Atara Biotherapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Atara is a clinical-stage cell-therapy company. Its lead candidate, tab-cel (tabelecleucel), is approved in the EU as Ebvallo and remains in Phase 3 development in the U.S. The filing was signed May 8, 2023. Amounts below are in U.S. dollars; financial statement amounts are in millions unless noted.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Total revenue | $1.2 | $7.3; down $6.1 |
| Commercialization revenue | $0.9 | None |
| Research and development expense | $62.2 | $75.0; down $12.8 |
| General and administrative expense | $13.9 | $20.6; down $6.7 |
| Operating loss | $(75.0) | $(88.2) |
| Net loss | $(74.8) | $(88.1) |
| Basic and diluted loss per share | $(0.72) | $(0.87) |
| Net cash used in operating activities | $(38.4) | $(84.5) |
- Commercialization revenue was $0.884 million and related cost was $0.216 million. The resulting $0.668 million difference is not a full product profitability measure: manufacturing costs for Ebvallo sold to date were expensed as R&D before EU approval.
- At March 31, cash and cash equivalents were $48.7 million and short-term investments were $156.7 million, totaling $205.4 million, versus $242.8 million at year-end 2022. Cash, cash equivalents and restricted cash declined $44.2 million during the quarter.
- Current assets were $224.2 million and current liabilities $67.9 million. Total liabilities were $237.1 million; stockholders’ equity was $65.0 million, down from $126.6 million at year-end.
- The long-term liability from the sale of future Ebvallo revenues to HCRx was $31.1 million, with a $0.3 million current portion. The filing reports an approximately 16% annual effective interest rate as of March 31. Operating lease liabilities were $54.9 million long-term and $11.8 million current.
- Operating cash use improved year over year, primarily reflecting receipt in January of a $40 million Pierre Fabre milestone earned in December 2022 and lower cash operating costs. Stock-based compensation was $11.8 million in the quarter.
Material changes and business developments
- EU marketing authorization for Ebvallo was transferred to Pierre Fabre in February 2023, and the first order shipped in January. Pierre Fabre is launching the product country by country. The company recognized $0.884 million of commercialization revenue; substantial deferred revenue remained at quarter-end.
- Revenue fell year over year chiefly because Bayer-related license and collaboration revenue ended after termination of the Bayer agreements in 2022. Q1 2023 license and collaboration revenue was $0.342 million, primarily related to Pierre Fabre’s early access program; the comparable 2022 amount was $7.314 million.
- R&D expense declined, including lower tab-cel expense from capitalization of certain post-approval manufacturing costs to inventory and reduced clinical and regulatory activity. G&A expense also declined, largely following the August 2022 workforce reduction and reduced U.S. tab-cel commercial activity.
- Atara sold its ATOM manufacturing facility assets to Fujifilm in April 2022 and now relies on contract manufacturers. The CRL manufacturing agreement was extended in February 2023 to the earlier of September 30, 2023 or receipt of certain batches.
Outlook, commentary and key risks
- Going concern and funding: Management concluded substantial doubt exists about the company’s ability to continue as a going concern for at least 12 months after issuance of the financial statements. It said March 31 cash, equivalents and investments were expected to fund planned operations into Q2 2024, but also said they would not be sufficient for at least the next 12 months from issuance. Additional capital is required; potential sources include equity offerings, the ATM facility and strategic transactions. The filing states $55.2 million remained available under the 2021 ATM facility at March 31. Financing may be unavailable or dilutive, and inability to raise funds could force program delays, reductions or termination.
- Tab-cel U.S. regulatory path: FDA discussions on clinical matters occurred in February 2023 and on CMC in April. The company said a further CMC meeting was anticipated in Q2 and expected to update its BLA plans at its next earnings release. FDA agreement on comparability of product versions and whether the existing clinical dataset can support a BLA remains uncertain; an additional clinical trial could be required.
- Pipeline milestones: Initial data from the Phase 2 tab-cel multi-cohort study were expected in Q4 2023. ATA188 Phase 2 primary-endpoint data were planned for communication in October 2023. Atara anticipated filing an IND for ATA3219 in Q2 2023, subject to completing process optimization and manufacturing runs.
- Other program status: ATA3271 development activities were paused while the company reassessed its approach. ATA2271 enrollment resumed after a voluntary pause related to a fatal serious adverse event in a higher-dose cohort; the event and study remain relevant safety considerations.
- Commercial and manufacturing risks: Ebvallo’s EU approval was granted under exceptional circumstances, with annual reassessment and continuing post-marketing obligations. The filing also disclosed mold contamination in certain manufacturing suites at a CMO; remediation was underway while production continued in other suites. Commercial supply depends on CMOs, facility qualification and product comparability.
- Other risks: The company has a history of losses, limited commercialization revenue and no assurance of profitability. Clinical, regulatory, reimbursement, competition, intellectual-property and third-party manufacturing risks could delay development or constrain commercialization. No material legal proceedings were reported. Management stated disclosure controls were effective as of March 31, 2023.
Important facts for investors to verify
- Reconcile the stated cash runway into Q2 2024 with the going-concern conclusion that existing resources are insufficient for at least 12 months after issuance; assess the timing and terms of any financing.
- Track FDA feedback on tab-cel CMC/comparability, the potential BLA pathway and whether another clinical trial is required.
- Verify Ebvallo launch progress, sales, deferred revenue recognition, manufacturing costs and the effect of HCRx’s royalty and milestone rights.
- Confirm timing and results of the expected ATA188 and tab-cel data, and whether the anticipated ATA3219 IND filing occurred.
- Monitor CMO qualification, remediation of the reported contamination, supply continuity and the company’s minimum manufacturing commitments.