Phase 1/2 clinical trial evaluating TCRs from our library for the investigational treatment of lung, cholangiocarcinoma, pancreatic, colorectal and gynecological cancers. Initially, six curated TCRs reactive to mutated KRAS and TP53 will be included in the clinical trial: however, we expect to expand the number of TCRs to be evaluated in our clinical trial. This clinical trial is being conducted in collaboration with The University of Texas MD Anderson Cancer Center, or MD Anderson, which will be the first site for the clinical trial.
Under our Cooperative Research and Development Agreement, the National Cancer Institute, or NCI, is conducting a Phase 2 Personalized TCR-T clinical trial to evaluate autologous peripheral blood lymphocytes genetically modified with the
Sleeping Beauty
system to express private neoantigen-specific TCRs. The trial is designed to enroll patients with a broad range of solid tumors. The FDA has cleared the IND application submitted by the NCI for this clinical trial. However, enrollment in this clinical trial has been temporarily suspended due to issues internal to NCI and unrelated to our technology. The progress and timeline for this trial, including the timeline for dosing patients, are under the control of the NCI.
We are developing chimeric antigen receptor, or CAR, T cell, or CAR
+
T, therapies targeting CD19 on malignant B cells using our
Sleeping Beauty
platform. We are advancing our so-called rapid personalized manufacture, or RPM, technology, in Greater China with Eden BioCell, Ltd., or Eden BioCell, our joint venture with TriArm Therapeutics, Ltd. RPM enables small numbers of T cells to be infused as soon as the day after gene transfer which is made possible by the genetic modification of resting T cells to express CAR and membrane
bound IL-15, or
mbIL15. Eden BioCell is leading the clinical development and commercialization of
Sleeping Beauty
-generated CD19-specific RPM CAR
+
T therapies using patient-derived (autologous) T cells in order to treat patients with relapsed or refractory CD19
+
leukemias and lymphomas. In the fourth quarter of 2020, an IND was cleared by the Taiwan FDA for a Phase 1 clinical trial designed to evaluate safety and efficacy in this patient group. In our Phase 1 clinical trial being conducted in the United States, we plan to infuse donor-derived T cells after allogeneic bone marrow transplantation, or BMT, for recipients who have relapsed with CD19
+
leukemias and lymphomas with our CD19-specific CAR
+
T therapies manufactured using our technology.
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Our Controlled IL-12 platform is
based on an engineered replication-incompetent adenovirus, referred to
as Ad-RTS-hIL-12, plus veledimex
as a gene delivery system to
conditionally produce IL-12, a potent,
naturally occurring anti-cancer protein, to treat patients with solid tumors.
Our Controlled IL-12 platform allows
us
to deliver IL-12 in a
tunable dose as the cytokine is under transcriptional control of the RheoSwitch Therapeutic System
®
(RTS
®
). We have completed enrollment to all our Phase 1 and 2 clinical trials of patients with recurrent glioblastoma multiforme, or rGBM. These trials examine the effect of Controlled
IL-12
as a monotherapy and in combination with blockade of the immune checkpoint protein
PD-1.
Dosing is ongoing in a Phase 2 clinical trial
evaluating Ad-RTS-hIL-12 plus veledimex
in
combination with PD-1 antibody Libtayo
®
(cemiplimab-rwlc) for the treatment of recurrent or progressive glioblastoma multiforme in adults. Data from our monotherapy and combination studies have been presented at major scientific conferences.
OUR STRATEGY
Our goal is to be an innovative immuno-oncology company that delivers safe and effective therapies that provide clinically transformative benefit for patients and long-term value for shareholders. Key elements of our strategy include:
SLEEPING BEAUTY PLATFORM TECHNOLOGY
We
are pursuing non-viral genetic engineering
technologies to develop two distinct therapies: addressing solid tumors via novel neoantigen-specific TCR
+
T therapies and addressing hematological cancers via CD19-specific CAR
+
T therapies. The platform we have licensed from MD Anderson uses the
Sleeping Beauty
non-viral
genetic modification system to generate and characterize both TCR and CAR designs in T cells.
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Limitations of Existing Approaches to Manufacturing T Cell Therapies
In recent years, companies have begun developing and commercializing therapies that include T cells engineered specifically for each patient, utilizing a viral vector. Manufacturing such products is typically undertaken at a centralized facility. The production time varies and typically takes many weeks with additional time needed for quality control. Manufacturing based on viral technology to express TCR or CAR has many challenges:
We believe these disadvantages will slow the development of clinically-effective and commercially-viable TCR therapies and continue to limit the long-term commercial potential of currently
available CAR-T therapies.
Sleeping Beauty Solution
The
Sleeping Beauty
system is a gene transfer method that utilizes a transposase enzyme to “cut and paste” donor transposon DNA from introduced plasmid into chromosomes using a process called transposition. The system can be used to stably deliver genes to a variety of cell types including human T cells.
Sleeping Beauty
transposons appear to integrate in a random distribution at thymine-adenine, or TA, dinucleotide sites, making them less likely
to cause off-target effects when
compared to other transposons and viral gene delivery methods.
We use the
Sleeping Beauty
system to express TCRs that target patients’ neoantigens as well as CARs that enable a T cell to recognize specific proteins or antigens that are present on the surface of other cells. Our RPM technology is used in our third generation CAR
+
T therapy, which uses the
Sleeping Beauty
system
to co-express our
proprietary mbIL15 and a kill switch along with the CAR, and we may elect to incorporate our mbIL15 technology in our TCR therapies in the future. Interleukin
15 (IL-15) may
have a variety of beneficial effects as it is considered
a pro-survival cytokine
that promotes survival of T cells.
Our pre-clinical data
suggest that incorporating mbIL15 into TCR and CAR
+
T therapies enhances
in vivo
persistence of the TCR and CAR
+
T cells.
We believe our
Sleeping Beauty
platform has several advantages compared with the viral gene transfer technologies used by other TCR
and CAR-T companies:
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SLEEPING BEAUTY TCR PROGRAM
Background
Each T cell has a unique alpha/beta TCR and an ability to rapidly increase in numbers when the TCR interrogates a target and detects a threat. A TCR can recognize cancer cells as a threat as the receptor docks with a specialized set of molecules on the cancer cell surface called the HLA system, which is also referred to as the major histocompatibility complex, or MHC. The HLA system reveals the health of a cell based on the loading of peptides (processed protein), which then await examination by unique TCRs on populations of T cells. Two types of HLA molecules, Class I and Class II, are interrogated by TCRs on T cells. Class I molecules activate CD8
+
T cells which have evolved an ability to be efficient killers. Class II molecules activate CD4
+
T cells which help coordinate an efficient immune response. In each person, there are both many different TCR structures and many different HLA structures. TCRs within each person are adapted to work with their own HLA structures or alleles. For a T cell to recognize and destroy a tumor cell, the TCR must recognize the foreign antigen in the context of HLA and then be activated to deepen the engagement to kill the cell. This is different from CARs, which directly recognize antigens, such as CD19, such as on the surface of malignant B cells, without the need for presentation by HLA.
Genes in cancer cells can lead to the production of proteins, which are then processed by the cell into protein fragments known as peptides. When these peptides are presented to T cells by HLA, by either tumor cells or antigen presenting cells, and they result in T cell activation, they are known as antigens. When these immunogenic peptides are derived from proteins which are in turn expressed from genes that are mutated only in tumor cells (for example, within the cancer genome and not encoded in the germline), they are known as neoantigens. Tumor cells presenting neoantigens via HLA are targets for T cells. T cells can recognize and kill neoantigen-presenting cancer cells and effect a positive feedback loop to heighten the immune response.
In general, the immune system avoids targeting the body’s own healthy cells principally through processes known as immune tolerance by which T cells do not respond to HLA containing peptides from normal proteins and therefore avoid targeting healthy cells for destruction. The recognition by the TCR of peptide presented by the HLA system is a vital immune mechanism that allows the body both to respond against foreign threats, including cancer, as well as to avoid targeting the body’s own healthy cells.
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Tumors utilize a variety of strategies to evade and suppress the host immune system. This renders T cells residing within the tumor, referred to as tumor-infiltrating lymphocytes, or TIL, ineffective and, despite expressing tumor-specific TCRs, unable to recycle their effector functions to eliminate tumor. To overcome immune suppression, “young” T cells are likely needed, such as those found in the peripheral blood. However, these circulating T cells do not typically express tumor-specific TCRs in adequate numbers. We seek to address this problem by genetically modifying peripheral blood-derived T cells to express TCRs with specificity to tumor-derived antigens, especially neoantigens, and propagating them to sufficient numbers prior to administration.
Neoantigens are encoded by tumor-specific mutated genes that are often unique to each patient. Targeting these neoantigens requires TCRs that are generated on
a patient-by-patient basis.
During cancer initiation and progression, tumor cells acquire mutations in naturally occurring genes that are responsible for transformation, known as driver mutations. Some of these driver mutations occur in “hotspots” and are a class of mutations shared between tumor types and between individuals. Since driver mutations can be anticipated, it is possible to prepare TCRs in a library in advance of a patient’s need.
Our Approach to Targeting Neoantigens
Using our
Sleeping Beauty
non-viral platform, we are developing TCR
+
T therapies to target solid tumors. Our TCR program designs and manufactures T cells that are intended to target tumor-specific neoantigens, thereby delivering personalized therapy that can attack an individual patient’s cancer.
To be successful, genetically modified T cells targeting one or more neoantigens will likely need to address the fact that (1) among a population of patients, not all tumors express the targeted neoantigen, referred to as inter-tumor heterogeneity, and (2) within a single patient, not all tumor cells express the targeted antigen, referred to as intra-tumor heterogeneity. Inter-tumor heterogeneity limits the number of recipients that are eligible to receive a treatment and intra-tumor heterogeneity creates the risk of antigen-escape variants, increasing the likelihood of cancer relapse. As a result, we believe companies developing T cell therapies targeting neoantigens must address both inter- and intra-tumor heterogeneity. The
Sleeping Beauty
system uses DNA plasmids to reprogram T cells to express introduced TCRs on
a patient-by-patient basis,
which helps address inter-tumor heterogeneity, and to express more than one TCR for each patient and/or to target driver mutations, which helps address intra-tumor heterogeneity.
The genetic modification using the
Sleeping Beauty
system of recipient-derived products enables us to target neoantigens in two ways, which we refer to as our Library TCR-T Approach and as our Personalized TCR-T Approach. We believe we are the only company that is using
non-viral
gene transfer to develop both personalized TCR
+
T therapies and TCR
+
T therapies from a library of TCRs derived from internal research and third parties. We believe using the
Sleeping Beauty
system to
scale TCR-T to
infuse multiple products per patient and develop a library of TCRs to facilitate the recruitment of patients is a competitive advantage.
Library TCR-T Approach
Our Library TCR-T Approach is based on the finding that subsets of neoantigens are shared between patients and between classes of tumors. These neoantigens can be considered as “drivers” for tumor formation. These neoantigens are referred to as “hotspots” and their presence allows us to potentially administer TCR+ T cells expressing TCRs from a library derived from internal research and third parties. The advantage of the Library TCR-T Approach is that subsets of patients with solid tumors may be rapidly treated based on screening them for targeted neoantigens (e.g., KRAS, TP53), identifying patient HLA, and matching these two data sets to the TCRs in the library. Once a match has been identified, the TCR is introduced into peripheral blood-derived T cells using the Sleeping Beauty system, propagated to clinically sufficient numbers and then infused into the patient. We have in-licensed from the NCI multiple allogeneic TCRs derived from third parties that are reactive to mutated KRAS, TP53 and EGFR in hotspots and we plan to expand our TCR library as part of our commitment to advance clinical development for the treatment of patients whose solid tumors have driver mutations.
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Personalized TCR-T Approach
Most neoantigens are unique to each patient’s tumor. We plan to address this uniqueness in our Personalized TCR-T Approach by infusing TCR
+
T cells expressing recipient-derived TCRs. There are three essential steps in creating a T cell therapy targeting personalized neoantigens:
The process for the production and infusion of
Sleeping Beauty
TCR-modified T cells
for our Library TCR-T Approach and Personalized TCR-T Approach is based on the electro-transfer of DNA plasmids coding for TCR(s) recognizing one or more neoantigens into T cells derived from a patient’s peripheral blood. Following electroporation, the genetically modified T cells are propagated prior to infusion. We believe the use of T cells from peripheral blood as the source of effector cells, rather than TIL, will improve the T cell’s ability to kill tumor cells because these circulating lymphocytes are generally “young” and can proliferate and survive
in vivo
to sustain anti-tumor effects.
Infrastructure and Capabilities
During 2020, we made significant progress building critical manufacturing infrastructure, hiring personnel and adding R&D capabilities to support our clinical activities. We completed a buildout of our laboratory and office space on MD Anderson’s campus which will support our internal research and development activities. We have begun construction of both a sequencing core laboratory as well as a pilot clinical production unit, or pilot CPU, for GMP cell therapy manufacturing. We expect the pilot CPU will be operational by the end of 2021 and will be used to manufacture a portion of the
TCR-T
therapies for our clinical trials.
We have also established processes
in-house
for neoantigen identification, TCR hunting, and
TCR-T
manufacturing process development. These processes will continue to be optimized to increase efficiencies, utilize new powerful technologies, and reduce time to treatment for the patient.
Clinical Development of TCR-T Program
We believe
that a non-viral platform represents
the most commercially feasible way of manufacturing neoantigen therapies due to the obstacles presented by inter-tumor heterogeneity and intra-tumor heterogeneity.
We are conducting a Phase 1/2 clinical trial to evaluate our Library TCR-T Approach. The FDA cleared our company-sponsored IND in February 2021 and we have selected MD Anderson as the initial clinical site for this trial. Our library of TCRs will be tested for the treatment of lung, cholangiocarcinoma, pancreatic, colorectal and
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gynecological cancers. We expect to begin dosing patients in this trial in the second half of 2021. The primary objective of the Phase 1 portion of the clinical trial is to evaluate the safety and tolerance of the cell therapy product.
We anticipate adding new TCRs to the library and clinical program as they are qualified by our laboratory.
In 2017, we entered into a Cooperative Research and Development Agreement, or CRADA, with the NCI for the development of adoptive cell transfer-based immunotherapies to treat solid tumors under the direction of Steven A. Rosenberg, M.D., Ph.D., Chief of the Surgery Branch at the NCI. Under our CRADA, the NCI will perform clinical evaluations of
Sleeping Beauty
-engineered T cells to express TCRs that are typically reactive against unique neoantigens to mediate cancer regression in patients with refractory solid tumors for several tumor types, including gastrointestinal and genitourinary,
breast, ovarian, non-small cell lung
cancer and glioblastoma. We anticipate that patients will receive populations of T cells genetically modified to express more than one TCR so that more than one neoantigen can be targeted in the patient. We expect infusing multiple TCRs per patient will reduce the probability of leaving some cancer cells unaddressed, lowering the risk of cancer relapse. The primary objective of the clinical trial is to evaluate tumor response rate with the secondary objective to evaluate the safety and tolerability of the therapy. The FDA has cleared the IND application submitted by the NCI for this Personalized TCR-T clinical trial and the trial was initiated in 2019. However, enrollment in this clinical trial has been temporarily suspended due to issues internal to the NCI and unrelated to our technology. The progress and timeline for this trial, including the timeline for dosing patients, are under the control of the NCI.
Solid Tumor Malignancy Prevalence
Cancer is the second most common cause of death in the United States, accounting for nearly one of every four deaths. Approximately 1,806,590 new cancer cases were expected to be diagnosed, and 606,520 cancer deaths expected to occur, in the United States in 2020 according to the American Cancer Society. Of these, the majority were caused by solid tumors. Invasive cancer, such as malignancies of epithelial tissue represent 80% to 90% of cancer cases according to the Surveillance, Epidemiology, and End Results Program of the NCI. These diseases include colorectal, lung, ovarian, skin, bladder, head and neck cancers, among others.
SLEEPING BEAUTY CAR
+
T PROGRAM
Background
We are developing CAR
+
T cell therapies targeting CD19 for hematologic malignancies using our
Sleeping Beauty
platform. Our CAR
+
T program is focused on (1) shortening the time the patient must wait for treatment with engineered T cells, (2) increasing the access of medical centers to deliver, and patients to receive, this therapy, and (3) providing safe and efficacious T cell therapies to patients.
CARs are engineered molecules that, when present on the surface of a T cell, enable the T cell to directly recognize specific proteins or antigens that are present on the surface of other cells. CAR
+
T cell therapies are manufactured individually for the recipient’s use by modifying T cells outside the body, causing the T cells to stably express CARs. Our CAR
+
T program is focused on CD19, which is a protein expressed on the cell surface of B cells and a validated target for B cell driven hematological malignancies.
Autologous anti-CD19 CAR
+
T cell therapies have been approved by the FDA for the treatment of relapsed/refractory (R/R) B-cell lymphomas (Kymriah
®
,Yescarta
®
, and Breyanzi
®
). These approaches have been successful in helping patients fight CD19-positive cancers, resulting in significant remission rates.
We believe our
Sleeping Beauty
CAR
+
T therapy could offer distinct advantages to the approach used by currently commercially available CAR
+
T cell companies. In particular, the ability of the DNA plasmids from the
Sleeping Beauty
system under our RPM approach to integrate into resting T cells from peripheral blood,
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coupled with expression of mbIL15 and CAR, will enable infused T cells to propagate within the patient to target leukemias and lymphoma, thereby avoiding the need to numerically expand T cells for weeks in bioreactors before administration. The reduced cost associated with using DNA plasmids, instead of virus and avoiding lengthy
ex vivo
manufacturing provides a solution to the cost and complexity of the current approach to manufacturing CAR
+
T cells.
Clinical Development of CAR
+
T
In the preclinical setting, the time to manufacture and administer Sleeping Beauty-modified CAR
+
T cells expressing mbIL15 has been reduced to two days or less from gene transfer. This includes time to release the product. This very rapid manufacturing process may deliver genetically modified T cells with superior therapeutic potential in vivo. Preclinical studies of our third generation Sleeping Beauty CAR
+
T cells, presented at the 2017 Annual Meeting of ASH, demonstrated that a single dose of T cells co-expressing a CD19-specific CAR, mbIL15, and kill switch resulted in sustained in vivo persistence that produced potent anti-tumor effects and superior leukemia-free survival in mice.
In conjunction with TriArm Therapeutics, Ltd., or TriArm, we launched Eden BioCell to lead clinical development and commercialization of Sleeping Beauty-generated CAR-T therapies in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea. Eden BioCell is focused on advancing our RPM technology using patient-derived (autologous) T cells in order to treat patients with relapsed or refractory CD19+ leukemias and lymphomas.
In the fourth quarter of 2020, the Taiwan FDA cleared the IND for a Phase 1 trial to evaluate the CAR-T CD19 RPM therapy in patients with relapsed CD19+ leukemias and lymphomas. This trial will be conducted at the National Taiwan University Hospital and will enroll up to 24 patients, with the goal of infusing 16 patients. The primary endpoint of the trial will be to evaluate the safety and tolerability of autologous CD19-specific T cells manufactured using the RPM technology. We expect patients will be enrolled in this trial in the first half of 2021.
We have advanced our CAR+ T technology in the United States in collaboration with MD Anderson in a Phase 1 clinical trial infusing CD19-specific CAR+ T therapies manufactured using our RPM technology. In this trial, we plan to infuse donor-derived T cells after allogeneic BMT for recipients who have relapsed with CD19+ leukemias and lymphomas. We announced the FDA cleared the IND application submitted by MD Anderson for this clinical trial in 2019 and MD Anderson initiated the trial in the first half of 2020. Patients have entered the study and corresponding donor cells have been collected. These patients are expected to be dosed upon progression of their cancer.
Hematologic Tumor Malignancy Prevalence
According to the Leukemia and Lymphoma Society, an estimated 178,520 people are expected to be diagnosed with leukemia, lymphoma, or myeloma in 2020. New diagnoses for such hematologic malignancies in the United States represented approximately 10% of the new cancer cases in the United States in 2020.
CONTROLLED IL-12 PLATFORM TECHNOLOGY
Background
Ad-RTS-hIL-12 plus veledimex
is our gene delivery system to regulate
production of IL-12, a potent,
naturally occurring anti-cancer protein which functions as a master regulator of the immune system. We control the generation
of recombinant IL-12 using a
replication-incompetent adenoviral, or Ad, vector administered via a single injection of virus into the brain tumor and engineered to conditionally
express human IL-12, or hIL-12.
The conditional
expression of hIL-12 is modulated
with the RheoSwitch Therapeutic System
®
(RTS
®
) by the small molecule veledimex, an activator ligand orally administered that has been shown to cross the blood-brain barrier.
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In
this way, Ad-RTS-hIL-12 is administered
within the tumor under the control of the RTS “switch”. Activation of the switch, and therefore conditional gene expression
and subsequent IL-12 protein production,
is tightly controlled by the activator ligand, veledimex, delivered to the patient as a daily oral capsule, typically over 14 days. When veledimex is administered to a patient, the switch is turned
“on” and IL-12 is produced;
when veledimex is withdrawn, the switch is turned “off” and production
of recombinant IL-12 ceases.
The amount of
IL-12
produced is proportional to the dosing of veledimex which further enhances control of this cytokine. We believe the ability regulate production
of IL-12 after
administration of the virus is critical for the development of this potent cytokine.
Recombinant IL-12 has been
shown to be biologically active as, for example, it can stimulate production of the body’s own interferon-gamma, or IFN-
g
. IL-12 is a potent pro-inflammatory cytokine capable
of reversing immune escape mechanisms and improving the function of tumor fighting natural killer, or NK, cells and T cells.
Controlled IL-12 has been
shown to biologically turn “cold tumors hot.” In our clinical trials, we have seen deep and sustained infiltration of activated T cells (i.e., “hot” tumors) where previously there had been very little T cell infiltration (i.e., “cold” tumors). Data from repeat biopsies obtained four to six months following administration of
Ad-RTS-hIL-12
plus veledimex has shown an increased and sustained infiltration of activated T cells producing IFN-
g
within the brain-tumor lesion as reported in
Science Translation Medicine
. Data from our Phase 1 monotherapy clinical trial provided compelling evidence from biopsies, taken more than four months after
administration of Ad-RTS-hIL-12 plus veledimex,
demonstrating that Controlled
IL-12
causes a sustained influx of activated killer (CD8
+
) T cells into brain tumors. These data also show upregulated expression of
PD-1/PDL-1
biomarkers, suggesting that the
combination of Ad-RTS-hIL-12 plus veledimex
with an immune checkpoint inhibitor, such
as targeting PD-1, may improve
patient outcomes.
Clinical Development of
Controlled IL-12
Glioblastoma Prevalence
We are currently
developing Controlled IL-12 to treat
patients with rGBM. Glioblastoma is an aggressive primary brain tumor affecting approximately 74,000 people worldwide each year; it is a fast-growing, aggressive type of central nervous system tumor, with an estimated 12,760 new adult cases predicted in the United States for 2018 according to the American Brain Tumor Association. Recurrence rates for this type of cancer are near 90 percent, and prognosis for adult patients is poor with treatment often combining multiple approaches including surgery, radiation and chemotherapy.
Recurrent glioblastoma is an aggressive cancer with one of
the lowest 3-year survival rates,
at 3%, among all cancers. For patients who have experienced multiple recurrences, the prognosis is particularly poor, with an overall survival of six to seven months, while overall survival in patients who have failed temozolomide and bevacizumab, or equivalent salvage chemotherapy, is approximately three to five months.
Clinical Development Ad-RTS-IL-12 plus Veledimex
for Adult rGBM (Monotherapy and in Combination)
We previously conducted a Phase 1 clinical trial of patients with rGBM, referred to as the Main Study, in patients with rGBM. The primary objective of the trial is to determine the safety and tolerability of a
single intra-tumoral Ad-RTS-hIL-12 injection activated
upon dosing with oral veledimex. Secondary objectives are to determine the maximum tolerated dose, the immune responses elicited, and assessment of biologic response.
A subset of patients in the Main Study (n=6) with unifocal disease who received single administration of
Ad-RTS-hIL-12
with 20 mg daily dosing (15 total planned doses) of veledimex along with
low-dose
steroids, achieved 17.8 months median overall survival, or mOS. Based on this result, we enrolled 36 subjects in a substudy, referred to as the Expansion Substudy, designed to encourage use of
low-dose
steroids and 20 mg veledimex to further understand the potential of Controlled
IL-12
as a monotherapy.
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We are conducting a Phase 1 clinical trial to evaluate
Ad-RTS-hIL-12
plus veledimex in combination with Bristol-Myers Squibb Company’s OPDIVO
®
(nivolumab), an immune checkpoint inhibitor, or
PD-1
inhibitor, in adult patients with rGBM. This trial was initiated in 2018 and is exploring the potentially synergistic effect of this combination in 21 patients, which have been enrolled. This multi-center, open-label,
single-arm
trial is being conducted at four sites. Patients with rGBM scheduled for resection who had not been treated previously with inhibitors of immune-checkpoint pathways received
Ad-RTS-hIL-12
intratumorally at the time of surgical resection plus a dose of veledimex (10 or 20mg), daily for 14 days. Patients receive nivolumab intravenously (1 or 3 mg/kg) every two weeks until documented progression or withdrawal from the clinical trial and an expansion cohort at the full dose of 20 mg veledimex and 3mg/kg of nivolumab was included.
In November 2018, we announced our entry into a clinical supply agreement with Regeneron to evaluate
Ad-RTS-hIL-12
plus veledimex in combination
with Regeneron’s PD-1 antibody Libtayo
®
(cemiplimab-rwlc) to treat patients with rGBM. Libtayo has been approved in the United States for the treatment of patients with metastatic cutaneous squamous cell carcinoma, or CSCC, or locally advanced CSCC who are not candidates for curative surgery or curative radiation. This multi-center,
open-label, single-arm trial
includes 36 patients and is fully enrolled, with the primary endpoints being safety and efficacy. Patients with rGBM scheduled for resection who have not been treated previously with inhibitors of immune-checkpoint pathways
received Ad-RTS-hIL-12 intratumorally
at the time of surgical resection plus a dose of veledimex (20mg), daily for 14 days. Patients will receive cemiplimab intravenously (350 mg) every three weeks until documented progression or withdrawal from the clinical trial.
We provided interim updates for these trials at the 2020 American Society of Clinical Oncology (ASCO) Annual (Virtual) and 2020 Society for Neuro-Oncology (SNO) Annual Meeting, where we announced that:
Monotherapy:
Clinical Development Ad-RTS-IL-12 plus Veledimex
for Pediatric Brain Tumors
In July 2020, we announced the first patient had been dosed in a Phase 1/2 clinical trial evaluating
Ad-RTS-hIL-12
plus veledimex for the treatment of DIPG. We provided an interim update for this trial at the 2020 SNO Annual Meeting where we announced that:
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• Survival of the first subject dosed was within the historical reference range.
Future Development of Controlled
IL-12
Program
As each of our programs progresses to clinical development, we strategically prioritize our portfolio to ensure our resources and capital are deployed in the optimal manner. With the clearance of the IND for our Ziopharm-sponsored TCR-T clinical trial and the IND for the Eden BioCell-sponsored CAR-T clinical trial, we have elected to allocate an increasing amount of our resources and capital to our Sleeping Beauty TCR program. As a result, we expect to reduce the amount of resources and capital allocated to our Controlled
IL-12
program in 2021 and continue to explore partnership opportunities for this program to support its further development. In connection with this reduction in spend, we are evaluating potential changes to data collection of long term follow up and reducing other activities.
License Agreements, Intellectual Property and Other Agreements
Our goal is to obtain, maintain, and enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies to preserve our trade secrets and other confidential information and to operate without infringing the proprietary rights of other parties. Our policy is to actively seek the strongest possible intellectual property protection for our product candidates through a combination of contractual arrangements and patents, both in the United States and abroad.
Exclusive License Agreement with PGEN Therapeutics
On October 5, 2018, we entered into an exclusive license agreement, or the License Agreement, with PGEN Therapeutics, or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation. As between us and PGEN, the terms of the License Agreement replace and supersede the terms of: (a) that certain Exclusive Channel Partner Agreement by and between us and Precigen, dated January 6, 2011, as amended by the First Amendment to Exclusive Channel Partner Agreement effective September 13, 2011, the Second Amendment to the Exclusive Channel Partner Agreement effective March 27, 2015, and the Third Amendment to Exclusive Channel Partner Agreement effective June 29, 2016, which was subsequently assigned by Precigen to PGEN; (b) certain rights and obligations pursuant to that certain License and Collaboration Agreement effective March 27, 2015 between us, Precigen and ARES TRADING S.A., or Ares Trading, a subsidiary of Merck KGaA, or Merck, as assigned by Precigen to PGEN, or the Ares Trading Agreement; (c) that certain License Agreement between us, Precigen, and MD Anderson, with an effective date of January 13, 2015, or the MD Anderson License, which was subsequently assigned by Precigen and assumed by PGEN effective as of January 1, 2018; and (d) that certain Research and Development Agreement between us, Precigen and MD Anderson with an effective date of August 17, 2015, or the Research and Development Agreement, and any amendments or statements of work thereto.
Pursuant to the terms of the License Agreement, we have exclusive, worldwide rights to research, develop and commercialize (i) products utilizing Precigen’s RheoSwitch
®
gene switch, or RTS, for the treatment of cancer, referred to as
IL-12
Products, (ii) CAR products directed to (A) CD19 for the treatment of cancer, referred to as CD19 Products, and (B) a second target for the treatment of cancer, subject to certain obligations to pursue such target under the Ares Trading Agreement, and (iii) TCR products designed for neoantigens for the treatment of cancer. Under the License Agreement, we also have exclusive, worldwide rights for certain patents relating to the
Sleeping Beauty
technology to research, develop and commercialize TCR products for both neoantigens and shared antigens for the treatment of cancer, referred to as TCR Products.
We will be solely responsible for all aspects of the research, development and commercialization of the exclusively licensed products for the treatment of cancer. We are required to use commercially reasonable efforts to develop and commercialize
IL-12
products, CD19 products and TCR Products.
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In consideration of the licenses and other rights granted by PGEN, we will pay PGEN an annual license fee of $100 thousand and we have agreed to reimburse PGEN for certain historical costs of the licensed programs up to $1.0 million, which was fully paid during the year ending December 31, 2019.
We will make milestone payments totaling up to an additional $52.5 million for each exclusively licensed program upon the initiation of later stage clinical trials and upon the approval of exclusively licensed products in various jurisdictions. In addition, we will pay PGEN tiered royalties ranging from
low-single
digit to high-single digit on the net sales derived from the sales of any approved
IL-12
products and CAR products. We will also pay PGEN royalties ranging from
low-single
digit to
mid-single
digit on the net sales derived from the sales of any approved TCR products, up to a maximum royalty amount of $100.0 million in the aggregate. We will also pay PGEN 20% of any sublicensing income received by us relating to the licensed products. We are responsible for all development costs associated with each of the licensed products.
PGEN will pay us royalties ranging from
low-single
digits to
mid-single
digits on the net sales derived from the sale of PGEN’s CAR products, up to a maximum royalty amount of $50.0 million.
In consideration of our entry into the License Agreement, Precigen has forfeited and returned to us all shares of our Series 1 preferred stock held by or payable to Precigen as of the date of the License Agreement.
In October 2020, we entered into an amendment to the License Agreement relating to the transfer of certain materials and PGEN’s obligations to provide transition assistance relating to the
IL-12
products.
We determined that this transaction represented a capital transaction between related parties. We fair valued the preferred stock and the derivative liability on the date of the transaction, noting a total fair value of $163.3 million. The relinquishment of our obligation under the Ares Trading Agreement was also considered part of the overall capital transaction. We recognized an additional credit to accumulated deficit of $49.5 million as a result of the relief of the obligation under the Ares Trading Agreement. The total amount of the settlement was $212.8 million.
We incurred approximately $7.4 million of transaction advisory costs with third-party vendors, of which $5.4 million was considered a direct cost associated with the Series 1 preferred stock extinguishment and is also included as part of the consideration transferred. The remaining $2.0 million of transaction costs were recognized as an expense during the year ended December 31, 2018.
We recognized a net credit to accumulated deficit of $207.3 million, calculated as the difference in the carrying value of the Series 1 preferred stock, derivative liability, and contract liability, and the consideration transferred of $5.4 million, in connection with the transaction. This amount is included in net income available to common shareholders in the calculation of earnings per share.
License Agreement and 2015 Research and Development Agreement—The University of Texas MD Anderson Cancer Center
On January 13, 2015, we, together with Precigen, entered into the MD Anderson License with MD Anderson (which Precigen subsequently assigned to PGEN). Pursuant to the MD Anderson License, we, together with PGEN, hold an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR
T-cell
therapies,
non-viral
gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs, arising from the laboratory of Laurence Cooper, M.D., Ph.D., who served as our Chief Executive Officer from May 2015 to February 2021 and was formerly a tenured professor of pediatrics at MD Anderson.
On August 17, 2015, we, Precigen and MD Anderson entered into the Research and Development Agreement, or the 2015 R&D Agreement, to formalize the scope and process for the transfer by MD Anderson, pursuant to the
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terms of the MD Anderson License, of certain existing research programs and related technology rights, as well as the terms and conditions for future collaborative research and development of new and ongoing research programs. The rights and obligations of Precigen under the 2015 R&D Agreement were assigned to us pursuant to the Fourth Amendment to Research and Development Agreement which was entered into on September 18, 2019 (the “Fourth Amendment”) with an effective date of October 5, 2018. The activities under the 2015 R&D Agreement are directed by a joint steering committee comprised of two members from our company and one member from MD Anderson.
As provided under the MD Anderson License, we provided funding for research and development activities in support of the research programs under the 2015 R&D Agreement for a period of three years and in an amount of no less than $15.0 million and no greater than $20.0 million per year. On November 14, 2017, we entered into an amendment to the 2015 R&D Agreement extending its term until April 15, 2021. During the year ended December 31, 2019, we made no payments to MD Anderson compared to $2.7 million during the year ended December 31, 2018. The decrease in cash paid to MD Anderson during the year ended December 31, 2019 as compared to the same period in the prior year is a result of the final quarterly payment being made to MD Anderson in January 2018 and the result of approved expenditures incurred by us being deducted from the January 2018 quarterly payment. The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $8.1 million, which is included in other current assets on our balance sheet at December 31, 2020.
The term of the MD Anderson License expires on the last to occur of (a) the expiration of all patents licensed thereunder, or (b) the twentieth anniversary of the date of the MD Anderson License; provided, however, that following the expiration of the term of the MD Anderson License, we, together with Precigen, shall then have a fully-paid up, royalty free, perpetual, irrevocable and sublicensable license to use the licensed intellectual property thereunder. After ten years from the date of the MD Anderson License and subject to a
90-day
cure period, MD Anderson will have the right to convert the MD Anderson License into a
non-exclusive
license if we and Precigen are not using commercially reasonable efforts to commercialize the licensed intellectual property on a
case-by-case
basis. After five years from the date of the MD Anderson License and subject to a
180-day
cure period, MD Anderson will have the right to terminate the MD Anderson License with respect to specific technology(ies) funded by the government or subject to a third-party contract if we and Precigen are not meeting the diligence requirements in such funding agreement or contract, as applicable. MD Anderson may also terminate the agreement with written notice upon material breach by us and Precigen, if such breach has not been cured within 60 days of receiving such notice. In addition, the MD Anderson License will terminate upon the occurrence of certain insolvency events for both us and Precigen and may be terminated by the mutual written agreement of us, Precigen, and MD Anderson.
In connection with the execution of the 2019 R&D Agreement described below, on October 22, 2019, we amended the 2015 R&D Agreement to extend the term of the 2015 R&D Agreement until December 31, 2026 and to allow cash resources on hand at MD Anderson under the 2015 R&D Agreement to be used for development costs under the 2019 R&D Agreement.
2019 Research and Development Agreement—The University of Texas MD Anderson Cancer Center
On October 22, 2019, we entered into the 2019 Research and Development Agreement, or the 2019 R&D Agreement, with MD Anderson pursuant to which the parties agreed to collaborate with respect to the TCR program. Under the 2019 R&D Agreement, the parties will, among other things, collaborate on programs to expand our TCR library and conduct clinical trials. The activities under the 2019 R&D Agreement are directed by a joint steering committee comprised of two members from our company and one member from MD Anderson.
We will own all intellectual property developed under the 2019 R&D Agreement and we will retain all rights to intellectual property for oncology products manufactured
using non-viral gene
transfer technologies under the
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2019 R&D Agreement, including our
Sleeping Beauty
technology. We have granted MD Anderson an exclusive license for such intellectual property outside the field of oncology and to develop and commercialize autologous TCR products manufactured using viral gene transfer technologies, and
a non-exclusive license
for allogeneic TCR products manufactured using viral-based technologies.
Under the 2019 R&D Agreement, we agreed, beginning on January 1, 2021, to reimburse MD Anderson up to a total of $20 million for development costs under the 2019 R&D Agreement, after the funds from the 2015 R&D Agreement are exhausted. In addition, we will pay MD Anderson royalties on net sales of its TCR products at rates in the low single digits. We are required to make performance-based payments upon the successful completion of clinical and regulatory benchmarks relating to its TCR products. The aggregate potential benchmark payments are $36.5 million, of which only $3.0 million will be due prior to the first marketing approval of our TCR products. The royalty rates and benchmark payments owed to MD Anderson may be reduced upon the occurrence of certain events. We also agreed to sell our TCR products to MD Anderson at preferential prices and will sell our TCR products in Texas exclusively to MD Anderson for a limited period of time following the first commercial sale of our TCR products.
The 2019 R&D Agreement will terminate on December 31, 2026 and either party may terminate the 2019 R&D Agreement following written notice of a material breach. The 2019 R&D Agreement also contains customary provisions related to indemnification obligations, confidentiality and other matters.
In connection with the execution of the 2019 R&D Agreement, on October 22, 2019, we issued MD Anderson a warrant to purchase 3,333,333 shares of our common stock, which is referred to as the MD Anderson Warrant. The MD Anderson Warrant has an initial exercise price of $0.001 per share, expires on December 31, 2026 and vests upon the occurrence of certain clinical milestones. As of December 31, 2020, none of the milestones have been met.
The MD Anderson Warrant and the shares of our common stock to be issued upon exercise of the MD Anderson Warrant have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
License Agreement with the National Cancer Institute
On May 28, 2019, we entered into a patent license agreement, or the Patent License, with the National Cancer Institute, or the NCI. Pursuant to the Patent License, we hold an exclusive, worldwide license to certain intellectual property to develop and commercialize patient-derived (autologous), peripheral blood
T-cell
therapy products engineered by transposon-mediated gene transfer to express TCRs reactive to mutated KRAS, p53 and EGFR neoantigens. In addition, pursuant to the Patent License, we hold an exclusive, worldwide license to certain intellectual property for manufacturing technologies to develop and commercialize autologous, peripheral blood
T-cell
therapy products engineered by
non-viral
gene transfer to express TCRs, as well as a
non-exclusive,
worldwide license to certain additional manufacturing technologies. On January 8, 2020 and September 28, 2020, we amended the Patent License to expand the TCR library licensed from the NCI to include additional TCRs reactive to mutated KRAS and TP53 neoantigens.
Pursuant to the terms of the Patent License, we are required to pay the NCI a cash payment in the aggregate amount of $1.5 million payable in $0.5 million installments within sixty days,
six-months,
and the twelve-month anniversary of the effective date of the agreement for the Patent License. We also reimbursed the NCI for past patent expenses in the aggregate amount of approximately $46 thousand. Under the amendment to the patent license signed in January 2020, we agreed to pay the NCI a cash payment of $600,000 within sixty days of the amendment and under the amendment to the patent license signed in September 2020, we agreed to pay the NCI a cash payment of $411,000 within sixty days of the amendment.
The terms of the Patent License also require us to pay the NCI minimum annual royalties in the amount of $0.3 million, which amount will be reduced to $0.1 million once the aggregate minimum annual royalties paid by us equals $1.5 million.
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We are also required to make performance-based payments upon successful completion of clinical and regulatory benchmarks relating to the licensed products. The aggregate potential benchmark payments are $4.3 million, of which aggregate payments of $3.0 million are due only after marketing approval in the United States or in Europe, Japan, Australia, China or India. The first benchmark payment of $0.1 million will be due upon the initiation of our first sponsored Phase 1 clinical trial of a licensed product or licensed process in the field of use licensed under the Patent License.
In addition, we are required to pay the NCI
one-time
benchmark payments following aggregate net sales of licensed products at certain net sales up to $1.0 billion. The aggregate potential amount of these benchmark payments is $12.0 million. We must also pay the NCI royalties on net sales of products covered by the Patent License at rates in the low to
mid-single
digits depending upon the technology included in a licensed product. To the extent we enter into a sublicensing agreement relating to a licensed product, we are required to pay the NCI a percentage of all consideration received from a sublicensee, which percentage will decrease based on the stage of development of the licensed product at the time of the sublicense.
The Patent License will expire upon expiration of the last patent contained in the licensed patent rights, unless terminated earlier. The NCI may terminate or modify the Patent License in the event of a material breach, including if we do not meet certain milestones by certain dates, or upon certain insolvency events that remain uncured following the date that is 90 days following written notice of such breach or insolvency event. We may terminate the Patent License, or any portion thereof, in our sole discretion at any time upon 60 days’ written notice to the NCI. In addition, the NCI has the right to: (i) require us to sublicense the rights to the product candidates covered by the Patent License upon certain conditions, including if we are not reasonably satisfying required health and safety needs and (ii) terminate or modify the Patent License, including if we are not satisfying requirements for public use as specified by federal regulations.
Cooperative Research and Development Agreement (CRADA) with the National Cancer Institute
On January 10, 2017, we announced the signing of the CRADA with the NCI for the development of adoptive cell transfer, or ACT,-based immunotherapies genetically modified using the
Sleeping Beauty
transposon/transposase system to express TCRs for the treatment of solid tumors. The principal goal of the CRADA is to develop and evaluate ACT for patients with advanced cancers using autologous peripheral blood lymphocytes, or PBL, genetically modified using the
non-viral
Sleeping Beauty
system to express TCRs that recognize neoantigens expressed within a patient’s cancer. Research conducted under the CRADA will be at the direction of Steven A. Rosenberg, M.D., Ph.D., Chief of the Surgery Branch at the NCI, in collaboration with our researchers and PGEN researchers. During the year ended December 31, 2020 and 2019, the Company made payments of $2.5 million, each year. In February of 2019, the Company extended the CRADA with the NCI for two years, committing an additional $5.0 million to this program.
Patents and Other Intellectual Property Rights and Protection
Patents extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained. The actual protection offering by a patent, which can vary from country to country, depends of the type of patent, the scope of its coverage and the availability of legal remedies in the country.
Pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments, some of our patents, under certain conditions, may be eligible for limited patent term extension for a period of up to five years as compensation for patent term lost during drug development and the FDA regulatory review process. However, this extension period cannot be extended beyond 14 years from the drug’s approval date. The patent term restoration period is generally
one-half
the period of time elapsed between the effective date of an IND application or the issue date of the patent, whichever is later, and the submission date of an NDA, plus the period of time between the submission date of the NDA or the issue date of the patent,
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whichever is later, and FDA approval. The United States Patent and Trademark Office, in consultation with the FDA, reviews and approves applications for any patent term extension or restoration. We intend to seek the benefits of this statute, but there can be no assurance that we will be able to obtain any such benefits.
We also depend upon the skills, knowledge, and experience of our scientific and technical personnel, as well as those of our advisors, consultants, and other contractors, none of which may be patentable. To help protect unpatentable proprietary
know-how,
and for inventions for which patents may be difficult to enforce, we currently rely, and in the future, will continue to rely, on trade secret protection and confidentiality agreements to protect our interests. To this end, we generally require employees, consultants, advisors and other contractors to enter into confidentiality agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business.
Our patent position and proprietary rights are subject to certain risks and uncertainties. Please read the
“
Risk Related to Our Intellectual Property
”
section for further information about certain risks and uncertainties that may affect our patent position and proprietary rights.
Additional information as of December 31, 2019 about material patents and other proprietary rights covering our product candidates is set forth below.