10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

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: 001-40908

 

MiNK Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-2142067

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

149 Fifth Avenue

Suite 500

New York, NY

10010

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: 212-994-8250

 

 

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 $0.00001 per share

 

INKT

 

Nasdaq Capital 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

As of May 5, 2023, the registrant had 34,422,063 shares of common stock, $0.00001 par value per share, outstanding.

 

 

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2023 and 2022

2

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2023 and 2022

3

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022

5

 

Notes to Unaudited Interim Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

16

Item 4.

Controls and Procedures

16

 

 

 

PART II.

OTHER INFORMATION

17

 

 

 

Item 1.

Legal Proceedings

17

Item 1A.

Risk Factors

17

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

17

Item 6.

Exhibits

18

 

Signatures

19

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MINK THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

March 31,
2023

 

 

December 31,
2022

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,892,050

 

 

$

19,635,725

 

Prepaid expenses

 

 

309,075

 

 

 

298,667

 

Other current assets

 

 

320,890

 

 

 

470,300

 

Total current assets

 

 

15,522,015

 

 

 

20,404,692

 

Equipment, net of accumulated depreciation of $332,603 and $283,682 at
   March 31, 2023 and December 31, 2022, respectively

 

 

1,066,743

 

 

 

1,066,910

 

Total assets

 

$

16,588,758

 

 

$

21,471,602

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

Accounts payable

 

$

6,001,900

 

 

$

5,823,000

 

Accrued liabilities

 

 

2,753,378

 

 

 

4,238,555

 

Other current liabilities

 

 

2,494,716

 

 

 

2,621,611

 

Total current liabilities

 

 

11,249,994

 

 

 

12,683,166

 

Other long-term liabilities

 

 

94,177

 

 

 

108,500

 

Due to related parties

 

 

9,720,368

 

 

 

9,081,239

 

Commitments and contingencies

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

Common stock, par value $0.00001 per share; 150,000,000 shares authorized;
   
34,299,441 and 33,856,428 shares issued at March 31, 2023
   and December 31, 2022, respectively

 

 

343

 

 

 

339

 

Additional paid-in capital

 

 

112,522,794

 

 

 

110,829,900

 

Accumulated other comprehensive loss

 

 

(373,803

)

 

 

(292,468

)

Accumulated deficit

 

 

(116,625,115

)

 

 

(110,939,074

)

Total stockholders’ deficit

 

 

(4,475,781

)

 

 

(401,303

)

Total liabilities and stockholders’ deficit

 

$

16,588,758

 

 

$

21,471,602

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

1


 

MINK THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

4,193,562

 

 

$

5,277,335

 

General and administrative

 

 

1,660,534

 

 

 

2,096,954

 

Operating loss

 

 

(5,854,096

)

 

 

(7,374,289

)

Other income (expense), net:

 

 

 

 

 

 

Interest income (expense), net

 

 

168,055

 

 

 

(848

)

Other income (expense), net

 

 

 

 

 

(401,964

)

Net loss

 

$

(5,686,041

)

 

$

(7,777,101

)

Per common share data:

 

 

 

 

 

 

Basic and diluted net loss per common share

 

$

(0.17

)

 

$

(0.23

)

Weighted average number of common shares outstanding

 

 

33,966,921

 

 

 

33,504,472

 

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

$

(81,335

)

 

$

522,771

 

Comprehensive loss

 

$

(5,767,376

)

 

$

(7,254,330

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

2


 

MINK THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

Treasury Stock

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Number of
Shares

 

 

Par
Value

 

 

Additional
Paid-In
Capital

 

 

Number of
Shares

 

 

Par
Value

 

 

Other
Comprehensive
Income (Loss)

 

 

Accumulated
Deficit

 

 

Total

 

Balance at December 31, 2022

 

 

33,856,428

 

 

$

339

 

 

$

110,829,900

 

 

 

 

 

$

 

 

$

(292,468

)

 

$

(110,939,074

)

 

 

(401,303

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,686,041

)

 

 

(5,686,041

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(81,335

)

 

 

 

 

 

(81,335

)

Exercise of stock options and employee share purchases

 

 

99,555

 

 

 

1

 

 

 

45,495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,496

 

Vesting of nonvested shares

 

 

30,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant and recognition of stock options

 

 

 

 

 

 

 

 

887,811

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

887,811

 

Recognition of parent stock options

 

 

 

 

 

 

 

 

33,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,328

 

Issuance of shares for employee bonuses

 

 

476,804

 

 

 

5

 

 

 

726,260

 

 

 

(163,759

)

 

 

(379,921

)

 

 

 

 

 

 

 

 

346,344

 

Retirement of treasury shares

 

 

(163,759

)

 

 

(2

)

 

 

 

 

 

163,759

 

 

 

379,921

 

 

 

 

 

 

 

 

 

379,919

 

Balance at March 31, 2023

 

 

34,299,441

 

 

$

343

 

 

$

112,522,794

 

 

 

 

 

$

 

 

$

(373,803

)

 

$

(116,625,115

)

 

$

(4,475,781

)

 

3


 

MINK THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

Treasury Stock

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Number of
Shares

 

 

Par
Value

 

 

Additional
Paid-In
Capital

 

 

Number of
Shares

 

 

Par
Value

 

 

Other
Comprehensive
Income (Loss)

 

 

Accumulated
Deficit

 

 

Total

 

Balance at December 31, 2021

 

 

33,476,523

 

 

$

335

 

 

$

107,349,265

 

 

 

 

 

$

 

 

$

(625,269

)

 

$

(82,947,862

)

 

$

23,776,469

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,777,101

)

 

 

(7,777,101

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

522,771

 

 

 

 

 

 

522,771

 

Option exercises

 

 

84,391

 

 

 

1

 

 

 

688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

689

 

Grant and recognition of stock options

 

 

 

 

 

 

 

 

741,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

741,773

 

Recognition of parent stock options

 

 

 

 

 

 

 

 

43,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,733

 

Balance at March 31, 2022

 

 

33,560,914

 

 

$

336

 

 

$

108,135,459

 

 

 

 

 

$

 

 

$

(102,498

)

 

$

(90,724,963

)

 

$

17,308,334

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


 

MINK THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(5,686,041

)

 

$

(7,777,101

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

45,686

 

 

 

27,077

 

Share-based compensation

 

 

921,139

 

 

 

785,506

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses

 

 

(10,010

)

 

 

(181,974

)

Accounts payable

 

 

153,919

 

 

 

642,226

 

Accrued liabilities and other current liabilities

 

 

(549,527

)

 

 

1,191,631

 

Other operating assets and liabilities

 

 

758,424

 

 

 

1,116,150

 

Net cash used in operating activities

 

 

(4,366,410

)

 

 

(4,196,485

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of plant and equipment

 

 

(13,500

)

 

 

 

Net cash used in investing activities

 

 

(13,500

)

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from employee stock purchases and option exercises

 

 

45,496

 

 

 

689

 

Purchase of treasury shares to satisfy tax withholdings

 

 

(379,921

)

 

 

 

Net cash provided by (used in) financing activities

 

 

(334,425

)

 

 

689

 

Effect of exchange rate changes on cash

 

 

(29,340

)

 

 

(4,586

)

Net decrease in cash and cash equivalents

 

 

(4,743,675

)

 

 

(4,200,382

)

Cash and cash equivalents, beginning of period

 

 

19,635,725

 

 

 

38,888,828

 

Cash and cash equivalents, end of period

 

$

14,892,050

 

 

$

34,688,446

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

9,961

 

 

$

1,550

 

Supplemental disclosures - non-cash activities:

 

 

 

 

 

 

Purchases of plant and equipment in accounts payable and accrued liabilities

 

$

23,042

 

 

$

91,928

 

Issuance of common stock, $0.00001 par value, for payment of employee bonuses

 

 

726,263

 

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


 

MINK THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Business and Liquidity

MiNK Therapeutics, Inc. (“MiNK” or the “Company”) is a clinical stage biopharmaceutical company pioneering the discovery, development and manufacturing of allogeneic, off-the-shelf, invariant natural killer T (“iNKT”) cell therapies to treat cancer and other immune-mediated diseases. iNKT cells are a distinct T cell population that combine durable memory responses with the rapid cytolytic features of natural killer cells. iNKT cells offer distinct therapeutic advantages as a platform for allogeneic therapy in that the cells naturally home to tissues, aid clearance of tumors and infected cells, and suppress graft-versus-host-disease. MiNK’s proprietary platform is designed to facilitate scalable and reproducible manufacturing for off-the-shelf delivery. As such, the Company believes that its approach represents a highly versatile application for therapeutic development in cancer and immune diseases. MiNK is leveraging its platform and manufacturing capabilities to develop a wholly owned or exclusively licensed pipeline of both native and engineered iNKT cells.

Since inception, in 2017, until the completion of the Company’s initial public offering (“IPO”), the Company financed its operations primarily through funding from Agenus Inc. (“Agenus”), its parent company. The Company has incurred losses since inception and, as of March 31, 2023, had an accumulated deficit of $116.6 million. MiNK expects to continue incurring operating losses and negative cash flows for the foreseeable future. Based on the Company’s current plans and projections, MiNK believes its cash and cash equivalents balance as of March 31, 2023 of $14.9 million will be sufficient to satisfy its liquidity requirements for more than one year from when these financial statements were issued.

Management continually monitors the Company’s liquidity position and adjusts spending as needed in order to preserve liquidity. The Company’s future liquidity needs will be determined primarily by the success of its operations with respect to the progression of the Company’s product candidates and key development and regulatory events in the future. Potential sources of additional funding for the Company include: (1) pursuing collaboration, out-licensing and/or partnering opportunities for the Company’s portfolio programs and product candidates with one or more third parties, (2) securing debt financing and/or (3) selling equity securities. If additional funding is not obtained through these sources, Agenus has indicated a willingness to loan the Company certain funds to finance its operations.

MiNK’s product candidates are in various stages of development and additional expenditures will be required if the Company starts new trials, encounters delays in its programs, applies for regulatory approvals, continues development of its technologies, expands its operations, and/or brings its product candidates to market. The eventual total cost of each clinical trial is dependent on a number of factors such as trial design, length of the trial, number of clinical sites, and number of patients. The process of obtaining and maintaining regulatory approvals for new therapeutic products is lengthy, expensive, and uncertain. Because all of the Company’s programs are at an early stage of clinical development, the Company is unable to reliably estimate the cost of completing its research and development programs or the timing for bringing such programs to various markets or substantial partnering or out-licensing arrangements, and, therefore, when, if ever, material cash inflows are likely to commence.

(2) Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 24, 2023. Since the date of those financial statements there have been no changes to the Company’s significant accounting policies.

Financial Statement Preparation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual consolidated financial statements. In the opinion of the Company’s management, the condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of the Company’s financial position and operating results. All significant intercompany transactions and accounts have been eliminated in consolidation. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Management bases its estimates on

6


 

historical experience and on various assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially from those estimates.

For the Company’s foreign subsidiaries, the local currency is the functional currency. Assets and liabilities of its foreign subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while expenses are translated into U.S. dollars using average exchange rates during the period. The cumulative translation adjustment resulting from changes in exchange rates are included in the condensed consolidated balance sheets as a component of accumulated other comprehensive income (loss) in total stockholders’ equity (deficit).

(3) Net Loss Per Share

Basic loss per common share is calculated by dividing the net loss by the weighted average number of common shares outstanding. Diluted loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding plus the dilutive effect of outstanding instruments such as stock options. Because the Company reported a net loss for all periods presented, diluted loss per common share is the same as basic loss per common share, as the effect of utilizing the fully diluted share count would have reduced the net loss per common share. Therefore, the following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as of March 31, 2023 and 2022, as they would be anti-dilutive:

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Stock options

 

 

6,720,366

 

 

 

6,847,531

 

Non-vested shares

 

 

885,756

 

 

 

848,779

 

 

(4) Cash and Cash Equivalents

Cash equivalents consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

Cost

 

 

Estimated Fair Value

 

 

Cost

 

 

Estimated Fair Value

 

Institutional money market funds

 

$

13,565

 

 

$

13,565

 

 

$

18,664

 

 

$

18,664

 

 

(5) Accrued and Other Current Liabilities

Accrued liabilities consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Payroll

 

$

884

 

 

$

1,655

 

Professional fees

 

 

354

 

 

 

642

 

Research services

 

 

895

 

 

 

1,681

 

Contract manufacturing costs

 

 

620

 

 

 

261

 

Total

 

$

2,753

 

 

$

4,239

 

 

Other current liabilities of $2.3 million and $2.2 million as of March 31, 2023 and December 31, 2022, respectively, represent the advance received under the Company’s research and development agreement with the Belgium Walloon Region Government (“Walloon Region”). In 2022, the Company received notice that the Walloon Region had obtained a default judgment seeking repayment of approximately $2.3 million of the advance based upon the Company allegedly not providing required notification that research and operations in the region were discontinued. The Company continues to evaluate its options relating to the default judgement and the outstanding liability.

(6) Share-based Compensation Plans

The Company primarily uses the Black-Scholes option pricing model to value options granted to employees and non-employees, as well as options granted to members of the Company’s Board of Directors. All stock option grants have 10-year terms and generally vest ratably over a 3 or 4-year period.

7


 

A summary of option activity for the three-month period ended March 31, 2023 is presented below:

 

 

 

Options

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Contractual
Term
(in years)

 

 

Aggregate
Intrinsic
Value

 

Outstanding at December 31, 2022

 

 

6,148,447

 

 

$

1.97

 

 

 

 

 

 

 

Granted

 

 

648,373

 

 

 

2.31

 

 

 

 

 

 

 

Exercised

 

 

(61,844

)

 

 

0.01

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

Expired

 

 

(14,610

)

 

 

3.03

 

 

 

 

 

 

 

Outstanding at March 31, 2023

 

 

6,720,366

 

 

$

2.02

 

 

 

7.97

 

 

$

4,047,686

 

Vested or expected to vest at March 31, 2023

 

 

6,720,366

 

 

$

2.02

 

 

 

7.97

 

 

$

4,047,686

 

Exercisable at March 31, 2023

 

 

3,594,127

 

 

$

1.23

 

 

 

7.22

 

 

$

4,027,006

 

 

The weighted average grant-date fair values of options granted during the three months ended March 31, 2023 and 2022 were $1.74 and $2.15, respectively. During the three months ended March 31, 2023 and 2022, all options were granted with exercise prices equal to the market value of the underlying shares of common stock on the grant date.

As of March 31, 2023, there was $5.4 million of unrecognized share-based compensation expense related to stock options granted to employees, consultants and directors which, if all milestones are achieved on outstanding performance based awards, will be recognized over a weighted average period of 2.5 years. For awards with performance conditions, expense is recognized if the underlying performance conditions are deemed probable of achievement.

A summary of non-vested stock activity for the three-month period ended March 31, 2023 is presented below:

 

 

 

Nonvested
Shares

 

 

Weighted
Average
Grant Date
Fair Value

 

Outstanding at December 31, 2022

 

 

726,163

 

 

$

3.01

 

Granted

 

 

666,810

 

 

 

2.30

 

Vested

 

 

(507,217

)

 

 

2.34

 

Forfeited

 

 

 

 

 

 

Outstanding at March 31, 2023

 

 

885,756

 

 

$

2.87

 

 

As of March 31, 2023, there was $0.6 million of unrecognized share-based compensation expense related to these non-vested shares which will be recognized over a weighted average period of 0.6 years.

During the three months ended March 31, 2023, 37,711 shares were issued under the 2021 Employee Stock Purchase Plan, 61,844 shares were issued as a result of stock option exercises and 30,413 shares were issued as a result of the vesting of non-vested stock. Additionally, 476,804 shares were issued as payment for certain employee bonuses, with 163,759 of those shares being withheld to cover taxes, resulting in a net share issuance of 313,045.

Stock based compensation expense also includes expense related to awards to employees of the Company from the Agenus 2019 Equity Incentive Plan. The impact on the Company’s results of operations from share-based compensation for the three months ended March 31, 2023 and 2022, was as follows (in thousands):

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

Research and development

 

$

141

 

 

$

118

 

General and administrative

 

 

780

 

 

 

668

 

Total share-based compensation expense

 

$

921

 

 

$

786

 

 

8


 

(7) Related Party Transactions

Until the completion of its IPO, the Company relied on Agenus for all of its working capital requirements. For the periods presented, certain of the Company’s operations were fully integrated with Agenus, including, but not limited to, corporate functions such as finance, human resources, information technology and legal functions. The Company’s consolidated financial statements reflect all costs of doing business related to these operations.

In September 2021, the Company entered into an Intellectual Property Assignment and License Agreement with Agenus (the “New Assignment and License Agreement”), upon which the prior intercompany agreement between Agenus and MiNK was terminated. Pursuant to the New Assignment and License Agreement, Agenus assigned to the Company certain patent rights and know-how related to its iNKT cell platform, product candidates and other patents and know-how related to its business. In addition to the patent rights assigned to the Company by Agenus, the Company also received an exclusive, royalty-free, sublicensable license to research, develop, manufacture and commercialize certain licensed technology in the field. The New Assignment and License Agreement further provides for the Company to grant Agenus a field-limited, non-exclusive, royalty-free license under the assigned patent rights, subject to MiNK’s discretion and provided such access would not reasonably result in a disruption of planned MiNK activities. Agenus has also agreed to provide the Company with Agenus’ biological material upon written request in order for the Company to use such material in its development activities of a combination therapy. Agenus may withhold the transfer of biological material, including, but not limited to, checkpoint modulating antibodies, for various reasons, including if such transfer would reasonably result in a disruption of planned Agenus activities. For any materials Agenus does share with the Company, the parties have agreed to enter into a separate agreement governing the transfer and providing for joint ownership of the data. Agenus has agreed that during the full term of the New Assignment and License Agreement, and for three years thereafter, it will not develop, manufacture or commercialize an iNKT cell therapy, directly or indirectly by transferring such technology. The Company may terminate the New Assignment and License Agreement without cause upon 90 days’ prior written notice to Agenus. Either party may terminate if there has been a material breach which has not been cured within 90 days (or 45 days for breach of payment obligations) of receiving such notice.

Effective April 1, 2022, the Company entered into an Amended and Restated Intercompany Services Agreement (the “New Intercompany Agreement”) with Agenus, which amended and restated the Intercompany General & Administrative Agreement between the Company and Agenus dated September 10, 2021 (the “Prior Intercompany Agreement”). Under the New Intercompany Agreement, Agenus provides the Company with certain general and administrative support, including, without limitation, financial, facilities management, human resources and information technology administrative support (the “Agenus Services”), and the Company and Agenus provide each other with certain research and development services (the “R&D Services”) and other support services, including legal and regulatory support (the “Shared Services”). The Company is required to pay 10% of Agenus’ costs related to the Agenus Services, and the costs of R&D Services are based upon pass-through costs related to such services plus an allocation of the costs of the employees performing the services. No payment will be due from either party for the Shared Services, provided that the services provided by each party are proportional in scope and volume. The Company is also entitled to use Agenus’ business offices and laboratory space and equipment in exchange for the Company contributing a proportionate payment for the use of such facilities and equipment, and the Company will be covered by certain Agenus insurance policies, subject to certain conditions, including the Company paying the cost of such coverage. Either party may terminate the New Intercompany Agreement upon 60 days’ prior written notice and individual services upon 30 days’ prior written notice.

Allocated Agenus services primarily include payroll related expenses, facility costs, insurance and stock-based compensation, and are included in the accompanying financial statements based on certain estimates and allocations described above. Under the Prior Intercompany Agreement, the allocation methods primarily included time devoted to activities and headcount-based allocations. Agenus business services and occupancy costs were allocated to the Company based on the Company’s headcount as a percentage of Agenus’ and the Company was required to pay 105% of Agenus’ costs for these business services and occupancy costs. Research services were charged between the entities based on hours recorded by Agenus employees as time spent on specific projects, applied to hourly wage rates, and the Company paid 110% of Agenus’ costs for these research services. As such, these allocations may not be indicative of the actual amounts that would have been recorded had the Company operated as an independent, publicly traded company for the periods presented.

Allocation of Agenus services, net of approximately $306,000 and $856,000 for the three months ended March 31, 2023 and 2022, respectively, is included in “Operating expenses” in the Company’s statement of operations and “Due to related parties,” of $9.7 million as of March 31, 2023, in the Company’s condensed consolidated balance sheet. Agenus has agreed to not require repayment of this balance prior to June 30, 2024.

In January 2023, the Company's CEO ("Dr. Buell"), became an employee of Agenus in the role of Chairman of the Executive Counsel. As an employee of Agenus, Dr. Buell is paid $150,000 annually and was granted an option to acquire 750,000 shares of Agenus common stock that vest over a period of four years.

9


 

In 2022, the Company entered into a Master Services Agreement with Atlant Clinical Ltd. (“Atlant”), a subsidiary of Agenus, to provide clinical trial support services to the Company, including an eTMF platform, medical monitoring and data manager services. The Company’s Audit and Finance Committee approved the engagement under its related-party transactions policy for up to $250,000 in services. These services are expected to be completed in 2022 and 2023. As of March 31, 2023, the Company had entered into work orders with Atlant totaling approximately $157,000, plus out of pocket expenses which are to pass through to Company at cost. For the three months ended March 31, 2023, approximately $22,000, related to these services is included in “Research and development” expense in the Company’s condensed consolidated statements of operations.

Dr. Buell's spouse is a partner in the law firm of Wolf, Greenfield & Sachs, P.C. (“Wolf Greenfield”), which provided legal services to the Company during the quarter ended March 31, 2023, and continues to do so. For the three months ended March 31, 2023, the Company expensed Wolf Greenfield fees totaling approximately $38,000. Dr. Buell’s spouse does not receive direct compensation from the fees paid to Wolf Greenfield by the Company and the fees paid by the Company to Wolf Greenfield in the period was an insignificant amount of Wolf Greenfield’s revenues. The Company’s Audit and Finance Committee approved these services under its related-party transactions policy.

(8) Contingencies

The Company may currently be, or may become, a party to legal proceedings. While the Company currently believes that the ultimate outcome of any of these proceedings will not have a material adverse effect on its financial position, results of operations, or liquidity, litigation is subject to inherent uncertainty and consumes both cash and management attention.

(9) Recent Accounting Pronouncements

No new accounting pronouncement issued or effective during the three months ended March 31, 2023 had or is expected to have a material impact on the Company’s consolidated financial statements or disclosures.

10


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

MiNK Therapeutics, Inc. (“we,” “us” and “our”) is a clinical stage biopharmaceutical company pioneering the discovery, development and manufacturing of allogeneic, off-the-shelf invariant natural killer T (“iNKT”) cell therapies to treat cancer and other immune-mediated diseases. iNKT cells are a distinct T cell population that combine durable memory responses with the rapid cytolytic features of natural killer (“NK”) cells. iNKT cells offer distinct therapeutic advantages as a platform for allogeneic therapy in that the cells naturally home to tissues, aid clearance of tumors and infected cells and suppress Graft versus Host Disease (“GvHD”). Our proprietary platform is designed to facilitate scalable and reproducible manufacturing for off-the-shelf delivery. As such, we believe that our approach represents a highly versatile application for therapeutic development in cancer and immune diseases. We are leveraging our platform and manufacturing capabilities to develop a wholly owned or exclusively licensed pipeline of both native and engineered iNKT cells.

Our business activities include product research and development, manufacturing, regulatory and clinical development, corporate finance, and support of our collaborations. To be successful, our product candidates require clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace. We are a party to an Amended and Restated Intercompany Services Agreement and an Intellectual Property Assignment and License Agreement with Agenus. Under the Amended and Restated Intercompany Services Agreement, Agenus provides us with certain general and administrative support, including, without limitation, financial, facilities management, human resources and information technology administrative support, and we and Agenus provide each other with certain research and development services and other support services, including legal and regulatory support. We are also entitled to use Agenus’ business offices and laboratory space and equipment in exchange for us contributing a proportionate payment for the use of such facilities and equipment, and we will be covered by certain Agenus insurance policies, subject to certain conditions, including us paying the cost of such coverage. Under the Intellectual Property Assignment and License Agreement, Agenus exclusively assigned patent rights and know-how related to our technology to us. We also have a field-limited exclusive license under certain Agenus patents and know-how; and we retain the rights to expand a proprietary pipeline of products and technologies.

Our most advanced product candidate, agenT-797, is an off-the-shelf, allogeneic, native iNKT cell therapy. iNKTs are a potent class of immune cells and serve as master regulators of immune response, possessing the killing power of NK cells and the memory of T-cells. Our proprietary manufacturing platform allows these cells to be infused in billion-fold numbers, arming the immune system against cancer and other life-threatening diseases. We have established and launched in-house iNKT cell manufacturing and product release capacity to supply more than 5,000 doses per year through an FDA-cleared scalable, fully closed, and automatic process. Our Phase 1 clinical trial studying agenT-797 in solid tumor cancers, as a monotherapy and in combination with anti-PD-1 checkpoint inhibitors, pembrolizumab and nivolumab, is currently advancing as a priority program. Encouraging activity was seen with agenT-797 monotherapy and combination, with durable responses and disease stabilization in patients, which was presented at the American Association for Cancer Research ("AACR") in 2023.

 

AgenT-797 showed clinical benefit and tolerable safety across a range of heavily pre-treated solid tumors, including non-small cell lung cancer ("NSCLC"), testicular cancer, and gastric cancer in a Phase 1 clinical trial (AACR 2023). A partial response was achieved in a metastatic gastric cancer patient treated with agenT-797 in combination with nivolumab, which was ongoing at 9 months. This patient previously had no response to anti-PD-1 therapy and standard of care chemotherapy. A tolerable safety profile seen with the cells alone and in combination with PD-1, up to a billion cells, with no neurotoxicity, dose-limiting toxicities, or severe cytokine release syndrome (> grade 3). We will further evaluate these signals through a phase 1/2 expansion trial in combination with standard of care agents (pembrolizumab/nivolumab) with or without botensilimab (Agenus’ multifunctional anti-CTLA-4) in relapsed/refractory gastric cancer.

With the unique circumstances of the COVID-19 pandemic, we commenced a Phase 1 clinical trial of agenT-797 in viral acute respiratory distress syndrome ("ARDS") and reported an encouraging survival benefit of 70%, compared to ~10-22% in an in-hospital control and time-matched data from the Centers for Disease Control and Prevention. These data were presented at Society of Immunotherapy for Cancer ("SITC") 2022, and an update from the trial will be presented at the American Thoracic Society International Conference in May 2023. There are currently no approved therapies for ARDS; our data contribute favorably as a potential therapeutic and we plan to advance agenT-797 in viral ARDS through strategic collaborations and non-dilutive external financing. Discussions are underway.

 

In addition, we completed a Phase 1 clinical trial of agenT-797 for the treatment of multiple myeloma and reported at SITC in 2022 that agenT-797 was tolerable to a billion cells/dose and suppressed biomarkers associated with disease progression. This proof of concept phase 1 underscores the potential application of INKT cells in multiple myeloma and we believe supports the advancement of our armored B cell maturation antigen ("BCMA")-CAR-INKT program as a potential best in class next generation allogeneic BCMA cell therapy for these patients. Strategic discussions to advance this program are underway.

11


 

We are also advancing a pipeline of next-generation allogeneic, engineered iNKT programs. Our two most advanced engineered programs are (1) MiNK-215, an IL-15 armored tumor stromal targeting FAP-CAR-iNKT and (2) MiNK-413, an IL-15 armored CAR-iNKT program targeting BCMA program. MiNK-413 has demonstrated tumor clearance and improved persistence in preclinical models, as well as manufacturing and logistical improvements over current BCMA cell therapies. MiNK-215 has demonstrated efficacy in NSCLC and melanoma preclinical models, promoting curative responses, eliminating tumor burden in the lungs, and enhancing tumor specific CD8+ T cell infiltration through tumor stroma. These data and programs were presented at SITC in 2022. These programs are both in preclinical development with investigational new drug application enabling activities underway in 2023.

Our research and development (“R&D”) expenses for the three months ended March 31, 2023 and 2022 were $4.2 million and $5.3 million, respectively. We have incurred losses since our inception. As of March 31, 2023, we had an accumulated deficit of $116.6 million.

We expect to continue to incur operating losses and negative cash flows for the foreseeable future. Based on our current plans and projections, we believe our quarter-end cash and cash equivalents balance will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued. Management continues to monitor our liquidity position and will adjust spending as needed in order to preserve liquidity. Our future liquidity needs will be determined primarily by the success of our operations with respect to the progress of our product candidates and key development and regulatory events in the future. Potential sources of additional funding include: (1) pursuing collaboration, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with one or more third parties, (2) securing debt financing and/or (3) selling equity securities. If additional funding is not obtained through these sources, our parent company has indicated a willingness to loan certain funds to us to finance our operations.

12


 

Historical Results of Operations

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Research and development expense

R&D expense includes the costs associated with our internal research and development activities, including compensation and benefits, occupancy costs, manufacturing costs, costs of expert consultants, and administrative costs. R&D expense decreased 21% to $4.2 million for the three months ended March 31, 2023 from $5.3 million for the three months ended March 31, 2022. This decrease is primarily due to decreased costs associated with the timing of our clinical trials and decreased costs associated with allocated Agenus services. These decreases were partially offset by increased personnel costs associated with increased headcount.

General and administrative expense

General and administrative (“G&A”) expense consists primarily of personnel costs, facility expenses, and professional fees. G&A expense decreased 21% to $1.7 million for the three months ended March 31, 2023 from $2.1 million for the three months ended March 31, 2022. This decrease is primarily due to decreased professional fees, primarily attributable decreased legal, strategy, audit and tax and insurance fees, and decreased costs associated with allocated Agenus services. These decreases were partially offset by increased personnel costs, including stock-based compensation expense, associated with increased headcount.

Interest income (expense), net

Interest income for the three months ended March 31, 2023 was $168,000 due to interest earned on our money market funds. Interest expense for the three months ended March 31, 2022 was de minimis.

Research and Development Programs

R&D program costs include compensation and other direct costs plus an allocation of indirect costs, based on certain assumptions.

 

 

 

For the three months ended March 31,

 

 

For the years ended December 31,

 

 

 

2023