SEC Filing | Y-mAbs Therapeutics, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 30, 2024

☐ 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 001-38650

Y-mAbs Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware		47-4619612

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

230 Park Avenue

Suite 3350

New York, NY 10169

(Address of principal executive offices)

(Zip Code)

(646) 885-8505

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, $0.0001 par value	YMAB	Nasdaq Global Select 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, 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 ☒.

There were 44,569,834 shares of Common Stock ($0.0001 par value) outstanding as of August 5, 2024.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, about us and our industry that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our business strategy, future operations and results thereof, future financial position, future revenue, projected costs, prospects, current and prospective products, product approvals, research and development costs, current and prospective collaborations, timing and likelihood of success, plans and objectives of management, expected market growth and future results of current and anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important 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 the forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “contemplate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, as supplemented in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements\, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we made. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections, that could cause actual results or events to differ materially from the forward-looking statements that we make. These factors include, without limitation:

●

We may not be able to successfully implement our business model, including our plans to expand the commercialization of DANYELZA® (naxitamab-gqgk), referred to as DANYELZA, and to develop, obtain regulatory approval of and commercialize our other product candidates;

●

Our expectations with respect to the rate and degree of market acceptance and clinical utility for DANYELZA or any current or future product candidates for which we may receive marketing approval may not be realized;

●

We may not be successful in implementing our business strategy, including our ability and plans in continuing to build out our commercial infrastructure and successfully launching, marketing, expanding the indications for, and selling DANYELZA and any current or future product candidates for which we may receive marketing approval. This includes our plans with respect to the focus and activities of our

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sales force, the nature of our marketing, market access and patient support activities of DANYELZA and related assumptions;

●

Our expectations with respect to the pricing, coverage and reimbursement of, and the extent to which patient assistance programs are utilized for DANYELZA or other product candidates for which we may receive marketing approval may not be realized;

●

We currently depend on a small number of third-party contract manufacturing organizations, or CMOs, and expect it would be difficult to find a suitable replacement for the complex and difficult manufacture of DANYELZA and our product candidates. The loss of any of these CMOs or the failure of any of them to meet their obligations to us could affect our ability to continue to sell DANYELZA or to develop our other product candidates in a timely manner;

●

Our expectations with respect to our ongoing and future clinical trials whether conducted by us or by any of our collaborators, may not be realized, including the timing of initiation of these trials, the pace of enrollment, the completion of enrollment, the availability of data from, and the outcome of, these trials, and expectations with respect to regulatory submissions and potential regulatory approvals may not be realized on the anticipated timing or at all;

●

The SADA PRIT Technology that we use has not been approved for commercial use by the FDA or any other regulatory authority and our clinical effort may not result in approval or marketable products;

●

We are dependent on our relationship with Memorial Sloan Kettering Cancer Center, or MSK, including our ability to maintain our exclusive rights under the 2015 MSK License Agreement (as amended), or the MSK License Agreement, and the 2020 SADA License Agreement, or the SADA License Agreement as well as our relationship with MSK as a user of DANYELZA and any future products;

●

The outcome of pre-clinical studies and early clinical trials may not be predictive of the success of later clinical trials, interim results of a clinical trial do not necessarily predict final results, and the results of our clinical trials may not satisfy the requirements of the FDA or comparable foreign regulatory authorities, and if an adverse safety issue, clinical hold or other adverse finding occurs in one or more of our clinical trials of our product candidates, such event could adversely affect other clinical trials of our product candidates;

●

Our expectations with respect to the commercial value of any of our product candidates, including antibody constructs based on Self-Assembly Dis-Assembly Pre-targeted Radioimmunotherapy, or SADA PRIT, technology platform, may not be realized;

●

We may be unable to attract, integrate, manage and retain qualified personnel or key employees;

●

Our expectations with respect to the timing of and our ability to obtain and maintain regulatory, marketing and reimbursement approvals for our product candidates may not be realized;

●

We may be unable to successfully implement our commercialization, marketing and manufacturing capabilities and strategy;

●

If we are unable to establish and maintain sufficient intellectual property position, strategy and scope of protection for the intellectual property rights covering our product candidates and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours and our ability to successfully commercialize our products, product candidates and other proprietary technologies, if approved, may be adversely affected;

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●

We may be unable to identify and develop additional product candidates and technologies with significant commercial potential;

●

We may be unable to enter into collaborations or strategic partnerships for the development and commercialization of our product candidates and future operations, and the potential benefits of any such collaboration or partnership may not be realized;

●

Any collaboration agreement that we may enter into may not be successful, which could adversely affect our ability to develop and commercialize our products or to enter new therapeutic areas;

●

We currently depend on third parties for a portion of our operations, and we may not be able to control their work as effectively as if we performed these functions ourselves. If the third parties fail to comply with regulations, our financial results and financial condition could be adversely affected;

●

Our expectations related to the use of our cash and cash equivalents, and how long our cash resources are expected to last, may be inaccurate and we may require additional funding sooner than we expect;

●

We will require substantial additional funding to finance our operations, complete the development and commercialization of our product and product candidates, and evaluate future product candidates, programs or other operations;

●

The timing and amount of any future financing transaction and our common stock price and other factors may impact our ability to raise additional capital on favorable terms;

●

Our expectations with respect to our financial performance, including our estimates regarding revenues, expenses, cash flow, and capital expenditure requirements may not be realized;

●

We face significant competition in an environment of rapid technological and scientific change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more effective than ours;

●

Our business, financial condition and results of operations have been and may in the future be adversely affected by health crises, macroeconomic conditions, such as inflation and high interest rates, uncertain global financial markets, supply-chain disruptions, and by geopolitical events, including the invasion of Ukraine by Russia, and sanctions related thereto, which resulted in the suspension of our clinical trial and regulatory activities in Russia; as well as the state of the war involving Israel and the related risk of a more global conflict;

●

We are subject to government laws and regulations, and we may be unable to comply with healthcare laws and regulations in the United States and any applicable foreign countries, including, without limitation, those applying to the marketing and sale of pharmaceutical products; and

●

Any litigation to which we are a party could result in substantial damages or other adverse consequences to our business and may divert management’s time and attention from our business. Any litigation, including product liability claims, that is successful against us may result in the incurrence of substantial liability if our insurance is inadequate.

Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, licensing agreements, collaborations, joint ventures, or investments that we may make

The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

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Unless expressly indicated or the context requires otherwise, the terms “Y-mAbs,” “Company,” “we,” “us,” and “our” in this document refer to Y-mAbs Therapeutics, Inc., a Delaware corporation, and, where appropriate, its subsidiary.

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		Page

	PART I — FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements:	6
	Consolidated Balance Sheets (unaudited) as of June 30, 2024 and December 31, 2023	6
	Consolidated Statements of Net Loss and Comprehensive Loss (unaudited) for the three and six months ended June 30, 2024 and 2023	7
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three and six months ended June 30, 2024 and 2023	8
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2024 and 2023	9
	Notes to Consolidated Financial Statements (unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults on Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49

You should read this Quarterly Report and the documents we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from the plans, intentions, and expectations disclosed in the forward-looking statements we may make.

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PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Y-MABS THERAPEUTICS, INC.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)


	June 30,		December 31,
	2024		2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	77,806	$	78,637
Accounts receivable, net		22,191		22,454
Inventories		8,498		5,065
Insurance recovery receivable related to legal settlement (Note 9)		16,025		—
Other current assets		2,243		4,955
Total current assets		126,763		111,111
Property and equipment, net		87		224
Operating lease right-of-use assets		1,271		1,412
Intangible assets, net		2,454		2,631
Other assets		13,460		12,491
TOTAL ASSETS	$	144,035	$	127,869
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accounts payable	$	10,190	$	6,060
Accrued liabilities		12,788		13,166
Accrued legal settlement (Note 9)		19,650		—
Operating lease liabilities, current portion		842		902
Total current liabilities		43,470		20,128
Accrued milestone and royalty payments		3,950		5,375
Operating lease liabilities, long-term portion		432		517
Other liabilities		847		864
TOTAL LIABILITIES		48,699		26,884
Commitments and contingencies (Note 9)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 5,500,000 shares authorized and none issued at June 30, 2024 and December 31, 2023		—		—
Common stock, $0.0001 par value, 100,000,000 shares authorized at June 30, 2024 and December 31, 2023; 44,567,334 and 43,672,112 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		4		4
Additional paid-in capital		567,633		558,002
Accumulated other comprehensive income		1,047		449
Accumulated deficit		(473,348)		(457,470)
TOTAL STOCKHOLDERS’ EQUITY		95,336		100,985
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	144,035	$	127,869

The accompanying notes are an integral part of the consolidated financial statements

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Y-MABS THERAPEUTICS, INC.

Consolidated Statements of Net Loss and Comprehensive Loss

(unaudited)

(In thousands, except share and per share data)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023


REVENUES
Product revenue, net	$	22,798	$	20,751	$	42,229	$	41,002
License revenue		—		—		500		—
Total revenues		22,798		20,751		42,729		41,002
OPERATING COSTS AND EXPENSES
Cost of goods sold		3,014		4,649		5,111		6,732
License royalties		—		—		50		—
Research and development		12,341		12,055		25,608		25,473
Selling, general, and administrative		17,232		11,270		28,657		23,521
Total operating costs and expenses		32,587		27,974		59,426		55,726
Loss from operations		(9,789)		(7,223)		(16,697)		(14,724)
OTHER INCOME, NET
Interest and other income		640		1,100		1,079		2,211
LOSS BEFORE INCOME TAXES		(9,149)		(6,123)		(15,618)		(12,513)
Provision for income taxes		100		179		260		179
NET LOSS	$	(9,249)	$	(6,302)	$	(15,878)	$	(12,692)
Other comprehensive income/(loss)
Foreign currency translation		199		18		598		(288)
COMPREHENSIVE LOSS	$	(9,050)	$	(6,284)	$	(15,280)	$	(12,980)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.21)	$	(0.14)	$	(0.36)	$	(0.29)
Weighted average common shares outstanding, basic and diluted		44,022,356		43,663,112		43,900,639		43,667,385

The accompanying notes are an integral part of the consolidated financial statements

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Y-MABS THERAPEUTICS, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

(In thousands, except share data)


						Accumulated
						Other
	Common Stock			Additional		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Paid-in Capital		Income / (Loss)		Deficit		Equity
Balance December 31, 2022	43,670,109	$	4	$	543,929	$	1,331	$	(436,043)	$	109,221
Stock-based compensation expense	7,658		—		5,304		—		—		5,304
Foreign currency translation	—		—		—		(306)		—		(306)
Net loss	—		—		—		—		(6,390)		(6,390)
Balance March 31, 2023	43,677,767	$	4	$	549,233	$	1,025	$	(442,433)	$	107,829
Retirement of treasury shares	(58,763)		—		(480)		—		—		(480)
Stock-based compensation expense	1,188		—		3,616		—		—		3,616
Foreign currency translation	—		—		—		18		—		18
Net loss	—		—		—		—		(6,302)		(6,302)
Balance June 30, 2023	43,620,192	$	4	$	552,369	$	1,043	$	(448,735)	$	104,681


						Accumulated
						Other
	Common Stock			Additional		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Paid-in Capital		Income / (Loss)		Deficit		Equity
Balance December 31, 2023	43,672,112	$	4	$	558,002	$	449	$	(457,470)	$	100,985
Exercise of stock options	71,550		—		588		—		—		588
Stock-based compensation expense	108,976		—		3,846		—		—		3,846
Foreign currency translation	—		—		—		399		—		399
Net loss	—		—		—		—		(6,629)		(6,629)
Balance March 31, 2024	43,852,638	$	4	$	562,436	$	848	$	(464,099)	$	99,189
Exercise of stock options	699,497		—		1,758		—		—		1,758
Stock-based compensation expense	15,199		—		3,439		—		—		3,439
Foreign currency translation	—		—		—		199		—		199
Net loss	—		—		—		—		(9,249)		(9,249)
Balance June 30, 2024	44,567,334	$	4	$	567,633	$	1,047	$	(473,348)	$	95,336

The accompanying notes are an integral part of the consolidated financial statements

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Y-MABS THERAPEUTICS, INC.

Consolidated Statements of Cash Flows

(unaudited)

(In thousands)


	Six months ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(15,878)	$	(12,692)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		312		406
Stock-based compensation		7,285		8,920
Foreign currency and other transactions		724		(774)
Changes in assets and liabilities:
Accounts receivable, net		263		(6,587)
Inventories		(3,433)		1,515
Insurance recovery receivable related to legal settlement		(16,025)		—
Other current assets		2,712		1,402
Other assets		(969)		(6,570)
Accounts payable		3,406		(6,149)
Accrued liabilities and other		(1,226)		2,671
Accrued legal settlement		19,650		—
NET CASH USED IN OPERATING ACTIVITIES		(3,179)		(17,858)
CASH FLOWS FROM INVESTING ACTIVITIES		—		—
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercised stock options		2,346		—
NET CASH PROVIDED BY FINANCING ACTIVITIES		2,346		—
Effect of exchange rates on cash and cash equivalents		2		5
NET DECREASE IN CASH AND CASH EQUIVALENTS		(831)		(17,853)
Cash and cash equivalents at the beginning of period		78,637		105,762
Cash and cash equivalents at the end of period	$	77,806	$	87,909

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Right-of-use assets obtained in exchange for lease obligations	$	320	$	—
Acquisition of treasury shares upon repayment of secured promissory note	$	—	$	480

The accompanying notes are an integral part of the consolidated financial statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—ORGANIZATION AND DESCRIPTION OF BUSINESS

Y-mAbs Therapeutics, Inc. (“we,” “us,” “our,” the “Company,” or “Y-mAbs”) is a commercial-stage biopharmaceutical company focused on the development and commercialization of novel, antibody-based therapeutic products for the treatment of cancer. Y-mAbs is leveraging the Company’s proprietary antibody platforms and deep expertise in the field of antibodies to develop a broad portfolio of innovative medicines.

The Company is headquartered in New York and was incorporated on April 30, 2015 under the laws of the State of Delaware.

NOTE 2—BASIS OF PRESENTATION

The Company has incurred losses in every year since inception. Operations of the Company are subject to certain risks and uncertainties, including, among others, uncertainty of drug candidate development; technological uncertainty; uncertainty regarding patents and proprietary rights; uncertainty in obtaining the FDA approval in the United States and regulatory approval in other jurisdictions; marketing or sales capability or experience; uncertainty in getting adequate payor coverage and reimbursement; dependence on key personnel; compliance with government regulations and the need to obtain additional financing. The Company’s drug candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance reporting capabilities.

The Company’s drug candidates are in various stages of development. DANYELZA received accelerated approval by the FDA in November 2020, but there can be no assurance that the Company’s other research and development efforts will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development and commercialization efforts are successful, it is uncertain when, if ever, the Company will become profitable. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.

The Company’s consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has experienced negative cash flows from operations since inception and had an accumulated deficit of $473,348,000 as of June 30, 2024 and $457,470,000 as of December 31, 2023. Through June 30, 2024, the Company has funded the operations primarily through proceeds from sales of shares of the Company’s common stock, including the initial public offering in September 2018 and the Company’s subsequent public offerings in November 2019 and February 2021, as well as additional funding from the sales of DANYELZA and from the sale of the Company’s Priority Review Voucher (“PRV”) obtained upon FDA approval of DANYELZA.

The Company had cash and cash equivalents of $77,806,000 and $78,637,000 as of June 30, 2024 and December 31, 2023, respectively. As of the issuance date of the consolidated financial statements for the three and six months ended June 30, 2024, the Company expects that the cash and cash equivalents as of June 30, 2024 will be sufficient to fund the Company’s operating expenses and capital expenditure requirements as currently planned through at least the next 12 months from the issuance of such financial statements.

The Company may raise additional capital to fund future operations through the sale of the Company’s securities, incurring debt, entering into licensing or collaboration agreements with partners, grants or other sources of financing. These potential financing sources are in addition to the successful commercialization of DANYELZA and our product candidates, for which the Company may obtain regulatory approval and marketing authorization. The Company’s commercialization strategy may include working with a collaborator or distributor. Sufficient funds may not

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be available to the Company on attractive terms or at all when needed from equity, debt or other financing. If the Company is unable to obtain additional financing from these or other sources when needed, it will likely be necessary to take other actions to enhance the Company’s liquidity position which may include significantly reducing the rate of spending through delaying or scaling back operations or suspending certain research and development programs and other operational programs in addition to other measures.

The accompanying unaudited consolidated financial statements reflect the accounts of the Company and the Company’s wholly-owned subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, Accounting Standards Codification (“ASC”) Topic 270-10 and the instructions to Form 10-Q. Accordingly, these consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The unaudited interim consolidated financial statements include all adjustments (consisting only of a normal recurring nature) necessary in the judgment of management for a fair statement of the results for the periods presented. All intercompany balances and transactions have been eliminated. The Company has evaluated subsequent events through the date of this filing. Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. The consolidated balance sheet data as of December 31, 2023 was derived from audited financial statements but does not include all disclosures required by GAAP. You should read these unaudited interim consolidated financial statements in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

●

Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets;

●

Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and

●

Level 3 — Unobservable inputs for the asset or liability, which include management's own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

Cash equivalents held in money market funds are valued using other significant observable inputs, which represent a Level 2 measurement within the fair value hierarchy. There is no change in the valuation methodology for the six months ended June 30, 2024. The Company has no other cash equivalents.

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The following tables present the Company’s fair value hierarchy for cash equivalents, which are measured at fair value on a recurring basis (in thousands):


	Fair Value Measurements as of June 30, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	—	$	72,387	$	—	$	72,387
Total	$	—	$	72,387	$	—	$	72,387


	Fair Value Measurements as of December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	—	$	75,501	$	—	$	75,501
Total	$	—	$	75,501	$	—	$	75,501

During the three and six months ended June 30, 2024, there were no transfers between Level 1, Level 2, and Level 3.

Stock-Based Compensation

The Company measures stock options granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense of those awards, over the requisite service period, which for employees and directors is the vesting period of the respective award. Forfeitures are accounted for as they occur. The Company issues stock options with only service based and records the expense for these awards using the straight-line method over the requisite service period.

The fair value of each stock option grant is estimated on the grant date using the Black Scholes option pricing model. The Company’s public trading commenced in September 2018, and, as a result, there is limited available historical volatility experience. Therefore, the Company estimates expected stock volatility based on the weighting of the Company’s historical volatility with the historical volatility of a group of publicly traded peer companies, and the Company expects to continue to do so until there is adequate historical data regarding the volatility of the Company’s traded stock prices. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards as the Company has limited historical data to support the expected term assumption. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future.

The fair value of restricted stock units is determined at the grant-date price of the Company’s common stock.

The fair value of performance-based restricted stock units (“PRSU”) is determined using a Monte-Carlo simulation model. The vesting of each tranche of the award depends on the fulfillment of both a service condition and the achievement of a stock price hurdle at the end of each tranche’s performance period, based on an average of the closing stock price over the 30 consecutive trading days immediately preceding each tranche’s vesting date. The stock price volatility is simulated using the Company’s historical volatility calculated from daily stock returns over a lookback term which equals the remaining service period from the grant date. The risk-free rate is determined using the zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the grant date. The expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future.

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Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, and are adopted by the Company as of the specific effective date. The adoption of these new standards did not have a material impact on the Company’s consolidated financial statements or disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvement to income tax disclosures (Topic 740). ASU 2023-09 addresses annual disclosures related to the income tax rate reconciliation and the income taxes paid within the tax note. ASU 2023-09 requires consistent categories and greater disaggregation of information in the income tax rate reconciliation as well as a disaggregation of taxes paid by jurisdiction for the income taxes paid. ASU 2023-09 is required to be adopted by the Company for annual periods beginning after December 15, 2024. Early adoption is permitted for annual consolidated financial statements that have not yet been issued or made available for issuance. The Company is evaluating the impact of this update on the Company’s disclosures.

The Company has evaluated all other accounting pronouncements and accounting standard updates recently issued but not yet adopted and believes that these pronouncements will not have a material impact on the Company’s consolidated financial statements or disclosures.

NOTE 4—PRODUCT REVENUE, NET

The Company’s product revenue, net was generated from sales of DANYELZA and consists of the following (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023

	(in thousands)
Product revenue, net by geographical location:
United States	$	15,226	$	15,851	$	33,836	$	32,685
International:
Western Europe		2,076		—		2,076		2,516
Eastern Asia		3,415		4,553		3,466		5,304
Latin America		1,749		—		2,257		—
Other regions		332		347		594		497
Total international		7,572		4,900		8,393		8,317
Total product revenue, net	$	22,798	$	20,751	$	42,229	$	41,002

The Company recognized royalty revenue from the distribution partners of $2,756,000 and $2,620,000 in the three months ended June 30, 2024 and 2023, respectively. The Company recognized royalty revenue from the distribution partners of $3,218,000 and $3,387,000 in the six months ended June 30, 2024 and 2023, respectively.

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Product sales to certain customers that accounted for more than 10% of total product revenue, net, for the three and six months ended June 30, 2024 and 2023 consists of the following:


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023


McKesson	38	%	46	%	43	%	44	%
Cardinal Health	18		12		19		12
AmerisouceBergen	11		18		17		23
SciClone	15		20		8		12

As of June 30, 2024, the Company had recorded on the Consolidated Balance Sheets accounts receivable of approximately $22,191,000, of which $3,431,000 represents an unbilled portion to which the Company has unconditional rights to collect the consideration, and accrued liabilities of $300,000 both related to product sales to the Company’s distributor in Western Europe, WEP.

Revenue from product sales is recorded as net of applicable provisions for rebates, chargebacks, discounts, distribution-related fees and other sales-related deductions. Accruals for chargebacks and discounts are recorded as a direct reduction to accounts receivable. Accruals for rebates, distribution-related fees without contractual right of offset and other sales-related deductions are recorded within accrued liabilities. As of June 30, 2024, the Company had recorded accounts receivable allowances of approximately $613,000 and accrued liabilities of approximately $1,681,000 related to product sales. As of December 31, 2023, the Company had recorded accounts receivable allowances of approximately $492,000 and accrued liabilities of $2,309,000 related to product sales.

An analysis of the change in reserves for discounts and allowances is summarized as follows (in thousands):


			Contractual
			Allowances and
	Discounts		Government Rebates		Returns		Total


Balance December 31, 2023	$	41	$	2,694	$	66	$	2,801
Current provisions relating to sales in current year		187		5,223		7		5,417
Payments/credits relating to sales in current year		(156)		(5,386)		—		(5,542)
Change in estimate related to sales in the prior year		—		(382)		—		(382)
Balance June 30, 2024	$	72	$	2,149	$	73	$	2,294

NOTE 5—NET LOSS PER SHARE

The calculations of basic and diluted net loss per share are as follows (in thousands, except per share amounts):


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023


Net loss (numerator)	$	(9,249)	$	(6,302)	$	(15,878)	$	(12,692)
Weighted-average shares (denominator), basic and diluted		44,022		43,663		43,901		43,667
Basic and diluted net loss per share	$	(0.21)	$	(0.14)	$	(0.36)	$	(0.29)

Potentially dilutive securities excluded from the computation of diluted earnings per share relate to stock options and unvested restricted stock units outstanding, which totaled 10,805,426 shares and 8,975,495 shares as of June 30, 2024 and 2023, respectively.

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NOTE 6—INVENTORIES

Inventories consist of the following (in thousands):


	June 30, 2024		December 31, 2023

Raw Material	$	224	$	—
Work In Progress		17,198		14,021
Finished Goods		4,108		2,992
Total Inventories	$	21,530	$	17,013

Inventories are classified on the Consolidated Balance Sheets in each respective period (in thousands):


	June 30, 2024		December 31, 2023
CURRENT ASSETS
Inventories	$	8,498	$	5,065
Total recorded in Current Assets		8,498		5,065

NONCURRENT ASSETS
Other assets		13,032		11,948
Total recorded in Noncurrent Assets		13,032		11,948
Total Inventories	$	21,530	$	17,013

As of June 30, 2024 and December 31, 2023, the Company has classified $13,032,000 and $11,948,000, respectively, of work in progress inventories as noncurrent assets based on the Company’s current demand schedule and expectation that such inventory will be utilized after one year from the balance sheet date. Changes in noncurrent assets are reflected on the Consolidated Statements of Cash Flows within the caption of other assets.

During the three and six months ended June 30, 2024, the Company did not record any charges to write-off inventory. During the three and six months ended June 30, 2023, the Company recorded charges to write-off inventory of $456,000.

NOTE 7—INTANGIBLE ASSETS, NET

The Company’s intangible assets, net related to capitalized milestone payments made following FDA and other regulatory approvals, and commercialization of DANYELZA. The Company’s intangible assets, net as of June 30, 2024 and December 31, 2023 are as follows (in thousands).

June 30, 2024

December 31, 2023

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amortization

Amount

DANYELZA

3,300

846

2,454

3,300

669

2,631

Intangible assets are amortized on a straight-line basis based on a 10-year useful life of the assets. Annual amortization expense is expected to be $355,000 each year for the five-year period from 2024 to 2028, and $679,000 thereafter.

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NOTE 8—ACCRUED LIABILITIES

Accrued liabilities as of June 30, 2024 and December 31, 2023, are as follows (in thousands):


	June 30,		December 31,
	2024		2023

Accrued licensing, milestone and royalty payments	$	4,522	$	3,452
Accrued clinical costs		551		597
Accrued compensation and board fees		3,184		3,858
Accrued manufacturing costs		2,078		2,531
Accrued sales reserves		1,681		2,309
Other		772		419
Total	$	12,788	$	13,166

NOTE 9—LICENSE AGREEMENTS AND COMMITMENTS

The Company has entered into three license agreements and certain other agreements with Memorial Sloan Kettering Cancer Center (“MSK”). The license agreements include the MSK License Agreement, dated August 20, 2015, between the Company and MSK (the “MSK License”), and the CD33 License Agreement, dated November 13, 2017, between the Company and MSK (the “CD33 License”). Through the Settlement and Assumption and Assignment of the MSK License and Y-mAbs Sublicense Agreement, dated December 2, 2019, among MabVax Therapeutics Holdings, Inc. and MabVax Therapeutics, Inc., (together “MabVax”), the Company and MSK (the “SAAA”), the Company has established a direct license with MSK relating to the GD2-GD3 Vaccine, which was originally sublicensed by the Company in 2018 from MabVax.

In addition, the Company entered into a license agreement, dated April 15, 2020, with MSK and Massachusetts Institute of Technology (“MIT”) (the “SADA License Agreement”). These license agreements with MSK and MIT grant the Company certain patent rights and intellectual property rights, and in consideration thereof, the Company agreed to make certain payments and issue shares of the Company’s common stock to MSK and MIT. Certain payments are contingent milestone and royalty payments, as disclosed in the table below. Amounts disclosed in NOTE 8—ACCRUED LIABILITIES for accrued licensing, milestone and royalty payments are inclusive of obligations under the MSK License Agreement, CD33 License Agreement, MabVax License Agreement and SADA License Agreement, collectively.

The Company’s material license agreements are described in NOTE 9— LICENSE AGREEMENTS AND COMMITMENTS to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

MSK License Agreement

The MSK License Agreement relates to intellectual property for DANYELZA and requires the Company to pay to MSK mid to high single-digit royalties based on annual net sales of licensed products or the performance of licensed services by the Company and the Company’s affiliates and sublicensees. The Company is required to pay annual minimum royalties of $80,000 over the royalty term, which amounts are non-refundable but are creditable against royalty payments otherwise due thereunder. The Company is also obligated to pay to MSK certain clinical, regulatory and sales-based milestone payments under the MSK License, which payments become due at the earlier of completion of the related milestone activity or the date indicated in the MSK License.

SADA License Agreement

Pursuant to the SADA License Agreement, the Company was granted an exclusive worldwide, sublicensable license to MSK’s and MIT’s rights to certain patent and intellectual property to develop, make, and commercialize licensed products and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics and cancer treatments using the SADA PRIT Technology.

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The SADA License Agreement requires the Company to pay MSK and MIT mid to high single-digit royalties based on annual net sales of licensed products or the performance of licensed services by the Company and its affiliates and sublicensees. The Company is obligated to pay non-refundable annual minimum royalties of $40,000, increasing to $60,000 once a patent has been issued, over the royalty term, commencing on the tenth anniversary of the license agreement, which are creditable against royalty payments otherwise due under the SADA License Agreement. Pursuant to the SADA License Agreement, the Company is also obligated to pay MSK and MIT certain clinical, regulatory and sales-based milestone payments, which become due at the earlier of completion of the related milestone activity or the date indicated in the SADA License Agreement. The Company may terminate the SADA License Agreement with prior written notice.

For the MSK License Agreement and the SADA License Agreement, in addition to any milestone payments, to the extent the Company enters into sublicense arrangements, it is obligated to pay to MSK, as indicated in MSK License Agreement, and MSK and MIT, as indicated in SADA License Agreement, a percentage of certain payments received from sublicensees of the rights licensed to it by MSK, or MSK and MIT, which percentage will be based upon the achievement of certain clinical milestones. See NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES for sublicense agreements related to MSK License Agreements by the Company.

Failure by the Company to meet certain conditions under each arrangement could cause the related licenses to such licensed products to be canceled and could result in termination of the respective arrangement with MSK, or MSK and MIT.

Summary of Significant License Agreements and Related Commitments

The below table represents the maximum clinical, regulatory or sales-based milestones as reflected within the significant license agreements, certain of which have been paid in prior periods or are accrued as presented in the table below (in thousands):


	Maximum		Maximum		Maximum
	Clinical		Regulatory		Sales-based
Agreements	Milestones		Milestones		Milestones
MSK		$ 2,450		$ 9,000		$ 20,000
CD33		550		500		7,500
MabVax		200		1,200		—
SADA		4,730		18,125		23,750

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The below table represents all obligations pertaining to the significant license agreements that have been paid, expensed, or accrued for during the three and six months ended June 30, 2024 and 2023, and as of June 30, 2024 and December 31, 2023 (in thousands)

Cash paid

Expense

Accrued

six

three

six

three

six

liabilities

months