ImmunityBio, owner of the former Athenex plant in Dunkirk, has run up $2.2 billion in deficits and will need more capital to continue developing its products.
Documents filed with the federal Securities and Exchange Commission show that the company has the ability to continue operations for the next 12 months, although this is in part due to the continued support of Dr. Patrick Soon-Shiong, Chief Scientific and Medical Officer. from ImmunityBio. Soon-Shiong is a Chinese-South African transplant surgeon who became a billionaire businessman, bioscientist and media owner. He created the drug Abraxane, which is used in the treatment of lung, breast and pancreatic cancer, and founded NantWorks, a network of healthcare, biotech and artificial intelligence startups. NantWorks and ImmunityBio merged in 2020.
“Due to the continued expected operating cash outflows, we believe that there is substantial doubt about our ability to continue our operations without additional funding and financial support,” company officials wrote in the SEC filing. “However, we believe that our cash, cash equivalents and investments in marketable securities, as well as capital to be raised through equity offerings … and our potential ability to borrow from affiliated entities, will be sufficient to fund our operations at least until the next 12 months after the date of issue of the condensed consolidated financial statements based primarily on (Soon-Shiong’s) intention and ability to support our operations with additional funds, including loans from affiliated entities, as required, which we believe alleviates this doubt.
Companies in Soon-Shiong’s extensive portfolio include ImmunityBio Inc., a clinical-stage biotechnology company that develops immunotherapy and cell therapy platforms 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 fashion. The company’s goal is to generate immunogenic cell death, thereby eliminating unwanted cells from the body, whether cancerous or infected with viruses, and to employ this approach to establish a “immunological memory” which confers long-term benefit to the patient.
Bringing these products to market is a bumpy and expensive road.
As of June 30, ImmunityBio had an accumulated deficit of $2.2 billion and negative operating cash flow of $166.2 million in the first half of 2022.
“The Company will likely require additional capital to continue funding the development of our product candidates and to obtain regulatory approvals for our product candidates, and to begin commercializing all approved products,” he added. ImmunityBio’s most recent SEC filing statements.
The Company has a product candidate, N-803 in combination with BCG for the treatment of patients with BCG-Insensitive NMIBC with CIS with or without Ta or T1 disease, which has been submitted for Food and Drug approval. Federal Administration in May 2022. In July Company officials said the FDA had accepted the drug for review and set a target action date of May 23, 2023. Its platforms also include nine first 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 cancers of the bladder, pancreas and lung, which are among the types of most common and deadly cancers for which there are high failure rates for existing standards of care or, in some cases, no effective treatment available. In the field of infectious diseases, the company’s pipeline targets pathogens such as the novel strain of coronavirus (SARS-CoV-2) and human immunodeficiency virus (HIV).
“We expect our research and development expenditures 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 filing with the SEC.
The clinical trial process can cost millions of dollars. Projected expenses to complete clinical trials — and rising costs to bring its offerings to their current state — mean ImmunityBio will need more funding. Capital can be raised through equity offerings and the ability to borrow from affiliated entities.
ImmunityBio finalized in February the acquisition of the former Athenex manufacturing plant in Dunkirk. 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 has committed to spend a total of $1.52 billion in operational expenses during the initial term, and an additional $1.5 billion in operational expenses if it renews the lease for 10 years. additional. The company must also hire 450 employees at the Dunkirk site during the first five years of operation, and 300 employees to be hired during the first 2.5 years of operation. The plant purchase is part of ImmunityBio’s $9.3 million increase in research and development spending in the second quarter of 2022 compared to the second quarter of 2021. The increase in research and development spending s Primarily explained by a $5 million increase in plant and equipment expenses, primarily related to the expansion of a manufacturing plant in El Segundo, California, and the acquisition of the Dunkirk plant, an increase $4.9 million in regulatory and consulting costs related to the BLA submission for the N-803 program, an increase of $4.8 million in personnel costs due to increased headcount at support of our ongoing research and development efforts and the acquisition of the Dunkirk facility, and a $900,000 increase in conference costs.
While the filing with the SEC notes 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 this loan into common stock at $5.67 per share. .
“There is no assurance that we will be able to refinance this promissory note or what terms will be available in the market at the time of the refinancing,” filings with the SEC. “In addition, if prevailing interest rates or other factors at the time of refinancing cause interest rates to rise on refinancing, interest expense on the refinanced debt will increase. These risks could adversely affect material to our financial condition, cash flow and results of operations.