Allogene Therapeutics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Financial statements are unaudited. Allogene is a clinical-stage immuno-oncology company developing allogeneic, off-the-shelf T-cell therapies; it had no approved products or product-sales revenue.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 / period-end comparison |
|---|---|---|
| Collaboration revenue | $38.3 million | $0 |
| Research and development expense | $55.2 million | $42.0 million; up 31% |
| General and administrative expense | $16.4 million | $15.6 million; up 5% |
| Total operating expenses | $71.5 million | $57.7 million; up 24% |
| Operating loss | $33.2 million | $57.7 million |
| Net loss | $33.0 million; $0.25 per share | $54.5 million; $0.50 per share |
| Operating cash used | $49.3 million | $40.8 million |
| Cash, cash equivalents and investments | $964.2 million at March 31 | $1,032.1 million at December 31, 2020 |
| Total assets / total liabilities | $1,179.0 million / $109.3 million | $1,227.8 million / $148.2 million at December 31, 2020 |
Q1 revenue was recognized under the related-party license agreement with Allogene Overland, mainly after delivery of licensed intellectual property and know-how. The $38.3 million revenue was not product revenue. The company recorded $38.8 million of deferred revenue at December 31, 2020 and $0.2 million at March 31, 2021. Conventional product margins are not meaningful for this clinical-stage business.
Cash and investments declined by $67.9 million from year-end, while cash, cash equivalents and restricted cash increased $53.5 million, largely because investment maturities exceeded purchases. Financing cash flow was $6.0 million, chiefly from option exercises and the employee stock purchase plan. Property and equipment purchases were $6.5 million. The filing reports no financial borrowings; operating lease liabilities totaled $54.7 million, including $51.6 million long term.
Material changes and management commentary
- Net loss narrowed by $21.5 million year over year, principally reflecting the new collaboration revenue; operating expenses still increased $13.9 million. R&D growth reflected personnel, product-candidate development, and facility costs. Interest and other income fell $2.8 million to $0.5 million as yields declined.
- Allogene invested a further $15.9 million in Notch Therapeutics in February 2021; its voting interest was 20.7% at quarter-end, accounted for under the equity method.
- Management expects continued losses and rising R&D and G&A spending. It said cash, cash equivalents and investments should fund operations for at least one year from the filing date, while also noting that additional capital will be needed to fully implement its business plan. No specific full-year financial guidance was provided.
Outlook, risks and contingencies
- Management planned to report updated ALPHA trial data and initial ALPHA2 data on May 19, 2021; progression to the ALPHA2 Phase 2 portion by year-end was conditional on data. The company expected to initiate the ALLO-605 IGNITE Phase 1 trial in mid-2021. These are forward-looking plans, not reported outcomes.
- COVID-19 was adversely affecting trial enrollment and patient follow-up; the timing and overall impact remained uncertain. Key risks include trial delays or failure, patient safety and efficacy, manufacturing scale-up and supply, donor-material availability, regulatory uncertainty, and dependence on third-party and licensed technology.
- Potential milestone and royalty obligations under Pfizer, Cellectis, Servier and Notch agreements are contingent on future development, regulatory and commercial events; timing and likelihood were not estimable. Non-cancellable purchase commitments were $4.1 million. Terminating the 20-year solar energy agreement could trigger an approximately $4.3 million payment.
- The company reported no material pending legal proceedings and no subsequent events. Disclosure controls were considered effective. A phased SAP enterprise-software implementation was underway, with management monitoring related changes to internal controls.
Key facts investors should verify
- Whether reported clinical updates support continued development and the stated trial timelines, including in light of COVID-19 enrollment effects.
- How much of the Allogene Overland license consideration is recognized in future periods, and whether recurring collaboration revenue or milestone payments materialize.
- Actual cash burn, runway and financing needs as clinical programs and manufacturing investment expand; the stated runway is management’s estimate.
- Manufacturing readiness, donor and raw-material supply, and continued access to Cellectis, Servier and other partner technologies and support.
- Whether the SAP rollout proceeds without material disruption or a material weakness in financial reporting controls.