Note 3 - License, Clinical Trial and Sponsored Research Agreements

Research and Development Expenses - All Licenses

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

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City of Hope National Medical Center

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 in the mid-single digits as a percentage of revenue are due on net sales of licensed products.  

For the nine months ended September 30, 2021, the Company expensed a non-refundable milestone payment of $0.3 million for the 24th patient treated in the Phase 1 clinical study for MB-102 at COH. For the nine months ended September 30, 2020, the Company expensed a non-refundable payment of $0.3 million in connection with Mustang’s public underwritten offerings.

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 in the mid-single digits as a percentage of revenue are due on net sales of licensed products.  

For the nine months ended, September 30, 2020, the Company expensed a non-refundable payment of $0.3 million in connection with Mustang’s public underwritten offerings.

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 in the low single digits as a percentage of revenue are due on net sales of licensed products.  

For the nine months ended, September 30, 2020, the Company expensed a non-refundable payment of $0.3 million in connection with Mustang’s public underwritten offerings.

PSCA License (MB-105)

In May 2017, the Company entered into an exclusive license agreement with COH for the use of prostate stem cell antigen (“PSCA”) CAR T technology to be used in the treatment of prostate cancer, pancreatic cancer and other solid tumors. Pursuant to this agreement, the Company paid an upfront fee of $0.3 million and pays an annual maintenance fee of $50,000. Additional payments are due for the achievement of ten development milestones totaling $14.9 million, and royalty payments in the mid-single digits as a percentage of revenue are due on net sales of licensed products.

For the three and nine months ended, September 30, 2021, the Company expensed a non-refundable milestone payment of $0.3 million for the twelfth patient treated in the Phase 1 clinical study of MB-105 at COH.

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 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 as a percentage of revenue in the mid-single digits are due on net sales of licensed products.

For the nine months ended, September 30, 2020, the Company expensed a non-refundable milestone payment of $0.3 million for the twelfth patient treated in the Phase 1 clinical study of MB-103 at COH.

CSL Behring (Calimmune) License

On August 23, 2019, the Company entered into a non-exclusive license agreement with CSL Behring (Calimmune, Inc.) (“Calimmune License”) for the rights to the Cytegrity^TM stable producer cell line for the production of viral vector for our lentiviral gene therapy program for the treatment of X-linked severe combined immunodeficiency (“XSCID”) (MB-107 and MB-207). The Company  previously licensed the XSCID gene therapy program from St. Jude Children’s Research Hospital, Inc. (“St. Jude”) in August 2018. Pursuant to the terms of the Calimmune License, the Company paid an upfront fee of $0.2 million. CSL Behring is eligible to receive additional payments totaling $1.2 million upon the achievement of three development and commercialization milestones. Royalty payments in the low-single digits as a percentage of revenue are due on net sales of licensed products.

For the three and nine months ended September 30, 2021 and 2020, the Company expensed non-refundable milestone payments of $30,000 and $0.2 million, respectively, in connection with the Calimmune License.

Leiden University Medical Centre License

On September 8, 2021, the Company entered into an exclusive, worldwide licensing agreement with Leiden University Medical Centre (“Leiden”) for the use of a gene therapy under development for the treatment of severe immunodeficiency caused by RAG1 deficiency (the “Leiden License”). Pursuant to the Leiden License, the Company expensed an upfront fee of $0.4 million. Additional payments are due for the achievement of certain development milestones totaling up to $31 million and royalty payments in the low to mid-single digits as a percentage of revenue are due on net sales of licensed products.

For the three and nine months ended September 30, 2021, the Company expensed an upfront payment of $0.4 million in connection with the Leiden License.

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 as a percentage of revenue are due on net sales of licensed products.

For the nine months ended, September 30, 2020, the Company expensed a non-refundable milestone payment of $0.3 million in connection with the Phase 1 clinical study of MB-106 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 as a percentage of revenue are due on net sales of licensed products.

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For the nine months ended September 30, 2021, the Company expensed an upfront payment of $0.8 million pursuant to the terms of the license agreement.

SIRION Biotech GmbH - LentiBOOST^TM

In October 2020, the Company announced a licensing agreement with SIRION Biotech (“SIRION”) for the rights to SIRION’s LentiBOOST^TM technology for the development of MB-207, our lentiviral gene therapy for the treatment of previously transplanted XSCID patients (the “SIRION Technology License”). Pursuant to the SIRION Technology License, the Company paid SIRION a one-time upfront fee of $0.1 million (€0.1 million). In addition, five future development milestone payments totaling up to approximately $5.4 million (€4.7 million) in the aggregate are due upon achievement of certain milestones. Additional milestone payments totaling up to $4.0 million (€3.5 million) in the aggregate are due in connection with the achievement of three commercial milestones, and low- to mid-single digit royalties as a percentage of revenue are due on aggregate cumulative worldwide net sales of licensed products.

For the three and nine months ended September 30, 2020, the Company expensed an upfront payment of $0.1 million pursuant to the terms of the SIRION Technology License.

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Research and Development Expenses - Sponsored Research and Clinical Trial Agreements

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

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City of Hope National Medical Center

Sponsored Research Agreement

In March 2015, the Company entered into a Sponsored Research Agreement (“SRA”) with COH in which the Company funded continued research in the amount of $2.0 million per year, payable in four equal installments, through the first quarter of 2020. The research covered under this arrangement is for the IL13Rα2-directed CAR T program, the CD123-directed CAR T program, and the Spacer technology. For the nine months ended September 30, 2020, the Company recorded $0.5 million in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.

CD123 (MB-102) Clinical Research Support Agreement

In February 2017, the Company entered into a clinical research support agreement for the CD123-directed CAR T program (the “CD123 CRA”). Pursuant to the terms of the CD123 CRA, the Company made an upfront payment of $19,450 and will contribute an additional $97,490 per patient in connection with the ongoing investigator-initiated study. Further, the Company agreed to fund approximately $0.2 million over three years pertaining to the clinical development of the CD123-directed CAR T program. For the three months ended September 30, 2021 and 2020, the Company recorded approximately $24,000 and $48,000, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement. For the nine months ended September 30, 2021 and 2020, the Company recorded $0.3 million and $0.3 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.

IL13Rα2 (MB-101) Clinical Research Support Agreements

In February 2017, the Company entered into a clinical research support agreement for the IL13Rα2-directed CAR T program (the “IL13Rα2 CRA”). Pursuant to the terms of the IL13Rα2 CRA, the Company made an upfront payment of approximately $9,300 and will contribute an additional $0.1 million related to patient costs in connection with the on-going investigator-initiated study. Further, the Company agreed to fund approximately $0.2 million over three years pertaining to the clinical development of the IL13Rα2-directed CAR T program for this patient population.

In October 2020, the Company entered into a clinical research support agreement for the IL13Rα2-directed CAR T program for adult patients with leptomeningeal glioblastoma, ependymoma or medulloblastoma (the “IL13Rα2 Leptomeningeal CRA”). Pursuant to the terms of the IL13Rα2 Leptomeningeal CRA, the Company made an upfront payment of approximately $29,000 and will contribute an additional $0.1 million per patient in connection with the ongoing investigator-initiated study. Further, the Company agreed to fund approximately $0.2 million annually pertaining to the clinical development of the IL13Rα2-directed CAR T program for this patient population.

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In March 2021, the Company entered into a clinical research support agreement for an Institutional Review Board-approved, investigator-initiated protocol entitled: “Single Patient Treatment with Intraventricular Infusions of IL13Rα2-targeting and HER2-targeting Chimeric Antigen Receptor (CAR)-T cells for a Single Patient (UPN 181) with Recurrent Multifocal Malignant Glioma.” Pursuant to the terms of this agreement, the Company will contribute up to $0.2 million in connection with the ongoing investigator-initiated study.

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For the three months ended September 30, 2021 and 2020, the Company recorded $0.2 million and $0.1 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of these agreements. For the nine months ended September 30, 2021 and 2020, the Company recorded $1.0 million and $0.4 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of these agreements.

CS1 (MB-104) Clinical Research  Support Agreement

In June 2020, the Company 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 the Company as MB-104. Under the terms of the agreement the Company paid 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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For the three months ended September 30, 2021 and 2020, the Company recorded $0.1 million and $0.1 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement. For the nine months ended September 30, 2021 and 2020, the Company recorded $0.5 million and $0.8 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.

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HER2 (MB-103) Clinical Research Support Agreement

In September 2020, the Company entered into a clinical research 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 of Cellular Immunotherapy using Memory-Enriched T Cells Lentivirally Transduced to Express a HER2-Specific, Hinge-Optimized, 41BB-Costimulatory Chimeric Receptor and a Truncated CD19 for Patients with Recurrent/Refractory Malignant Glioma.” The CAR T being studied under this protocol has been designated as MB-103. Under the terms of the agreement the Company paid COH $29,375 upon execution and will reimburse COH for costs associated with this trial not to exceed $3.0 million. The agreement will expire upon the delivery of a final study report or earlier.

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For the three and nine months ended September 30, 2021, the Company recorded approximately $0.3 million and $0.5 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.

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PSCA (MB-105) Clinical Research Support Agreement

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In October 2020, the Company entered into a clinical research support agreement with COH in connection with an investigator-sponsored study conducted under an Institutional Review Board-approved, investigator-initiated protocol entitled: “A Phase 1 study to evaluate PSCA-specific chimeric antigen receptor (CAR)-T cells for patients with metastatic castration resistant prostate cancer.” The CAR T being studied under this protocol has been designated as MB-105. Under the terms of the agreement the Company paid COH $33,000 upon execution and will reimburse COH for costs associated with this trial not to exceed $2.3 million.  The agreement will expire upon the delivery of a final study report or earlier.

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For the three months ended September 30, 2021, the Company recorded expense of approximately $23,000 pursuant to the terms of this agreement. For the nine months ended September 30, 2021, the Company recorded approximately $69,000 in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.

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CD20 (MB-106) Clinical Trial Agreement with Fred Hutchinson Cancer Research Center

On July 3, 2017, in conjunction with the CD20 Technology License from Fred Hutchinson Cancer Research Center (“Fred Hutch”), the Company entered into an investigator-initiated clinical trial agreement (the “CD20 CTA”) to provide partial funding for a Phase 1/2 clinical trial at Fred Hutch evaluating the safety and efficacy of the CD20 Technology in patients with relapsed or refractory B-cell non-Hodgkin lymphomas. In connection with the CD20 CTA, the Company agreed to fund up to $5.3 million of costs associated with the clinical trial, which commenced during the fourth quarter of 2017. In November 2020, the CD20 CTA was amended to include additional funding of approximately $0.8 million for the treatment of five patients with chronic lymphocytic leukemia.

For the three months ended September 30, 2021 and 2020, the Company recorded $0.5 million and $0.4 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement. For the nine months ended September 30, 2021 and 2020, the Company recorded $1.5 million and $1.1 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.

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

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In June 2020, the Company entered into a Data Transfer Agreement with St. Jude under which Mustang will reimburse St. Jude for costs associated with St. Jude’s clinical trial for the treatment of infants with XSCID.  Pursuant to the terms of this agreement the Company 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.

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For the three months ended September 30, 2021 and 2020, the Company recorded $0.3 million and $0.1 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement. For the nine months ended September 30, 2021 and 2020, the Company recorded $0.6 million and $1.7 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.

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Sponsored Research Support Agreement with Mayo Clinic  

In June 2021, the Company entered into an SRA with Mayo Clinic under which the Company will fund research in the amount of $2.1 million over a period of two years. The research performed pursuant to this agreement will support technology the Company has licensed from 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.

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For the three and nine months ended September 30, 2021, the Company recorded $0.2 million and $0.5 million, respectively, in research and development expenses in the Unaudited Condensed Statements of Operations pursuant to the terms of this agreement.