BELLICUM PHARMACEUTICALS, INC (Form: 10-Q, Received: 11/07/2017 16:23:45)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended September 30, 2017



o	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: 001-36783

BELLICUM PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)



Delaware	2836	20-1450200
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

2130 W. Holcombe Blvd., Ste. 800

Houston, TX 77030

(832) 384-1100

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

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. (Check one):



Large accelerated filer	o		Accelerated filer	x
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
Emerging growth company	x

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. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 3, 2017, there were 33,226,519 outstanding shares of Bellicum’s common stock, par value, $0.01 per share.

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28

PART II. OTHER INFORMATION		29

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6.	Exhibits	29

SIGNATURES		30

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Bellicum Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and par value amounts)



	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	54,468		$	33,140
Investment securities, available for sale - short-term	58,608			70,632
Accounts receivable, interest and other receivables	468			334
Prepaid expenses and other current assets	2,114			1,504
Total current assets	115,658			105,610
Investment securities, available for sale - long-term	2,556			—
Property and equipment, net	26,252			16,504
Restricted cash	2,947			9,640
Other assets	358			283
TOTAL ASSETS	$	147,771		$	132,037
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,162		$	3,623
Accrued expenses and other current liabilities	8,550			9,363
Current maturities of long-term debt	6,913			1,787
Current portion of capital lease obligations	29			21
Current portion of deferred rent	359			319
Total current liabilities	19,013			15,113
Long-term liabilities:
Long-term debt	23,839			18,436
Capital lease obligation	140			141
Deferred rent	1,662			1,773
TOTAL LIABILITIES	44,654			35,463
Commitments and contingencies:
Stockholders’ equity:
Preferred stock: $0.01 par value; 10,000,000 shares authorized: no shares issued and outstanding	—			—
Common stock, $0.01 par value; 200,000,000 shares authorized at September 30, 2017 and December 31, 2016, 33,929,516 shares issued and 33,252,053 shares outstanding at September 30, 2017; 27,833,028 shares issued and 27,155,565 shares outstanding at December 31, 2016	339			278
Treasury stock: 677,463 shares held at September 30, 2017 and December 31, 2016	(5,056		)	(5,056		)
Additional paid-in capital	408,412			332,068
Accumulated other comprehensive income	16			17
Accumulated deficit	(300,594		)	(230,733		)
Total stockholders’ equity	103,117			96,574
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	147,771		$	132,037

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

Bellicum Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share amounts)

(Unaudited)



	Three months ended Sept 30,						Nine months ended Sept 30,
	2017			2016			2017			2016
REVENUES
Grants	$	126		$	114		$	254		$	307
Total revenues	126			114			254			307
OPERATING EXPENSES
Research and development	18,101			13,290			51,355			36,179
License fees	151			—			849			280
General and administrative	4,579			4,252			15,992			12,715
Total operating expenses	22,831			17,542			68,196			49,174
Loss from operations	(22,705		)	(17,428		)	(67,942		)	(48,867		)
OTHER INCOME (EXPENSE):
Interest income	284			224			788			687
Interest expense	(1,010		)	(515		)	(2,707		)	(1,123		)
Total other expense	(726		)	(291		)	(1,919		)	(436		)
NET LOSS	$	(23,431	)	$	(17,719	)	$	(69,861	)	$	(49,303	)

Net loss per common share attributable to common shareholders, basic and diluted	$	(0.71	)	$	(0.66	)	$	(2.24	)	$	(1.83	)
Weighted-average shares outstanding, basic and diluted	33,178,611			26,966,630			31,204,521			26,919,984

Net loss	$	(23,431	)	$	(17,719	)	$	(69,861	)	$	(49,303	)
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities	22			(18		)	(1		)	380
Comprehensive loss	$	(23,409	)	$	(17,737	)	$	(69,862	)	$	(48,923	)

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

Bellicum Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	Nine months ended September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(69,861	)	$	(49,303	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	2,524			1,619
Share-based compensation	10,217			9,243
Amortization of premium on investment securities, net	214			449
Amortization of lease liability	(71		)	(100		)
Amortization of deferred financing costs	604			275
Loss on disposition of fixed assets	—			20
Changes in operating assets and liabilities:
Receivables	(134		)	135
Prepaid expenses and other assets	(685		)	482
Accounts payable	(923		)	(488		)
Accrued liabilities and other	(2,046		)	1,716
NET CASH USED IN OPERATING ACTIVITIES	(60,161		)	(35,952		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities	(36,283		)	(26,116		)
Proceeds from sale of investment securities	45,536			25,767
Purchases of property and equipment	(10,554		)	(5,787		)
CASH USED IN INVESTING ACTIVITIES	(1,301		)	(6,136		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock offering, net of offering costs	64,568			—
Proceeds from issuance of common stock - ESPP	167			188
Proceeds from exercise of stock options	1,453			562
Proceeds from notes payable	10,000			20,000
Payment of debt issuance costs	(75		)	(199		)
Payment on capital lease obligation	(16		)	(10		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	76,097			20,541
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	14,635			(21,547		)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	42,780			70,241
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	57,415		$	48,694

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment in accounts payables and accrued liabilities	$	1,695		$	1,066
Accrued debt issuance costs	$	695		$	1,390
Capital lease obligations incurred for equipment	$	23		$	34

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

Bellicum Pharmaceuticals, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION

Bellicum Pharmaceuticals, Inc., or Bellicum, was incorporated in Delaware in July 2004 and is based in Houston, Texas. Bellicum is a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for various forms of cancer, including both hematological cancers and solid tumors, as well as orphan inherited blood disorders. Bellicum is devoting substantially all of its present efforts to developing next-generation product candidates in some of the most important areas of cellular immunotherapy, including, hematopoietic stem cell transplantation, CAR T and TCR cell therapy.

In January 2017, Bellicum formed a wholly-owned subsidiary, Bellicum Pharma Limited, a private limited company organized under the laws of the United Kingdom for the purpose of developing product candidates in Europe. Bellicum and Bellicum Pharma Limited are collectively referred to herein as the Company.

NOTE 2 - BASIS OF PRESENTATION AND MANAGEMENT PLANS

The accompanying interim consolidated financial statements are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been omitted. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments necessary for the fair presentation of the Company’s financial position and its results of operations and its cash flows for the periods presented. All such adjustments are normal and recurring in nature. These statements should be read in conjunction with the Company's Annual Report on Form 10-K filed for the fiscal year ended December 31, 2016 (the “Annual Report”). A copy of the Annual Report is available on the SEC’s website, www.sec.gov , under the Company’s ticker symbol “BLCM” or on Bellicum’s website, www.bellicum.com . The results for the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period. Any reference in these footnotes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The Company has not generated any revenue from product sales to date and, if the Company does not successfully obtain regulatory approval and commercialize any of its product candidates, the Company will not be able to generate product revenue or achieve profitability. As of September 30, 2017, the Company had an accumulated deficit of $300.6 million .

The Company is subject to risks common to companies in the biotechnology industry and the future success of the Company is dependent on its ability to successfully complete the development of, and obtain regulatory approval for, its product candidates, manage the growth of the organization, obtain additional financing necessary in order to develop, launch and commercialize its product candidates, and compete successfully with other companies in its industry.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. Actual results could differ from those estimates.

Consolidation

All financial information presented includes the accounts of the Company and its wholly-owned subsidiary, for which there has been no material activity to date. All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior period amounts in research and development expenses pertaining to license fees have been reclassified and listed separately to conform to the current period presentation. The reclassifications did not impact net loss or net loss per share.

Revenue Recognition

The Company has not yet generated any revenue from product sales. The Company’s source of revenue in 2016 and the nine months ended September 30, 2017 has been from grants. When grant funds are received after costs have been incurred, the Company accrues revenue and records a grant receivable. Cash received from grants in advance of incurring qualifying costs is recorded as deferred revenue, and recognized as revenue when qualifying costs are incurred.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments with maturity of three months or less from the date of purchase to be cash equivalents.

Net Loss and Net Loss per Share of Common Stock Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period without consideration for common stock equivalents.

The following outstanding shares of common stock equivalents were excluded from the computations of diluted net loss per share of common stock attributable to common stockholders for the periods presented, as the effect of including such securities would be anti-dilutive.



	As of September 30,
	2017	2016
Common Stock Equivalents:	Number of shares
Options to purchase common stock	5,299,158	4,501,561
Unvested shares of restricted stock units	96,250	—
Unvested shares of restricted stock	44,119	88,236
Total common stock equivalents	5,439,527	4,589,797

Investment Securities

Consistent with its investment policy, the Company invests its cash allocated to fund its short-term liquidity requirements with prominent financial institutions in bank depository accounts and institutional money market funds. The Company invests the remainder of its cash in corporate debt securities and municipal bonds rated at least A quality or equivalent, U.S. Treasury notes and bonds and U.S. and state government agency-backed securities.

The Company determines the appropriate classification of investment securities based on whether they represent the investment of funds available for current operations, as defined in ASC 210-10-45-1 and ASC 210-10-45-2. The Company reevaluates its classification as of each balance sheet date. All investment securities owned are classified as available-for-sale. The cost of securities sold is based on the specific identification method. Investment securities are recorded as of each balance sheet date at fair value, with unrealized gains and, to the extent deemed temporary, unrealized losses reported as accumulated other comprehensive gain (loss), a separate component of stockholders' equity. Interest and dividend income on investment securities, accretion of discounts and amortization of premiums and realized gains and losses are included in interest income in the statements of operations and comprehensive income (loss).

An investment security is considered to be impaired when a decline in fair value below its cost basis is determined to be other than temporary. The Company evaluates whether a decline in fair value of an investment security is below its cost basis is other than temporary using available evidence. In the event that the cost basis of the investment security exceeds its fair value, the Company evaluates, among other factors, the amount and duration of the period that the fair value is less than the cost basis, the financial health of and business outlook for the issuer, including industry and sector performance, and operational and financing cash flow factors, overall market conditions and trends, the Company’s intent to sell the investment security and whether it is more likely than not the Company would be required to sell the investment security before its anticipated recovery. If a decline in fair value is determined to be other than temporary, the Company records an impairment charge in the statement of operations and comprehensive loss and establishes a new cost basis in the investment.

Property and Equipment

Furniture, equipment and software are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term.

Debt Issuance Costs

Costs related to debt issuance are presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts and are amortized using the effective interest method. Amortization of debt issuance costs are included in interest expense.

Deferred Rent and Rent

The Company recognizes rent expense for leases with increasing annual rents on a straight-line basis over the term of the lease. The amount of rent expense in excess of cash payments is classified as accrued rent. Any lease incentives received are deferred and amortized over the term of the lease.

Equity Issuance Costs

Equity issuance costs represent costs paid to third parties in order to obtain equity financing. These costs have been netted against the proceeds of the equity issuances.

Licenses and Patents

Licenses and patent costs for technologies that are utilized in research and development and have no alternative future use are expensed as incurred. Costs related to the license of patents from third parties and internally developed patents are classified as research and development expenses. Legal costs related to patent applications and maintenance are classified as general and administrative expenses.

Clinical Trials

The Company estimates its clinical trial expense accrual for a given period based on the number of patients enrolled at each site, estimated cost per patient, and the length of time each patient has been in the trial, less amounts previously billed. These accruals are recorded in accrued expenses and other current liabilities, and the related expense is recorded in research and development expense.

Research and Development

Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for research and development employees and consultants, facilities expenses, overhead expenses, cost of laboratory supplies, manufacturing expenses, fees paid to third parties and other outside expenses.

Research and development costs are expensed as incurred. Clinical trial and other development costs incurred by third parties are expensed as the contracted work is performed. The Company accrues for costs incurred as the services are being provided by monitoring the status of the clinical trial or project and the invoices received from its external service providers. The Company estimates depend on the timeliness and accuracy of the data provided by the vendors regarding the status of each project and total project spending. The Company adjusts its accrual as actual costs become known. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone events are achieved.

Collaboration Agreements

The Company enters into collaboration agreements that include varying arrangements regarding which parties perform and bear the costs of research and development activities. The Company may share the costs of research and development activities with a collaborator, or the Company may be reimbursed for all or a significant portion of the costs of the Company's research and development activities. The Company records its internal and third-party development costs associated with these collaborations as research and development expenses. When the Company is entitled to reimbursement of all or a portion of the research and development expenses that it incurs under a collaboration, the Company records those reimbursable amounts as a deduction to the research and development expenses. If the collaboration is a cost-sharing arrangement in which both the Company and its collaborator perform development work and share costs. The Company also recognizes, as research and development expenses in

the period when its collaborator incurs development expenses, the portion of the collaborator's development expenses that the Company is obligated to reimburse.

Contract Manufacturing Services

Contract manufacturing services are expensed as incurred. Prepaid expenses are capitalized and amortized as services are performed.

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with ASC 718, Compensation - Stock Compensation , which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors to be recognized in the financial statements, based on their fair value. The Company measures share-based compensation to consultants in accordance with ASC 505-50, Equity-Based Payments to Non-Employees , and recognizes the fair value of the award over the period the services are rendered.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock option awards. The fair value is recognized as expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award on a straight-line basis.

Application of New Accounting Standards

During 2017, the Company adopted ASU No. 2016-09, “ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ”, which is intended to simplify the financial reporting of the income tax impacts of share-based compensation arrangements. The classification guidance under ASU No. 2016-09 requires the recognition of excess tax benefits from share-based compensation arrangements as a discrete item within income tax benefit rather than additional paid-in capital and the classification guidance requiring presentation of excess tax benefits from share-based compensation arrangements as an operating activity on the statement of cash flows, rather than as a financing activity.

The adoption of ASU No 2016-09 had no immediate impact on our financial statements and related disclosures because the Company does not currently recognize a tax benefit related to share-based compensation expense as we maintain net operating loss carryforwards and have established a valuation allowance against the entire net deferred tax asset as of September 30, 2017. Further, we have elected to continue to estimate the number of stock-based awards expected to vest, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur.

In August 2016, the FASB issued ASU 2016-15, “ Classification of Certain Cash Receipts and Cash Payments, ” which provides guidance on the classification of certain cash receipts and payments in the statement of cash flows. The pronouncement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Earlier application is permitted in any interim or annual period. The Company adopted this standard in 2017, with no material effect upon its financial statements.

New Accounting Requirements and Disclosures

In January 2016, the FASB issued ASU No. 2016-01, “ Recognition and Measurement of Financial Assets and Financial Liabilities .” ASU 2016-01 requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The pronouncement also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company does not believe that the adoption of this pronouncement will have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “ Leases, ” which requires companies that lease assets to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The pronouncement will also require additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of this pronouncement on the Company's consolidated financial statements.

NOTE 4 - CASH, CASH EQUIVALENTS AND RESTRICTED CASH

As of September 30, 2017, and December 31, 2016, respectively, the Company maintained $ 2.9 million and $ 9.6 million as restricted cash. The funds are being held by an escrow agent to cover the construction costs related to the Company's facility lease. The restricted cash is subject to the terms of the escrow agreement and the requirements specified therein. The amount will decrease as the Company and its landlord authorize completion of certain aspects of the building improvements.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same such amounts shown in the statements of cash flows.



	June 30, 2017		December 31, 2016
	(in thousands)
Cash and cash equivalents ⁽¹⁾	$	54,468	$	33,140
Restricted cash, noncurrent	2,947		9,640
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	57,415	$	42,780

⁽¹⁾ As of September 30, 2017, and December 31, 2016, the Company invested approximately $43.6 million and $23.5 million , respectively, in cash equivalent instruments.

NOTE 5 - FAI R VALU E MEASUREMENTS AND INVESTMENT SECURITIES

Fair Value Measurement

The Company follows ASC, Topic 820, Fair Value Measurements and Disclosures , or ASC 820, for application to financial assets. ASC 820 defines fair value, provides a consistent framework for measuring fair value under GAAP and requires fair value financial statement disclosures. ASC 820 applies only to the measurement and disclosure of financial assets that are required or permitted to be measured and reported at fair value under other ASC topics (except for standards that relate to share-based payments such as ASC Topic 718, Compensation - Stock Compensation ).

The valuation techniques required by ASC 820 may be based on either observable or unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, and unobservable inputs reflect the Company’s market assumptions.

These inputs are classified into the following hierarchy:

Level 1 Inputs - quoted prices (unadjusted) in active markets for identical assets that the reporting entity has the ability to access at the measurement date;

Level 2 Inputs - inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly; and

Level 3 Inputs - unobservable inputs for the assets.

The following tables present the Company’s investment securities (including, if applicable, those classified on the Company’s balance sheet as cash equivalents) that are measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 , respectively:



			Fair Value Measurements at Reporting Date
	Balance at September 30, 2017		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Cash Equivalents:
Money market funds	$	43,573	$	43,573	$	—	$	—
Total Cash Equivalents	$	43,573	$	43,573	$	—	$	—

Investment Securities:
U.S. government agency-backed securities	$	19,434	$	—	$	19,434	$	—
Corporate debt securities	41,082		—		41,082		—
Municipal bonds	648		—		648		—
Total Investment Securities	$	61,164	$	—	$	61,164	$	—



			Fair Value Measurements at Reporting Date
	Balance at December 31, 2016		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(in thousands)
Cash Equivalents:
Money market funds	$	23,459	$	23,459	$	—	$	—
Total Cash Equivalents	$	23,459	$	23,459	$	—	$	—

Investment Securities:
U.S. government agency-backed securities	$	25,908	$	—	$	25,908	$	—
Corporate debt securities	42,053		—		42,053		—
Municipal bonds	2,671		—		2,671		—
Total Investment Securities	$	70,632	$	—	$	70,632	$	—

U.S. Treasury, U.S. government agency-backed securities, corporate debt securities and municipal bonds are valued based on various observable inputs such as benchmark yields, reported trades, broker/dealer quotes, benchmark securities and bids.

Investment securities, all classified as available-for-sale, consisted of the following as of September 30, 2017 and December 31, 2016, respectively:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Aggregate Estimated Fair Value
September 30, 2017	(in thousands)
Investment Securities:
U.S. government agency-backed securities	$	19,449	$	—	$	(15	)	$	19,434
Corporate debt securities	41,051		37		(6		)	41,082
Municipal bonds	648		—		—			648
Total Investment Securities	$	61,148	$	37	$	(21	)	$	61,164



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Aggregate Estimated Fair Value
December 31, 2016	(in thousands)
U.S. government agency-backed securities	$	25,906	$	7	$	(5	)	$	25,908
Corporate debt securities	42,040		41		(28		)	42,053
Municipal bonds	2,669		2		—			2,671
Total	$	70,615	$	50	$	(33	)	$	70,632

The Company's investment securities as of September 30, 2017 , will reach maturity between October 2017 and January 2019 , with a weighted-average maturity date in March 2018.

At December 31, 2016, the Company classified all of its available-for-sale investment securities, including those with maturities beyond one year, as current assets on the accompanying balance sheets based on the highly liquid nature of the investment securities and because these investment securities were considered available for use in current operations. However, as of September 30, 2017, the Company reclassified the investment securities with maturity dates beyond one year as non-current assets as the Company does not intend to utilize them to fund current operations.

NOTE 6 - PROPERT Y AN D EQUIPMENT



Property and equipment consists of the following:
	September 30, 2017			December 31, 2016
	(in thousands)
Leasehold improvements	$	21,033		$	12,131
Lab equipment	7,777			5,397
Office furniture	1,569			1,560
Manufacturing equipment	1,691			1,275
Computer and office equipment	1,040			623
Equipment held under capital leases	204			181
Software	210			85
Total	33,524			21,252
Less: accumulated depreciation	(7,272		)	(4,748		)
Property and equipment, net	$	26,252		$	16,504

During the nine months ended September 30, 2017 and 2016, the Company recorded $2.5 million and $1.6 million of depreciation expense, respectively. Leasehold improvements as of September 30, 2017 includes $2.5 million related to costs incurred by the landlord.

NOTE 7 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other liabilities consist of the following:



	September 30, 2017		December 31, 2016
	(in thousands)
Accrued construction costs	$	1,195	$	3,120
Accrued payroll	2,208		1,568
Accrued patient treatment costs	1,153		1,006
Accrued manufacturing costs	2,195		1,704
Accrued other	1,799		1,965
Total accrued expenses and other current liabilities	$	8,550	$	9,363

NOTE 8 - DEBT

On March 10, 2016, (the “Closing Date”), the Company, entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc. Hercules Technology II, L.P., and Hercules Technology III, L.P., or collectively, Hercules, as a lender, under which the Company borrowed $15.0 million on the Closing Date. The Company borrowed an additional $5.0 million and $10.0 million on September 15, 2016 and March 8, 2017, respectively. The total debt is secured by a lien covering substantially all of the Company's assets, excluding intellectual property, but including proceeds from the sale, license, or disposition of our intellectual property. The interest rate will be calculated at a rate equal to the greater of either (i) 9.35% plus the prime rate as reported in The Wall Street Journal minus 3.50% , or (ii) 9.35% . The interest rate on amounts borrowed under the Loan Agreement was 9.60% and 10.10% at December 31, 2016 and September 30, 2017, respectively.

As a result of the additional borrowing on March 8, 2017, the interest only period was extended for an additional six months through March 2018. Beginning in April 2018, equal monthly payments of principal and interest are due over a 24 month period through the maturity date of March 1, 2020, upon which the remaining principal balance and the final facility charge of $2.1 million will be due and payable.

The Company paid expenses related to the Loan Agreement of $0.3 million , which, along with the final facility charge of $2.1 million , have been recorded as deferred financing costs, which offset long-term debt on the Company's balance sheet. The deferred financing costs are being amortized over the term of the loan as interest expense. During the three and nine months ended September 30, 2017, interest expense included $0.2 million and $0.6 million , respectively, of amortized deferred financing costs. During the three and nine months ended September 30, 2016, interest expense included $0.1 million and $0.3 million , respectively, of amortized deferred financing costs.

Management believes that the carrying value of the debt facility approximates its fair value, as the Company's debt facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics. The fair value of the Company's debt facility is determined under Level 2 in the fair value hierarchy.

NOTE 9 - STOCKHOLDERS' EQUITY

On March 29, 2017, the Company completed an underwritten public offering of 5,750,000 shares of its common stock at a price of $12.00 per share, for an aggregate offering size of $69.0 million , pursuant to a registration statement on Form S-3. The net proceeds to the Company, after deducting underwriting discounts, and commissions and offering expenses was approximately $64.6 million . These costs have been recorded as a reduction of the proceeds received from the offering.

On June 28, 2017, the Company filed a Registration Statement on Form S-3 for the offer and sale by the Company of its securities in one or more offerings for up to an aggregate maximum offering price of $150,000,000 .

NOTE 10 - CANCER RESEARCH GRANT CONTRACT

On August 9, 2017, the Company entered into a Cancer Research Grant Contract (the “Agreement”) with the Cancer Prevention and Research Institute of Texas (“CPRIT”), pursuant to which CPRIT awarded a grant of approximately $16.9 million to the Company to fund development of BPX-501 for hematologic cancer (the “Award”). The Award is contingent upon funds being available during the term of the Agreement and subject to CPRIT’s ability to perform its obligations under the Agreement.

The Company and CPRIT will retain joint ownership over any intellectual property developed under the Agreement. With respect to non-commercial use of any intellectual property developed under the Agreement (the “Project Results”), the Company agreed to grant to CPRIT a sublicensable, nonexclusive, irrevocable, royalty-free, perpetual worldwide license to any intellectual property of the Company that is necessary to exploit the Project Results. The Agreement permits the Company to license any Project Results, subject to the Company retaining an exclusive sublicensable license to exploit the Project Results for non-commercial purposes.

The Company is obligated to make revenue-sharing payments to CPRIT with respect to net sales of any product covered by the Agreement, up to a maximum repayment of 400% of the aggregate amount paid to the Company by CPRIT under the Agreement. The payments are determined as a percentage of net sales ranging from the low to mid-single digits, which may be reduced if the Company is required to obtain a license from a third party to sell any such product. In addition, upon meeting the foregoing limitation on revenue-sharing payments, the Company agreed to make continued revenue-sharing payments to CPRIT of less than 1% of net sales.

The Agreement will expire on February 29, 2020 unless terminated earlier by: mutual consent of the parties; CPRIT upon an event of default by the Company as specified in the Agreement; CPRIT if allocated funds become unavailable or CPRIT is unable to obtain additional funds; or the Company in its sole discretion.

Table of Contents

As of September 30, 2017, the Company incurred expenses and accrued revenue of $126,000 for work performed under the CPRIT grant.

NOTE 11 - SHARE-BASED COMPENSATION PLANS

At September 30, 2017 , the Company had share-based awards outstanding under four share-based compensation plans, as follows:

2006 Stock Option Plan

The 2006 Stock Option Plan (the “2006 Plan”) provided for the issuance of incentive and non-qualified stock options to employees, including officers, non-employee directors and consultants to the Company. As of September 30, 2017, there were 141,210 shares of common stock reserved for issuance pursuant to outstanding options granted under the 2006 Plan. The 2006 Plan was terminated by the Board in October 2014.

2011 Stock Option Plan

The 2011 Stock Option Plan (the “2011 Plan”) provided for the issuance of incentive and non-qualified stock options to employees, including officers, non-employee directors and consultants to the Company. As of September 30, 2017, there were 1,657,621 shares of common stock reserved for issuance pursuant to outstanding options granted under the 2011 Plan. The 2011 Plan terminated upon the effectiveness of the 2014 Plan described below.

2014 Equity Incentive Plan

The 2014 Equity Incentive Plan (the “2014 Plan”) became effective in December 2014, upon the closing of the Company's initial public offering. The 2014 Plan provides for the issuance of equity awards, including incentive and non-qualified stock options and restricted stock awards to employees, including officers, non-employee directors and consultants to the Company or its affiliates. The 2014 Plan also provides for the grant of performance cash awards and performance-based stock awards.

On June 14, 2017, the stockholders approved an amendment to the 2014 Plan to, among other things, increase the number of shares of common stock authorized for issuance under the 2014 Plan by 3,100,000 shares and eliminate the prior provision in the 2014 Plan that allowed the Company’s Board of Directors to reprice stock options without stockholder approval.

The aggregate number of shares of common stock that are authorized for issuance under the 2014 Plan is 6,090,354 shares, plus any shares subject to outstanding options that were granted under the 2011 Plan or 2006 Plan that are forfeited, terminated, expired or are otherwise not issued. As of September 30, 2017, there were 5,299,158 options, 44,119 shares of unvested restricted stock, and 96,250 unvested restricted stock units outstanding, and there were 3,115,339 shares available for issuance under the 2014 Plan.

2014 Employee Stock Purchase Plan

The 2014 Employee Stock Purchase Plan (the “ESPP”) provides for eligible Company employees, as defined by the ESPP, to be given an opportunity to purchase the Company's common stock at a discount, through payroll deductions, with stock purchases being made upon defined purchase dates. The ESPP authorizes the issuance of up to 550,000 shares of common stock to participating employees, and allows eligible employees to purchase shares of common stock at a 15% discount from the grant date fair market value. During the nine months ended September 30, 2017 and 2016, 19,204 and 17,115 shares were purchased under the ESPP. As of September 30, 2017, there were 475,477 shares available for issuance under the ESPP.



A summary of activity within the ESPP follows:	Nine months ended September 30,
	2017		2016
	(amounts in thousands)
Deductions from employees	$	226	$	290
Share-based compensation expense recognized	$	183	$	208
Remaining share-based compensation expense	$	311	$	58

Share-Based Compensation Expense

The valuation of the share-based compensation awards is a significant accounting estimate that requires the use of judgments and assumptions that are likely to have a material impact on the financial statements. The fair value of option grants is determined using the Black-Scholes option-pricing model. Expected volatilities utilized in the model are based on implied volatilities from

traded stocks of peer companies. Similarly, the dividend yield is based on historical experience and the estimate of future dividend yields. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The expected term of the options is based on the average period the stock options are expected to remain outstanding. As the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, the expected term is calculated as the midpoint between the weighted-average vesting term and the contractual expiration period also known as the simplified method.

At September 30, 2017 , total compensation cost not yet recognized was $23.9 million and the weighted-average period over which this amount is expected to be recognized is 2.2 years.

The fair value of the option grants has been estimated, with the following weighted-average assumptions:



	Nine months ended September 30,
	2017		2016
Risk-free interest rate	2.06	%	1.78	%
Volatility	71.7	%	71.9	%
Expected life (years)	6.08		6.08
Expected dividend yield	—	%	—	%

During the three and nine months ended September 30, 2017, the Company received cash proceeds from the exercise of stock options of approximately $0.2 million and $1.5 million , respectively. The aggregate intrinsic value of options exercised during the three and nine months ended September 30, 2017 was $0.6 million and $2.5 million .

Share-based compensation expense by classification for the three and nine months ended September 30, 2017 and 2016 are as follows:



	Three Months Ended Sept 30,				Nine Months Ended Sept 30,
	2017		2016		2017		2016
	(in thousands)				(in thousands)
Research and development	$	1,802	$	1,420	$	4,870	$	4,180
General and administrative	1,861		1,640		5,347		5,063
Total	$	3,663	$	3,060	$	10,217	$	9,243

The following table summarizes the stock option activity for all stock plans during the nine months ended September 30, 2017:



	Options and Inducement awards		Weighted- Average Exercise Price Per Share		(in years) Weighted- Average Contractual Life	Aggregate Intrinsic Value ⁽¹⁾ (in thousands)
Outstanding at December 31, 2016	4,521,810		$	12.37	7.58	$	20,446
Granted ⁽²⁾	1,410,625		$	11.78
Exercised	(327,284	)	$	4.44
Forfeited	(305,993	)	$	16.12
Outstanding at September 30, 2017	5,299,158		$	12.48	7.55	$	13,586
Exercisable at September 30, 2017	2,752,484		$	10.92	6.46	$	11,946

⁽¹⁾ The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in the money at September 30, 2017.

⁽²⁾ Includes 630,000 of inducement option awards granted in 2017.

The following table summarizes the stock award activity for all stock plans during the nine months ended September 30, 2017:



	Restricted Stock Awards and Units		Aggregate Intrinsic Value ⁽¹⁾ (in thousands)
December 31, 2016 ⁽²⁾	58,825		$	801
Granted ⁽³⁾	102,500
Vested	(14,706	)
Forfeited	(6,250	)
Outstanding at September 30, 2017	140,369		$	1,621

⁽¹⁾ The aggregate intrinsic value is calculated as the fair value of restricted stock and restricted stock units at September 30, 2017.

⁽²⁾ At September 30, 2017 and December 31, 2016, there were 44,119 and 58,825 shares of unvested restricted common stock outstanding, respectively.

⁽³⁾ Includes 15,000 of inducement restricted stock units granted during 2017.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Litigation

None.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 13, 2017, or our Annual Report, as well as our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q, or this Quarterly Report.

Forward-Looking Statements

This report contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipate,” “believe,” “could,” “designed,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project," “will," “would," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q, filed May 8, 2017, Part I, Item 1A, “Risk Factors” in our Annual Report and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

Overview

We are a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for various forms of cancer, including both hematological cancers and solid tumors, as well as orphan inherited blood disorders. We are using our proprietary Chemical Induction of Dimerization, or CID technology platform to engineer our product candidates with switch technologies that are designed to control components of the immune system in real time. By incorporating our CID platform, our product candidates may offer better safety and efficacy outcomes than are seen with current cellular immunotherapies.

We are developing next-generation product candidates in some of the most important areas of cellular immunotherapy, including hematopoietic stem cell transplantation, or HSCT, chimeric antigen receptor T cell therapy, or CAR T, and T cell receptors, or TCRs. HSCT, also known as bone marrow transplantation, has for decades been curative for many patients with hematological cancers or orphan inherited blood disorders. However, adoption of HSCT to date has been limited by the risks of transplant-related morbidity and mortality from graft-versus-host-disease, or GvHD, and the potential for serious infections due to the lack of an effective immune system following a transplant. CAR T and TCR cell therapies are an innovative approach in which a patient’s T cells are genetically modified to carry chimeric antigen receptors, or CARs, or TCRs which redirect the T cells against cancer cells. While high objective response rates have been reported in some hematological malignancies, serious and sometimes fatal toxicities have arisen in patients treated with CAR T cell therapies. These toxicities include instances in which the CAR T cells have caused high levels of cytokines due to over-activation, referred to as “cytokine release syndrome,” or CRS, neurologic toxicities and cases in which they have attacked healthy organs. In each case, these toxicities have sometimes resulted in death. In solid tumors, where the behavior of CAR T cells is particularly unpredictable and results have been inconsistent, enhanced CAR T cell approaches are being developed that raise even greater safety concerns.

Our proprietary CID platform is designed to address these challenges. Events inside a cell are controlled by cascades of specialized signaling proteins. CID consists of molecular switches, modified forms of these signaling proteins, which are triggered inside the patient by infusion of a small molecule, rimiducid, instead of by natural upstream signals. We include these molecular switches in the appropriate immune cells and deliver the cells to the patient in the manner of conventional cellular immunotherapy. We have developed two such switches: a “safety switch,” designed to initiate programmed cell death, or apoptosis, of the immunotherapy cells, and an “activation switch,” designed to stimulate activation and in some cases proliferation and/or persistence of the immunotherapy cells. Each of our product candidates incorporates one of these switches, for enhanced, real time control of safety and efficacy:


•	CaspaCIDe is our safety switch, incorporated into our HSCT and TCR product candidates, where it is inactive unless the patient experiences a serious side effect. In that event, rimiducid is administered to induce Caspase-9,

or iCaspase, switch activation to fully or partially eliminate the cells, with the goal of terminating or attenuating the therapy and resolving the serious side effect.

•

Our “Go” switch incorporated into our GoCAR-T product candidates contains our proprietary inducible MyD88/CD40 or iMC activation switch and is designed to allow control of the activation and proliferation of the T cells through the scheduled administration of a course of rimiducid infusions that may continue until the desired patient outcome is achieved. In the event of emergence of side effects, the level of activation of the GoCAR-T cells is designed to be attenuated by extending the interval between rimiducid doses, reducing the dosage per infusion, or suspending further rimiducid administration.

In addition, we have an active research effort to develop other advanced molecular switch approaches, including a “dual-switch” that is designed to provide a system for managing persistence and safety of tumor antigen-specific CAR T cells.

By incorporating our novel switch technologies, we are developing product candidates with the potential to elicit positive clinical outcomes and ultimately change the treatment paradigm in various areas of cellular immunotherapy. Our lead clinical product candidate is described below.

•

BPX-501 is a CaspaCIDe product candidate designed as an adjunct T cell therapy administered after allogeneic HSCT. BPX-501 is designed to improve transplant outcomes by enhancing the recovery of the immune system following an HSCT procedure. BPX-501 addresses the risk of infusing donor T cells by enabling the elimination of donor T cells through the activation of the CaspaCIDe safety switch if there is an emergence of uncontrolled GvHD.

The European Commission has granted orphan drug designations to BPX-501 for treatment in HSCT, and for activator agent rimiducid for the treatment of GvHD. Additionally, BPX-501 and rimiducid have received orphan drug status from the U.S. Food and Drug Administration, or the FDA, as a combination replacement T-cell therapy for the treatment of immunodeficiency and GvHD after allogeneic HSCT.

During 2016, we discussed with the European Medicines Agency, or the EMA, clinical and regulatory plans to support the filing of Marketing Authorization Applications, or MAAs, for BPX-501 and rimiducid in Europe, initially for pediatric patients with certain orphan inherited blood disorders or treatment-refractory hematological cancers. Based on the regulatory discussions, we believe that data from the European arm of our BP-004 trial, expanded to enroll additional patients, with a primary endpoint of event-free survival, (with events defined as transplant-related or non-relapse mortality, severe GvHD, and serious infection) at six months, could form the basis of MAAs for BPX-501 and rimiducid. In addition, the EMA’s Committee for Medicinal Products for Human Use, or the CHMP, has agreed that review and approval under “exceptional circumstances” may be suitable, recognizing that a randomized trial may not be feasible in the pediatric haploidentical hematopoietic stem cell transplant setting. Exceptional circumstances may be granted for medicines that treat very rare diseases, or where controlled studies are impractical or not consistent with accepted principles of medical ethics. In place of a randomized trial, we are collecting data from a concurrent observational study in the pediatric matched unrelated donor hematopoietic stem cell transplant setting, which will include both retrospective patients and prospective patients.

We are working on plans and assessing feasibility for future U.S. clinical trials of BPX-501. We expect to pursue one or more clinical trials with the intent of an eventual filing for regulatory approval in the U.S., partially supported by a $16.9 million award from the Cancer Prevention and Research Institute of Texas, or CPRIT.

In addition to BPX-501, our clinical stage product candidates which are designed to overcome limitations of CAR T and TCR therapies, include the following:

•

BPX-701 is a CaspaCIDe-enabled natural high affinity TCR product candidate designed to target malignant cells expressing the preferentially-expressed antigen in melanoma, or PRAME. Initial planned indications for BPX-701 development are refractory or relapsed acute myeloid leukemia, or AML, and myelodysplastic syndromes, or MDS, and are considering studies in additional indications. Each of these is an orphan indication where PRAME is highly expressed and for which current treatment options are limited. A Phase 1 dose finding clinical trial in patients with relapsed or refractory myeloid neoplasms is being conducted at the Oregon Health & Science University Hospital in Portland, Oregon.


•	BPX-601 is a GoCAR-T product candidate designed to treat solid tumors expressing prostate stem cell antigen, or PSCA. Preclinical data shows enhanced T cell proliferation, persistence and in vivo anti-tumor activity

compared to traditional CAR T therapies. A Phase 1 clinical trial in patients with non-resectable pancreatic cancer is being conducted at the Baylor Sammons Cancer Center in Dallas, Texas.

•

CD19 CAR-T Program - We are working with academic collaborators to establish clinical proof of concept for CaspaCIDe ^® in the CD19 setting. We believe that this strategy allows a cost-effective approach for clinical evaluation of differentiated product candidates in the highly competitive landscape of CD19-targeted therapies. As part of this strategy, in November 2016 we announced an expanded collaboration with Ospedale Pediatrico Bambino Gesù, a leading European pediatric research center and hospital, and expect a CaspaCIDe-enabled CD19 CAR-T cell therapy to enter clinical development in the fourth quarter of 2017.

We have developed an efficient and scalable process to manufacture genetically modified T cells of high quality, which T cells are currently being manufactured in-house and by third-party contract manufacturers in Europe to produce BPX-501 for our clinical trials. We are leveraging this process, as well as our resources, capabilities and expertise for the manufacture of our CAR T and TCR product candidates.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires us to make judgments, estimates and assumptions in the preparation of our consolidated financial statements and accompanying notes. Actual results could differ from those estimates. We believe there have been no material changes in our critical accounting policies as discussed in our Annual Report.

Financial Operations Overview

Revenue

To date, we have only recognized revenue from government grants and we have not generated any product revenue. Grant funds are received based on the progress of the program being funded. In cases when the grant money is not received until expenses for the program are incurred, we accrue the revenue based on the costs incurred for the programs associated with the grant.

In the future, we may generate revenue from a combination of product sales, government or other third-party grants, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. We expect that any revenue we generate will fluctuate as a result of the timing and amount of license fees, milestone and other payments, and the amount and timing of payments that we receive upon the sale of our products, to the extent we obtain regulatory approval for any and that they are successfully commercialized. If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval of them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected. Our policy is to recognize revenue in accordance with ASC 605. See the discussion of “Collaboration Agreements” contained within Note 3 to the unaudited condensed consolidated financial statements contained herein.

NIH Grant

During 2013, we entered into a grant agreement with the NIH. The grant was a modular five year grant with funds being awarded each year based on the progress of the program being funded. Grant money is not received until expenses for the program are incurred. We have been awarded approximately $1.4 million to date. The grant expired March 31, 2017.

CPRIT Grant

On August 9, 2017, we entered into a grant agreement with CPRIT. CPRIT awarded a grant of approximately $16.9 million to fund research of a cancer therapy involving BPX-501. We incurred expenses of $0.1 million during the three and nine months ended September 30, 2017 for work performed under the CPRIT Grant. For additional information about the CPRIT grant, see Note 10 to the unaudited condensed consolidated financial statements included herein.

Research and Development Expenses

To date, our research and development expenses have related primarily to the development of our CID platform and the identification and development of our product candidates. Research and development expenses consist of expenses incurred in performing research and development activities, including compensation, share-based compensation expense and benefits for research and development employees and consultants, facilities expenses, overhead expenses, cost of laboratory supplies, manufacturing expenses, fees paid to third parties and other outside expenses.

Research and development costs are expensed as incurred. Clinical trial and other development costs incurred by third parties are expensed as the contracted work is performed. We accrue for costs incurred as the services are being provided by monitoring the status of the clinical trial or project and the invoices received from our external service providers. We adjust our accrual as actual costs become known. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone events are achieved. See the discussion of “Research and Development” expenses in Note 3 to the unaudited condensed consolidated financial statements included herein.

We utilize our research and development personnel and infrastructure resources across several programs, and many of our costs are not specifically attributable to a single program. Accordingly, we cannot state precisely our total costs incurred on a program-by-program basis.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Thus, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates.

The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that include, but are not limited to, the following:


•	per patient clinical trial costs;


•	the number of patients that participate in the clinical trials;


•	the number of sites included in the clinical trials;


•	the process of collection, differentiation, selection and expansion of immune cells for our cellular immuno-therapies;


•	the countries in which the clinical trials are conducted;


•	the outcomes of our clinical trials;


•	the length of time required to enroll eligible patients;


•	the number of doses that patients receive;


•	the drop-out or discontinuation rates of patients;


•	potential additional safety monitoring or other studies requested by regulatory agencies;


•	the duration of patient follow-up;


•	the efficacy and safety profile of the product candidates; and


•	the ability to successfully manufacture patient doses

In addition, the potential for success of each product candidate will depend on numerous factors, including clinical trial outcomes, acceptance by regulatory authorities, competition, manufacturing capability and commercial viability. We determine which programs to pursue and how much to fund each program in response to ongoing scientific assessments, competitive developments, clinical trial results, as well as an assessment of each product candidate's commercial potential.

We expect our research and development expenses to increase over the next several years as we progress our business plan which includes conducting ongoing and new clinical trials for BPX-501, BPX-601 and BPX-701, and advancing additional product candidates into clinical development, manufacturing clinical trial and preclinical study materials, expanding our research and development and process development and optimization efforts, seeking regulatory approvals for our product candidates that successfully complete clinical trials, and hiring additional personnel.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in executive, finance, accounting, business development, legal and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters, insurance costs and professional fees for consultancy, accounting, audit and investor relations.

As our research and development activities continue to expand, we also expect general and administrative expenses to increase due to the anticipated need for additional supporting infrastructure, primarily personnel costs. We also expect general and administrative expenses to increase as we prepare for commercialization of BPX-501, continue to evaluate the commercial opportunities for BPX-601 and BPX 701, and as we begin operations in our European subsidiary.

Income Taxes

We did not recognize any income tax expense for the three and nine months ended September 30, 2017.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2017 and 2016

The following table sets forth our results of operations for the three and nine months ended September 30, 2017 and 2016:



	Three Months Ended Sept 30,									Nine Months Ended Sept 30,
	2017			2016			Change			2017			2016			Change
	(in thousands)									(in thousands)
Total revenues	$	126		$	114		$	12		$	254		$	307		$	(53	)
Operating expenses:
Research and development	18,101			13,290			4,811			51,355			36,179			15,176
License fees	151			—			151			849			280			569
General and administrative	4,579			4,252			327			15,992			12,715			3,277
Total operating expenses	22,831			17,542			5,289			68,196			49,174			19,022
Loss from operations	(22,705		)	(17,428		)	(5,277		)	(67,942		)	(48,867		)	(19,075		)
Other income (expense):
Interest income	284			224			60			788			687			101
Interest expense	(1,010		)	(515		)	(495		)	(2,707		)	(1,123		)	(1,584		)
Total other expense	(726		)	(291		)	(435		)	(1,919		)	(436		)	(1,483		)
Net loss	$	(23,431	)	$	(17,719	)	$	(5,712	)	$	(69,861	)	$	(49,303	)	$	(20,558	)

Research and Development Expenses

Research and development expenses were $ 18.1 million and $ 13.3 million for the three months ended September 30, 2017 and 2016, respectively. The $4.8 million increase in research and development expenses for the three months ended September 30, 2017, was due to an increase in clinical and manufacturing costs of $2.7 million related to BPX-501, primarily due to increased patient enrollment in our clinical trials. Increased research and development expenses in the three months ended September 30, 2017 also includes $0.1 million under collaboration agreements, and $2.5 million in increased personnel, overhead charges and manufacturing start-up expenses. Expenses related to BPX-601 and BPX-701 were approximately $0.2 million and $0.3 million higher, respectively in the 2016 period, as we were performing pre-clinical, process development and regulatory work in preparation for clinical trials.

Research and development expenses were $ 51.4 million and $ 36.2 million for the nine months ended September 30, 2017 and 2016, respectively. The $15.2 million increase in research and development expenses for the nine months ended September 30, 2017, included an increase in clinical and manufacturing costs of $8.1 million related to BPX-501, primarily due to increased patient enrollment in our clinical trials. The increase in research and development expenses is also due to increased expenses of approximately $0.9 million under collaboration agreements, increased clinical and manufacturing costs of $0.6 million related to BPX-701 and $6.6 million for increased personnel, overhead charges and manufacturing facility start-up costs. Expenses related to BPX-601 were approximately $1 million higher in the 2016 period, as we were performing pre-clinical, process development and regulatory work in preparation for clinical trials.

The following table presents our research and development expense by project/category for the three and nine months ended September 30, 2017 and 2016:



	Three Months Ended Sept 30,							Nine Months Ended Sept 30,
Product Candidates	2017		2016		Change			2017		2016		Change
	(in thousands)							(in thousands)
BPX-501	$	9,559	$	6,856	$	2,703		$	27,305	$	19,211	$	8,094
BPX-601	454		627		(173		)	1,571		2,526		(955		)
BPX-701	323		603		(280		)	1,481		883		598
General	7,765		5,204		2,561			20,998		13,559		7,439
Total	$	18,101	$	13,290	$	4,811		$	51,355	$	36,179	$	15,176

License Fees

We incurred license fees of $0.2 million and $- in the three month periods ended September 30, 2017 and 2016, respectively, under the terms of our various license agreements for intellectual property. In the nine month periods ended September 30, 2017 and 2016, license fees incurred were $0.8 million and $0.3 million , respectively. See “ Contractual Obligations and Commitments ” below and Note 12 to the audited financial statements in our Annual Report for additional information about our license agreements.

General and Administrative Expenses

General and administrative, or G&A, expenses were $4.6 million and $16.0 million for the three and nine months ended September 30, 2017, respectively, and $4.3 million and $12.7 million for the three and nine months ended September 30, 2016, respectively. The increase in G&A expenses of $0.3 million and $3.3 million for the three and nine months ended September 30, 2017, respectively, was primarily due to our overall growth, including an increase in personnel related costs, primarily due to hiring additional employees and severance costs, higher facility costs and increased legal, accounting and travel expenses. We believe our future general and administrative expenses will continue to increase as the Company continues to grow and expand its operations.

Liquidity and Capital Resources

Sources of Liquidity

We are a clinical stage biopharmaceutical company with a limited operating history. To date, we have financed our operations primarily through equity and debt financings and grants. We have not generated any revenue from the sale of any products. As of September 30, 2017, and December 31, 2016, we had cash, cash equivalents, restricted cash and investment securities of $118.6 million and $113.4 million , respectively. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.

On June 28, 2017, we filed a registration statement on Form S-3 for the offer and sale by the Company of its securities in one or more offerings for up to an aggregate maximum offering price of $150,000,000.

On March 29, 2017, we completed an underwritten public offering of 5,750,000 shares of our common stock at a price of $12.00 per share, for an aggregate offering size of $69.0 million, pursuant to a registration statement on Form S-3. The net proceeds to us, after deducting underwriting discounts and commissions and offering expenses, was approximately $64.6 million.

On March 10, 2016, we entered into a term loan arrangement with Hercules Capital, as agent and lender and borrowed $15.0 million on the closing date. We borrowed an additional $5.0 million on September 15, 2016 and the remaining $10.0 million on March 8, 2017. We used the proceeds to complete the build-out of our manufacturing facilities, and for general corporate purposes. As a result of the additional borrowing on March 8, 2017, the interest only period was extended for an additional six months through March 2018. Thereafter, we are required to repay the loan over the remaining term, through its final maturity date of March 1, 2020. We incurred issuance costs of $0.3 million and facility charges of $2.1 million. The facility charges are payable at the earlier of the repayment of the loan in full or the final maturity date. The $2.4 million debt issuance costs are being recognized over the term of the loan as additional interest expense. We will pay interest on the loan at the greater of either (i) 9.35% plus the prime rate as reported in the Wall Street Journal minus 3.5% and (ii) 9.35%. The interest rate on the loan was 9.35% and 10.1% at September 30, 2016 and 2017, respectively. For additional information about the loan, see Note 8 to the unaudited consolidated condensed financial statements included herein.

C ash Flows

The following table sets forth a summary of our cash flows for the nine months ended September 30, 2017 and 2016:



	Nine Months Ended September 30,
	2017			2016			Change
	(in thousands)
Net cash used in operating activities	$	(60,161	)	$	(35,952	)	$	(24,209	)
Net cash used in investing activities	(1,301		)	(6,136		)	4,835
Net cash provided by financing activities	76,097			20,541			55,556
Net change in cash, cash equivalents, and restricted cash	$	14,635		$	(21,547	)	$	36,182

Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2017 was comprised of a net loss of $69.9 million , which included share-based compensation expense of $10.2 million , and depreciation expense of $2.5 million and amortization of deferred financing costs of $0.6 million . Net cash used in operating activities also included an increase in prepaid expenses and other assets of $0.6 million , a decrease in accounts payable and other liabilities of $3.0 million , primarily due to completion of the first phase of construction of our manufacturing facility.

Net cash used in operating activities for the nine months ended September 30, 2016 was comprised of a net loss of $49.3 million , which included share-based compensation expense of $1.6 million and depreciation expense of $9.2 million and amortization of deferred financing costs of $0.3 million . Net cash used in operating activities was also primarily comprised of the following primary components: a decrease in receivables of $0.1 million , a decrease in prepaid expenses and other assets of $0.5 million and a decrease in accounts payable and other liabilities of $1.2 million .

Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2017 was $1.3 million , consisting of the proceeds from sale of investment securities of $45.5 million and the purchase of property and equipment of $10.6 million , offset by the purchases of investment securities totaling $36.3 million .

Net cash used in investing activities for the nine months ended September 30, 2016 was $6.1 million , consisting of the purchase of investment securities of $26.1 million and the purchase of property and equipment of $5.8 million , offset by the proceeds from sale of investment securities totaling $25.8 million .

Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2017 was $76.1 million , which was derived from $64.6 million in net proceeds from our public offering in the first quarter, borrowings on long-term debt of $10.0 million , proceeds from the exercise of stock options of $1.5 million , proceeds from the issuance of stock under the employee stock purchase plan of $0.2 million , reduced by the payment of debt issuance costs of $0.1 million .

Net cash provided by financing activities for the nine months ended September 30, 2016 was $20.5 million , which was derived primarily from borrowings of long-term debt of $20.0 million and proceeds from the issuance of stock under the employee stock purchase plan of $0.2 million and proceeds of stock option exercises of $0.6 million , partially offset by payment of debt issuance costs of $0.2 million .

Funding Requirements

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, laboratory and related supplies, clinical costs, legal and other regulatory expenses, facility costs and general overhead costs. In addition, we expect to use capital to expand our manufacturing capabilities.

The successful development of any of our product candidates is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the development of BPX-501 or our other current and future product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of product candidates. This is due to the numerous risks and uncertainties associated with developing medical treatments, including, but not limited to, the uncertainty of:


•	successful enrollment in, and successful completion of, clinical trials;


•	receipt of marketing approvals from applicable regulatory authorities;


•	making arrangements with third-party manufacturers;


•	obtaining and maintaining patent and trade secret protection and regulatory exclusivity;


•	launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;


•	market acceptance of our products, if and when approved; and


•	successfully negotiating reimbursement for our products from various third-party payors;


•	the ability to successfully manufacture patient doses

A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that product candidate.

Because all of our product candidates are in the early stages of clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of product candidates or whether, or when, we may achieve profitability. Until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements.

We plan to continue to fund our operations and capital funding needs through equity and/or debt financing. We may also consider new collaborations or selectively partnering our technology. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our existing stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms unfavorable to us. Any of these actions could harm our business, results of operations and future prospects.

Outlook

Based on our research and development plans and our timing expectations related to the progress of our programs, we expect that our cash and cash equivalents as of September 30, 2017 will enable us to fund our operating expenses and capital expenditure requirements through 2018. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Furthermore, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates and the extent to which we may enter into additional collaborations with third parties to participate in their development and commercialization, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials. Our future funding requirements will depend on many factors, as we:


•	initiate or continue clinical trials of BPX-501, BPX-701 and BPX-601 and any other product candidates;


•	continue the research and development of our product candidates; seek to discover additional product candidates; seek regulatory approvals for our product candidates if they successfully complete clinical trials;


•	establish sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any product candidates that may receive regulatory approval;


•	build out European operations to support our product development and commercialization plans for BPX-501 and potentially other product candidates; and


•	enhance operational, financial and information management systems and hire additional personnel, including personnel to support development of our product candidates and, if a product candidate is approved, our commercialization efforts.

Contractual Obligations and Commitments

Our contractual obligations as of September 30, 2017 were as follows:



	(in thousands)
	Commitment		Less Than 1 Year		1 to 3 Years		3 to 5 Years		More Than 5 Years
License agreements (1)	$	67,179	$	708	$	8,300	$	16,591	$	41,580
Long-term debt obligations (2)	32,085		6,913		25,172		—		—
Operating lease agreements (3)	12,238		2,020		3,453		2,130		4,635
Manufacturing build-out obligation (4)	1,892		1,892		—		—		—
Research collaborations (5)	1,035		828		207		—		—
Manufacturing arrangements (6)	9,956		7,832		708		708		708
Sponsored research agreements (7)	2,434		1,217		1,217		—		—
Equipment capital lease agreements (8)	271		69		139		63		—
Total contractual obligations	$	127,090	$	21,479	$	39,196	$	19,492	$	46,923

(1)

License agreements - We have entered into several license agreements under which we obtained rights to certain intellectual property. Under the agreements, we could be obligated for payments upon successful completion of clinical and regulatory milestones regarding the products covered by the licenses. The obligations listed in the table above represent estimates of when the milestones will be achieved. The milestones may not be completed when estimated or at all.


(2)	Long-term debt obligations - Obligations under our debt facility. See Note 8 to the unaudited condensed consolidated financial statements included herein.


(3)	Operating lease agreements - The amounts above are comprised of one five-year lease agreement and one 11-year lease agreement. The first lease expires on January 31, 2020 and the second lease expires on August 31, 2026. See Note 12 to the financial statements included in our Annual Report.


(4)	Manufacturing build-out obligation - We entered into a construction contract to build-out our manufacturing facilities. The obligation listed in the table above represents the remaining agreed upon costs.


(5)	Research collaborations - We entered into a research collaboration with Ospedale Pediatrico Bambino Gesù (OPBG), a leading European pediatric research center and hospital, with commitments through 2018.


(6)	Manufacturing arrangements - We have entered into multiple manufacturing service arrangements with various terms. The obligations listed in the table above represent estimates of when certain services will be performed.


(7)	Sponsored research agreements - We have entered into multiple sponsored research agreements to undertake research which is of mutual interest to all parties. The commitments range from one to three years.


(8)	Equipment capital lease agreements - We have entered into multiple office equipment lease agreements with various terms. The commitments include equipment, maintenance and supplies. See Note 12 to the financial statements included in our Annual Report.

We have entered and will enter into other contracts in the normal course of business with third-party manufacturers, contract research organizations for clinical trials and other vendors for other services and products for operating purposes. These agreements generally provide for termination or cancellation, and, other than for costs already incurred, are not included in the table above.

Recent Accounting Pronouncements

See Note 3 to the Notes to Unaudited Condensed Consolidated Financial Statements in “Item 1 - Financial Statements” in this Quarterly Report for discussion regarding recent accounting pronouncements.

Table of Contents

Off-Balance Sheet Arrangements

During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

The primary objective of our investment activities is to preserve our capital and meet our liquidity needs to fund operations. We also seek to generate competitive rates of return from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of cash equivalents and investments in a variety of securities that are of high credit quality based on ratings from commonly relied upon rating agencies. As of September 30, 2017 , we had cash, cash equivalents, restricted cash and investment securities of $118.6 million . Our cash equivalents and investments in investment securities may be subject to interest rate risk and could fall in value if market interest rates increase. However, because our cash is invested in accounts with market interest rates and because our cash equivalents and investments in investment securities are traded in active markets, we believe that our exposure to interest rate risk is not significant and estimate that an immediate and uniform 10% increase in market interest rates from levels as of September 30, 2017 would not have a material impact on the total fair value of our portfolio.

We sometimes contract for the conduct of clinical trials or other research and development and manufacturing activities with contract research organizations, clinical trial sites and contract manufacturers in Europe, and in the future potentially elsewhere outside of the United States. We may be subject to exposure to fluctuations in foreign currency exchange rates in connection with these agreements. If the average exchange rate between the currency of our payment obligations under any of these agreements and the U.S. dollar were to strengthen or weaken by 10% against the corresponding exchange rate as of September 30, 2017 , we estimate that the impact on our financial position, results of operations and cash flows would not be material. We do not hedge our foreign currency exposures.

We have not used derivative financial instruments for speculation or trading purposes.

Item 4. Controls and Procedures

Management’s Evaluation of our Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial and accounting officer, respectively), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2017 . The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2017 , our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Our business and results of operations are subject to a number of risks and uncertainties. You should carefully consider the risk factors described under the heading “Risk Factors” in our Annual Report , our Quarterly Report on Form 10-Q, filed May 8, 2017, and in other reports we file with the SEC. The occurrence of any of the risks described in our Annual Report or herein could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this Quarterly Report and those we may make from time to time. You should consider all of the risk factors described in our Annual Report and our Quarterly Report on Form 10-Q, filed May 8, 2017, when evaluating our business. Other than risk factors included in Item 1A of our Quarterly Report on Form 10-Q filed on May 8, 2017, there have been no material changes to the risk factors included in Item 1A of our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None.

Use of Proceeds from Initial Public Offering of Common Stock

None.

Purchase of Equity Securities

We did not purchase any of our registered securities during the period covered by this Quarterly Report.

Item 5. Other Information

(a)

None.

Item 6. Exhibits

The exhibits filed as part of this Quarterly Report are set forth on the Exhibit Index, which is incorporated herein by reference.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	Bellicum Pharmaceuticals, Inc.

Date: November 7, 2017	By:	/s/ Richard A. Fair
		Richard A. Fair
		President and Chief Executive Officer

Date: November 7, 2017	By:	/s/ Alan A. Musso
		Alan A. Musso
		Chief Financial Officer and Treasurer Principal Financial and Accounting Officer



EXHIBIT INDEX
Exhibit number		Description of exhibit

3.1(1)		Amended and Restated Certificate of Incorporation of the Registrant.

3.2(1)		Amended and Restated Bylaws of the Registrant.

4.1		Reference is made to Exhibits 3.1 and 3.2.

4.2(2)		Form of Common Stock Certificate of the Registrant.

4.3(2)		Second Amended and Restated Investor Rights Agreement by and among the Registrant and certain of its stockholders, dated August 22, 2014.

4.4(3)		Registration Rights Agreement by and among the Registrant and Baker Brothers Life Sciences, LP, and two of its affiliated funds, dated January 15, 2016.

10.1		Letter agreement by and between the registrant and Alan A. Musso, effective August 3, 2017.

10.2#		Cancer Research Grant Contract with the Cancer Prevention and Research Institute of Texas, dated August 9, 2017.

10.3		Employment Agreement by and between registrant and Gregory Naeve, effective July 27, 2017.

10.4(4)		Bellicum Pharmaceuticals, Inc. 2014 Equity Incentive Plan, as amended.

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

#		Certain provisions of this exhibit have been omitted pursuant to a request for confidential treatment.

(1)		Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the SEC on December 23, 2014.

(2)		Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 333-200328), as amended, originally filed with the SEC on November 18, 2014.



(3)		Incorporated by reference to the Registrant's Annual Report on Form 10-K, filed with the SEC on March 14, 2016.

(4)		Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (File No. 333-220170), filed with the SEC on August 25, 2017.



Objective 1: ADDED	[…***…]
Objective 2: ADDED	[…***…]
Objective 3: ADDED	[…***…]
Objective 4: ADDED	[…***…]
Objective 5: ADDED	[…***…]



Objective 1: ADDED	[…***…]
Objective 2: ADDED	[…***…]
Objective 3: ADDED	[…***…]
Objective 4: ADDED	[…***…]



Objective 1: ADDED	[…***…]
Objective 2: ADDED	[…***…]
Objective 3: ADDED	[…***…]
Objective 4: ADDED	[…***…]
Objective 5: ADDED	[…***…]



Budget	Budget Year 1	Budget Year 2	Budget Year 3	Total Budget
a. Personnel	[…***…]	[…***…]	[…***…]	[…***…]
b. Fringe Benefits	[…***…]	[…***…]	[…***…]	[…***…]
c. Travel	[…***…]	[…***…]	[…***…]	[…***…]
d. Equipment	[…***…]	[…***…]	[…***…]	[…***…]
e. Supplies	[…***…]	[…***…]	[…***…]	[…***…]
f. Contractual	[…***…]	[…***…]	[…***…]	[…***…]
g. Other	[…***…]	[…***…]	[…***…]	[…***…]
h. Total Direct Charges	[…***…]	[…***…]	[…***…]	[…***…]
i. Indirect Charges (doesn't apply to prevention grants awarded prior to 01 Sep 2016)	[…***…]	[…***…]	[…***…]	[…***…]
j. Total Charges	[…***…]	[…***…]	[…***…]	$16,946,716.00



Federal ID#:
Vendor ID#:	12014502004000
ASO Contact:	Musso, Alan
Address:	2130 West Holcombe Boulevard
Address 2:	Suite 800
City, State, ZIP	Houston, TX 77030
Phone:	832-384-1116
Fax:	832-384-1150
Email:	[…***…]


(b)	Attachment B – Approved Budget, including changes approved by the INSTITUTE subsequent to execution of the Contract.


(d)	Attachment D – Intellectual Property and Revenue Sharing


(f)	Attachment F – Approved Amendments to Contract, excluding budget amendments reflected in Attachment B.


(a)	It has legal authority to enter into, execute, and deliver this Contract, and all documents referred to herein, and it has taken all actions necessary to its execution and delivery of such documents;


(b)	It will comply with all of the terms, conditions, provisions, covenants, requirements, and certifications in this Contract, applicable statutory provisions, agency administrative rules, and all other documents incorporated herein by reference;


(c)	It has made no material false statement or misstatement of fact in connection with this Contract and its receipt of the Grant, and all of the information it previously submitted to the INSTITUTE or that it is required under this Contract to submit to the INSTITUTE relating to the Grant or the disbursement of any of the Grant is and will be true and correct at the time such statement is made;


(f)	It shall furnish such satisfactory evidence regarding the representations and certifications described herein as may be required and requested by the INSTITUTE from time to time.


(a)	was in the public domain at the time of disclosure or later became part of the public domain through no act or omission of the INSTITUTE in breach of this Contract;


(b)	was lawfully disclosed to the INSTITUTE by a third party having the right to disclose it without an obligation of confidentiality;


(c)	was already lawfully known to the INSTITUTE without an obligation of confidentiality at the time of disclosure;


(d)	was independently developed by the INSTITUTE without using or referring to the RECIPIENT’s Confidential Information; or


(a)	The total dollar amount of all changes of any single line item within budget categories (individually and in the aggregate) is less than […***…] of the total Approved Budget;


(b)	The transfer will not increase or decrease the total Approved Budget;


(c)	The transfer will not materially change the nature, performance level, or Scope of Work of the Project; and


(d)	The RECIPIENT submits a revised copy of the Approved Budget including a narrative justification of the changes prior to incurring costs in the new category.


(a)	Mutual written consent of all parties to this Contract; or


(b)	The INSTITUTE for an Event of Default (defined in Section 8.03) by the RECIPIENT; or


(c)	The INSTITUTE if allocated funds should become legally unavailable during the Contract period and the INSTITUTE is unable to obtain additional funds for such purposes; or


(a)	The RECIPIENT’s failure, in any material respect, to conduct the Project in accordance with the approved Scope of Work and to demonstrate progress towards achieving the milestones set forth in Section 2.02;


(b)	The RECIPIENT’s failure to conduct the Project within the State of Texas to the extent required under this Contract unless as otherwise specified in the application, Scope of Work or Approved Budget;


(c)	The RECIPIENT’s failure to fully comply, in any material respect, with any provision, term, condition, covenant, representation, certification, or warranty contained in this Contract or any other document incorporated herein by reference;


(d)	The RECIPIENT’s failure to comply with any applicable federal or state law, administrative rule, regulation or policy with regard to the conduct of the Project;


(e)	The RECIPIENT’s material misrepresentation or false covenant, representation, certification, or warranty made by RECIPIENT herein, in the Grant application, or in any other document furnished by RECIPIENT pursuant to this Contract that was misleading at the time that it was made; or


(f)	The RECIPIENT ceases its business operations, has a receiver appointed for all or substantially all of its assets, makes a general assignment for the benefit of creditors, is declared insolvent by a court of competent jurisdiction or becomes the subject, as a debtor, of a proceeding under the federal bankruptcy code, which such proceedings are not dismissed within ninety (90) days after filing.


(a)	The INSTITUTE may refrain from disbursing any amount of the Grant funds not previously disbursed; provided, however, the INSTITUTE may make such a disbursement after the occurrence of an Event of Default without thereby waiving its rights and remedies hereunder;


(b)	The INSTITUTE may enforce any additional remedies it has in law or equity.


(a)	The INSTITUTE must authorize the acquisition in advance and in writing but an acquisition is deemed authorized if included in the Approved Budget for the Project;


(b)	Equipment purchased with Grant funds must stay within the State of Texas;


(d)	In the event the RECIPIENT is indemnified, reimbursed or otherwise compensated for any loss of, destruction of, or damage to the Equipment purchased using Grant funds, it shall use the proceeds to repair or replace said Equipment;


(e)	Equipment may be exchanged (trade-in) or sold without the prior written approval of the INSTITUTE if the proceeds thereof shall be applied to the acquisition cost of replacement Equipment;