10-Q

Large Accelerated Filer

Accelerated Filer

Non-Accelerated
Filer

Smaller Reporting Company

Emerging Growth Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2021

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

Commission File Number:

001-33038

ZIOPHARM Oncology, Inc.

(Exact name of registrant as specified in its charter)


Delaware		84-1475642
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One First Avenue, Parris Building 34, Navy Yard Plaza

Boston, Massachusetts 02129

(617)

259-1970

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

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	ZIOP	The Nasdaq Stock Market LLC

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

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.

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 April 30, 2021, the number of outstanding shares of the registrant’s common stock

, $0.001 par value, was 215,525,411 shares.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form

10-Q

contains forward-looking statements that are based on our current beliefs and expectations. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “target,” “will” and other words and terms of similar meaning, although not all forward-looking statements contain these identifying words. These statements involve known and unknown risks, uncertainties and other factors that may cause our 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 Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain.

The forward-looking statements in this Quarterly Report include, but are not limited to, statements about:

•

our ability to raise substantial additional capital to fund our planned operations in the near term;

•

estimates regarding our expenses, use of cash, timing of future cash needs and anticipated capital requirements;

•

the development of our product candidates, including statements regarding the initiation, timing, progress and results of our preclinical clinical studies, clinical trials and research and development programs;

•

our ability to advance our product candidates through various stages of development, especially through pivotal safety and efficacy trials;

•

the risk that final trial data may not support interim analysis of the viability of our product candidates;

•

our expectation regarding the safety and efficacy of our product candidates;

•

the timing, scope or likelihood of regulatory filings and approvals from the U.S. Food and Drug Administration or equivalent foreign regulatory agencies for our product candidates and for which indications;

•

our ability to license additional intellectual property relating to our product candidates from third parties and to comply with our existing license agreements;

•

our ability to enter into partnerships or strategic collaboration agreements, our ability to achieve the results contemplated and the potential benefits to be derived from relationships with collaborators;

•

our ability to maintain and establish collaborations and licenses; developments and projections relating to competition from other pharmaceutical and biotechnology companies or our industry;

•

our estimates regarding the potential market opportunity for our product candidates;

•

the anticipated rate and degree of commercial scope and potential, as well as market acceptance of our product candidates for any indication, if approved;

•

the anticipated amount, timing and accounting of contract liability (formerly deferred revenue), milestones and other payments under licensing, collaboration or acquisition agreements, research and development costs and other expenses;

•

our intellectual property position, including the strength and enforceability of our intellectual property rights;

•

our ability to attract, hire, and retain qualified employees and key personnel;

•

the impact of government laws and regulations in the United States and foreign countries;

•

our expectations regarding the impact of the ongoing coronavirus disease 2019, or

COVID-19,

pandemic, included the expected duration of disruption and immediate and long-term impact and effect on our business and operations;

•

the diversion of healthcare resources away from the conduct of clinical trials as a result of the ongoing

COVID-19

pandemic, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

•

the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel, quarantines or social distancing protocols imposed or recommended by federal or state governments, employers and others in connection with the ongoing

COVID-19

pandemic; and

•

other risks and uncertainties, including those listed under Part II, Item 1A, “Risk Factors”.

Any forward-looking statements in this Quarterly Report on Form

10-Q

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 listed under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form

10-Q.

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.

NOTE REGARDING COMPANY REFERENCES

Throughout this Quarterly Report on Form

10-Q,

“Ziopharm,” the “Company,” “we,” “us” and “our” refer to ZIOPHARM Oncology, Inc. and its subsidiaries.

NOTE REGARDING TRADEMARKS

All trademarks, trade names and service marks appearing in this Quarterly Report on Form

10-Q

are the property of their respective owners.

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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 Quarterly Report. Some of the more significant risks include the following:

•

Our business, operations and clinical development plans and timelines could be adversely affected by the effects of health epidemics, including the

COVID-19

pandemic, on the manufacturing, clinical trial and other business activities performed by us or by third parties with whom we conduct business, including our contract manufacturers, clinical research organizations, or CROs, shippers and others.

•

We will require substantial additional financial resources to continue ongoing development of our product candidates and pursue our business objectives; if we are unable to obtain these additional resources when needed, we may be forced to delay or discontinue our planned operations, including clinical testing of our product candidates.

•

Our plans to develop and commercialize

non-viral

and viral adoptive cellular therapies based on engineered cytokines and CAR

T-cell

as well as TCR therapies can be considered as new approaches to cancer treatment, the successful development of which is subject to significant challenges.

•

Our current product candidates are based on novel technologies and are supported by limited clinical data and we cannot assure you that our current and planned clinical trials will produce data that supports regulatory approval of one or more of these product candidates.

•

If we are unable to obtain the necessary U.S. or worldwide regulatory approvals to commercialize any product candidate, our business will suffer.

•

Our product candidates are in various stages of clinical trials, which are very expensive and time-consuming. We cannot be certain when we will be able to submit a BLA to the FDA and any failure or delay in completing clinical trials for our product candidates could harm our business.

•

Our cell-based and gene therapy immuno-oncology products rely on the availability of reagents, specialized equipment, and other specialty materials and infrastructure, which may not be available to us on acceptable terms or at all. For some of these reagents, equipment, and materials, we rely or may rely on sole source vendors or a limited number of vendors, which could impair our ability to manufacture and supply our products.

•

Our immuno-oncology product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval. Currently, few gene therapy and cell therapy products have been approved in the United States and Europe.

•

Our reliance on third parties to formulate and manufacture our product candidates exposes us to a number of risks that may delay the development, regulatory approval and commercialization of our products or result in higher product costs.

•

If we are unable either to create sales, marketing and distribution capabilities or enter into agreements with third parties to perform these functions, we will be unable to commercialize our product candidates successfully.

•

Our immuno-oncology product candidates may face competition in the future from biosimilars.

•

If we or our licensors fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish and our ability to successfully commercialize our products may be impaired.

•

Our stock price has been, and may continue to be, volatile.

•

We previously identified a material weakness in our internal control over financial reporting for the year ended December 31, 2019, which we believe has been fully remediated as of December 31, 2020. If we have inadequately remediated this material weakness, or we otherwise fail to develop, implement and maintain an effective system of internal controls in future periods, our ability to report our financial condition or results of operations could be adversely affected and may result in material misstatements of our financial statements or could have a material adverse effect on our business and trading price of our securities.

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ZIOPHARM Oncology, Inc.

Table of Contents


		Page
Part I - Financial Information

Item 1.	Financial Statements

	Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020		5

	Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)		6

	Statement of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 (unaudited)		7

	Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)		9

	Notes to Financial Statements (unaudited)		10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		36

Item 4.	Controls and Procedures		37

Part II - Other Information

Item 1.	Legal Proceedings		38

Item 1A.	Risk Factors		38

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		71

Item 3.	Defaults upon Senior Securities		71

Item 4.	Mine Safety Disclosures		71

Item 5.	Other Information		71

Item 6.	Exhibits		72

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

ZIOPHARM Oncology, Inc.

BALANCE SHEET

(unaudited)

(in thousands, except share and per share data)


	March 31, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	100,056		$	115,069
Receivables		5,006			4,665
Prepaid expenses and other current assets		7,648			10,855

Total current assets		112,710			130,589
Property and equipment, net		11,090			10,231
Right of use asset		4,357			4,650
Deposits		130			130
Other non-current assets		185			745

Total assets	$	128,472		$	146,345

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,190		$	960
Accrued expenses		14,012			16,589
Lease liability - current portion		759			819

Total current liabilities		18,961			18,368
Lease liability - noncurrent portion		3,870			3,995

Total liabilities		22,831			22,363

Commitments and contingencies (Note 7)
Preferred stock, $0.001 par value, 30,000,000 shares authorized
Stockholders’ equity:
Common stock, $0.001 par value; 250,000,000 shares authorized; 215,257,674 and 214,591,906 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		215			215
Additional paid-in capital		891,081			887,868
Accumulated deficit		(785,655	)		(764,101	)

Total stockholders’ equity		105,641			123,982

Total liabilities and stockholders’ equity	$	128,472		$	146,345

The accompanying notes are an integral part of the unaudited interim financial statements.

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ZIOPHARM Oncology, Inc.

STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share data)


	For the Three Months Ended March 31,
	2021			2020
Operating expenses:
Research and development	$	13,336		$	12,706
General and administrative		8,227			5,954

Total operating expenses		21,563			18,660

Loss from operations		(21,563	)		(18,660	)
Other income, net		9			367

Net loss	$	(21,554	)	$	(18,293	)

Basic and diluted net loss per share	$	(0.10	)	$	(0.09	)

Weighted average common shares outstanding used to compute basic and diluted net loss per share		213,954,665			199,814,768

The accompanying notes are an integral part of the unaudited interim financial statements.

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ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2021 and 2020

(unaudited)

(in thousands, except share and per share data)


For the Three Months Ended March 31, 2020
	Common Stock				Additional Paid In Capital			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance at December 31, 2019		181,803,320	$	182	$	778,953		$	(684,125	)		95,010
Stock-based compensation		—		—		1,940			—			1,940
Exercise of employee stock options		2,333		—		4			—			4
Issuance of restricted common stock		555,900		1		(1	)		—			—
Issuance of common stock in connection with a public offering, net of commissions and expenses of $5.9 million		29,110,111		29		88,632			—			88,661
Issuance of common stock in connection with an at the market offering, net of commissions and expenses of $0.4 million		2,814,673		2		13,013			—			13,015
and expenses of $2.7 million		—		—		—			—			—
Net loss		—		—		—			(18,293	)		(18,293	)

Balance at March 31, 2020		214,286,337	$	214	$	882,541		$	(702,418	)	$	180,337

The accompanying notes are an integral part of the unaudited interim financial statements.

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ZIOPHARM Oncology, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY…continued

For the Three Months Ended March 31, 2021 and 202

(unaudited)

(in thousands, except share and per share data)


For the Three Months Ended March 31, 2021
	Common Stock				Additional Paid In Capital		Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance at December 31, 2020		214,591,906	$	215	$	887,868	$	(764,101	)		123,982
Stock-based compensation		—		—		2,197		—			2,197
Exercise of employee stock options		352,442		—		1,016		—			1,016
Restricted stock awards		313,326		—		—		—			—
Net loss		—		—		—		(21,554	)		(21,554	)

Balance at March 31, 2021		215,257,674	$	215	$	891,081	$	(785,655	)	$	105,641

The accompanying notes are an integral part of the unaudited interim financial statements.

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ZIOPHARM Oncology, Inc.

STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	For the Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(21,554	)	$	(18,293	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		540			142
Stock-based compensation		2,197			1,940
Change in operating assets and liabilities
(Increase) decrease in:
Receivables		(340	)		2,548
Prepaid expenses and other current assets		3,207			2,585
Right of use asset		292			193
Other noncurrent assets		559			(556	)
Increase (decrease) in:
Accounts payable		2,654			(510	)
Accrued expenses		(2,684	)		2,206
Lease liabilities		(184	)		(161	)

Net cash used in operating activities		(15,313	)		(9,906	)

Cash flows from investing activities:
Purchases of property and equipment		(717	)		(513	)

Net cash used in investing activities		(717	)		(513	)

Cash flows from financing activities:
Proceeds from exercise of stock options		1,017			4
Issuance of common stock in connection with a public offering, net		—			88,661
Issuance of common stock in connection with at the market offerings, net		—			13,015

Net cash provided by financing activities		1,017			101,680

Net increase in cash and cash equivalents, and restricted cash		(15,013	)		91,261
Cash and cash equivalents, and restricted cash, beginning of period		115,069			79,741

Cash and cash equivalents, and restricted cash, end of period	$	100,056		$	171,002

Supplementary disclosure of cash flow information:
Accounts included in accrued expenses and accounts payable related to property and equipment	$	682		$	2,303
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SEC Form 10-Q filed by ZIOPHARM Oncology Inc