atra-10q_20190630.htm

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

☐	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

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.

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.

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.

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.

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.

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.