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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 September 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 199,463,645 shares of the registrant's common stock outstanding as of November 1, 2021.



Table of Contents
SESEN BIO, INC.
Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2021
Table of Contents
  Page
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements.
Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020
Condensed Consolidated Statements of Income (Operations) and Comprehensive Income (Loss) for the Three and Nine Months ended September 30, 2021 and 2020
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the Three and Nine Months ended September 30, 2021 and 2020
Condensed Consolidated Statements of Cash Flows for the Nine Months ended
September 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)
September 30,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents$175,236 $52,389 
Accounts receivable1,107  
Prepaid expenses and other current assets24,137 7,478 
Restricted cash 3,000 
Total current assets200,480 62,867 
Non-current assets:
Restricted cash20 20 
Property and equipment, net53 123 
Intangible assets14,700 46,400 
Goodwill13,064 13,064 
Long term prepaid expenses7,192  
Other assets162 349 
Total non-current assets35,191 59,956 
                         Total Assets$235,671 $122,823 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable$3,909 $3,102 
Accrued expenses8,186 3,973 
Deferred revenue 1,500 
Contingent consideration 8,985 
Other current liabilities499 489 
Total current liabilities12,594 18,049 
Non-current liabilities:
Contingent consideration, net of current portion56,600 99,855 
Deferred tax liability3,969 12,528 
Deferred revenue, net of current portion1,500 1,500 
Other non-current liabilities 118 
Total non-current liabilities62,069 114,001 
                         Total liabilities74,663 132,050 
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020
  
Common stock, $0.001 par value per share; 400,000,000 and 200,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; 199,463,645 and 140,449,647 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
199 140 
Additional paid-in capital486,010 306,554 
Accumulated deficit(325,201)(315,921)
                         Total Stockholders’ Equity (Deficit)161,008 (9,227)
Total Liabilities and Stockholders’ Equity$235,671 $122,823 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1

Table of Contents
SESEN BIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (OPERATIONS)
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited; In thousands, except per share data)
 
 Three Months ended
September 30,
Nine Months ended
 September 30,
 2021202020212020
License and related revenue$ $11,236 $6,544 $11,236 
Operating expenses:
Research and development4,967 10,196 18,273 23,625 
General and administrative8,699 4,115 20,797 10,882 
Restructuring charge5,522  5,522  
Intangibles impairment charge31,700  31,700  
Change in fair value of contingent consideration(114,000)18,400 (52,240)(16,820)
Total operating expenses(63,112)32,711 24,052 17,687 
Income (Loss) from Operations63,112 (21,475)(17,508)(6,451)
Other income (expense), net1 (1)(45)195 
Income (Loss) Before Taxes63,113 (21,476)(17,553)(6,256)
Benefit (provision) from income taxes 8,561 (1,132)8,273 (1,132)
Net Income (Loss) and Comprehensive Income (Loss) After Taxes$71,674 $(22,608)$(9,280)$(7,388)
Net income (loss) attributable to common stockholders - basic$71,622 $(22,608)$(9,280)$(7,535)
Net income (loss) attributable to common stockholders - diluted$71,623 $(22,608)$(9,280)$(7,535)
Net income (loss) per common share - basic$0.36 $(0.19)$(0.05)$(0.07)
Weighted-average common shares outstanding - basic196,778 117,886 176,547 113,437 
Net income (loss) per common share - diluted$0.36 $(0.19)$(0.05)$(0.07)
Weighted-average common shares outstanding - diluted201,017 117,886 176,547 113,437 

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 
Net income— — — 71,674 71,674 
Share-based compensation— — 1,168 — 1,168 
Exercises of stock options3,000 — 3 — 3 
Exercises of common stock warrants1,195,219 1 656 — 657 
Issuance of common stock under ATM Offering, net of issuance costs of $1.2 million
9,804,475 10 38,147 — 38,157 
Balance at September 30, 2021199,463,645 $199 $486,010 $(325,201)$161,008 


3

Table of Contents
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Stockholders’
Equity (Deficit)
 SharesAmount
Balance at December 31, 2019106,801,409 $107 $266,717 $(293,524)$(26,700)
Net income— — — 41,564 41,564 
Share-based compensation— — 407 — 407 
Sales of common stock under 2014 ESPP2,785 — 1 — 1 
Issuance of common stock under ATM Offering, net of issuance costs of $0.1 million
3,187,359 3 3,176 — 3,179 
Balance at March 31, 2020109,991,553 $110 $270,301 $(251,960)$18,451 
Net 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)
Net loss— — — (22,608)(22,608)
Share-based compensation— — 453 — 453 
Sales of common stock under 2014 ESPP25,401 — 9 — 9 
Issuance of common stock under ATM Offering, net of issuance costs of $0.3 million
6,991,953 7 8,214 — 8,221 
Balance at September 30, 2020123,645,007 $123 $284,236 $(300,912)$(16,553)

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
















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SESEN BIO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In thousands)
 Nine Months ended
 September 30,
 20212020
Cash Flows from Operating Activities:
Net loss$(9,280)$(7,388)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation74 92 
Share-based compensation 3,386 1,351 
Change in fair value of contingent consideration (52,240)(16,820)
       Intangibles impairment charge31,700  
Changes in operating assets and liabilities:
Accounts receivable (net)(1,107) 
Prepaid expenses and other assets (23,665)(899)
Accounts payable807 (378)
Accrued expenses and other liabilities(4,453)1,714 
Deferred revenue(1,500) 
                      Net cash used in operating activities(56,278)(22,328)
Cash Flows from Investing Activities:
Purchases of equipment(4)(8)
                      Net cash used in investing activities(4)(8)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock under ATM Offering, net of
issuance costs
174,961 16,174 
Proceeds from exercises of stock options42 10 
Proceeds from the exercise of common stock warrants1,126  
                      Net cash provided by financing activities176,129 16,184 
Net increase (decrease) in cash, cash equivalents and restricted cash119,847 (6,152)
Cash, cash equivalents and restricted cash - beginning of period55,409 48,141 
Cash, cash equivalents and restricted cash - end of period$175,256 $41,989 
Supplemental cash flow disclosure:
Right-of-use assets obtained in exchange for lease obligations$ $290 
Cash paid for amounts included in the measurement of lease liabilities$131 $113 
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.
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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 set a target Prescription Drug User Fee Act ("PDUFA") date for a decision on the BLA of August 18, 2021. 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 was no Advisory Committee meeting planned at that time, and that no post-marketing requirements, including a confirmatory trial, had been identified at that 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. On August 13, 2021, the Company received a complete response letter (“CRL”) from the FDA indicating that the FDA had determined that it could not approve the BLA for Vicineum in its present form and provided recommendations specific to additional clinical/statistical data and analyses in addition to CMC issues pertaining to a recent pre-approval inspection and product quality. On October 29, 2021, the Company participated in a Type A meeting with the FDA to discuss questions related to CMC raised in the CRL (the "CMC Type A Meeting"). During the CMC Type A Meeting, the Company and the FDA reviewed issues related to CMC to be further discussed during the review of the BLA for Vicineum upon potential resubmission. The Company believes it has a clear understanding of what additional information regarding CMC is required for resubmission of the BLA. Additionally, although not an issue raised in the CRL, the FDA confirmed that Vicineum manufactured using the proposed commercial process is comparable to Vicineum used in prior clinical trials. The FDA also confirmed that the Company can utilize Vicineum manufactured during process validation for any potential future clinical trials needed to address issues raised in the CRL, and that these potential trials can proceed while addressing CMC issues. The Company is preparing for a separate Type A Meeting to discuss the recommendations specific to additional clinical/statistical data and analyses that the FDA raised in the CRL (the “Clinical Type A Meeting”), which the Company expects to occur later this year. 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
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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 September 30, 2021, none of these individuals are employees or members of the Company's board of directors.
2. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the ASC and Accounting Standards Updates (“ASUs”), promulgated by the Financial Accounting Standards Board (“FASB”).
Interim Financial Statements
The accompanying unaudited interim condensed consolidated financial statements have been prepared from the books and records of the Company in accordance with GAAP for interim financial information and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosures for interim periods. All adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the accompanying condensed consolidated balance sheets and statements of 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 nine months ended September 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
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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. 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 September 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 September 30, 2021 and December 31, 2020 (in thousands):
September 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)
$16,380 $16,380 $16,380 $ $ 
Liabilities:
Contingent consideration - short term$ $ $ $ $ 
Contingent consideration - long term$56,600 $56,600 $ $ $56,600 
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 
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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 nine months ended September 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 clinical and regulatory milestones and commercial sales, the period in which these milestones and sales are expected to be achieved ranging from 2024 to 2033, the level of commercial sales of Vicineum forecasted for the United States, Europe, Japan, China and other potential markets and discount rates ranging from 7.5% to 8.6% as of September 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 nine months ended September 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 nine months ended September 30, 2021 (in thousands):
Balance at December 31, 2020$108,840
Change in fair value of contingent consideration - short term (8,985)
Change in fair value of contingent consideration - long term(43,255)
Balance at September 30, 2021$56,600 
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 8.6% as of September 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 7.5% as of September 30, 2021. The decrease in the fair value of contingent consideration of $52.2 million for the nine months ended September 30, 2021 was driven by the receipt of the CRL from the FDA, in which the FDA determined that it could not approve the BLA for Vicineum in its present form. Due to the inherent uncertainty in the path forward for Vicineum at this time, the Company reassessed the underlying assumptions used to develop the revenue projections upon which the fair value of its contingent consideration is based. The most significant and impactful assumptions in our revenue projection models are timing of product launch and probabilities of clinical and regulatory success (POS); the Company expects delays in the start of commercialization and estimates lower POS as a direct result of the CRL. The Company anticipates needing to conduct an additional clinical trial, which will lead to delays in the start of commercialization globally. The Company has assessed a range of commercialization timeline assumptions and applied a probability to each outcome based on management’s best estimate. In addition, the Company now assumes a lower POS in achieving certain clinical and regulatory milestones in the range of approximately 45% to 55% globally. The Company participated in a Type A Meeting with the FDA on October 29, 2021 to discuss questions related to CMC raised in the CRL, and expects to engage in a Type A meeting with the FDA later this year to discuss questions related to clinical matters raised in the CRL. Both meetings are intended to help the Company determine the appropriate path forward for Vicineum. Any changes in these assumptions and estimates as a result of these meetings, or other information obtained, may have a significant impact on the remeasurement of the contingent consideration liability in the future.
6.INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
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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 September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021December 31, 2020
IPR&D intangible assets:
Vicineum United States rights
$ $31,700 
Vicineum European Union rights
14,700 14,700 
Total Intangibles$14,700 $46,400 

The fair value of the acquired intangible asset for the U.S. and E.U. rights of Vicineum is determined using a risk-adjusted discounted cash flow approach, which includes probability adjustments for projected revenues and operating expenses based on the success rates assigned to each stage of development for each geographical region; as well as discount rates applied to the projected cash flows. In August 2021, the Company received a CRL from the FDA regarding its BLA for Vicineum for the treatment of NMIBC, the Company’s lead product candidate. In the CRL, the FDA determined that it could not approve the BLA for Vicineum in its present form and provided recommendations specific to additional clinical/statistical data and analyses in addition to CMC issues pertaining to a recent pre-approval inspection and product quality. The Company participated in a Type A Meeting with the FDA on October 29, 2021 to discuss questions related to CMC raised in the CRL, and expects to engage in a Type A meeting with the FDA in the fourth quarter of 2021 to discuss the clinical issues raised in the CRL. Both meetings are intended to help the Company determine the appropriate path forward for Vicineum. Given the inherent uncertainty at this time in the development plans for Vicineum as a result of the CRL, an impairment analysis was conducted, which concluded that the carrying value of our intangible assets of Vicineum United States rights was fully impaired as of September 30, 2021. However, while similar delays in timelines and reduced probabilities of success also affected the carrying value of our intangible assets of Vicineum E.U. rights, this asset was not impaired as of September 30, 2021. The $31.7 million of impairment charges for the period ended September 30, 2021 are due to delays in the expected start of commercialization and lower probabilities of success, combined with higher operating expenses expected to be incurred prior to commercialization, resulting in lower expected future cash flows estimated in the US market as of September 30, 2021. However, while similar delays in timelines and reduced probabilities of success also affected the estimated fair value of our intangible assets of Vicineum E.U. rights, this asset was not impaired as of September 30, 2021. At this time, management has assessed that the carrying value of the Vicineum EU rights is not at significant risk of impairment in the future within the current range of commercialization timelines and POS assumptions. This is primarily due to the fact that the EU asset is burdened with significantly less expense than the US asset, as our strategic operating plan is to sublicense Vicineum to business development partners in all regions outside the US, including the EU, with the Company earning a potential combination of upfront, milestone, and royalty payments, and the business development partner bearing the majority of regulatory and commercialization costs.

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 September 30, 2021 and December 31, 2020. Given the inherent uncertainty at this time in the development plans for Vicineum as a result of the CRL, a quantitative impairment analysis was conducted during the quarter, in advance of the Company's typical annual assessment date of October 1. While an impairment was recognized in one of its intangible assets, Vicineum U.S. Rights, the Company concluded that the carrying value of its goodwill of $13.1 million was not impaired as of September 30, 2021, with the fair value of equity of the reporting unit exceeding the estimated carrying value of the reporting unit by approximately 45%. The Company believes it has sufficient future cash flows from additional geographic regions outside the US to support the value of its goodwill. The Company projects future cash flows based on various timeline assumptions and applies a probability to each outcome based on management’s best estimate. In addition, probabilities of success in achieving certain clinical and regulatory success in our current development profile (ranging from 45% to 55% globally) also have a material effect on the estimated fair value of its reporting unit as of the impairment assessment date. The Company will continue to evaluate its timelines for commercialization and probability of success of development of Vicineum for the treatment of BCG-unresponsive NMIBC. The Company participated in a Type A Meeting with the FDA on October 29, 2021 to discuss questions related to CMC raised in the CRL, and expects to engage in a Type A meeting with the FDA in the fourth quarter of 2021 to discuss questions related to clinical matters raised in the CRL. Both meetings are intended to help the Company determine the appropriate path forward for Vicineum, and will assess the outcome of those meetings, and other information obtained, to determine if further impairment testing is required. Further reductions to probabilities of success, additional development and commercial launch delays, or increases in underlying discount rates have the potential to result in future goodwill impairment.
7. LEASES
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The Company accounts for operating leases under ASC Topic 842, Leases. The Company's lease portfolio includes 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 (approximately $14,300 at exchange rates in effect on September 30, 2021). In addition to rent expense, the Company expects to incur CAD $18,200 per month related to operating expenses (approximately $14,300 at exchange rates in effect on September 30, 2021). Operating lease cost under this lease, including the related operating costs, were $79,000 and $245,000 for the three and nine months ended September 30, 2021 and $75,000 and $223,000 for the three and nine months ended September 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 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 June 2022 and November 2021, respectively. The minimum monthly rent for these office spaces is $2,100 and $18,000, respectively, which is subject to change if and as the Company adds space to or deducts space from the leases. The Company recorded $63,000 and $201,000 in rent expense for the three and nine months ended September 30, 2021 and $64,000 and $195,000 for the three and nine months ended September 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 September 30, 2021 and December 31, 2020 (in thousands):
September 30,
2021
December 31, 2020
Research and development$2,148 $1,372 
Payroll-related expenses1,628 1,892 
Professional fees2,089 684 
Restructuring charge related 2,237  
Other84 25 
Total Accrued Expenses$8,186 $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. In June and July 2021, the Company filed prospectus supplements with the SEC in connection with the offer and sale of up to an aggregate of $200 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, 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
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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 $38.2 million of net proceeds from the sale of 9.8 million shares of common stock at a weighted-average price of $4.01 per share during the three months ended September 30, 2021, compared to $8.2 million of net proceeds from the sale of 7.0 million shares of common stock at a weighted-average price of $1.21 per share during the three months ended September 30, 2020. The Company raised $175.0 million of net proceeds from the sale of 56.9 million shares of common stock at a weighted-average price of $3.17 per share during the nine months ended September 30, 2021, compared to $16.2 million of net proceeds from the sale of 16.8 million shares of common stock at a weighted-average price of $0.99 per share during the nine months ended September 30, 2020. Share issuance costs, including sales agent commissions, related to the ATM Offering totaled $1.2 million and $5.4 million during the three and nine months ended September 30, 2021, respectively.

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 September 30, 2021 and December 31, 2020.
Common Stock
Following approval by the Company’s stockholders on May 3, 2021, an amendment became effective to the Certificate of Incorporation that increased the number of authorized shares of common stock from 200 million to 400 million, of which 199 million and 140 million shares were issued and outstanding as of September 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 September 30, 2021 and December 31, 2020 (in thousands):
September 30,
2021
December 31, 2020
Shares of common stock issued199,464 140,450 
Shares of common stock reserved for issuance for:
Warrants199 2,247 
Stock options15,511 10,147 
Shares available for grant under 2014 Stock Incentive Plan11,983 4,863 
Shares available for sale under 2014 Employee Stock Purchase Plan 2,300  
Total shares of common stock issued and reserved for issuance229,457 157,707 

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
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All of the Company’s outstanding warrants are non-tradeable and permanently classified as equity because they meet the derivative scope exception under ASC Topic 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity ("ASC 815-40"). The following table sets forth the Company's warrant activity for the nine months ended September 30, 2021 (in thousands):
Year-to-Date Warrant Activity
IssuedExercise
Price
ExpirationDecember 31, 2020Issued(Exercised)(Expired)September 30,
2021
Mar-2018$0.55*Mar-20231,705  (1,573) 132 
Nov-2017$0.55*Nov-2022487  (475) 12 
May-2015$11.83Nov-202428    28 
Nov-2014$11.04Nov-202427    27 
2,247  (2,048) 199 

* 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. EARNINGS (LOSS) PER SHARE
A net loss cannot be diluted. Therefore, when the Company is in a net loss position, basic and diluted loss per common share are the same. If the Company achieves profitability, the denominator of a diluted earnings per common share calculation includes both the weighted-average number of shares outstanding and the number of common stock equivalents, if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include warrants, stock options and non-vested restricted stock awards and units using the treasury stock method, along with the effect, if any, from outstanding convertible securities. The majority of the Company’s outstanding warrants to purchase common stock have participation rights to any dividends that may be declared in the future and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to the participating securities since the holders have no contractual obligation to share in the losses of the Company.
Additionally, an entity that presents earnings per share shall recognize the value of the effect of an anti-dilution provision in an equity-classified freestanding financial instrument in the period the anti-dilution provision is triggered. That effect shall be treated as a deemed dividend and as a reduction of income available to common stockholders in basic earnings per share. The deemed dividend is added back to income available to common stockholders when applying the treasury stock method for diluted earnings per share.
For periods with net income, diluted net earnings per share is calculated by either (i) adjusting the weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period as determined using the treasury stock method or (ii) the two-class method considering common stock equivalents, whichever is more dilutive. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders.
Accordingly, the Company applied the two-class method to calculate basic and diluted net earnings per share of common stock for the three months ended September 30, 2021. The two-class method was not applied for the nine months ended September 30, 2021 and for the three and nine months ended September 30, 2020 as the Company’s participating securities do not have any obligation to absorb net losses.

For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation if their effect would be anti-dilutive.
The following table illustrates the determination of earnings (loss) per share for each period presented:

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Three Months ended September 30,Nine Months ended September 30,
2021202020212020
(in thousands, except per share amounts)
Basic Earnings (Loss) Per Share:
Numerator:
Net income (loss)$71,674 $(22,608)$(9,280)$(7,388)
Less: Deemed Dividend   (147)
Less: Income attributable to participating securities - basic(52)   
Net income (loss) attributable to common stockholders - basic$71,622 $(22,608)$(9,280)$(7,535)
Denominator:
Weighted average common shares outstanding - basic196,778117,886176,547113,437
Net income (loss) per share applicable to common stockholders - basic$0.36 $(0.19)$(0.05)$(0.07)
Dilutive Earnings (Loss) Per Share:
Numerator:
Net income (loss)$71,674 $(22,608)$(9,280)$(7,388)
Less: Deemed Dividend   (147)
Less: Income attributable to participating securities - diluted(51)   
Net income (loss) attributable to common stockholders - diluted$71,623 $(22,608)$(9,280)$(7,535)
Denominator:
Weighted average shares outstanding196,778 117,886 176,547 113,437 
Dilutive impact from:
Stock options and employee stock purchase plan4,239    
Weighted average common shares outstanding
- diluted
201,017 117,886 176,547 113,437 
Net income (loss) per share applicable to common stockholders - diluted$0.36 $(0.19)$(0.05)$(0.07)

The following potentially dilutive securities outstanding as of September 30, 2021 and 2020 have been excluded from the denominator of the diluted income (loss) per share of common stock outstanding calculation as their effect is anti-dilutive.
(in thousands):

Three Months ended September 30,Nine Months ended
 September 30,
 2021202020212020
Warrants55 2,485 199 2,485 
Stock options11,273 10,227 15,511 10,227 
11,328 12,712 15,710 12,712 



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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 income (operations) and comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020 (in thousands):
 Three Months ended
September 30,
Nine Months ended
 September 30,
 2021202020212020
Research and development$152 $95 $536 $266 
General and administrative1,016 358 2,849 1,085 
$1,168 $453 $3,385 $1,351 
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.
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 12.0 million shares of common stock available for issuance under the 2014 Plan as of September 30, 2021.
Stock options outstanding under the 2014 Plan 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 12.7 million stock options outstanding under the 2014 Plan as of September 30, 2021.
On September 9, 2021, the Board of Directors and the Compensation Committee of the Company approved a retention program for all current employees, except for the Chief Executive Officer, pursuant to which the Company will provide certain incentives designed to retain such employees (the “Retention Program”). Pursuant to the Retention Program and effective as of October 1, 2021, the Company’s non-executive employees received a combination of a cash bonus award and a one-time restricted stock unit (“RSU”) award which vests in full on September 30, 2022, subject to continued employment through September 30, 2022. Each RSU represents a contingent right to receive one share of the Company’s common stock.
Also pursuant to the Retention Program and effective as of October 1, 2021, the Company’s executive officers, except for the Chief Executive Officer, were granted a one-time performance-based restricted stock unit (“PSU”) award equal to the value of approximately fifty percent of current base salary. Each PSU represents a contingent right to receive one share of the Company’s common stock upon the satisfaction of pre-determined performance criteria. Subject to continued employment, such awards vest on September 30, 2023 upon the determination by the Compensation Committee of the level of achievement of certain key milestones consisting of a clinical trial milestone, an employee retention milestone and cash management milestones.
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
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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 September 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 2.6 million stock options outstanding which were granted as employment inducement awards outside of the 2014 Plan as of September 30, 2021.
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 nine months ended September 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 
Granted8,026 $3.40
Exercised(34)$1.23
Canceled or forfeited(2,628)$3.75
Outstanding at September 30, 202115,511 $1.958.3$63 
Exercisable at September 30, 20216,706 $1.617.6$49 
The Company recognized share-based compensation expense related to stock options of $1.2 million and $3.4 million for the three and nine months ended September 30, 2021, respectively and $0.5 million and $1.4 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, there was $11.5 million of total unrecognized compensation cost related to non-vested stock options which the Company expects to recognize over a weighted-average period of 2.83 years. The weighted-average grant-date fair value of stock options granted was $2.20 per option for the nine months ended September 30, 2021 and $0.56 per option for the nine months ended September 30, 2020. The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 was de minimis.
For the nine months ended September 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:
September 30,
2021
September 30,
2020
Fair market value$3.40$0.87
Grant exercise price$3.40$0.87
Expected term (in years)6.036.1
Risk-free interest rate0.91.3
Expected volatility74.671.5
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
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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 September 30, 2021, there were 2.3 million shares of common stock available for sale under the 2014 ESPP.
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. INCOME TAXES
The following table sets forth the components of the Company's loss before income taxes by country (in thousands):
 Nine Months Ended September 30,
 20212020
Country:
United States
$(38,864)$(18,838)
Canada
21,311 12,582 
Total Loss before Income Taxes
$(17,553)$(6,256)
The Company's tax benefit (provision) is comprised of the following components (in thousands):
Nine Months Ended September 30,
 20212020
Current Tax Benefit (Provision):
Federal$8,559 $ 
State  
Foreign$(286)(1,132)
Total Current Benefit (Provision)$8,273 $(1,132)

The Company's deferred tax liability is comprised of the following:
September 30, 2021December 31, 2020
Deferred tax liabilities:
IPR&D$(3,969)$(12,528)
Property and equipment  
Total Deferred Tax Liabilities$(3,969)$(12,528)

For the nine months ended September 30, 2021, the Company recorded a benefit from income taxes of $8.3 million. In the third quarter of 2021, the Company determined that the fair value of the Vicineum United States rights was zero, which resulted in an impairment charge of $31.7 million. In connection with this impairment charge, in the third quarter of 2021, the Company wrote-down the associated deferred tax liability by $8.6 million as a benefit. Please refer to Note 6, "Intangible Assets and
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Goodwill," for further information regarding the impairment charge. For the nine months ended September 30, 2020, the Company recorded a provision for income taxes of $1.1 million. This provision consisted of income taxes paid to foreign jurisdictions pursuant to the License Agreement with Qilu.
14. 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. Upon the Company's receipt of the CRL regarding the BLA for Vicineum for the treatment of BCG-unresponsive NMIBC, the Company became obligated to pay $0.5 million in a milestone payment to Zurich. 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 and $0.5 million related to achievement of a development milestone, (the submission of the Company’s BLA with the FDA in December 2020), in the three months ended December 31, 2020 and a regulatory milestone, (the Company’s receipt of the CRL from the FDA in August 2021), in the three months ended September 30, 2021, respectively.
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 September 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 $2.8 million at exchange rates in effect on September 30, 2021). 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 $57,965 at exchange rates in effect as of September 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 a development milestone 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 Vysyneum™ in the first quarter of 2021. Vysyneum is the proprietary brand name that was conditionally approved by the EMA for oportuzumab monatox in the European Union.
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 Vicineu