Atara Biotherapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter ended September 30, 2023. Financial statement amounts below are in U.S. dollars; “million” figures are converted from the filing’s thousands. Atara is a clinical-stage cell-therapy company whose lead program, tab-cel (Ebvallo), is approved in the EU and UK and in Phase 3 development in the U.S.
Financial performance and position
| Metric | Q3 2023 / September 30, 2023 | Comparable period / December 31, 2022 |
|---|---|---|
| Revenue | $2.1 million for Q3; $4.3 million for the first nine months | $4.5 million for Q3 2022; $63.4 million for the first nine months of 2022 |
| Operating loss | $69.6 million for Q3; $216.0 million for the first nine months | $84.6 million for Q3 2022; $205.0 million for the first nine months of 2022 |
| Net loss | $69.8 million for Q3; $215.7 million for the first nine months | $84.1 million for Q3 2022; $153.7 million for the first nine months of 2022 |
| Loss per share, diluted | $0.66 for Q3; $2.05 for the first nine months | $0.82 for Q3 2022; $1.51 for the first nine months of 2022 |
| Cash, cash equivalents and short-term investments | $102.4 million | $242.8 million at December 31, 2022 |
| Current assets / current liabilities | $118.7 million / $79.1 million | $295.1 million / $78.9 million at December 31, 2022 |
| Total assets / total liabilities | $188.8 million / $239.6 million | $376.4 million / $249.8 million at December 31, 2022 |
| Stockholders’ equity (deficit) | $(50.8) million | $126.6 million at December 31, 2022 |
- Revenue and margins: Q3 commercialization revenue was $2.0 million, against $2.6 million of commercialization costs, resulting in a gross loss on commercialization revenue. The filing attributes these costs primarily to inventory adjustments and in-license sales-related milestone expense. It does not report a consolidated gross margin.
- Operating expenses: Q3 R&D was $56.9 million and G&A was $12.2 million. For the first nine months, R&D was $175.2 million and G&A was $39.5 million.
- Cash flow: Net cash used in operations was $142.6 million in the first nine months, compared with $213.6 million in the same 2022 period. Investing activities provided $113.9 million, principally from investment maturities and sales; financing activities provided $0.5 million. Cash, cash equivalents and restricted cash declined $28.2 million to $64.9 million.
- Debt-like obligations: The company reported a $34.0 million liability related to the sale of future Ebvallo revenues, including $3.7 million of accretion expense in the first nine months. Its estimated annual effective interest rate was approximately 15% at September 30. The filing also reports operating lease liabilities, but no conventional borrowings are identified in the provided financial statements.
Material changes versus prior periods
- Q3 total revenue fell $2.3 million year over year; nine-month revenue fell $59.0 million. The principal driver was the absence of Bayer collaboration revenue after Bayer terminated its agreements in 2022, when remaining deferred revenue was recognized. Ebvallo commercialization revenue began in 2023 following transfer of the EU marketing authorization to Pierre Fabre.
- Nine-month net loss increased by $62.0 million year over year, despite lower operating expenses. The prior-year period included a $50.2 million gain on the sale of the ATOM manufacturing facility and substantially higher license and collaboration revenue.
- R&D and G&A expenses declined year over year, primarily reflecting reduced payroll and other costs after the ATOM facility sale and the 2022 workforce reduction. CAR T program costs increased, mainly due to ATA3219 manufacturing and trial-startup activity.
- Cash, cash equivalents and short-term investments decreased $140.4 million from year-end 2022. The 2023 operating cash outflow was lower than in 2022, partly because Atara received a $40 million Pierre Fabre milestone payment in January 2023 for milestones achieved in December 2022.
Outlook, risks and subsequent events
- Liquidity and going concern: The financial-statement note says September 30 resources were not sufficient to fund planned operations for at least 12 months from issuance and concludes substantial doubt exists about the company’s ability to continue as a going concern. Elsewhere, management estimates resources plus certain anticipated Pierre Fabre payments could fund operations into Q3 2025. That longer runway depends on uncertain future payments, including payments tied to tab-cel regulatory milestones; without them, the filing says resources would not cover the next 12 months. Additional financing is not assured.
- Global tab-cel partnership: On October 31, 2023, Atara signed an amended and restated Pierre Fabre agreement expanding Pierre Fabre’s exclusive rights worldwide, subject to Hart-Scott-Rodino clearance. It provides for a further $20 million upfront payment and up to $620 million in additional regulatory and commercial milestones, plus tiered double-digit royalties. These are contingent payments, not guaranteed revenue. Initial Territory royalties and milestones remain subject to the HCRx agreement.
- Tab-cel regulatory path: Management reported alignment with the FDA on analytical comparability between manufacturing process versions and plans to request a pre-BLA meeting in Q1 2024 and submit a BLA in Q2 2024. The filing cautions that FDA agreement on the submission path is not assured and that additional clinical trials could be required. Initial data from the Phase 2 multi-cohort study were expected in December 2023.
- Other pipeline updates: ATA188 Phase 2 data were planned for early November 2023; ATA3219 had received an FDA “Safe to Proceed” letter, with a Phase 1 study planned and preliminary data anticipated in the second half of 2024. Atara said it was not actively conducting development activities for ATA3271 while reassessing its approach.
- Workforce reduction: On November 1, 2023, Atara announced a further workforce reduction of approximately 30%, with about $7 million of expected one-time cash severance and related charges.
- Key risks: Continued losses and need for financing; clinical and regulatory uncertainty; reliance on Pierre Fabre and third-party manufacturers; manufacturing qualification, comparability and supply risks; and potential disruption from workforce reductions. Ebvallo’s EU and UK authorizations are subject to annual reassessment and post-marketing obligations.
- The company reported effective disclosure controls as of September 30, 2023, no material change in internal control over financial reporting during the quarter, and no material legal proceedings.
Important facts for investors to verify
- Whether the Pierre Fabre expanded agreement obtains regulatory clearance, becomes effective as expected, and delivers the upfront and milestone payments assumed in management’s cash-runway estimate.
- Whether Atara can fund operations and meet obligations if contingent payments are delayed or not achieved; reconcile the conditional Q3 2025 runway estimate with the formal going-concern warning.
- FDA feedback at the planned pre-BLA meeting, the timing and filing basis for the tab-cel BLA, and whether additional clinical work is required.
- ATA188 study results and the planned ATA3219 trial start and data timeline.
- Manufacturing-site qualification, supply reliability, and the terms and execution of any transfer of tab-cel manufacturing responsibility to Pierre Fabre.
- Cash burn, the $34.0 million revenue-sale liability and its interest accretion, and potential dilution from the November 2023 proposed $100 million ATM facility.
- Actual costs and operational effects of the announced 30% workforce reduction.