sesn-20200630
000148500312/312020Q2FALSE117,171,636P4M00014850032020-01-012020-06-30xbrli:shares00014850032020-08-03iso4217:USD00014850032020-06-3000014850032019-12-31iso4217:USDxbrli:shares00014850032020-04-012020-06-3000014850032019-04-012019-06-3000014850032019-01-012019-06-300001485003us-gaap:CommonStockMember2019-12-310001485003us-gaap:AdditionalPaidInCapitalMember2019-12-310001485003us-gaap:RetainedEarningsMember2019-12-310001485003us-gaap:RetainedEarningsMember2020-01-012020-03-3100014850032020-01-012020-03-310001485003us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001485003us-gaap:CommonStockMember2020-01-012020-03-310001485003us-gaap:CommonStockMember2020-03-310001485003us-gaap:AdditionalPaidInCapitalMember2020-03-310001485003us-gaap:RetainedEarningsMember2020-03-3100014850032020-03-310001485003us-gaap:RetainedEarningsMember2020-04-012020-06-300001485003us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001485003us-gaap:CommonStockMember2020-04-012020-06-300001485003us-gaap:CommonStockMember2020-06-300001485003us-gaap:AdditionalPaidInCapitalMember2020-06-300001485003us-gaap:RetainedEarningsMember2020-06-300001485003us-gaap:CommonStockMember2018-12-310001485003us-gaap:AdditionalPaidInCapitalMember2018-12-310001485003us-gaap:RetainedEarningsMember2018-12-3100014850032018-12-310001485003us-gaap:RetainedEarningsMember2019-01-012019-03-3100014850032019-01-012019-03-310001485003us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001485003us-gaap:CommonStockMember2019-01-012019-03-310001485003us-gaap:CommonStockMember2019-03-310001485003us-gaap:AdditionalPaidInCapitalMember2019-03-310001485003us-gaap:RetainedEarningsMember2019-03-3100014850032019-03-310001485003us-gaap:RetainedEarningsMember2019-04-012019-06-300001485003us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300001485003us-gaap:CommonStockMember2019-04-012019-06-300001485003us-gaap:CommonStockMember2019-06-300001485003us-gaap:AdditionalPaidInCapitalMember2019-06-300001485003us-gaap:RetainedEarningsMember2019-06-3000014850032019-06-30sesn:patient00014850032018-04-012018-04-30sesn:segment0001485003sesn:ViventiaBioIncMember2016-09-012016-09-30xbrli:pure0001485003sesn:ViventiaBioIncMember2016-09-300001485003sesn:CollaborativeArrangementRevenueBasedOnSpecifiedMilestoneMembersesn:ViventiaBioIncMembersrt:EuropeMembersesn:ViciniumMember2016-09-012016-09-300001485003country:JPsesn:CollaborativeArrangementRevenueBasedOnSpecifiedMilestoneMembersesn:ViventiaBioIncMembersesn:ViciniumMember2016-09-012016-09-300001485003sesn:CollaborativeArrangementRevenueBasedOnSpecifiedMilestoneMembersesn:ViventiaBioIncMembersesn:ViciniumMember2016-09-012016-09-3000014850032019-01-012019-12-310001485003us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-06-300001485003us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-06-300001485003us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-06-300001485003us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-06-300001485003us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-06-300001485003us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001485003us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001485003us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310001485003us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001485003us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001485003us-gaap:FairValueInputsLevel3Member2019-12-310001485003us-gaap:FairValueInputsLevel3Member2020-01-012020-06-300001485003us-gaap:FairValueInputsLevel3Member2020-06-300001485003us-gaap:MeasurementInputDiscountRateMember2019-12-310001485003us-gaap:MeasurementInputDiscountRateMember2020-06-300001485003country:USsesn:ViciniumMemberus-gaap:InProcessResearchAndDevelopmentMember2020-06-300001485003country:USsesn:ViciniumMemberus-gaap:InProcessResearchAndDevelopmentMember2019-12-310001485003srt:EuropeMembersesn:ViciniumMemberus-gaap:InProcessResearchAndDevelopmentMember2020-06-300001485003srt:EuropeMembersesn:ViciniumMemberus-gaap:InProcessResearchAndDevelopmentMember2019-12-310001485003sesn:ViciniumMemberus-gaap:InProcessResearchAndDevelopmentMember2020-06-300001485003sesn:ViciniumMemberus-gaap:InProcessResearchAndDevelopmentMember2019-12-31utr:sqft0001485003country:CA2020-01-012020-06-300001485003country:CA2020-06-30sesn:term0001485003country:CA2020-04-012020-06-300001485003country:CA2019-04-012019-06-300001485003country:CA2019-01-012019-06-300001485003srt:MinimumMember2020-06-300001485003srt:MaximumMember2020-06-300001485003sesn:FormerChiefFinancialOfficerMember2019-09-092019-09-090001485003sesn:FormerChiefFinancialOfficerMember2019-09-090001485003sesn:FormerChiefMedicalOfficerMember2019-08-022019-08-020001485003sesn:FormerChiefMedicalOfficerMember2019-08-020001485003sesn:FormerChiefMedicalOfficerMember2019-08-030001485003sesn:ATMFacilityMember2019-11-012019-11-300001485003sesn:ATMFacilityMember2019-11-012020-03-310001485003sesn:ATMFacilityMember2020-01-012020-06-300001485003sesn:ATMFacilityMember2020-04-012020-06-3000014850032019-06-012019-06-3000014850032019-09-300001485003us-gaap:WarrantMember2020-06-300001485003us-gaap:WarrantMember2019-12-310001485003us-gaap:EmployeeStockOptionMember2020-06-300001485003us-gaap:EmployeeStockOptionMember2019-12-310001485003us-gaap:StockCompensationPlanMember2020-06-300001485003us-gaap:StockCompensationPlanMember2019-12-310001485003us-gaap:EmployeeStockMember2020-06-300001485003us-gaap:EmployeeStockMember2019-12-310001485003sesn:WarrantsExpiringJune2020Member2020-06-300001485003sesn:WarrantsExpiringJune2020Member2019-12-310001485003sesn:WarrantsExpiringJune2020Member2020-01-012020-06-300001485003sesn:WarrantsExpiringJune2020Member2019-01-012019-06-300001485003sesn:WarrantsExpiringMarch2023Member2020-06-300001485003sesn:WarrantsExpiringMarch2023Member2019-12-310001485003sesn:WarrantsExpiringMarch2023Member2020-01-012020-06-300001485003sesn:WarrantsExpiringMarch2023Member2019-01-012019-06-300001485003sesn:WarrantsExpiringNovember2022Member2020-06-300001485003sesn:WarrantsExpiringNovember2022Member2019-12-310001485003sesn:WarrantsExpiringNovember2022Member2020-01-012020-06-300001485003sesn:WarrantsExpiringNovember2022Member2019-01-012019-06-300001485003sesn:WarrantsExpiringNovember2024IssuedMay2015Member2020-06-300001485003sesn:WarrantsExpiringNovember2024IssuedMay2015Member2019-12-310001485003sesn:WarrantsExpiringNovember2024IssuedMay2015Member2020-01-012020-06-300001485003sesn:WarrantsExpiringNovember2024IssuedMay2015Member2019-01-012019-06-300001485003sesn:WarrantsExpiringNovember2024IssuedNovember2014Member2020-06-300001485003sesn:WarrantsExpiringNovember2024IssuedNovember2014Member2019-12-310001485003sesn:WarrantsExpiringNovember2024IssuedNovember2014Member2020-01-012020-06-300001485003sesn:WarrantsExpiringNovember2024IssuedNovember2014Member2019-01-012019-06-300001485003us-gaap:CommonStockMember2018-03-012018-03-310001485003sesn:A2018WarrantAmendmentAmendmenttoSecuritiesPurchaseAgreementMember2018-03-310001485003sesn:A2018WarrantAmendmentAmendmenttoSecuritiesPurchaseAgreementMember2018-03-012018-03-310001485003sesn:A2018WarrantAmendmentAmendmenttoSecuritiesPurchaseAgreementMember2020-06-300001485003us-gaap:WarrantMember2020-04-012020-06-300001485003us-gaap:WarrantMember2019-04-012019-06-300001485003us-gaap:WarrantMember2020-01-012020-06-300001485003us-gaap:WarrantMember2019-01-012019-06-300001485003us-gaap:EmployeeStockOptionMember2020-04-012020-06-300001485003us-gaap:EmployeeStockOptionMember2019-04-012019-06-300001485003us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001485003us-gaap:EmployeeStockOptionMember2019-01-012019-06-300001485003us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-300001485003us-gaap:ResearchAndDevelopmentExpenseMember2019-04-012019-06-300001485003us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-06-300001485003us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-06-300001485003us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-300001485003us-gaap:GeneralAndAdministrativeExpenseMember2019-04-012019-06-300001485003us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-06-300001485003us-gaap:GeneralAndAdministrativeExpenseMember2019-01-012019-06-300001485003us-gaap:EmployeeStockOptionMembersesn:StockIncentivePlanTwoThousandFourteenMember2020-01-012020-06-300001485003us-gaap:EmployeeStockOptionMembersesn:StockIncentivePlanTwoThousandFourteenMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-01-012020-06-300001485003us-gaap:EmployeeStockOptionMembersesn:StockIncentivePlanTwoThousandFourteenMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2020-01-012020-06-300001485003us-gaap:EmployeeStockOptionMembersesn:StockIncentivePlanTwoThousandFourteenMember2020-06-300001485003us-gaap:EmployeeStockOptionMembersesn:StockIncentivePlan2009Member2020-01-012020-06-300001485003us-gaap:ShareBasedPaymentArrangementEmployeeMember2020-06-300001485003sesn:A2014EmployeeStockPurchasePlanMember2014-02-280001485003sesn:A2014EmployeeStockPurchasePlanMember2020-01-012020-06-300001485003sesn:A2014EmployeeStockPurchasePlanMember2020-06-300001485003sesn:UniversityOfZurichMembersesn:CollaborativeArrangementRevenueBasedOnClinicalDevelopmentMilestoneMember2020-01-012020-06-300001485003sesn:UniversityOfZurichMember2020-01-012020-06-30iso4217:EUR0001485003sesn:MicrometAGMember2020-01-012020-06-300001485003sesn:XOMAIrelandLimitedMember2020-01-012020-06-300001485003sesn:RocheMember2016-08-012016-08-310001485003sesn:RocheMembersesn:FirstIndicationMember2016-08-012016-08-310001485003sesn:RocheMembersesn:CollaborativeArrangementRevenueBasedonDevelopmentMilestoneMember2016-08-012016-08-310001485003sesn:RocheMembersesn:CollaborativeArrangementRevenueBasedonRegulatoryMilestoneMember2016-08-012016-08-310001485003sesn:CollaborativeArrangementRevenueBasedonCommercializationMilestoneMembersesn:RocheMember2016-08-012016-08-310001485003sesn:RocheMembersesn:EBI031Membersesn:CollaborativeArrangementRevenueBasedonDevelopmentMilestoneMember2016-09-012016-09-300001485003sesn:RocheMembersesn:SecondIndicationMember2020-01-012020-06-300001485003sesn:RocheMembersesn:EBI031Membersrt:MinimumMember2020-06-300001485003sesn:RocheMembersesn:EBI031Membersrt:MaximumMember2020-06-300001485003sesn:RocheMembersesn:IL6Member2020-06-30sesn:option0001485003sesn:RocheMember2016-06-012016-06-300001485003us-gaap:MajorityShareholderMembersesn:RentExpenseAssociatedWithLeaseFacilityInWinnipegManitobaMember2020-04-012020-06-300001485003us-gaap:MajorityShareholderMembersesn:RentExpenseAssociatedWithLeaseFacilityInWinnipegManitobaMember2020-01-012020-06-300001485003us-gaap:MajorityShareholderMembersesn:RentExpenseAssociatedWithLeaseFacilityInWinnipegManitobaMember2019-04-012019-06-300001485003us-gaap:MajorityShareholderMembersesn:RentExpenseAssociatedWithLeaseFacilityInWinnipegManitobaMember2019-01-012019-06-300001485003us-gaap:IntellectualPropertyMembersrt:DirectorMember2020-01-012020-06-300001485003us-gaap:IntellectualPropertyMembersrt:DirectorMember2019-01-012019-06-300001485003us-gaap:LicensingAgreementsMemberus-gaap:SubsequentEventMembersesn:QiluPharmaceuticalCoLtdMember2020-07-302020-07-30
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
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: 001-36296
Sesen Bio, Inc.
(Exact name of registrant as specified in its charter)

Delaware
26-2025616
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

245 First Street, Suite 1800
Cambridge, MA
02142
(Address of principal executive offices)(Zip Code)
(617444-8550
(Registrant’s telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueSESNThe Nasdaq Stock 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 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 filerSmaller reporting company
Accelerated Filer
Emerging growth company
Non-accelerated filer
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 117,171,636 shares of the registrant's common stock outstanding as of August 3, 2020.



Table of Contents
SESEN BIO, INC.
Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 2020
Table of Contents
  Page
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements.
Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019
Condensed Consolidated Statements of Income (Operations) and Comprehensive Income (Loss) for the Three and Six Months ended June 30, 2020 and 2019
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the Three and Six Months ended June 30, 2020 and 2019
Condensed Consolidated Statements of Cash Flows for the Six Months ended
    June 30, 2020 and 2019
Notes to Condensed Consolidated Financial Statements
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
Item 4.Controls and Procedures.
PART II - OTHER INFORMATION
Item 1.Legal Proceedings.
Item 1A.Risk Factors.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3.Defaults Upon Senior Securities.
Item 4.Mine Safety Disclosures.
Item 5.Other Information.
Item 6. Exhibits.



Table of Contents
PART I - FINANCIAL INFORMATION
Item 1.   Financial Statements.
SESEN BIO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; In thousands, except share and per share data)
June 30,
2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents$37,741  $48,121  
Prepaid expenses and other current assets3,727  6,326  
Total current assets41,468  54,447  
Restricted cash20  20  
Property and equipment, net of accumulated depreciation
    of $820 and $758, respectively
185  238  
Intangible assets46,400  46,400  
Goodwill13,064  13,064  
Other assets76  196  
Total Assets$101,213  $114,365  
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable$1,274  $1,902  
Accrued expenses4,866  6,169  
Other current liabilities373  446  
Total current liabilities6,513  8,517  
Contingent consideration84,800  120,020  
Deferred tax liability12,528  12,528  
Total Liabilities$103,841  $141,065  
Commitments and contingencies
Stockholders’ Deficit:
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at June 30, 2020 and December 31, 2019; no shares issued and outstanding at June 30, 2020 and December 31, 2019
    
Common stock, $0.001 par value per share; 200,000,000 shares authorized at June 30, 2020 and December 31, 2019; 116,627,653 and 106,801,409 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
116  107  
Additional paid-in capital275,560  266,717  
Accumulated deficit(278,304) (293,524) 
Total Stockholders’ Deficit(2,628) (26,700) 
Total Liabilities and Stockholders’ Deficit$101,213  $114,365  

The accompanying notes are an integral part of these condensed consolidated financial statements.
1

Table of Contents
SESEN BIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (OPERATIONS)
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited; In thousands, except per share data)
 
 Three Months ended
June 30,
Six Months ended June 30,
 2020201920202019
Operating expenses:
Research and development$4,562  $7,944  $13,429  $12,630  
General and administrative3,318  2,617  6,766  5,672  
Change in fair value of contingent consideration18,480  44,000  (35,220) 43,000  
Total operating expenses26,360  54,561  (15,025) 61,302  
Income (Loss) from Operations(26,360) (54,561) 15,025  (61,302) 
Other income (expense):
Other income, net16  226  195  487  
Net Income (Loss) and Comprehensive Income (Loss)$(26,344) $(54,335) $15,220  $(60,815) 
Net income (loss) per common share - basic$(0.24) $(0.67) $0.13  $(0.77) 
Weighted-average common shares outstanding - basic112,569  80,739  111,189  79,107  
Net income (loss) per common share - diluted$(0.24) $(0.67) $0.11  $(0.77) 
Weighted-average common shares outstanding - diluted112,569  80,739  111,203  79,107  

The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Table of Contents
SESEN BIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited; In thousands, except share data)
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Stockholders’
Equity (Deficit)
 SharesAmount
Balance at December 31, 2019106,801,409  $107  $266,717  $(293,524) $(26,700) 
Net income—  —  —  41,564  41,564  
Share-based compensation—  —  407  —  407  
Sales of common stock under 2014 ESPP2,785  —  1  —  1  
Issuance of common stock under ATM Offering, net of issuance costs of $0.1 million
3,187,359  3  3,176  —  3,179  
Balance at March 31, 2020109,991,553  $110  $270,301  $(251,960) $18,451  
Net income—  —  —  (26,344) (26,344) 
Share-based compensation—  —  491  —  491  
Issuance of common stock under ATM Offering, net of issuance costs of $0.1 million
6,636,100  6  4,768  —  4,774  
Balance at June 30, 2020116,627,653  $116  $275,560  $(278,304) $(2,628) 

3

Table of Contents
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Stockholders’
Equity
 SharesAmount
Balance at December 31, 201877,456,180  $77  $230,154  $(186,024) $44,207  
Net loss—  —  —  (6,480) (6,480) 
Share-based compensation—  —  326  —  326  
Sales of common stock under 2014 ESPP8,601  —  7  —  7  
Balance at March 31, 201977,464,781  $77  $230,487  $(192,504) $38,060  
Net loss—  —  —  (54,335) (54,335) 
Share-based compensation—  —  356  —  356  
Exercise of stock options30,000  —  45  —  45  
Exercise of common stock warrants3,361,115  4  3,430  —  3,434  
Issuance of common stock and common stock warrants, net of issuance costs of $2.2 million
20,410,000  20  27,789  —  27,809  
Balance at June 30, 2019101,265,896  $101  $262,107  $(246,839) $15,369  

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

4

Table of Contents
SESEN BIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In thousands)
 Six Months ended June 30,
 20202019
Cash Flows from Operating Activities:
Net income (loss)$15,220  $(60,815) 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation61  107  
Share-based compensation898  682  
Change in fair value of contingent consideration(35,220) 43,000  
Changes in operating assets and liabilities:
Prepaid expenses and other assets2,719  (1,487) 
Accounts payable(628) 809  
Accrued expenses and other liabilities(1,376) 961  
Net Cash Used in Operating Activities(18,326) (16,743) 
Cash Flows from Investing Activities:
Net Cash Used in Investing Activities(8) (43) 
Cash Flows from Financing Activities:
Proceeds from issuance of common stock under ATM Offering, net of issuance costs7,953    
Proceeds from sales of common stock under 2014 ESPP1  7  
Proceeds from exercises of stock options  45
Proceeds from the issuance of common stock and common stock warrants, net of issuance costs  27,809  
Proceeds from the exercise of common stock warrants  3,434  
Net Cash Provided by Financing Activities7,954  31,295  
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash(10,380) 14,509  
Cash, Cash Equivalents and Restricted Cash - Beginning of Period48,141  50,442  
Cash, Cash Equivalents and Restricted Cash - End of Period$37,761  $64,951  
Supplemental disclosure of non-cash operating activities:
Right-of-use assets related to the adoption of ASC 842  $236  
Cash paid for amounts included in the measurement of lease liabilities$75  $76  
Supplemental disclosure of non-cash investing activities:
Fixed assets included in Accrued Expenses  $119  
Supplemental disclosure of non-cash financing activities:
Deemed dividend on adjustment of exercise price on certain warrants$147    

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Table of Contents
SESEN BIO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF BUSINESS
Sesen Bio, Inc. ("Sesen" or the “Company”), a Delaware corporation formed in February 2008, is a late-stage clinical company developing targeted fusion protein therapeutics ("TFPTs") for the treatment of patients with cancer. The Company’s most advanced product candidate, VicineumTM, also known as VB4-845, is a locally-administered targeted fusion protein composed of an anti-epithelial cell adhesion molecule ("EpCAM") antibody fragment tethered to a truncated form of Pseudomonas exotoxin A. The Company has an ongoing single-arm, multi-center, open-label Phase 3 clinical trial of Vicineum as a monotherapy in patients with high-risk, bacillus Calmette-Guérin ("BCG")-unresponsive non-muscle invasive bladder cancer ("NMIBC") (the "VISTA Trial"). The VISTA Trial completed enrollment in April 2018 with a total of 133 patients, and in December 2019, the Company initiated submission of the Biologics License Application ("BLA") for Vicineum to the United States Food and Drug Administration ("FDA") under Rolling Review, which enables individual modules to be submitted and reviewed on an ongoing basis, rather than waiting for all sections to be completed before submission. The Company operates in one segment under the direction of its Chief Executive Officer (chief operating decision maker).
Viventia Acquisition
In September 2016, the Company entered into a Share Purchase Agreement with Viventia Bio, Inc., a corporation incorporated under the laws of the Province of Ontario, Canada ("Viventia"), the shareholders of Viventia named therein (the “Selling Shareholders”) and, solely in its capacity as seller representative, Clairmark Investments Ltd., a corporation incorporated under the laws of the Province of Ontario, Canada (“Clairmark”) (the “Share Purchase Agreement”), pursuant to which the Company agreed to and simultaneously completed the acquisition of all of the outstanding capital stock of Viventia from the Selling Shareholders (the “Viventia Acquisition”). In connection with the closing of the Viventia Acquisition, the Company issued 4.0 million shares of its common stock to the Selling Shareholders, which at that time represented approximately 19.9% of the voting power of the Company as of immediately prior to the issuance of such shares. Clairmark is an affiliate of Leslie L. Dan, a director of the Company until his retirement in July 2019.
In addition, under the Share Purchase Agreement, the Company is obligated to pay to the Selling Shareholders certain post-closing contingent cash payments upon the achievement of specified milestones and based upon net sales, in each case subject to the terms and conditions set forth in the Share Purchase Agreement, including: (i) a one-time milestone payment of $12.5 million payable upon the first sale of Vicineum (the “Purchased Product”), in the United States; (ii) a one-time milestone payment of $7.0 million payable upon the first sale of the Purchased Product in any one of certain specified European countries; (iii) a one-time milestone payment of $3.0 million payable upon the first sale of the Purchased Product in Japan; and (iv) quarterly earn-out payments equal to 2% of net sales of the Purchased Product during specified earn-out periods. Such earn-out payments are payable with respect to net sales in a country beginning on the date of the first sale in such country and ending on the earlier of (i) December 31, 2033 and (ii) fifteen years after the date of such sale, subject to early termination in certain circumstances if a biosimilar product is on the market in the applicable country (collectively, the "Contingent Consideration"). Under the Share Purchase Agreement, the Company, its affiliates, licensees and subcontractors are required to use commercially reasonable efforts, for the first seven years following the closing of the Viventia Acquisition, to achieve marketing authorizations throughout the world and, during the applicable earn-out period, to commercialize the Purchased Product in the United States, France, Germany, Italy, Spain, United Kingdom, Japan, China and Canada. Certain of these payments are payable to individuals or affiliates of individuals that were previously employees or members of the Company's board of directors.
Liquidity and Going Concern
As of June 30, 2020, the Company had cash and cash equivalents of $37.7 million, net working capital of $35.0 million and an accumulated deficit of $278.3 million. The Company incurred negative cash flows from operating activities of $37.5 million for the year ended December 31, 2019 and $18.3 million for the six months ended June 30, 2020. Since its inception, the Company has received no revenue from sales of its products, and management anticipates that operating losses will continue for the foreseeable future as the Company continues its ongoing Phase 3 VISTA Trial for Vicineum for the treatment of high-risk NMIBC and seeks marketing approval from the FDA. The Company has financed its operations to date primarily through private placements of its common stock, preferred stock, common stock warrants and convertible bridge notes, venture debt borrowings, its initial public offering ("IPO"), follow-on public offerings, sales effected in "at-the-market" ("ATM") offerings, a License Agreement with F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. (collectively, "Roche") (the "License Agreement with Roche") and, to a lesser extent, from a collaboration. See “Note 9. Stockholders’ Equity” below for information regarding the Company’s recently completed equity financings.
6

Table of Contents
Under Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements - Going Concern, management is required at each reporting period to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management's plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates the substantial doubt about the Company's ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered if both (i) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued and (ii) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved by the Company's board of directors before the date that the financial statements are issued.
The Company's future success is dependent on its ability to develop and commercialize Vicineum for the treatment of high-risk NMIBC, and ultimately upon its ability to attain profitable operations. In order to commercialize its product candidates, including Vicineum for the treatment of high-risk NMIBC, the Company needs to complete clinical development and comply with comprehensive regulatory requirements. The Company is subject to a number of risks similar to other late-stage clinical companies, including, but not limited to, successful discovery and development of its product candidates, raising additional capital, development and commercialization by its competitors of new technological innovations, protection of proprietary technology and market acceptance of its products. The successful discovery and development of product candidates, including Vicineum for the treatment of high-risk NMIBC, requires substantial working capital, and management expects to seek additional funds through equity or debt financings or through additional collaboration, licensing transactions or other sources. The Company may be unable to obtain equity or debt financings or enter into additional collaboration or licensing transactions at favorable terms, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include liens or other restrictive covenants limiting the Company's ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If the Company raises additional funds through government or other third-party funding, strategic collaborations and alliances or licensing arrangements, it may have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable. If the Company is unable to raise additional funds when needed, it may be required to implement cost reduction strategies and delay, limit, reduce or terminate its product development or future commercialization efforts or grant rights to develop and market products or product candidates that management would otherwise prefer to develop and market.
The Company's management does not believe that its cash and cash equivalents of $37.7 million as of June 30, 2020 is sufficient to fund the Company's current operating plan for at least twelve months after the issuance of these condensed consolidated financial statements. Given the history of significant losses, negative cash flows from operations, limited cash resources currently on hand, the ongoing COVID-19 pandemic and dependence by the Company on its ability - about which there can be no certainty - to obtain additional financing to fund its operations after the current cash resources are exhausted, substantial doubt exists about the Company's ability to continue as a going concern. These condensed consolidated financial statements were prepared under the assumption that the Company will continue as a going concern and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.


2. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the ASC and Accounting Standards Updates (“ASUs”), promulgated by the Financial Accounting Standards Board (“FASB”).
Interim Financial Statements
The accompanying unaudited interim condensed consolidated financial statements have been prepared from the books and records of the Company in accordance with GAAP for interim financial information and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosures for interim periods. All adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the accompanying condensed consolidated balance sheets and statements of income (operations) and comprehensive income (loss), stockholders’ equity and cash flows have been made. Although these interim financial statements do not include all of the information and footnotes required for complete annual financial statements, management believes the disclosures are adequate
7

Table of Contents
to make the information presented not misleading. These unaudited interim results of operations and cash flows for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the full year. These unaudited interim condensed consolidated financial statements and footnotes should be read in conjunction with the Company’s audited annual consolidated financial statements and footnotes included in its Annual Report on Form 10-K, as filed with the SEC on March 16, 2020, wherein a more complete discussion of significant accounting policies and certain other information can be found.
Use of Estimates
The preparation of financial statements in accordance with GAAP and the rules and regulations of the SEC requires the use of estimates and assumptions, based on judgments considered reasonable, which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on historical experience, known trends and events and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Although management believes its estimates and assumptions are reasonable when made, they are based upon information available at the time they are made. Management evaluates the estimates and assumptions on an ongoing basis and, if necessary, makes adjustments. Due to the risks and uncertainties involved in the Company’s business and evolving market conditions, and given the subjective element of the estimates and assumptions made, actual results may differ from estimated results. The most significant estimates and judgments impact the fair value of intangible assets, goodwill and contingent consideration; income taxes (including the valuation allowance for deferred tax assets); research and development expenses; and going concern considerations.
Principles of Consolidation
The Company’s consolidated financial statements include the accounts of the Company, its wholly owned subsidiary Viventia and its indirect subsidiaries, Viventia Bio USA Inc. and Viventia Biotech (EU) Limited. All intercompany transactions and balances have been eliminated in consolidation.
Foreign Currency Translation
The functional currency of the Company and each of its subsidiaries is the U.S. dollar.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's complete summary of significant accounting policies can be found in "Item 15. Exhibits and Financial Statement Schedules - Note 3. Summary of Significant Accounting Policies" in the audited annual consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019.

4. RECENT ACCOUNTING PRONOUNCEMENTS
Adopted in 2020
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets held. The amendments in ASU 2016-13 eliminate the probable threshold for initial recognition of a credit loss in current GAAP and reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 is effective for annual and interim periods beginning January 1, 2020 and is to be applied using a modified retrospective transition method. The Company adopted this guidance effective January 1, 2020, and it did not have a material impact on the Company’s financial position, results of operations or cash flows.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements ("ASU 2018-13"). ASU 2018-13 modifies fair value measurement disclosure requirements. ASU 2018-13 is effective for annual and interim periods beginning after December 15, 2019. The Company adopted this guidance effective January 1, 2020, and although it resulted in some additional footnote disclosures, it did not have a material impact on the Company’s disclosures. For the new disclosures regarding our Level 3 instruments, please read Note 5, Fair Value Measurements and Financial Instruments, to these condensed consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to
8

Table of Contents
follow the internal-use software guidance to determine which implementation costs to defer and recognize as an asset. The effective date for ASU 2018-15 is for annual and interim periods beginning after December 15, 2019. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this guidance effective January 1, 2020, and it did not have a material impact on the Company’s financial position, results of operations or cash flows.
Pending Adoption
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments in ASU 2019-12 also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The method with which the amendments in this ASU are to be applied varies depending on the nature of the tax item impacted by amendment. Because the Company generates losses and pays no income taxes, it does not expect the adoption of ASU 2019-12 to have a material impact on the Company's financial position, results of operations or cash flows.

5. FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, restricted cash, prepaid expenses and other current assets, and accounts payable on the Company’s consolidated balance sheets approximated their fair values as of June 30, 2020 and December 31, 2019 due to their short-term nature.
Certain of the Company’s financial instruments are measured at fair value using a three-level hierarchy that prioritizes the inputs used to measure fair value. This fair value hierarchy prioritizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1: Inputs are quoted prices for identical instruments in active markets.
Level 2: Inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3: Inputs are unobservable and reflect the Company’s own assumptions, based on the best information available, including the Company’s own data.
The following tables set forth the carrying amounts and fair values of the Company's financial instruments measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 (in thousands):
June 30, 2020
Fair Value Measurement Based on
Carrying AmountFair ValueQuoted Prices in Active
Markets
(Level 1)
Significant other Observable
Inputs
(Level 2)
Significant Unobservable
Inputs
(Level 3)
Assets:
Money market funds
(cash equivalents)
$31,339  $31,339  $31,339  $  $  
Liabilities:
Contingent consideration$84,800  $84,800  $  $  $84,800  

9

Table of Contents
December 31, 2019
Fair Value Measurement Based on
Carrying AmountFair ValueQuoted Prices in Active
Markets
(Level 1)
Significant other Observable
Inputs
(Level 2)
Significant Unobservable
Inputs
(Level 3)
Assets:
Money market funds
(cash equivalents)
$31,146  $31,146  $31,146  $  $  
Liabilities:
Contingent consideration$120,020  $120,020  $  $  $120,020  
The Company evaluates transfers between fair value levels at the end of each reporting period. There were no transfers of assets or liabilities between fair value levels during the six months ended June 30, 2020.
Contingent Consideration
On September 20, 2016, the Company acquired Viventia through the issuance of common stock plus contingent consideration, pursuant to the terms of a Share Purchase Agreement. The Company recorded the acquired assets and liabilities based on their estimated fair values as of the acquisition date and finalized its purchase accounting for the Viventia Acquisition during the third quarter of 2017. The contingent consideration relates to amounts potentially payable to the former shareholders of Viventia under the Share Purchase Agreement. Contingent consideration is measured at its estimated fair value at each reporting period, with fluctuations in value resulting in a non-cash charge to earnings (or loss) during the period. The estimated fair value measurement is based on significant inputs, including internally developed financial forecasts, probabilities of success, and the timing of certain milestone events and achievements, which are not observable in the market, representing a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration requires the use of significant assumptions and judgments, which management believes are consistent with those that would be made by a market participant. Management reviews its assumptions and judgments on an ongoing basis as additional market and other data is obtained, and any future changes in the assumptions and judgments utilized by management may cause the estimated fair value of contingent consideration to fluctuate materially, resulting in earnings volatility.
The following table sets forth a summary of the change in the fair value of the Company's contingent consideration liability, measured on a recurring basis at each reporting period, for the six months ended June 30, 2020 (in thousands):
Balance at December 31, 2019$120,020  
Change in fair value of contingent consideration(35,220) 
Balance at June 30, 2020$84,800  
The fair value of the Company’s contingent consideration was determined using probabilities of successful achievement of regulatory milestones and commercial sales, the period in which these milestones and sales are expected to be achieved ranging from 2021 to 2033, and the level of commercial sales of Vicineum forecasted for the United States, Europe, Japan and other potential markets. There have been no changes to the valuation methods utilized during the six months ended June 30, 2020. Because of the business environment uncertainty created by the ongoing COVID-19 pandemic, management carefully reviewed as of June 30, 2020 all of the Company’s financial forecast assumptions related to probability, timing and anticipated level of commercial sales, which were used to determine the estimated fair value of contingent consideration, and updated its forecasts for commercial sales in the second quarter of 2020 to reflect certain changes within the current competitive landscape. However, given the evolving and uncertain nature of the COVID-19 pandemic, management will continue to closely monitor developments in order to timely determine if any financial forecast changes may be required. As of June 30, 2020, no financial forecast changes due to COVID-19 were currently required. Changes to probabilities of success, timing of certain milestones and achievements, and level of commercial sales could materially affect the valuation of contingent consideration.
However, the estimated fair value of contingent consideration is also determined by applying appropriate discount rates to future cash outflows related to the contingent payment obligations, and these discount rates have increased significantly as a result of the extreme volatility of financial markets as global economies shut down in order to contain the spread of COVID-19. The milestone payments constitute debt-like obligations, and the high-yield debt index rate applied to the milestones in order to determine the estimated fair value increased from 11.8% as of December 31, 2019 to 14.5% as of June 30, 2020. The discount rate applied to the 2% royalty due on forecasted Vicineum revenues is derived from the Company’s estimated weighted-average cost of capital (“WACC”), and this WACC-derived discount rate increased from 5.6% as of December 31, 2019 to 13.2% as of June 30, 2020. These significant increases in the applicable discount rates, in conjunction with changes to the competitive
10

Table of Contents
landscape, resulted in a $35.2 million decrease in the estimated fair value of contingent consideration as of June 30, 2020. Changes to the discount rates could materially affect the valuation of the contingent consideration.

6. INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
Intangible assets on the Company's consolidated balance sheet are the result of the Viventia Acquisition in September 2016. The following table sets forth the composition of intangible assets as of June 30, 2020 and December 31, 2019 (in thousands):
June 30, 2020December 31, 2019
IPR&D intangible assets:
Vicineum United States rights
$31,700  $31,700  
Vicineum European Union rights
14,700  14,700  
Total Intangibles$46,400  $46,400  
Goodwill
Goodwill on the Company's consolidated balance sheet is the result of the Viventia Acquisition in September 2016. Goodwill had a carrying value of $13.1 million as of June 30, 2020 and December 31, 2019.

7. LEASES
On January 1, 2019, the Company adopted ASC Topic 842, Leases using the optional transition method. The Company’s lease portfolio includes:
1.An operating lease for its 31,100 square foot facility in Winnipeg, Manitoba which consists of manufacturing, laboratory, warehouse and office space, under a five-year renewable lease through September 2020 with a right to renew the lease for one subsequent five-year term. The minimum monthly rent under this lease is $12,800 per month. In addition to rent expense, the Company expects to incur $12,500 per month in related operating expenses. Operating lease cost under this lease, including the related operating costs, was $72,000 and $148,000 for the three and six months ended June 30, 2020 and $71,000 and $146,000 for the three and six months ended June 30, 2019, respectively;
2.Short-term property leases for modular office space for 1) its current corporate headquarters in Cambridge, MA and 2) office space in Philadelphia, PA. The short-term leases renew every four to nine months and currently extend through March 2021. The minimum monthly rent for these office spaces is currently $21,400 per month, which is subject to change if and as the Company adds or deducts space to or from the leases. The Company recorded $65,000 and $131,000 in rent expense for the three and six months ended June 30, 2020 and $53,000 and $129,000 for the three and six months ended June 30, 2019, respectively, for these leases.
The asset component of the Company’s operating leases is recorded as operating lease right-of-use assets and reported within other assets on the Company's consolidated balance sheet. The short-term liability is recorded in other current liabilities on the Company’s consolidated balance sheet. Operating lease cost is recognized on a straight-line basis over the lease term.

8. ACCRUED EXPENSES
The following table sets forth the composition of accrued expenses as of June 30, 2020 and December 31, 2019 (in thousands):
June 30,
2020
December 31, 2019
Research and development$3,100  $3,688  
Payroll-related expenses985  1,638  
Severance to former Executives and other employees66  378  
Professional fees692  378  
Other23  87  
Total Accrued Expenses$4,866  $6,169  
11

Table of Contents

Management Changes
On August 26, 2019, Richard Fitzgerald departed as the Company's Chief Financial Officer. In connection with his separation from the Company, Mr. Fitzgerald and the Company entered into a Separation Agreement and General Release dated as of September 9, 2019, pursuant to which the Company provided Mr. Fitzgerald with twelve months of separation payments and benefits. The Company recorded $0.3 million of expense, which will be paid through the normal payroll cycle through August 2020.
On August 2, 2019, Dennis Kim, M.D., MPH departed as the Company's Chief Medical Officer. In connection with his separation from the Company, Dr. Kim and the Company entered into a Separation Agreement and General Release dated as of August 2, 2019 (the “Kim Separation Agreement”), pursuant to which the Company provided Dr. Kim with six months of separation payments in the amount of $0.2 million. In addition, Dr. Kim and the Company entered into a Consulting Agreement dated as of August 3, 2019 (the "Kim Consulting Agreement"), pursuant to which the Company agreed to pay Dr. Kim $0.1 million in consulting fees and transition expenses over the following three months ended November 2, 2019. The Company recorded $0.3 million of expenses related to these agreements in 2019. The Kim Consulting Agreement payments were made in a lump sum when the agreement concluded in November 2019. The separation payments were paid through the normal payroll cycle through January 2020, when the Company concluded its obligations under the Kim Separation Agreement.

9. STOCKHOLDERS' EQUITY (DEFICIT)
Equity Financings
ATM Offering
In November 2019, the Company entered into an Open Market Sale Agreement SM (the "Sales Agreement") with Jefferies LLC ("Jefferies"), under which the Company may issue and sell shares of its common stock from time to time for an aggregate sales price of up to $35.0 million through Jefferies (the "ATM Offering"). Sales of common stock under the Sales Agreement are made by any method that is deemed to be an ATM offering as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended, including but not limited to sales made directly on or through the Nasdaq Global Market or any other existing trading market for the common stock. The Company has no obligation to sell any of its common stock and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, Jefferies will use its commercially reasonable efforts to sell common stock from time to time, as the sales agent, based upon the Company’s instructions, which include a prohibition on sales below a minimum price set by the Company from time to time. The Company has provided Jefferies with customary indemnification rights, and Jefferies is entitled to a commission at a fixed rate equal to 3.0% of the gross proceeds for each sale of common stock. The Company incurred $0.2 million in legal, accounting and printing costs related to the commencement of the ATM Offering. For the six months ended June 30, 2020, the Company raised $8.0 million of net proceeds from the sale of 9.8 million shares of common stock at a weighted-average price of $0.75 per share under the ATM Offering, including $4.8 million of net proceeds from the sale of 6.6 million shares of common stock at a weighted-average price of $0.69 per share during the three months ended June 30, 2020. Share issue costs, including sales agent commissions, related to the ATM Offering totaled $0.1 million and $0.2 million during the three and six months ended June 30, 2020, respectively.
June 2019 Financing
In June 2019, the Company raised $27.8 million of net proceeds from the sale of 20.4 million shares of common stock and accompanying warrants to purchase an additional 20.4 million shares of common stock in an underwritten public offering (the "June 2019 Financing"). The combined purchase price for each share of common stock and accompanying warrant was $1.47. Subject to certain ownership limitations, the warrants issued in the June 2019 Financing were exercisable immediately upon issuance at an exercise price of $1.47 per share, subject to adjustments as provided under the terms of such warrants, and had a one-year term expiring on June 21, 2020. As of June 30, 2020, all warrants issued in connection with the June 2019 financing have expired.
Preferred Stock
Pursuant to its Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation"), the Company is authorized to issue 5.0 million shares of "blank check" preferred stock, $0.001 par value per share, which enables its board of directors, from time to time, to create one or more series of preferred stock. Each series of preferred stock issued shall have the rights, preferences, privileges and restrictions as designated by the board of directors. The issuance of any series of preferred stock could affect, among other things, the dividend, voting and liquidation rights of the Company's common stock. The Company had no preferred stock issued and outstanding as of June 30, 2020 and December 31, 2019.
Common Stock
12

Table of Contents
Pursuant to its Certificate of Incorporation, the Company is authorized to issue 200.0 million shares of common stock, $0.001 par value per share, of which 116.6 million and 106.8 million shares were issued and outstanding as of June 30, 2020 and December 31, 2019, respectively. In addition, the Company had reserved for issuance the following amounts of shares of its common stock for the purposes described below as of June 30, 2020 and December 31, 2019 (in thousands):
June 30, 2020December 31, 2019
Shares of common stock issued116,628  106,801  
Shares of common stock reserved for issuance for:
Warrants2,485  22,895  
Stock options9,990  6,236  
Shares available for grant under 2014 Stock Incentive Plan5,084  8,753  
Shares available for sale under 2014 Employee Stock Purchase Plan25  28  
Total shares of common stock issued and reserved for issuance134,212  144,713  

The voting, dividend and liquidation rights of holders of shares of common stock are subject to and qualified by the rights, powers and preferences of holders of shares of preferred stock. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company's stockholders; provided, however, that, except as otherwise required by law, holders of common stock shall not be entitled to vote on any amendment to the Company’s Certificate of Incorporation that relates solely to the terms of one or more outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more such series, to vote thereon. There shall be no cumulative voting.
Dividends may be declared and paid on the common stock from funds lawfully available thereof as and when determined by the board of directors and subject to any preferential dividend or other rights of any then-outstanding preferred stock. The Company has never declared or paid, and for the foreseeable future does not expect to declare or pay, dividends on its common stock.
Upon the dissolution or liquidation of the Company, whether voluntary or involuntary, holders of common stock will be entitled to receive all assets of the Company available for distribution to its stockholders, subject to any preferential or other rights of any then-outstanding preferred stock.
Warrants
All of the Company’s outstanding warrants are non-tradeable and permanently classified as equity because they meet the derivative scope exception under ASC Topic 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity ("ASC 815-40"). The following table sets forth the Company's warrant activity for the six months ended June 30, 2020 (in thousands):
Year-to-Date Warrant Activity
Issued
Exercise
Price (1)
ExpirationDecember 31, 2019Issued(Exercised)(Expired)June 30, 2020
Jun-2019$1.47Jun-202020,410      (20,410)  
Mar-2018$0.55*Mar-20231,943        1,943  
Nov-2017$0.55*Nov-2022487        487  
May-2015$11.83Nov-202428        28  
Nov-2014$11.04Nov-202427        27  
22,895      (20,410) 2,485  
(1) As of June 30, 2020.
* Exercise price shown subject to further adjustment based on down round provision added by amendment.
In March 2018, the Company raised $9.0 million of net proceeds from the sale of common stock in a registered direct public offering and the sale of warrants to purchase shares of the Company's common stock with an exercise price of $1.20 per share (the "2018 Warrants") in a concurrent private placement. On October 28, 2019, the Company entered into transactions with certain holders of its then outstanding 2018 Warrants to amend their warrants pursuant to a Warrant Amendment Agreement (the "2018 Warrant Amendment Agreements"). The 2018 Warrant Amendment Agreements reduced the exercise price of the warrants from $1.20 to the lesser of (a) $0.95 per share of common stock and (b) the exercise price as determined from time to
13

Table of Contents
time, pursuant to the anti-dilution provisions in the 2018 Warrant Amendment Agreements. During the three months ended June 30, 2020, the anti-dilution provision was triggered; as such, the Company recognized a deemed dividend of approximately $0.1 million which reduced the income available to common stockholders for both the three and six months ended June 30, 2020. As of June 30, 2020, the exercise price of the 2018 Warrants was $0.55. As the Company has an accumulated deficit balance as of June 30, 2020, the deemed dividend was recorded as offsetting debit and credit entries to additional-paid-in capital for the period ended June 30, 2020. As there was no overall impact to additional paid-in capital, the amounts were not presented on the Statement of Stockholders' Equity (Deficit) for the period ended June 30, 2020.

10. EARNINGS (LOSS) PER SHARE
A net loss cannot be diluted. Therefore, when the Company is in a net loss position, basic and diluted loss per common share are the same. If the Company achieves profitability, the denominator of a diluted earnings per common share calculation includes both the weighted-average number of shares outstanding and the number of common stock equivalents, if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include warrants, stock options and non-vested restricted stock awards and units using the treasury stock method, along with the effect, if any, from outstanding convertible securities. The majority of the Company’s outstanding warrants to purchase common stock have participation rights to any dividends that may be declared in the future and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to the participating securities since the holders have no contractual obligation to share in the losses of the Company.
Additionally, an entity that presents earnings per share shall recognize the value of the effect of an anti-dilution provision in an equity-classified freestanding financial instrument in the period the anti-dilution provision is triggered. That effect shall be treated as a deemed dividend and as a reduction of income available to common stockholders in basic earnings per share. The deemed dividend is added back to income available to common stockholders when applying the treasury stock method for diluted earnings per share.
For periods with net income, diluted net earnings per share is calculated by either (i) adjusting the weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period as determined using the treasury stock method or (ii) the two-class method considering common stock equivalents, whichever is more dilutive. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders.
Accordingly, the Company applied the two-class method to calculate basic and diluted net earnings per share of common stock for the six months ended June 30, 2020. The two-class method was not applied for the three months ended June 30, 2020 and for the three and six months ended June 30, 2019 as the Company’s participating securities do not have any obligation to absorb net losses.

For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation if their effect would be anti-dilutive.

The following table illustrates the determination of earnings (loss) per share for each period presented:
14

Table of Contents
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(in thousands, except per share amounts)
Basic Earnings (Loss) Per Share:
Numerator:
Net income (loss) $(26,344) $(54,335) $15,220  $(60,815) 
Less: Deemed dividend(147)   (147)   
Less: Income attributable to participating securities - basic    (322)   
Net income (loss) attributable to common stockholders - basic$(26,491) $(54,335) $14,751  $(60,815) 
Denominator:
Weighted average common shares outstanding - basic112,569  80,739  111,189  79,107  
Net income (loss) per share applicable to common stockholders - basic$(0.24) $(0.67) $0.13  $(0.77) 
Dilutive Earnings (Loss) Per Share:
Numerator:
Net income (loss)$(26,344) $(54,335) $15,220  $(60,815) 
Less: Deemed Dividend(147)   (147)   
Less: Income attributable to participating securities - diluted    (2,473) 
Net income (loss) attributable to common stockholders - diluted$(26,491) $(54,335) $12,600  $(60,815) 
Denominator:
Weighted average shares outstanding112,569  80,739  111,189  79,107  
Dilutive impact from:
Stock options and employee stock purchase plan    14    
Weighted average common shares outstanding for diluted112,569  80,739  111,203  79,107  
Net income (loss) per share applicable to common stockholders - diluted$(0.24) $(0.67) $0.11  $(0.77) 

The following potentially dilutive securities outstanding as of June 30, 2020 and 2019 have been excluded from the denominator of the diluted income (loss) per share of common stock outstanding calculation as their effect is anti-dilutive (in thousands):
15

Table of Contents
Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Warrants2,485  5,779  55  5,779  
Stock options9,990  26,307  9,989  26,307  
12,475  32,086  10,044  32,086  

11. SHARE-BASED COMPENSATION
The following table sets forth the amount of share-based compensation expense recognized by the Company by line item on its consolidated statements of income (operations) for the three and six months ended June 30, 2020 and 2019 (in thousands):
 Three Months ended
June 30,
Six Months ended
June 30,
 2020201920202019
Research and development$91  $86  $171  $139  
General and administrative400  269  727  543  
$491  $355