ATARA BIOTHERAPEUTICS, INC. You should read the following discussion and analysis of our financial condition
and results of operations together with our condensed consolidated financial
statements and related notes included elsewhere in our Quarterly Report on Form
10-Q for the quarter ended
Overview
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Tab-cel®: Our most advanced T-cell immunotherapy program, tab-cel, has received
MAA for commercial sale in the EU under the proprietary name Ebvallo and is
partnered with
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ATA188: T-cell immunotherapy targeting EBV antigens, believed to be important for the potential treatment of primary and secondary progressive multiple sclerosis, and is currently in Phase 2 development; and
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ATA3219: Allogeneic CAR T targeting CD19, currently in preclinical development, and being developed as a potential best-in-class product intended to target B-cell malignancies, based on a next generation 1XX co-stimulatory domain and the innate advantages of EBV T cells as the foundation for an allogeneic CAR T platform.
In addition to the aforementioned strategic priorities, we also have a number of clinical and preclinical programs, including ATA2271, an autologous CAR T immunotherapy currently in Phase 1 development targeting solid tumors expressing the tumor antigen mesothelin; and ATA3271, an allogeneic CAR T immunotherapy currently in preclinical development targeting mesothelin.
Our T-cell immunotherapy platform includes the capability to progress both allogeneic and autologous programs and is potentially applicable to a broad array of targets and diseases. Our off-the-shelf, allogeneic T-cell platform allows for rapid delivery of a T-cell immunotherapy product manufactured in advance of patient need and stored in inventory, with each manufactured lot of cells providing therapy for numerous potential patients. This differs from autologous treatments, in which each patient's own cells must be extracted, genetically modified outside the body and then delivered back to the patient, requiring a complex logistics network. For our allogeneic programs, we select the appropriate set of cells for use based on a patient's unique immune profile. One of our contract manufacturing organizations (CMOs) has completed commercial production qualification activities for tab-cel and our other CMOs are currently in the process of completing commercial production qualification activities for tab-cel while we build inventory according to our commercial product supply strategy.
In
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We have also entered into research collaborations with leading academic
institutions such as
Our research facilities in
In
We also work with Charles River Laboratories (CRL) pursuant to a Commercial
Manufacturing Services Agreement (CRL MSA) that we entered into in
We have non-cancellable minimum commitments for products and services, subject to agreements with a term of greater than one year, with clinical research organizations and CMOs.
In
Pipeline
Ebvallo™ / Tab-cel®
Our most advanced T-cell immunotherapy program, tab-cel, is approved by the EC
for commercial sale and use in the EU under the proprietary name Ebvallo. We
continue to advance development of tab-cel in the
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In
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In
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In
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We are engaged in discussions with potential partners for the potential
commercialization of tab-cel in the
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We continue to pursue development of tab-cel in additional patient populations, with a primary focus on immunodeficiency-associated lymphoproliferative diseases (IA-LPDs), given the commonality of their EBV-driven mechanism of disease in immunocompromised patients, high unmet medical need and positive clinical data to date with tab-cel.
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We continue to enroll patients in our Phase 2 multi-cohort study in six patient
populations, including four within IA-LPDs and two in other EBV-driven diseases,
in both the
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Due to the evolving treatment landscape of EBV-driven nasopharyngeal carcinoma (NPC), we are not actively conducting any development activities while we reassess our approach and the development and regulatory pathways for patients with platinum resistant or recurrent EBV-driven NPC.
ATA188
We continue to progress our development of ATA188, which has received fast track designation from the FDA for treatment of primary progressive multiple sclerosis (PPMS) and secondary progressive multiple sclerosis (SPMS), an allogeneic T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of multiple sclerosis (MS).
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Based on enrollment in our Phase 2 randomized, double-blind, placebo-controlled
study evaluating the efficacy and safety of ATA188 in patients with PPMS and
SPMS (EMBOLD) at the end of
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We continue to plan for Phase 3 readiness, including interacting with the FDA based on two fast track designations, and further developing our proprietary large-scale bioreactor manufacturing process.
ATA3219
We are also developing ATA3219, a potential best-in-class, allogeneic CD19 CAR T immunotherapy targeting B-cell malignancies, leveraging our next-generation 1XX CAR co-stimulatory signaling domain and EBV T-cell platform and does not require TCR or human leukocyte antigen (HLA) gene editing.
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We continue to make progress on the ATA3219 manufacturing process for scale-up. We anticipate filing an IND for the ATA3219 program in the second quarter of 2023 following completion of process optimization and manufacturing runs in the GMP manufacturing suites of our CMO. Our EBV CD19 CAR T program is enriched for a memory T-cell phenotype and continues to show robust activity in preclinical studies.
Additional Programs and Platform Expansion Activities
In addition to the prioritized programs described above, we have a number of other clinical and preclinical programs.
Our CAR T immunotherapy pipeline include autologous ATA2271 and allogeneic ATA3271 targeting mesothelin, which is a tumor antigen expressed on a number of solid tumors including mesothelioma, ovarian cancer, pancreatic cancer, non-small cell lung cancer and other tumors over-expressing mesothelin.
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MSK is currently conducting an open-label, single-arm Phase 1 clinical study of
ATA2271 for patients with advanced mesothelioma. In
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We have been conducting IND-enabling studies for ATA3271, an off-the-shelf,
allogeneic CAR T therapy targeting mesothelin using a PD-1
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MSLN-CAR-engineered EBV T cells are a promising approach for the treatment of MSLN-positive cancers. We are not actively conducting any development activities while we reassess our approach for the development of ATA3271.
We are also developing ATA3431, a multi-targeted allogeneic CAR T immunotherapy targeting B-cell malignancies. We are also collaborating with QIMR Berghofer to develop a potential next generation EBV vaccine which is differentiated from earlier EBV vaccine efforts that solely focused on B cell responses to EBV.
We believe our platform will have utility beyond the current set of targets to which it has been directed. We continue to evaluate additional product candidates, including those derived from collaborations with our partners. We also continue to evaluate opportunities to license or acquire additional product candidates or technologies to enhance our existing platform.
Manufacturing
In
We also work with CRL pursuant to the CRL MSA. CRL provides manufacturing
services for our product and certain of our product candidates. In
COVID-19 Business Update
We continue to monitor the impact of the COVID-19 pandemic on our business and operations and have taken steps designed to minimize such impacts and maintain business continuity. We have transitioned a portion of our workforce to a remote, work-from-home model, while maintaining essential in-person laboratory functions in order to advance key research, development and manufacturing priorities. We implemented safety protocols and procedures to support our onsite workforce.
Our clinical study and operational teams work with clinical sites to minimize the impact of the COVID-19 pandemic. Where needed, remote study visits, tele-medicine, home health care, and other methods have been leveraged to ensure continuity of care for patients while preserving key endpoint data.
To date, the COVID-19 pandemic has not materially impacted our or our partners' clinical, research and development, regulatory, and manufacturing operations or timelines. However, at the onset of the pandemic, we experienced, and we may again experience, some transient delays in clinical study operations, as a result COVID-19.
The full extent to which the COVID-19 pandemic may impact our business and operations is subject to future developments, which are uncertain and difficult to predict.
For additional information about risks and uncertainties related to the COVID-19 pandemic that may impact our business, financial condition and operations, see the section titled "Risk Factors" under Part II, Item 1A in this Quarterly Report on Form 10-Q.
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Financial Overview
We have a limited operating history. Since our inception in 2012, we have devoted substantially all of our resources to identify, acquire and develop our product and product candidates, including conducting preclinical and clinical studies, acquiring or manufacturing materials for clinical studies, and providing general and administrative support for these operations.
Our net losses were
Revenues
We have only just begun to generate commercialization revenues under the Pierre
Fabre Commercialization Agreement, following the
We expect that any revenue we generate from the Pierre Fabre Commercialization Agreement and any future collaboration and research and license partners will fluctuate from year to year as a result of the timing and number of milestones and other payments.
Cost of commercialization revenue
Cost of commercialization revenue consists primarily of expenses associated with cell selection services performed for Pierre Fabre. All Ebvallo sold to Pierre Fabre to date had been produced prior to receiving regulatory approval of Ebvallo. Costs incurred to produce Ebvallo prior to regulatory approval have been recorded as research and development expense in our condensed consolidated statement of operations and comprehensive loss. Once we begin selling Ebvallo produced after receiving regulatory approval and in a qualified manufacturing facility, and as revenue is recognized on such Ebvallo shipments, cost of commercialization revenue will also include direct and indirect costs related to the production of Ebvallo. Such costs include, but are not limited to, CMO costs, quality testing and validation, materials used in production, and an allocation of compensation, benefits and overhead costs associated with employees involved with production.
Research and Development Expenses
The largest component of our total operating expenses since inception has been our investment in research and development activities, including the preclinical and clinical development of our product candidates. Research and development expenses consist primarily of compensation and benefits for research and development and regulatory support employees, including stock-based compensation; expenses incurred under agreements with contract research organizations and investigative sites that conduct preclinical and clinical studies; the costs of acquiring and manufacturing clinical study materials and other supplies, including expenses incurred under agreements with CMOs for the manufacture of product candidates prior to receiving regulatory approval to manufacture commercial product; payments under licensing and research and development agreements related to product candidates; other outside services and consulting costs; and information technology and overhead expenses. Research and development costs are expensed as incurred.
We plan to continue investment in the development of our product candidates. Our current planned research and development activities include the following:
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continuing to enroll patients in our Phase 3 clinical study of tab-cel for the treatment of patients with EBV+ PTLD after HCT and SOT who have failed rituximab;
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process development, testing and manufacturing of drug supply to support clinical and IND-enabling studies;
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continuing development of ATA188 in PMS;
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continuing to develop product candidates based on our next-generation CAR T programs;
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continuing to develop our product candidates in additional indications, including tab-cel for EBV+ cancers;
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continuing to develop other pre-clinical product candidates; and
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leveraging our relationships and experience to in-license or acquire additional product candidates or technologies.
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In addition, we believe it is important to invest in the development of new product candidates to continue to build the value of our product candidate pipeline and our business. We plan to continue to advance our most promising early product candidates into preclinical development with the objective to advance these early-stage programs to human clinical studies over the next several years.
Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs, and timing of clinical studies and development of our product candidates will depend on a variety of factors, including:
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the availability of qualified drug supply for use in our ongoing Phase 3 or other clinical studies;
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the scope, rate of progress, and expenses of our ongoing clinical studies, potential additional clinical studies and other research and development activities;
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the potential review or reanalysis of our clinical study results;
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future clinical study results;
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uncertainties in clinical study enrollment rates or discontinuation rates of patients, including any potential impact of health epidemics and pandemics;
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potential additional safety monitoring or other studies requested by regulatory agencies;
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changing medical practice patterns related to the indications we are investigating;
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significant and changing government regulation;
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disruptions caused by man-made or natural disasters or public health pandemics or epidemics, including, for example, the COVID-19 pandemic; and
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the timing and receipt of any regulatory approvals, as well as potential post-market requirements.
The process of conducting the necessary clinical research to obtain approval from the FDA and other regulators is costly and time consuming and the successful development of our product candidates is highly uncertain. The risks and uncertainties associated with our research and development projects are discussed more fully in the section of this report titled "1A. Risk Factors." As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extent we will generate revenues from any of our product candidates that obtain regulatory approval.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and benefits for legal, human resources, finance, commercial and other general and administrative employees, including stock-based compensation; professional services costs, including legal, patent, human resources, audit and accounting services; other outside services and consulting costs; and information technology and overhead expenses.
Interest Income
Interest income consists primarily of interest earned on our cash, cash equivalents and short-term investments.
Interest Expense
Interest expense consists primarily of interest expense recorded in connection with the HCRx Agreement.
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Critical Accounting Policies and Significant Judgments and Estimates
Liability related to the sale of future revenues
To the extent we account for the sale of future revenues as debt in accordance with ASC 470, we amortize the liability and recognize interest expense related to the sale of future revenues using the effective interest rate method over the estimated life of the underlying agreement. The liability and related interest expense are based on our current estimate of expected future payments over the life of the arrangement. We re-assess the amount and timing of expected payments each reporting period using a combination of internal projections and forecasts from external resources and record interest expense on the carrying value of the liability using the imputed effective interest rate. To the extent our estimates of future payments are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, this could impact the amount of interest expense we record each period as well as the amount and classification of the liability. We will account for any such changes by adjusting the effective interest rate on a prospective basis. The assumptions used in determining the expected repayment term of the liability and amortization period requires that we make estimates that could impact the effective interest rate, short-term and long-term classification of the liability and the period over which the liability will be amortized.
Except as set forth above, there have been no significant changes to our
critical accounting policies and significant judgments and estimates during the
three months ended
Results of Operations
Comparison of the Three Months Ended
Revenues
Revenue consisted of the following in the periods presented:
Three Months Ended
March 31, Increase
2023 2022 (Decrease)
(in thousands)
Commercialization revenue $ 884 $ - $ 884
License and collaboration revenue 342 7,314 (6,972 )
Total revenue $ 1,226 $ 7,314 $ (6,088 ) Commercialization revenues were
License and collaboration revenues were
Cost of commercialization revenue
Cost of commercialization revenue consisted of the following in the periods
presented:
Three Months Ended
March 31, Increase
2023 2022 (Decrease)
(in thousands)
Cost of commercialization revenue
Cost of commercialization revenue was
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Total costs of commercialization revenue for the three months ended
Research and development expenses
Research and development expenses consisted of the following, by program, in the
periods presented:
Three Months Ended
March 31, Increase
2023 2022 (Decrease)
(in thousands)
Program-specific expenses
Tab-cel® expenses $ 3,972 $ 10,626 $ (6,654 )
ATA188 expenses 5,899 4,530 1,369
CAR T and other program expenses 2,590 2,999 (409 )
Non program-specific expenses
Employee and overhead expenses 46,626 55,958 (9,332 )
Other non program-specific expenses 3,069 850 2,219
Total research and development expenses
Tab-cel expenses were
ATA188 expenses were
CAR T and other program expenses were
Non program-specific expenses were
Total research and development expenses for the three months ended
General and administrative expenses
Three Months Ended
March 31, Increase
2023 2022 (Decrease)
(in thousands)
General and administrative expenses
General and administrative expenses were
Total general and administrative expenses for the three months ended
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Other income (expense), net
Three Months Ended
March 31, Increase
2023 2022 (Decrease)
(in thousands)
Interest income $ 1,802 $ 228 $ 1,574
Interest expense (1,336 ) (4 ) (1,332 )
Other income (expense), net (197 ) (109 ) (88 )
Total other income (expense), net
Interest income was
Liquidity and Capital Resources
Sources of Liquidity
Since our inception in 2012, we have funded our operations primarily through the
issuance of common and preferred stock, issuance of pre-funded warrants to
purchase common stock, upfront fees and milestone payments from the Research,
Development and License Agreement with Bayer (Bayer License Agreement) which
terminated as of
In recent years, we have entered into two separate sales agreements with
During the three months ended
As of
We have incurred losses and negative cash flows from operations in each year
since inception and have only just begun to generate commercialization revenues
under the Pierre Fabre Commercialization Agreement, following the
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Cash in excess of immediate requirements is invested in accordance with our
investment policy, primarily with a view to liquidity and capital preservation.
Currently, our cash, cash equivalents and short-term investments are held in
bank and custodial accounts and consist of money market funds,
Our cash, cash equivalents and short-term investments balances as of the dates indicated were as follows:
March 31, December 31,
2023 2022
(in thousands)
Cash and cash equivalents $ 48,741 $ 92,942
Short-term investments 156,666 149,877
Total cash, cash equivalents and short-term investments
Cash Flows
Comparison of the Three Months Ended
The following table details the primary sources and uses of cash for each of the
periods set forth below:
Three Months Ended March 31,
2023 2022
(in thousands)
Net cash (used in) provided by:
Operating activities $ (38,429 ) $ (84,529 )
Investing activities (6,007 ) 60,215
Financing activities 235 19,851
Net (decrease) increase in cash, cash equivalents and
restricted cash $ (44,201 ) $ (4,463 )
Operating activities
Net cash used in operating activities was
Investing activities
Net cash used in investing activities in the three months ended
Financing activities
Net cash provided by financing activities in the three months ended
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Operating Capital Requirements and Plan of Operations
We expect that our existing cash, cash equivalents and short-term investments as
of
In order to complete the process of obtaining regulatory approval for any of our product candidates that have not received approval, we will require substantial additional funding. We expect to continue to opportunistically seek access to additional funds through additional public or private equity offerings or debt financings, through potential commercialization, collaboration, partnering or other strategic arrangements, or a combination of the foregoing. If we are unable to obtain sufficient funding on acceptable terms, we could be forced to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
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the timing, costs and results of our ongoing and planned clinical and preclinical studies for our product candidates;
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our success in establishing and maintaining commercial manufacturing relationships with CMOs;
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the number and characteristics of product candidates that we pursue;
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the outcome, timing and costs of seeking regulatory approvals;
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subject to receipt of regulatory approval, costs associated with the commercialization of our product candidates by our partners and the amount of revenues received from commercial sales of our product candidates;
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the timing of proceeds from, and our ability to perform under, the Pierre Fabre Commercialization Agreement, as well as the terms and timing of any future commercialization, collaboration, licensing, consulting or other arrangements that we may establish;
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the amount and timing of any payments we may be required to make in connection with the licensing, filing, prosecution, maintenance, defense and enforcement of any patents or patent applications or other intellectual property rights;
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the extent to which we in-license or acquire other products and technologies; and
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the timing of the qualification of our CMOs' manufacturing facilities.
Until we are able to generate a sufficient amount of net cash inflows from operations, which we may never do, meeting our long-term capital requirements is in large part reliant on access to public and private equity and debt capital markets, augmented by cash generated from operations and interest income earned on the investment of our cash balances. We expect to continue to seek access to the equity and debt capital markets to support our development efforts and operations. To the extent that we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. To the extent that we raise additional funds through commercialization, collaboration or partnering arrangements, we may be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grant licenses or other rights on terms that are not favorable to us, or issue equity that may be substantially dilutive to our stockholders.
As a result of economic conditions, general global economic uncertainty, political change and other factors, we do not know whether additional capital will be available when needed, or that, if available, we will be able to obtain additional capital on reasonable terms. If we are unable to raise additional capital due to the volatile global financial markets, general economic uncertainty or other factors, we will be forced to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates.
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Contractual Obligations and Commitments
Our contractual obligations primarily consist of our obligations under
non-cancellable operating and finance leases and contracts we enter into in the
normal course of business with clinical research organizations for clinical
studies, with CMOs for clinical and commercial materials, and with other vendors
for preclinical studies and supplies and other services and products for
operating purposes. These contracts generally provide for termination for
convenience following a notice period. There have been no material changes to
our contractual obligations and commitments reported in our Annual Report on
Form 10-K for the year ended
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