Atara Biotherapeutics, Inc. annual report, FY2023

Atara Biotherapeutics, Inc. — 2023 Form 10-K

Reporting period: Fiscal year ended December 31, 2023. The filing was signed March 28, 2024. This is an annual report, not a standalone fourth-quarter report; quarterly results are not clearly provided in the supplied text.

Business context

Atara is a clinical-stage cell-therapy company developing allogeneic Epstein-Barr virus (EBV) T-cell therapies. Its lead product, tab-cel (Ebvallo), is approved in the EU and UK for certain patients with EBV-positive post-transplant lymphoproliferative disease (PTLD), under an exceptional-circumstances pathway. U.S. approval has not been obtained. The company’s other prioritized clinical program is ATA3219, an allogeneic CD19 CAR T therapy; most other programs remain preclinical or paused.

Atara granted Pierre Fabre worldwide exclusive rights to tab-cel under an amended agreement effective December 2023. Atara remains responsible for specified U.S. development activities and, until a manufacturing transition, product supply. Certain royalties and milestones from the initial territory are subject to the HCRx revenue-sale agreement.

Key financial metrics

Metric	2023	2022
Total revenue	$8.6 million	$63.6 million
Commercialization revenue	$7.9 million	$0
License and collaboration revenue	$0.7 million	$63.6 million
Research and development expense	$224.8 million	$272.5 million
General and administrative expense	$50.9 million	$71.6 million
Operating loss	$276.0 million	$280.5 million
Net loss	$276.1 million	$228.3 million
Net loss per share	$2.61	$2.24
Net cash used in operating activities	$193.0 million	$270.4 million

Commercialization cost was $8.9 million, exceeding 2023 commercialization revenue. The filing attributes costs in part to a $6.6 million inventory write-down/adjustment, idle-capacity manufacturing costs and sales-related milestone expense. All tab-cel sold during 2023 came from pre-approval “zero-cost” inventory, whose production costs had previously been expensed as R&D. A conventional product gross margin is therefore not a useful measure for this period.

Cash, cash equivalents and short-term investments totaled $51.7 million at year-end, down from $242.8 million. Total assets were $165.5 million; total liabilities were $264.7 million; stockholders’ deficit was $99.2 million. The HCRx future-revenue liability was $35.1 million, including $34.6 million long-term; related 2023 interest expense was $5.3 million. Operating lease liabilities were $57.0 million in total, including current obligations. The filing does not report a conventional funded-debt balance beyond the HCRx liability and lease obligations.

Deferred revenue under the Pierre Fabre agreements was $115.4 million at year-end ($77.8 million current and $37.6 million long-term). This is not equivalent to cash on hand or guaranteed future revenue.

Material changes versus 2022

• Revenue fell $55.0 million, primarily because Bayer-related deferred revenue was recognized in 2022 after Bayer terminated its agreements; 2023 revenue was mainly from Pierre Fabre.
• Net loss widened by $47.8 million. The 2022 result included a $50.2 million gain on the sale of the ATOM manufacturing facility; there was no comparable gain in 2023.
• R&D expense declined $47.7 million and G&A declined $20.6 million, largely reflecting reduced headcount and lower activity. Tab-cel manufacturing costs moved into inventory after EU approval, while ATA188 spending declined as development was paused.
• Operating cash use improved by $77.5 million, including receipt in 2023 of a $40 million Pierre Fabre milestone earned in December 2022 and lower cash operating expenses. Cash and short-term investments nevertheless declined substantially.
• Atara recorded $6.7 million of restructuring charges for its November 2023 reduction in force, approximately 30% of the workforce then in place. A further workforce reduction of approximately 25% was announced in January 2024, with about $4.5 million of expected severance and related benefits.

Outlook, commentary and principal risks

• Liquidity and going concern: Management said year-end cash and investments were insufficient to fund planned operations for at least 12 months after the financial statements were issued. The auditor also highlighted substantial doubt about the company’s ability to continue as a going concern. Management’s estimate that resources plus anticipated Pierre Fabre payments and cost reductions could fund operations into 2027 depends on uncertain milestones, BLA progress, third-party actions and execution of cost plans. Additional financing is required, with no assurance it will be available on acceptable terms.
• Tab-cel U.S. regulatory path: Following FDA discussions on CMC and analytical comparability, Atara said a positive pre-BLA meeting supported its plan to submit a BLA in Q2 2024. Potential Pierre Fabre regulatory milestones include $20 million expected in April 2024 based on the meeting, $20 million upon BLA acceptance and up to $60 million upon approval. These payments are contingent, not assured. The FDA may require additional data or studies or decline to accept or approve the filing.
• Commercial agreement: The worldwide Pierre Fabre agreement provides for up to $620 million in additional-territory milestones and significant double-digit tiered royalties, subject to conditions. A $20 million upfront payment earned in December 2023 was received in January 2024. Initial-territory royalties and milestones remain subject to HCRx’s contractual recovery cap, which is 185%–250% of its $31 million investment; Atara may receive limited net proceeds from that territory until the cap is met.
• Pipeline: ATA3219 entered Phase 1 development for B-cell non-Hodgkin lymphoma, with initial data anticipated in Q4 2024. FDA allowed the ATA3219 lupus nephritis program to proceed in February 2024; Atara expected to begin a Phase 1 study in the second half of 2024. ATA188 development was paused after its Phase 2 EMBOLD study did not meet its primary endpoint. Atara also planned to return mesothelin programs ATA2271 and ATA3271 to MSK.
• Manufacturing and execution: Atara depends on contract manufacturers, including Fujifilm and Charles River. The Charles River agreement was due to expire March 31, 2024, and negotiations for a replacement were ongoing; no acceptable agreement was assured. Manufacturing transfer, facility qualification, product comparability, supply continuity and Pierre Fabre’s commercialization performance remain important dependencies.
• Regulatory and market risks: Ebvallo’s EU and UK approvals require ongoing post-marketing obligations and annual reassessment. Commercial prospects also depend on pricing, reimbursement, patient identification, adoption and competition. The company continues to incur substantial losses and may never achieve profitability.
• Listing risk: Nasdaq notified Atara in January 2024 that its share price had been below the $1 minimum bid requirement for 30 consecutive business days. The initial compliance deadline was July 8, 2024. Atara also reported a stockholders’ deficit, which could affect eligibility for an additional compliance period.
• Unusual cybersecurity item: Atara disclosed a November 2023 incident involving unauthorized access to certain IT systems and theft of documents. The company said the incident was contained within hours and that no material confidential information was accessed.

Most important facts for investors to verify

• Current cash, cash burn and financing raised after March 15, 2024; assess whether subsequent funding and receipts resolve the disclosed going-concern uncertainty.
• Whether the tab-cel BLA was submitted and accepted, the FDA’s review requirements and status, and whether the stated Pierre Fabre milestones were received.
• Whether Charles River supply arrangements were renewed or replaced, and progress and timing of tab-cel manufacturing and cell-selection technology transfers to Pierre Fabre.
• Actual Ebvallo launches, sales, reimbursement and royalty receipts, including how HCRx’s cap affects cash available to Atara.
• Execution of the workforce reductions and their realized cash savings, severance costs and effects on development and manufacturing capability.
• ATA3219 trial initiation, enrollment and data timing, alongside the implications of ATA188’s failed endpoint and paused development.
• Nasdaq bid-price compliance and any further equity issuance or dilution, including pre-funded warrants and ATM sales.