10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, 2024


☐	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 001-36548

ATARA BIOTHERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		46-0920988
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2380 Conejo Spectrum Street, Suite 200 Thousand Oaks, CA		91320
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (805) 623-4211

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share	ATRA	The Nasdaq Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

The number of outstanding shares of the Registrant’s Common Stock as of May 2, 2024 was 120,416,138 shares.

ATARA BIOTHERAPEUTICS, INC.

INDEX


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets	6

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	7

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	8

	Condensed Consolidated Statements of Cash Flows	9

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35

Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 5.	Other Information	83

Item 6.	Exhibits	84

	Signatures	85

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which represent our intent, belief or current expectations, involve risks and uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “predict,” “plan,” “expect” or the negative or plural of these words or similar expressions. The forward-looking statements include, but are not limited to, statements about:

•

our expectations regarding the timing of initiating clinical studies, opening client sites, enrolling clinical studies and reporting results of clinical studies for our programs, including our ATA3219 program;

•

the likelihood and timing of regulatory submissions or related approvals for our product candidates, including the initiation, completion and expectations about the timing of approvals for a biologics license application (BLA) for tab-cel® for patients with Epstein-Barr virus with post-transplant lymphoproliferative disease (EBV+ PTLD);

•

the potential indications for our product and product candidates;

•

commercialization of tab-cel (Ebvallo™ in the United Kingdom (UK) and the European Union (EU)) worldwide and our amended and restated Commercialization Agreement with Pierre Fabre Medicament, including potential milestone and royalty payments under the agreement (Ebvallo in the UK and the EU subject to the Purchase and Sale Agreement with HCR Molag Fund, L.P.);

•

our Purchase and Sale Agreement and related transactions with HCR Molag Fund, L.P.;

•

our Commercial Manufacturing Services Agreement with Charles River Laboratories, Inc. (CRL) and other agreements we may enter into with CRL, including our ability to enter into a new drug supply agreement with CRL on terms favorable or acceptable to us, or at all;

•

our Master Services and Supply Agreement and related transactions with FUJIFILM Diosynth Biotechnologies California, Inc.;

•

our expectations regarding the potential commercial market opportunities, market size and the size of the patient populations for our product and product candidates;

•

estimates of our expenses, capital requirements and need for additional financing;

•

our expectation regarding the length of time that our existing capital resources will be sufficient to enable us to fund our planned operations, including our going concern assessment;

•

our ability to enter into favorable commercialization arrangements with third parties to commercialize our product candidates;

•

our ability to develop, acquire and advance product candidates into, and successfully complete, clinical studies;

•

the initiation, timing, costs, progress and results of future preclinical studies and clinical studies and our research and development programs;

•

our ability to enter into and maintain contracts with clinical research organizations, contract manufacturing organizations (CMOs) and other vendors for clinical and preclinical studies, supplies and other services;

•

the scope of protection we are able to obtain and maintain for the intellectual property rights covering our product and product candidates;

•

our financial performance;

•

our election to rely on reduced reporting and disclosure requirements available to smaller reporting companies;

•

developments and projections relating to our competitors and our industry;

•

our ability to have our product and product candidates manufactured for our clinical studies or for commercial sale, including at commercially reasonable values;

•

the impact of public health emergencies, such as COVID-19, to our business and operations, as well as the businesses and operations of third parties on which we rely;

•

the impact of our workforce reductions on our ability to attract, retain and motivate qualified personnel and on our business, operations, and financial condition; and

•

timing and costs related to the qualification of the manufacturing facilities of our CMOs for commercial production.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, including, without limitation, risks and uncertainties associated with the costly and time-consuming pharmaceutical product development process and the uncertainty of clinical success; the sufficiency of our cash resources and need for additional capital; and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this report in greater detail under the heading “1A. Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, “Atara,” “Atara Biotherapeutics,” “Company,” “we,” “our,” and “us” means Atara Biotherapeutics, Inc. and, where appropriate, its subsidiaries.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. These risks are more fully described under the heading “1A. Risk Factors” and elsewhere in this report and include, among others:

•

we have incurred substantial losses since our inception and anticipate that we will continue to incur substantial losses for the foreseeable future;

•

we have earned limited commercialization revenues to date, and we may never achieve profitability;

•

we have one approved product, Ebvallo, in the EU and the UK, are generally early in our development efforts and have only a small number of product candidates in clinical development, and all of our other product candidates are still in preclinical development. If we or our collaborators are unable to successfully develop, manufacture and commercialize our product or product candidates or experience significant delays in doing so, our business may be materially harmed;

•

we will require substantial additional financing on terms acceptable to us to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or manufacturing efforts;

•

our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel;

•

the results of preclinical studies or earlier clinical studies are not necessarily predictive of future results, and our existing product candidates in clinical studies, and any other product candidates we advance into clinical studies may not have favorable results in later clinical studies or receive regulatory approval;

•

clinical drug development involves a lengthy and expensive process with an uncertain outcome;

•

our T-cell immunotherapy product and product candidates and our next-generation CAR T programs represent new therapeutic approaches that could result in heightened regulatory scrutiny, delays in clinical development or our inability to achieve regulatory approval, commercialization or payor coverage of our product candidates;

•

there can be no assurance that we will achieve all of the anticipated benefits of the Fujifilm Transaction and we could face unanticipated challenges;

•

the market opportunities for our product and product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small;

•

we may not be able to obtain or maintain orphan drug exclusivity for our product candidates;

•

the proposed revision of the European legislation on pharmaceuticals could lead to uncertainties over the regulatory framework that will be applicable to medicinal products in the EU, including orphan medicinal products;

•

we have been affected by and could be adversely affected in the future by the effects of health epidemics and pandemics, such as the COVID-19 pandemic, which could materially and adversely affect our business and operations in the future, as well as the businesses and operations of third parties on which we rely;

•

if we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our ability to commercialize our product candidates successfully and to compete effectively may be adversely affected;

•

our principal stockholders own a significant percentage of our stock and will be able to exert control or significant influence over matters subject to stockholder approval;

•

if we continue to fail to meet the listing standards of the Nasdaq Stock Market LLC (Nasdaq), our common stock may be delisted, which could have a material adverse effect on the liquidity of our common stock;

•

we qualify as a “smaller reporting company” and a “non-accelerated filer,” and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to such companies could make our stock less attractive to investors;

•

our workforce reductions may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business; and

•

maintaining clinical and commercial timelines is dependent on our end-to-end supply chain network to support manufacturing; if we experience problems with our third party suppliers or CMOs, development and/or commercialization of our product and product candidates may be adversely affected.

Atara Biotherapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)


	March 31,			December 31,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	35,087		$	25,841
Short-term investments		11,152			25,884
Restricted cash		146			146
Accounts receivable		35,834			34,108
Inventories		16,084			9,706
Other current assets		8,131			6,184
Total current assets		106,434			101,869
Property and equipment, net		2,989			3,856
Operating lease assets		51,981			54,935
Other assets		3,868			4,844
Total assets	$	165,272		$	165,504

Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	2,854		$	3,684
Accrued compensation		5,707			11,519
Accrued research and development expenses		15,928			17,364
Deferred revenue		123,154			77,833
Other current liabilities		33,047			31,826
Total current liabilities		180,690			142,226
Deferred revenue – long-term		719			37,562
Operating lease liabilities – long-term		42,197			45,693
Liability related to the sale of future revenues – long-term		35,573			34,623
Other long-term liabilities		4,401			4,631
Total liabilities		263,580			264,735

Commitments and contingencies (Note 8)

Stockholders’ equity (deficit):
Common stock—$0.0001 par value, 500,000 shares authorized as of March 31, 2024 and December 31, 2023; 120,325 and 106,447 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		12			11
Additional paid-in capital		1,902,637			1,870,112
Accumulated other comprehensive (loss) income		(55	)		(204	)
Accumulated deficit		(2,000,902	)		(1,969,150	)
Total stockholders’ equity (deficit)		(98,308	)		(99,231	)
Total liabilities and stockholders’ equity (deficit)	$	165,272		$	165,504

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended March 31,
	2024			2023
Commercialization revenue	$	27,357		$	884
License and collaboration revenue		—			342
Total revenue		27,357			1,226
Costs and operating expenses:
Cost of commercialization revenue		1,985			216
Research and development expenses		45,506			62,156
General and administrative expenses		11,113			13,872
Total costs and operating expenses		58,604			76,244
Loss from operations		(31,247	)		(75,018	)
Other income (expense), net:
Interest income		604			1,802
Interest expense		(1,153	)		(1,336	)
Other income (expense), net		68			(197	)
Total other income (expense), net		(481	)		269
Loss before provision for (benefit from) income taxes		(31,728	)		(74,749	)
Provision for (benefit from) income taxes		24			22
Net income (loss)	$	(31,752	)	$	(74,771	)
Other comprehensive gain (loss):
Unrealized gain (loss) on available-for-sale securities		149			830
Comprehensive income (loss)	$	(31,603	)	$	(73,941	)

Basic and diluted net loss per common share	$	(0.23	)	$	(0.72	)

Basic and diluted weighted-average shares outstanding		140,587			103,969

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(Unaudited)

(In thousands)


								Accumulated
	Common				Additional			Other						Total
	Stock				Paid-in			Comprehensive			Accumulated			Stockholders’
For the Three Months Ended March 31, 2024	Shares		Amount		Capital			Income (Loss)			Deficit			Equity (Deficit)
Balance as of January 1, 2024		106,447	$	11	$	1,870,112		$	(204	)	$	(1,969,150	)	$	(99,231	)
Issuance of pre-funded warrants to purchase common stock through a registered direct offering, net of offering costs of $177		—		—	$	14,823			—			—			14,823
Issuance of common stock through ATM facilities, net of commissions and offering costs of $168		12,321		1		9,311			—			—			9,312
RSU settlements, net of shares withheld		1,557		—		(6	)		—			—			(6	)
Stock-based compensation expense		—		—		8,397			—			—			8,397
Net (loss) income		—		—		—			—			(31,752	)		(31,752	)
Unrealized gain (loss) on available-for-sale securities		—		—		—			149			—			149
Balance as of March 31, 2024		120,325	$	12	$	1,902,637		$	(55	)	$	(2,000,902	)	$	(98,308	)


								Accumulated
	Common				Additional			Other						Total
	Stock				Paid-in			Comprehensive			Accumulated			Stockholders’
For the Three Months Ended March 31, 2023	Shares		Amount		Capital			Income (Loss)			Deficit			Equity (Deficit)
Balance as of January 1, 2023		95,927	$	10	$	1,821,721		$	(2,067	)	$	(1,693,024	)	$	126,640
Issuance of common stock through ATM facilities, net of commissions and offering costs of $97		148		—		590			—			—			590
RSU settlements, net of shares withheld		463		—		(93	)		—			—			(93	)
Stock-based compensation expense		—		—		11,764			—			—			11,764
Net (loss) income		—		—		—			—			(74,771	)		(74,771	)
Unrealized gain (loss) on available-for-sale securities		—		—		—			830			—			830
Balance as of March 31, 2023		96,538	$	10	$	1,833,982		$	(1,237	)	$	(1,767,795	)	$	64,960

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2024			2023
Operating activities
Net income (loss)	$	(31,752	)	$	(74,771	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation expense		8,397			11,764
Depreciation and amortization expense		1,391			1,214
Accretion of liability related to sale of future revenues		1,046			1,204
Amortization (accretion) of investment premiums (discounts)		37			(351	)
Non-cash operating lease expense		2,954			2,879
Other non-cash items, net		48			80
Changes in operating assets and liabilities:
Accounts receivable		(1,726	)		39,824
Inventories		(6,378	)		(3,754	)
Other current assets		(2,061	)		(2,584	)
Other assets		443			(156	)
Accounts payable		(826	)		(1,886	)
Accrued compensation		(5,812	)		(8,746	)
Accrued research and development expenses		(1,436	)		(1,226	)
Other current liabilities		(742	)		(609	)
Deferred revenue		8,478			2,965
Operating lease liabilities		(1,673	)		(4,174	)
Other long-term liabilities		—			(102	)
Net cash used in operating activities		(29,612	)		(38,429	)
Investing activities
Purchases of short-term investments		—			(67,903	)
Proceeds from maturities and sales of short-term investments		14,844			62,295
Purchases of property and equipment		(127	)		(399	)
Net cash provided by (used in) investing activities		14,717			(6,007	)
Financing activities
Proceeds from sale of pre-funded warrants to purchase common stock in a registered direct offering, net		15,000			—
Proceeds from issuance of common stock through ATM facilities, net		9,374			640
Proceeds from employee stock awards		—			—
Taxes paid related to net share settlement of restricted stock units		(6	)		(93	)
Principal payments on finance lease obligations		(227	)		(312	)
Net cash provided by financing activities		24,141			235
Increase (decrease) in cash, cash equivalents and restricted cash		9,246			(44,201	)
Cash, cash equivalents and restricted cash at beginning of period		25,987			93,088
Cash, cash equivalents and restricted cash at end of period	$	35,233		$	48,887
Non-cash investing and financing activities
Property and equipment purchases included in accounts payable and other accrued liabilities	$	—		$	194
Accrued costs related to underwritten public offering	$	177		$	—
Accrued costs related to ATM facility	$	26		$	73

Supplemental cash flow disclosure
Cash paid for interest	$	114		$	112
Cash paid for income taxes	$	24		$	1

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Description of Business

Atara Biotherapeutics, Inc. (Atara, we, our or the Company) was incorporated in August 2012 in Delaware. Atara is a leader in T-cell immunotherapy, leveraging its novel allogeneic Epstein-Barr Virus (EBV) T-cell platform to develop transformative therapies for patients with cancer and autoimmune disease.

We have several T-cell immunotherapies in clinical development and are progressing multiple next-generation allogeneic chimeric antigen receptor T-cell (CAR T) programs. Our most advanced T-cell immunotherapy program, tab-cel® (tabelecleucel), has received marketing authorization approval under the proprietary name Ebvallo™ by the European Commission (EC) for commercial sale and use in the European Union (EU) and by the Medicines and Healthcare products Regulatory Agency (MHRA) for commercial sale and use in the United Kingdom (UK). Tab-cel is currently in Phase 3 development in the US. In October 2021, we entered into a commercialization agreement (Pierre Fabre Commercialization Agreement) with Pierre Fabre Medicament (Pierre Fabre), as amended in September 2022, pursuant to which we granted to Pierre Fabre an exclusive, field-limited license to commercialize and distribute Ebvallo in Europe and select emerging markets in the Middle East, Africa, Eastern Europe and Central Asia (the Initial Territory), following regulatory approval. In October 2023, we amended and restated the Pierre Fabre Commercialization Agreement (A&R Commercialization Agreement). Pursuant to the A&R Commercialization Agreement, Pierre Fabre’s exclusive rights to research, develop, manufacture, commercialize and distribute tab-cel (Ebvallo) were expanded to include all other countries in the world (Additional Territory) in addition to the Initial Territory (Initial Territory and Additional Territory together, the Territory), subject to our performance of certain obligations. See Note 5 for further information. In December 2022, we sold a portion of our right to receive royalties and certain milestones in Ebvallo under the Pierre Fabre Commercialization Agreement to HCR Molag Fund L.P. (HCRx) for a total investment amount of $31.0 million, subject to a repayment cap between 185% and 250% of the total investment amount by HCRx. See Note 6 for further information.

We have licensed rights to T-cell product candidates from Memorial Sloan Kettering Cancer Center (MSK), rights related to our next-generation CAR T programs from MSK, and rights to know-how and technology from the Council of the Queensland Institute of Medical Research (QIMR Berghofer). See Note 8 for further information.

We and FUJIFILM Diosynth Biotechnologies California, Inc. (FDB) entered into a Master Services and Supply Agreement and related Statements of Work (collectively, the Fujifilm MSA), which became effective in April 2022 and could extend for up to ten years. Pursuant to the Fujifilm MSA, FDB will supply us with specified quantities of our cell therapy product candidates and any products approved by regulatory authorities, manufactured in accordance with cGMP standards. See Note 8 for further information.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of Atara and its wholly owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These unaudited interim condensed consolidated financial statements should therefore be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the Company’s condensed consolidated financial statements. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or any other future period. The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete consolidated financial statements.

Liquidity Risk

We have incurred significant operating losses since inception and have relied primarily on public and private equity financings and receipts from commercialization and license and collaboration agreements to fund our operations. As we continue to incur losses, our transition to profitability will depend on the successful development, approval and commercialization of product candidates and on the achievement of sufficient revenues to support our cost structure. We may never achieve sustained operating cash inflows or profitability.

Going Concern

We have incurred operating losses since inception and we expect that existing cash, cash equivalents and short-term investments as of March 31, 2024, will not be sufficient to fund our planned operations for at least 12 months from the date of issuance of these condensed consolidated financial statements. Although we anticipate the receipt of certain payments from the amended and restated Pierre Fabre Commercialization Agreement in 2024 and 2025, such payments are contingent upon the successful filing and approval of the tab-cel BLA, as well as the completing of specific development and regulatory activities by us and actions taken by third parties, and are, therefore, uncertain at this time.

To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure additional capital, potentially through a combination of public or private security offerings; use of our ATM facility as described in Note 9; and/or strategic transactions. We may also need to raise additional funding as required based on the status of our development programs and our projected cash flows. Although we have been successful in raising capital in the past, and expect to continue to raise capital as required, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, or identify and enter into any strategic transactions that will provide the capital that we will require. If we are unable to obtain sufficient funding on acceptable terms, we could be forced to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates, which could have a material adverse effect on our business, results of operations, and financial condition. Accordingly, we have concluded that substantial doubt exists with respect to our ability to continue as a going concern for at least 12 months after the issuance of the accompanying condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. Significant estimates relied upon in preparing these financial statements include estimates related to revenue recognition, accrued research and development expenses, stock-based compensation expense, income taxes and the liability related to the sale of future revenues. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

We consider the applicability and impact of any recent Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB). Other than the ASUs listed below, all other ASUs were assessed and determined to be either not applicable to Atara or are expected to have minimal impact on our condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendment requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Additionally, all disclosure requirements under the guidance are also required for public entities with a single reportable segment. We will adopt the amendments effective for the fiscal year ending December 31, 2024, and for interim periods within fiscal years beginning January 1, 2025. We are currently evaluating this ASU to determine its impact on our disclosures.

In December 2023, the FASB issued ASU No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhancements to certain income tax disclosures, most notably the income tax rate reconciliation and income taxes paid. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this standard will have a material impact on our disclosures.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing net loss by the weighted-average number of shares of common stock and pre-funded warrants outstanding during the period, without consideration of common share equivalents. Diluted net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock, pre-funded warrants and common share equivalents outstanding for the period. The pre-funded warrants are included in the computation of basic and diluted net loss per common share as the exercise price is negligible and the pre-funded warrants are fully vested and exercisable. Common share equivalents are only included in the calculation of diluted net loss per common share when their effect is dilutive.

Potential dilutive securities, which include unvested restricted stock units (RSUs), unvested performance-based RSUs and performance-based options to purchase common stock for which established performance criteria have been achieved as of the end of the respective periods, vested and unvested options to purchase common stock and shares to be issued under our employee stock purchase plan (ESPP), have been excluded from the computation of diluted net loss per common share as the effect is antidilutive. Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in all periods presented.

The following table represents the potential common shares issuable pursuant to outstanding securities as of the related period end dates that were excluded from the computation of diluted net loss per common share, as their inclusion would have an antidilutive effect:



	As of March 31,
	2024		2023
Unvested RSUs		15,605,196		10,565,596
Vested and unvested options		9,188,927		13,441,909
ESPP share purchase rights		241,362		472,184
Total		25,035,485		24,479,689

Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable U.S. GAAP:

Level 1: Quoted prices in active markets for identical assets or liabilities that we have the ability to access

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves

Level 3: Inputs that are unobservable data points that are not corroborated by market data

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2 and Level 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

The following tables summarize the estimated fair value and related valuation input hierarchy of our available-for-sale securities as of each period end:


		Total			Total			Total			Total
		Amortized			Unrealized			Unrealized			Estimated
As of March 31, 2024:	Input Level	Cost			Gain			Loss			Fair Value
		(in thousands)
Money market funds	Level 1	$	34,008		$	—		$	—		$	34,008
Corporate debt obligations	Level 2		11,207			—			(55	)	$	11,152
Total available-for-sale securities			45,215			—			(55	)		45,160
Less: amounts classified as cash equivalents			(34,008	)		—			—			(34,008	)
Amounts classified as short-term investments		$	11,207		$	—		$	(55	)	$	11,152

		Total			Total			Total			Total
		Amortized			Unrealized			Unrealized			Estimated
As of December 31, 2023:	Input Level	Cost			Gain			Loss			Fair Value
		(in thousands)
Money market funds	Level 1	$	14,376		$	—		$	—		$	14,376
U.S. Treasury obligations	Level 2		9,928			1			—			9,929
Corporate debt obligations	Level 2		26,089			—			(205	)		25,884
Total available-for-sale securities			50,393			1			(205	)		50,189
Less: amounts classified as cash equivalents			(24,304	)		(1	)		—			(24,305	)
Amounts classified as short-term investments		$	26,089		$	—		$	(205	)	$	25,884

The amortized cost and fair value of our available-for-sale securities by contractual maturity were as follows:


	As of March 31, 2024				As of December 31, 2023
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(in thousands)				(in thousands)
Maturing within one year	$	45,215	$	45,160	$	50,393	$	50,189
Maturing in one to five years		—		—		—		—
Total available-for-sale securities	$	45,215	$	45,160	$	50,393	$	50,189

We considered the current and expected future global economic and market conditions, including, but not limited to, the wars in Ukraine and the Middle East and increased tensions between the U.S. and China, and determined that our investments have not been significantly impacted. As of March 31, 2024, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the issuers of the available-for-sale securities we hold, and we have no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. For all securities with a fair value less than its amortized cost basis, we determined the decline in fair value below amortized cost basis to be non-credit related and no allowance for losses has been recorded. During the three months ended March 31, 2024 and 2023, we did not recognize any impairment losses on our investments.

We have elected the practical expedient to exclude the applicable accrued interest from both the fair value and the amortized cost basis of our available-for-sale securities for purposes of identifying and measuring an impairment. We present accrued interest receivable related to our available-for-sale securities in other current assets, separate from short-term investments, on our condensed consolidated balance sheet. As of March 31, 2024 and December 31, 2023, accrued interest receivable was $0.2 million and $0.3 million, respectively. We have not written off any accrued interest receivables during the three months ended March 31, 2024 and 2023.

In addition, restricted cash collateralized by money market funds is a financial asset measured at fair value and is a Level 1 financial instrument under the fair value hierarchy.

The following table provides a reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheets that sum to the total of the same such amounts in the condensed consolidated statement of cash flows:


	March 31,		December 31,
	2024		2023
	(in thousands)
Cash and cash equivalents	$	35,087	$	25,841
Restricted cash – short term		146		146
Total cash, cash equivalents and restricted cash	$	35,233	$	25,987

Out-license Agreements

Pierre Fabre Agreements

In October 2021, we entered into the Pierre Fabre Commercialization Agreement, pursuant to which, we granted to Pierre Fabre an exclusive, field-limited license to commercialize and distribute Ebvallo in Europe and select emerging markets in the Initial Territory following regulatory approval. In September 2022, we entered into Amendment No. 1 to the Pierre Fabre Commercialization Agreement (the PF Amendment). Under the terms of the PF Amendment, following EC approval of Ebvallo for EBV+ PTLD and subsequent filing of the Marketing Authorization Application (MAA) transfer to Pierre Fabre, we received an additional $30 million milestone payment in exchange for, among other things, a reduction in: (i) royalties we are eligible to receive as a percentage of net sales of tab-cel (Ebvallo) in the Initial Territory, and (ii) the supply price mark up on tab-cel purchased by Pierre Fabre. Additionally, we agreed to extend the time period for provision of certain services to Pierre Fabre in the Initial Territory at our cost pursuant to the Pierre Fabre Commercialization Agreement. In December 2022, we sold a portion of our right to receive royalties and certain milestone payments related to Ebvallo in the Initial Territory under the Pierre Fabre Commercialization Agreement to HCRx for a total investment amount of $31.0 million, subject to a repayment cap between 185% and 250% of the total investment amount by HCRx. See Note 6 for further information related to the agreement with HCRx.

In October 2023, we entered into the A&R Commercialization Agreement with Pierre Fabre. Pursuant to the A&R Commercialization Agreement, Pierre Fabre’s exclusive rights to research, develop, manufacture, commercialize and distribute tab-cel were expanded to include the Additional Territory in addition to the Initial Territory, subject to our performance of certain obligations as described below.

Pierre Fabre paid us an upfront cash payment of $45.0 million for the exclusive license grant for the Initial Territory in the fourth quarter of 2021. In December 2022, we met the contractual right to receive $40.0 million in milestone payments upon certain regulatory milestones, for which the cash was received in January 2023. Subject to the terms of the royalty purchase agreement with HCRx, as described in Note 6, we are entitled to receive an aggregate of up to $308.0 million in remaining milestone payments upon achieving certain regulatory and commercial milestones in addition to double-digit tiered royalties as a percentage of net sales of Ebvallo in the Initial Territory, until the later of 12 years after the first commercial sale in each such country, the expiration of specified patent rights, or the expiration of all regulatory exclusivity for Ebvallo on a country-by-country basis. In December 2023, upon the effective date of the A&R Commercialization Agreement, we met the contractual right to receive an additional upfront cash payment of $20.0 million for the expanded exclusive license grant in the Additional Territory, for which the cash was received in January 2024. In March 2024, we met the contractual right to receive $20.0 million in milestone payments upon achieving a regulatory milestone, for which the cash was received in April 2024. We will also be entitled to receive an aggregate of up to $600.0 million in additional payments upon achieving certain regulatory and commercial milestones relating to tab-cel in the Additional Territory. We will be eligible to receive significant double-digit tiered royalties as a percentage of net sales of tab-cel in the Additional Territory until the later of 12 years after the first commercial sale in each such country, the expiration of specified patent rights in each such country, or the expiration of all regulatory exclusivity for tab-cel on a country-by-country basis.

We have entered into a separate manufacturing and supply agreement with Pierre Fabre for us to manufacture Ebvallo for Pierre Fabre to use in the Initial Territory based on a fixed price through December 31, 2023 and at a price equal to cost plus a margin for orders placed after December 31, 2023, subject to a maximum annual increase. Pierre Fabre will assume the responsibility and cost for the manufacture and supply of tab-cel (Ebvallo) in the Territory upon the Manufacturing Transition Date, which is defined as the earlier of: i) all activities relating to the transfer of tab-cel manufacturing, pursuant to the A&R Commercialization Agreement, from Atara to Pierre Fabre have been completed to the reasonable satisfaction of both parties, or ii) December 31, 2025, through the remainder of the term of the A&R Commercialization Agreement. Pierre Fabre and we are to use commercially reasonable efforts to achieve this prior to the earlier transfer date from Atara to Pierre Fabre of the first marketing authorization in the Additional Territory or the first BLA (PF Transfer Date). Prior to the Manufacturing Transition Date, we are responsible for manufacturing and supplying tab-cel (Ebvallo) to Pierre Fabre in the Territory. Without transfer of the manufacturing technology, no other party can manufacture tab-cel (Ebvallo).

Cell selection is the process of identifying the appropriate cell line from available tab-cel inventory to be used for a patient. We are responsible for the performance of cell selection services in the Initial Territory at our cost through the earlier of the PF Transfer Date, June 30, 2025 or a date otherwise agreed to by Pierre Fabre and us. To the extent that the transfer of cell selection technology occurs subsequent to June 30, 2025, we will be responsible for the performance of cell selection services in the Initial Territory at Pierre Fabre’s cost until cell selection technology is transferred to Pierre Fabre. Without transfer of the cell selection technology, no other party can provide such services. We are responsible for the performance of cell selection services in the Additional Territory through the earlier of the PF Transfer Date or a date otherwise agreed to by Pierre Fabre and us, at the sole expense of Pierre Fabre.

As part of the Pierre Fabre Commercialization Agreement, we formed a joint steering committee (JSC) with Pierre Fabre that provides oversight, decision making and implementation guidance regarding the commercialization activities, the responsibilities of which has been expanded to cover the incremental scope of the A&R Commercialization Agreement.

During the applicable period specified in the A&R Commercialization Agreement, we are responsible for various development, safety, process science, and regulatory activities, including obtaining regulatory approval in the United States for tab-cel for EBV-associated post-transplant lymphoproliferative disease. Pierre Fabre will pay us for these services in accordance with the A&R Commercialization Agreement. Pierre Fabre will be responsible, at its cost, for obtaining and maintaining all other required regulatory approvals and for commercialization and distribution of tab-cel in the Additional Territory, including conducting any other clinical study required. We will own any intellectual property rights developed solely by us under the A&R Commercialization Agreement.

Accounting Analysis

Identification of the Contract

We assessed this arrangement in accordance with ASC 606 and concluded that the promises in the A&R Commercialization Agreement represent transactions with a customer.

Identification of the Promises and Performance Obligations

We identified four performance obligations under the A&R Commercialization Agreement, consisting of the following material promises:

(1)

the transfer of intellectual property rights in the form of a license in the Initial Territory, the obligation to participate in the JSC, a material right for purchases associated with the manufacture and supply of Ebvallo and the performance of cell-selection services. We concluded that the individual promises are not distinct because Pierre Fabre cannot benefit from the license without the other services and vice versa, since Pierre Fabre is not capable of carrying out the manufacturing and supply and cell selection services on their own, until the transfer of the related technologies occur. Consequently, these promises represent a single performance obligation, collectively referred to as the Initial Territory Obligation.

(2)

the transfer of intellectual property rights in the form of a license in the Additional Territory, the manufacture and supply of tab-cel and the performance of cell-selection services, as well as the promises to transfer the related technologies, and perform certain development, safety and regulatory services. We concluded that the promises are not distinct because Pierre Fabre cannot benefit from the license without the other services and vice versa. Consequently, these promises represent a single performance obligation, collectively referred to as the Additional Territory Obligation.

(3)

performance of certain process science services, referred to as the Process Sciences Obligation.

(4)

the sale of certain intermediate inventory used in the production of tab-cel in existence on the Manufacturing Transition Date, referred to as the Intermediate Inventory Obligation.

Determination of the Transaction Price

Under the Pierre Fabre Commercialization Agreement, we determined that the $45.0 million upfront payment constituted the entire consideration to be included in the transaction price at the outset of the arrangement, and the $40.0 million in regulatory milestones achieved in December 2022 were added to the transaction price upon meeting the related milestone criteria. The remaining potential regulatory and commercial milestone payments that we are eligible to receive were excluded from the transaction price, as the milestone amounts were fully constrained based on the probability of achievement or have not been earned. None of the future royalty and sales-based milestone payments were included in the transaction price, as the potential payments represent sales-based consideration. We reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, as necessary, we adjust our estimate of the transaction price.

Upon the effective date of the A&R Commercialization Agreement, the $20.0 million additional upfront payment received and estimated revenue for the development, safety, regulatory and process science services were added to the transaction price, and the $20.0 million in regulatory milestone achieved in March 2024 was added to the transaction price upon meeting the related milestone criteria. The remaining potential regulatory and commercial milestone payments that we are eligible to receive were excluded from the transaction price, as the milestone amounts were fully constrained based on the probability of achievement or have not been earned. None of the future royalty and sales-based milestone payments were included in the transaction price, as the potential payments represent sales-based consideration. Any consideration associated

with the Intermediate Inventory Obligation was excluded from the transaction price as the amount was fully constrained based on uncertainty surrounding available inventory on the Manufacturing Transition Date.

Allocation of the Transaction Price to Performance Obligations

The transaction price was allocated to each performance obligation based on their relative standalone selling price. We developed the estimated standalone selling price for each of the A&R Commercialization Agreement performance obligations with the objective of determining the price at which we would sell such an item if it were to be sold regularly on a standalone basis.

Recognition of Revenue

Commercialization revenue associated with the Initial Territory Obligation is recognized over the period during which the material right exists, which would end upon the Manufacturing Transition Date. Based on these considerations and our forecast of the timing and associated costs of the purchases related to the manufacture and supply of Ebvallo and estimated timing of technology transfer, we estimate the material right in the Initial Territory will exist for approximately one year. We reassess this evaluation each reporting period. Commercialization revenue associated with sales of Ebvallo to Pierre Fabre under the Initial Territory Obligation is deferred until we have performed the associated cell selection services, or once cell selection technology transfer to Pierre Fabre has been completed. At that point, Pierre Fabre would be able to utilize the Ebvallo it had purchased from us on its own.

Commercialization revenue associated with the Additional Territory Obligation and the Process Sciences Obligation is recognized using a cost-based input method based on the amount of actual costs incurred relative to the total budgeted costs expected to be incurred for the respective performance obligations. A cost-based input method of revenue recognition requires us to make estimates of costs to complete our performance obligation. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete our performance obligation will be recorded in the period in which changes are identified and amounts can be reasonably estimated. We expect to recognize the remaining deferred revenue associated with the Additional Territory Obligation and the Process Sciences Obligation over a period of approximately one year and two years, respectively. We reassess this evaluation each reporting period. The transfer of control occurs over the respective time period and, in our judgment, is the best measure of progress towards satisfying the performance obligation. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods. We expect to recognize revenue associated with the Intermediate Inventory Obligation at a point in time on the Manufacturing Transition Date, which is when title and risk of loss, and thus, control, of the intermediate inventory transfers to Pierre Fabre.

Deferred revenue activity related to commercialization revenue for the three months ended March 31, 2024 was as follows:


	(in thousands)
Deferred revenue, January 1, 2024	$	115,395
Additions		35,154
Recognized into commercialization revenue		(26,676	)
Deferred revenue March 31, 2024		123,873
Less: deferred revenue – current portion		(123,154	)
Deferred revenue – long-term, March 31, 2024	$	719

During the three months ended March 31, 2024, we recognized $9.1 million of revenue that was included in the deferred revenue balance as of December 31, 2023.

Costs incurred relating to performing the services within the Additional Territory Obligation and Process Sciences Obligation consist of third party expenses and for time incurred by our employees to satisfy requirements set forth by the A&R Commercialization Agreement. These costs are included in research and development expenses in the condensed consolidated statements of operations and comprehensive income (loss) during the three months ended March 31, 2024. Such costs were approximately $12.3 million for the three months ended March 31, 2024.

Liability Related to the Sale of Future Revenues

In December 2022, we entered into a Purchase and Sale Agreement (the HCRx Agreement) with HCR Molag Fund, L.P., a Delaware limited partnership, (HCRx). In exchange for a payment of $31.0 million (the Investment Amount) to Atara, net of certain transaction expenses, HCRx obtained the right to receive certain Ebvallo royalties and milestone payments payable by Pierre Fabre under the Pierre Fabre Commercialization Agreement up to an agreed upon multiple of the Investment Amount.

Under the HCRx Agreement, HCRx is entitled to receive tiered royalties on net sales of Ebvallo in the Initial Territory in amounts ranging from the mid-single digits to double digits based on annual net sales. HCRx is also entitled to certain milestone payments due to Atara from Pierre Fabre. The total royalties and milestones payable to HCRx are capped between 185% and 250% of the Investment Amount, depending upon the timing of such royalties and milestones. Upon meeting the cap amount, HCRx’s right to receive royalties and milestone payments will terminate and all rights will revert to Atara. To the extent a certain milestone within the Pierre Fabre Commercialization Agreement is not achieved on or prior to June 30, 2026, we will be required to make a one-time cash payment in the amount of $9.0 million to HCRx, and HCRx shall transfer all of its right, title and interest in this certain $9.0 million milestone payment to Atara. This payment, if required, would be included in the calculation of aggregate payments made to HCRx.

The gross proceeds of the Investment Amount of $31.0 million were recorded as a liability related to the sale of future revenues, net of transaction costs of $0.4 million, and will be amortized using the effective interest method over the life of the arrangement.

To determine the amortization of the recorded liability, we are required to estimate the total amount of future payments to be received by HCRx. The sum of these amounts less the $31.0 million proceeds we received will be recorded as interest expense over the life of the HCRx Agreement. We estimate the effective interest rate used to record non-cash interest expense under the HCRx Agreement based on the estimate of future payments to be received by HCRx. At March 31, 2024, the annual effective interest rate was approximately 12%. Over the life of the arrangement, the actual effective interest rate will be affected by the amount and timing of the actual and forecasted royalty and milestone payments to HCRx. At each reporting date, we will reassess our estimate of the timing and amounts of future payments made to HCRx, and prospectively adjust the effective interest rate and amortization of the liability as necessary.

The following table presents the changes in the liability related to the sale of future revenues under the HCRx Agreement for the three months ended March 31, 2023:


	(in thousands)
Liability related to sale of future revenues as of January 1, 2024	$	35,076
Accretion of interest expense on liability related to sale of future revenues		1,046
Amortization of debt discount and debt issuance costs		17
Repayment of the liability		(25	)
Liability related to the sale of future revenues as of March 31, 2024		36,114
Less: current portion classified within other accrued liabilities		(541	)
Liability related to sale of future revenues - long-term	$	35,573

Restructuring

In November 2023, we announced a strategic reduction in workforce of approximately 30%. The workforce reduction included total restructuring charges of $6.7 million, comprised primarily of severance payments and wages for the 60-day notice period in accordance with the California Worker Adjustment and Retraining Notification (WARN) Act. In most cases, the severance payments were paid as a lump sum in January 2024. All of the costs are cash expenditures and represent one-time termination benefits. As of March 31, 2024, $0.6 million of further payments are required for the November 2023 reduction in workforce, and we expect these payments to be made in the second quarter of 2024.

In January 2024, we announced a strategic reduction in workforce of approximately 25%. The workforce reduction resulted in total restructuring charges of $4.8 million, comprised primarily of severance payments and wages for the 60-day notice period in accordance with the California WARN Act. In most cases, the severance payments are being paid during the first half of 2024. Certain of the notified employees had employment agreements that provided for separation benefits in the form of salary continuation, which are being paid from February 2024 through January 2025. As of March 31, 2024, approximately $1.8 million of further separation payments and benefits are required for the January 2024 reduction in workforce. The majority of the associated costs are cash expenditures and primarily represent one-time termination benefits.

The following is a summary of restructuring charges associated with the reductions in force for the periods presented:


	Three Months Ended March 31,
	2024		2023
	(in thousands)		(in thousands)
Research and development expense	$	3,394	$	—
General and administrative expense		1,357		45
Total restructuring charges	$	4,751	$	45

The following restructuring liability activity was recorded in connection with the reductions in force for the three months ended March 31, 2024:


	(in thousands)
Liability balance, January 1, 2024	$	4,923
Restructuring charges		4,751
Cash payments		(6,641	)
Non-cash settlements/adjustments	$	(613	)
Liability balance, March 31, 2024	$	2,420

The liability balance as of March 31, 2024 and December 31, 2023 is recorded within other current liabilities on the accompanying condensed consolidated balance sheet.

Commitments and Contingencies

MSK In-license Agreements

In June 2015, we entered into an exclusive license agreement with MSK for three clinical stage T-cell therapies. We are required to make payments to MSK based on achievement of specified regulatory and sales-related milestones, as well as mid-single-digit percentage tiered royalty payments based on future sales of products resulting from the development of the licensed product candidates, if any. In addition, under certain circumstances, we are required to make certain minimum annual royalty payments to MSK, which are creditable against earned royalties owed for the same annual period. We are also required to pay a low double-digit percentage of any consideration we receive for sublicensing the licensed rights. The license agreement expires on a product-by-product and country-by-country basis on the latest of: (i) expiration of the last licensed patent rights related to each licensed product, (ii) expiration of any market exclusivity period granted by law with respect to each licensed product, and (iii) a specified number of years after the first commercial sale of the licensed product in each country. Upon expiration of the license agreement, we will retain non-exclusive rights to the licensed products.

In May and December 2018, we licensed additional technology from MSK. We are obligated to make additional milestone payments based on achievement of specified development, regulatory and sales-related milestones, as well as mid-single-digit percentage tiered royalty payments based on future sales of products resulting from the development of the licensed product candidates, if any.

In March 2021, we amended and restated our license agreement with MSK to terminate our license to certain rights and license additional know-how rights not otherwise covered by our existing agreements.

In March 2024, we terminated our license agreements with MSK to the ATA2271 and ATA3271 programs targeting mesothelin.

QIMR Berghofer In-license Agreements

In October 2015, we entered into an exclusive license agreement and a research and development collaboration agreement with QIMR Berghofer. Under the terms of the license agreement, we obtained an exclusive, worldwide license to develop and commercialize allogeneic T-cell therapy programs utilizing technology and know-how developed by QIMR Berghofer. In September 2016, the exclusive license agreement and research and development collaboration agreement were amended and restated. Under the amended and restated agreements, we obtained an exclusive, worldwide license to develop and commercialize additional T-cell programs, as well as the option to license additional technology that we exercised in June 2018. We further amended and restated our license agreement and research and development collaboration agreements with QIMR Berghofer in August 2019, August 2020 and December 2021, in each case, to terminate our license to certain rights. Our current license agreement also provides for various milestone and royalty payments to QIMR Berghofer based on future product sales, if any. Under the terms of our current research and development collaboration agreement, we are also required to reimburse the cost of agreed-upon development activities related to programs developed under the collaboration. These payments are expensed on a straight-line basis over the related development periods. The agreement also provides for various milestone payments to QIMR Berghofer based on achievement of certain developmental and regulatory milestones.

Other In-license and Collaboration Agreements

From time to time, we have entered into other license and collaboration agreements with other parties. For example, we licensed rights related to our MSK-partnered next-generation CAR T programs from the National Institutes of Health in December 2018.

Milestones and royalties under each of the above agreements are contingent upon future events and will be recorded as expense when the underlying milestones are achieved or royalties are earned. Sales related milestone and royalty costs related to Ebvallo are recorded in cost of commercialization revenue, whereas regulatory milestone costs are recorded in research and development expense. As of March 31, 2024 and December 31, 2023, there were no material outstanding obligations for milestones and royalties under our license and collaboration agreements.

CRL Manufacturing Agreement

In December 2019, we entered into a Commercial Manufacturing Services Agreement (the CRL MSA) with Cognate BioServices, Inc., which was acquired by Charles River Laboratories Inc. (CRL) in March 2021.

Pursuant to the CRL MSA, CRL provides manufacturing services for our product and certain of our product candidates. We further amended the CRL MSA to extend the term until the earlier of April 30, 2024 or upon receipt of certain batches of our product and product candidates. We are currently in negotiations with CRL for an amendment to further extend the term of the CRL MSA and new commercial drug product supply agreement to be effective upon the expiration of the CRL MSA. However, there can be no assurance that we will be able to further extend the CRL MSA or enter into a new commercial drug product supply agreement with CRL on terms favorable or acceptable to us, or at all. If we are unable to enter into a new commercial drug product supply agreement or extend the CRL MSA, we may need to identify alternative sources of drug product supply.

Fujifilm Master Services and Supply Agreement

In January 2022, we entered into the Fujifilm MSA, which became effective upon the closing of the sale of the ATOM Facility on April 4, 2022 and could extend for up to ten years. Pursuant to the Fujifilm MSA, FDB will supply us with specified quantities of our cell therapy products and product candidates, manufactured in accordance with cGMP standards. We have certain non-cancellable minimum commitments to purchase products and services over the first five years of the Fujifilm MSA. The Fujifilm MSA does not obligate us to purchase products and product candidates exclusively from FDB.

Other Research, Development and Manufacturing Agreements

We may enter into other contracts in the normal course of business with clinical research organizations for clinical trials, with CMOs for product, product candidates and clinical supplies, and with other vendors for preclinical studies, supplies and other services for our operating purposes. These contracts generally provide for termination on notice. As of March 31, 2024 and December 31, 2023, there were no material amounts accrued related to contract termination charges.

Minimum Commitments

We have non-cancellable minimum commitments for products and services, subject to agreements with a term of greater than one year with clinical research organizations and CMOs.

We have incurred $3.5 million and $9.5 million against the minimum commitments for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, and December 31, 2023, we have accrued $12.7 million and $11.2 million, respectively, in research and development expenses related to minimum purchase commitments.

Indemnification Agreements

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for indemnification for certain liabilities. The exposure under these agreements is unknown because it involves claims that may be made against us in the future but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations. We also have indemnification obligations to our directors and executive officers for specified events or occurrences, subject to some limits, while they are serving at our request in such capacities. There have been no claims to date and we consider the fair value of these indemnification agreements to be minimal. Accordingly, we did not record liabilities for these agreements as of March 31, 2024 and December 31, 2023.

Contingencies

From time to time, we may be involved in legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business or otherwise. The ultimate outcome of any litigation is uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition. Regardless of outcome, litigation can have an adverse impact on us because of the defense costs, diversion of management resources and other factors. We are not currently involved in any material legal proceedings.

Stockholders’ Equity (Deficit)

Our authorized capital stock consists of 520,000,000 shares, all with a par value of $0.0001 per share, of which 500,000,000 shares are designated as common stock and 20,000,000 shares are designated as preferred stock. There were no shares of preferred stock outstanding as of March 31, 2024 and December 31, 2023.

Equity Offerings

As part of our July 2019 underwritten public offering, we issued and sold pre-funded warrants to purchase 2,945,026 shares of common stock in an underwritten public offering pursuant to a shelf registration on Form S-3.

Each pre-funded warrant entitles the holder to purchase one share of common stock at an exercise price of $0.0001 per share and expires seven years from the date of issuance. These warrants were recorded as a component of stockholders’ equity (deficit) within additional paid-in capital. Per the terms of the warrant agreement, a holder of the outstanding warrants is not entitled to exercise any portion of any pre-funded warrant if, upon exercise of the warrant, the holder’s ownership (together with its affiliates) of our common stock or combined voting power of our securities beneficially owned by such holder (together with its affiliates) would exceed 9.99% after giving effect to the exercise (the Maximum Ownership Percentage). Upon at least 61 days’ prior notice to us by the holder, any holder may increase or decrease the Maximum Ownership Percentage to any other percentage not to exceed 19.99%. No July 2019 pre-funded warrants were exercised during the three months ended March 31, 2024, and as of March 31, 2024, pre-funded warrants to purchase 2,527,266 shares of our common stock from the July 2019 underwritten public offering were outstanding.

As part of the May 2020 underwritten public offering, we issued and sold pre-funded warrants to purchase 2,866,961 shares of common stock in an underwritten public offering pursuant to a shelf registration on Form S-3. Additionally, as part of the December 2020 underwritten public offering, we issued and sold pre-funded warrants to purchase 2,040,816 shares of common stock in an underwritten public offering pursuant to a shelf registration on Form S-3. These warrants were recorded as a component of stockholders' equity (deficit) within additional paid-in capital.

The terms of the pre-funded warrants issued and sold as part of the 2020 public offerings were similar to those issued and sold in 2019. No May 2020 or December 2020 pre-funded warrants were exercised during the three months ended March 31, 2024. As of March 31, 2024, 968,383 and 1,384,709 of the pre-funded warrants to purchase shares of our common stock issued and sold as part of the May 2020 and December 2020 underwritten public offerings, respectively, were outstanding.

In January 2024, we issued and sold pre-funded warrants to purchase 27,272,727 shares of common stock at a price of $0.5499 per warrant in a registered direct offering pursuant to a shelf registration on Form S-3. The gross proceeds from this sale were $15.0 million, resulting in net proceeds of $14.8 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Each of the January 2024 pre-funded warrants issued entitles the holder to purchase one share of common stock at an exercise price of $0.0001 per share, with no expiration date. These warrants were recorded as a component of stockholders’ equity (deficit) within additional paid-in capital. Per the terms of the warrant agreement, a holder of the outstanding warrants is not entitled to exercise any portion of any pre-funded warrant if, upon exercise of the warrant, the holder’s ownership (together with its affiliates) of our common stock or combined voting power of our securities beneficially owned by such holder (together with its affiliates) would exceed 9.99% after giving effect to the exercise (the Maximum Ownership Percentage). Upon at least 61 days’ prior notice to us by the holder, any holder may increase or decrease the Maximum Ownership Percentage to any other percentage not to exceed 19.99%.

No January 2024 pre-funded warrants were exercised during the three months ended March 31, 2024 and all 27,272,727 of the January 2024 pre-funded warrants remain outstanding as of March 31, 2024.

ATM Facilities

In the past three years, we have entered into two separate sales agreements with Cowen and Company, LLC (Cowen): in November 2021 (the 2021 ATM Facility) and in November 2023 (the 2023 ATM Facility). Each ATM facility provides or provided for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million, through Cowen, as our sales agent. We filed a registration statement on Form S-3 registering the offer and sale of these shares under the Securities Act (the 2023 Registration Statement). Upon the effectiveness of the 2023 Registration Statement, the 2021 ATM Facility was terminated, and no further sales can be made under the 2021 ATM Facility. The issuance and sale of these shares by us pursuant to the ATM facilities are deemed “at the market” offerings defined in Rule 415 under the Securities Act of 1933, as amended (the Securities Act), and were registered under the Securities Act. Commissions of up to 3.0% are due on the gross sales proceeds of the common stock sold under each ATM facility.

During the three months ended March 31, 2023, we sold an aggregate of 147,930 shares of common stock under the 2021 ATM Facility, at an average price of $4.64 per share, for gross proceeds of $0.7 million and net proceeds of $0.6 million, after deducting commissions and other offering expenses payable by us.

During the three months ended March 31, 2024, we sold an aggregate of 12,321,365 shares of common stock under the 2023 ATM Facility, at an average price of $0.77 per share, for gross proceeds of $9.5 million and net proceeds of $9.3 million, after deducting commissions and other offering expenses payable by us.

As of March 31, 2024, $88.7 million of common stock remained available to be sold under the 2023 ATM Facility, subject to certain conditions as specified in the sales agreement.

Equity Incentive Plans

Under the terms of the 2014 Equity Incentive Plan, as amended (the 2014 EIP), we may grant stock options, restricted stock awards (RSAs) and RSUs to employees, directors, consultants and other service providers.

RSUs generally vest over two to four years. We have granted performance-based RSUs to certain of our employees that provide for the issuance of common stock if specified Company performance criteria related to tab-cel regulatory milestones are achieved. The number of performance-based RSUs that ultimately vests depends upon if and which performance criteria are achieved, as well as the employee’s continuous service, as defined in the 2014 EIP, through the date of vesting. The fair value of performance-based RSUs is determined as the closing stock price on the date of grant.

Stock options are granted at prices no less than 100% of the estimated fair value of the shares on the date of grant as determined by the board of directors, provided, however, that the exercise price of an option granted to a 10% shareholder cannot be less than 110% of the estimated fair value of the shares on the date of grant. Options granted generally vest over three or four years and expire in seven to ten years. We have granted performance-based stock options to certain of our employees that provide for the issuance of a right to purchase a share of common stock if specified Company performance criteria related to tab-cel regulatory milestones are achieved. The vesting of performance-based stock options depends upon if and when the performance criteria are achieved, as well as the employee’s continuous service as defined in the 2014 EIP, through the date of vesting.

As of March 31, 2024, a total of 24,326,974 shares of common stock were reserved for issuance under the 2014 EIP, of which all were subject to outstanding options and RSUs, including performance-based awards. The 2014 EIP expired March 31, 2024, after which no new awards can be granted. All awards granted prior to the 2014 EIP expiration continue to remain outstanding and governed in accordance with the rules set forth in the 2014 EIP and the terms of the associated grant notice.

In February 2018, we adopted the 2018 Inducement Plan (the Inducement Plan), under which we may grant options, stock appreciation rights, RSAs and RSUs to new employees. In November 2020, September 2021 and June 2022 we amended the Inducement Plan to reserve an additional 1,500,000 shares of the Company’s common stock for issuance under the Inducement Plan in each case.

As of March 31, 2024, 4,433,902 shares of common stock were reserved for issuance under the Inducement Plan, of which 2,749,253 shares were available for future grant and 1,684,649 shares were subject to outstanding options and RSUs.

Restricted Stock Units

The following is a summary of RSU activity under our 2014 EIP and Inducement Plan:


	RSUs
	Shares			Weighted Average Grant Date Fair Value
Balance as of December 31, 2023		6,267,713		$	6.32
Granted		12,347,597		$	0.57
Forfeited		(584,211	)	$	5.07
Vested		(1,565,528	)	$	5.66
Balance as of March 31, 2024		16,465,571		$	2.12

As of March 31, 2024, there was $29.9 million of unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted average period of 1.8 years. This excludes unrecognized stock-based compensation expense for performance-based RSUs that were deemed not probable of vesting in accordance with U.S. GAAP.

Stock Options

The following is a summary of stock option activity under our 2014 EIP and Inducement Plan:

          
         Shares

         Weighted Average
Exercise Price

         Weighted Average
Remaining
Contractual Term
(Years)

         Aggregate Intrinsic
Value 
(in thousands)

Balance as of December 31, 2023

10,719,651

11.63