Allogene Therapeutics, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 14, 2024. This is an annual filing, not a standalone Q4 report. Allogene is a clinical-stage cell therapy company with no approved products and no product-sales revenue.
Financial performance and liquidity
- Revenue: $95,000, compared with $156,000 in 2022. Revenue was collaboration revenue from the Allogene Overland license agreement.
- Net loss: $327.3 million, or $2.09 per share, versus a restated loss of $340.4 million, or $2.38 per share, in 2022. Operating loss was $327.7 million.
- Expenses: R&D was $242.9 million, down 5.3% from $256.4 million; general and administrative expense was $71.7 million, down 9.6% from $79.3 million. The company also recorded a $13.2 million long-lived-asset impairment.
- Cash flow: Operating activities used $237.7 million, versus $220.5 million in 2022. Investing activities provided $163.3 million, primarily reflecting investment maturities, while financing activities provided $95.7 million, primarily from ATM share sales.
- Liquidity: Cash, cash equivalents and investments totaled $448.7 million at year-end, including $83.2 million cash and cash equivalents and $365.5 million short-term investments. Current assets were $459.1 million and current liabilities $37.1 million.
- Debt and obligations: The balance sheet reports no borrowings; operating lease liabilities totaled $95.1 million. Non-cancellable purchase commitments were $2.1 million. The company expects cash runway into 2026, while noting it will need substantial additional financing for development and commercialization.
Changes versus comparable periods
- Net loss narrowed by $13.1 million year over year, mainly as higher interest income and lower operating expenses partly offset ongoing development costs and higher other expenses.
- R&D declined by $13.5 million, largely due to lower personnel and stock-based compensation costs, partly offset by development and manufacturing costs. G&A fell by $7.6 million.
- Interest and other income rose to $18.3 million from $4.6 million, largely because of higher yields on cash and investments. Other expenses increased to $17.8 million, including investment impairment and equity-method losses.
- ATM offerings generated $91.1 million net proceeds from 20.9 million shares issued in 2023, increasing shares outstanding and diluting existing holders.
Outlook, material events and risks
- Pipeline priorities: Management is concentrating on cema-cel for large B-cell lymphoma (LBCL) and chronic lymphocytic leukemia (CLL), ALLO-316 for renal cell carcinoma, and ALLO-329 for autoimmune disease. The company plans to start the pivotal Phase 2 ALPHA3 LBCL trial in mid-2024; initial CLL data are expected by year-end 2024. ALLO-316 updates are planned during 2024, and an ALLO-329 Phase 1 trial is expected to begin in early 2025.
- Portfolio and workforce changes: Allogene deprioritized its later-line LBCL ALPHA2 and EXPAND trials. In January 2024, it substantially completed a workforce reduction of approximately 22%; estimated severance and benefit charges are $2.9 million, primarily in Q1 2024.
- Restatement and controls: The company restated prior annual and quarterly financial information after determining that shares received in the Allogene Overland joint venture should have been recorded at fair value. The correction increased historical collaboration revenue and other expenses and adjusted equity-method investment and deferred revenue balances; it did not affect cash, cash equivalents or investments. Management reported ineffective disclosure controls and internal control over financial reporting at year-end 2023, citing a material weakness in technical accounting for significant non-routine transactions. Remediation is underway, including use of outside accounting experts.
- Partner dispute: Servier discontinued development of CD19 products and disputes remain over cost-sharing, audit rights and the timing of Allogene’s option for ex-U.S. rights. The matters could proceed to arbitration and could affect the collaboration and cema-cel rights.
- Key risks: Clinical efficacy, durability and safety remain unproven; CAR T-related toxicities and prior clinical holds could delay programs. Additional risks include financing needs, manufacturing scale-up and supplier dependence, diagnostic-test performance and approval, intense competition, and dependence on licensed technology and collaborators.
- Additional commitments: A January 2024 Foresight Diagnostics agreement provides for approximately $26 million of MRD-assay development, regulatory and sample-testing costs. Future milestone and royalty obligations under licenses depend on development, regulatory and commercial outcomes; timing and likelihood are not estimable in the filing.
Important facts for investors to verify
- Use the restated financial statements in this 10-K and the amended 2022 10-K/A; prior reported quarterly figures are superseded.
- Monitor cash use, financing needs, ATM issuance and whether the stated runway into 2026 remains achievable.
- Track ALPHA3 initiation, enrollment, MRD-assay regulatory status and the planned mid-2025 selection of a lymphodepletion regimen.
- Review updated clinical safety and efficacy data for cema-cel and ALLO-316, including the effects of protocol changes.
- Follow remediation of the material weakness and any further accounting corrections or restatements.
- Assess developments in the Servier dispute and any resulting changes to cost-sharing or ex-U.S. product rights.