Atara Biotherapeutics, Inc. — Q2 2018 Form 10-Q
Reporting period: Three and six months ended June 30, 2018. Unaudited consolidated financial statements; dollar amounts below are in U.S. dollars.
Business context
Atara is a clinical-stage T-cell immunotherapy company developing allogeneic and autologous treatments for cancer, autoimmune and viral diseases. It had no approved products and had generated no revenue. Its lead candidate, tabelecleucel, was in two Phase 3 trials for EBV-positive post-transplant lymphoproliferative disorder (PTLD); ATA188 was in Phase 1 for multiple sclerosis (MS), and ATA230 was in Phase 2 for CMV infection.
Financial performance and position
| Metric | Q2 2018 | Q2 2017 | Six months 2018 | Six months 2017 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $33.4M | $18.3M | $61.8M | $35.8M |
| General and administrative expense | $19.2M | $9.6M | $33.2M | $18.2M |
| Net loss | $50.9M | $27.4M | $92.3M | $53.1M |
| Basic and diluted loss per share | $1.15 | $0.94 | $2.20 | $1.82 |
- No meaningful operating margin is available because the company had no revenue and incurred operating losses.
- Six-month operating cash use was $74.3M, versus $42.3M in 2017. Investing activities used $253.8M, largely reflecting purchases of short-term investments and $27.3M in property and equipment. Financing activities provided $352.0M.
- At June 30, cash and cash equivalents were $103.2M and short-term investments were $313.8M, totaling $417.0M. Total assets were $492.7M; total liabilities were $40.2M, including $13.0M of long-term liabilities. The filing reports no conventional funded debt balance; lease financing obligations and other lease commitments apply.
- Future minimum payments under operating, capital and finance leases were $20.1M. The Thousand Oaks facility lease has an initial 15-year term and $16.4M of aggregate contractual obligations during that term.
- Accumulated deficit was $389.0M. Management expected available cash, cash equivalents and short-term investments to fund planned operations to mid-2020, while warning that additional funding would be needed to support development and potential commercialization.
Changes versus the prior comparable period
- Q2 net loss increased to $50.9M from $27.4M; six-month net loss rose to $92.3M from $53.1M. Higher clinical, manufacturing, personnel, professional-services and facility costs contributed to the increase.
- Six-month R&D expense increased $26.0M, including expanded ATA188/ATA190 and other program spending, higher employee and overhead costs, and continued tabelecleucel Phase 3 activity. Six-month G&A expense increased $15.0M, mainly from professional services and staffing.
- Cash, cash equivalents and short-term investments rose from $166.1M at December 31, 2017 to $417.0M at June 30, 2018. The increase was primarily funded by equity offerings: January and March underwritten offerings generated $293.3M net, and the at-the-market (ATM) facility generated $47.6M net.
- Common shares issued and outstanding increased from 30.7M at December 31, 2017 to 45.3M at June 30, 2018. The company reported 45,342,653 shares outstanding as of July 27, 2018.
Outlook, commentary and risks
- Management anticipated continued increases in R&D and G&A spending and ongoing losses. It said future funding needs depend on trial timing and results, manufacturing scale-up, regulatory approvals and commercialization costs; no external funding was committed.
- Initial results from the first tabelecleucel Phase 3 study (or first ALLELE cohort) and initial ATA188 Phase 1 results in progressive MS were expected in the first half of 2019. A European conditional marketing authorization application for tabelecleucel was planned for the first half of 2019, with U.S. BLA plans following completion of one Phase 3 trial.
- Atara exercised its option to license autologous ATA190 in June 2018 and planned a randomized ATA190 study in progressive MS in 2019. It planned to initiate an ATA621 Phase 1 trial in 2019. The company prioritized EBV programs and planned to reassess ATA230’s development strategy later in 2018.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, patient enrollment, manufacturing comparability and supply, reliance on contract manufacturers and research partners, competition, intellectual-property disputes, and the need for further capital. The filing notes hypoxia observed in some ATA230 patients treated for CMV pneumonitis.
- The Thousand Oaks manufacturing facility was completed to the substantial-completion milestone in February 2018, but remained subject to manufacturing readiness, regulatory and scale-up risks. The company recorded a $10.3M build-to-suit asset and corresponding financing obligation after construction completion.
- The company reported no material legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls as of June 30, 2018.
Important facts for investors to verify
- Whether enrollment, manufacturing comparability and data timing support the planned tabelecleucel Phase 3 readouts and European filing.
- Whether the stated mid-2020 cash runway remains realistic as trial, facility and commercialization spending develops, and whether further financing will be required.
- Progress and safety results for ATA188 and ATA190 in MS, including the planned 2019 ATA190 study, and the company’s updated plans for ATA230.
- Manufacturing-facility readiness, production capacity and regulatory compliance, plus continued dependence on third-party manufacturers and collaborators.
- The extent of potential shareholder dilution from equity compensation and future capital raises; review the remaining ATM capacity of $6.1M at June 30, 2018.