UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
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Trading Symbol(s) |
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Name of Each Exchange on Which Registered |
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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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 November 6, 2024 was
ATARA BIOTHERAPEUTICS, INC.
INDEX
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PART I. |
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FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements (Unaudited) |
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6 |
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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
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7 |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) |
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8 |
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9 |
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10 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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26 |
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Item 3. |
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37 |
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Item 4. |
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37 |
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PART II. |
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38 |
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Item 1. |
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38 |
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Item 1A. |
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38 |
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Item 5. |
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84 |
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Item 6. |
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85 |
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86 |
2
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:
3
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:
4
5
Atara Biotherapeutics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
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September 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Restricted cash |
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Accounts receivable |
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Inventories |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease assets |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity (deficit) |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued compensation |
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Accrued research and development expenses |
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Deferred revenue |
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Other current liabilities |
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Total current liabilities |
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Deferred revenue – long-term |
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Operating lease liabilities – long-term |
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Liability related to the sale of future revenues – long-term |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity (deficit): |
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Common stock—$ |
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Additional paid-in capital |
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Accumulated other comprehensive (loss) income |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity (deficit) |
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( |
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( |
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Total liabilities and stockholders’ equity (deficit) |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
6
Atara Biotherapeutics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(In thousands, except per share amounts)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Commercialization revenue |
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$ |
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$ |
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$ |
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$ |
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License and collaboration revenue |
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Total revenue |
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Costs and operating expenses: |
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Cost of commercialization revenue |
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Research and development expenses |
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General and administrative expenses |
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Total costs and operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense), net: |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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( |
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Other income (expense), net |
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( |
) |
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( |
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Total other income (expense), net |
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( |
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( |
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( |
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Loss before provision for (benefit from) income taxes |
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( |
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( |
) |
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( |
) |
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( |
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Provision for (benefit from) income taxes |
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( |
) |
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( |
) |
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Net income (loss) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Other comprehensive gain (loss): |
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Unrealized gain (loss) on available-for-sale securities |
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Comprehensive income (loss) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Basic and diluted net loss per common share |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Basic and diluted weighted-average shares outstanding |
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See accompanying notes to the condensed consolidated financial statements.
7
Atara Biotherapeutics, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
(In thousands)
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Accumulated |
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Common |
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Additional |
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Other |
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Total |
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Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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For the Nine Months Ended September 30, 2024 |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity (Deficit) |
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Balance as of January 1, 2024 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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Issuance of pre-funded warrants to purchase common stock through a registered direct offering, net of offering costs of $ |
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— |
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— |
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$ |
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— |
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— |
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Issuance of common stock through ATM facilities, net of commissions and offering costs of $ |
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— |
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— |
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— |
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RSU settlements, net of shares withheld |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Net (loss) income |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Unrealized gain (loss) on available-for-sale securities |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2024 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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RSU settlements, net of shares withheld |
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— |
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( |
) |
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— |
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— |
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( |
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Issuance of common stock pursuant to employee stock awards |
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— |
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— |
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— |
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|||
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Net (loss) income |
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— |
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— |
|
|
|
— |
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|
|
— |
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|
( |
) |
|
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( |
) |
Unrealized gain (loss) on available-for-sale securities |
|
|
— |
|
|
|
— |
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|
|
— |
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|
|
|
|
|
— |
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||
Balance as of June 30, 2024 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
||
Issuance of common stock and pre-funded warrants to purchase common stock through a registered direct offering, net of offering costs of $ |
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759 |
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$ |
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$ |
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RSU settlements, net of shares withheld |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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||
Net (loss) income |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Unrealized gain (loss) on available-for-sale securities |
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— |
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— |
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— |
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— |
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||
Balance as of September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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Accumulated |
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Common |
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Additional |
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Other |
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Total |
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|||||||||
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Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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|||||||||
For the Nine Months Ended September 30, 2023 |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity (Deficit) |
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||||||
Balance as of January 1, 2023 |
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|
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|
$ |
— |
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|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
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$ |
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|||
Issuance of common stock through ATM facilities, net of commissions and offering costs of $ |
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— |
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— |
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— |
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|||
RSU settlements, net of shares withheld |
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— |
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|
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( |
) |
|
|
— |
|
|
|
— |
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|
|
( |
) |
|
Stock-based compensation expense |
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— |
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— |
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|
|
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— |
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— |
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||
Net (loss) income |
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— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain (loss) on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance as of March 31, 2023 |
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
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|||
Exercise of pre-funded warrants |
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|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
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— |
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|
RSU settlements, net of shares withheld |
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|
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|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
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( |
) |
|
Issuance of common stock pursuant to employee stock awards |
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|
|
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|
— |
|
|
|
|
|
|
— |
|
|
|
— |
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|||
Stock-based compensation expense |
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|
— |
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|
— |
|
|
|
|
|
|
— |
|
|
|
— |
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||
Net (loss) income |
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— |
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|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain (loss) on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
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|
||
Balance as of June 30, 2023 |
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
RSU settlements, net of shares withheld |
|
|
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|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
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|
|
— |
|
|
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Net (loss) income |
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— |
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— |
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|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain (loss) on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance as of September 30, 2023 |
|
|
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
See accompanying notes to the condensed consolidated financial statements.
8
Atara Biotherapeutics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
|
|
|
|
||
Depreciation and amortization expense |
|
|
|
|
|
|
||
Accretion of liability related to sale of future revenues |
|
|
|
|
|
|
||
Amortization (accretion) of investment premiums (discounts) |
|
|
( |
) |
|
|
( |
) |
Non-cash operating lease expense |
|
|
|
|
|
|
||
Other non-cash items, net |
|
|
( |
) |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Inventories |
|
|
( |
) |
|
|
( |
) |
Other current assets |
|
|
( |
) |
|
|
|
|
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued compensation |
|
|
( |
) |
|
|
( |
) |
Accrued research and development expenses |
|
|
( |
) |
|
|
( |
) |
Other current liabilities |
|
|
( |
) |
|
|
|
|
Deferred revenue |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Other long-term liabilities |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Investing activities |
|
|
|
|
|
|
||
Purchases of short-term investments |
|
|
( |
) |
|
|
( |
) |
Proceeds from maturities and sales of short-term investments |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of property and equipment |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Proceeds from sale of common stock and pre-funded warrants in registered direct offerings, net |
|
|
|
|
|
|
||
Proceeds from issuance of common stock through ATM facilities, net |
|
|
|
|
|
|
||
Proceeds from employee stock awards |
|
|
|
|
|
|
||
Taxes paid related to net share settlement of restricted stock units |
|
|
|
|
|
( |
) |
|
Principal payments on finance lease obligations |
|
|
( |
) |
|
|
( |
) |
Other financing activities, net |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
Non-cash investing and financing activities |
|
|
|
|
|
|
||
Property and equipment purchases included in accounts payable and other accrued liabilities |
|
$ |
|
|
$ |
|
||
Accrued costs related to registered direct offering |
|
$ |
|
|
$ |
|
||
Supplemental cash flow disclosure |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
See accompanying notes to the condensed consolidated financial statements.
9
Atara Biotherapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Atara Biotherapeutics, Inc. (Atara, we, our or the Company) was incorporated in in
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 Economic Area (EEA), by the Medicines and Healthcare products Regulatory Agency (MHRA) for commercial sale and use in the United Kingdom (UK) and by Swissmedic for commercial sale and use in Switzerland. 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 $
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.
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.
10
June 2024 Reverse Stock Split
At our annual meeting of stockholders held on June 10, 2024, the stockholders of Atara approved a proposal to authorize our Board of Directors (the Board) to amend our Amended and Restated Certificate of Incorporation to effect a reverse stock split. The Board approved the reverse stock split on June 10, 2024 and, on June 20, 2024, we effected a 1-for-25 reverse stock split of our common stock. The par value and the authorized shares of the common stock were not adjusted as a result of the reverse stock split. All equity related information including per share amounts for all periods presented in these condensed consolidated financial statements and the notes thereto have been adjusted retroactively, where applicable, to reflect the effect of this reverse stock split.
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 September 30, 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 2025, such payments are contingent upon the approval of the tab-cel BLA, which is dependent upon the completion 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 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.
11
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 required for public entities with a single reportable segment and are to be applied retrospectively to all periods presented. 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. The adoption of ASU 2023-07 will not have a material impact on our consolidated financial statements and will consist of the inclusion of additional disclosures related to our single reportable segment in the notes to the consolidated financial statements. The amendments in this update do not affect the recognition, measurement or financial statement presentation of expenses.
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. We will adopt the amendments effective for the fiscal year ending December 31, 2025. We do not expect the adoption of this standard will have a material impact on our disclosures.
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 September 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Unvested RSUs |
|
|
|
|
|
||
Vested and unvested options |
|
|
|
|
|
||
ESPP share purchase rights |
|
|
|
|
|
||
Total |
|
|
|
|
|
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.
12
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 September 30, 2024: |
|
Input Level |
|
Cost |
|
|
Gain |
|
|
Loss |
|
|
Fair Value |
|
||||
|
|
|
|
(in thousands) |
|
|||||||||||||
Money market funds |
|
Level 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Treasury obligations |
|
Level 2 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Corporate debt obligations |
|
Level 2 |
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|||
Commercial paper |
|
Level 2 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Total available-for-sale securities |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Less: amounts classified as cash equivalents |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amounts classified as short-term investments |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Treasury obligations |
|