Atara Biotherapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Financial amounts are in U.S. dollars; figures below are in millions unless otherwise indicated.
Business context
Atara is a clinical-stage cell-therapy company. Its lead candidate, tab-cel (Ebvallo), is approved in the EU and UK and is in Phase 3 development in the U.S. Pierre Fabre holds commercialization rights worldwide under an amended agreement. ATA3219 is in Phase 1 development; development of ATA188 is paused, and the company returned its ATA2271 and ATA3271 programs to Memorial Sloan Kettering in March.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior period |
|---|---|---|
| Total revenue | $27.4 | $1.2 |
| Operating expenses | $58.6 | $76.2 |
| Operating loss | $(31.2) | $(75.0) |
| Net loss | $(31.8) | $(74.8) |
| Net loss per share, basic and diluted | $(0.23) | $(0.72) |
| Net cash used in operating activities | $(29.6) | $(38.4) |
- Commercialization revenue was $27.4 million, up from $0.9 million. The increase primarily reflected revenue recognition under the expanded Pierre Fabre agreement, including $12.3 million of transition-plan activity and accelerated recognition of an existing obligation. It should not be read as equivalent to product-sales growth.
- Cost of commercialization revenue was $2.0 million, versus $0.2 million; the increase was primarily related to inventory adjustments to net realizable value. Revenue less this cost was approximately $25.4 million, but this is not a like-for-like product gross margin given the nature of the recognized agreement revenue.
- Research and development expense declined to $45.5 million from $62.2 million, mainly due to lower staffing, outside-service and manufacturing costs, partly offset by tab-cel process-science and BLA work. General and administrative expense fell to $11.1 million from $13.9 million, mainly due to workforce reductions.
- Cash, cash equivalents and short-term investments totaled $46.2 million at quarter-end, down from $51.7 million at December 31, 2023. Current assets were $106.4 million and current liabilities $180.7 million, a current ratio of approximately 0.59.
- Cash from financing activities was $24.1 million, primarily $15.0 million net proceeds from pre-funded warrants and $9.4 million net proceeds from the ATM. Investing activities provided $14.7 million, mainly from investment maturities and sales. Cash, cash equivalents and restricted cash increased $9.2 million during the quarter.
- Total liabilities were $263.6 million and stockholders’ deficit was $98.3 million. The filing reports a $36.1 million liability related to the sale of future royalties and milestones to HCRx, including a $35.6 million long-term portion; the liability carries an estimated annual effective interest rate of approximately 12%. Operating lease liabilities were $55.3 million in total. The filing does not present a conventional borrowing balance.
- Common shares outstanding were 120.3 million at March 31, versus 106.4 million at year-end. Q1 equity financing included 12.3 million shares sold through the ATM and pre-funded warrants to purchase 27.3 million shares.
Changes, outlook and key risks
- The net loss narrowed by $43.0 million year over year, while revenue rose substantially, largely reflecting Pierre Fabre agreement accounting. Operating cash use improved by $8.8 million.
- Management states existing cash and investments are insufficient to fund planned operations for at least 12 months after issuance of the financial statements, and concludes substantial doubt exists about the company’s ability to continue as a going concern. Separately, management estimates that cash, certain anticipated Pierre Fabre payments, cost reductions and planned operating efficiencies could fund operations into 2027. That longer runway depends on contingent payments tied to BLA filing and approval and specified activities; the company warns assumptions could change.
- Atara plans to submit the tab-cel BLA in Q2 2024 following a March pre-BLA meeting. The filing says $20 million was earned upon a March regulatory milestone and received in April. Further payments, including potential U.S. BLA acceptance and approval milestones, depend on regulatory outcomes. The FDA could reject the application, require additional evidence or a further clinical study, or not approve the BLA.
- For ATA3219, the company planned to initiate a Phase 1 lupus-nephritis study in Q4 2024, with initial data anticipated in H1 2025; initial data from its Phase 1 NHL study were anticipated in Q4 2024. These are forward-looking expectations, not assured outcomes.
- Atara recorded $4.8 million of restructuring charges in Q1 related to its January 2024 workforce reduction of approximately 25%; approximately $1.8 million of related separation payments and benefits remained at quarter-end. This followed an approximately 30% reduction announced in November 2023.
- The CRL manufacturing agreement was due to expire April 30, 2024; Atara was negotiating an extension and a new supply agreement, with no assurance of agreement. Manufacturing continuity, qualification and transfer to Pierre Fabre are material execution risks.
- Nasdaq notified the company in January 2024 that its share price had been below the $1 minimum bid requirement for 30 consecutive business days. The stated compliance deadline was July 8, 2024; the filing also notes the company’s stockholders’ deficit was below the equity threshold cited for a potential additional compliance period.
- The company reported no material legal proceedings. It said disclosure controls were effective as of March 31, 2024 and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the tab-cel BLA was submitted and accepted, and whether the FDA requests additional clinical or manufacturing evidence.
- Actual timing and receipt of Pierre Fabre milestones, especially payments dependent on BLA acceptance, approval and other obligations; assess runway without assuming contingent payments.
- Cash burn, financing needs and dilution from ATM sales, outstanding pre-funded warrants and any additional capital raises.
- CRL supply-agreement status, alternative manufacturing capacity, and progress and timing of manufacturing transfer to Pierre Fabre.
- Nasdaq bid-price compliance and any exchange-listing consequences.
- Progress against ATA3219 study timelines and the operational impact of workforce reductions.