Note 3 - License, Clinical Trial and Sponsored Research Agreements

Research and Development Expenses - All Licenses

For the three and six months ended June 30, 2020 and 2019, the Company recorded the following expense in research and development for licenses acquired:

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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, 2020, the Company expensed a non-refundable payment of $0.3 million in connection with the CD123 license.

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.

HER2 License (MB-103)

On May 31, 2017, the Company entered into an exclusive license agreement with COH for the use of human epidermal growth factor receptor 2 (“HER2”) CAR T technology, which will initially be applied in the treatment of glioblastoma multiforme. Pursuant to this agreement, 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 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 HER2 CAR T technology at COH.

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.

Research and Development Expenses - Sponsored Research and Clinical Trial Agreements

For the three and six months ended June 30, 2020, and 2019, the Company recorded the following expense in research and development for sponsored research and clinical trial agreements:

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CS1 (MB-104) Clinical Research and Support Agreement with City of Hope

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In June 2020, Mustang entered into a clinical research and support agreement with COH in connection with an Investigator-sponsored study conducted under an Institutional Review Board-approved, investigator-initiated protocol entitled: “Phase I Study to Evaluate Cellular Immunotherapy Using Memory-Enriched T Cells Lentivirally Transduced to Express a CS1-Targeting, Hinge-Optimized, 41BB-Costimulatory Chimeric Antigen Receptor and a Truncated EGFR Following Lymphodepleting Chemotherapy in Adult Patients with CS1+ Multiple Myeloma.” The CAR T being studied under this protocol has been designated by Mustang as MB-104. Under the terms of the agreement Mustang will pay COH $0.8 million for costs incurred and will reimburse COH for costs associated with this trial, when incurred, not to exceed $2.4 million. The agreement will expire upon the delivery of a final study report or earlier.

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XSCID (MB-107) Data Transfer Agreement with St. Jude Children’s Research Hospital

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In June 2020, Mustang entered into a Data Transfer Agreement with St. Jude Children’s Research Hospital (“St. Jude”) under which Mustang will reimburse St. Jude for costs associated with St Jude’s clinical trial for the treatment of infants with X-linked Severe Combined Immunodeficiency Disorder (“XSCID”).  Pursuant to the terms of this agreement Mustang paid an upfront fee of $1.1 million on July 1, 2020 and will continue to reimburse St. Jude for costs incurred in connection with this trial.