ImmunityBio(IBRX) - 2025 Q4 - Annual Report

Financial Instruments and Capital Structure - As of December 31, 2025, the company had a $505.0 million promissory note convertible into common stock at a price of $5.4270 per share, with an interest rate of Term SOFR plus 8.0% per annum [598]. - The company has approximately $300.6 million in contingent value rights (CVRs) outstanding, which may be converted into cash or shares if worldwide net sales of ANKTIVA exceed $1.0 billion [599]. - There are 65,053,571 shares subject to warrants with exercise prices between $3.1010 and $3.2946, expiring between July 24, 2026, and July 28, 2030 [600]. - The company has outstanding stock options and RSU awards totaling 5,783,187 shares, with a portion vested and exercisable [600]. - The company issued contingent value rights (CVRs) for approximately $304.0 million contingent upon achieving specific regulatory and sales milestones for ANKTIVA [623]. - As of December 31, 2025, the company has a $505.0 million variable-rate loan outstanding, maturing on December 31, 2027, with an interest rate of 11.66% [785][786]. - The company has 65,053,571 warrants outstanding at a fair value of $84.4 million as of December 31, 2025 [791]. - A hypothetical 10% increase in the market price of the company's common stock would increase the fair value of warrant liabilities by $10.3 million [791]. Shareholder and Ownership Structure - Dr. Soon-Shiong and affiliates hold approximately 64.2% of the company's common stock as of December 31, 2025, which could impact stock price if sold [610]. - The company is classified as a controlled company under Nasdaq listing standards, with Dr. Soon-Shiong and affiliates controlling approximately 64.2% of the common stock [621]. Financial Performance and Risks - The company expects to need additional capital for commercialization, clinical trials, and R&D, which may lead to dilution of existing shareholders [613]. - The company has incurred significant costs related to operating as a public company, including legal and compliance expenses, which may affect financial performance [614]. - The market price of the company's common stock has been volatile, influenced by various factors including clinical trial results and regulatory decisions [603]. - Future sales of common stock or rights to purchase common stock could result in additional dilution and negatively affect stock price [610]. - The company is subject to ongoing litigation, which may divert management's attention and resources, potentially harming business operations [605]. Compliance and Regulatory Issues - The company is subject to increased compliance costs due to the requirements of Section 404 of the Sarbanes-Oxley Act, which may necessitate hiring additional finance staff [617]. - The company may face sanctions or investigations by regulatory authorities if it fails to demonstrate compliance with Section 404 in a timely manner [617]. - The FDA approved the company's Biologics License Application (BLA) in April 2024, which was after the milestone date set forth in the CVR agreement, resulting in the termination of the regulatory milestone CVR [624]. Cash and Investment Position - The company has $88.3 million in cash and cash equivalents and $154.5 million in its investment portfolio as of December 31, 2025 [782]. - The company’s investment policy focuses on low-risk, investment-grade debt instruments, but it can no longer invest excess funds in corporate or European bonds due to the RIPA [782]. Interest Rate and Currency Risks - The company is exposed to interest rate risk from its revenue interest purchase agreement, which may vary based on forecasted net sales [787]. - A hypothetical 100 basis point change in interest rates would not have had a material impact on the company's consolidated financial statements due to the short-term maturities of cash equivalents [783]. - A hypothetical 100-basis point increase in the Term SOFR rate would increase future interest payments by $10.1 million [786]. - The company has not incurred any material effects from foreign currency changes on contracts, and a 10% adverse change in exchange rates would not have been material [788]. - The company does not currently enter into currency forward exchange or option contracts to hedge foreign currency exposures, but may do so in the future [790]. - The company has not entered into any material foreign currency hedging contracts but may consider them in the future [788]. Inflation and Market Conditions - Inflation has not had a material effect on the company's business, financial condition, or results of operations [792]. - The fair value of warrant liabilities is sensitive to changes in the market price and volatility of the company's common stock [791]. - The company’s charter documents may have anti-takeover effects that could discourage acquisitions, even if beneficial to stockholders [626].