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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, 2021
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 FilerEmerging 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 196,002,620 shares of the registrant's common stock outstanding as of August 2, 2021.



Table of Contents
SESEN BIO, INC.
Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 2021
Table of Contents
  Page
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements.
Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Six Months ended June 30, 2021 and 2020
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the Three and Six Months ended June 30, 2021 and 2020
Condensed Consolidated Statements of Cash Flows for the Six Months ended
June 30, 2021 and 2020
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,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents$151,036 $52,389 
Accounts receivable2,303  
Prepaid expenses and other current assets21,760 7,478 
Restricted cash 3,000 
Total current assets175,099 62,867 
Non-current assets:
Restricted cash20 20 
Property and equipment, net109 123 
Intangible assets46,400 46,400 
Goodwill13,064 13,064 
Long term prepaid expenses6,150  
Other assets205 349 
Total non-current assets65,948 $59,956 
                         Total Assets$241,047 $122,823 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable$1,228 $3,102 
Accrued expenses5,301 3,973 
Deferred revenue1,500 1,500 
Contingent consideration10,300 8,985 
Other current liabilities498 489 
Total current liabilities18,827 18,049 
Non-current liabilities:
Contingent consideration, net of current portion160,300 99,855 
Deferred tax liability12,528 12,528 
Deferred revenue, net of current portion 1,500 
Other non-current liabilities43 118 
Total non-current liabilities172,871 114,001 
                         Total liabilities191,698 132,050 
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at June 30, 2021 and December 31, 2020; no shares issued and outstanding at June 30, 2021 and December 31, 2020
  
Common stock, $0.001 par value per share; 400,000,000 and 200,000,000 shares authorized at June 30, 2021 and December 31, 2020, respectively; 188,460,951 and 140,449,647 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
188 140 
Additional paid-in capital446,036 306,554 
Accumulated deficit(396,875)(315,921)
                         Total Stockholders’ Equity (Deficit)49,349 (9,227)
Total Liabilities and Stockholders’ Equity$241,047 $122,823 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
SESEN BIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
(Unaudited; In thousands, except per share data)
 
 Three Months ended
June 30,
Six Months ended
 June 30,
 2021202020212020
License and related revenue$2,234 $ $6,544 $ 
Operating expenses:
Research and development7,228 4,562 13,306 13,429 
General and administrative6,805 3,318 12,098 6,766 
Change in fair value of contingent consideration13,600 18,480 61,760 (35,220)
Total operating expenses27,633 26,360 87,164 (15,025)
(Loss) Income from Operations(25,399)(26,360)(80,620)15,025 
Other (expense) income , net(43)16 (46)195 
Net (Loss) Income and Comprehensive (Loss) Income Before Taxes(25,442)(26,344)(80,666)15,220 
Provision for income taxes  (288) 
Net (Loss) Income and Comprehensive (Loss) Income After Taxes$(25,442)$(26,344)$(80,954)$15,220 
Net (loss) income attributable to common stockholders - basic$(25,442)$(26,491)$(80,954)$14,751 
Net (loss) income attributable to common stockholders - diluted(25,442)(26,491)(80,954)12,600 
Net (loss) income per common share - basic$(0.15)$(0.24)$(0.49)$0.13 
Weighted-average common shares outstanding - basic175,393 112,569 166,264 111,189 
Net (loss) income per common share - diluted$(0.15)$(0.24)$(0.49)$0.11 
Weighted-average common shares outstanding - diluted175,393 112,569 166,264 111,203 

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
 SharesAmount
Balance at December 31, 2020140,449,647 $140 $306,554 $(315,921)$(9,227)
Net loss— — — (55,512)(55,512)
Share-based compensation— — 958 — 958 
Exercises of stock options30,610 — 39 — 39 
Exercises of common stock warrants852,840 1 468 — 469 
Issuance of common stock under ATM Offering, net of issuance costs of $2.2 million
30,645,702 31 72,512 — 72,543 
Balance at March 31, 2021171,978,799 $172 $380,531 $(371,433)$9,270 
Net loss— — — (25,442)(25,442)
Share-based compensation— — 1,260 — 1,260 
Issuance of common stock under ATM Offering, net of issuance costs of $2.0 million
16,482,152 16 64,245 — 64,261 
Balance at June 30, 2021188,460,951 $188 $446,036 $(396,875)$49,349 


 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Stockholders’
Equity
 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 (loss)— — — (26,344)(26,344)
Share-based compensation— — 491 — 491 
Issuance of common stock and common stock warrants, net of issuance costs of $0.1 million
6,636,100 6 4,768 — 4,774 
Balance as of June 30, 2020116,627,653 $116 $275,560$(278,304)$(2,628)

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



3

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SESEN BIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In thousands)
 Six Months ended
 June 30,
 20212020
Cash Flows from Operating Activities:
Net (loss) income $(80,954)$15,220 
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation64 61 
Share-based compensation 2,217 898 
Change in fair value of contingent consideration 61,760 (35,220)
Changes in operating assets and liabilities:
Accounts receivable (net)(2,303) 
Prepaid expenses and other assets (20,287)2,719 
Accounts payable(1,875)(628)
Accrued expenses and other liabilities1,262 (1,376)
Deferred revenue(1,500) 
                      Net cash used in operating activities(41,616)(18,326)
Cash Flows from Investing Activities:
Purchases of equipment(49)(8)
                      Net cash used in investing activities(49)(8)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock under ATM Offering, net of
issuance costs
136,804 7,953 
Proceeds from exercises of stock options39  
Proceeds from the exercise of common stock warrants469  
Proceeds from sale of common stock pursuant to ESPP 1 
                      Net cash provided by financing activities137,312 7,954 
Net Increase (decrease) in cash, cash equivalents and restricted cash95,647 (10,380)
Cash, cash equivalents and restricted cash - beginning of period55,409 48,141 
Cash, cash equivalents and restricted cash - end of period$151,056 $37,761 
Supplemental cash flow disclosure:
Cash paid for amounts included in the measurement of lease liabilities$87 $75 
Supplemental disclosure of non-cash investing activities:
Purchase of equipment included in accrued expenses$27 $ 
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.
4

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 advancing 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 for the treatment of bacillus Calmette-Guérin ("BCG")-unresponsive non-muscle invasive bladder cancer ("NMIBC"). The Company has an ongoing single-arm, multi-center, open-label Phase 3 clinical trial of Vicineum as a monotherapy in patients with BCG-unresponsive NMIBC (the "VISTA Trial"). The VISTA Trial completed enrollment in April 2018 with a total of 133 patients. On December 18, 2020, the Company submitted its completed Biologics License Application (the "BLA") for Vicineum for the treatment of BCG-unresponsive NMIBC to the United States Food and Drug Administration ("FDA"). On February 12, 2021, the FDA notified the Company that it has accepted for filing the BLA. The FDA also granted Priority Review for the BLA and the target Prescription Drug User Fee Act ("PDUFA") date for a decision on the BLA is August 18, 2021. In addition to the file acceptance and granting of Priority Review, the FDA also indicated that it is not currently planning to hold an advisory committee meeting to discuss the BLA for Vicineum. On July 13, 2021, the Company participated in a productive Late-Cycle Meeting with the FDA regarding the BLA for Vicineum for the treatment of BCG-unresponsive NMIBC. In the meeting, the FDA confirmed that there is no Advisory Committee meeting planned at this time, and that no post-marketing requirements, including a confirmatory trial, have been identified at this time. Also in the meeting, the Company and the FDA discussed remaining questions related to manufacturing facilities inspection, product quality information requests and additional information related to chemistry, manufacturing and controls (“CMC”), and a timeline to submit additional supporting information was agreed upon. In the US, the Company believes it remains on track for an FDA decision on its BLA for Vicineum by the target PDUFA date of August 18, 2021. The Company operates in one segment under the direction of its Chief Executive Officer (chief operating decision maker). The Company was formerly known as Eleven Biotherapeutics, Inc. until its name changed in May 2018.

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, who served as 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 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 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 became employees or members of the Company's board of directors, however as of June 30, 2021, none of these individuals are employees or members of the Company's board of directors.
Liquidity and Going Concern
As of June 30, 2021, the Company had cash and cash equivalents of $151.0 million, net working capital of $156.3 million and an accumulated deficit of $396.9 million. The Company incurred negative cash flows from operating activities of $30.8 million for the year ended December 31, 2020 and $41.6 million for the six months ended June 30, 2021. Since its inception, the
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Company has received no revenue from sales of its products, and management anticipates that operating losses will continue as the Company completes the follow-up stage of its ongoing Phase 3 VISTA Trial for Vicineum for the treatment of BCG-unresponsive NMIBC and seeks marketing approval from the FDA and the European Medicines Agency ("EMA"), and if approved, commercializes Vicineum. 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, out-licensing agreements and outside of United States ("OUS") business development partnership agreements, and, to a lesser extent, from a collaboration. See “Note 9. Stockholders’ Equity (Deficit)” below for information regarding the Company’s recently completed equity financings.
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 BCG-unresponsive NMIBC, and ultimately upon its ability to attain profitable operations. In order to commercialize its product candidates, including Vicineum for the treatment of BCG-unresponsive 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, market acceptance of its products and dependence on third parties for the development and commercialization of Vicineum in certain markets. The successful discovery and development of product candidates, including Vicineum for the treatment of BCG-unresponsive NMIBC, requires substantial working capital, and management expects to seek additional funds through equity or debt financings or through additional business development partnerships, collaborations or licensing transactions or other sources. The Company may be unable to obtain equity or debt financings or enter into additional business development partnerships, collaborations or licensing transactions on 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, business development partnerships, 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, regulatory approval or future commercialization efforts or grant rights to develop and market products or product candidates that management would otherwise prefer to develop and market.
Management does not believe that the Company's cash and cash equivalents of $151.0 million as of June 30, 2021 are 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, 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
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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 operations and comprehensive (loss) income, stockholders’ equity (deficit) 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 to make the information presented not misleading. These unaudited interim results of operations and cash flows for the six months ended June 30, 2021 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 15, 2021, 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; revenue recognition and going concern considerations.
Principles of Consolidation
The Company’s condensed 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, 2020.

4. RECENT ACCOUNTING PRONOUNCEMENTS
Adopted in 2021
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.
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The Company adopted this guidance effective January 1, 2021, and it did not have a material impact on its 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 condensed consolidated balance sheets approximated their fair values as of June 30, 2021 and December 31, 2020 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, 2021 and December 31, 2020 (in thousands):
June 30, 2021
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)
$16,379 $16,379 $16,379 $ $ 
Liabilities:
Contingent consideration - short term$10,300 $10,300 $ $ $10,300 
Contingent consideration - long term$160,300 $160,300 $ $ $160,300 
December 31, 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)
$16,374 $16,374 $16,374 $ $ 
Liabilities:
Contingent consideration - short term$8,985 $8,985 $ $ $8,985 
Contingent consideration - long term$99,855 $99,855 $ $ $99,855 
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, 2021.

Contingent Consideration
On September 20, 2016, the Company acquired Viventia through the issuance of shares 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 estimated 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, the level of commercial sales of Vicineum forecasted for the United States, Europe, Japan,
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China and other potential markets and discount rates ranging from 6.6% to 6.8% as of June 30, 2021 and 8.4% to 8.8% as of December 31, 2020. There have been no changes to the valuation methods utilized during the six months ended June 30, 2021.
The following table sets forth a summary of the change in the fair value of the Company's total contingent consideration liability, measured on a recurring basis at each reporting period, for the six months ended June 30, 2021 (in thousands):
Balance at December 31, 2020$108,840
Change in fair value of contingent consideration - short term 1,315 
Change in fair value of contingent consideration - long term60,445 
Balance at June 30, 2021$170,600 
The fair value of the Company’s contingent consideration is determined based on the present value of projected future cash flows associated with sales based milestones and earnouts on net sales and is heavily dependent on discount rates to estimate the fair value at each reporting period. Earnouts are determined using an earnout rate of 2% on all commercial net sales of Vicineum through December 2033. The discount rate applied to the 2% earnout is derived from the Company’s estimated weighted-average cost of capital (“WACC”), which has fluctuated from 8.8% as of December 31, 2020 to 6.8% as of June 30, 2021. Milestone payments constitute debt-like obligations, and therefore a high-yield debt index rate is applied to the milestones in order to determine the estimated fair value. This index rate changed from 8.4% as of December 31, 2020 to 6.6% as of June 30, 2021. Improvements to the competitive landscape, higher probability of regulatory success, expanded patient population, as well as the refinement of estimated launch timelines for Vicineum, if approved, in certain markets and the aforementioned changes in discounts rates, resulted in an overall $61.8 million increase in the estimated fair value of contingent consideration during the six months ended June 30, 2021. The current portion of total contingent consideration reflects amounts expected to be paid out within twelve months of June 30, 2021.

6.INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
Intangible assets on the Company's condensed consolidated balance sheets are the result of the Viventia Acquisition in September 2016. The following table sets forth the composition of intangible assets as of June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
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 condensed consolidated balance sheets is the result of the Viventia Acquisition in September 2016. Goodwill had a carrying value of $13.1 million as of June 30, 2021 and December 31, 2020.

7. LEASES
The Company accounts for operating leases under ASC Topic 842, Leases. An operating lease for its 31,100 square foot facility in Winnipeg, Manitoba which consists of manufacturing, laboratory, warehouse and office space. In September 2020, the Company entered into an extension of this lease for an additional two years, through September 2022, with a right to extend the lease for one subsequent three year term. The minimum monthly rent under this lease is CAD $18,100 per month (approximately $14,600 at exchange rates in effect on June 30, 2021). In addition to rent expense, the Company expects to incur CAD $18,200 per month related to operating expenses (approximately $14,700 at exchange rates in effect on June 30, 2021). Operating lease cost under this lease, including the related operating costs, were $84,000 and $166,000 for the three and six months ended June 30, 2021 and $72,000 and $148,000 for the three and six months ended June 30, 2020, respectively.
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 condensed consolidated balance sheets. The short-term lease liability is recorded in other current
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liabilities and the long term lease liability is recorded in other liabilities on the Company’s condensed consolidated balance sheets. Operating lease cost is recognized on a straight-line basis over the term of the lease.
In addition, the Company has short-term property leases for modular office space for 1) its corporate headquarters in Cambridge, MA and 2) office space in Philadelphia, PA. The short-term leases renew every three months to six months and currently extend through November and December 2021, respectively. The minimum monthly rent for these office spaces is $20,100 per month, which is subject to change if and as the Company adds space to or deducts space from the leases. The Company recorded $69,000 and $138,000 in rent expense for the three and six months ended June 30, 2021 and $65,000 and $131,000 three and six months ended June 30, 2020, respectively. The Company's accounting policy election was disclosed 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, 2020.


8. ACCRUED EXPENSES
The following table sets forth the composition of accrued expenses as of June 30, 2021 and December 31, 2020 (in thousands):
June 30,
2021
December 31, 2020
Research and development$1,958 $1,372 
Payroll-related expenses1,798 1,892 
Professional fees876 684 
Commercial expenses620  
Other49 25 
Total Accrued Expenses$5,301 $3,973 

9. STOCKHOLDERS' EQUITY (DEFICIT)
Equity Financings
ATM Offering
In November 2019, the Company entered into an Open Market Sale Agreement SM (the "Sale Agreement") with Jefferies LLC ("Jefferies"), under which the Company may issue and sell shares of its common stock, par value $0.001 per share, from time to time for an aggregate sales price of up to $35 million through Jefferies (the "ATM Offering"). In October 2020 and February 2021, the Company entered into Amendments No. 1 and No. 2 to the Sale Agreement, respectively. Amendments No. 1 and No. 2 modified the Sale Agreement to reflect that the Company may issue and sell shares of its common stock from time to time for an aggregate sales price of up to an additional $50 million and $34.5 million, respectively. In June 2021, the Company entered into Amendment No. 3 to the Sale Agreement, which modified the Sale Agreement to remove the maximum dollar amount of shares of common stock that may be sold pursuant to the Sale Agreement and filed a prospectus supplement with the SEC in connection with the offer and sale of up to $100 million of common stock pursuant to the Sale Agreement. Sales 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 our common stock. The Company may sell shares of its common stock efficiently from time to time over the coming months, but has no obligation to sell any of its common stock and may at any time suspend offers under the Sale Agreement or terminate the Sale Agreement. Subject to the terms and conditions of the Sale 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 under the Sale Agreement. The Company raised $136.8 million of net proceeds from the sale of 47.1 million shares of common stock at a weighted-average price of $2.99 per share during the six months ended June 30, 2021, compared to $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 during the six months ended June 30, 2020. The Company raised $64.3 million of net proceeds from the sale of 16.5 million shares of common stock at a weighted-average price of $4.02 per share during the three months ended June 30, 2021, compared to $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 $2.0 million and $4.2 million during the three and six months ended June 30, 2021, respectively.
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Preferred Stock
Pursuant to its Amended and Restated Certificate of Incorporation, as amended (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, 2021 and December 31, 2020.
Common Stock
Pursuant to its Certificate of Incorporation, the Company is authorized to issue 400 million and 200 million shares of common stock, of which 188 million and 140 million shares were issued and outstanding as of June 30, 2021 and December 31, 2020, respectively. In addition, the Company had reserved for issuance the following number of shares of common stock for the purposes described below as of June 30, 2021 and December 31, 2020 (in thousands):
June 30,
2021
December 31, 2020
Shares of common stock issued188,461 140,450 
Shares of common stock reserved for issuance for:
Warrants1,394 2,247 
Stock options17,349 10,147 
Shares available for grant under 2014 Stock Incentive Plan12,290 4,863 
Shares available for sale under 2014 Employee Stock Purchase Plan 2,300  
Total shares of common stock issued and reserved for issuance221,794 157,707 

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
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815-40"). The following table sets forth the Company's warrant activity for the six months ended June 30, 2021 (in thousands):
Year-to-Date Warrant Activity
IssuedExercise
Price
ExpirationDecember 31, 2020Issued(Exercised)(Expired)June 30,
2021
Jun-2019$1.47Jun-2020     
Mar-2018$0.55*Mar-20231,705  (378) 1,327 
Nov-2017$0.55*Nov-2022487  (475) 12 
May-2015$11.83Nov-202428    28 
Nov-2014$11.04Nov-202427    27 
2,247  (853) 1,394 

* Exercise price shown (i) reflects modification (ii) subject to further adjustment based on down round provision added by amendment described in "Item 15. Exhibits and Financial Statement Schedules - Note. 10 Stockholders' (Deficit) Equity" in the audited annual consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.


10. (LOSS) EARNINGS 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. The two-class method was applied for the six months ended June 30, 2020. The two-class method was not applied for the three and six months ended June 30, 2021 and was not applied for the three months ended June 30, 2020 as the Company’s participating securities do not have any obligation to absorb net losses.

The following table illustrates the determination of (loss) earnings per share for each period presented:
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Three Months ended June 30,Six Months ended June 30,
2021202020212020
(in thousands, except per share amounts)
Basic (Loss) Earnings Per Share:
Numerator:
Net (loss) income $(25,442)$(26,344)$(80,954)$15,220 
Less: Deemed Dividend $(147) $(147)
Less: Income attributable to participating securities - basic$ $ $ $(322)
Net (loss) income attributable to common stockholders - basic$(25,442)$(26,491)$(80,954)$14,751 
Denominator:
Weighted average common shares outstanding - basic175,393112,569166,264111,189
Net (loss) income per share applicable to common stockholders - basic$(0.15)$(0.24)$(0.49)$0.13 
Dilutive Earnings (Loss) Per Share:
Numerator:
Net (loss) income $(25,442)$(26,344)$(80,954)$15,220 
Less: Deemed Dividend $(147) $(147)
Less: Income attributable to participating securities - diluted$ $ $ $(2,473)
Net (loss) income attributable to common stockholders - diluted$(25,442)$(26,491)$(80,954)$12,600 
Denominator:
Weighted average shares outstanding175,393 112,569 166,264 111,189 
Dilutive impact from:
Stock options and employee stock purchase plan   14 
Weighted average common shares outstanding for diluted175,393 112,569 166,264 111,203 
Net (loss) income per share applicable to common stockholders - diluted$(0.15)$(0.24)$(0.49)$0.11 

The following potentially dilutive securities outstanding as of June 30, 2021 and 2020 have been excluded from the denominator of the diluted (loss) income per share of common stock outstanding calculation as their effect is anti-dilutive
(in thousands):
Three Months ended June 30,Six Months ended
 June 30,
 2021202020212020
Warrants1,394 2,485 1,394 55 
Stock options17,349 9,990 17,349 9,989 
18,743 12,475 18,743 10,044 




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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 condensed consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2021 and 2020 (in thousands):
 Three Months ended
June 30,
Six Months ended
 June 30,
 2021202020212020
Research and development$207 $91 $386 $171 
General and administrative1,052 400 1,831 727 
$1,259 $491 $2,217 $898 

2014 Stock Incentive Plan
The Company's 2014 Stock Incentive Plan, as amended ("2014 Plan"), was adopted by its board of directors in December 2013 and subsequently approved by its stockholders in January 2014. The 2014 Plan became effective immediately prior to the closing of the Company's IPO in February 2014 and provides for the grant of incentive and non-qualified stock options, restricted stock awards and restricted stock units, stock appreciation rights and other stock-based awards, with amounts and terms of grants determined by the Company's board of directors at the time of grant, to the Company's employees, officers, directors, consultants and advisors. Currently there are only stock options outstanding under the 2014 Plan, which generally vest over a four-year period at the rate of 25% of the grant vesting on the first anniversary of the date of grant and 6.25% of the grant vesting at the end of each successive three month period thereafter. Stock options granted under the 2014 Plan are exercisable for a period of ten years from the date of grant. There were approximately 12.4 million stock options outstanding under the 2014 Plan as of June 30, 2021.

At the Annual Meeting of the Company's stockholders in June 2019, the Company's stockholders approved an amendment to the 2014 Plan that (i) increased by 7.9 million the number of shares of common stock reserved for issuance under the 2014 Plan and (ii) eliminated the “evergreen” or automatic replenishment provision of the 2014 Plan, pursuant to which the number of shares of common stock authorized for issuance under the 2014 Plan was automatically increased on an annual basis. At the Annual Meeting of the Company’s stockholders in May 2021, the Company’s stockholders approved an amendment to the 2014 Plan that increased by 12 million the number of shares of common stock reserved for issuance under the 2014 Plan. There were approximately 12.3 million shares of common stock available for issuance under the 2014 Plan as of June 30, 2021.

2009 Stock Incentive Plan
The Company maintains a 2009 Stock Incentive Plan, as amended and restated ("2009 Plan"), which provided for the grant of incentive and non-qualified stock options and restricted stock awards and restricted stock units, with amounts and terms of grants determined by the Company's board of directors at the time of grant, to its employees, officers, directors, consultants and advisors. Upon the closing of its IPO in February 2014, the Company ceased granting awards under the 2009 Plan and all shares (i) available for issuance under the 2009 Plan at such time and (ii) subject to outstanding awards under the 2009 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased without having been fully exercised or resulting in any common stock being issued were carried over to the 2014 Plan. Stock options granted under the 2009 Plan are exercisable for a period of ten years from the date of grant. There were approximately 0.1 million fully vested stock options outstanding under the 2009 Plan as of June 30, 2021.
Out-of-Plan Inducement Grants
From time to time, the Company has granted equity awards to its newly hired employees, including executives, in accordance with the Nasdaq Stock Market LLC ("Nasdaq") employment inducement grant exemption (Nasdaq Listing Rule 5635(c)(4)). Such grants are made outside of the 2014 Plan and act as an inducement material to the employee's acceptance of employment with the Company. There were approximately 4.8 million stock options outstanding which were granted as employment inducement awards outside of the 2014 Plan as of June 30, 2021.

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Stock Options
The following table sets forth a summary of the Company’s total stock option activity, including awards granted under the 2014 Plan and 2009 Plan and inducement grants made outside of stockholder approved plans, for the six months ended June 30, 2021:
Number of Shares under Option
(in thousands)
Weighted-average Exercise Price per OptionWeighted-average Remaining Contractual Life
(in years)
Aggregate Intrinsic Value
(in thousands)
Outstanding at December 31, 202010,147 $1.268.5$3,160 
Granted7,233 $3.34
Exercised(31)$1.27
Canceled or forfeited 
Outstanding at June 30, 202117,349 $2.138.6$43,999 
Exercisable at June 30, 20215,719 $1.577.6$18,214 

The Company recognized share-based compensation expense related to stock options of $1.3 million and $2.2 million for the three and six months ended June 30, 2021, respectively and $0.5 million and $0.9 million for the three and six months ended June 30, 2020, respectively. As of June 30, 2021, there was $17.1 million of total unrecognized compensation cost related to non-vested stock options which the Company expects to recognize over a weighted-average period of 3.3 years. The weighted-average grant-date fair value of stock options granted was $2.17 per option for the six months ended June 30, 2021.and $0.55 per option for the six months ended June 30, 2020. The total intrinsic value of stock options exercised during the six months ended June 30, 2021 was de minimis.
For the six months ended June 30, 2021 and 2020, the grant-date fair value of stock options was determined using the following weighted-average inputs and assumptions in the Black-Scholes option pricing model:
June 30,
2021
June 30,
2020
Fair market value$3.34$0.87
Grant exercise price$3.34$0.87
Expected term (in years)6.046.02
Risk-free interest rate0.91.4
Expected volatility74.771.3
Dividend yield%%

12. EMPLOYEE BENEFIT PLANS
2014 Employee Stock Purchase Plan
The Company's 2014 Employee Stock Purchase Plan ("2014 ESPP") was adopted by its board of directors in December 2013 and subsequently approved by its stockholders in January 2014. The 2014 ESPP became effective immediately prior to the closing of the Company's IPO in February 2014 and established an initial reserve of 0.2 million shares of the Company's common stock for issuance to participating employees. At the Annual Meeting of the Company's stockholders in May 2021, the Company's stockholders approved an amendment to the 2014 ESPP that increased by 2.3 million the number of shares of common stock reserved for issuance under the 2014 ESPP. The purpose of the 2014 ESPP is to enhance employee interest in the success and progress of the Company by encouraging employee ownership of common stock of the Company. The 2014 ESPP provides employees with the opportunity to purchase shares of common stock at a 15% discount to the market price through payroll deductions or lump sum cash investments. The Company estimates the number of shares to be issued at the end of an offering period and recognizes expense over the requisite service period. Shares of the common stock issued and sold pursuant to the 2014 ESPP are shown on the consolidated statements of changes in stockholders' equity (deficit). As of June 30, 2021, there were 2.3 million shares of common stock available for sale under the 2014 ESPP.


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Defined Contribution Plans
United States - 401(k) Plan
The Company maintains a 401(k) defined contribution retirement plan which covers all of its U.S. employees. Employees are eligible to participate immediately upon their date of hire. Under the 401(k) plan, participating employees may defer up to 100% of their pre-tax salary, subject to certain statutory limitations. Employee contributions vest immediately. The plan allows for a discretionary match per participating employee up to a maximum $4,000 per year. The expenses incurred for the periods presented were de minimis.
Canada - Defined Contribution Plan
The Company maintains a defined contribution plan for its Canadian employees. Participants may contribute a percentage of their annual compensation to this plan, subject to statutory limitations. The Company contributes up to the first 4% of eligible compensation for its Canadian-based employees to the retirement plan. The expenses incurred for the periods presented were de minimis.

13. LICENSE AGREEMENTS
In-License Agreements
License Agreement with Zurich
The Company has a License Agreement with the University of Zurich ("Zurich") which grants the Company exclusive license rights, with the right to sublicense, to make, have made, use and sell under certain patents primarily directed to the Company's targeting agent, including an EpCAM chimera and related immunoconjugates and methods of use and manufacture of the same. These patents cover some key aspects of Vicineum. The Company may be obligated to pay $0.50 million in milestone payments for the first product candidate that achieves applicable clinical development milestones. Based on current status, the Company anticipates that these milestones may be triggered by Vicineum's clinical development pathway. As part of the consideration, the Company is also obligated to pay up to a 4% royalty on the net product sales for products covered by or manufactured using a method covered by a valid claim in the Zurich patent rights. Royalties owed to Zurich will be reduced if the total royalty rate owed by the Company to Zurich and any other third party is 10% or greater, provided that the royalty rate to Zurich may not be less than 2% of net sales. The obligation to pay royalties in a particular country expires upon the expiration or termination of the last of the Zurich patent rights that covers the manufacture, use or sale of a product. There is no obligation to pay royalties in a country if there is no valid claim that covers the product or a method of manufacturing the product. The Company recorded an expense of $0.3 million related to achievement of a development milestone in the three months ended December 31, 2020 due to the submission of the Company's BLA application with the FDA in December 2020.

License Agreement with Micromet
The Company has a License Agreement with Micromet AG ("Micromet"), now part of Amgen, Inc., which grants it nonexclusive rights, with certain sublicense rights, for know-how and patents allowing exploitation of certain single chain antibody products. These patents cover some key aspects of Vicineum. Under the terms of the License Agreement with Micromet, as of June 30, 2021, the Company may be obligated to pay up to €2.4 million in milestone payments for the first product candidate that achieves applicable regulatory and sales-based development milestones (approximately $2.9 million at exchange rates in effect on June 30, 2021). Based on current development status, the Company anticipates that certain of these milestones may be triggered by the development pathway of Vicineum. The Company is also required to pay up to a 3.5% royalty on the net sales for products covered by the agreement, which includes Vicineum. The royalty rate owed to Micromet in a particular country will be reduced to 1.5% if there are no valid claims covering the product in that country. The obligation to pay royalties in a particular country expires upon the later of the expiration date of the last valid claim covering the product and the tenth anniversary of the first commercial sale of the product in such country. Finally, the Company is required to pay to Micromet an annual license maintenance fee of €50,000 (approximately $59,420 at exchange rates in effect as of June 30, 2021), which can be credited towards any royalty payment the Company owes to Micromet. The Company recorded an expense of €0.7 million ($0.9 million) related to achievement of development milestones in the three months ended December 31, 2020, due to the submission of the Company's BLA for Vicineum with the FDA in December 2020. The Company recorded an expense of €0.5 million (approximately $0.6 million) related to the submission of the Marketing Authorization Application (“MAA”) to the European Medicines Agency (“EMA”) for Vicineum in the first quarter of 2021.



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License Agreement with XOMA
The Company has a License Agreement with XOMA Ireland Limited ("XOMA") which grants it non-exclusive rights to certain XOMA patent rights and know-how related to certain expression technology, including plasmids, expression strains, plasmid maps and production systems. These patents and related know-how cover some key aspects of Vicineum. Under the terms of the License Agreement with XOMA, the Company is required to pay up to $0.25 million in milestone payments for a product candidate that incorporates know-how under the license and achieves applicable clinical development milestones. Based on current clinical status, the Company anticipates that these milestones may be triggered by Vicineum’s clinical development pathway. The Company is also required to pay a 2.5% royalty on the net sales for products incorporating XOMA’s technology, which includes Vicineum. The Company has the right to reduce the amount of royalties owed to XOMA on a country-by-country basis by the amount of royalties paid to other third parties, provided that the royalty rate to XOMA may not be less than 1.75% of net sales. In addition, the foregoing royalty rates are reduced by 50% with respect to products that are not covered by a valid patent claim in the country of sale. The obligation to pay royalties in a particular country expires upon the later of the expiration date of the last valid claim covering the product and the tenth anniversary of the first commercial sale of the product in such country.
Out-License Agreements
Roche License Agreement
In June 2016, the Company entered into the License Agreement with F. Hoffmann-LA Roche Ltd and Hoffman-La Roche Inc. (collectively, "Roche"), pursuant to which the Company granted Roche an exclusive, worldwide license, including the right to sublicense, to its patent rights and know-how related to the Company’s monoclonal antibody EBI-031 and all other IL-6 anti-IL-6 antagonist monoclonal antibody technology owned by the Company (collectively, the "Roche Licensed Intellectual Property"). Under the License Agreement with Roche, Roche is required to continue developing, at its cost, EBI-031 and any other product made from the Roche Licensed Intellectual Property that contains an IL-6 antagonist anti-IL monoclonal antibody (“Roche Licensed Product”) and pursue ongoing patent prosecution, at its cost.
Financial Terms
The Company received from Roche an upfront license fee of $7.5 million in August 2016 upon the effectiveness of the License Agreement with Roche following approval by the Company's stockholders, and Roche agreed to pay up to an additional $262.5 million upon the achievement of specified regulatory, development and commercialization milestones with respect to up to two unrelated indications. Specifically, an aggregate amount of up to $197.5 million is payable to the Company for the achievement of specified milestones with respect to the first indication, consisting of (i) $72.5 million in development milestones, the next of which is $20.0 million for initiation of the first Phase II study, (ii) $50 million in regulatory milestones and (iii) $75 million in commercialization milestones. In September 2016, Roche paid the Company the first development milestone of $22.5 million as a result of the Investigational New Drug application for EBI-031 becoming effective on or before September 15, 2016. Additional amounts of up to $65 million are payable upon the achievement of specified development and regulatory milestones in a second indication.
In addition, the Company is entitled to receive royalty payments in accordance with a tiered royalty rate scale, with rates ranging from 7.5% to 15% of net sales of potential future products containing EBI-031 and up to 50% of these rates for net sales of potential future products containing other IL-6 compounds, with each of the royalties subject to reduction under certain circumstances and to the buy-out options of Roche.
Buy-Out Options
The License Agreement with Roche provides for two “option periods” during which Roche may elect to make a one-time payment to the Company and, in turn, terminate its diligence, milestone and royalty payment obligations under the License Agreement. Specifically, (i) Roche may exercise a buy-out option following the first dosing (“Initiation”) in the first Phase 2 study for a Roche Licensed Product until the day before Initiation of the first Phase 3 study for a Roche Licensed Product, in which case Roche is required to pay the Company $135 million within 30 days after Roche's exercise of such buy-out option and receipt of an invoice from the Company, or (ii) Roche may exercise a buy-out option following the day after Initiation of the first Phase 3 study for a Roche Licensed Product until the day before the acceptance for review by the FDA or other regulatory authority of a BLA or similar application for marketing approval for a Roche Licensed Product in either the United States or in the E.U., in which case Roche is required to pay the Company, within 30 days after Roche’s exercise of such buy-out option and receipt of an invoice from the Company, $265 million, which amount would be reduced to $220 million if none of the Company’s patent rights containing a composition of matter claim covering any compound or Roche Licensed Product has issued in the E.U.


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Termination
Either the Company or Roche may each terminate the License Agreement with Roche if the other party breaches any of its material obligations under the agreement and does not cure such breach within a specified cure period. Roche may terminate the License Agreement with Roche following effectiveness by providing advance written notice to the Company or by providing written notice if the Company is debarred, disqualified, suspended, excluded, or otherwise declared ineligible from certain federal or state agencies or programs. The Company may terminate the License Agreement with Roche if, prior to the first filing of a BLA for a Roche Licensed Product, there is a period of twelve months where Roche is not conducting sufficient development activities with respect to the products made from the Roche Licensed Intellectual Property.
OUS Business Development Partnership Agreements

Qilu License Agreement
On July 30, 2020, the Company and its a wholly-owned subsidiary, Viventia Bio, Inc., entered into an exclusive license agreement with Qilu Pharmaceutical Co., Ltd. (“Qilu”) pursuant to which the Company granted Qilu an exclusive, sublicensable, royalty-bearing license, under certain intellectual property owned or exclusively licensed by the Company, to develop, manufacture and commercialize Vicineum (the “Licensed Product”) for the treatment of NMIBC and other types of cancer (the “Field”) in China, Hong Kong, Macau and Taiwan ("Greater China”). The Company also granted Qilu a non-exclusive, sublicensable, royalty-bearing sublicense, under certain other intellectual property licensed by the Company to develop, manufacture and commercialize the Licensed Product in the Greater China. The Company retains (i) development, and commercialization rights in the rest of the world excluding Greater China, the Middle East and North Africa region ("MENA”) and Turkey and (ii) manufacturing rights with respect to Vicineum in the rest of the world excluding China.

In consideration for the rights granted by the Company, Qilu agreed to pay to the Company a one-time upfront cash payment of $12 million, and milestone payments totaling up to $23 million upon the achievement of certain technology transfer, development and regulatory milestones. All payments were to be inclusive of value-added tax ("VAT"), which can be withheld by Qilu upon payment, and for which future recovery of such taxes may be available.

Qilu also agreed to pay the Company a 12% royalty based upon annual net sales of Licensed Products in Greater China. The royalties are payable on a Licensed Product-by-Licensed Product and region-by-region basis commencing on the first commercial sale of a Licensed Product in a region and continuing until the latest of (i) twelve years after the first commercial sale of such Licensed Product in such region, (ii) the expiration of the last valid patent claim covering or claiming the composition of matter, method of treatment, or method of manufacture of such Licensed Product in such region, and (iii) the expiration of regulatory or data exclusivity for such Licensed Product in such region (collectively, the “Royalty Terms”). The royalty rate is subject to reduction under certain circumstances, including when there is no valid claim of a licensed patent that covers a Licensed Product in a particular region or no data or regulatory exclusivity of a Licensed Product in a particular region.

Qilu is responsible for all costs related to developing, obtaining regulatory approval of and commercializing the Licensed Products in the Field in Greater China. Qilu is required to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize at least one Licensed Product in the Field in Greater China. A joint development committee was established between the Company and Qilu to coordinate and review the development, manufacturing and commercialization plans with respect to the Licensed Products in Greater China. The Company and Qilu also executed the terms and conditions of a supply agreement and related quality agreement pursuant to which the Company will manufacture or have manufactured and supply Qilu with all quantities of the Licensed Product necessary for Qilu to develop and commercialize the Licensed Product in the Field in Greater China until the Company has completed manufacturing technology transfer to Qilu and approval of a Qilu manufactured product by the National Medical Products Administration in China ("NMPA") for the Licensed Product has been obtained.

The License Agreement with Qilu will expire on a Licensed Product-by-Licensed Product and region-by-region basis on the date of the expiration of all applicable Royalty Terms. Either party may terminate the License Agreement with Qilu for the other party’s material breach following a cure period or upon certain insolvency events. Qilu has the right to receive a refund of all amounts paid to the Company in the event the License Agreement with Qilu is terminated under certain circumstances. The License Agreement with Qilu includes customary representations and warranties, covenants and indemnification obligations for a transaction of this nature.

The License Agreement with Qilu is subject to the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606"), which was adopted effective January 1, 2018. In 2020, the initial transaction price was estimated to be $11.2 million and was based on the up-front fixed consideration of $12 million less amounts withheld for VAT. The Company concluded that its promises under the License Agreement with Qilu represented one bundled performance obligation that had been achieved as of September 30, 2020. As such, $11.2 million of the total $11.2 million transaction price
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was considered earned and the Company recorded $11.2 million of revenue during the three-month period ended September 30, 2020.

The Investigational New Drug application for Vicineum submitted by Qilu to the Center for Drug Evaluation of the NMPA was accepted for review in January 2021 and approved in March 2021, resulting in a $3 million dollar milestone payment from Qilu, the first milestone payment out of the $23 million in potential milestone payments. The Company recorded $2.8 million (net of VAT) as license revenue during the three-month period ended March 31, 2021. The Company recorded the outstanding $2.8 million to accounts receivables as of March 31,2021 and received the payment as of June 30, 2021.

In June 2021, the Qilu License Agreement was recognized by Shandong Province, Bureau of Science and Technology as a "Technology Transfer". An agreement that is designated as a Technology Transfer shall be entitled to a tax incentive of VAT recovery. As such, the Company recorded $0.9 million of revenue during the three months ended June 30, 2021 for additional purchase price resulting from Qilu's obligation to pay Sesen an amount equal to its recovery of VAT. The Company will not be subject to VAT on future potential milestone payments.
Other OUS Business Development Partnership Agreements

On November 30, 2020, the Company entered into a license agreement with a third party pursuant to which the Company granted an exclusive, sublicensable, royalty-bearing license, under certain intellectual property owned or exclusively licensed by the Company, to commercialize Vicineum in the MENA region, ("the MENA License Agreement"). The Company retains development and commercialization rights in the rest of the world excluding Greater China and MENA. In consideration for the rights granted by the Company, the counterparty to the MENA License Agreement agreed to pay to the Company an upfront payment of $3 million, which would be subject to certain tax withholdings. In addition, the counterparty agreed to pay to the Company milestone payments upon the achievement of certain sales-based milestones as well as a royalty based upon annual net sales in the MENA region for the term of the MENA License Agreement.

The MENA License Agreement is also subject to the provisions of ASC 606. The initial transaction price was estimated by management as $1.5 million as of December 31, 2020 and was based on 50% of the upfront payment, or the amount not subject to a refund if certain regulatory approvals in MENA are not obtained. The Company also concluded that its promises under the MENA License Agreement represented two distinct performance obligations, the first of which is a bundled performance obligation related to the delivery of the license, associated know-how and certain documentation. The second performance obligation relates to the delivery of manufactured product. The first performance obligation (delivery of the license, associated know-how and certain documentation) was achieved during the quarter ended March 31, 2021; as such, revenue of $1.5 million has been recognized. Additional variable consideration, determined to be allocated entirely to the bundled license performance obligation, to be paid to the Company based upon future sales levels will be recognized as revenue when the underlying sales of the licensed product occurs. In addition, variable consideration related to any future delivery of product will be recognized in future periods as the product is delivered. As of June 30, 2021, none of these additional amounts were reasonably certain to be achieved due to the nature and timing of the underlying activities.

14. SUBSEQUENT EVENTS

On July 13, 2021, the Company participated in a productive Late-Cycle Meeting with the FDA regarding the BLA for Vicineum for the treatment of BCG-unresponsive NMIBC. In the meeting, the FDA confirmed that there is no Advisory Committee meeting planned at this time, and that no post-marketing requirements, including a confirmatory trial, have been identified at this time. Also in the meeting, the Company and the FDA discussed remaining questions related to manufacturing facilities inspection, product quality information requests and additional information related to CMC, and a timeline to submit additional supporting information was agreed upon. In the US, the Company believes it remains on track for an FDA decision on its BLA for Vicineum by the target PDUFA date of August 18, 2021.

On July 14, 2021, the Company filed a prospectus supplement with the SEC in connection with the offer and sale of up to $100 million of shares of the Company’s common stock, par value $0.001 per share, from time to time pursuant to the previously disclosed Open Market Sale Agreement with Jefferies LLC, as sales agent. The Company may sell this amount efficiently from time to time over the coming months.

On July 21, 2021, the Company announced the appointments of Dr. Peter K Honig, MPH, former Senior Vice President and Head of Global Regulatory Affairs and Group Head of Development China and Japan at Pfizer, and Dr. Michael A.S. Jewett, FRCSC, FACS, a practicing Oncologist and global Key Opinion Leader (KOL) to the Sesen Bio Board of Directors.

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On August 5, 2021, the Company entered into an exclusive license agreement with Eczacibasi Pharmaceuticals Marketing (“EIP”) pursuant to which the Company granted EIP an exclusive license to register and commercialize Vicineum for the treatment of BCG-unresponsive NMIBC in Turkey and Northern Cyprus. Under the terms of the licensing agreement, the Company is entitled to receive an upfront payment of $1.5 million, is eligible to receive additional regulatory and commercial milestone payments and is also entitled to receive a 30% royalty on net sales in Turkey.

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Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations, as well as other sections in this Quarterly Report on Form 10-Q, should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes thereto appearing elsewhere herein and our audited annual consolidated financial statements and related notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2020, included in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on March 15, 2021. In addition to historical financial information, some of the information contained in the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements other than statements of historical facts, including statements regarding our future results of operations and financial position, the impact of the COVID-19 pandemic, business strategy, current and prospective products, product approvals, research and development costs, current and prospective collaborations, timing and likelihood of success, plans and objectives of management for future operations and future results of current and anticipated products, are forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
our plans and ability to commercialize VicineumTM for the treatment of bacillus Calmette-Guérin (“BCG”)
unresponsive non-muscle invasive bladder cancer (“NMIBC”), if approved;
the expectation that the United States Food and Drug Administration (“FDA”), will make a decision regarding our
Biologics License Application (“BLA”) for Vicineum for the treatment of BCG-unresponsive NMIBC on or before the
target Prescription Drug User Fee Act (“PDUFA”) date of August 18, 2021;
the expectation that the FDA will not hold an advisory committee meeting to discuss the BLA for Vicineum;
the expectation that the FDA will not identify any post-marketing requirements, including a confirmatory trial, for Vicineum;
the resolution of remaining questions from the FDA regarding our BLA for Vicineum related to manufacturing facilities inspection, product quality information requests and additional information related to chemistry, manufacturing and controls (“CMC”);
our expectation for the potential commercial launch of Vicineum for the treatment of BCG-unresponsive NMIBC in
the U.S., if approved, by the fourth quarter of 2021;
the potential impact of the COVID-19 pandemic on our business;
our expected future loss and accumulated deficit levels;
the difficulties and expenses associated with obtaining and maintaining regulatory approval of Vicineum for the
treatment of BCG-unresponsive NMIBC in the United States and other foreign jurisdictions, and the labeling under
any approval we may obtain;
our projected financial position and estimated cash burn rate;
our estimates regarding expenses, future revenues, capital requirements and needs for, and ability to obtain, additional
financing;
our ability to continue as a going concern;
our need to raise substantial additional capital to fund our operations;
the potential impairment of our goodwill and indefinite lived-intangible assets;
the success, cost and timing of our pre-clinical studies and clinical trials in the United States and other foreign
jurisdictions;
the potential that results of pre-clinical studies and clinical trials indicate our product candidates are unsafe or
ineffective;
our dependence on third parties, including contract research organizations (“CROs”) in the conduct of our pre-clinical
studies and clinical trials;
the timing and costs associated with our manufacturing process and technology transfer to FUJIFILM Diosynth
Biotechnologies U.S.A., Inc. (“Fujifilm”) for the production of Vicineum drug substance, and our reliance on Fujifilm
to perform under our agreement with Fujifilm;
the timing and costs associated with our manufacturing process and technology transfer to Baxter Oncology GmbH
(“Baxter”) for the production of Vicineum drug product, and our reliance on Baxter to perform under our agreement
with Baxter;
the timing and costs associated with our manufacturing process and technology transfer to Qilu Pharmaceutical Co.,
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Ltd. (“Qilu”) for the production of Vicineum drug substance and drug product, and our reliance on Qilu to perform
under our agreement with Qilu;
our expectation that the FDA will determine that the commercial supply of Vicineum is comparable to the clinical
supply of Vicineum, and that no additional clinical trials are warranted;
market acceptance of our product candidates, including Vicineum for the treatment of BCG-unresponsive NMIBC, the
size and growth of the potential markets for our product candidates, and our ability to serve those markets;
obtaining and maintaining intellectual property protection for our product candidates and our proprietary technology;
the successful development of our commercialization capabilities, including sales and marketing capabilities, for
Vicineum for the treatment of BCG-unresponsive NMIBC in the United States;
our expectation that the European Medicines Agency (“EMA”), will potentially approve our marketing authorization
application for Vicineum (under the proprietary brand name VysyneumTM, which has been conditionally approved by
the EMA) for the treatment of BCG-unresponsive NMIBC in 2022;
our expectations regarding the amount and timing of milestone and royalty payments pursuant to our out-license
agreements and business development partnership agreements, including our license agreement with F. Hoffmann-La
Roche Ltd and Hoffmann-La Roche Inc. (collectively, “Roche”) and our exclusive license agreement with Qilu for the
development, manufacture and commercialization of Vicineum in Greater China;
our plans to seek additional business development partnerships; and
the success of competing therapies and products that are or become available.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and involve known and unknown risks, uncertainties, assumptions and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, among others, the following:
the FDA may not approve our BLA for Vicineum for the treatment of BCG-unresponsive NMIBC within the anticipated timeframe, or at all;
we may not achieve profitable operations or access needed capital;
clinical trials of Vicineum for the treatment of BCG-unresponsive NMIBC may not demonstrate safety and efficacy to
the satisfaction of the FDA or other foreign regulatory authorities or otherwise produce favorable results;
we may not obtain marketing approval of Vicineum for the treatment of BCG-unresponsive NMIBC in the United
States or other foreign jurisdictions;
Vicineum may not gain market acceptance for the treatment of BCG-unresponsive NMIBC in the United States or
other foreign jurisdictions;
market opportunity for Vicineum may be limited to those patients who are ineligible for established therapies or for
whom prior therapies have failed;
we may experience issues or delays with implementation of commercial-scale manufacturing of Vicineum;
we may be unable to establish sales, marketing and distribution capabilities or scale up and validate external
manufacturing capabilities of Vicineum (including completing the manufacturing process and technology transfer to
any third-party manufacturers) for the treatment of BCG-unresponsive NMIBC in the United States;
our competitors may discover, develop or commercialize products before, or more successfully than, we do;
we may be unable to obtain, maintain, defend and enforce patent claims and other intellectual property rights;
we may fail to comply with all regulatory requirements or experience unanticipated problems with our products;
such other factors described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to the “Company,” “Sesen,” “we,” “us,” and “our” include Sesen Bio, Inc. and its subsidiaries.
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Overview
We are a late-stage clinical company advancing targeted fusion protein therapeutics ("TFPTs") for the treatment of patients with cancer. We genetically fuse the targeting antibody fragment and the cytotoxic protein payload into a single molecule that is produced through our proprietary one-step, microbial manufacturing process. We target tumor cell surface antigens with limited expression on normal cells. Binding of the target antigen by the TFPT allows for rapid internalization into the targeted cancer cell. We have designed our targeted proteins to overcome the fundamental efficacy and safety challenges inherent in existing antibody-drug conjugates ("ADCs") where a payload is chemically attached to a targeting antibody.
Our most advanced product candidate, Vicineum, 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 for the treatment of BCG-unresponsive NMIBC.
On December 18, 2020, we submitted our completed BLA for Vicineum for the treatment of BCG-unresponsive NMIBC to the FDA. On February 12, 2021, the FDA notified us that it had accepted our BLA filing. The FDA also granted Priority Review for the BLA and the target PDUFA date for a decision on the BLA is August 18, 2021. In addition to the file acceptance and granting of Priority Review, the FDA also indicated that it is not currently planning to hold an advisory committee meeting to discuss the BLA for Vicineum.
In August 2019, we reported updated preliminary efficacy data from our ongoing single-arm, multi-center, open-label Phase 3 clinical trial of Vicineum as a monotherapy in patients with BCG-unresponsive NMIBC (the "VISTA Trial"). As of the May 29, 2019 data cutoff date, the preliminary complete response rates ("CRRs") in evaluable carcinoma in situ ("CIS") patients following three, six, nine and 12 months of treatment in the clinical trial were consistent with those observed in the previously completed Phase 1 and Phase 2 Vicineum clinical trials for the treatment of NMIBC. The VISTA Trial completed enrollment in April 2018 with a total of 133 patients across three cohorts based on histology and time to disease recurrence after adequate BCG treatment (under 2018 FDA guidance on treatment of NMIBC, adequate BCG is defined as at least two courses of BCG with at least five doses in an initial induction course of treatment, plus at least two doses in a second course of treatment):
Cohort 1 (n=86): Patients with CIS with or without papillary disease that were determined to be refractory or recurred within six months of their last course of adequate BCG;
Cohort 2 (n=7): Patients with CIS with or without papillary disease that recurred after six months, but less than 11 months, after their last course of adequate BCG; and
Cohort 3 (n=40): Patients with high-risk (Ta or T1) papillary disease without CIS that was determined to be refractory or recurred within six months of their last course of adequate BCG.
The primary endpoints of the VISTA Trial were CRR at 3 months in patients with CIS (with or without papillary disease) whose disease is BCG-unresponsive and duration of response ("DoR") for BCG-unresponsive CIS patients who experience a complete response ("CR").
As of the May 29, 2019 data cutoff date, preliminary primary and secondary endpoint data for each of the trial cohorts were as follows:
Cohort 1 (n=86) Evaluable Population (n=82) Complete Response Rate, for CIS
Time PointEvaluable Patients*Complete Response Rate
(95% Confidence Interval)
3-monthsn=8239% (28%-50%)
6-monthsn=8226% (17%-36%)
9-monthsn=8220% (12%-30%)
12-monthsn=8217% (10%-27%)
* Response-evaluable population includes any modified intention-to-treat ("mITT") patient who completed the induction phase.


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Cohort 2 (n=7) Evaluable Population (n=7) Complete Response Rate, for CIS
Time PointEvaluable Patients*Complete Response Rate
(95% Confidence Interval)
3-monthsn=757% (18%-90%)
6-monthsn=757% (18%-90%)
9-monthsn=743% (10%-82%)
12-monthsn=714% (0%-58%)
* Response-evaluable population includes any mITT patient who completed the induction phase.

Pooled Cohorts 1 and 2 (n=93) Evaluable Population (n=89) Complete Response Rate, for CIS
Time PointEvaluable Patients*
Complete Response Rate
(95% Confidence Interval)
3-monthsn=8940% (30%-51%)
6-monthsn=8928% (19%-39%)
9-monthsn=8921% (13%-31%)
12-monthsn=8917% (10%-26%)
* Response-evaluable population includes any mITT patient who completed the induction phase.

Phase 3 Pooled Complete Response Rate vs. Phase 2 Pooled Complete Response Rate