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, 2021

☐ 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 43,576,950 shares of Common Stock ($0.0001 par value) outstanding as of August 3, 2021.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements 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,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “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 largely 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 II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. 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 risk factors, 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 and adversely from those anticipated or implied in the forward-looking statements.

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.

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 subsidiaries.

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. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. 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.

SUMMARY OF RISK FACTORS

Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects.

These risks are discussed more fully below and include, but are not limited to, risks related to:

●

our ability to successfully commercialize DANYELZA® (naxitamab-gqgk), referred to as DANYELZA, for the treatment of relapsed/refractory high-risk neuroblastoma in bone and/or bone marrow, in the United States and to successfully launch and commercialize in any other jurisdictions where we may receive marketing approval in the future;

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●

the implementation of our business model and our plans to obtain regulatory approval and develop and commercialize our lead product candidate omburtamab and other product candidates, including the potential clinical efficacy, safety and other benefits thereof;

●

the rate and degree of market acceptance and clinical utility for DANYELZA or any current or future product candidate for which we may receive marketing approval;

●

the timing of our resubmission and potential approval of our Biological License Application, or BLA, for omburtamab;

●

our ability and plans for continuing to build out our commercial infrastructure and successfully launching, marketing, and selling DANYELZA, omburtamab, if approved, and any other current or future product candidate for which we may receive marketing approval, including our plans with respect to the focus and activities of our sales force, the nature of our marketing efforts, market access and patient support activities of DANYELZA and related assumptions;

●

the pricing, coverage and reimbursement of, and the extent to which patient assistance programs are utilized for DANYELZA, omburtamab, if approved, or any other current or future product candidate for which we may receive marketing approval;

●

our ongoing and future clinical trials for DANYELZA, our lead product candidate omburtamab and other product candidates, whether conducted by us or by any of our collaborators, including the timing of initiation of these trials, the pace of enrollment, the completion of enrollment, the availability of data from these trials, the expected dates of any BLA, submission and approval by the United States Food and Drug Administration, or FDA, and equivalent foreign regulatory authorities and of the anticipated results;

●

our ability to manage our business, operations and pre-clinical and clinical development plans and timelines could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 pandemic, on the manufacturing, pre-clinical studies, clinical trials and other business activities performed by us or by third parties with whom we conduct business, including our contract manufacturing organizations, or CMOs, contract research organizations, or CROs, shippers and others;

●

our ability to attract, integrate, manage and retain qualified personnel or key employees;

●

current and future pre-clinical studies and clinical trials for our product candidates and our research and development programs, whether conducted by us or by any of our third party collaborators, including the timing of initiation of these studies and trials, the pace of enrollment, the expected date of completion and of the anticipated results;

●

the timing and our ability to obtain and maintain regulatory, marketing and reimbursement approvals for our product candidates;

●

our ability to retain the continued service of our key employees and to identify, hire and retain additional qualified employees, including a direct sales force;

●

our ability to continue to comply with Section 404(a) and 404(b) of the Sarbanes-Oxley Act;

●

our commercialization, marketing and manufacturing capabilities and strategy;

●

our intellectual property position and strategy and the scope of protection we are able to establish and maintain for the intellectual property rights covering our product candidates and technology;

●

our ability to identify and develop additional product candidates and technologies with significant commercial potential;

●

our plans and ability to enter into collaborations or strategic partnerships with third parties for the development and commercialization of our product candidates and future operations;

●

our ability to continue to maintain and leverage our relationship with Memorial Sloan Kettering Cancer Center, or MSK, including our exclusive rights to current and any future technology granted to us under our license agreements with MSK;

●

our relationship with MSK as a user of DANYELZA and any future products;

●

the potential benefits of any future collaboration or strategic partnerships we may enter into with third parties;

●

our expectations related to the use of our cash and cash equivalents and the duration for which such cash is expected to last;

●

the need for, timing, type, terms and amount of any future financing transaction;

●

our financial performance, including our estimates regarding revenues, expenses, operating cash flow and capital expenditure requirements;

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●

developments relating to our competitors and our industry;

●

any adverse effects on our business, financial condition and results of operations from the global COVID-19 pandemic, including the pace of global economic recovery from the pandemic and the ability of our employees to be able to come to work as a result of COVID-19 or any other health epidemic;

●

the impact of government laws and regulations;

●

our dependence on, and difficulty to find a suitable replacement for, a small number of third party CMOs that we currently use for the complex and difficult manufacturing of our product candidates;

●

our ability to comply with healthcare laws and regulations in the United States and any foreign countries, including, without limitation, where we may apply for and receive approval for marketing and sale of pharmaceutical products;

●

our expectations related to the use of our available cash balances and any further financing transaction we may undertake or the use of revenues that we may generate; and

●

other risks and uncertainties described in the section herein entitled “Risk Factors.”

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		Page
	PART I — FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements:	5
	Consolidated Balance Sheets (unaudited) as of June 30, 2021 and December 31, 2020	5
	Consolidated Statements of Net Income/(Loss) and Comprehensive Income/(Loss) (unaudited) for the three and six months ended June 30, 2021 and 2020	6
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three and six months ended June 30, 2021 and 2020	7
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2021 and 2020	8
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	107
Item 3.	Defaults Upon Senior Securities	108
Item 4.	Mine Safety Disclosures	108
Item 5.	Other Information	108
Item 6.	Exhibits	108

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 data)


	June 30,		December 31,
	2021		2020

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	233,587	$	114,634
Accounts receivable, net		8,517		—
Inventories		3,820		—
Other current assets		3,445		7,729
Total current assets		249,369		122,363
Property and equipment, net		1,919		1,825
Operating lease right-of-use assets		3,398		4,569
Other assets		4,793		3,290
TOTAL ASSETS	$	259,479	$	132,047
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accounts payable	$	6,803	$	9,372
Accrued liabilities		12,169		8,197
Operating lease liabilities, current portion		2,014		1,966
Total current liabilities		20,986		19,535
Accrued milestone and royalty payments		2,250		2,695
Operating lease liabilities, long-term portion		988		2,013
Other liabilities		939		1,968
TOTAL LIABILITIES		25,163		26,211
Commitments and contingencies (Note 8)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 5,500,000 shares authorized at June 30, 2021 and December 31, 2020; none issued at June 30, 2021 and December 31, 2020		—		—
Common stock, $0.0001 par value, 100,000,000 shares authorized at June 30, 2021 and December 31, 2020; 43,576,950 and 40,688,447 shares issued at June 30, 2021 and December 31, 2020, respectively		4		4
Additional paid in capital		509,049		391,558
Accumulated other comprehensive loss		(13)		(526)
Accumulated deficit		(274,724)		(285,200)
TOTAL STOCKHOLDERS’ EQUITY		234,316		105,836
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	259,479	$	132,047

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

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Y-MABS THERAPEUTICS, INC.

Consolidated Statements of Net Income / (Loss) and Comprehensive Income / (Loss)

(unaudited)

(In thousands, except share and per share data)


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020


REVENUE
Product revenue, net	$	8,951	$	—	$	14,334	$	—
License revenue		2,000		—		2,000		—
Total revenue		10,951		—		16,334		—
OPERATING COSTS AND EXPENSES
Cost of goods sold		200		—		293		—
Royalties		210		—		210		—
Research and development		19,778		30,059		41,357		48,681
Selling, general, and administrative		13,475		10,393		25,445		18,519
Total operating costs and expenses		33,663		40,452		67,305		67,200
Loss from operations		(22,712)		(40,452)		(50,971)		(67,200)
OTHER INCOME, NET
Gain from sale of priority review voucher, net		—		—		62,010		—
Interest and other income / (loss)		(225)		59		(563)		628
NET INCOME / (LOSS)	$	(22,937)	$	(40,393)	$	10,476	$	(66,572)
Other comprehensive income / (loss)
Foreign currency translation		78		(91)		513		(66)
COMPREHENSIVE INCOME / (LOSS)	$	(22,859)	$	(40,484)	$	10,989	$	(66,638)
Net income/(loss) per share attributable to common stockholders, basic	$	(0.53)	$	(1.01)	$	0.25	$	(1.67)
Weighted average common shares outstanding, basic		43,569,482		39,972,174		42,724,813		39,862,878
Net income/(loss) per share attributable to common stockholders, diluted	$	(0.53)	$	(1.01)	$	0.23	$	(1.67)
Weighted average common shares outstanding, diluted		43,569,482		39,972,174		45,080,419		39,862,878

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		Deficit		Equity
Balance December 31, 2019	39,728,416	$	4	$	364,712	$	50	$	(165,863)	$	198,903
Exercise of stock options	25,778		—		370		—		—		370
Stock-based compensation expense	3,429		—		2,211		—		—		2,211
Foreign currency translation	—		—		—		25		—		25
Net loss	—		—		—		—		(26,179)		(26,179)
Balance March 31, 2020	39,757,623		4		367,293		75		(192,042)		175,330
Issuance of common stock	256,896		—		8,707		—		—		8,707
Stock-based compensation expense	—		—		2,455		—		—		2,455
Foreign currency translation	—		—		—		(91)		—		(91)
Net loss	—		—		—		—		(40,393)		(40,393)
Balance June 30, 2020	40,014,519	$	4	$	378,455	$	(16)	$	(232,435)	$	146,008

						Accumulated
						Other
	Common Stock			Additional		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Paid-in Capital		Loss		Deficit		Equity
Balance December 31, 2020	40,688,447	$	4	$	391,558	$	(526)	$	(285,200)	$	105,836
Issuance of common stock to investors, net of issuance costs	2,804,878		—		107,725		—		—		107,725
Exercise of stock options	46,000		—		110		—		—		110
Stock-based compensation expense	9,094		—		4,698		—		—		4,698
Foreign currency translation	—		—		—		435		—		435
Net income	—		—		—		—		33,413		33,413
Balance March 31, 2021	43,548,419		4		504,091		(91)		(251,787)		252,217
Exercise of stock options	28,332		—		131		—		—		131
Stock-based compensation expense	199		—		4,827		—		—		4,827
Foreign currency translation	—		—				78		—		78
Net loss	—		—		—		—		(22,937)		(22,937)
Balance June 30, 2021	43,576,950	$	4	$	509,049	$	(13)	$	(274,724)	$	234,316

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,
	2021		2020

CASH FLOWS FROM OPERATING ACTIVITIES
Net income / (loss)	$	10,476	$	(66,572)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain from sale of priority review voucher, net		(62,010)		—
Depreciation and amortization		346		186
Stock-based compensation		9,525		4,665
Non-cash expense in connection with equity issuance to MSK/MIT		—		1,331
Non-cash expense in connection with equity issuance to inventors		—		7,376
Foreign currency transactions		513		(66)
Changes in assets and liabilities:
Accounts receivable, net		(8,517)		—
Inventories		(3,820)		—
Other current assets		4,284		(442)
Other assets		(1,503)		13
Accounts payable		(2,569)		1,305
Accrued liabilities and other		2,658		2,813
NET CASH USED IN OPERATING ACTIVITIES		(50,617)		(49,391)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(441)		(28)
Net proceeds from sale of priority review voucher		62,010		—
NET CASH PROVIDED BY/ (USED IN) INVESTING ACTIVITIES		61,569		(28)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of issuance costs		107,725		—
Proceeds from exercised stock options		241		370
NET CASH PROVIDED BY FINANCING ACTIVITIES		107,966		370
Effect of exchange rates on cash and cash equivalents		35		(28)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS		118,953		(49,077)
Cash and cash equivalents at the beginning of period		114,634		207,136
Cash and cash equivalents at the end of period	$	233,587	$	158,059

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 clinical biopharmaceutical company focused on the development and commercialization of novel, antibody based therapeutic products for the treatment of cancer. We are leveraging our 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, New York and was incorporated on April 30, 2015 under the laws of the State of Delaware.

NOTE 2—BASIS OF PRESENTATION

Except for the quarter ended March 31, 2021, the Company has incurred quarterly losses 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 FDA approval in the United States and regulatory approval in other jurisdictions; marketing or sales capability or experience; uncertainty in getting adequate payer 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 (naxitamab-gqgk) was approved by the U.S. FDA in November 2020, but there can be no assurance that the Company’s other research and development 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 efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.

The Company’s 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 $274,724,000 as of June 30, 2021 and $285,200,000 as of December 31, 2020. Through June 30, 2021, the Company has funded its operations primarily through proceeds from sales of shares of its common stock, including its initial public offering in September 2018 and its subsequent public offerings in November 2019 and February 2021.

On February 22, 2021, the Company announced the closing of its public offering of 2,804,878 shares of its common stock, at a public offering price of $41.00 per share, which included the exercise in full of the underwriters' option to purchase 365,853 additional shares of common stock. The aggregate gross proceeds to the Company, before deducting underwriting discounts and commissions and offering expenses payable by the Company, were approximately $115,000,000.

As of June 30, 2021, the Company had cash and cash equivalents of $233,587,000, and as of December 31, 2020 the Company had cash and cash equivalents of $114,634,000. As of the issuance date of the financial statements for the second quarter ended June 30, 2021, the Company expects that its cash and cash equivalents at June 30, 2021 will

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be sufficient to fund its operating expenses and capital expenditure requirements through at least the next 12 months, irrespective of whether any additional product approvals are obtained.

The Company may raise additional capital to fund future operations through the sale of its equity securities, incurring debt, entering into licensing or collaboration agreements with partners, grants or other sources of financing. Sufficient funds may not be available to the Company on attractive terms or at all when needed from equity or debt financing. If FDA approval for omburtamab does not occur or is significantly delayed, and 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 its liquidity position which may include significantly reducing the current rate of spending through delaying, scaling back current operations, or suspending certain research and development programs and other operational programs.

The accompanying unaudited consolidated financial statements reflect the accounts of the Company and its 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 with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. The unaudited interim financial statements include all adjustments (consisting only of 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-month period ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. The December 31, 2020 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. You should read these unaudited interim condensed 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, 2020.

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Operating Leases

The Company determines if an arrangement includes a lease at inception. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its estimated incremental borrowing rate based on information available at the lease commencement date. Because most of the Company’s leases do not provide an implicit rate of return, an incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The Company’s incremental borrowing rate for a lease is the estimated rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that it will exercise any such options. None of the Company’s leases contain any residual value guarantees. Lease expense is recognized on a straight-line basis over the expected lease term. Related variable lease costs incurred are not material to the Company.

The Company currently elects the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize right-of-use assets or liabilities, and this includes not recognizing right-of-use assets or liabilities for existing short-term leases of those assets in transition. We also elect the practical expedient to not separate lease and non-lease components for all of our leases. The Company has made an

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accounting policy election to account for each separate lease component of a contract and its associated non-lease components as a single lease component. See the Lease Agreements section in Note 8 for the related disclosures.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturities of three months or less from date of purchase to be cash equivalents. All cash and cash equivalents are held in highly rated securities including a Treasury money market fund which is unrestricted as to withdrawal or use. The carrying amount of cash and cash equivalents approximates its fair value due to its short-term and liquid nature. To date, the Company has not experienced any losses on its cash and cash equivalents, and we do not anticipate any losses with respect to such cash balances. While we maintain cash balances in excess of insured limits within a limited number of financial institutions, we mitigate our risk by maintaining the majority of our cash and equivalents with high quality financial institutions.

Trade Accounts Receivables

The Company’s trade accounts receivable balance consists of amounts due from sales of our approved product, DANYELZA. Receivables from product sales are recorded net of allowances which generally include chargebacks, doubtful accounts, rebates, returns, and discounts. The Company accrues allowances based on the estimation of each individual sales transaction.

The Company has not experienced any write-offs related to our customers and has not recognized any allowance for doubtful accounts.

Concentration of Credit Risk

The Company product sales are made through arrangements primarily with three national speciality distributors in the United States of America. As of June 30, 2021, the receivables balances from such distributors totaled 99% of our outstanding accounts receivable. The Company has contractual payment terms with each of its customers and the Company monitors their financial performance, historical payment terms and credit worthiness to timely assess and respond to any changes in their credit profile.

Inventory

The Company values its inventories at the lower of cost or net realizable value on a first-in, first-out basis. The Company’s inventory costs include amounts related to materials, third-party contract manufacturing, third-party packaging services, freight, labor costs for personnel involved in the manufacturing process, and indirect overhead costs. Raw and intermediate materials that may be utilized for both commercial and clinical programs are identical and given the alternative future use such amounts are initially classified as inventory. Amounts in inventory associated with clinical development programs are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have an alternative future use.

The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. For DANYELZA, the Company commenced capitalization of inventory at the receipt of FDA approval.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified. Such impairment charges, should they occur, are recorded within cost of goods sold. The determination of whether inventory costs will be realizable requires estimates by management. No material inventory write-downs occurred in the three and six months ended June 30, 2021.

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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. The Company has no other cash equivalents.

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


	Fair Value Measurements at June 30, 2021 Using:
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	—	$	209,703	$	—	$	209,703
	$	—	$	209,703	$	—	$	209,703


	Fair Value Measurements at December 31, 2020 Using:
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	—	$	97,302	$	—	$	97,302
	$	—	$	97,302	$	—	$	97,302

During the quarter ended June 30, 2021, there were no transfers between Level 1, Level 2, and Level 3.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, net product revenues, the accrual for research and development expenses, the accrual of milestone and royalty payments, and the valuation of stock options. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets.

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Revenue Recognition - Product revenue

We recognize revenue from sales of DANYELZA at a point in time when our customer is deemed to have obtained control of the product, which generally occurs upon receipt at the end-user hospital.

The amount of revenue we recognize from sales of DANYELZA varies due to rebates, chargebacks and discounts provided under governmental and other programs, distribution related fees and other sales-related deductions. In order to determine those deductions, we estimate, utilizing the expected value method, the amount of revenue that we will ultimately be entitled to. This estimate is based upon contracts with customers and government agencies, statutorily-defined discounts applicable to government-funded programs, estimated payor mix, and other relevant factors. Calculating these amounts involves estimates and judgments.

Revenue Recognition - License revenue

In December 2020, the Company entered into a development and commercialization arrangement with SciClone International Pharmaceuticals Ltd. (“SciClone”) for certain indications of DANYELZA and omburtamab within China. As part of the agreement, we received a nonrefundable up-front fee of $20,000,000 for the transfer of the license and know-how related to the product indications. The Company may receive regulatory-based milestone payments up to $40,000,000 and sales-based milestone payments up to $60,000,000 and is entitled to royalties based upon the net sales generated by SciClone related to the product indications in the territory. We considered the license to be distinct from other promises within the arrangement based on the rights and know-how transferred, late-stage development of the underlying indications and anticipated lack of significant involvement required from the joint steering committee associated with the indications. Accordingly, the full transaction price of $20,000,000 was recognized upon transferring of the license and know-how to SciClone. The future potential regulatory milestone amounts were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606. As part of our evaluation of the regulatory milestones constraint, we determined that the achievement of such milestones are contingent upon regulatory approvals which are not within our control and therefore not deemed probable. We expect that the sales-based milestone payments and royalty arrangements will be recognized when the related sales occur or the milestone is achieved. We reevaluate the transaction price each quarter and as uncertain events are resolved or other changes in circumstances occur, we assess whether this resolves the constraint and revenue will be recognized. We also considered that the manufacturing and supply terms, included within the arrangement, did not represent a material right to SciClone at inception as the terms reflected stand-alone selling price for similar goods or services. During the three and six-month period ended June 30, 2021, no revenue was recognized related to this arrangement as no sales were occurred which are subject to the arrangement and no milestones were achieved.

In May 2021, the Company entered into an exclusive distribution agreement with Adium Pharma S.A. (“Adium”) to be the exclusive distributor in Latin America of the Company’s antibodies, including DANYELZA and omburtamab. As part of this agreement, we received and recognized a nonrefundable up-front fee of $2,000,000 for the transfer of the license and know-how related to the product indications in the three and six months ended June 30, 2021. The Company may also receive regulatory-based milestone payments up to $3,500,000 and is entitled to royalties based upon the net sales generated by Adium related to the product indications in the territories. We considered the license to be distinct from other promises within the arrangement based on the rights and know-how transferred, late-stage development of the underlying indications and anticipated lack of significant involvement required from the joint steering committee associated with the indications. The future potential regulatory milestone amounts were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606.

Segment Information

The Company is engaged solely in the discovery and development of novel antibody-based therapeutic products for the treatment of cancer. Accordingly, the Company has determined that it operates in one operating segment.

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Recently Issued Accounting Pronouncements – Adopted

In March 2020, the FASB issued Accounting Standards Update No. 2020-04 (“ASU 2020-04”), Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting. The amendments in this Update provide optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects) of reference rate reform on financial reporting. The amendments in this Update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of this standard on January 1, 2021 did not have a material impact on our consolidated financial statements and related disclosures.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this Update affect entities within the scope of Topic 740, Income Taxes, and are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The adoption of this standard on January 1, 2021 did not have a material impact on our consolidated financial statements and related disclosures.

NOTE 4—PRODUCT REVENUE

The Company’s product revenues were generated from sales of DANYELZA and totaled $8,951,000 and $14,334,000 for the three and six months ended June 30, 2021. There were no product sales during the three and six months ended June 30, 2020.

Revenue from product sales is recorded 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 and other sales-related deductions are recorded within accrued liabilities. As of June 30, 2021, the company had recorded accounts receivable allowances of approximately $10,000 and accrued liabilities of $1,475,000 related to product sales.

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


				Contractual
		Discounts		Allowances		Returns		Total
		(in thousands)		(in thousands)		(in thousands)		(in thousands)
Balance, December 31, 2020	$	—	$	—	$	—	$	—
Current provisions relating to sales in current year		31		1,541		163		1,735
Payments/credits relating to sales in current year		(21)		(66)		(163)		(250)
Balance, June 30, 2021	$	10	$	1,475	$	—	$	1,485

Substantially all of the Company’s product sales were in the United States. The Company had product sales to certain customers that accounted for more than 10% of total gross product revenue for the three and six months ended June 30, 2021. Two wholesalers accounted for 75% and 19%, respectively, of our gross product revenue for the three months ended June 30, 2021 and two wholesalers accounted for 77% and 13%, respectively, of our gross product revenue for the six months ended June 30, 2021.

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NOTE 5—NET LOSS PER SHARE

Basic net loss per share (“EPS”) is calculated by dividing net income or loss attributable to common stockholders by the weighted average common stock outstanding. Diluted EPS is calculated by adjusting weighted average common shares outstanding for the dilutive effect of common stock options and restricted stock units. In periods in which a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be antidilutive. Securities that could potentially dilute basic EPS in the future were not included in the computation of diluted EPS because to do so would have been antidilutive. 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,
	2021		2020		2021		2020

	(in thousands, except per share amounts)

Net income / (loss) (numerator)	$	(22,937)	$	(40,393)	$	10,476	$	(66,572)
Weighted-average shares (denominator), basic		43,569		39,972		42,725		39,863
Basic net income / (loss) per share	$	(0.53)	$	(1.01)	$	0.25	$	(1.67)
Weighted-average shares (denominator), diluted		43,569		39,972		45,080		39,863
Diluted net income / (loss) per share	$	(0.53)	$	(1.01)	$	0.23	$	(1.67)

Potentially dilutive securities excluded from the computation of diluted earnings per share relate to stock options outstanding and unvested restricted stock units totaled 1,427,850 shares as of June 30, 2021 and 4,956,513 shares as of June 30, 2020.

NOTE 6—INVENTORY

Inventories consist of the following (in thousands):


		As of June 30, 2021
	Raw Material		Work In Progress		Finished Goods		Total

Inventories	$	—	$	3,700	$	120	$	3,820

There were no inventories as of June 30, 2020.

NOTE 7—ACCRUED LIABILITIES

Accrued short-term liabilities at June 30, 2021 and December 31, 2020 are as follows (in thousands):


	June 30,		December 31,
	2021		2020



Accrued licensing, milestone and royalty payments	$	3,010	$	3,608
Accrued clinical costs		922		678
Accrued compensation and board fees		4,144		2,603
Accrued manufacturing costs		1,620		983
Sales reserves accruals		1,475		—
Other		998		325
Total	$	12,169	$	8,197

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NOTE 8—LICENSE AGREEMENTS AND COMMITMENTS

As of June 30, 2021, the Company has entered into two license agreements and certain other agreements with Memorial Sloan Kettering Cancer Center (“MSK”). The license agreements, as previously disclosed in our annual report on Form 10-K, are the MSK License Agreement and the CD33 License Agreement. In addition, the Company entered into the SADA License Agreement with MSK and Massachusetts Institute of Technology (“MIT”) in 2020. Through a 2019 Settlement and Assumption and Assignment of the MSK License Agreement and Y-mAbs Sublicense Agreement (“SAAA”) with MabVax, Inc. (“MabVax”) and MSK, 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. 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 of the payments are contingent milestone and royalty payments, as disclosed in the table below. Amounts disclosed in Note 7 for accrued milestone and royalty payments are inclusive of obligations under the MSK License Agreement, CD33 License Agreement and SADA License Agreement, collectively.

We have the following significant license agreements and related commitments which include all obligations that have been paid or accrued as of and for the period three and six months ended June 30, 2021 (in thousands):


	Cash paid		Cash paid		Expense		Expense		Expense		Expense		Accrued liabilities		Accrued liabilities		Accrued liabilities		Accrued liabilities
	Six months		Six months		Three months		Six months		Three months		Six months		Current as of		Non-current		Current as of		Non-current
	ended June		ended June		ended June		ended June		ended June		ended June		June		June		December		December
Agreements	2021		2020		2021		2021		2020		2020		2021		2021		2020		2020
MSK		$ 450		$ -		$ 210		$ 210		$ -		$ -		$ 1,405		$ 1,800		$ 305		$ 1,640
CD33		100		—		—		—		—		—		—		450		100		450
MabVax		—		—		10		10		—		—		—		—		—		—
SADA		1,000		1,995		—		—		13,307		13,307		1,605		—		1,000		1,605

As of June 30, 2021, the Company has $1,800,000 of gross intangible assets related to the product rights for DANYELZA that were recorded under the MSK License Agreement and are included in “Other Assets” on the consolidated balance sheets. Amortization expense recorded during the period was not material.

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


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

Certain minimum royalties and clinical and regulatory milestones that become due based upon the passage of time under the CD33 License Agreement, the SADA Agreement and the MabVax Agreement are not recorded as a liability as the Company does not consider such obligations to be probable as of June 30, 2021.

Other agreements

We have also entered into various other support agreements with MSK including a sponsored research agreement to provide research services related to the intellectual property licensed under the MSK License Agreement; a master data services agreement, for services provided by approximately five full-time employees at MSK, who are engaged in transferring clinical data, databases, regulatory files and other know-how included in the MSK License Agreement to the Company; a master clinical trial agreement pursuant to which we committed to fund certain clinical trials at MSK; two separate core facility service agreements pursuant to which we committed to obtaining certain laboratory services from MSK; and in October 2020 we entered into a SADA sponsored research agreement pursuant to

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which we agreed to pay MSK to provide research services over a period of three years related to the intellectual property licensed under the SADA License Agreement. For three months ended June 30, 2021 and 2020, we incurred research and development expenses of $947,000 and $929,000, respectively, under these agreements. For six months ended June 30, 2021 and 2020, we incurred research and development expenses of $1,895,000 and $1,978,000, respectively, under these agreements.

Lease Agreements

In July 2019, the Company entered a development, manufacturing and supply agreement with SpectronRx in South Bend, Indiana, to secure access to clinical and commercial scale radiolabeling capacity for omburtamab. Under the terms of the agreement, SpectronRx has agreed to establish a manufacturing unit designated for the Company within its existing facilities, at which both clinical and commercial supply of radiolabeled omburtamab can be produced. Since the Company possesses the right to substantially all the economic benefits and directs the use of the production area, the Company accounts for the payments related to the access to the manufacturing space under ASC 842 as an operating lease. The term of the lease is two years from the commencement date of August 31, 2020. Upon the lease commencement date, we recorded $3,617,000 as right of use asset and $2,679,000 as lease liability with the difference of $938,000 resulting from certain prepayments and other costs incurred. The company pays equal monthly installments of approximately $117,000 per month in additional access fees through September 2022 resulting in total payments of $1,631,000 remaining under the agreement. There are no renewal options in this agreement.

In February 2019, the Company entered into a lease agreement in connection with its 4,548 square feet laboratory in New Jersey. In December 2019, we expanded the space with an additional 235 square feet. The term of the lease is three years from the date the Company occupied the premises, with an option to extend for an additional two years which the Company expects to exercise and has included in the determination of the related lease liability. Fixed rent payable under the lease is approximately $144,000 per annum and is payable in equal monthly installments of approximately $12,000.

In January 2018, the Company entered into a lease agreement in connection with its corporate headquarters in New York. The term of the lease is five years from the date the Company began to occupy the premises. Fixed rent payable under the lease is approximately $384,000 per annum and is payable in equal monthly installments of approximately $32,000, which are recognized on a straight-line basis.

Additionally, the Company entered a three-year lease agreement for the lease of certain office space in Denmark in February 2018, as amended in November 2018 and February 2019. The lease is payable in monthly installments of approximately $19,000, which are recognized on a straight-line basis.

Total operating lease costs were $646,000 and $173,000 for the three months ended June 30, 2021 and 2020, respectively, and $1,291,000 and $347,000 for the six months ended June 30, 2021 and 2020, respectively.

For the three months ended June 30, 2021, the operating lease expenses were recorded as $587,000 in research and development expense and $59,000 in general and administrative expense. For the three months ended June 30, 2020, the expenses were recorded as $124,000 in research and development expense and $49,000 in general and administrative expense. For the six months ended June 30, 2021, the expenses were recorded as $1,174,000 in research and development expense and $117,000 in general and administrative expense. For the six months ended June 30, 2020, the expenses were recorded as $247,000 in research and development expense and $100,000 in general and administrative expense.

Cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2021 was $549,000 and $1,093,000, respectively, and cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2020 was $205,000 and $393,000, respectively. These payments were included in net cash used in operating activities in the Company’s Consolidated Statements of Cash Flows.

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Maturities of operating lease liabilities at June 30, 2021 were as follows (in thousands):


	Operating Leases
	at June 30, 2021
Remainder of 2021	$	1,086
Years ending December 31,
2022		1,589
2023		539
2024		64
Total lease payments		3,278
Less: Imputed interest