Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies

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Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

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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 and Going Concern

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date the accompanying financial statements are issued. We have incurred significant operating losses since inception and have relied on public and private equity financings to fund our operations. As of March 31, 2020, we had an accumulated deficit of $891.5 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 March 31, 2020 will be sufficient to fund our planned operations into the second quarter of 2021. However, the uncertainties inherent in the Company’s future operations and in our ability to obtain additional funding raise substantial doubt about our ability to continue as a going concern beyond one year from the date these financial statements are issued. The interim condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. We currently plan to raise additional funding as required, based on the status of our development programs and our projected cash flows. We may also need to pursue the sale or sublicense of rights to the Company’s programs and assets on terms potentially unfavorable to us. If we are unable to obtain additional funding, we will be forced to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates.

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-loss model, and record the estimate through an allowance for credit losses. We do not hold material amounts of the types of financial instruments impacted by this guidance on our balance sheet. The guidance also establishes a new impairment model for available-for-sale debt securities. The adoption did not have a material impact on our condensed consolidated balance sheet or our condensed consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the three months ended March 31, 2020 and 2019.

We adopted ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, effective January 1, 2020, electing a prospective adoption method. The new standard requires that certain implementation costs for cloud computing arrangements are capitalized and amortized over the term of associated hosted cloud computing arrangement service. Capitalized implementation costs are classified in the same line on the balance sheet as amounts prepaid for hosted cloud computing arrangement service, or prepaid expenses and other assets. The amortization of the capitalized asset is presented in the same line on the statement of operations and comprehensive loss as the fees for the associated hosted cloud computing arrangement service and not included with depreciation or amortization expense related to property and equipment or intangible assets. Cash flows related to capitalized implementation costs are presented consistent with the presentation of cash flows for fees related to the hosted cloud computing arrangement service, or cash flows used in operating activities. The adoption did not have a material impact on our condensed consolidated balance sheet or our condensed consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the three months ended March 31, 2020 and 2019.

We adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as of January 1, 2020, which eliminates certain exceptions related to the general principles in ASC 740 and makes amendments to other areas with the intention of simplifying various aspects related to accounting for income taxes. The provisions of the ASU that are applicable to Atara are applied on a prospective basis. The adoption did not have a material impact on our condensed consolidated balance sheet or our condensed consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the three months ended March 31, 2020 and 2019.