Business

6 Months Ended

Jun. 30, 2019

1. Business

Overview

ZIOPHARM Oncology, Inc., which is referred to herein as “ZIOPHARM,” or the “Company,” is a biopharmaceutical company seeking to develop, acquire, and commercialize, on its own or with partners, a diverse portfolio of immuno-oncology therapies.

The Company’s operations to date have consisted primarily of conducting research and development and raising capital to fund those efforts. The Company’s fiscal year ends on December 31.

The Company has operated at a loss since its inception in 2003 and has no recurring revenues from operations. The Company anticipates that losses will continue for the foreseeable future. As of June 30, 2019, the Company had approximately $

43.6

million of cash and cash equivalents and the Company’s accumulated deficit was approximately $594.4 million. Given its current development plans,

along with the $45.0 million in gross proceeds from the July 2019 private placement,

the Company anticipates cash resources will be sufficient to fund operations into the first half of 2021. The Company’s ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given. Cash requirements may vary materially from those now planned because of changes in the Company’s focus and direction of its research and development programs, competitive and technical advances, patent developments, regulatory changes or other developments. If adequate additional funds are not available when required, or if the Company is unsuccessful in entering into partnership agreements for further development of its product candidates, management may need to curtail its development efforts and planned operations to conserve cash.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form

10-Q

pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. Certain information and note disclosures required by generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations.

It is management’s opinion that the accompanying unaudited interim financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair statement of the results for the interim periods. The unaudited interim financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2018, included in the Company’s Annual Report on Form

10-K

for the fiscal year ended December 31, 2018 filed with the SEC on March 5, 2019, or the Form

10-K.

The

year-end

balance sheet data was derived from the audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States.

The results disclosed in the statements of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.

The Company’s most significant estimates and judgments used in the preparation of its financial statements are:

•

Clinical trial expenses;

•

Collaboration agreements and revenue recognition;

•

Fair value measurements of stock-based compensation and Series 1 preferred stock; and

•

Income taxes

Subsequent Events

The Company evaluated all events and transactions that occurred after the balance sheet date through the date of this filing. Except as disclosed below, the Company did not have any material subsequent events that impacted its financial statements or disclosures.

On December 18, 2018, the Company and TriArm Therapeutics, Ltd., or TriArm, announced their plans to establish a joint venture, Eden BioCell, Ltd., to lead clinical development and commercialization of

Sleeping Beauty

-generated CAR-T therapies in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea. TriArm is a cell therapy company with operations in Germany, China and the United States.

For the territory of China, Taiwan and Korea, the Company has licensed the rights to Eden BioCell, Ltd., or Eden BioCell, for third-generation

Sleeping Beauty

-generated CAR-T therapies targeting the CD19 antigen. Eden BioCell is jointly-owned by the Company and TriArm. TriArm has committed up to $35.0 million to this joint venture. Under the terms of the agreement, Eden BioCell has rights in the region to CAR-T cells very rapidly manufactured in two days or less using the

Sleeping Beauty

platform to express a CD19-specific CAR and membrane-bound interleukin 15, or mbIL15, along with a kill switch. The Company and TriArm share decision-making authority and TriArm will manage all clinical development to execute trials in China for Eden BioCell. On January 3, 2019 Eden BioCell was incorporated in Hong Kong and the transaction closed on July 5, 2019.

On July 29, 2019, the Company announced that it entered into an agreement with existing investors for the exercise of previously issued warrants to purchase common stock in a private placement. Pursuant to the terms of the agreement, investors have agreed to exercise warrants for an aggregate of 15,015,152 shares of common stock, at an exercise price of $3.01 per share. The warrants being exercised were originally issued by the Company in a private placement that closed in November 2018. The Company will issue new warrants to purchase up to 15,015,152 additional shares of common stock. The warrants will become exercisable six months following the date of issuance, will expire on the fifth anniversary of the initial exercise date, and have an exercise price of $7.00. Gross proceeds from the offering, before deducting placement agent and other offering expenses is approximately $45.0 million.