Allogene Therapeutics, Inc. — Q3 2023 Form 10-Q
Business context and reporting period
Clinical-stage immuno-oncology company developing off-the-shelf, genetically engineered allogeneic T-cell therapies for cancer. The unaudited quarter and nine-month periods ended September 30, 2023; balance-sheet comparisons are with December 31, 2022. Allogene had no approved products or product-sale revenue.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $0.04m | $0.05m | $0.14m | $0.20m |
| Research and development | $46.0m | $63.6m | $188.3m | $181.0m |
| General and administrative | $17.0m | $18.9m | $54.4m | $58.3m |
| Operating loss | $63.0m | $82.5m | $242.6m | $239.1m |
| Net loss | $61.3m | $83.1m | $238.0m | $237.8m |
| Net loss per share | $0.37 | $0.58 | $1.55 | $1.67 |
Q3 operating expenses fell 24%, mainly from lower external development and manufacturing costs and lower personnel-related costs. Nine-month R&D rose 4%, primarily because Servier cost recoveries were $19.7m lower year over year; lower personnel and external costs partly offset this. Higher investment yields increased nine-month interest and other income to $12.0m from $1.8m.
At September 30, cash and cash equivalents were $69.2m; short- and long-term investments were $428.4m, totaling $497.7m in cash, cash equivalents and investments. Current assets were $473.5m and current liabilities $37.6m. Nine-month operating cash outflow was $184.0m, versus $158.4m a year earlier. Financing cash inflow was $95.5m, including $91.1m net ATM proceeds. No conventional borrowings are reported; operating lease liabilities totaled $96.7m. Stockholders’ equity was $583.1m.
Outlook, risks, contingencies and notable developments
- Management expects the September 30 cash and investments to fund operations into the second half of 2025; the financial-statement note separately states they are expected to be sufficient for at least 12 months from filing. The company expects continued losses and says additional capital is needed to fully implement its plan.
- ALLO-501A Phase 2 ALPHA2 enrollment was expected to finish in the first half of 2024, with an initial data readout planned by year-end 2024. EXPAND, intended to assess ALLO-647’s contribution to the lymphodepletion regimen, was enrolling, including at newly approved European sites. These are management expectations, not assurances.
- Enrollment was paused in the ALLO-715 UNIVERSAL and ALLO-605 IGNITE multiple-myeloma trials while the company reviewed and optimized BCMA manufacturing. TRAVERSE, testing ALLO-316 in renal-cell carcinoma, was ongoing; planned dose exploration and expansion-cohort enrollment were subject to results, with expansion intended for early 2024.
- Servier disputes the consequences of discontinuing CD19 development, including continued cost-sharing and the timing of Allogene’s ex-U.S. license option. Servier also alleged material breach over cost-sharing and manufacturing costs; Allogene disputes the allegations. Unresolved matters may go to arbitration, and the dispute could affect development, cost recoveries or license rights.
- The company reported a $3.0m impairment of its Notch equity-method investment during the nine months. It raised $91.1m net through ATM sales of approximately 20.9m shares, increasing dilution; its ATM sales-agreement limit was removed in a November 2, 2023 amendment.
- Other material risks include clinical efficacy and safety uncertainty, manufacturing and donor-cell supply, regulatory approval, competition, reliance on licensed technology and partners, and the need for future financing. Management reported disclosure controls were effective; phased implementation of SAP continues.
Important facts for investors to verify
- Whether ALPHA2 and EXPAND enroll on schedule and produce data supporting the stated development and regulatory plans.
- Whether the Servier dispute affects cost-sharing, the ex-U.S. option, or Allogene’s CD19 rights, and whether it proceeds to arbitration.
- Actual quarterly cash burn, investment balances and financing needs compared with management’s runway expectation; monitor further ATM issuance and dilution.
- Progress and timing for BCMA manufacturing optimization, any resumption of UNIVERSAL or IGNITE, and TRAVERSE safety and enrollment.
- Potential further impairments, partner or license changes, and clinical safety or manufacturing events that could delay programs or increase costs.