Atara Biotherapeutics, Inc. quarterly report, Q3 FY2022

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Atara Biotherapeutics, Inc. — Q3 2022 Form 10-Q

Reporting period: Quarter and nine months ended September 30, 2022. Unaudited figures below are in U.S. dollars; financial amounts are presented in millions unless stated otherwise.

Business context

Atara is a clinical-stage T-cell immunotherapy company with no approved products and no commercial product revenue. Its lead candidate, tab-cel (tabelecleucel), is in Phase 3 development for EBV-positive post-transplant lymphoproliferative disease (EBV+ PTLD). Other priorities include ATA188, in Phase 2 development for progressive multiple sclerosis, and preclinical CAR T candidate ATA3219.

Financial performance and liquidity

  • Revenue: Q3 license and collaboration revenue was $4.5 million, down from $5.4 million in Q3 2021. Nine-month revenue was $63.4 million, up from $12.8 million, primarily because termination of the Bayer agreements led to recognition of remaining deferred revenue in Q2.
  • Expenses and losses: Q3 R&D expense was $70.2 million and G&A was $18.9 million; total operating expenses were $89.1 million, versus $90.2 million a year earlier. Q3 net loss was $84.1 million, compared with $84.7 million; loss per share was $0.82 versus $0.90. Nine-month net loss was $153.7 million versus $246.8 million, including a $50.2 million gain on the ATOM Facility sale. The company remains loss-making, and commercial margins are not yet applicable.
  • Cash flow: Net cash used in operations was $213.6 million for the nine months, compared with $186.3 million in 2021. Investing activities provided $151.7 million, including $94.8 million net proceeds from the ATOM Facility sale. Financing provided $20.8 million, including $20.5 million net ATM proceeds. Cash, cash equivalents and restricted cash decreased by $41.0 million to $66.5 million.
  • Liquidity: Cash, cash equivalents and short-term investments totaled $265.4 million at September 30, down from $371.1 million at December 31, 2021. Current assets were $283.0 million and current liabilities $72.2 million. Management said these resources, together with anticipated Pierre Fabre inflows, were expected to fund planned operations into Q1 2024; the financial-statement note also states they are expected to cover at least the next 12 months from issuance. Funding beyond that remains uncertain.
  • Debt and obligations: The filing reports no conventional borrowings. Lease liabilities totaled $76.7 million, comprising $72.1 million of operating leases and $4.6 million of finance leases. Minimum commitments for products and services were $64.0 million, excluding amounts already on the balance sheet.

Material changes and unusual items

  • Atara sold its ATOM manufacturing facility to FUJIFILM Diosynth Biotechnologies (FDB) in April for $94.8 million net proceeds and recorded a $50.2 million gain. FDB is now a manufacturing supplier under an agreement that may extend up to ten years; certain facility lease assets and liabilities remain with Atara because landlord novation had not been obtained.
  • Bayer terminated its agreements covering ATA2271 and ATA3271, with rights reverting to Atara effective July 31, 2022. Atara recognized remaining related deferred revenue, including $61.8 million for the nine-month period, and said future collaboration revenue would fall substantially. ATA3271 development was paused.
  • Atara reduced its workforce by approximately 20% in August, recording $5.9 million in restructuring charges through September 30, against an expected total of approximately $6.3 million. The company said the reduction was intended to focus the organization on R&D and reduce cash burn.
  • Shares outstanding were 94.9 million at September 30, versus 91.7 million at year-end 2021. Nine-month ATM sales generated $20.5 million net proceeds; $57.4 million remained available under the facility at quarter-end.

Outlook, commentary and key risks

  • In October 2022, after quarter-end, the EMA’s CHMP issued a positive opinion recommending tab-cel for EBV+ PTLD. Atara expected an EC decision by year-end 2022 and reported filing a UK marketing application; these were expectations, not approvals as of the filing date.
  • Atara reported ongoing FDA discussions about CMC requirements and the clinical data package for a potential tab-cel BLA. Earlier FDA discussions raised comparability concerns between the ALLELE-study product and intended commercial product. A new clinical trial might still be required if agreement on a BLA pathway is not reached.
  • The September amendment to the Pierre Fabre agreement provides for a conditional additional $30 million milestone after EC approval and transfer of the marketing authorization, in exchange in part for lower royalties and supply-price markup. No development or commercial milestones had been earned by September 30. Manufacturing and supply terms with Pierre Fabre were still being negotiated.
  • Atara expected an ATA188 Phase 2 primary-endpoint readout in October 2023, based on approximately 90 patients. It anticipated filing an IND for ATA3219 in Q2 2023, subject to process optimization and manufacturing runs.
  • MSK had temporarily paused enrollment in its ATA2271 study after a fatal serious adverse event in February 2022; enrollment later resumed following review and communication with the FDA. The event underscores clinical safety risk.
  • Principal risks include continued operating losses and need for additional financing; uncertain clinical and regulatory outcomes; manufacturing capacity, comparability and supplier dependence; commercialization and reimbursement uncertainty; and possible delays or disruption from COVID-19. The filing says capital may not be available on acceptable terms, potentially requiring program delays or reductions.

Investor facts to verify

  • Whether tab-cel receives EC and UK authorization, and the timing and terms of any transfer to Pierre Fabre, including the conditional $30 million milestone.
  • Whether Atara and the FDA agree on a tab-cel BLA pathway without an additional clinical trial, and whether CMC and commercial-product comparability requirements are met.
  • Actual cash burn, future financing needs, and whether the stated runway into Q1 2024 remains achievable as collaboration revenue declines.
  • Progress and safety results for ATA188 and ATA3219, and the status and resourcing of ATA2271 after Bayer’s termination.
  • Completion of the Pierre Fabre supply agreement and FDB manufacturing qualification, minimum purchase commitments, and any remaining ATOM lease exposure.