Atara Biotherapeutics, Inc. — Q3 2019 Form 10-Q
Reporting period: Three and nine months ended September 30, 2019; comparisons are with the same periods in 2018. Atara is a clinical-stage, allogeneic T-cell immunotherapy company developing treatments for cancer, autoimmune and viral diseases. It reported no revenue and has no approved products.
Financial performance and liquidity
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $53.5M | $43.4M | $154.5M | $105.2M |
| General and administrative expense | $19.0M | $16.9M | $61.5M | $50.1M |
| Total operating expense | $72.6M | $60.2M | $216.0M | $155.3M |
| Net loss | $71.9M | $58.4M | $212.5M | $150.7M |
| Basic and diluted loss per share | $1.31 | $1.29 | $4.32 | $3.49 |
| Net cash used in operating activities | Not provided for quarter | Not provided for quarter | $176.9M | $122.4M |
Margins are not meaningful because the company had no revenue. At September 30, cash and cash equivalents were $94.4M and short-term investments were $188.5M, totaling $282.9M, compared with $309.6M at December 31, 2018. Current assets were $293.4M and current liabilities $30.7M. The company reported no conventional debt; it had $15.7M in operating lease liabilities and $0.4M in finance lease liabilities. Accumulated deficit was $739.5M.
For the first nine months, investing activities provided $59.3M, principally reflecting net maturities and sales of investments; financing activities provided $151.3M. Cash, cash equivalents and restricted cash increased by $33.7M to $95.8M. These cash-flow figures include restricted cash and are distinct from the $282.9M cash-and-investments liquidity figure.
Changes versus the prior comparable period
- Nine-month net loss increased to $212.5M from $150.7M, while operating cash use rose to $176.9M from $122.4M.
- Nine-month R&D expense increased $49.3M. The company attributed the increase mainly to higher employee and overhead costs, expanded ATA188 and CAR T development, and research and manufacturing process work. Tab-cel expense was broadly stable for the nine-month period.
- Nine-month G&A expense increased $11.4M, primarily due to compensation costs and increased headcount.
- At September 30, 2019, cash and short-term investments were $26.7M below year-end 2018. At the same time, the July equity offering generated $140.7M in net proceeds.
Outlook, developments and risks
- Management expected existing cash, cash equivalents and short-term investments to fund planned operations into 2021, while stating that substantial additional funding would be required for continued development and potential commercialization. The company expected ongoing losses and no product revenue in the foreseeable future.
- Tab-cel: The two Phase 3 studies were combined into the ALLELE study, with HCT and SOT cohorts. The amended protocol includes an interim analysis. Atara planned to initiate a U.S. BLA submission in the second half of 2020; timing of a European conditional marketing application remained subject to discussions with the EMA. The filing notes slower-than-anticipated enrollment announced in May 2019.
- ATA188: The Phase 1 study’s final dose-escalation cohort had completed enrollment. Reported preliminary data indicated tolerability without cytokine release syndrome, graft-versus-host disease or dose-limiting toxicities. The company selected the cohort 3 dose for the randomized, placebo-controlled Phase 1b portion and expected further results in 2020.
- CAR T and manufacturing: Atara prioritized mesothelin-targeted ATA2271, with an autologous-program IND planned for 2020, and continued preclinical work on allogeneic ATA3271 and CD19-targeted ATA3219. Commercial production qualification at its ATOM facility was progressing; the company also relies on external manufacturing services.
- Financing and dilution: The July 2019 public offering raised $140.7M net through common shares and pre-funded warrants. The ATM facility had $86.9M of capacity remaining at quarter-end. Further equity financing could dilute existing shareholders; debt or partnering could impose restrictions or require relinquishing rights.
- Key risks: Clinical and regulatory outcomes are uncertain; enrollment, manufacturing comparability, supply, facility qualification and scale-up may delay development. Atara has no approved products, no product revenue and no committed external funding source. The filing reported no material legal proceedings and stated disclosure controls were effective as of September 30, 2019.
Important facts for investors to verify
- Whether the ALLELE study enrolls and meets its endpoint, and whether the planned BLA timing remains achievable.
- Updated clinical data and safety findings for tab-cel and ATA188, including final versus preliminary results.
- Progress in ATOM commercial qualification and the reliability and comparability of external manufacturing supply.
- Cash burn, updated runway assumptions, future financing needs and remaining ATM capacity.
- Potential dilution from equity awards and the 2.945M pre-funded warrants issued in July 2019, none exercised as of September 30, 2019.