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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 June 30, 2019

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 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.)

 

 

 

611 Gateway Blvd., Suite 900

South San Francisco, CA

 

94080

(Address of principal executive offices)

 

(Zip Code)

(Registrant’s telephone number, including area code: (650) 278-8930

 

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  

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

 


 

The number of outstanding shares of the Registrant’s Common Stock as of July 31, 2019 was 53,757,962 shares.

 

 

 

 


 

ATARA BIOTHERAPEUTICS, INC.

INDEX

 

 

  

 

  

Page

PART I.

  

FINANCIAL INFORMATION

  

 

 

 

 

Item 1.

  

Financial Statements (Unaudited)

  

3

 

 

 

 

  

Condensed Consolidated Balance Sheets

  

3

 

 

 

 

  

Condensed Consolidated Statements of Operations and Comprehensive Loss

  

4

 

 

 

 

  

Condensed Consolidated Statements of Changes in Stockholders’ Equity

  

5

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows

  

6

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements

  

7

 

 

 

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

19

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

  

26

 

 

 

Item 4.

  

Controls and Procedures

  

26

 

 

 

PART II.

  

OTHER INFORMATION

  

 

 

 

 

Item 1.

  

Legal Proceedings

  

28

 

 

 

Item 1A.

  

Risk Factors

  

28

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

59

 

Item 3.

  

Defaults Upon Senior Securities

  

59

 

Item 4.

  

Mine Safety Disclosures

  

59

 

Item 5.

  

Other Information

  

59

 

Item 6.

  

Exhibits

  

60

 

 

 

  

Signatures

  

61

 

 

 

 

 

 

2


 

Atara Biotherapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,159

 

 

$

60,698

 

Short-term investments

 

 

130,976

 

 

 

248,933

 

Restricted cash - short-term

 

 

194

 

 

 

194

 

Prepaid expenses and other current assets

 

 

10,810

 

 

 

11,664

 

Total current assets

 

 

201,139

 

 

 

321,489

 

Property and equipment, net

 

 

57,090

 

 

 

68,576

 

Operating lease assets

 

 

14,396

 

 

 

 

Restricted cash - long-term

 

 

1,200

 

 

 

1,200

 

Other assets

 

 

319

 

 

 

574

 

Total assets

 

$

274,144

 

 

$

391,839

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,420

 

 

$

3,719

 

Accrued compensation

 

 

7,822

 

 

 

10,636

 

Accrued research and development expenses

 

 

5,139

 

 

 

19,210

 

Other current liabilities

 

 

6,422

 

 

 

6,414

 

Total current liabilities

 

 

25,803

 

 

 

39,979

 

Operating lease liabilities - long-term

 

 

14,919

 

 

 

 

Other long-term liabilities

 

 

1,143

 

 

 

13,003

 

Total liabilities

 

 

41,865

 

 

 

52,982

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock—$0.0001 par value, 500,000 shares authorized as of June 30, 2019

   and December 31, 2018, respectively; 46,883 and 45,951 shares issued and

   outstanding as of June 30, 2019 and December 31, 2018, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

899,671

 

 

 

866,541

 

Accumulated other comprehensive income (loss)

 

 

173

 

 

 

(340

)

Accumulated deficit

 

 

(667,570

)

 

 

(527,349

)

Total stockholders’ equity

 

 

232,279

 

 

 

338,857

 

Total liabilities and stockholders’ equity

 

$

274,144

 

 

$

391,839

 

 

 

See accompanying notes.

3


 

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

52,251

 

 

$

33,387

 

 

$

100,919

 

 

$

61,847

 

General and administrative

 

 

23,284

 

 

 

19,236

 

 

 

42,507

 

 

 

33,228

 

Total operating expenses

 

 

75,535

 

 

 

52,623

 

 

 

143,426

 

 

 

95,075

 

Loss from operations

 

 

(75,535

)

 

 

(52,623

)

 

 

(143,426

)

 

 

(95,075

)

Interest and other income, net

 

 

1,207

 

 

 

1,743

 

 

 

2,841

 

 

 

2,752

 

Loss before provision for income taxes

 

 

(74,328

)

 

 

(50,880

)

 

 

(140,585

)

 

 

(92,323

)

Provision for income taxes

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

$

(74,328

)

 

$

(50,883

)

 

$

(140,585

)

 

$

(92,326

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

135

 

 

 

19

 

 

 

513

 

 

 

(354

)

Comprehensive loss

 

$

(74,193

)

 

$

(50,864

)

 

$

(140,072

)

 

$

(92,680

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common share

 

$

(1.60

)

 

$

(1.15

)

 

$

(3.04

)

 

$

(2.20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding used to calculate basic

   and diluted net loss per common share

 

 

46,426

 

 

 

44,379

 

 

 

46,276

 

 

 

42,001

 

 

See accompanying notes.

4


 

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

For the Six Months Ended June 30, 2019

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2018

 

 

45,951

 

 

$

5

 

 

$

866,541

 

 

$

(340

)

 

$

(527,349

)

 

$

338,857

 

Effect of the adoption of ASC topic 842 (Leases)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

364

 

 

 

364

 

Balance as of January 1, 2019

 

 

45,951

 

 

$

5

 

 

$

866,541

 

 

$

(340

)

 

$

(526,985

)

 

$

339,221

 

RSU settlements, net of shares withheld

 

 

197

 

 

 

 

 

 

(4,575

)

 

 

 

 

 

 

 

 

(4,575

)

Issuance of common stock pursuant to employee stock awards

 

 

159

 

 

 

 

 

 

2,898

 

 

 

 

 

 

 

 

 

2,898

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

12,269

 

 

 

 

 

 

 

 

 

12,269

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(66,257

)

 

 

(66,257

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

378

 

 

 

 

 

 

378

 

Balance as of March 31, 2019

 

 

46,307

 

 

 

5

 

 

 

877,133

 

 

 

38

 

 

 

(593,242

)

 

 

283,934

 

Issuance of common stock through ATM Facility, net of commissions

   and offering costs of $338

 

 

359

 

 

 

 

 

 

7,630

 

 

 

 

 

 

 

 

 

7,630

 

RSU settlements, net of shares withheld

 

 

120

 

 

 

 

 

 

(2,095

)

 

 

 

 

 

 

 

 

 

(2,095

)

Issuance of common stock pursuant to employee stock awards

 

 

97

 

 

 

 

 

 

1,802

 

 

 

 

 

 

 

 

 

1,802

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

15,201

 

 

 

 

 

 

 

 

 

15,201

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(74,328

)

 

 

(74,328

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

135

 

 

 

 

 

 

135

 

Balance as of June 30, 2019

 

 

46,883

 

 

$

5

 

 

$

899,671

 

 

$

173

 

 

$

(667,570

)

 

$

232,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

For the Six Months Ended June 30, 2018

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2017

 

 

30,730

 

 

$

3

 

 

$

474,662

 

 

$

(151

)

 

$

(296,650

)

 

$

177,864

 

Issuance of common stock through underwritten offerings, net of

   commissions and offering costs of $526

 

 

12,604

 

 

 

1

 

 

 

293,288

 

 

 

 

 

 

 

 

 

293,289

 

RSU settlements, net of shares withheld

 

 

250

 

 

 

 

 

 

(3,363

)

 

 

 

 

 

 

 

 

(3,363

)

Issuance of common stock pursuant to employee stock awards

 

 

309

 

 

 

 

 

 

6,196

 

 

 

 

 

 

 

 

 

6,196

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

7,014

 

 

 

 

 

 

 

 

 

7,014

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,443

)

 

 

(41,443

)

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(373

)

 

 

 

 

 

(373

)

Balance as of March 31, 2018

 

 

43,893

 

 

 

4

 

 

 

777,797

 

 

 

(524

)

 

 

(338,093

)

 

 

439,184

 

Issuance of common stock through ATM Facility, net of commissions

   and offering costs of $1,310

 

 

1,008

 

 

 

1

 

 

 

47,586

 

 

 

 

 

 

 

 

 

47,587

 

RSU settlements, net of shares withheld

 

 

42

 

 

 

 

 

 

(67

)

 

 

 

 

 

 

 

 

(67

)

Issuance of common stock pursuant to employee stock awards

 

 

391

 

 

 

 

 

 

8,661

 

 

 

 

 

 

 

 

 

8,661

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

7,998

 

 

 

 

 

 

 

 

 

7,998

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,883

)

 

 

(50,883

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

19

 

Balance as of June 30, 2018

 

 

45,334

 

 

$

5

 

 

$

841,975

 

 

$

(505

)

 

$

(388,976

)

 

$

452,499

 

 

See accompanying notes.

5


 

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(140,585

)

 

$

(92,326

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

27,470

 

 

 

15,013

 

Accretion of investment discounts

 

 

(817

)

 

 

(756

)

Depreciation and amortization expense

 

 

3,385

 

 

 

1,064

 

Loss on disposals of property and equipment

 

 

127

 

 

 

 

Non-cash interest expense

 

 

 

 

 

125

 

Asset retirement obligation accretion expense

 

 

35

 

 

 

16

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

720

 

 

 

(1,961

)

Operating lease assets

 

 

814

 

 

 

 

Other assets

 

 

255

 

 

 

(102

)

Accounts payable

 

 

2,649

 

 

 

(207

)

Accrued compensation

 

 

(2,814

)

 

 

(388

)

Accrued research and development expenses

 

 

(14,071

)

 

 

2,655

 

Other current liabilities

 

 

(1,658

)

 

 

2,545

 

Operating lease liabilities

 

 

(299

)

 

 

 

Other long-term liabilities

 

 

 

 

 

66

 

Net cash used in operating activities

 

 

(124,789

)

 

 

(74,256

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(17,589

)

 

 

(357,647

)

Proceeds from maturities and sales of short-term investments

 

 

136,876

 

 

 

131,110

 

Purchases of property and equipment

 

 

(1,534

)

 

 

(27,257

)

Proceeds from sale of property and equipment

 

 

96

 

 

 

 

Net cash provided by (used in) investing activities

 

 

117,849

 

 

 

(253,794

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from sale of common stock in underwritten offerings, net

 

 

 

 

 

293,290

 

Proceeds from issuance of common stock through ATM facility, net

 

 

7,630

 

 

 

47,586

 

Proceeds from employee stock awards

 

 

4,676

 

 

 

14,857

 

Taxes paid related to net share settlement of restricted stock units

 

 

(6,670

)

 

 

(3,431

)

Principal payments on finance and capital lease obligations

 

 

(235

)

 

 

(272

)

Net cash provided by financing activities

 

 

5,401

 

 

 

352,030

 

(Decrease) increase in cash, cash equivalents and restricted cash

 

 

(1,539

)

 

 

23,980

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

62,092

 

 

 

80,617

 

Cash, cash equivalents and restricted cash at end of period

 

$

60,553

 

 

$

104,597

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

Property and equipment purchases included in accounts payable and other accrued liabilities

 

$

473

 

 

$

5,078

 

Capitalized lease obligations

 

$

 

 

$

441

 

Property & equipment acquired under capital leases

 

$

 

 

$

191

 

Asset retirement cost

 

$

 

 

$

88

 

Interest capitalized during construction period for build-to-suit lease transaction

 

$

 

 

$

77

 

Receivable for options exercised

 

$

24

 

 

$

 

Supplemental cash flow disclosure

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

31

 

 

$

67

 

 

See accompanying notes.

6


 

Atara Biotherapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1.

Description of Business

Atara Biotherapeutics, Inc. (“Atara”, “we”, “our” or “the Company”) was incorporated in August 2012 in Delaware. Atara is a leading off-the-shelf, allogeneic T-cell immunotherapy company that is developing novel treatments for patients with cancer, autoimmune and viral diseases. We have several T-cell immunotherapies in clinical development and are progressing a next-generation allogeneic chimeric antigen receptor T-cell, or CAR T, program.

We licensed rights to T-cell product candidates from Memorial Sloan Kettering Cancer Center (“MSK”) in June 2015 and licensed rights related to our next-generation CAR T programs from MSK in May 2018 and December 2018 and from Moffitt Cancer Center in August 2018. Additionally, we licensed rights to know-how and technology from the Council of the Queensland Institute of Medical Research (“QIMR Berghofer”) in October 2015, September 2016 and June 2018. See Note 6 for further information.

We have incurred significant operating losses since inception and have relied on public and private equity financings to fund our operations. As of June 30, 2019, we had an accumulated deficit of $667.6 million. 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 profitability, and unless and until we do, we will need to continue to raise additional capital.

In July 2019, we completed an underwritten public offering of shares of common stock and pre-funded warrants and received aggregate net proceeds of approximately $140.6 million (see Note 10). Management expects that our cash, cash equivalents and short-term investments, together with the net proceeds from the underwritten public offering in July 2019, will be sufficient to fund our planned operations into 2021.

 

2.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited 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 condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, except for the recognition of operating lease assets and operating lease liabilities effective January 1, 2019, in accordance with newly-adopted accounting pronouncements relating to leases as discussed below. 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 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, 2018 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.

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 clinical trial and other accruals, stock-based compensation expense and income taxes. Actual results could differ materially from those estimates.

Leases

We lease office space in multiple locations. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease assets, other current liabilities, and operating lease liabilities on our condensed consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities on our condensed consolidated balance sheets.

7


 

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The operating lease asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Our facilities and equipment operating leases have lease and non-lease components and we have made a policy election to account for the lease and non-lease components as a single lease component.

Through December 31, 2018, the leases were reviewed for classification as operating, capital or build-to-suit leases. For operating leases, rent was recognized on a straight-line basis over the lease period. For capital leases, we recorded the leased asset with a corresponding liability for principal and interest. Payments were recorded as reductions to these liabilities with interest being charged to interest expense in our condensed consolidated statements of operations and comprehensive loss.