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Filings show more losses for ImmunityBio

Filings show more losses for ImmunityBio

Filings with the federal Securities and Exchange Commission show the company has the ability to continue operation for the next 12 months, though that is in part due to continued support from Dr. Patrick Soon-Shiong, ImmunityBio’s global chief scientific and medical officer. Soon-Shiong is a Chinese-South African transplant surgeon who has become a billionaire businessman, bioscientist and media proprietor. He created the drug Abraxane, which is used in treatment of lung, breast, and pancreatic cancer, and founded NantWorks, a network of health care, biotech, and artificial intelligence startups. NantWorks and ImmunityBio merged in 2020.

“As a result of continuing anticipated operating cash outflows, we believe that substantial doubt exists regarding our ability to continue as a going concern without additional funding or financial support,” company officials wrote in the SEC filing. “However, we believe our existing cash, cash equivalents, and investments in marketable securities, together with capital to be raised through equity offerings … and our potential ability to borrow from affiliated entities, will be sufficient to fund our operations through at least the next 12 months following the issuance date of the condensed consolidated financial statements based primarily upon (Soon-Shiong’s) intent and ability to support our operations with additional funds, including loans from affiliated entities, as required, which we believe alleviates such doubt.”

Among companies under Soon-Shiong’s broad portfolio is ImmunityBio Inc., is a clinical-stage biotechnology company developing immunotherapy and cell therapy platforms are designed to attack cancer and infectious pathogens by activating both the innate immune system — natural killer (NK) cells, dendritic cells, and macrophages — and the adaptive immune system — B cells and T cells — in an orchestrated manner. The company’s goal is to generate immunogenic cell death thereby eliminating rogue cells from the body whether they are cancerous or virally infected and to employ that approach to establish an “immunological memory” that confers long-term benefit for the patient.

Getting those products to market is a bumpy and costly road.

“The company will likely need additional capital to further fund the development of, and to seek regulatory approvals for, our product candidates, and to begin to commercialize any approved products,” ImmunityBio’s most recent SEC filing states.

The company has one product candidate, N-803 in combination with BCG for the treatment of patients with BCG-unresponsive NMIBC with CIS with or without Ta or T1 disease, that was submitted for federal Food and Drug Administration approval in May 2022. In July company officials said the FDA has accepted the drug for review and set a target action date of May 23, 2023. Its platforms also include nine first-in-human therapeutic agents that are being studied in 27 clinical trials — 18 of which are in Phase 2 or 3 development — across 13 indications in liquid and solid tumors, including bladder, pancreatic and lung cancers, which are among the most frequent and lethal cancer types for which there are high failure rates for existing standards of care or, in some cases, no available effective treatment. In infectious disease, the company’s pipeline targets such pathogens as the novel strain of the coronavirus (SARS-CoV-2) and human immunodeficiency virus (HIV).

“We expect our research and development expense to increase significantly for the foreseeable future as we advance our product candidates through clinical development and conduct our ongoing and planned clinical trials,” company officials said in their SEC filing.

The clinical trial process can cost in the millions of dollars. Planned spending to finish clinical trials — and the mounting costs to get its offerings to their current state — mean ImmunityBio will need more funding. Capital can be raised through equity offerings and an ability to borrow from affiliated entities.

ImmunityBio finalized its purchase of the former Athenex manufacturing plant in Dunkirk in February. The acquisition expands and diversifies ImmunityBio’s manufacturing capacity in the United States and will increase production of its products as they are approved.

As part of the transaction, ImmunityBio committed to spend an aggregate of $1.52 billion on operational expenses during the initial term, and an additional $1.5 billion on operational expenses if it renews the lease for another 10 years. The company is also to hire 450 employees at the Dunkirk facility within the first five years of operations, with 300 employees to be hired within the first 2.5 years of operation. Purchase of the plant is part of ImmunityBio’s $9.3 million increase in research and development expense in the second quarter of 2022 when compared to the second quarter of 2021. The increase in research and development expense was primarily driven by a $5 million increase in facilities and equipment expense, primarily related to the expansion of a manufacturing facility in El Segundo, Calif., and the Dunkirk facility acquisition, a $4.9 million increase in regulatory and consulting costs related to the BLA submission for the N-803 program, a $4.8 million increase in personnel costs due to higher headcount in support of our continued research and development efforts and the acquisition of the Dunkirk facility, and a $900,000 increase in conference costs.

While the SEC filing makes note of Soon-Shiong’s likely desire to continue supporting ImmunityBio’s work, the company also has a $300 million loan due to Soon-Shiong on Dec. 17. ImmunityBio can convert that loan into shares of common stock at $5.67 a share.

“There can be no assurance that we can refinance this promissory note or what terms will be available in the market at the time of refinancing,” the SEC filing states. “Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to the refinanced indebtedness would increase. These risks could materially adversely affect our financial condition, cash flows and results of operations.”

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