Atara Biotherapeutics, Inc. quarterly report, Q2 FY2021

Atara Biotherapeutics, Inc. — Q2 2021 Form 10-Q

Reporting period: Three and six months ended June 30, 2021. Atara is a clinical-stage T-cell immunotherapy company with no approved products and no product-sales revenue.

Financial performance and position

Metric	Q2 2021	Q2 2020	Six months 2021	Six months 2020
License and collaboration revenue	$3.9 million	$0	$7.4 million	$0
Research and development expense	$68.5 million	$61.6 million	$132.5 million	$119.2 million
General and administrative expense	$19.4 million	$16.4 million	$37.1 million	$33.4 million
Net loss	$83.8 million	$77.5 million	$162.1 million	$151.0 million
Net loss per share	$0.91	$1.14	$1.77	$2.34

• Cash, cash equivalents and short-term investments were $373.4 million at June 30, 2021, down from $500.7 million at December 31, 2020. Current assets were $392.3 million and current liabilities $88.8 million.
• Operating cash use was $127.3 million for the first half, compared with $123.7 million in 2020. Investing activities provided $45.4 million, primarily reflecting investment maturities and sales; financing activities provided $5.3 million.
• Total liabilities were $125.3 million. The filing reports operating lease liabilities but no material conventional borrowing or debt balance. Operating margin is not meaningful for this pre-commercial company; no product gross margin was reported.
• Accumulated deficit was $1.29 billion. Weighted-average shares were 92.2 million for Q2 and 91.8 million for the first half; 84.8 million common shares were outstanding at June 30.

Changes versus prior comparable periods

• Revenue began to be recognized under the Bayer collaboration agreements; no license and collaboration revenue was recorded in the 2020 periods.
• First-half net loss increased by $11.2 million. R&D expense rose $13.3 million, driven by higher employee and overhead costs and greater ATA188/CAR T program spending, partly offset by lower tab-cel spending as 2020 included greater inventory build-up. G&A increased $3.7 million, primarily for anticipated tab-cel launch preparation.
• First-half operating cash use increased by $3.6 million. Cash and investments declined by $127.3 million, while the 2020 period included $189.6 million of net proceeds from an underwritten offering.

Outlook, commentary and risks

• Management said cash, cash equivalents and short-term investments were expected to fund planned operations into 2023. The financial-statement liquidity note separately states resources should cover at least the next 12 months. Atara expects continued losses and says substantial additional funding will be needed; financing may be dilutive or unavailable on acceptable terms.
• For tab-cel, management expected to complete the U.S. BLA submission in Q1 2022 and anticipated potential U.S. approval and commercialization in H2 2022. It expected to submit an EU marketing application in November 2021, with a potential decision in H2 2022. These are expectations, not assured outcomes.
• The FDA requested further CMC and clinical discussions, including review of manufacturing-lot data and updated ALLELE study data. Because comparability data were unavailable for all lots used in non-pivotal studies, Atara planned separate, non-pooled analyses for pivotal and non-pivotal clinical data in the anticipated BLA.
• Management reported that updated ALLELE data showed an objective response rate consistent with prior results and durability, with no new safety signals; the filing provides no specific response-rate value in this discussion. A further data presentation was planned for Q4 2021.
• ATA188’s Phase 2 EMBOLD trial was enrolling; an interim analysis and planned enrollment completion were expected in H1 2022. Bayer was responsible for most further development and commercialization of ATA2271/ATA3271; Bayer’s IND filing for ATA3271 was expected in H2 2022. Atara planned an ATA3219 IND submission in Q1 2022.
• COVID-19 had caused some transient site and enrollment delays, although management said it had not materially affected operations or key timelines to date. Principal risks include clinical and regulatory uncertainty, tab-cel manufacturing comparability and facility qualification, supply and trial-enrollment disruption, competition, and the need for additional capital.
• The Bayer agreements include up to $610 million in development, regulatory and commercial milestones and tiered royalties up to low double digits; no milestone or sales-based payments had been received by June 30, 2021. Deferred revenue under the Bayer agreements was $63.4 million, expected to be recognized over approximately three years.

Important facts for investors to verify

• Progress and timing of FDA meetings, tab-cel BLA preparation, manufacturing comparability, and commercial qualification.
• Final ALLELE efficacy and safety data, including how separate pivotal and non-pivotal analyses affect the regulatory submission.
• Actual cash burn, operating plans and financing needs relative to management’s runway estimate into 2023.
• Enrollment and interim results for EMBOLD, and progress on ATA3219 and Bayer-led ATA3271 development.
• Whether planned U.S. and EU regulatory milestones and potential launch timing remain achievable.