Allogene Therapeutics, Inc. — FY 2018 Form 10-K
Reporting period: Fiscal year ended December 31, 2018. The filing also presents unaudited quarterly figures; it is an annual report, not a standalone Q4 filing. Allogene is a clinical-stage cell-therapy company with no product revenue to date.
Business context and development
Allogene is developing engineered, off-the-shelf allogeneic CAR T-cell therapies. Its lead programs include UCART19 and ALLO-501 (CD19), and ALLO-715 (BCMA). UCART19 trials are sponsored by Servier; Allogene plans to sponsor ALLO-501 and ALLO-715 trials. FDA cleared the ALLO-501 IND in January 2019. In February 2019, Allogene leased space for a planned cell-therapy manufacturing facility in Newark, California.
Financial results and liquidity
| Metric | FY 2018 | Q4 2018 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $151.9 million | Not separately provided |
| General and administrative expense | $41.0 million | Not separately provided |
| Operating loss | $192.8 million | $33.0 million |
| Net loss | $211.5 million | $30.5 million |
| Net loss per share, basic and diluted | $7.31 | $0.37 |
| Cash, cash equivalents and investments at year-end | $721.4 million | — |
| Cash used in operating activities | $44.7 million | — |
| Working capital at year-end | $438.5 million | — |
FY 2018 investing cash outflow was $632.8 million, primarily reflecting purchases of investments; financing cash inflow was $771.2 million, including IPO proceeds, preferred-stock financing and convertible notes. The notes converted into common stock at the IPO; no convertible notes remained outstanding at year-end. Total liabilities were $70.7 million, including lease liabilities. The company reported no off-balance-sheet arrangements.
Changes versus the prior period
Comparison with 2017 is limited: Allogene was incorporated in November 2017 and reported only $2,000 of expenses through year-end; principal operations began in April 2018 following the Pfizer asset acquisition. FY 2018 R&D expense included a $109.4 million noncash charge for acquired in-process R&D. G&A included $14.9 million of stock-based compensation related to modified founders’ shares. The $21.2 million change in fair value of convertible notes and $3.4 million of note issuance costs also contributed to the annual loss.
Outlook, risks and unusual items
- Management expects significant ongoing losses and increasing R&D, G&A and capital spending. It stated that year-end cash and investments were expected to fund operations for at least one year from the financial-statement filing date; further funding will ultimately be needed to advance and commercialize programs.
- Management planned to begin the ALLO-501 Phase 1/2 ALPHA trial in the first half of 2019 and to submit an IND and initiate a Phase 1 ALLO-715 trial in 2019. Potential UCART19 registrational trials were targeted for 2020. These are plans, not assurances.
- UCART19 interim data through October 23, 2018 showed CR/CRi in 14 of 21 patients (67%); 14 of 17 patients given fludarabine, cyclophosphamide and an anti-CD52 antibody responded. No responses or cell expansion were observed among four patients given FC alone. Results are preliminary. Reported serious risks included CRS, prolonged cytopenia, infections and two treatment-related deaths.
- Servier reported UCART19 manufacturing-supply issues; the CALM and PALL trials remained active but were not recruiting new patients at the filing date. Allogene said this did not affect its ALLO-501 or ALLO-715 manufacturing/program timelines.
- Key risks include clinical efficacy and safety, gene-editing effects, manufacturing scale-up and supply, dependence on Servier/Cellectis and contract manufacturers, regulatory uncertainty, competition, and the need for future financing. Potential milestone obligations are substantial: up to $840 million under the Pfizer agreement and up to $2.8 billion in aggregate under the Cellectis arrangement, contingent on future milestones; royalties may also apply.
Investor verification priorities
- Track UCART19 trial recruitment and supply resolution, updated efficacy, durability and safety data, and the role of anti-CD52 lymphodepletion.
- Confirm ALLO-501 and ALLO-715 trial start dates, enrollment, manufacturing readiness and any regulatory changes.
- Assess cash burn against the $721.4 million year-end cash-and-investment balance and management’s stated funding horizon.
- Review the cost, schedule and obligations of the planned Newark facility, alongside existing lease commitments.
- Examine the full agreement terms for milestone, royalty and collaboration obligations, and note that the auditor did not attest to internal control effectiveness under the newly public-company transition exemption.