The share price of ImmunityBio Inc. stock is on the rebound — slightly — after a recent significant drop in value.
The Culver City-based company’s stock suffered a 55% drop in value after the Food and Drug Administration recently rejected an application for an ImmunityBio bladder cancer drug.
“The letter indicates that the FDA has determined that it cannot approve the (application) in its present form, and the FDA has made recommendations to address the issues raised,” the company said in a filing published on May 11.
The deficiencies cited by the agency that need to be addressed relate to the third-party manufacturing sites to be used by ImmunityBio. The filing stated that satisfactory resolution of the observations noted at the pre-license inspection is required before the application is approved.
“The FDA further provided recommendations specific to additional chemistry, manufacturing and controls issues and assays to be resolved,” the filing added.
The filing caused the company’s share price to decrease significantly, from a closing price of $6.22 on May 10 to $2.79 the following day. The stock closed at $3.23 on May 18.
As the company’s largest shareholder and founder, Patrick Soon-Shiong has been hard hit by the stock’s travails. He was No. 1 on the Business Journal’s annual list of wealthiest Angelenos last year with a net worth of $19.1 billion.
As of April 17, Soon-Shiong owned 371.6 million shares of ImmunityBio, a stake of 76%.
Assuming the number of shares has remained constant, as of May 17, Soon-Shiong’s stake in ImmunityBio was worth $1.2 billion. That’s a plunge of $10.9 billion, or 90% from its peak of $12.1 billion on the first day of trading as a public company on March 10, 2021. Soon-Shiong has invested about $407 million of personal funds into the company.
On Dec. 20, 2021, ImmunityBio announced that Soon-Shiong’s personal investment company, Nant Capital, had loaned the company $300 million, the major component of a $470 million financing package designed to provide capital for the company to expand operations to manufacture the “natural killer” cells that form the basis of its immunotherapy technology.
A year later, the company said Nant Capital had agreed to provide $50 million in debt financing. Soon-Shiong also agreed to convert approximately $56.6 million in debt held by his company NantWorks into shares of ImmunityBio, essentially freeing ImmunityBio of those debt payments.
The numbers
On May 11, the company also reported its first-quarter results. It reported a net loss of $116 million (27 cents a share) for the quarter ending March 31, compared to a net loss of $103 million (26 cents) in the same period of the previous year. Revenue increased by nearly 2,500% from the first quarter of the prior year to $360,000.
As of March 31, the company had an accumulated deficit of $2.5 billion. It also had negative cash flows from operations of $84.3 million for the three months ended March 31.
“The company will likely need additional capital to further fund the development of, and to seek regulatory approvals for, our product candidates, and to begin to commercialize any approved products,” it said in the quarterly results filing.
As a result of anticipated operating cash outflows, the company believed that “substantial doubt” exists regarding its ability to stay in business without additional funding.
“However, we believe our existing cash, cash equivalents, and investments in marketable securities, together with capital to be raised through equity offerings and our potential ability to borrow from affiliated entities, will be sufficient to fund our operations through at least the next 12 months … based primarily upon (Soon-Shiong’s) intent and ability to support our operations with additional funds, including loans from affiliated entities, as required, which we believe alleviates such doubt.”
