UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

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: 001-37507

_____________________________________

IMMUNITYBIO, INC.

(Exact name of registrant as specified in its charter)

_____________________________________

Delaware	43-1979754
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3530 John Hopkins Court San Diego, California	92121
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (844) 696-5235

_____________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	IBRX	The Nasdaq Global Select 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 þ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 filer	¨	Accelerated filer	¨
Non-accelerated filer	þ	Smaller reporting company	þ
		Emerging growth company	¨

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 þ

The number of shares of the Registrant’s common stock outstanding as of May 3, 2024 was 691,567,961 (excluding 163,800 shares held by a majority owned subsidiary of ours which are treated as treasury shares for accounting purposes).

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets –    As of March 31, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations –    For the three months ended March 31, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Loss –    For the three months ended March 31, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders’ Deficit –    For the three months ended March 31, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows –    For the three months ended March 31, 2024 and 2023	6
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 4.	Controls and Procedures	63
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	135
Item 3.	Defaults Upon Senior Securities	135
Item 4.	Mine Safety Disclosures	135
Item 5.	Other Information	135
Item 6.	Exhibits	136
Signatures		137

i

Defined Terms

Unless expressly indicated or the context required otherwise, the terms “ImmunityBio,” “the company,” “we,” “us,” and “our” in this Quarterly Report refer to ImmunityBio, Inc., a Delaware corporation, and, where appropriate, its subsidiaries. We have also used several other terms in this Quarterly Report, the unaudited condensed consolidated financial statements and accompanying notes included herein, most of which are defined below:

Term	Definition
2015 Plan	ImmunityBio, Inc. 2015 Equity Incentive Plan
3M IPC	3M Innovative Properties Company
AAHI	Access to Advanced Health Institute
ACA	Affordable Care Act
Altor	Altor BioScience, LLC
America Invents Act	Leahy-Smith America Invents Act
Amyris	Amyris, Inc.
ANKTIVA®	Proprietary name for N-803 (formerly ALT-803), our novel IL-15 agonist complex    (nogapendekin alfa inbakicept-pmln) currently approved for use in the United States    with BCG for the treatment of adult patients with BCG-unresponsive non-muscle invasive    bladder cancer with carcinoma in situ with or without papillary tumors, and currently in    clinical development for other indications.
Annual Report	Annual Report on Form 10-K for the year ended December 31, 2023
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Athenex	Athenex, Inc.
ATM	“at-the-market” sales agreement
ATRA	American Taxpayer Relief Act of 2012
BCG	Bacillus Calmette-Guérin
Beike	Shenzhen Beike Biotechnology Co. Ltd.
BLA	Biologics License Application
BPCIA	Biologics Price Competition and Innovation Act of 2009
Brink	Brink Biologics, Inc.
Cambridge	Cambridge Equities, LP
CCPA	California Consumer Privacy Act of 2018
CEO	chief executive officer
CFO	chief financial officer
cGMP	current Good Manufacturing Practice
China	when used in connection with the RIPA, People’s Republic of China, Hong Kong and    any territories controlled by the People’s Republic of China
CI	confidence interval
CIS	carcinoma in situ
Clinic	Immuno-Oncology Clinic, Inc.
Closing Date	when used in connection with the RIPA, December 29, 2023
CMC	Chemistry, Manufacturing and Controls
CMO	contract manufacturing organization
CMS	Centers for Medicare & Medicaid Services
Code	Internal Revenue Code of 1986, as amended
Company Common Stock	common stock, par value $0.0001 per share, of the company

ii

Term	Definition
CPRA	California Privacy Rights Act
CR	complete response
CRL	complete response letter
CRO	contract research organization
CVR	contingent value right
DGCL	Delaware General Corporation Law
DOR	duration of response
Duley Road	Duley Road, LLC
Dunkirk Facility	a leasehold interest in a cGMP ISO Class 5 pharmaceutical manufacturing space in    western New York
EMA	European Medicines Agency
EU	European Union
Exchange Act	Securities Exchange Act of 1934, as amended
Exyte	Exyte U.S., Inc.
FASB	Financial Accounting Standards Board
FCA	False Claims Act
FCPA	U.S. Foreign Corrupt Practices Act
FDA	U.S. Food and Drug Administration
FSMC	Fort Schuyler Management Corporation, a not-for-profit corporation affiliated with the    State of New York
FTO	freedom-to-operate
FVO	fair value option
GBM	glioblastoma multiforme
GCP	Good Clinical Practice
GDPR	General Data Protection Regulation
GLP	Good Laboratory Practice
GMP	Good Manufacturing Practice
GTP	Good Tissue Practice
hAd5	human adenovirus serotype 5
Hatch-Waxman Act	Drug Price Competition and Patent Term Restoration Act of 1984
HCW	HCW Biologics, Inc.
HIPAA	Health Insurance Portability and Accountability Act of 1996
HITECH	Health Information Technology for Economic and Clinical Health Act
HIV	human immunodeficiency virus
iBCG	recombinant BCG
IgDraSol	IgDraSol, Inc., a subsidiary of the company
IND	investigational new drug
Infinity	Infinity SA LLC, as purchaser agent for affiliates of Oberland
IPR&D	In-process research and development
IRA	Inflation Reduction Act of 2022
IRS	Internal Revenue Service
LMIC	low- and middle-income countries
mAbs	monoclonal antibodies

iii

Term	Definition
Nant Capital	Nant Capital, LLC
NantBio	NantBio, Inc.
NantCell	NantCell, Inc., a subsidiary of the company
NANTibody	Immunotherapy NANTibody, LLC, a subsidiary of the company
NantKwest	NantKwest, Inc.
NantMobile	NantMobile, LLC
NantPharma	NantPharma, LLC
NantWorks	NantWorks, LLC, a related-party
NCI	National Cancer Institute
NCSC	NantCancerStemCell, LLC
NDA	New Drug Application
NEO	named executive officer
NK	natural killer
NMIBC	non-muscle invasive bladder cancer
NOL	net operating loss
NSCLC	non-small cell lung cancer
Oberland	Oberland Capital Management LLC and its affiliates (including Purchasers as    defined in the RIPA)
OFAC	U.S. Treasury Department’s Office of Foreign Assets Control
PDUFA date	user fee goal date
PHI	Protected Health Information
PMA	premarket approval
QMSR	Quality Management System Regulation
QSR	Quality System Regulation
Quarterly Report	Quarterly Report on Form 10-Q for the three months ended March 31, 2024
QUILT	QUantitative Integrated Lifelong Trial
REMS	Risk Evaluation and Mitigation Strategy
RIPA	Revenue Interest Purchase Agreement
RSU	restricted stock unit
Sarbanes-Oxley	Sarbanes-Oxley Act of 2002
saRNA	self-amplifying RNA
SARS-CoV-2	novel strain of the coronavirus (COVID-19)
SEC	U.S. Securities and Exchange Commission
Section 404	Section 404 of the Sarbanes-Oxley Act of 2002
Securities Act	Securities Act of 1933, as amended
SII	Serum Institute of India
Sorrento	Sorrento Therapeutics, Inc.
SPOA	Stock Purchase and Option Agreement
sBCG	standard BCG
TAA	tumor-associated antigen
TCJA	Tax Cuts and Jobs Act of 2017
Term SOFR	Term Secured Overnight Financing Rate
Test Date	when used in connection with the RIPA, December 31, 2029

iv

Term	Definition
TLR	toll-like receptor
U.S. GAAP	accounting principles generally accepted in the United States of America
UK GDPR	UK Data Protection Act of 2018
USPTO	U.S. Patent and Trademark Office
VBC Holdings	VBC Holdings, LLC, a subsidiary of the company
VIE	variable interest entity
VivaBioCell	VivaBioCell, S.p.A., a wholly-owned subsidiary of VBC Holdings

v

PART I—FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS.

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	133,035	$	265,453
Marketable securities	37,460		1,009
Due from related parties	2,137		2,019
Prepaid expenses and other current assets (including amounts with related parties)	23,090		25,603
Total current assets	195,722		294,084
Marketable securities, noncurrent	—		891
Property, plant and equipment, net	143,517		146,082
Intangible assets, net	16,572		17,093
Convertible note receivable	6,942		6,879
Operating lease right-of-use assets, net (including amounts with related parties)	35,197		36,543
Other assets (including amounts with related parties)	2,729		2,880
Total assets	$	400,679	$	504,452
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	13,869	$	9,195
Accrued expenses and other liabilities	32,712		42,708
Due to related parties	1,096		1,136
Operating lease liabilities (including amounts with related parties)	6,082		5,244
Total current liabilities	53,759		58,283
Related-party nonconvertible note, net of discount (Note 10)	106,637		104,586
Related-party convertible notes and accrued interest, net of discount (Note 10)	580,449		576,951
Revenue interest liability (Note 9)	163,416		155,415
Operating lease liabilities, less current portion (including amounts with related parties)	38,199		39,942
Derivative liabilities (Note 9) and (Note 10)	37,930		35,333
Warrant liabilities	109,987		118,770
Other liabilities	1,285		1,109
Total liabilities	1,091,662		1,090,389
Commitments and contingencies (Note 7)
Stockholders’ deficit:
Common stock, $0.0001 par value; 1,350,000,000 shares authorized    as of March 31, 2024 and December 31, 2023; 677,003,411 and    670,867,344 shares issued and outstanding as of March 31, 2024 and    December 31, 2023, respectively; excluding treasury stock, 163,800 shares    outstanding as of March 31, 2024 and December 31, 2023	68		67
Additional paid-in capital	2,403,720		2,374,620
Accumulated deficit	(3,095,793)		(2,961,684)
Accumulated other comprehensive (loss) income	(7)		10
Total ImmunityBio stockholders’ deficit	(692,012)		(586,987)
Noncontrolling interests	1,029		1,050
Total stockholders’ deficit	(690,983)		(585,937)
Total liabilities and stockholders’ deficit	$	400,679	$	504,452

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

1

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Revenue	$	40	$	360
Operating expenses:
Research and development (including amounts with related parties)	53,351		79,264
Selling, general and administrative (including amounts with related parties)	41,885		32,676
Total operating expenses	95,236		111,940
Loss from operations	(95,196)		(111,580)
Other expense, net:
Interest and investment income, net	3,099		673
Interest expense (including amounts with related parties)	(29,483)		(29,816)
Loss on equity method investment	—		(2,337)
Change in fair value of warrant liabilities	(1,802)		27,554
Change in fair value of derivative liabilities	(2,724)		—
Interest expense related to revenue interest liability	(8,004)		—
Other expense, net (including amounts with related parties)	(20)		(1,077)
Total other expense, net	(38,934)		(5,003)
Loss before income taxes and noncontrolling interests	(134,130)		(116,583)
Income tax expense	—		—
Net loss	(134,130)		(116,583)
Net loss attributable to noncontrolling interests, net of tax	(21)		(240)
Net loss attributable to ImmunityBio common stockholders	$	(134,109)	$	(116,343)
Net loss per ImmunityBio common share – basic and diluted	$	(0.20)	$	(0.27)
Weighted-average number of common shares used in computing    net loss per share – basic and diluted	672,831,258		428,381,485

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

2

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Net loss	$	(134,130)	$	(116,583)
Other comprehensive loss, net of income taxes:
Net unrealized (losses) gains on available-for-sale securities	(17)		4
Reclassification of net realized losses on    available-for-sale securities included in net loss	49		6
Foreign currency translation adjustments	(49)		(226)
Total other comprehensive loss	(17)		(216)
Comprehensive loss	(134,147)		(116,799)
Less: Comprehensive loss attributable to noncontrolling interests	21		240
Comprehensive loss attributable to ImmunityBio common stockholders	$	(134,126)	$	(116,559)

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

3

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands, except share amounts)

(Unaudited)

	Three Months Ended March 31, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total ImmunityBio Stockholders’ Deficit		Noncontrolling Interests		Total Stockholders’ Deficit
	Shares	Amount
Balance as of December 31, 2023	670,867,344	$	67	$	2,374,620	$	(2,961,684)	$	10	$	(586,987)	$	1,050	$	(585,937)
Stock-based compensation expense	—	—		8,266		—		—		8,266		—		8,266
Vesting of RSUs	2,969,156	—		—		—		—		—		—		—
Net share settlement for RSUs vesting	(1,117,737)	—		(3,867)		—		—		(3,867)		—		(3,867)
Exercise of warrants	4,284,648	1		24,701		—		—		24,702		—		24,702
Other comprehensive loss, net of tax	—	—		—		—		(17)		(17)		—		(17)
Net loss	—	—		—		(134,109)		—		(134,109)		(21)		(134,130)
Balance as of March 31, 2024	677,003,411	$	68	$	2,403,720	$	(3,095,793)	$	(7)	$	(692,012)	$	1,029	$	(690,983)

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

4

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Deficit (Continued)

(in thousands, except share amounts)

(Unaudited)

	Three Months Ended March 31, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total ImmunityBio Stockholders’ Deficit		Noncontrolling Interests		Total Stockholders’ Deficit
	Shares	Amount
Balance as of December 31, 2022	421,569,115	$	42	$	1,930,936	$	(2,378,488)	$	183	$	(447,327)	$	(2,493)	$	(449,820)
Issuance of shares in a registered direct offering, net of    discount and offering costs of $2,046 and value ascribed    to associated warrants	14,072,615	1		24,255		—		—		24,256		—		24,256
Stock-based compensation expense	—	—		10,878		—		—		10,878		—		10,878
Exercise of stock options	81,037	—		126		—		—		126		—		126
Vesting of RSUs	313,975	—		—		—		—		—		—		—
Net share settlement for RSUs vesting	(113,638)	—		(357)		—		—		(357)		—		(357)
Other comprehensive income, net of tax	—	—		—		—		(216)		(216)		—		(216)
Net loss	—	—		—		(116,343)		—		(116,343)		(240)		(116,583)
Balance as of March 31, 2023	435,923,104	$	43	$	1,965,838	$	(2,494,831)	$	(33)	$	(528,983)	$	(2,733)	$	(531,716)

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

5

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Operating activities:
Net loss	$	(134,130)	$	(116,583)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	8,266		10,878
Non-cash interest expense related to the revenue interest liability	8,004		—
Amortization of related-party notes discounts	5,549		11,536
Depreciation and amortization	4,555		4,681
Change in fair value of derivative liabilities	2,724		—
Change in fair value of warrant liabilities	1,802		(27,554)
Non-cash lease expense related to operating lease right-of-use assets	1,346		1,597
Unrealized (gains) on equity securities	(725)		(135)
Accretion of discounts on marketable debt securities	(491)		—
Non-cash interest items, net (including amounts with related parties)	(63)		2,505
Transaction costs allocated to warrant liabilities	—		984
Other	74		111
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	1,634		9,689
Other assets	132		295
Accounts payable	4,314		668
Accrued expenses and other liabilities	(8,917)		18,590
Related parties	(158)		(61)
Operating lease liabilities	(898)		(1,511)
Net cash used in operating activities	(106,982)		(84,310)
Investing activities:
Purchases of property, plant and equipment	(1,261)		(8,428)
Purchases of marketable debt securities, available-for-sale	(48,363)		(158)
Proceeds from sale of marketable debt securities	981		102
Maturities of marketable debt securities, available-for-sale	13,021		—
Net cash used in investing activities	(35,622)		(8,484)

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

6

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Financing activities:
Proceeds from exercises of warrants	$	14,116	$	—
Net share settlement for RSUs vesting	(3,867)		(357)
Principal payments of finance leases	(21)		(19)
Payment of revenue interest liability	(3)		—
Proceeds from equity offerings, net of discounts and issuance costs	—		47,288
Proceeds from issuance of related-party promissory notes, net of issuance costs paid	—		29,850
Proceeds from exercises of stock options	—		126
Net cash provided by financing activities	10,225		76,888
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(39)		(254)
Net change in cash, cash equivalents, and restricted cash	(132,418)		(16,160)
Cash, cash equivalents, and restricted cash, beginning of period	265,787		104,965
Cash, cash equivalents, and restricted cash, end of period	$	133,369	$	88,805

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

7

ImmunityBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Reconciliation of cash, cash equivalents, and restricted cash, end of period:
Cash and cash equivalents	$	133,035	$	88,481
Restricted cash	334		324
Cash, cash equivalents, and restricted cash, end of period	$	133,369	$	88,805
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	23,912	$	15,515
Income taxes	$	8	$	—
Supplemental disclosure of non-cash activities:
Property and equipment purchases included in accounts payable,    accrued expenses and due to related parties	$	1,379	$	19,033
Unrealized gains on marketable debt securities, net	$	32	$	10
Initial measurement of warrants issued in connection with    registered direct offerings accounted for as liabilities	$	—	$	23,698
Unpaid offering costs included in accounts payable and accrued expenses	$	—	$	318

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

8

ImmunityBio, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

1.    Description of Business

In these notes to unaudited condensed consolidated financial statements, the terms “ImmunityBio,” “the company,” “we,” “us,” and “our” refer to ImmunityBio, Inc. and its subsidiaries.

Our Business

ImmunityBio is a vertically-integrated biotechnology company developing next-generation therapies and vaccines that bolster the natural immune system to defeat cancers and infectious diseases. The company’s range of immunotherapy and cell therapy platforms, alone and together, act to drive and sustain an immune response with the goal of creating durable and safe protection against disease. We are applying our science and platforms to treating cancers, including the development of potential cancer vaccines, as well as developing immunotherapies and cell therapies that we believe sharply reduce or eliminate the need for standard high-dose chemotherapy. These platforms and their associated product candidates are designed to be more effective, accessible, and easily administered than current standards of care in oncology and infectious diseases.

Our platforms and their associated product and product candidates are designed to attack cancer and infectious pathogens by activating both the innate immune system, including—NK cells, dendritic cells, and macrophages, as well as—the adaptive immune system comprising—B and T cells,—in an orchestrated manner. The goal of this potentially best-in-class approach is to generate immunogenic cell death thereby eliminating rogue cells from the body whether they are cancerous or virally-infected. Our ultimate goal is to overcome the limitations of current treatments, such as checkpoint inhibitors, and/or reduce the need for standard high-dose chemotherapy in cancer by employing this coordinated approach to establish “immunological memory” that confers long-term benefit for the patient.

Our proprietary platforms for the development of biologic product candidates include: (i) antibody-cytokine fusion proteins, (ii) DNA, RNA, and recombinant protein vaccines, and (iii) cell therapies. These platforms have generated 9 novel therapeutic agents for which clinical trials are either underway or planned in solid and liquid tumors. Specifically, our clinical focus includes bladder, lung, and colorectal cancers and GBM, which are among the most frequent and lethal cancer types, and where there are high failure rates for existing standards of care or no available effective treatment.

Our lead biologic product ANKTIVA is a novel first-in-class IL-15 agonist antibody-cytokine fusion protein. On April 22, 2024, the FDA approved our product, ANKTIVA with BCG for the treatment of adult patients with BCG-unresponsive NMIBC with CIS, with or without papillary tumors (the “approved product”).

2.    Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. Certain items in the prior year’s consolidated financial statements have been reclassified to conform to the current presentation. These reclassifications had no effect on the reported results of operations. The unaudited condensed consolidated financial statements do not include all information and notes required by U.S. GAAP for annual reports and therefore should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report filed with the SEC on March 19, 2024. These interim financials are not necessarily indicative of results expected for the full fiscal year.

9

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the company, its wholly-owned subsidiaries, and a VIE for which the company is the primary beneficiary. Any material intercompany transactions and balances have been eliminated upon consolidation. For consolidated entities where we have less than 100% of ownership, we record net loss attributable to noncontrolling interests, net of tax, on the condensed consolidated statement of operations equal to the percentage of the ownership interest retained in such entities by the respective noncontrolling parties.

We assess whether we are the primary beneficiary of a VIE at the inception of the arrangement and at each reporting date. This assessment is based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

If the entity is within the scope of the variable interest model and meets the definition of a VIE, we consider whether we must consolidate the VIE or provide additional disclosures regarding our involvement with the VIE. If we determine that we are the primary beneficiary of the VIE, we will consolidate the VIE. This analysis is performed at the initial investment in the entity or upon any reconsideration event.

For entities we hold as an equity investment that are not consolidated under the VIE model, we consider whether our investment constitutes a controlling financial interest in the entity and therefore should be considered for consolidation under the voting interest model.

Liquidity

As of March 31, 2024, the company had an accumulated deficit of $3.1 billion. We also had negative cash flows from operations of $107.0 million during the three months ended March 31, 2024. The company will likely need additional capital to commercialize our approved product, and to further fund the development of, and to seek regulatory approvals for, our other product candidates.

The condensed consolidated financial statements have been prepared assuming the company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of the uncertainty of our ability to continue as a going concern. As a result of continuing anticipated operating cash outflows as we commercialize our approved product and accelerate our development efforts, we believe that substantial doubt exists regarding our ability to continue as a going concern without additional funding or financial support. However, we believe our existing cash, cash equivalents, and investments in marketable securities; sales of our approved product; capital to be raised through equity offerings, including but not limited to, the offering, issuance and sale by us of our common stock under the ATM, of which we had $208.8 million available for future issuance as of March 31, 2024 (which was increased to $300.8 million after giving effect to the April 2024 shelf registration statement and associated prospectus); the $100.0 million Second Payment upon satisfaction of certain conditions specified in the RIPA, including the receipt of approval by the FDA of our BLA for ANKTIVA on or before June 30, 2024 (which we received on April 22, 2024 and we have requested the Second Payment); and our potential ability to borrow from affiliated entities will be sufficient to fund our operations through at least the next 12 months following the issuance date of the consolidated financial statements based primarily upon our Executive Chairman and Global Chief Scientific and Medical Officer’s intent and ability to support our operations with additional funds, including loans from affiliated entities, as required, which we believe alleviates such doubt.

In addition to funds from the future sales of our approved product, which we expect to take time to establish, we may also seek to sell additional equity, through one or more follow-on offerings, or in separate financings, or obtain incremental subordinated debt in compliance with our existing revenue interest liability. However, we may not be able to secure such external financing in a timely manner or on favorable terms. Without significant sales of our approved product or additional funds, we may choose to delay or reduce our operating or investment expenditures. Further, because of the risk and uncertainties associated with the commercialization of our approved product and our other product candidates, we may need additional funds to meet our needs sooner than planned.

10

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to the valuation of equity-based awards, deferred income taxes and related valuation allowances, preclinical and clinical trial accruals, impairment assessments, CVR measurement and assessments, the measurement of right-of-use assets and lease liabilities, useful lives of long-lived assets, loss contingencies, fair value calculation of warrants, stock options, derivative liabilities, and convertible promissory notes, fair value measurements, revenue interest liability, and the assessment of our ability to fund our operations for at least the next 12 months from the date of issuance of these condensed consolidated financial statements. We base our estimates on historical experience and on various other market-specific and relevant assumptions that we believe to be reasonable under the circumstances. Estimates are assessed each period and updated to reflect current information. Actual results could differ from those estimates.

Significant Accounting Policies

There have been no material changes to our significant accounting policies from those described in Note 2, Summary of Significant Accounting Policies, of the “Notes to Consolidated Financial Statements” that appears in Part II, Item 8. “Financial Statements and Supplementary Data” of our Annual Report filed with the SEC on March 19, 2024.

Warrants

The company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480), and ASC Topic 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the company’s own stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For warrants that meet all criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital, on the condensed consolidated statement of stockholders’ deficit at the time of issuance. For warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and on each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recorded as a non-cash gain or loss in other (expense) income, net, on the condensed consolidated statement of operations. The fair value of the warrants was estimated using the Black-Scholes option pricing model.

Fair Value Option Election

The company accounted for a convertible note issued on March 31, 2023 under the FVO election of ASC Topic 825, Financial Instruments (ASC 825) until it was amended and restated on December 29, 2023. Prior to its extinguishment on December 29, 2023, the convertible note was a debt host financial instrument containing embedded features wherein the entire financial instrument was initially measured at its issuance-date fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.

Changes in the estimated fair value of this convertible note were recorded in other (expense) income, net, on the condensed consolidated statement of operations, except that changes in estimated fair value caused by changes in the instrument-specific credit risk are included in other comprehensive income (loss). In accordance with FASB ASC Topic 470-50, Debt – Modifications and Extinguishments (ASC 470-50), when the convertible note was extinguished on December 29, 2023, the cumulative amount previously recorded in other comprehensive (loss) income resulting from changes in the instrument-specific credit risk were reclassified and reported in current earnings on the condensed consolidated statement of operations. See Note 10, Related-Party Debt, for more information.

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Debt Modification and Extinguishment

The company evaluates amendments to its debt instruments in accordance with ASC 470-50. This evaluation includes comparing (1) if applicable, the net present value of future cash flows of the amended debt to that of the original debt and (2) the change in fair value of an embedded conversion feature to that of the carrying amount of the debt immediately prior to amendment to determine, in each case, if a change greater than 10% occurred. In instances where the net present value of future cash flows or the fair value of an embedded conversion feature, if any, changed more than 10%, the company applies extinguishment accounting. In instances where the net present value of future cash flows and the fair value of an embedded conversion feature, if any, changed less than 10%, the company accounts for the amendment to the debt as a debt modification. Gains and losses on debt amendments that are considered extinguishments are recognized in current earnings or in additional paid-in capital if the transactions are with entities under common control. Debt amendments that are considered debt modifications are accounted for prospectively through yield adjustments, based on the revised terms. The increase in fair value of the embedded conversion feature from the debt modification was accounted for as an increase in debt discount with a corresponding increase in additional paid-in capital. Legal fees and other costs incurred with third parties that are directly related to debt modifications are expensed as incurred. Amounts paid by the company to the lenders, are reflected as additional debt discount and amortized as an adjustment of interest expense over remaining term of modified debt using the effective interest method.

Revenue Interest Liability

On December 29, 2023, we entered into the RIPA with Infinity and Oberland. Pursuant to the RIPA, Oberland acquired certain Revenue Interests (as defined in the RIPA) from us for a gross purchase price of $200.0 million paid on closing. In addition, Oberland may purchase additional Revenue Interests from us in exchange for a $100.0 million Second Payment upon satisfaction of certain conditions specified in the RIPA, including the receipt of approval by the FDA of our BLA for ANKTIVA on or before June 30, 2024. Under the RIPA, Oberland has the right to receive quarterly payments from us based on, among other things, a certain percentage of our worldwide net sales, excluding those in China, during such quarter. The RIPA is considered a sale of future revenues and is accounted for as a liability net of a debt discount comprised of deferred issuance costs, the fair value of a freestanding option agreement related to the SPOA, and the fair value of embedded derivatives requiring bifurcation on the consolidated balance sheet. The company imputes interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. Interest expense is recognized over the estimated term on the consolidated statement of operations. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of actual and forecasted net sales. The company evaluates the interest rate quarterly based on actual and forecasted net sales utilizing the prospective method. A significant increase or decrease in actual or forecasted net sales will materially impact the revenue interest liability, interest expense, and the time period for repayment.

Derivative Liabilities

Embedded derivatives that are required to be bifurcated from the underlying debt instrument that do not meet the derivative scope exception and equity classification criteria are accounted for and valued as separate financial instruments. The terms of an embedded derivative related to a contingent exercisable prepayment feature of a convertible note have been evaluated and deemed to require bifurcation. This embedded derivative will be initially measured at fair value and will be remeasured to fair value at each reporting date until the derivative is settled.

In addition, the RIPA contains certain features that meet the definition of being an embedded derivative requiring bifurcation as a separate compound financial instrument apart from the RIPA. The derivative liability is initially measured at fair value upon issuance and is subject to remeasurement at each reporting period with changes in fair value recognized in other expense, net, on the consolidated statement of operations.

12

Basic and Diluted Net Loss per Share of Common Stock

Basic net loss per share is calculated by dividing the net loss attributable to ImmunityBio common stockholders by the weighted-average number of common shares outstanding for the period. Diluted loss per share is computed by dividing net loss attributable to ImmunityBio common stockholders by the weighted-average number of common shares, including the number of additional shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

For all periods presented, potentially dilutive securities are excluded from the computation of fully diluted loss per share as their effect is anti-dilutive. The following table details those securities that have been excluded from the computation of potentially dilutive securities:

	As of March 31,
	2024	2023
	(Unaudited)
Related-party convertible notes	162,471,837	46,726,407
Outstanding third-party warrants	33,448,172	23,163,524
Outstanding stock options	15,439,134	9,159,665
Outstanding RSUs	6,627,983	6,188,292
Outstanding related-party warrants	1,638,000	1,638,000
Total	219,625,126	86,875,888

The dilutive securities shown in the table above as of March 31, 2024 exclude the option to purchase up to $10.0 million of the company’s common stock pursuant to the SPOA entered in connection with the RIPA, as the exercise price cannot be determined until the date of exercise. This option was exercised in part in April 2024. See Note 13, Stockholders’ Deficit, and Note 16, Subsequent Events, for more information.

Recent Accounting Pronouncements

Application of New or Revised Accounting Standards – Adopted

In June 2022, the FASB, issued ASU, 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and introduces certain disclosure requirements for equity securities subject to such restrictions. We adopted this ASU on January 1, 2024 on a prospective basis with no impact on our condensed consolidated financial statements.

In March 2023, the FASB issued ASU 2023-01, Leases-Common Control Arrangements (Topic 842). This ASU provides updated guidance for accounting for leasehold improvements associated with common control leases. We adopted this ASU on January 1, 2024 on a prospective basis with no impact on our condensed consolidated financial statements.

Application of New or Revised Accounting Standards – Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve its income tax disclosure requirements. Under the ASU, entities must annually (1) disclose specific categories in the rate reconciliation, (2) provide additional information for reconciling items that meet a quantitative threshold, and (3) disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from continuing operations; and income tax expense (or benefit). The ASU is effective for fiscal years beginning after December 15, 2024, and interim periods beginning after December 15, 2025, with early adoption permitted. We are currently evaluating the impact of this standard on our disclosures.

13

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. We are currently evaluating the impact of this standard on our disclosures.

In August 2023, the FASB issued ASU 2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which requires a joint venture to initially measure all contributions received upon its formation at fair value. This ASU is applicable to joint venture entities with a formation date on or after January 1, 2025 on a prospective basis. We will apply this guidance prospectively in future reporting periods after the guidance is effective to any future arrangements meeting the definition of a joint venture.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), and the SEC during the three months ended March 31, 2024 did not, or are not expected to, have a material effect on our condensed consolidated financial statements.

3.    Financial Statement Details

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

	March 31, 2024		December 31, 2023
	(Unaudited)
Prepaid research and development costs	$	8,505	$	7,847
Prepaid services	5,558		5,869
Prepaid software license fees	2,108		2,100
Prepaid insurance	1,846		2,242
Prepaid equipment maintenance	1,163		1,183
ERP system implementation cost	739		1,087
Insurance premium financing asset	596		1,475
Insurance claims receivable	—		1,149
Other	2,575		2,651
Prepaid expenses and other current assets	$	23,090	$	25,603

Property, Plant and Equipment, Net

Property, plant and equipment, net, consist of the following (in thousands):

	March 31, 2024		December 31, 2023
	(Unaudited)
Leasehold improvements	$	72,549	$	72,552
Equipment	70,642		69,915
Construction in progress	85,169		84,436
Furniture & fixtures	1,879		1,889
Software	1,664		1,666
Gross property, plant and equipment	231,903		230,458
Less: Accumulated depreciation and amortization	88,386		84,376
Property, plant and equipment, net	$	143,517	$	146,082

14

During the three months ended March 31, 2024 and 2023, depreciation expense related to property, plant and equipment totaled $4.0 million and $4.2 million, respectively.

Intangible Assets, Net

The gross carrying amounts and accumulated amortization of intangible assets are as follows at the dates indicated (in thousands):

	March 31, 2024
	(Unaudited)
	Weighted- Average Life (in years)	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount
Definite-lived: Favorable leasehold rights	7.9	$	20,398	$	(4,334)	$	—	$	16,064
Indefinite-lived: IPR&D		508		—		—		508
Total intangible assets		$	20,906	$	(4,334)	$	—	$	16,572

	December 31, 2023
	Weighted- Average Life (in years)	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount
Definite-lived: Favorable leasehold rights	8.1	$	20,398	$	(3,825)	$	—	$	16,573
Indefinite-lived: IPR&D		1,406		—		(886)		520
Total intangible assets		$	21,804	$	(3,825)	$	(886)	$	17,093

During the three months ended March 31, 2024 and 2023, we recorded amortization expense of our definite-lived intangible assets totaling $0.5 million, respectively, in research and development expense, on the condensed consolidated statements of operations.

Future amortization expense associated with our definite-lived intangible assets is as follows (in thousands):

Years ending December 31:	Definite-lived Intangible Assets (Unaudited)
2024 (excluding the three months ended March 31, 2024)	$	1,530
2025	2,040
2026	2,040
2027	2,040
2028	2,040
2029	2,040
Thereafter	4,334
Total	$	16,064

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Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following (in thousands):

	March 31, 2024		December 31, 2023
	(Unaudited)
Accrued professional and service fees	$	11,838	$	9,829
Accrued research and development costs	5,761		7,700
Accrued compensation	5,469		6,241
Accrued preclinical and clinical trial costs	4,194		4,218
Accrued bonus	3,266		11,350
Accrued construction costs	1,032		1,179
Financing obligation – current portion	596		1,475
Other	556		716
Accrued expenses and other liabilities	$	32,712	$	42,708

Interest and Investment Income, Net

Interest and investment income, net consists of the following (in thousands):

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Investment accretion income, net	$	2,263	$	260
Unrealized gains from equity securities	725		135
Interest income	160		284
Net realized losses on investments	(49)		(6)
Interest and investment income, net	$	3,099	$	673

Interest income includes interest from marketable securities, convertible notes receivable, other assets, and on bank deposits.

Interest expense

Interest expense consists of the following (in thousands):

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Interest expense on related-party notes payable	$	23,909	$	18,260
Amortization of related-party notes discounts	5,549		11,536
Other interest expense	25		20
Interest expense	$	29,483	$	29,816

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4.    Financial Instruments

Investments in Marketable Debt Securities

As of March 31, 2024, the weighted-average remaining contractual life, amortized cost, gross unrealized gains, gross unrealized losses and fair value of marketable debt securities, which were considered as available-for-sale, by type of security were as follows (in thousands):

	March 31, 2024
	(Unaudited)
	Weighted- Average Remaining Contractual Life (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Current:
U.S. Treasury securities	0.1	$	20,836	$	—	$	(4)	$	20,832
U.S. Government Agency securities	0.0	14,996		—		(9)		14,987
Total		$	35,832	$	—	$	(13)	$	35,819

As of December 31, 2023, the weighted-average remaining contractual life, amortized cost, gross unrealized gains, gross unrealized losses and fair value of marketable debt securities, which were considered as available-for-sale, by type of security were as follows (in thousands):

	December 31, 2023
	Weighted- Average Remaining Contractual Life (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair  Value
Current:
Foreign bonds	0.8	$	54	$	—	$	—	$	54
Mutual funds		40		—		(1)		39
Current portion		94		—		(1)		93
Noncurrent:
Foreign bonds	3.3	939		—		(48)		891
Total		$	1,033	$	—	$	(49)	$	984

As of March 31, 2024, 15 of the securities were in an unrealized loss position. Accumulated unrealized losses on marketable debt securities that have been in a continuous loss position for less than 12 months and more than 12 months were as follows (in thousands):

	March 31, 2024
	(Unaudited)
	Less than 12 months				More than 12 months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities	$	20,832	$	(4)	$	—	$	—
U.S. Government Agency securities	14,987		(9)		—		—
Total	$	35,819	$	(13)	$	—	$	—

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	December 31, 2023
	Less than 12 months				More than 12 months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Mutual funds	$	39	$	(1)	$	—	$	—
Foreign bonds	891		(48)		—		—
Total	$	930	$	(49)	$	—	$	—

Investments in Marketable Equity Securities

As of March 31, 2024 and December 31, 2023, we held investments in marketable equity securities with readily determinable fair values of $1.6 million and $0.9 million as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, unrealized gains recorded on these securities totaled $0.7 million and $0.1 million, respectively, in interest and investment income, net, on the condensed consolidated statements of operations.

5.    Fair Value Measurements

Fair value is defined as an exit price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.

The three tiers are defined as follows:

•Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, the valuation of these products does not entail a significant degree of judgment. Our Level 1 assets consist of bank deposits, money market funds, and marketable equity securities.

•Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities. Our Level 2 assets consist of corporate debt securities including commercial paper, government-sponsored securities and corporate bonds, as well as foreign municipal securities.

•Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

We utilize a third-party pricing service to assist in obtaining fair value pricing for our investments in marketable debt securities. Inputs are documented in accordance with the fair value disclosure hierarchy. The fair values of financial instruments other than marketable securities and cash and cash equivalents are determined through a combination of management estimates and third-party valuations.

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Recurring Valuations

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurements at March 31, 2024
	(Unaudited)
	Total			Level 1		Level 2		Level 3
Assets at Fair Value:
Current:
Cash and cash equivalents	$	133,035		$	133,035	$	—	$	—
Equity securities	1,641			1,641		—		—
U.S. Treasury securities	20,832			20,832		—		—
U.S. Government Agency securities	14,987			—		14,987		—
Total assets measured at fair value	$	170,495		$	155,508	$	14,987	$	—
Liabilities at Fair Value:
Current:
Contingent consideration	$	(20)		$	—	$	—	$	(20)
Noncurrent:
Stock option purchase liability	(946)		(1)	—		—		(946)
Derivative liabilities	(37,930)		(2)	—		—		(37,930)
Warrant liabilities	(109,987)		(3)	—		—		(109,987)
Total liabilities measured at fair value	$	(148,883)		$	—	$	—	$	(148,883)

	Fair Value Measurements at December 31, 2023
	Total			Level 1		Level 2		Level 3
Assets at Fair Value:
Current:
Cash and cash equivalents	$	265,453		$	265,453	$	—	$	—
Equity securities	916			916		—		—
Foreign bonds	54			—		54		—
Mutual funds	39			39		—		—
Noncurrent:
Foreign bonds	891			—		891		—
Total assets measured at fair value	$	267,353		$	266,408	$	945	$	—
Liabilities at Fair Value:
Current:
Contingent consideration	$	(20)		$	—	$	—	$	(20)
Noncurrent:
Stock option purchase liability	(819)		(1)	—		—		(819)
Derivative liabilities	(35,333)		(2)	—		—		(35,333)
Warrant liabilities	(118,770)		(3)	—		—		(118,770)
Total liabilities measured at fair value	$	(154,942)		$	—	$	—	$	(154,942)

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_______________

(1) Stock Option Purchase Liability

In connection with the RIPA, we entered into an SPOA pursuant to which Oberland has an option to purchase up to an additional $10.0 million of our common stock, at a price to be determined by reference to the 30-day trailing volume weighted-average price of our common stock calculated from the date of exercise. This stock purchase option is classified as other liabilities on the condensed consolidated balance sheet at its fair value. The fair value is estimated using probability-weighted scenarios over the likelihood of this option being exercised. As of March 31, 2024, the stock purchase option was outstanding. See Note 9, Revenue Interest Purchase Agreement, for more information.

The change in the carrying amount of the stock option purchase liability is as follows (in thousands):

	(Unaudited)
Beginning fair value, at December 31, 2023	$	819
Change in fair value	127
Ending fair value, at March 31, 2024	$	946

(2) Derivative Liabilities

The debt incurred pursuant to the RIPA entered on December 29, 2023 contains embedded derivatives requiring bifurcation as a single compound derivative instrument. The company estimated the fair value of the derivative liability using a “with-and-without” method. The with-and-without methodology involves valuing the whole instrument on an as-is basis and then valuing the instrument without the individual embedded derivative. The difference between the entire instrument with the embedded derivative compared to the instrument without the embedded derivative is the fair value of the derivative liability, which is estimated at $37.1 million and $34.5 million as of March 31, 2024 and December 31, 2023, respectively. The estimated probability and timing of underlying events triggering the exercisability of the Put Option contained in the RIPA, forecasted cash flows and the discount rate are significant unobservable inputs used to determine the estimated fair value of the entire instrument with the embedded derivative. As of March 31, 2024 and December 31, 2023, the discount rate used for valuation of the derivative liability was 13.4% and 12.1%, respectively. See Note 9, Revenue Interest Purchase Agreement, for more information.

The change in the carrying amount of the derivative liabilities is as follows (in thousands):

	(Unaudited)
Beginning fair value, at December 31, 2023	$	34,500
Change in fair value	2,630
Ending fair value, at March 31, 2024