BELLICUM PHARMACEUTICALS, INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

The following discussion and analysis should be read in conjunction with the
financial statements and related notes included in "Item 8 - Financial
Statements and Supplementary Data" in this Annual Report on Form 10-K. The
following discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those expressed
or implied in any forward-looking statements as a result of various factors,
including those set forth under the caption "Item 1A. Risk Factors."

On February 5, 2020, we filed a Certificate of Amendment of the Amended and
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware to (i) effect a reverse stock split of all issued and outstanding
shares of our common stock at a ratio of 1-for-10 and (ii) reduce the number of
authorized shares of our common stock from 200,000,000 to 40,000,000.

On February 5, 2020, we effected a reverse stock split of all issued and
outstanding shares of our common stock at a ratio of 1-for-10, and reduced the
number of authorized shares of our common stock from 200,000,000 to 40,000,000.
Share related amounts have been retroactively adjusted in this Annual Report on
Form 10-K to reflect this reverse stock-split for all periods presented.

Overview

We are a clinical stage biopharmaceutical company focused on discovering and
developing novel, controllable cellular immunotherapies for various forms of
cancer, including both hematological cancers and solid tumors. We are advancing
CAR-T cell therapies, which are an innovative approach in which a patient's or
donor's T cells are genetically modified to carry chimeric antigen receptors, or
CARs. 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 efficacy
and safety outcomes than are seen with current cellular immunotherapies. For
additional information about our business, and candidate development programs,
see the discussions contained within "Item 1. Business" in this Annual Report.



Results of Operations

The following table presents our results of operations for the periods indicated:

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                                                                              Year Ended
(in thousands)                                   December 31, 2021           December 31, 2020              Change
Revenues
Supply agreement                               $              700          $                -          $         700
License revenue                                             5,500                         500                  5,000
Total revenues                                 $            6,200          $              500          $       5,700
Operating expenses:
Research and development                                   23,578                      39,052                (15,474)
General and administrative                                  7,010                      15,531                 (8,521)
Total operating expenses                                   30,588                      54,583                (23,995)
Other operating income (expense)
Impairment of property and equipment                            -                      (1,265)                 1,265
(Loss) Gain on dispositions, net                             (478)                      3,656                 (4,134)
Total other operating income (expense)                       (478)                      2,391                 (2,869)
Loss from operations                                      (24,866)                    (51,692)                26,826
Other income (expense):
Interest income                                                32                         387                   (355)
Interest expense                                               (4)                     (2,659)                 2,655
Change in fair value of warrant and
private placement option liabilities                       15,126                      46,130                (31,004)
Gain on extinguishment of debt                                  -                         112                   (112)
Other income                                                    7                           -                      7
Total other income                                         15,161                      43,970                (28,809)
Net loss                                       $           (9,705)         $           (7,722)         $      (1,983)



Revenues

The increase in revenues for the year ended December 31, 2021, compared to last
year, was due to agreements executed with external parties during the year. In
the first quarter of 2021, we entered into a multi-year supply agreement with
Takeda Development Center Americas, Inc. (Takeda) for the supply of rimiducid
for potential use in clinical trials of TAK-007 (CD19 CAR-NK cell therapy). The
supply was fulfilled in the second quarter of 2021 generating revenue of $0.7
million. In the third quarter of 2021, we entered into an option and license
agreement with The University of Texas M. D. Anderson Cancer Center ("MD
Anderson") for certain option and license rights to CaspaCIDe and related
technologies. An upfront fee under the agreement of $5.0 million was recognized
as revenue, together with $0.5 million of annual license fee under a previous
license agreement with MD Anderson. For the year ended December 31, 2020, the
only source of revenue was the annual license fee of $0.5 million.

Research and development (R&D) costs

The decrease in R&D expenses for the year ended December 31, 2021, compared to
the year ended December 31, 2020, was primarily due to reduced expenses related
to rivo-cel related activities, the sale of the manufacturing facility, and the
reduction in force that was implemented in the fourth quarter of 2020, partially
offset by an increase in expenses related to our GoCAR-T programs. This resulted
in $12.3 million reduction in salaries, benefits, travel, and share based
compensation related charges and a $3.2 million reduction in general R&D
supplies, technical operations and pharmaceutical development expenses and
facility charges primarily due to lower clinical trial activities. Additionally,
depreciation expense decreased $0.1 million due to the manufacturing facility
and related laboratories disposed of in April 2020 and additional laboratory
assets and equipment sold in March 2021.

General and administrative expenses (G&A)

The decrease in G&A expenses for the year ended December 31, 2021, compared to
the year ended December 31, 2020, was primarily due the aforementioned reduction
in force that reduced employee-related charges by $6.8 million as well as the
reduction in rivo-cel related commercialization activities that reduced charges
by $1.7 million.

Impairment

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In connection with the Company's restructuring plan, the management elected to
seek an exit to its leased R&D facility in Houston, Texas during the fourth
quarter of 2020. As a result, we reclassified the assets and liabilities
associated with the leased facility as held for sale, which included a
right-of-use asset of $0.5 million, and property plant and equipment of $2.3
million. Based on the cost to exit the lease and the net realizable value of the
related assets, we recognized an impairment charge of $1.3 million for the year
ended December 31, 2020. The sale of the assets and equipment was completed in
the first quarter of 2021, and there was no additional impairment recognized for
the year ended December 31, 2021.

Gain on disposal, net

The decrease in gain of dispositions, net for the year ended December 31, 2021,
compared to last year, was primarily due to the disposal of the clinical supply
manufacturing facility to MD Anderson in the second quarter of 2020 which
resulted a gain of $3.7 million in 2020. In addition, there was a loss on
termination of the South San Francisco office space of $0.5 million during the
first quarter of 2021.

Other Income (Expense)

Other income or expense primarily consists of interest income, interest expense,
and changes in fair values of our warrant liability and the private placement
option, which are remeasured at each reporting period. Due to the nature of the
inputs in the model used to assess the fair value of the warrant liability and
private placement option, we may experience significant fluctuations at each
reporting period. These fluctuations may be due to a variety of factors,
including changes in our stock price and changes in stock price volatility over
the remaining term of the warrants and options.

The decrease in other income for the year ended December 31, 2021, was primarily
due to a decreased gain of $15.1 million from the change in fair value of our
warrant and private placement option liabilities, compared to a gain from change
in fair value of $46.1 million for the year ended December 31, 2020. The bigger
change in fair value over 2020 was primarily driven by a more significant
decrease in our stock price compared to 2021. Meanwhile, there is a decrease of
$3.0 million in interest expense for the year ended December 31, 2021 compared
to last year, as a result of the early retirement of the Oxford Loan in 2020.

Cash and capital resources

Sources of liquidity

At December 31, 2021, we had cash, cash equivalents, and restricted cash of
$47.7 million and net cash used in operations of approximately $23.1 million for
the year ended December 31, 2021. Notably, in December 2021, we completed a
private placement equity financing transaction for gross proceeds of
approximately $35.0 million before deducting placement agent commissions and
offering expenses.

The accompanying consolidated financial statements have been prepared on the
basis that there is no substantial doubt about our ability to continue as a
going concern, which contemplates realization of assets and the satisfaction of
liabilities in the normal course of business. Our cash resources are primarily
consumed by operating activities and we expect negative cash flows from
operations to continue for at least the next 12 months. We do not have any
material contractual obligations or commitments as of December 31, 2021. Our
primary uses of capital are, and we expect will continue to be, compensation and
related expenses, third-party clinical research and development services,
clinical costs, legal and other regulatory expenses, and general overhead costs.
Based on our current research and development plans and our timing expectations
related to the progress of our programs, we believe that our cash and cash
equivalents will be sufficient to fund our operating expenses and capital
expenditure requirements through at least mid-2023.

We plan to continue attempting to obtain future financing and/or engage in
strategic transactions, but we cannot predict, with certainty, the outcome of
our actions to generate liquidity, including the availability of additional
equity or debt financing, or whether such actions would generate the expected
liquidity as currently planned. To continue as a going concern, we may postpone
or eliminate some of our research and development programs and reduce our
administrative costs. We may also intend to seek additional funding including,
but not limited to, any or all of the following potential sources:

We have an effective shelf registration statement on Form S-3 for the offer and
sale of up to $400.0 million of our securities, of which approximately
$317.5 million remains available for future offerings. We may pursue additional
funding through the sale of our securities in one or more offerings under this
registration statement; however, we cannot assure you that we will be able to do
so on favorable terms. Our ability to offer and sell our securities in a primary
offering on our Form S-3 is currently limited by Instruction I.B.6 of Form S-3,
commonly referred to as the "baby shelf" limitation. If 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 could adversely affect the rights of our
existing stockholders. If we raise additional capital through the issuance of
debt securities, we could incur fixed payment obligations and become subject to
certain restrictive covenants, including limitations on

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Contents our ability to incur additional debt and acquire or license intellectual property rights, and other operating restrictions that may limit our ability to conduct our business.

In addition, we may receive additional capital through the exercise of
outstanding warrants to purchase our stock if our stock price sufficiently
increases. As of December 31, 2021, warrants to purchase 5,750,000 shares of our
Series 1 preferred stock at an exercise price of $130.00 per share (equivalent
to $13.00 per share of common stock), warrants to purchase 4,149,378 shares of
our common stock at an exercise price of $6.50 per share and warrants to
purchase 2,055,920 shares of our common stock at an exercise price of $1.69 per
share were outstanding. The preferred stock warrants expire on August 21, 2026
and the common warrants expire on November 3, 2025 and December 7, 2028,
respectively.

As a result of the COVID-19 pandemic and actions taken to slow its spread, the
global credit and financial markets have experienced extreme volatility,
including diminished liquidity and credit availability, declines in consumer
confidence, declines in economic growth, increases in unemployment rates and
uncertainty about economic stability. There can be no assurance that further
deterioration in credit and financial markets and confidence in economic
conditions will not occur. If equity and credit markets deteriorate, it may make
any necessary debt or equity financing more difficult to obtain, more costly
and/or more dilutive. Moreover, if we do not obtain such additional funds, there
could be substantial doubt about our ability to continue as a going concern and
increased risk of insolvency, which could result in a total loss of investment
to our stockholders and other security holders.

Cash flow

Operational activities

Net cash used in operating activities during the year ended December 31, 2021,
was $23.1 million compared to $56.7 million for the year ended December 31,
2020. The primary operating activities during 2021 were (1) $9.7 million of net
losses, (2) a $15.1 million non-cash gain from change in fair market value of
warrant derivative and private placement option liabilities, (3) a $2.4 million
decrease from operating assets and liabilities, and (4) a $0.5 million of loss
on dispositions, net. These activities were partially offset by share-based
compensation charges of $3.4 million and other smaller non-cash items.

Investing activities

Net cash provided by investing activities during the year ended December 31,
2021, was $0.9 million compared to $14.1 million for the year ended December 31,
2020. The net cash provided by investing activities during the year ended
December 31, 2021, was primarily due to $0.9 million of net proceeds received
from the sale of property and equipment. The $14.1 million of net cash provided
by investing activities during 2020 was also related to proceeds from the sale
of property and equipment.

Financing Activities

Net cash provided by financing activities during the year ended December 31,
2021, was $32.9 million compared to net cash used of $14.2 million for the year
ended December 31, 2020. The net cash provided by financing activities during
the year ended December 31, 2021 was generated from the issuance of pre-funded
warrants during the private placement closed in December 2021, net of offering
expenses. The net cash used in financing activities for the year ended December
31, 2020 was primarily due to the principal payments and the subsequent early
retirement of debt totaling $37.1 million partially offset by proceeds from the
issuance of common stock and pre-funded warrants, net in the amount of $22.9
million.

From December 31, 2021, we have no short or long term lease liabilities, debt securities or other material capital commitments. Planned capital expenditures for the next 12 months are minimal.

Off-balance sheet arrangements

We do not have any off-balance sheet arrangements (as defined by applicable
regulations of the SEC) that are reasonably likely to have a current or future
material effect on our financial condition, results of operations, liquidity,
capital expenditures or capital resources. We do not have any relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or for any other contractually narrow or limited purpose.

Significant Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of
operations are based on our financial statements, which are prepared in
accordance with U.S. generally accepted accounting principles, or GAAP. The
preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues,
costs and expenses and related disclosures. We base our estimates on historical
experience and on various other assumptions that we believe to

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be reasonable under the circumstances. In many instances, we could have
reasonably used different accounting estimates, and in other instances changes
in the accounting estimates are reasonably likely to occur from period to
period. Accordingly, actual results could differ significantly from management's
estimates under different assumptions or conditions. To the extent that there
are material differences between these estimates and actual results, our future
financial statement presentation, financial condition, results of operations and
cash flows will be affected. While our significant accounting policies are
described in the notes to our financial statements, we believe that the
accounting policies discussed below are critical to understanding our historical
and future performance, as these policies related to the more significant areas
involving management's judgments and estimates. Our management has discussed the
development and selection of these critical accounting estimates with the audit
committee of our board of directors and the audit committee has reviewed the
company's disclosure relating to it in this MD&A.

Derivatives on warrants

Freestanding public warrants exercisable for multiple underlying instruments are
classified as liabilities. The Company accounts for these warrants in accordance
with ASC Topic 480, Distinguishing Liabilities From Equity ("ASC 480") and ASC
Topic 815, Accounting for Derivative Instruments and Hedging Activities ("ASC
815"). The Company estimates the fair value of these liabilities using the
binomial option model. The option pricing model of our warrant derivative
liabilities are estimates and are sensitive to changes to certain inputs used in
the pricing model. See Note 1 - Organization, Basis of Presentation, and Summary
of Significant Accounting Policies for a discussion of how the Company accounts
for its warrant derivatives.

Freestanding pre-funded warrants and accompanying warrants exercisable for
multiple underlying instruments are classified as equity. The Company accounts
for these warrants in accordance with ASC Topic 480, Distinguishing Liabilities
From Equity ("ASC 480") and ASC Topic 815, Accounting for Derivative Instruments
and Hedging Activities ("ASC 815"). Upon the issuance of pre-funded warrants or
the exercise of its accompanying common warrants, the Company receives proceeds
from its investors which are recognized as equity. Furthermore, because
pre-funded warrants and accompanying warrants do not participate in dividends
with common stockholders, they are not considered a participating security in
its current form and, therefore, they will be considered in the Company's basic
and diluted EPS calculations (if in net income position). See Note 1 -
Organization, Basis of Presentation, and Summary of Significant Accounting
Policies for a discussion of how the Company accounts for its pre-funded
warrants.

Private placement option

The Company previously entered into a 2019 securities purchase agreement that
contained a call option on preferred shares that are puttable outside the
control of the Company. The Company accounted for the option in accordance with
ASC Topic 480, Distinguishing Liabilities From Equity ("ASC 480") and ASC Topic
815, Accounting for Derivative Instruments and Hedging Activities ("ASC 815").
The Company estimated the fair value of the liability using a binomial lattice
model, which is sensitive to changes to certain inputs. See Note 1 -
Organization, Basis of Presentation, and Summary of Significant Accounting
Policies for a discussion of how the Company accounted for its private placement
option derivative. The private placement option was terminated on December 4,
2021, in connection with the 2021 securities purchase agreement.

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. 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. See Note 1 - Organization,
Basis of Presentation, and Summary of Significant Accounting Policies for a
discussion of how the Company accounts for research and development expenses.

Share-based compensation

The Company's share-based awards include stock option grants and restricted
stock awards. The estimated fair value for stock options, which determines the
Company's calculation of compensation expense, is based on the Black-Scholes
pricing model, which requires a number of estimates, including the expected
lives of awards, interest rates, stock volatility and other assumptions.
Additionally, we apply a forfeiture rate to estimate the number of grants that
will ultimately vest, as applicable, and adjust the expense as these awards
vest. See Note 1 - Organization, Basis of Presentation, and Summary of
Significant Accounting Policies for a discussion of how the Company accounts for
share-based compensation.

Recently published accounting pronouncements

See Note 1 – Organization, Basis of Presentation and Summary of Significant Accounting Policies for a discussion of recent accounting pronouncements.

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