Atara Biotherapeutics, Inc. — FY 2014 Form 10-K
Reporting period: Fiscal year ended December 31, 2014. The filing also reports fourth-quarter results. Atara is a clinical-stage biopharmaceutical company developing therapies for muscle wasting and cancer; it had no approved products or revenue.
Financial performance and liquidity
| Metric | FY 2014 | FY 2013 |
|---|---|---|
| Revenue | None | None |
| Research and development expense, including Amgen costs | $15.4 million | $4.9 million |
| General and administrative expense | $12.7 million | $3.8 million |
| Total operating expenses | $28.2 million | $8.6 million |
| Net loss | $28.0 million | $8.8 million |
| Net loss per share | $5.62 | $9.08 |
| Cash used in operating activities | $16.6 million | $6.0 million |
| Cash, cash equivalents and short-term investments at year-end | $104.1 million | $51.6 million |
| Working capital at year-end | $103.3 million | $50.3 million |
Fourth-quarter 2014 net loss was $10.5 million, compared with $3.6 million in Q4 2013. Q4 operating expenses were $10.6 million versus $3.4 million. The filing reports no product margins because the company had no revenue. No borrowings or material debt are reported; year-end total liabilities were $2.9 million. Cash-flow investing outflow was $83.4 million, primarily reflecting purchases of short-term investments, partly offset by maturities. Financing activities provided $70.3 million, including $56.5 million net IPO proceeds and $13.5 million from preferred-stock sales.
Changes and notable items
- Net loss rose from $8.8 million to $28.0 million as the company expanded clinical development, staffing and public-company activities. R&D expense increased to $15.4 million from $4.9 million; G&A increased to $12.7 million from $3.8 million.
- FY 2014 included $10.1 million of stock-based compensation, including awards that vested in connection with the October IPO, and a $2.0 million expense for the MSK T-cell program option.
- The October 2014 IPO generated approximately $56.5 million in net proceeds; preferred shares converted into common stock at the IPO. In February 2015, after year-end, a follow-on offering generated approximately $69.4 million net.
Business, outlook and key risks
- Pipeline: PINTA 745 was in a Phase 2 trial for protein-energy wasting in end-stage renal disease patients; management expected initial trial data in Q4 2015. STM 434 entered a Phase 1 study for ovarian cancer and other solid tumors in 2014, with initial data expected in the first half of 2016. Five additional TGF-beta-pathway candidates remained preclinical. Atara held an option to license three MSK T-cell programs.
- Funding outlook: Management expected year-end 2014 cash and investments plus February 2015 offering proceeds to fund the current operating plan into the second half of 2017. The company cautioned that plans could change and additional capital may be needed; no external funding was committed.
- Clinical and operational risks: Atara had not completed a Phase 2 or Phase 3 trial and depended on third-party clinical and manufacturing providers. A randomization and inventory-distribution error in the PINTA 745 Phase 2 trial unblinded the first six patients and required a trial restart. In early PINTA 745 dose escalation, the company reported no dose-limiting toxicities or treatment-related serious adverse events in the first eight patients.
- STM 434 safety and supply: A prior study of a related compound reported bleeding observations in monkeys; causation was undetermined. Atara amended the Phase 1 protocol to exclude patients at elevated bleeding risk and increase monitoring. A small number of cracked frozen STM 434 vials were reported; the company said it changed freezing temperature and was developing a refrigerated liquid formulation.
- Other risks and commitments: The company had no commercial revenue and expected continuing losses. Amgen agreements included up to $86 million in development and regulatory milestones, commercial milestones and royalties. If Atara exercised the MSK license option, the contemplated terms included a $4.5 million upfront payment and up to $33 million in specified additional payments, plus royalties.
Important facts for investors to verify
- Progress, enrollment, safety findings and efficacy results for the PINTA 745 Phase 2 trial, including whether the amended dosing cohorts support further development.
- STM 434 clinical safety and activity, particularly in light of the related-compound bleeding observations and protocol changes.
- Cash burn versus the stated runway, and whether further financing or licensing decisions alter the operating plan.
- Manufacturing continuity and comparability at contract manufacturers, including resolution of the vial issue and readiness for later-stage trials.
- Potential Amgen milestone, royalty and commercial obligations, and the cost and strategic implications of exercising the MSK option.