Atara Biotherapeutics, Inc. — Q1 2018 Form 10-Q
Reporting period: Three months ended March 31, 2018; unaudited. Atara is a clinical-stage cell-therapy company developing allogeneic T-cell treatments for cancer, multiple sclerosis and viral diseases. It reported no product revenue.
Financial results and liquidity
| Metric | Q1 2018 | Q1 2017 / comparison |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $28.5 million | $17.5 million |
| General and administrative expense | $14.0 million | $8.6 million |
| Total operating expenses | $42.5 million | $26.2 million |
| Net loss | $41.4 million | $25.7 million |
| Basic and diluted loss per share | $1.05 | $0.88 |
| Net cash used in operating activities | $34.8 million | $22.0 million |
| Cash, cash equivalents and short-term investments | $407.3 million at March 31 | $166.1 million at December 31, 2017 |
Operating margins are not meaningful because the company had no revenue. Accumulated deficit was $338.1 million. Current assets were $413.6 million and current liabilities $21.0 million. Total liabilities were $33.9 million; long-term liabilities were $12.9 million, including a $10.3 million build-to-suit financing obligation. The filing does not report conventional borrowings as a material funding source.
Cash, cash equivalents and restricted cash rose $11.3 million during the quarter. Investing cash outflow was $249.9 million, principally reflecting purchases of short-term investments and $19.8 million of property and equipment; financing cash inflow was $296.0 million. The financing inflow included $293.3 million net proceeds from January and March public offerings. The company said available cash, cash equivalents and short-term investments were expected to fund planned operations to mid-2020. It expected to spend $8–10 million on the Thousand Oaks facility build-out during the remainder of 2018.
Changes versus the prior comparable period
- Net loss increased by $15.8 million; total operating expenses rose by $16.3 million. R&D increased by $10.9 million and G&A by $5.4 million, reflecting expanded clinical, manufacturing, staffing and operating activities.
- Operating cash use increased by $12.8 million. Q1 2018 included substantial equity financing, unlike Q1 2017.
- Year-end-to-quarter-end cash and short-term investments increased by $241.2 million, primarily from the two public offerings; common shares issued and outstanding increased from 30.7 million to 43.9 million.
- Property and equipment, net, rose from $44.1 million to $58.2 million, mainly reflecting construction of the Thousand Oaks facility.
Outlook, management commentary and risks
- Management anticipated increasing R&D and G&A costs and continuing losses for the foreseeable future; it stated profitability depends on successful development, approval and commercialization, which may never occur.
- Tabelecleucel was in two Phase 3 trials for EBV-positive post-transplant lymphoproliferative disorder. The company expected results from the first study or cohort to reach its primary endpoint in the first half of 2019 and planned an EU conditional marketing authorization application in the first half of 2019. U.S. biologics license applications were planned after completion of a Phase 3 trial.
- ATA188 was in Phase 1 development for MS; the company expected Phase 1 results in progressive MS in the first half of 2019. A randomized ATA190 study in progressive MS was planned for 2019.
- The company planned to initiate a tabelecleucel/pembrolizumab study in EBV-associated nasopharyngeal carcinoma in the second half of 2018. ATA621 Phase 1 initiation was planned for 2019. ATA230 development was deprioritized relative to EBV programs, with strategy to be reassessed later in 2018; ATA520 trial initiation was deferred pending further process development and progress in other programs.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, patient enrollment, manufacturing comparability and supply, reliance on third-party manufacturers and research organizations, facility construction and scale-up, competition, intellectual-property protection, and the need for additional capital if plans or costs change. The company had no committed external funding source.
- MSK and QIMR Berghofer license agreements provide for contingent milestones and royalties; no milestone or royalty obligations were outstanding at quarter-end. The filing reported no material legal proceedings and no off-balance-sheet arrangements. Disclosure controls were assessed as effective at March 31, 2018.
Important facts for investors to verify
- Whether the company’s stated mid-2020 cash runway remains achievable as clinical, manufacturing and commercialization costs evolve.
- Enrollment, safety, efficacy and timing of the tabelecleucel Phase 3 trials, and whether data support the proposed 2019 EU filing and later U.S. submissions.
- Progress on ATA188 and ATA190 MS studies, including the timing and interpretation of planned clinical results.
- Manufacturing comparability, clinical supply, regulatory readiness and cost/timing of the Thousand Oaks facility build-out.
- Potential dilution from future financing, equity compensation and use of the remaining $55 million capacity under the ATM facility.