Atara Biotherapeutics, Inc. — FY 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; filed February 27, 2020. The filing also reports fourth-quarter results. Atara is a clinical-stage biotechnology company developing off-the-shelf T-cell immunotherapies; it had no approved products and no revenue.
Financial performance and liquidity
- Revenue and margins: No revenue was reported. With no product sales, operating and profit margins are not meaningful.
- Operating expenses: Research and development expense was $216.1 million, up from $167.5 million in 2018. General and administrative expense was $79.6 million, up from $69.7 million. Total operating expenses were $295.7 million, versus $237.1 million.
- Loss: Net loss was $291.0 million, compared with $230.7 million in 2018; diluted loss per share was $5.67 versus $5.27. Accumulated deficit was $818.0 million at year-end.
- Fourth quarter: Net loss was $78.5 million, compared with $80.0 million in Q4 2018. Q4 2019 R&D expense was $61.6 million and G&A was $18.1 million.
- Cash flow: Operating cash outflow was $235.6 million, up from $179.8 million in 2018. Investing activities provided $60.5 million, primarily reflecting investment maturities and sales; financing activities provided $188.8 million.
- Liquidity: Cash, cash equivalents and short-term investments totaled $259.1 million, down from $309.6 million. Working capital was $236.2 million. Total liabilities were $52.2 million; reported lease liabilities included $15.4 million of operating leases and $0.5 million of finance leases. The filing does not identify material conventional borrowings.
- Funding and dilution: Atara raised approximately $140.7 million net in a July 2019 offering and $48.9 million net through its 2019 ATM facility. It sold a further $21.1 million net under that ATM in January 2020 and established a separate ATM facility of up to $100 million in February 2020.
Material changes and business developments
- R&D expense rose substantially, mainly from higher employee and overhead costs, expanded clinical and manufacturing work, and development of CAR T programs. Atara had 393 employees at year-end.
- Tab-cel (tabelecleucel), the lead program for EBV-positive post-transplant lymphoproliferative disease (PTLD), remained in Phase 3. In 2019, the company combined its MATCH and ALLELE studies into one ALLELE study with HCT and SOT cohorts. Management reported that enrollment had been slower than anticipated.
- ATA188, an allogeneic EBV-targeted therapy for progressive multiple sclerosis, completed enrollment in its Phase 1 dose-escalation cohorts. The company reported it was well tolerated in the available data, with no observed cytokine release syndrome, graft-versus-host disease or dose-limiting toxicities. These were early clinical findings, not proof of efficacy.
- Atara prioritized mesothelin-targeted CAR T programs ATA2271 and ATA3271 and continued development of CD19-targeted ATA3219. Most CAR T programs remained preclinical or in development planning.
Outlook, risks and unusual items
- Management expected year-end 2019 liquidity, plus January 2020 ATM proceeds, to fund planned operations into the second quarter of 2021. The company also said it would need substantial additional funding; this runway estimate depends on its operating plan and assumptions.
- Management expected R&D and G&A expenses to increase in 2020, including from expanded tab-cel trial sites and studies, ATA188 clinical work, CAR T research and manufacturing development.
- Atara planned to discuss tab-cel data with the FDA before initiating a BLA submission in the second half of 2020, and planned an EU marketing application in 2021, subject to clinical, regulatory and pediatric-plan requirements.
- Key risks include clinical-trial delays or failure, limited enrollment in rare diseases, manufacturing scale-up and qualification, reliance on collaborators and contract manufacturers, regulatory uncertainty, competition, and the need for further financing. Additional equity financing may dilute shareholders.
- The company adopted lease accounting standard ASC 842 in 2019, recording operating lease assets and liabilities; the change did not significantly affect reported operating results. Deloitte issued unqualified opinions on the financial statements and internal control over financial reporting. No material legal proceedings were reported.
Important facts for investors to verify
- Actual ALLELE enrollment, cohort-specific response results and the evidence needed to support a tab-cel regulatory filing.
- Whether the planned tab-cel FDA and EU submission timelines were achieved, and any regulator feedback or additional study requirements.
- ATA188’s later-stage safety and efficacy results, including the planned randomized, placebo-controlled study.
- Manufacturing-facility commercial qualification, product supply capacity and dependence on Cognate and other external partners.
- Cash burn, ATM usage, financing needs and resulting share dilution relative to the stated second-quarter 2021 runway.