Atara Biotherapeutics, Inc. — Q2 2015 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2015. Atara is a clinical-stage biopharmaceutical company developing biologics and allogeneic T-cell therapies; it had no product revenue and no approved products.
Financial results
| Metric | Q2 2015 | Q2 2014 | Six months 2015 | Six months 2014 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development, including MSK license expense | $11.5m | $3.2m | $17.3m | $6.2m |
| General and administrative expense | $3.6m | $1.4m | $7.1m | $5.5m |
| Total operating expenses | $15.1m | $4.5m | $24.4m | $11.6m |
| Net loss | $14.9m | $4.5m | $24.1m | $11.6m |
| Basic and diluted loss per share | $0.62 | $3.37 | $1.04 | $8.89 |
Margins are not meaningful because the company had no revenue. Interest and other income was $0.2m for Q2 and $0.3m for the first half of 2015.
At June 30, cash and cash equivalents were $26.2m and short-term available-for-sale investments were $128.8m, totaling $155.0m. Working capital was $149.0m. Total liabilities were $11.8m, including a $4.5m MSK license fee payable; the filing reports no material debt. For the six months, operating cash use was $12.9m, investing cash use $47.8m, and financing cash provided $65.0m. Cash increased $4.3m.
Changes versus prior comparable periods
- First-half net loss more than doubled year over year, from $11.6m to $24.1m, mainly as research and development spending rose with clinical and pipeline activity, higher staffing and stock compensation, and the MSK license expense.
- Q2 total operating expenses rose to $15.1m from $4.5m. R&D included a $4.5m upfront MSK license charge; T-cell program spending also began following the June license.
- G&A increased, reflecting higher stock-based compensation in Q2 and higher payroll, legal and other public-company costs. First-half stock-based compensation was $5.1m, versus $3.8m.
- Cash and investments increased from $104.1m at December 31, 2014 to $155.0m at June 30, 2015, supported in part by February 2015 offering proceeds of approximately $69.5m net. The company invested more cash in short-term securities.
Business, outlook and material items
- Pipeline included Phase 2 PINTA 745 for protein-energy wasting and Phase 1 STM 434 for ovarian cancer and other solid tumors; EBV-CTL and CMV-CTL were in Phase 2 studies, and WT1-CTL in Phase 1. FDA granted Breakthrough Therapy designation to EBV-CTL for rituximab-refractory EBV-associated lymphoproliferative disease after hematopoietic cell transplant.
- In June, Atara exercised its MSK option and licensed three T-cell therapies. The agreement includes the $4.5m upfront payment, up to $33m in development, regulatory and sales milestones, escalating mid-single-digit royalties, and certain sublicensing payments. Amgen agreements carry up to $86m in development and regulatory milestones, potential commercial milestones, and royalties.
- Management expected June 30 cash and cash equivalents to fund the current operating plan for at least 12 months. Separately, it projected available cash and investments plus proceeds from the July offering would support planned preclinical and clinical trials for lead candidates through the second half of 2018. The July 2015 offering, after period-end, raised approximately $193.9m net.
- Management expected R&D and G&A expenses to rise and losses to continue for the foreseeable future; substantial further funding may be needed for regulatory approval and commercialization. The company has never generated revenue or achieved profitability.
- Unusual development items disclosed include a randomization and inventory-distribution error in the PINTA 745 Phase 2 trial that unblinded the first six patients and required a trial restart, and cracked vials in certain STM 434 drug-product lots in April 2014. No material litigation was reported. Management stated disclosure controls were effective as of June 30, 2015.
Important facts for investors to verify
- Clinical progress, enrollment and results for each program, including the restarted PINTA 745 study and the evidence supporting T-cell candidates.
- Whether the projected runway through the second half of 2018 remains valid after the July offering and as trial, manufacturing and staffing costs evolve.
- MSK and Amgen milestone, royalty, minimum-royalty and sublicensing obligations, and the timing or likelihood of triggering payments.
- Manufacturing scale-up, cell-therapy supply and quality controls, and any recurrence or impact of the disclosed trial or vial issues.
- Potential dilution: February and July equity offerings, equity awards and options; 24.2m shares were outstanding at June 30 and 28.5m at July 31, 2015.