Atara Biotherapeutics, Inc. — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019. Atara is a clinical-stage, off-the-shelf allogeneic T-cell immunotherapy company developing treatments for cancer, autoimmune and viral diseases. It reported no revenue and has no approved products.
Financial performance and liquidity
Amounts below are in millions, except per-share data.
| Metric | Q1 2019 | Q1 2018 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $48.7 | $28.5 |
| General and administrative expense | $19.2 | $14.0 |
| Total operating expenses | $67.9 | $42.5 |
| Net loss | $66.3 | $41.4 |
| Basic and diluted loss per share | $1.44 | $1.05 |
| Net cash used in operating activities | $70.2 | $34.8 |
| Cash, cash equivalents and short-term investments at period end | $237.5 | $309.6 at Dec. 31, 2018 |
- Cash, cash equivalents and restricted cash totaled $57.6 million at March 31, 2019, versus $62.1 million at year-end 2018. Short-term investments were $181.4 million.
- Current assets were $250.8 million and current liabilities $25.2 million. Total liabilities were $40.8 million; reported long-term operating lease liabilities were $14.4 million. The filing does not report conventional funded debt as a material balance.
- No operating margin is applicable because the company had no revenue. Accumulated deficit was $593.2 million.
- The company had an unused at-the-market equity facility of up to $100 million at March 31, 2019; it sold no shares under the facility in Q1.
Material changes versus the prior comparable period
- Net loss rose by $24.8 million year over year, while operating cash use increased by $35.4 million.
- R&D expense increased $20.2 million, principally from higher employee and overhead costs, clinical and manufacturing activity, and program development. G&A expense increased $5.2 million, primarily due to compensation and professional services.
- Cash and short-term investments declined $72.1 million from Dec. 31, 2018. The 2018 comparison included $293.3 million of net proceeds from underwritten offerings; there were no comparable offering proceeds in Q1 2019.
- Adoption of lease accounting standard ASC 842 on Jan. 1, 2019 added operating lease assets and liabilities and derecognized the build-to-suit asset and related obligation. The filing says adoption did not significantly affect Q1 results or cash flows.
Outlook, management commentary and risks
- Management expected existing cash, cash equivalents and short-term investments to fund planned operations to mid-2020. It anticipated continued losses, rising operating expenses and a need for additional capital; future financing could dilute shareholders or require concessions on product rights.
- Tab-cel was in Phase 3 development for EBV-positive post-transplant lymphoproliferative disorder (PTLD). The company planned to submit an EU conditional marketing authorization application based on initial Phase 3 results in 2020; initial top-line disclosure was expected after acceptance of that application. FDA and EMA discussions on global regulatory strategy were ongoing, with outcomes expected in the first half of 2019.
- ATA188 was in a Phase 1 study for progressive multiple sclerosis. At the time of the filing, the company expected initial safety results in June 2019 and additional safety and efficacy results in the second half of 2019; it planned to initiate a randomized ATA190 study in the second half of 2019.
- The company prioritized mesothelin-targeted CAR T development and expected its first CAR T program to enter the clinic, with an IND expected in 2020.
- ATOM, the Thousand Oaks manufacturing facility, was supporting preclinical work; product-specific qualification activities for clinical and commercial production were expected to be completed in 2019. Manufacturing scale-up, regulatory qualification, supply continuity and cell-line availability remain important execution risks.
- The filing’s risk disclosures emphasize clinical-trial uncertainty, enrollment and regulatory delays, safety risks, manufacturing challenges, competition, dependence on third-party suppliers and collaborators, intellectual-property exposure, and the possibility of needing capital sooner than projected. The filing also notes that tab-cel Phase 3 enrollment was proceeding slower than anticipated in a May 2019 update, after the quarter.
- CEO Isaac Ciechanover had announced plans to step down by the earlier of June 30, 2019 or appointment of a successor; the board was conducting a search.
- No material legal proceedings were reported. Management concluded disclosure controls were effective as of March 31, 2019; no material change in internal control over financial reporting was identified.
Important facts for investors to verify
- Current tab-cel Phase 3 enrollment, timing of results and regulatory alignment, including the effect of the slower-enrollment update.
- Actual cash burn and runway against management’s mid-2020 estimate, and any subsequent use of the $100 million ATM facility or other financing.
- Progress of ATA188 and ATA190 studies and whether anticipated clinical milestones were met.
- ATOM qualification, manufacturing capacity and supply reliability for ongoing clinical programs.
- CEO succession and any resulting changes to strategy, operating plans or spending.