atra-10q_20200630.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, 2020

☐	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

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 July 31, 2020 was 74,307,894 shares.

ATARA BIOTHERAPEUTICS, INC.

INDEX

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	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	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25

Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61

	Signatures	62

Atara Biotherapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

	June 30,			December 31,
	2020			2019
Assets
Current assets:
Cash and cash equivalents	$	74,511		$	74,317
Short-term investments		273,201			184,792
Restricted cash - short-term		194			194
Prepaid expenses and other current assets		11,081			13,689
Total current assets		358,987			272,992
Property and equipment, net		53,587			54,176
Operating lease assets		13,321			14,007
Restricted cash - long-term		1,200			1,200
Other assets		1,016			567
Total assets	$	428,111		$	342,942

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,106		$	7,963
Accrued compensation		12,657			14,706
Accrued research and development expenses		8,244			8,341
Other current liabilities		5,677			5,733
Total current liabilities		31,684			36,743
Operating lease liabilities - long-term		13,420			14,136
Other long-term liabilities		1,882			1,282
Total liabilities		46,986			52,161

Commitments and contingencies (Note 7)

Stockholders’ equity:
Common stock—$0.0001 par value, 500,000 shares authorized as of June 30, 2020 and December 31, 2019; 74,308 and 56,806 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		7			6
Additional paid-in capital		1,349,234			1,108,516
Accumulated other comprehensive income		810			220
Accumulated deficit		(968,926	)		(817,961	)
Total stockholders’ equity		381,125			290,781
Total liabilities and stockholders’ equity	$	428,111		$	342,942

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,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	61,560		$	52,251		$	119,219		$	100,919
General and administrative		16,392			23,284			33,430			42,507
Total operating expenses		77,952			75,535			152,649			143,426
Loss from operations		(77,952	)		(75,535	)		(152,649	)		(143,426	)
Interest and other income, net		497			1,207			1,685			2,841
Loss before provision for income taxes		(77,455	)		(74,328	)		(150,964	)		(140,585	)
Provision for income taxes		1			—			1			—
Net loss	$	(77,456	)	$	(74,328	)	$	(150,965	)	$	(140,585	)
Other comprehensive gain:
Unrealized gain on available-for-sale securities		606			135			590			513
Comprehensive loss	$	(76,850	)	$	(74,193	)	$	(150,375	)	$	(140,072	)
Net loss per common share:
Basic and diluted net loss per common share	$	(1.14	)	$	(1.60	)	$	(2.34	)	$	(3.04	)

Weighted-average shares outstanding used to calculate basic and diluted net loss per common share		67,975			46,426			64,592			46,276

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, 2020	Shares		Amount		Capital			Income			Deficit			Equity
Balance as of December 31, 2019		56,806	$	6	$	1,108,516		$	220		$	(817,961	)	$	290,781
Issuance of common stock through ATM facilities, net of commissions and offering costs of $704		1,528		—		22,987			—			—			22,987
Exercise of pre-funded warrants		57		—		—			—			—			—
RSU settlements, net of shares withheld		455		—		(1,395	)		—			—			(1,395	)
Issuance of common stock pursuant to employee stock awards		94		—		1,330			—			—			1,330
Stock-based compensation expense		—		—		12,644			—			—			12,644
Net loss		—		—		—			—			(73,509	)		(73,509	)
Unrealized loss on available-for-sale securities		—		—		—			(16	)		—			(16	)
Balance as of March 31, 2020		58,940		6		1,144,082			204			(891,470	)		252,822
Issuance of common stock and pre-funded warrants through underwritten offering, net of offering costs of $370		14,958		1		189,300			—			—			189,301
RSU settlements, net of shares withheld		219		—		—			—			—			—
Issuance of common stock pursuant to employee stock awards		191		—		1,904			—			—			1,904
Stock-based compensation expense		—		—		13,948			—			—			13,948
Net loss		—		—		—			—			(77,456	)		(77,456	)
Unrealized gain on available-for-sale securities		—		—		—			606			—			606
Balance as of June 30, 2020		74,308	$	7	$	1,349,234		$	810		$	(968,926	)	$	381,125

								Accumulated
	Common				Additional			Other						Total
	Stock				Paid-in			Comprehensive			Accumulated			Stockholders’
For the Six Months Ended June 30, 2019	Shares		Amount		Capital			(Loss) Income			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 facilities, 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

See accompanying notes.

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2020			2019
Operating activities
Net loss	$	(150,965	)	$	(140,585	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		26,592			27,470
Depreciation and amortization expense		4,002			3,385
Amortization (accretion) of investment premiums (discounts)		170			(817	)
Non-cash operating lease expense		734			576
Loss on disposals of property and equipment		93			127
Asset retirement obligation accretion expense		38			35
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,423			720
Operating lease assets		-			238
Other assets		(288	)		255
Accounts payable		(2,933	)		2,649
Accrued compensation		(2,049	)		(2,814	)
Accrued research and development expenses		(97	)		(14,071	)
Other current liabilities		(406	)		(1,658	)
Operating lease liabilities		(535	)		(299	)
Other long-term liabilities		541			—
Net cash used in operating activities		(123,680	)		(124,789	)
Investing activities
Purchases of short-term investments		(228,224	)		(17,589	)
Proceeds from maturities and sales of short-term investments		140,235			136,876
Purchases of property and equipment		(3,409	)		(1,534	)
Proceeds from sale of property and equipment		—			96
Net cash (used in) provided by investing activities		(91,398	)		117,849
Financing activities
Proceeds from sale of common stock in underwritten offerings, net		189,623			—
Proceeds from issuance of common stock through ATM facilities, net		24,172			7,630
Proceeds from employee stock awards		3,234			4,676
Taxes paid related to net share settlement of restricted stock units		(1,395	)		(6,670	)
Principal payments on finance lease obligations		(197	)		(235	)
Other financing activities, net		(165	)		—
Net cash provided by financing activities		215,272			5,401
Increase (decrease) in cash, cash equivalents and restricted cash		194			(1,539	)
Cash, cash equivalents and restricted cash at beginning of period		75,711			62,092
Cash, cash equivalents and restricted cash at end of period	$	75,905		$	60,553
Non-cash investing and financing activities
Property and equipment purchases included in accounts payable and other accrued liabilities	$	253		$	473
Finance lease assets obtained in exchange for lease obligations	$	281		$	—
Accrued costs related to underwritten public offering	$	322		$	—
Receivable for options exercised	$	—		$	24
Supplemental cash flow disclosure
Cash paid for interest	$	37		$	31
Cash paid for income taxes	$	1		$	—

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 pioneer in T-cell immunotherapy, leveraging its novel allogeneic EBV T-cell platform to develop transformative therapies for patients with severe diseases, including solid tumors, hematologic cancers 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.

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 from Moffitt Cancer Center, and rights to know-how and technology from the Council of the Queensland Institute of Medical Research (“QIMR Berghofer”). See Note 6 for further information.

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, 2019, except for the adoption of accounting pronouncements relating to credit losses on financial instruments, implementation of cloud computing arrangements, and simplification of income tax accounting, effective January 1, 2020, 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, 2019 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

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, 2020, we had an accumulated deficit of $968.9 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. We expect that our cash, cash equivalents and short-term investments as of June 30, 2020 will be sufficient to fund our planned operations into 2022.

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.

Recent Accounting Pronouncements

The Company considers the applicability and impact of any Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). Other than the ASUs we adopted effective January 1, 2020 and listed below, all other ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

Adoption of New Accounting Pronouncements

We adopted ASU No. 2016-13 (as amended by ASUs 2018-19, 2019-04, 2019-05 and 2019-11), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, prospectively on January 1, 2020. Under this new guidance, a company is required to estimate credit losses on certain types of financial instruments using an expected-loss model, replacing the current incurred