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 001-38191

MUSTANG BIO, INC.

(Exact name of registrant as specified in its charter)

Delaware		47-3828760
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

377 Plantation Street

Worcester, MA 01605

(Address including zip code of principal executive offices)

(781) 652-4500

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	MBIO	NASDAQ Global 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 registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Class of Common Stock		Outstanding Shares as of August 13, 2021
Class A Common Stock, $0.0001 par value		845,385
Common Stock, $0.0001 par value		90,557,101

Table of Contents

MUSTANG BIO, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		5

Item 1.	Financial Statements	5

	Condensed Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	5

	Condensed Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited)	6

	Condensed Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020 (unaudited)	7

	Condensed Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)	9

	Notes to the Condensed Financial Statements (unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	29

Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION		31

Item 1.	Legal Proceedings	31

Item 1A	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72

Item 3.	Defaults Upon Senior Securities	72

Item 4.	Mine Safety Disclosures	72

Item 5.	Other Information	72

Item 6.	Exhibits	73

Signatures		74

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SUMMARY OF RISK FACTORS

Our business is subject to risks of which you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated with an investment in us and are not the only risks we face. You should carefully consider these risk factors, the risk factors described in Item 1A, and the other reports and documents that we have filed with the Securities and Exchange Commission (“SEC”).

Risks Related to our Finances and Capital Requirements

●

We have incurred significant losses since our inception and anticipate that we will incur continued losses for the foreseeable future. We have not generated any revenue from our development stage products, and we do not know when, or if, we will generate any revenue.

●

Our short operating history makes it difficult to evaluate our business and prospects.

●

Our success is contingent upon raising additional capital, which efforts may fail. Even if successful, our future capital raising activities may dilute our current stockholders, restrict our operations, cause us to relinquish proprietary rights.

Risks Pertaining to our Business Strategy, Structure and Organization

●

Our future growth and success depend on our ability to successfully develop and commercialize our product candidates, which we have yet to do.

●

Our growth and success depend on our acquiring or in-licensing products or product candidates and integrating such products into our business, and we may have limited growth opportunities if we fail to do so.

●

Our future success is highly dependent on the successful development of our CAR T technology and product candidates.

Risks Inherent in Drug Development and Commercialization

●

Preclinical development is highly speculative and carries a high failure risk.

●

We may not receive the required regulatory approvals for any of our product candidates on our projected timelines, if at all, which may result in increased costs and delay our ability to generate revenue.

●

We may not obtain the desired labeling claims or intended uses for product promotion, or favorable scheduling classifications, to successfully promote our products.

●

If a product candidate demonstrates adverse side effects, we may need to abandon or limit the development of such product candidate.

●

Even if a product candidate is approved, it may be subject to various post-marketing requirements, including studies or clinical trials, and increased regulatory scrutiny.

●

Our competitors may develop treatments for our or our partner companies’ products’ target indications, which could limit our product candidates’ commercial opportunity and profitability.

●

If our products are not broadly accepted by the healthcare community, the revenues from any such product will likely be limited.

●

Any successful products liability claim related to any of our current or future product candidates may cause us to incur substantial liability and limit the commercialization of such products.

●

Our gene therapy product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval.

Risks Related to Reliance on Third Parties

●

We rely, and expect to continue to rely, on third parties to conduct our preclinical studies and clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or complying with applicable regulatory requirements.

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●

We contract with third parties for the manufacture of our product candidates for preclinical and clinical testing and may also do so for commercialization, if and when our product candidates are approved.

●

We rely on clinical data and results obtained by third parties, which may prove inaccurate or unreliable.

●

We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.

Risks Relating to Legislation and Regulation Affecting the Biopharmaceutical and Other Industries

●

We operate in a heavily regulated industry, and we cannot predict the impact that any future legislation or administrative or executive action may have on our operations.

●

We may be subject to anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

●

We are subject to numerous environmental, health and safety laws and regulations and could become subject to fines or penalties or incur costs that could harm our business.

Risks Pertaining to Intellectual Property and Potential Disputes with Licensors Thereof

●

If we are unable to maintain sufficient patent protection for our technology and products, our competitors could develop and commercialize products similar or identical to ours and our ability to successfully commercialize our technology and products could be impaired.

●

We depend on our licensors to maintain and enforce the intellectual property covering certain of our product candidates.

●

We or our licensors may be subject to costly and time-consuming litigation for infringement of third-party intellectual property rights or to enforce our or our licensors’ patents.

●

Any dispute with our licensors may affect our ability to develop or commercialize our product candidates.

Risks Relating to Our Control by Fortress Biotech, Inc. (“Fortress”)

●

Fortress controls a voting majority of our common stock and has the right to receive significant share grants annually, which will result in dilution of our other stockholders and could reduce the value of our common stock.

●

We have entered into certain agreements with Fortress and may have received better terms from unaffiliated third parties.

Risks Related to Conflicts of Interest

●

We share certain directors with Fortress, which could create conflicts of interest between us and Fortress.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MUSTANG BIO, INC.

Condensed Balance Sheets

(in thousands, except share and per share amounts)


	June 30,		December 31,
	2021		2020
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	129,923	$	97,804
Other receivables - related party		32		15
Prepaid expenses and other current assets		1,386		1,715
Total current assets		131,341		99,534

Property, plant and equipment, net		7,155		7,529
Fixed assets - construction in process		2,355		499
Restricted cash		1,000		1,000
Other assets		255		250
Operating lease right-of-use asset, net		1,101		1,088
Total Assets	$	143,207	$	109,900

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	5,766	$	8,747
Payables and accrued expenses - related party		249		490
Operating lease liabilities - short-term		346		278
Total current liabilities		6,361		9,515

Operating lease liabilities - long-term		1,821		1,950
Total Liabilities		8,182		11,465

Commitments and Contingencies

Stockholders’ Equity
Preferred stock ($0.0001 par value), 2,000,000 shares authorized, 250,000 shares of Class A preferred stock issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		—		—
Common Stock ($0.0001 par value), 150,000,000 and 125,000,000 shares authorized as of June 30, 2021 and December 31, 2020, respectively
Class A common shares, 845,385 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		—		—
Common shares, 89,936,162 and 70,920,693 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		9		7
Common stock issuable, 52,019 and 2,103,122 shares as of June 30, 2021 and December 31, 2020, respectively		185		7,939
Additional paid-in capital		349,621		275,963
Accumulated deficit		(214,790)		(185,474)
Total Stockholders’ Equity		135,025		98,435
Total Liabilities and Stockholders’ Equity	$	143,207	$	109,900

The accompanying notes are an integral part of these condensed financial statements.

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MUSTANG BIO, INC.

Condensed Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)


	For the three months ended June 30,				For the six months ended June 30,
	2021		2020		2021		2020
Operating expenses:
Research and development	$	10,902	$	9,830	$	22,520	$	19,144
Research and development – licenses acquired		1,000		1,300		1,000		1,550
General and administrative		2,538		2,991		6,007		4,947
Total operating expenses		14,440		14,121		29,527		25,641
Loss from operations		(14,440)		(14,121)		(29,527)		(25,641)

Other income (expense)
Interest income		85		142		219		405
Interest expense		(4)		(619)		(8)		(1,219)
Total other income (expense)		81		(477)		211		(814)
Net Loss	$	(14,359)	$	(14,598)	$	(29,316)	$	(26,455)

Net loss per common share outstanding, basic and diluted	$	(0.16)	$	(0.32)	$	(0.35)	$	(0.61)

Weighted average number of common shares outstanding, basic and diluted		87,561,764		45,023,030		84,033,508		43,497,173

The accompanying notes are an integral part of these condensed financial statements.

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MUSTANG BIO, INC.

Condensed Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)


	For the Three Months Ended June 30, 2021
										Common		Additional				Total
	Class A Preferred Stock			Class A Common Shares			Common Shares			Stock		Paid-in		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		Issuable		Capital		Deficit		Equity
Balances at March 31, 2021	250,000	$	—	845,385	$	—	85,043,153	$	8	$	218	$	333,566	$	(200,431)	$	133,361
Issuance of common shares, net of offering costs - At-the-Market Offering	—		—	—		—	4,606,102		1		—		15,087		—		15,088
Issuance of common shares, equity fee on At-the-Market Offering	—		—	—		—	127,744		—		(33)		421		—		388
Issuance of common shares under ESPP	—		—	—		—	1,043		—		—		—		—		—
Stock-based compensation expenses	—		—	—		—	158,120		—		—		547		—		547
Net loss	—		—	—		—	—		—		—		—		(14,359)		(14,359)
Balances at June 30, 2021	250,000	$	—	845,385	$	—	89,936,162	$	9	$	185	$	349,621	$	(214,790)	$	135,025


	For the Six Months Ended June 30, 2021
										Common		Additional				Total
	Class A Preferred Stock			Class A Common Shares			Common Shares			Stock		Paid-in		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		Issuable		Capital		Deficit		Equity
Balances at December 31, 2020	250,000	$	—	845,385	$	—	70,920,693	$	7	$	7,939	$	275,963	$	(185,474)	$	98,435
Issuance of common shares - Founders Agreement	—		—	—		—	2,001,490		—		(7,577)		7,577		—		—
Issuance of common shares, net of offering costs - At-the-Market Offering	—		—	—		—	16,203,605		2		—		62,617		—		62,619
Issuance of common shares, equity fee on At-the-Market Offering	—		—	—		—	452,965		—		(177)		1,763		—		1,586
Issuance of common shares under ESPP	—		—	—		—	55,963		—		—		158		—		158
Stock-based compensation expenses	—		—	—		—	301,308		—		—		1,543		—		1,543
Exercise of warrants	—		—	—		—	138		—		—		—		—		—
Net loss	—		—	—		—	—		—		—		—		(29,316)		(29,316)
Balances at June 30, 2021	250,000	$	—	845,385	$	—	89,936,162	$	9	$	185	$	349,621	$	(214,790)	$	135,025


	For the Three Months Ended June 30, 2020
										Additional				Total
	Class A Preferred Stock			Class A Common Shares			Common Shares			Paid-in		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balances at March 31, 2020	250,000	$	—	845,385	$	—	42,076,840	$	4	$	183,116	$	(137,316)	$	45,804
Issuance of common shares, net of offering shares -At-the-Market Offering	—		—	—		—	886,800		—		2,933		—		2,933
Issuance of common shares - Equity fee on At-the-Market Offering	—		—	—		—	22,170		—		77		—		77
Issuance of common shares, net of offering costs- Public Offering	—		—	—		—	11,455,604		1		34,923		—		34,924
Issuance of common shares, equity fee on Public Offering	—		—	—		—	286,390		—		932		—		932
Stock-based compensation expenses	—		—	—		—	98,439		—		957		—		957
Net loss	—		—	—		—	—		—		—		(14,598)		(14,598)
Balances at June 30, 2020	250,000	$	—	845,385	$	—	54,826,243	$	5	$	222,938	$	(151,914)	$	71,029

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	For the Six Months Ended June 30, 2020
										Common		Additional				Total
	Class A Preferred Stock			Class A Common Shares			Common Shares			Stock		Paid-in		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		Issuable		Capital		Deficit		Equity
Balances at December 31, 2019	250,000	$	—	845,385	$	—	39,403,519	$	4	$	4,923	$	172,184	$	(125,459)	$	51,652
Issuance of common shares - Founders Agreement	—		—	—		—	1,206,667		—		(4,923)		4,923		—		—
Issuance of common shares, net of offering shares -At-the-Market Offering	—		—	—		—	2,135,634		—		—		7,843		—		7,843
Issuance of common shares - Equity fee on At-the-Market Offering	—		—	—		—	53,390		—		—		202		—		202
Issuance of common shares, net of offering costs- Public Offering	—		—	—		—	11,455,604		1		—		34,923		—		34,924
Issuance of common shares, equity fee on Public Offering	—		—	—		—	286,390		—		—		932		—		932
Issuance of common shares under ESPP	—		—	—		—	68,351		—		—		169		—		169
Stock-based compensation expenses	—		—	—		—	213,689		—		—		1,762		—		1,762
Exercise of warrants	—		—	—		—	2,999		—		—		—		—		—
Net loss	—		—	—		—	—		—		—		—		(26,455)		(26,455)
Balances at June 30, 2020	250,000	$	—	845,385	$	—	54,826,243	$	5	$	—	$	222,938	$	(151,914)	$	71,029

The accompanying notes are an integral part of these condensed financial statements.

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MUSTANG BIO, INC.

Condensed Statements of Cash Flows

(in thousands)

(Unaudited)


	For the six months ended June 30,
	2021		2020
Cash Flows from Operating Activities:
Net loss	$	(29,316)	$	(26,455)
Adjustments to reconcile net loss to net cash used in operating activities:
Issuance of common shares - Equity fee on At-the-Market Offering to Fortress Biotech		1,586		202
Issuance of common shares - Equity fee on Public Offering to Fortress Biotech		—		932
Research and development - licenses acquired		1,000		1,550
Stock-based compensation expenses		1,543		1,762
Depreciation expense		934		798
Accretion of debt discount		—		529
Amortization of operating lease right-of-use assets		68		56
Changes in operating assets and liabilities:
Prepaid expenses and other assets		324		1,606
Other receivables - related party		(17)		(867)
Accounts payable and accrued expenses		(3,414)		2,017
Payable and accrued expenses - related party		(241)		(105)
Lease liabilities		(142)		255
Net cash used in operating activities		(27,675)		(17,720)

Cash Flows from Investing Activities:
Purchase of research and development licenses		(750)		(250)
Purchase of fixed assets		(2,149)		(1,090)
Net cash used in investing activities		(2,899)		(1,340)

Cash Flows from Financing Activities:
Proceeds from issuance of common shares - At-the-Market Offering		63,773		8,023
Offering costs for the issuance of common shares - At-the-Market Offering		(1,238)		(180)
Proceeds from issuance of common shares - Public Offering		—		37,230
Offering costs for the issuance of common shares - Public Offering		—		(2,234)
Proceeds from issuance of common shares under ESPP		158		169
Net cash provided by financing activities		62,693		43,008

Net change in cash, cash equivalents and restricted cash		32,119		23,948
Cash, cash equivalents and restricted cash, beginning of the period		98,804		62,413
Cash, cash equivalents and restricted cash, end of the period	$	130,923	$	86,361

Supplemental disclosure of cash flow information:
Cash paid for interest	$	—	$	683

Supplemental disclosure of noncash investing and financing activities:
Fixed assets (acquired but not paid)	$	298	$	127
Issuance of common shares - Founders Agreement	$	7,577	$	4,923
Research and development licenses included in accounts payable and accrued expenses	$	250	$	1,300
Lease liabilities arising from obtaining right-of-use assets	$	81	$	—
Offering costs for the issuance of common shares - Public Offering, in accounts payable and accrued expenses	$	—	$	72

The accompanying notes are an integral part of these condensed financial statements

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Note 1 - Organization, Description of Business and Liquidity and Capital Resources

Mustang Bio, Inc. (the “Company” or “Mustang”) was incorporated in Delaware on March 13, 2015. Mustang is as a clinical-stage biopharmaceutical company focused on translating today’s medical breakthroughs in cell and gene therapy into potential cures for hematologic cancers, solid tumors and rare genetic diseases. The Company may acquire rights to these technologies by licensing the rights or otherwise acquiring an ownership interest in the technologies, funding their research and development and eventually either out-licensing or bringing the technologies to market.

The Company is a majority-controlled subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”).

The Company’s common stock is listed on the NASDAQ Global Market and trades under the symbol “MBIO”.

Liquidity and Capital Resources

The Company has incurred substantial operating losses and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of June 30, 2021, the Company had an accumulated deficit of $214.8 million.

The Company has funded its operations to date primarily through the sale of equity. The Company expects to continue to use the proceeds from previous financing transactions primarily for general corporate purposes, including financing the Company’s growth, developing new or existing product candidates, and funding capital expenditures, acquisitions and investments. The Company currently anticipates that its cash and cash equivalents balances at June 30, 2021, are sufficient to fund its anticipated operating cash requirements for at least one year from the filing date of this Form 10-Q.

The Company will be required to expend significant funds in order to advance the development of its product candidates. The Company will require additional financings through equity and debt offerings, collaborations and licensing arrangements or other sources to fully develop, prepare regulatory filings, obtain regulatory approvals and commercialize its existing and any new product candidates. In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world.

Note 2 - Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended December 31, 2020, which were included in the Company’s Form 10-K and filed with the SEC on March 24, 2021. The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

Use of Estimates

The Company’s unaudited condensed financial statements include certain amounts that are based on management’s best estimates and judgments. The Company’s significant estimates include, but are not limited to, assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Due to the uncertainty inherent in such estimates actual results could differ from those estimates.

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Cash, Cash Equivalents and Restricted Cash

The Company records cash held in an escrow account as a security deposit for the manufacturing facility in Worcester, Massachusetts, as restricted cash.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash from the Condensed Balance Sheets to the Condensed Statements of Cash Flows for the six months ended June 30, 2021 and 2020:


	June 30
($ in thousands)	2021	2020
Cash and cash equivalents	$ 129,923	$ 85,361
Restricted cash	1,000	1,000
Total cash, cash equivalents and restricted cash	$ 130,923	$ 86,361

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies previously disclosed in the Company’s Form 10-K filed with the SEC on March 24, 2021.

Recently Issued Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption will be permitted. The Company is currently evaluating the impact of this standard on its financial statements.

In June 2016, FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires that expected credit losses relating to financial assets are measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. The Company is currently assessing the impact of the adoption of this ASU on its financial statements.

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Note 3 - License, Clinical Trial and Sponsored Research Agreements

Research and Development Expenses - All Licenses

For the three and six months ended June 30, 2021 and 2020, the Company recorded the following expense in research and development for licenses acquired:


	For the three months ended June 30,				For the six months ended June 30,
($ in thousands)	2021		2020		2021		2020
City of Hope National Medical Center
CD123	$	250	$	334	$	250	$	334
IL13Rα2		—		333		—		333
Spacer		—		333		—		333
HER2		—		—		—		250
Fred Hutchinson Cancer Research Center - CD20		—		300		—		300
Mayo Clinic		750		—		750		—
Total	$	1,000	$	1,300	$	1,000	$	1,550

City of Hope

CD123 License (MB-102)

In February 2017, the Company entered into an Amended and Restated Exclusive License Agreement with the City of Hope National Medical Center (“COH”) to acquire intellectual property rights pertaining to CD123-specific chimeric antigen receptor (“CAR”) engineered T cell (“CAR T”) technology. Pursuant to this agreement, payments are due for the achievement of eight development milestones totaling $14.5 million; additional payments are due upon the occurrence of certain one-time events, and royalty payments as a percentage of revenue in the mid-single digits are due on net sales of licensed products.

For the three and six months ended, June 30, 2021 and June 30, 2020, the Company expensed a non-refundable payment of $0.3 million in connection with the CD123 license. The $0.3 million represented a non-refundable milestone payment for the 24th patient treated in connection with the CD123 clinical study.

IL13Rα2 License (MB-101)

In February 2017, the Company entered into an Amended and Restated Exclusive License Agreement with COH to acquire intellectual property rights pertaining to IL13Rα2-specific CAR T technology. Pursuant to this agreement, payments are due for the achievement of eight development milestones totaling $14.5 million; additional payments are due upon the occurrence of certain one-time events, and royalty payments as a percentage of revenue in the mid-single digits are due on net sales of licensed products.

For the three and six months ended, June 30, 2020, the Company expensed a non-refundable payment of $0.3 million in connection with the IL13Rα2 license.

Spacer License

In February 2017, the Company entered into an Amended and Restated Exclusive License Agreement with COH to acquire intellectual property rights pertaining to Spacer patent rights. Pursuant to this agreement, payments are due upon the occurrence of certain one-time events, and royalty payments as a percentage of revenue in the low single digits are due on net sales of licensed products.

For the three and six months ended, June 30, 2020, the Company expensed a non-refundable payment of $0.3 million in connection with the Spacer license.

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HER2 License (MB-103)

On May 31, 2017, the Company entered into an exclusive license agreement with City of Hope National Medical Center (“COH”) for the use of human epidermal growth factor receptor 2 (“HER2”) chimeric antigen receptor (“CAR”) engineered T cell (“CAR T”) technology, which will initially be applied in the treatment of glioblastoma multiforme and brain metastases from HER2+ malignancies. Pursuant to this agreement, the Company paid an upfront fee of $0.6 million and pays an annual maintenance fee of $50,000 (which began in 2019). Additional payments are due for the achievement of ten development milestones totaling $14.9 million, and royalty payments in the mid-single digits are due on net sales of licensed products.

For the three months ended, June 30, 2021 and June 30, 2020, the Company recorded no expense in connection with the HER2 license agreement with COH. For the six months ended, June 30, 2021 and 2020, the Company recorded nil and $0.3 million, respectively, in connection with the HER2 license agreement with COH. The $0.3 million represented a non-refundable milestone payment in connection with the twelfth patient treated in the Phase 1 clinical study of MB-103 at COH, for the six months ended June 30, 2020.

Fred Hutchinson Cancer Research Center - CD20 License (MB-106)

On July 3, 2017, Mustang entered into an exclusive, worldwide licensing agreement with Fred Hutchinson Cancer Research Center (“Fred Hutch”) for the use of a CAR T therapy related to autologous T cells engineered to express a CD20-specific chimeric antigen receptor (“CD20 Technology License”). Pursuant to the CD20 Technology License, the Company paid Fred Hutch an upfront fee of $0.3 million and will owe an annual maintenance fee of $50,000 on each anniversary of the license until the achievement by the Company of regulatory approval of a licensed product using CD20 Technology. Additional payments are due for the achievement of eleven development milestones totaling $39.1 million, and royalty payments in the mid-single digits are due on net sales of licensed products.

For the three and six months ended, June 30, 2020, the Company expensed a non-refundable milestone payment of $0.3 million in connection with the Phase 1 clinical study of CD20 CAR T technology at Fred Hutch.

Mayo Clinic – CAR T Technology License

On April 1, 2021, the Company entered into an exclusive license agreement with the Mayo Foundation for Medical Education and Research (the “Mayo Clinic”) for a novel technology that may be able to transform the administration of CAR T therapies and has the potential to be used as an off-the shelf therapy. Pursuant to this agreement, the Company paid an upfront fee of $0.8 million and will pay an annual maintenance fee of $25,000. Additional payments are due for each of two licensed products for the achievement of eleven development and commercial milestones totaling up to $92.6 million per product, and royalty payments in the mid-single digits are due on net sales of licensed products.

For the three and six months ended June 30, 2021, the Company recorded $0.8 million in research and development expenses in the Condensed Statements of Operations pursuant to the terms of this agreement. For the three and six months ended June 30, 2020, the Company recorded no expenses pursuant to the terms of this agreement.

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Research and Development Expenses - Sponsored Research and Clinical Trial Agreements

For the three and six months ended June 30, 2021 and 2020, the Company recorded the following expense in research and development for sponsored research and clinical trial agreements:


	For the three months ended June 30,				For the six months ended June 30,
($ in thousands)	2021		2020		2021		2020
City of Hope National Medical Center	$	—	$	—	$	—	$	500
CD123