Related Party Transactions

6 Months Ended

Jun. 30, 2019

7. Related Party Transactions

Collaborations with Intrexon/ Precigen

During the three months ended June 30, 2018, the Company issued an aggregate of 3,734 shares of Series 1 preferred stock to Intrexon, the holder of all of the outstanding shares of the Company’s Series 1 preferred stock, as monthly dividend payments. At June 30, 2018, the Company recorded such shares of Series 1 preferred stock at a fair value of $5.4 million which is a component of temporary equity. During the six months ended June 30, 2018, the Company recorded a gain on the change of the derivative liabilities in the amount of $0.2 million.

During the six months ended June 30, 2019 and 2018, the Company expensed $1.5 million and $4.7 million, respectively, for services performed by Precigen. As of June 30, 2019 and 2018, the Company recorded $1.1 million and $1.9 million, respectively, in current liabilities on its balance sheet for amounts due to Precigen.

On October 5, 2018, the Company entered into the License Agreement, the terms of which replaced the terms of the Channel Agreement.

Collaboration with Precigen and MD Anderson

On January 13, 2015, the Company, together with Intrexon, entered into the MD Anderson License with MD Anderson (which Intrexon subsequently assigned to Precigen). Pursuant to the MD Anderson License, the Company, together with Precigen, hold an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR

T cell

therapies,

non-viral

gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs, arising from the laboratory of Laurence Cooper, M.D., Ph.D., who became the Company’s Chief Executive Officer in May 2015 and was formerly a tenured professor of pediatrics at MD Anderson and is now currently a visiting scientist under that institution’s policies. In partial consideration for entering into the MD Anderson License, the Company issued MD Anderson an aggregate of 11,722,163 shares of common stock for which the Company incurred a $67.3 million charge recorded in 2015.

The Company has determined that the rights acquired in the MD Anderson License represent

in-process

research and development with no alternative future use. During the six months ended June 30, 2018, the Company made one quarterly payment totaling $2.7 million, bringing the total aggregate payments to $41.9 million under this arrangement. The net balance of cash resources on hand at MD Anderson available to offset expenses and future costs is $24.2 million, of which $19.4 million is included in other current assets and the remaining $4.8 million is included in

non-current

assets at June 30, 2019. The classification is based on management’s current estimate of plans to utilize the prepaid balance and is subject to revision on a quarterly basis.