Atara Biotherapeutics, Inc. — FY 2018 Form 10-K
Reporting period: Fiscal year ended December 31, 2018; filed February 26, 2019. Atara is a clinical-stage biotechnology company developing off-the-shelf, allogeneic T-cell immunotherapies for cancer, autoimmune and viral diseases. It had no approved products and generated no revenue.
Financial results and liquidity
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $167.5 million | $81.2 million |
| General and administrative expense | $69.7 million | $40.3 million |
| Total operating expenses / operating loss | $237.1 million | $121.5 million |
| Net loss | $230.7 million | $119.5 million |
| Net loss per share, basic and diluted | $5.27 | $4.00 |
| Cash, cash equivalents and short-term investments at year-end | $309.6 million | $166.1 million |
| Net cash used in operating activities | $179.8 million | $87.5 million |
| Working capital at year-end | $281.5 million | $144.5 million |
Atara reported no product revenue, so revenue growth and profit margins are not applicable. Accumulated deficit was $527.3 million. Total liabilities were $53.0 million, including $13.0 million of long-term liabilities; disclosed lease commitments totaled $27.4 million. The filing does not identify conventional borrowing as a material source of financing.
Changes and notable items
- Net loss increased by $111.2 million year over year. R&D expense more than doubled, reflecting Phase 3 tab-cel studies, other clinical and manufacturing work, increased headcount and facility costs. G&A also rose, mainly from compensation and professional services.
- Fourth-quarter 2018 net loss was $80.0 million versus $35.3 million in fourth-quarter 2017; quarterly operating expenses were $81.8 million versus $35.8 million.
- Cash from operations was funded substantially by equity issuance. January and March public offerings generated $293.3 million net, and the ATM program generated $47.6 million net in 2018. Shares outstanding increased to 45.95 million at year-end from 30.73 million.
- A $12.5 million MSK license fee for mesothelin-targeted CAR T rights was expensed in fourth-quarter 2018 and paid in first-quarter 2019. The company also spent $35.9 million on property and equipment in 2018 as it developed its manufacturing capacity.
Business outlook, milestones and risks
- Management expected year-end cash, cash equivalents and short-term investments to fund planned operations to mid-2020, while stating additional capital would be required to complete development and support potential commercialization. No committed external funding source was disclosed.
- Tab-cel (tabelecleucel) was in Phase 3 studies for EBV-positive post-transplant lymphoproliferative disorder (PTLD). Management expected initial study results to be available to the company in first-half 2019, with public topline disclosure anticipated in second-half 2019 after the planned EU conditional marketing authorization submission. FDA and EMA discussions on global development strategy were ongoing.
- Other stated targets included initial ATA188 safety results in first-half 2019 and further results in second-half 2019; a randomized ATA190 study in progressive MS in second-half 2019; and the first next-generation CAR T IND submission in fourth-quarter 2019 or first-quarter 2020. These are forward-looking expectations, not reported outcomes.
- ATOM, the Thousand Oaks manufacturing facility, opened in June 2018. Facility commissioning and qualification were reported completed in fourth-quarter 2018, while product-specific qualification to support clinical and commercial production was expected in 2019.
- Key risks include clinical failure or delays, uncertain regulatory requirements and approval, manufacturing comparability and scale-up, dependence on donors and third-party suppliers, competition, and the need for further financing and potential shareholder dilution. The CEO had announced plans to step down by June 30, 2019 or when a successor was appointed.
- The company reported no material legal proceedings. The auditor issued an unqualified opinion on the financial statements and internal controls; management also concluded controls were effective at year-end.
Important facts for investors to verify
- Whether tab-cel Phase 3 enrollment, response data and regulatory discussions supported the anticipated 2019 milestones.
- Whether cash burn, spending plans and equity financing leave adequate liquidity beyond management’s mid-2020 estimate, and the effect of further issuance under the new $100 million ATM facility.
- Whether ATOM product-specific qualification and manufacturing comparability were achieved on schedule and can support reliable clinical and commercial supply.
- Progress and safety data for ATA188 and ATA190, and timing of the planned CAR T IND submission.
- Potential collaboration milestone and royalty obligations, lease costs, and dilution from outstanding equity awards and future financing.