Atara Biotherapeutics, Inc. — Q1 2017 Form 10-Q
Reporting period: Three months ended March 31, 2017; filed May 4, 2017. Amounts below are in U.S. dollars. Atara is a clinical-stage biopharmaceutical company developing allogeneic, antigen-specific T-cell therapies. It has no approved products and has not generated revenue.
Financial results and liquidity
| Metric | Q1 2017 | Q1 2016 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $17.5 million | $11.2 million; up $6.3 million (56%) |
| General and administrative expense | $8.6 million | $5.8 million; up $2.8 million (48%) |
| Total operating expenses | $26.2 million | $17.1 million; up $9.1 million (53%) |
| Net loss | $25.7 million; $0.88 per share | $16.6 million; $0.58 per share |
| Cash used in operating activities | $22.0 million | $12.5 million |
| Cash, cash equivalents and short-term investments | $230.6 million at March 31, 2017 | $255.7 million at December 31, 2016 |
Operating loss was $26.2 million; interest and other income, net, was $0.5 million. Profit margins are not meaningful because the company had no revenue and incurred a loss. The accumulated deficit was $202.8 million. Cash and investments declined by $25.0 million from year-end, while cash and cash equivalents alone increased to $62.4 million. Q1 investing cash inflow of $36.8 million largely reflected purchases, maturities and sales of securities—not operating cash generation.
Total assets were $241.7 million and total liabilities were $8.6 million at quarter-end. The filing reports no conventional borrowings; it records a $0.3 million long-term financing obligation related to the Thousand Oaks build-to-suit lease. Current liabilities were $7.8 million. Restricted cash totaled $1.4 million.
Material changes and business developments
- Operating expenses and net loss increased year over year, driven by higher research and development activity, manufacturing and clinical-trial preparation, employee costs, and stock-based compensation.
- ATA129 research and development expense rose to $3.8 million from $2.0 million, primarily for manufacturing and preparation for two Phase 3 EBV-PTLD trials. ATA230 costs rose to $0.9 million from $15,000, largely for manufacturing and outside services. The company expects to prioritize EBV programs over ATA230 for now.
- Atara reported ongoing work to establish comparability of ATA129 made by its contract manufacturer with prior material. It identified assays requiring refinement and was making additional lots and continuing regulatory discussions.
- In February 2017, Atara entered a 15-year lease for approximately 90,580 square feet of office, laboratory and cell-therapy manufacturing space in Thousand Oaks. The initial-term contractual obligations are $16.4 million; the company estimated approximately $50 million in facility build-out cash spending for the remainder of 2017 and early 2018.
Outlook, risks and contingencies
- Management expected existing cash, cash equivalents and short-term investments to fund planned operations into the first quarter of 2019. The company also stated it would need substantial additional funding to complete development and support potential commercialization; it had no committed external funding source.
- Atara expected to initiate ATA129 Phase 3 trials in the second half of 2017: MATCH for post-HCT EBV-PTLD and ALLELE for post-SOT EBV-PTLD. The filing describes planned enrollment of approximately 35 patients in MATCH and approximately 35 in each of ALLELE’s two cohorts. In the EU, the company planned to submit a conditional marketing authorization application for ATA129 in 2018, supported by earlier trial data and available ongoing Phase 3 data.
- Atara was on track, based on FDA discussions, to initiate a Phase 1 trial of allogeneic ATA188 for multiple sclerosis in the second half of 2017. Separately, QIMR Berghofer reported interim results from its autologous ATA188 trial: six patients treated, with three showing reported symptom improvements. These early observations are not established efficacy evidence.
- Atara planned a Phase 1/2 ATA129 combination trial with pembrolizumab for EBV-associated nasopharyngeal carcinoma, targeted to begin in 2018. It also expected a Phase 1/2 ATA520 trial in hematologic malignancies in 2018. ATA230 Phase 3 design work was deferred until after ATA129 Phase 3 initiation.
- Key risks include clinical and regulatory failure or delay, ATA129 manufacturing comparability and assay readiness, dependence on contract manufacturers and research partners, enrollment and safety uncertainties, substantial future financing needs, and construction costs or delays at the new facility. The company warned it may never achieve profitability.
- Potential MSK license obligations include up to $33.0 million in regulatory and sales milestones, royalties on future product sales, and certain sublicensing payments. These contingent amounts were not recorded as liabilities. The filing reported no material legal proceedings and no accrued termination charges under research and development contracts.
Investor verification points
- Confirm whether ATA129 assay refinement, manufacturing comparability assessments and regulatory discussions supported the planned Phase 3 start in the second half of 2017.
- Track actual operating cash burn, facility build-out spending and any financing activity against management’s stated runway into Q1 2019.
- Verify progress and enrollment in the MATCH and ALLELE trials, and assess the evidentiary basis and limitations of prior ATA129 results and the small autologous ATA188 interim dataset.
- Monitor construction timing, total cost, and the lease’s financing and contractual obligations.
- Review subsequent filings for changes to product prioritization, license milestones or royalties, clinical safety, and the need for additional capital.