Atara Biotherapeutics, Inc. — Q2 2019 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2019. Amounts below are in millions of U.S. dollars unless stated otherwise. Atara is a clinical-stage, off-the-shelf allogeneic T-cell immunotherapy company; it reported no revenue and had no approved products.
Financial performance
| Metric | Q2 2019 | Q2 2018 | Six months 2019 | Six months 2018 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $52.3 | $33.4 | $100.9 | $61.8 |
| General and administrative expense | $23.3 | $19.2 | $42.5 | $33.2 |
| Total operating expense | $75.5 | $52.6 | $143.4 | $95.1 |
| Net loss | $74.3 | $50.9 | $140.6 | $92.3 |
| Basic and diluted loss per share | $1.60 | $1.15 | $3.04 | $2.20 |
| Operating cash used | Not presented quarterly | Not presented quarterly | $124.8 | $74.3 |
Gross and operating margins are not meaningful because the company had no product revenue. Q2 R&D expense increased 56.5% and G&A increased 21.1% year over year; six-month R&D increased 63.2% and G&A increased 27.9%. Management attributed increases chiefly to clinical, manufacturing and outside-service costs, expanded programs and higher headcount and overhead. Stock-based compensation was $27.5 million for the first half, versus $15.0 million a year earlier.
Financial position and liquidity
- At June 30, cash and cash equivalents were $59.2 million and short-term investments were $131.0 million, totaling $190.1 million, down from $309.6 million at December 31, 2018.
- Current assets were $201.1 million and current liabilities $25.8 million; working capital was $175.3 million. Total assets were $274.1 million, total liabilities $41.9 million, and stockholders’ equity $232.3 million.
- Accumulated deficit was $667.6 million. The filing reports finance-lease liabilities of $0.5 million and operating-lease liabilities of $15.9 million; it does not identify conventional borrowing debt as a material balance-sheet item.
- First-half operating cash outflow was $124.8 million. Investing activities provided $117.8 million, primarily from investment maturities and sales; financing activities provided $5.4 million, mainly ATM proceeds and employee stock transactions. Cash, cash equivalents and restricted cash declined $1.5 million.
- In February 2019, Atara established a $100 million at-the-market facility and sold shares for $7.6 million net through June 30. In July, it completed a public offering of common shares and pre-funded warrants, receiving approximately $140.6 million net. Management said existing cash, cash equivalents and short-term investments, plus the July proceeds, were expected to fund planned operations into 2021.
Business developments, outlook and risks
- Tab-cel: The lead candidate was in Phase 3 development for EBV-positive post-transplant lymphoproliferative disorder (PTLD). Atara combined the MATCH and ALLELE trials into a single ALLELE study with separate transplant cohorts and planned an interim analysis before a potential filing. Following FDA discussions, the company planned to initiate a U.S. BLA submission in the second half of 2020, ahead of an EU conditional marketing authorization application; EU timing remained dependent on EMA discussions. Enrollment in the Phase 3 studies had been slower than anticipated, as announced in May 2019.
- Tab-cel was also being studied with pembrolizumab in EBV-associated nasopharyngeal carcinoma; a Phase 2 multi-cohort study in other EBV-positive cancers was expected to begin in the second half of 2020.
- Multiple sclerosis: ATA188 was in a Phase 1 study for progressive MS. Initial safety results reported in June 2019 showed the first three dose cohorts were tolerated without dose-limiting toxicities or grade 3-or-higher treatment-related events. Initial efficacy and additional safety results were expected in the second half of 2019. Atara planned a randomized Phase 1b portion and an autologous ATA190 study in the second half of 2019.
- CAR T and manufacturing: Atara prioritized its mesothelin-targeted next-generation CAR T program, with an IND planned for autologous ATA2271 in advanced mesothelioma in 2020. Commercial production qualification at the Thousand Oaks ATOM facility was nearing completion; clinical production qualification was complete.
- Management expected R&D and G&A expenses to continue increasing, including from tab-cel trials and manufacturing, MS programs and CAR T development. Atara cautioned that operating plans and cash needs depend on uncertain clinical, regulatory, manufacturing and enrollment outcomes, and that additional capital may be required sooner than expected. Further equity financing could dilute shareholders; other financing could impose restrictions or require rights concessions.
- Key risks include clinical failure or delays, slow enrollment, uncertain regulatory outcomes, cell-therapy safety and manufacturing comparability or supply issues, limited target patient populations, competition, and the need for future financing. The company reported no material legal proceedings or material accrued contract termination charges. It reported effective disclosure controls as of June 30, 2019.
Important facts for investors to verify
- Whether enrollment and interim/final results from the ALLELE Phase 3 study support the expected BLA timing and filing basis.
- Whether the expected runway into 2021 remains achievable given the $124.8 million first-half operating cash use and planned increases in development spending.
- The clinical progress and forthcoming safety and efficacy data for ATA188, and progress of planned ATA190 and ATA2271 studies.
- Whether ATOM commercial qualification and external manufacturing arrangements can provide reliable, comparable product supply at scale.
- The dilution and potential share-count effects of the July 2019 offering, including exercise of pre-funded warrants and any underwriters’ option, which had not been exercised as of the filing.