Item 8. Financial Statements and Supplementary Data
Item 8. Financial Statements and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2025 and 2024
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 )
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Consolidated Financial Statements:
Consolidated Balance Sheets
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Consolidated Statements of Operations and Comprehensive Loss
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Consolidated Statements of Stockholders’ Equity
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Consolidated Statements of Cash Flows
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Notes to Consolidated Financial Statements
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Allogene Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Allogene Therapeutics, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2018.
San Mateo, California
March 12, 2026
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ALLOGENE THERAPEUTICS, INC.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
December 31,
2025 December 31,
2024
Assets
Current assets:
Cash and cash equivalents $ 51,688 $ 75,218
Short-term investments 198,522 217,258
Prepaid expenses and other current assets 7,539 10,910
Total current assets 257,749 303,386
Long-term investments 8,043 80,673
Operating lease right-of-use asset 39,888 45,205
Property and equipment, net 72,839 86,056
Deposit placed in escrow 23,479 20,773
Restricted cash 10,292 10,292
Other long-term assets 3,615 2,325
Total assets $ 415,905 $ 548,710
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 4,270 $ 5,394
Accrued and other current liabilities 28,244 30,129
Total current liabilities 32,514 35,523
Lease liability, noncurrent 75,045 83,247
Other long-term liabilities 15,804 7,761
Total liabilities 123,363 126,531
Commitments and Contingencies (Notes 6 and 7)
Stockholders’ equity:
Preferred stock, $ 0.001 par value: 10,000,000 authorized as of December 31, 2025 and December 31, 2024; no shares were issued and outstanding as of December 31, 2025 and December 31, 2024
— —
Common stock, $ 0.001 par value: 400,000,000 shares authorized as of December 31, 2025 and December 31, 2024; 229,413,523 and 212,210,597 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively
229 212
Additional paid-in capital 2,302,753 2,241,879
Accumulated deficit ( 2,010,709 ) ( 1,819,823 )
Accumulated other comprehensive gain (loss) 269 ( 89 )
Total stockholders’ equity 292,542 422,179
Total liabilities and stockholders’ equity $ 415,905 $ 548,710
The accompanying notes are an integral part of these consolidated financial statements.
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ALLOGENE THERAPEUTICS, INC.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
Year Ended December 31,
2025 2024
Collaboration revenue - related party $ — $ 22
Operating expenses:
Research and development 150,152 192,299
General and administrative 56,781 65,205
Impairment of long-lived asset 2,382 15,717
Total operating expenses 209,315 273,221
Loss from operations ( 209,315 ) ( 273,199 )
Other income (expense), net:
Interest and other income, net 19,289 20,153
Interest expense ( 1,075 ) ( 181 )
Other income (expense), net 215 ( 3,920 )
Total other income (expense), net 18,429 16,052
Loss before income taxes
( 190,886 ) ( 257,147 )
Income tax expense — ( 443 )
Net loss ( 190,886 ) ( 257,590 )
Other comprehensive loss:
Net unrealized gain on available-for-sale investments 358 866
Net comprehensive loss $ ( 190,528 ) $ ( 256,724 )
Net loss per share, basic and diluted $ ( 0.87 ) $ ( 1.32 )
Weighted-average number of shares used in computing net loss per
share, basic and diluted 220,622,669 194,811,756
The accompanying notes are an integral part of these consolidated financial statements.
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ALLOGENE THERAPEUTICS, INC.
Consolidated Statements of Stockholders’ Equity
(In thousands, except share and per share data)
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Income (Loss) Total
Stockholders’
Equity
Shares Amount
Balance — December 31, 2023 168,642,238 $ 169 $ 2,075,252 $ ( 1,562,233 ) $ ( 955 ) $ 512,233
Issuance of common stock from ATM offering, net of commissions and offering costs of $ 0.1 million
2,539,134 2 6,762 — — 6,764
Issuance of common stock from registered offering, net of commissions and offering costs of 4.7 million
37,931,035 38 105,245 — — 105,283
Issuance of common stock upon exercise of stock options and vesting of RSUs 2,569,680 2 811 — — 813
Vesting of early exercised common stock — — 532 — — 532
Stock-based compensation — — 51,743 — — 51,743
Employee stock purchase plan 528,510 1 1,534 — — 1,535
Net loss
— — — ( 257,590 ) — ( 257,590 )
Net unrealized gain on available-for-sale investments — — — — 866 866
Balance — December 31, 2024 212,210,597 212 2,241,879 ( 1,819,823 ) ( 89 ) 422,179
Issuance of common stock from ATM offering, net of commissions and offering costs of $ 0.3 million
13,430,193 14 22,340 — — 22,354
Issuance of common stock upon vesting of RSUs 3,123,885 2 ( 2 ) — — —
Stock-based compensation
— — 37,642 — — 37,642
Employee stock purchase plan
648,848 1 894 — — 895
Net loss
— — — ( 190,886 ) — ( 190,886 )
Net unrealized gain on available-for-sale investments
— — — — 358 358
Balance — December 31, 2025 229,413,523 $ 229 $ 2,302,753 $ ( 2,010,709 ) $ 269 $ 292,542
The accompanying notes are an integral part of these consolidated financial statements.
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ALLOGENE THERAPEUTICS, INC.
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2025 2024
Cash flows from operating activities:
Net loss $ ( 190,886 ) $ ( 257,590 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation 37,642 51,743
Depreciation and amortization 12,359 13,639
Net amortization/accretion on investment securities ( 4,221 ) ( 8,348 )
Impairment of long-lived asset 2,382 15,717
Impairment of equity investment and equity method investment — 1,957
Non-cash rent expense 4,355 5,264
Income tax expense — 443
Non-cash collaboration revenue - related party — ( 14 )
Share of loss from equity method investments — 1,688
Changes in operating assets and liabilities:
Deposit placed in escrow ( 2,706 ) ( 20,773 )
Prepaid expenses and other current assets 3,238 ( 492 )
Other long-term assets ( 1,290 ) 4,279
Accounts payable ( 1,231 ) ( 503 )
Accrued and other current liabilities ( 2,520 ) ( 1,262 )
Operating lease liabilities ( 7,503 ) ( 6,307 )
Other long-term liabilities 1,135 259
Net cash used in operating activities ( 149,246 ) ( 200,300 )
Cash flows from investing activities:
Purchases of property and equipment ( 386 ) ( 694 )
Proceeds from sales of investments — 5,398
Proceeds from maturities of investments 234,202 432,459
Purchase of investments ( 138,257 ) ( 361,475 )
Net cash provided by investing activities 95,559 75,688
Cash flows from financing activities:
Proceeds from issuance of common stock from ATM offering, net of commissions and issuance costs 22,354 6,764
Proceeds from issuance of common stock from public offering, net of commissions and issuance costs — 105,283
Proceeds from issuance of common stock upon exercise of stock options — 813
Proceeds from issuance of common stock under the employee stock purchase plan 895 1,535
Proceeds from CIRM award 6,908 2,280
Net cash provided by financing activities 30,157 116,675
Net decrease in cash, cash equivalents and restricted cash ( 23,530 ) ( 7,937 )
Cash, cash equivalents and restricted cash — beginning of period 85,510 93,447
Cash, cash equivalents and restricted cash — end of period $ 61,980 $ 85,510
Non-cash operating, investing and financing activities:
Right-of-use asset obtained in exchange for lease liability $ — $ 2,409
Property and equipment purchases in accounts payable and accrued and other current liabilities $ 107 $ 64
Supplemental disclosure:
Cash paid for amounts included in the measurement of lease liabilities $ ( 12,921 ) $ ( 12,505 )
The accompanying notes are an integral part of these consolidated financial statements.
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ALLOGENE THERAPEUTICS, INC.
Notes to Consolidated Financial Statements
Note 1. Description of Business and Summary of Significant Accounting Policies
Allogene Therapeutics, Inc. (the Company or Allogene) was incorporated on November 30, 2017 in the State of Delaware and is headquartered in South San Francisco, California. Allogene is a clinical stage immuno-oncology company pioneering the development of genetically engineered allogeneic T cell product candidates for the treatment of cancer and autoimmune diseases. The Company is developing a pipeline of “off-the-shelf” T cell product candidates that are designed to target and kill cancer cells in patients or eliminate pathogenic autoreactive cells in patients with autoimmune disorders. The Company’s engineered T cells are allogeneic, meaning they are derived from healthy donors for intended use in any patient, rather than from an individual patient for that patient’s use, as in the case of autologous T cells. The Company believes this key difference will enable it to deliver readily available treatments faster, more reliably, at greater scale, and to more patients.
Public Offerings
In November 2019, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), as amended on November 2, 2022 and November 2, 2023, under which the Company may from time to time issue and sell shares of its common stock through Cowen in at-the-market (ATM) offerings. The aggregate compensation payable to Cowen as the Company's sales agent equals up to 3.0 % of the gross sales price of the shares sold through Cowen pursuant to the sales agreement. The specified dollar limit on the amount of common stock that may be sold under the sales agreement was removed pursuant to the November 2, 2023 amendment to the sales agreement. During the years ended December 31, 2025 and 2024, the Company sold an aggregate of 13,430,193 and 2,539,134 shares of common stock in ATM offerings resulting in net proceeds of $ 22.4 million and $ 6.8 million, respectively.
Registered Offering
On May 13, 2024, the Company entered into (i) an underwriting agreement (Underwriting Agreement) with Goldman Sachs & Co. LLC (Underwriter) and (ii) a Securities Purchase Agreement (Securities Purchase Agreement) with certain members of the Company’s Board of Directors and executive officers or their respective affiliates (Purchasers), pursuant to which the Company sold and issued to the Underwriter and the Purchasers an aggregate of 37,931,035 shares of common stock of the Company at a purchase price of $ 2.90 per share, in a registered offering transaction (Registered Offering) for aggregate gross proceeds of $110.0 million, before deducting the underwriting discount and commissions and estimated offering expenses payable by the Company. The Registered Offering closed on May 16, 2024. The aggregate fee payable by the Company to the Underwriter was $4.7 million, plus the reimbursement of certain expenses. The Purchasers purchased an aggregate of 1,034,484 shares of common stock of the Company in the Registered Offering.
Need for Additional Capital
The Company has sustained operating losses and expects to continue to generate operating losses for the foreseeable future. The Company’s ultimate success depends on the outcome of its research and development activities as well as the ability to commercialize the Company’s product candidates. The Company had cash, cash equivalents and investments of $ 258.3 million as of December 31, 2025. Since inception through December 31, 2025, the Company has incurred cumulative net losses of $ 2,010.7 million. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.
The Company intends to raise additional capital through the issuance of equity securities, debt financings or other sources in order to further implement its business plan. However, if such financing is not available at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of its product candidates. The Company expects that its cash and cash equivalents and investments will be sufficient to fund its operations for at least the next 12 months from the date the Company’s Annual Report on Form 10-K is filed with the Securities and Exchange Commission (SEC).
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
In June 2020, the Company formed a wholly-owned, Netherlands-based subsidiary, Allogene Therapeutics, B.V., to help prepare for and assist with the Company's activities in Europe. The consolidated financial statements include the accounts
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of the Company and its wholly-owned subsidiary, Allogene Therapeutics, B.V. All material intercompany balances and transactions have been eliminated during consolidation. The subsidiary was dissolved on January 3, 2024.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying consolidated financial statements include but are not limited to the fair value of common stock, the fair value of stock options, the fair value of investments, income tax uncertainties, the CIRM (as defined below) award liability and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances change. Actual results could differ from those estimates.
Concentration of Credit and other Risks and Uncertainties
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents and investments. The primary objectives for the Company’s investment portfolio are the preservation of capital and the maintenance of liquidity. The Company does not enter into any investment transaction for trading or speculative purposes.
The Company’s investment policy limits investments to certain types of instruments such as certificates of deposit, commercial paper, money market instruments, asset-backed securities, obligations issued by the U.S. government and U.S. government agencies as well as corporate debt securities, and places restrictions on maturities and concentration by type and issuer. The Company maintains cash balances in excess of amounts insured by the FDIC and concentrated within a limited number of financial institutions. The accounts are monitored by management and management believes that the financial institutions are financially sound, and, accordingly, minimal credit risk exists with respect to these financial institutions. As of December 31, 2025 and 2024, the Company has not experienced any significant credit losses in such accounts or investments.
The Company is subject to a number of risks common for early-stage biopharmaceutical companies including, but not limited to, the ability to achieve any clinical or commercial success of its product candidates, ability to obtain regulatory approval of its product candidates, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and patients, significant competition, dependency on the Company's contract manufacturing organization, and ability to manufacture.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in a single operating segment and has one reportable segment. The Company’s method for measuring profitability on a reportable segment basis is net profit or loss. The Company's CODM does not evaluate operating segments using asset or liability information. Additional significant segment expenses are provided on a quarterly basis to the CODM to support the CODM’s decision making process. Refer to Note 14 for additional information.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of amounts invested in bank money market accounts and money market mutual funds.
The Company has issued letters of credit under separate lease and other agreements which have been collateralized by restricted cash. This cash is classified as long-term restricted cash on the accompanying consolidated balance sheets based on the terms of the underlying agreements.
Investments
Investments are available-for-sale and are carried at estimated fair value. The Company’s valuations of marketable securities are generally derived from independent pricing services based upon quoted prices in active markets for similar securities, with prices adjusted for yield and number of days to maturity, or based on industry models using data inputs, such as interest rates and prices that can be directly observed or corroborated in active markets. Management determines the appropriate classification of its investments in debt securities at the time of purchase and at the end of each reporting period. Investments with original maturities of less than three months at the date of purchase are classified as cash and cash equivalents. Investments
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with original maturities beyond three months at the date of purchase and which mature at, or less than twelve months from the consolidated balance sheet date are classified as current.
Unrealized gains and losses are excluded from earnings and are reported as a component of other comprehensive income. The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any available-for-sale securities before recovery of its amortized cost basis. Realized gains and losses and declines in fair value considered to be other than temporary, if any, on available-for-sale securities are included in interest and other income, net. The cost of investments sold is based on the specific-identification method. Interest income on investments is included in interest and other income, net.
Fair Value Measurement
Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3— Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, generally three to seven years . Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheets and the resulting gain or loss is reflected in other expense.
The Company has determined the estimated life of assets to be as follows:
Laboratory equipment 5 years
Computer equipment and purchased software 3 - 5 years
Fixtures and furniture 7 years
Leasehold improvements Shorter of lease term or useful life
The Company capitalizes implementation costs associated with internal use cloud computing arrangements in alignment with ASC 350-40 internal-use software. Costs incurred in preliminary project stage and post implementation stage are expensed as incurred. Costs incurred during the application development stage of implementation are capitalized in other long-term assets on the consolidated balance sheets. Capitalized implementation costs from cloud computing arrangements are amortized over the term of the cloud-based service arrangement.
California Institute for Regenerative Medicine (CIRM) Award
Accounting for the CIRM award does not fall under ASC 606, Revenue from Contracts and Customers, as CIRM does not meet the definition of a customer. No income associated with the CIRM award will be recognized until it is confirmed with CIRM that the award does not require repayment. Until then such award will be recognized, along with any interest, as a long-term liability upon cash receipt. Any estimated interest accrued for the CIRM award received is recognized as interest expense in the consolidated statements of operations. The Company will not recognize a receivable of future awards until it is approved by CIRM. Refer to Note 5 below for more details.
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Leases
For its long-term operating leases, the Company recognizes a right-of-use asset and a lease liability on its consolidated balance sheets. The lease liability is determined as the present value of future lease payments using an estimated rate of interest that the Company would pay to borrow equivalent funds on a collateralized basis at the lease commencement date. The right-of-use asset is based on the liability adjusted for any prepaid or deferred rent. The lease term at the commencement date is determined by considering whether renewal options and termination options are reasonably assured of exercise.
Rent expense for the operating lease is recognized on a straight-line basis over the lease term and is included in operating expenses on the consolidated statements of operations and comprehensive loss. Variable lease payments include lease operating expenses.
The Company elected to exclude from its consolidated balance sheets recognition of leases having a term of 12 months or less (short-term leases) and elected to not separate lease components and non-lease components for its long-term real-estate leases.
Equity Method Investments
The Company uses the equity method of accounting for equity investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. The Company's proportionate share of the net income or loss of these companies is included in other expenses, net in the consolidated statement of operations. Judgment regarding the level of influence over each equity method investment includes considering key factors such as the Company's ownership interest, representation on the board of directors, participation in policy-making decisions and material purchase and sale transactions.
The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified.
Variable Interest Entities
For entities in which the Company has variable interests, the Company focuses on identifying if one of the entities is the primary beneficiary through having the power to direct the activities that most significantly impact the variable interest entity’s economic performance and having the obligation to absorb losses or the right to receive benefits from the variable interest entity. If the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Company’s consolidated financial statements. The Company did not consolidate any variable interest entities in any of the periods presented because the Company determined that it was not the primary beneficiary.
Accrued Research and Development Costs
The Company records accrued liabilities for estimated costs of research and development activities conducted by collaboration partners and third-party service providers, which include the conduct of preclinical studies and clinical trials, and contract manufacturing activities. The Company records the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and includes these costs in accrued and other current liabilities on the consolidated balance sheets and within research and development expenses on the consolidated statements of operations and comprehensive loss.
The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its collaboration partners and third-party service providers. The Company makes significant judgments and estimates in determining the accrued liabilities balance at the end of each reporting period. As actual costs become known, the Company adjusts its accrued liabilities.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is
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more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s historical operating performance and net losses, the net deferred tax assets have been fully offset by a valuation allowance.
The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected in the period in which judgment occurs. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of the provision for income taxes.
Stock-Based Compensation
The Company measures its stock-based awards granted to employees, consultants and directors based on the estimated fair values of the awards and recognizes the compensation over the requisite service period. The Company uses the Black-Scholes option-pricing model, the lattice option pricing model or Monte Carlo simulation to estimate the fair value of its stock-based awards. Stock-based compensation is recognized using the straight-line method. As the stock compensation expense is based on awards ultimately expected to vest, it is reduced by forfeitures. The Company accounts for forfeitures as they occur.
Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive. Shares of common stock subject to repurchase are excluded from the weighted-average shares.
Comprehensive Loss
Comprehensive loss includes net loss and certain changes in stockholders’ equity that are excluded from net loss. For the years ended December 31, 2025 and 2024, this was comprised of unrealized gains and losses, net of tax, on the Company’s investments.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount of an asset group to the future net undiscounted cash flows that the assets are expected to generate. The long-lived assets recoverability test is performed at the asset group level, i.e., the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If this test indicates that the carrying amount of the asset group is not recoverable, an impairment loss is measured as the amount by which the carrying amount of an asset group exceeds its fair value. Any impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the carrying amount of an individual asset shall not be reduced below its fair value. The Company recorded long-lived asset impairment losses of $ 2.4 million and $ 15.7 million for the years ended December 31, 2025 and 2024, respectively (refer to Note 5).
Revenue Recognition
The Company’s revenue has been generated through collaboration research and license agreements. The terms of these agreements may contain multiple deliverables which may include (i) grant of licenses, (ii) transfer of know-how, (iii) research and development activities, (iii) clinical manufacturing, and (iv) product supply. The payment terms of these agreements may include nonrefundable upfront fees, payments for research and development activities, payments based upon the achievement of certain milestones, royalty payments based on product sales derived from the collaboration, and payments for supplying product.
The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (ASC 808) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and, therefore, within the scope of Topic 606, Revenue from Contracts with Customers (ASC 606). For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606.
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For elements of those arrangements that the Company determines should be accounted for under ASC 606, the Company assesses which activities in the collaboration agreements are performance obligations that should be accounted for separately and determines the transaction price of the arrangement, which includes the assessment of the probability of achievement of future milestones and other potential consideration. A performance obligation represents a promise in a contract to transfer a distinct good or service to a customer, which represents a unit of accounting in accordance with ASC 606. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once the Company has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. A portion of the consideration should be allocated to each distinct performance obligation. The total consideration which the Company expects to collect in exchange for the Company’s products is an estimate and may be fixed or variable. The Company constrains the estimated variable consideration when it assesses it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. The transaction price is re-evaluated, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur. The allocation of the transaction price is performed based on standalone selling prices, which are based on estimated amounts that the Company would charge for a performance obligation if it were sold separately. Revenue is recognized when, or as, performance obligations in the contracts are satisfied, in the amount reflecting the expected consideration to be received from the goods or services transferred to the customers. Funds received in advance are recorded as deferred revenue and are recognized as the related performance obligation is satisfied.
Research and Development Expenses
Research and development costs are expensed as incurred and consist of salaries and benefits, including associated stock-based compensation, and laboratory supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities on the Company’s behalf. Research and development expenses also include costs incurred for internal and sponsored collaborative research and development activities. Costs associated with co-development activities performed under the various license and collaboration agreements are included in research and development expenses.
Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are capitalized and then expensed as the related goods are delivered or the services are performed.
Note 2. Recent Accounting Guidance
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-09, Income taxes (Topic 740), Improvements to Income Tax Disclosures (ASU 2023-09), which enhances the disclosures required for income taxes in the Company’s annual financial statements. The Company adopted this standard effective January 1, 2025 and applied the disclosure requirements on a retrospective basis. Adoption of the new guidance had no significant impact on the Company’s financial statements. Refer to Note 12 for the revised disclosures consistent with the new guidance. These reclassifications have no effect on the benefit for income taxes for the year ended December 31, 2024.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) , which requires new disclosures to disaggregate prescribed natural expenses underlying any income statement caption. ASU 2024-03 is effective for annual periods in fiscal years beginning after December 15, 2026, and interim periods thereafter. Early adoption is permitted. ASU 2024-03 applies on a prospective basis for periods beginning after the effective date. However, retrospective application to any or all prior periods presented is permitted. The Company is currently assessing the impact ASU 2024-03 will have on the consolidated financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software costs. ASU 2025-06 removes all references to prescriptive and sequential software development stages throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1) Management has authorized and committed to funding the software project and 2) It is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, with early adoption permitted as of the beginning of an annual period. The Company is currently in the process of evaluating the impact of this pronouncement on the consolidated financial statements and disclosures.
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Note 3. Fair Value Measurements
The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
The Company measures and reports its cash equivalents, restricted cash, and investments at fair value.
Money market funds are measured at fair value on a recurring basis using quoted prices and are classified as Level 1. Investments are measured at fair value based on inputs other than quoted prices that are derived from observable market data and are classified as Level 2 inputs, except for investments in U.S. treasury securities which are classified as Level 1.
There were no Level 3 assets or liabilities as of December 31, 2025 or 2024.
Financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of December 31, 2025 and 2024 are presented in the following table:
December 31, 2025
Level 1 Level 2 Level 3 Fair Value
(in thousands)
Financial Assets:
Money market funds ¹ $ 48,576 $ — $ — $ 48,576
Commercial paper — 42,704 — 42,704
Corporate bonds — 53,705 — 53,705
U.S. treasury securities 76,157 — — 76,157
U.S. agency securities — 33,999 — 33,999
Total financial assets $ 124,733 $ 130,408 $ — $ 255,141
¹ Included within cash and cash equivalents on the Company’s consolidated balance sheets
December 31, 2024
Level 1 Level 2 Level 3 Fair Value
(in thousands)
Financial Assets:
Money market funds ¹ $ 65,780 $ — $ — $ 65,780
Commercial paper — 66,255 — 66,255
Corporate bonds — 82,725 — 82,725
U.S. treasury securities 85,728 — — 85,728
U.S. agency securities — 58,514 — 58,514
Asset-backed securities — 9,700 — 9,700
Total financial assets $ 151,508 $ 217,194 $ — $ 368,702
¹ Included within cash and cash equivalents on the Company’s consolidated balance sheets
The carrying amounts of accounts payable and accrued liabilities approximate their fair values due to their short-term maturities. The Company’s Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.
There were no transfers of assets between the fair value measurement levels during the years ended December 31, 2025 or 2024.
Note 4. Investments
The fair value and amortized cost of cash equivalents and available-for-sale securities by major security type as of December 31, 2025 are presented in the following tables:
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December 31, 2025
Amortized Cost Unrealized Gains Unrealized Losses Fair Value
(in thousands)
Money market funds $ 48,576 $ — $ — $ 48,576
Commercial paper 42,696 18 ( 10 ) 42,704
Corporate bonds 53,636 69 — 53,705
U.S. treasury securities 75,990 167 — 76,157
U.S. agency securities 33,974 25 — 33,999
Total cash equivalents and investments $ 254,872 $ 279 $ ( 10 ) $ 255,141
Classified as:
Cash equivalents $ 48,576
Short-term investments 198,522
Long-term investments 8,043
Total cash equivalents, and investments $ 255,141
The fair value and amortized cost of cash equivalents and available-for-sale securities by major security type as of December 31, 2024 are presented in the following tables:
December 31, 2024
Amortized Cost Unrealized Gains Unrealized Losses Fair Value
(in thousands)
Money market funds $ 65,780 $ — $ — $ 65,780
Commercial paper 66,269 19 ( 34 ) 66,254
Corporate bonds 82,716 53 ( 45 ) 82,724
U.S. treasury securities 85,765 54 ( 91 ) 85,728
U.S. agency securities 58,566 20 ( 70 ) 58,516
Asset-backed securities 9,695 5 — 9,700
Total cash equivalents and investments $ 368,791 $ 151 $ ( 240 ) $ 368,702
Classified as:
Cash equivalents $ 70,771
Short-term investments 217,258
Long-term investments 80,673
Total cash equivalents, and investments $ 368,702
The fair values of available-for-sale debt investments by contractual maturity as of December 31, 2025 and 2024 were as follows:
December 31,
2025 2024
(in thousands)
Due in 1 year or less $ 198,522 $ 222,250
Due in 1 - 2 years 8,043 70,972
Due in 3 years — 9,700
Instruments not due at a single maturity date 48,576 65,780
Total cash equivalents and investments $ 255,141 $ 368,702
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There were no significant realized losses on available-for-sale securities for the years ended December 31, 2025 and 2024. As of December 31, 2025 and 2024, unrealized losses on available-for-sale securities are not attributed to credit risk. The Company believes that it is more likely than not that investments in an unrealized loss position will be held until maturity and all interest and principal will be received. The Company does not intend to sell these investments and it is more likely than not that the Company will not be required to sell the investment before recovery of its amortized cost basis. The Company believes that an allowance for credit losses is unnecessary because the unrealized losses on certain of the Company’s available-for-sale securities are due to market factors. As of December 31, 2025 and 2024, there were no securities were in a continuous net unrealized loss position for more than 12 months. To date, the Company has not recorded any impairment charges on available-for-sale securities.
The Company has made an accounting policy election not to recognize an allowance for credit losses for accrued interest receivable on available-for-sale securities. As of December 31, 2025 and 2024, the Company recognized $ 1.5 million and $ 1.9 million, respectively, of accrued interest receivable from available-for-sale securities within prepaid expenses and other current assets on the consolidated balance sheets.
Note 5. Balance Sheet Components
Property and Equipment, Net
December 31,
2025 2024
(in thousands)
Leasehold improvements $ 107,537 $ 108,127
Laboratory equipment 28,748 31,595
Computer equipment and purchased software 4,873 4,658
Furniture and fixtures 4,214 4,214
Total 145,372 148,594
Less: accumulated depreciation ( 72,533 ) ( 62,538 )
Total property and equipment, net $ 72,839 $ 86,056
Depreciation expense for the years ended December 31, 2025, and 2024 was $ 12.4 million, and $ 13.6 million, respectively. Disposals of property and equipment were less than $ 0.1 million and $ 0.3 million for the years ended December 31, 2025 and 2024, respectively.
The Company reviews for indicators of impairment on a quarterly basis which includes the change in how its property is being used. During the year ended December 31, 2024, the Company made a decision to sublease one of its leased buildings in South San Francisco. The Company vacated and ceased occupancy of this building and began actively marketing the leased building for sublease in 2024. The Company determined that the change in how this building is being used was an indicator of impairment. The Company identified this to-be-sublet property as a separate asset group. The Company concluded that the carrying value of this to-be-sublet property asset group was not recoverable and the estimated fair value of this asset group was below its carrying value. The decrease in the fair value of this asset group was mainly due to the lower estimated sublease income based on current commercial rental market conditions compared to the lease payments in accordance with the initial operating lease agreement. The Company performed discounted cash flow analysis to estimate the fair value of its right-of-use asset and leasehold improvements. The key inputs to this valuation were expected sublease rental income of $ 1.9 million through March 2032 and the risk-adjusted annual discount rate of 9.5 %. Based on this analysis, the Company concluded the fair value of the right-of-use asset and leasehold improvements of $ 1.2 million was lower than its net book value of $ 7.5 million. The Company recognized an aggregate long-lived asset impairment charge of $ 6.2 million on the right-of-use asset and leasehold improvements for the year ended December 31, 2024.
During the year ended December 31, 2025, the Company identified an additional indicator that the carrying value of this to-be-sublet property asset group was not recoverable. The expected sublease rental income of $ 1.9 million as of December 31, 2024 had decreased to $ 0.7 million based on the sublease agreement executed in July 2025. The risk-adjusted annual discount was 9.25 %. The Company updated its discounted cash flow analysis to estimate fair value of its right-of-use asset and leasehold improvements. Based on this analysis, the resulting fair value was immaterial resulting in the write off of the $ 0.9 million right-of-use asset and $ 0.1 million leasehold improvements as long-lived asset impairment charges for the year ended December 31, 2025.
Previously, in December 2023, the Company made a decision to sublease one of its other leased buildings in South San Francisco. The Company had vacated and ceased occupancy of this building in December 2023, and in January 2025, the
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Company executed two subleases for the majority of the leased building. During the year ended December 31, 2024, the Company recognized long-lived asset impairment charge of $ 9.5 million on the right-of-use asset by applying a discounted cash flow method to estimate fair value of its right-of-use asset. The key inputs to this valuation were expected sublease rental income of $ 4.7 million through March 31, 2032 and an annual discount rate of 9.0 %. The Company concluded the fair value of the right-of-use asset of $ 3.1 million was lower than its book value of $ 12.6 million. Total long-lived asset impairment charges recognized on the Company's right-of-use assets were $ 15.7 million for the year ended December 31, 2024.
In addition, during the year ended December 31, 2025, the Company recognized a non-cash equipment impairment charge of $ 1.3 million as a result of the Workforce Reduction (refer to the Accrued and Other Current Liabilities section in Footnote 5 for further information).
Accrued Liabilities
Accrued liabilities consist of the following:
December 31,
2025 2024
(in thousands)
Accrued compensation and related benefits $ 10,241 $ 12,146
Accrued research and development expenses 7,398 9,402
Lease liability, current 8,208 7,509
Other 2,397 1,072
Total accrued and other current liabilities $ 28,244 $ 30,129
Accrued and Other Current Liabilities
On May 12, 2025, the Company’s Board of Directors approved an approximately 28 % reduction in the Company’s employee workforce (Workforce Reduction) in connection with a reduction in manufacturing operations and a reprioritization of resources to focus on the Company’s clinical programs. The Workforce Reduction included one-time severance payments and other employee benefits and impairment of equipment of $ 4.7 million which comprised of $ 3.1 million in research and development expense, $ 1.3 million in equipment impairment expense, and $ 0.3 million in general and administrative expense in the consolidated statement of operations and comprehensive loss during the year ended December 31, 2025. As of December 31, 2025, less than $ 0.1 million of the severance and other employee benefits accrual was included in accrued and other current liabilities on the consolidated balance sheets.
Costs associated with the Workforce Reduction consist of the following:
Severance and Employee Benefit Costs Impairment Costs Total
(in thousands)
Balance at December 31, 2024 $ — $ — $ —
Charges 3,406 1,340 4,746
Cash payments made ( 3,227 ) — ( 3,227 )
Non-cash adjustments ( 165 ) ( 1,340 ) ( 1,505 )
Balance at December 31, 2025 $ 14 $ — $ 14
California Institute for Regenerative Medicine (CIRM) Award
On April 26, 2024, the Company was awarded up to $ 15.0 million from CIRM to support the clinical development of ALLO-316, an AlloCAR T investigational product targeting CD70 in development for the treatment of advanced or metastatic renal cell carcinoma (RCC). Upon treatment of 20 patients, the Company met the primary study objectives of the ALLO-316 Phase 1b study plan supported by CIRM and was able to successfully complete the study plan on time and under budget without further enrollment. As a result, the Company updated the study plan and requested a reduction in its co-funding responsibility and adjustments to the remaining milestone payments to align with the updated research plan. On April 28, 2025, the terms of the award were amended and the total award amount was adjusted to up to $ 9.2 million.
Pursuant to terms of the award, the disbursements are tied to the achievement of specified operational milestones. In addition, the terms of the award and amended award include a co-funding requirement pursuant to which the Company is
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required to spend up to approximately $ 15.7 million of its own capital to fund the CIRM funded research project. The award was made in accordance with the CIRM Grants Administration Policy for Clinical Stage Projects which may require the award to be repaid by the Company. Under the terms of the CIRM award, the Company is obligated to pay royalties based on a low single digit royalty percentage on net sales of CIRM-funded product candidate. The maximum royalty that the Company may be required to pay to CIRM is equal to nine times the total amount awarded and paid to the Company.
After completing the CIRM funded research project and at any time after the award period end date (but no later than the ten-year anniversary of the date of the award), the Company has the right, upon its election, to convert the award into a loan. The terms of conversion into a loan will be determined based on various factors and could result in 80 % to 100 % plus interest at 10 % per annum plus the Secured Overnight Financing Rate of the total award dependent upon the phase of clinical development of the product candidate at the time of the Company’s election to be repaid to CIRM.
No income associated with the CIRM award will be recognized until it is confirmed with CIRM that the award does not require repayment. Upon cash receipt, the CIRM award and accrued interest will be recognized as other long-term liabilities on the consolidated balance sheets. The Company will not recognize a receivable of future awards until it is approved by CIRM.
The Company received $ 6.9 million and $ 2.3 million from CIRM through December 31, 2025 and 2024, respectively, and accounted for the total $ 9.2 million proceeds as a liability within other long-term liabilities on the consolidated balance sheets. The Company recorded interest expense of $ 1.1 million and $ 0.2 million for the year ended December 31, 2025 and 2024, respectively. As of December 31, 2025, $ 1.3 million of accrued interest was included in other long-term liabilities.
Note 6. License and Collaboration Agreements
Asset Contribution Agreement with Pfizer
In April 2018, the Company entered into an Asset Contribution Agreement (the Pfizer Agreement) with Pfizer pursuant to which the Company acquired certain assets, including certain contracts and intellectual property for the development and administration of chimeric antigen receptor (CAR) T cells for the treatment of cancer. The Company is required to make milestone payments upon successful completion of regulatory and sales milestones on a target-by-target basis for the targets including CD19 and B-cell maturation antigen (BCMA), covered by the Pfizer Agreement. The aggregate potential milestone payments upon successful completion of various regulatory milestones in the United States and the European Union are $ 30.0 million or $ 60.0 million, depending on the target, with aggregate potential regulatory and development milestones of up to $ 840.0 million. The aggregate potential milestone payments upon reaching certain annual net sales thresholds in North America, Europe, Asia, Australia and Oceania (the Territory) for a certain number of targets covered by the Pfizer Agreement are $ 325.0 million per target. The sales milestones in the foregoing sentence are payable on a country-by-country basis until the last to expire of any Pfizer Royalty Term, as described below, for any product in such country in the Territory. In October 2019, the Territory was expanded to all countries in the world. No milestones were achieved and no royalty payments were made for the years ended December 31, 2025 and 2024, respectively.
Pfizer is also eligible to receive, on a product-by-product and country-by-country basis, royalties in single-digit percentages on annual net sales for products covered by the Pfizer Agreement. The Company’s royalty obligation with respect to a given product in a given country begins upon the first sale of such product in such country and ends on the later of (i) expiration of the last claim of any applicable patent or (ii) 12 years from the first sale of such product in such country.
Research Collaboration and License Agreement with Cellectis
As part of the Pfizer Agreement, Pfizer assigned to the Company a Research Collaboration and License Agreement (the Original Cellectis Agreement) with Cellectis S.A. (Cellectis). On March 8, 2019, the Company entered into a License Agreement (the Cellectis Agreement) with Cellectis. In connection with the execution of the Cellectis Agreement, on March 8, 2019, the Company and Cellectis also entered into a letter agreement (the Letter Agreement), pursuant to which the Company and Cellectis agreed to terminate the Original Cellectis Agreement. The Original Cellectis Agreement included a research collaboration to conduct discovery and pre-clinical development activities to generate CAR T cells directed at targets selected by each party, which was completed in June 2018.
Pursuant to the Cellectis Agreement, Cellectis granted to the Company an exclusive, worldwide, royalty-bearing license, on a target-by-target basis, with sublicensing rights under certain conditions, under certain of Cellectis’s intellectual property, including its TALEN and electroporation technology, to make, use, sell, import, and otherwise exploit and commercialize CAR T products directed at certain targets, including BCMA, CD70, Claudin 18.2, DLL3 and FLT3 (the Allogene Targets), for human oncologic therapeutic, diagnostic, prophylactic and prognostic purposes. In addition, certain Cellectis intellectual property rights granted by Cellectis to the Company and to Servier pursuant to the Exclusive License and
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Collaboration Agreement by and between Servier and Pfizer, dated October 30, 2016, which Pfizer assigned to the Company in April 2018, will survive the termination of the Original Cellectis Agreement.
Pursuant to the Cellectis Agreement, the Company granted Cellectis a non-exclusive, worldwide, royalty-free, perpetual and irrevocable license, with sublicensing rights under certain conditions, under certain of the Company's intellectual property, to make, use, sell, import and otherwise commercialize CAR T products directed at certain targets (the Cellectis Targets).
The Cellectis Agreement provides for development and sales milestone payments by the Company of up to $ 185.0 million per product that is directed against an Allogene Target, with aggregate potential development and sales milestone payments totaling up to $ 2.8 billion. Cellectis is also eligible to receive tiered royalties on annual worldwide net sales of any products that are commercialized by the Company that contain or incorporate, are made using or are claimed or covered by, Cellectis intellectual property licensed to the Company under the Cellectis Agreement (the Allogene Products), at rates in the high single-digit percentages. Such royalties may be reduced, on a licensed product-by-licensed product and country-by-country basis, for generic entry and for payments due under licenses of third-party patents. Pursuant to the Cellectis Agreement, and subject to certain exceptions, the Company is required to indemnify Cellectis against all third-party claims related to the development, manufacturing, commercialization or use of any Allogene Product or arising out of the Company’s material breach of the representations, warranties or covenants set forth in the Cellectis Agreement, and Cellectis is required, subject to certain exceptions, to indemnify the Company against all third party claims related to the development, manufacturing, commercialization or use of CAR T products directed at Cellectis Targets or arising out of Cellectis’ material breach of the representations, warranties or covenants set forth in the Cellectis Agreement.
The royalties are payable, on a licensed product-by-licensed product and country-by-country basis, until the later of (i) the expiration of the last to expire of the licensed patents covering such product; (ii) the loss of regulatory exclusivity afforded such product in such country, and (iii) the tenth anniversary of the date of the first commercial sale of such product in such country; however, in no event shall such royalties be payable, with respect to a particular licensed product, past the twentieth anniversary of the first commercial sale for such product.
Depending on the Cellectis Target, the Company has a right of first refusal or right of first negotiation to purchase or license from Cellectis rights to develop and commercialize products against such Cellectis Targets.
Under the Cellectis Agreement, the Company has certain diligence obligations to progress the development of CAR T product candidates and to commercialize one CAR T product per Allogene Target in one major market country where the Company has received regulatory approval. If the Company materially breaches any of its diligence obligations and fails to cure within 90 days, then with respect to certain targets, such target will cease to be an Allogene Target and instead will become a Cellectis Target.
Unless earlier terminated in accordance with its terms, the Cellectis Agreement will expire on a product-by-product and country-by-country basis, upon expiration of all royalty payment obligations with respect to such licensed product in such country. The Company has the right to terminate the Cellectis Agreement at will upon 60 days’ prior written notice, either in its entirety or on a target-by-target basis. Either party may terminate the Cellectis Agreement, in its entirety or on a target-by-target basis, upon 90 days’ prior written notice in the event of the other party’s uncured material breach. The Cellectis Agreement may also be terminated by the Company upon written notice at any time in the event that Cellectis becomes bankrupt or insolvent or upon written notice within 60 days of a consummation of a change of control of Cellectis.
No milestones were achieved for the years ended December 31, 2025 and 2024.
Exclusive License Agreement with Servier
As part of the Pfizer Agreement, Pfizer assigned to the Company an Exclusive License Agreement (the Original Servier Agreement), with Les Laboratoires Servier SAS and Institut de Recherches Internationales Servier SAS (collectively, Servier) to develop, manufacture and commercialize certain allogeneic anti-CD19 CAR T cell product candidates, including UCART19, in the United States with the option to obtain the rights over additional anti-CD19 product candidates and for allogeneic CAR T cell product candidates directed against one additional target. In October 2019, the Company agreed to waive its rights to the one additional target.
On May 10, 2024, the Company and Servier entered into an Amendment and Settlement Agreement (the Servier Amendment) which restructured the parties’ relationship under the Original Servier Agreement (as amended, the Servier Agreement). The Company’s licensed territory was expanded to include the European Union and the United Kingdom. The Company was also granted an option to further extend its licensed territory to include China and Japan upon the objective showing of sufficient resources to develop licensed products in those countries, which could be met through the Company entering into a strategic partnership covering those countries. Additionally, the Company agreed to waive certain of its rights under the Original Servier Agreement to elect a conversion of its license to the products directed against CD19, including
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UCART19, ALLO-501 and cemacabtagene ansegedleucel (cema-cel, previously ALLO-501A) (collectively, CD19 Products) to a worldwide license. Under the Servier Agreement, the Company is required to use commercially reasonable efforts to develop, manufacture and commercialize a CD19 Product.
Under the Servier Agreement, Servier sublicenses to the Company certain rights which Servier licenses from Cellectis pursuant to a License, Development and Commercialization Agreement by and between Cellectis and Servier, dated February 7, 2014, as amended by Amendment No. 1 to the License, Development and Commercialization Agreement, dated March 4, 2020 (as amended, the Servier-Cellectis Agreement). As amended by the Servier Amendment, all of the Company’s future milestone payments (regulatory and sales) under the Original Servier Agreement were modified to be the same as, and to coincide with, Servier’s milestone payments to Cellectis that are required under the Servier-Cellectis Agreement. The Servier Agreement provides for aggregate potential milestone payments by the Company to Servier of up to € 75.0 million upon successful completion of various regulatory milestones and first commercial sale milestones in the United States, European Union and the United Kingdom for the initial indication of each licensed product, of which € 60.0 million remains for the initial indication for cema-cel, with additional payments of € 55.0 million, due for each subsequent indication, of which € 50.0 million remains for the first subsequent indication for cema-cel, and aggregate potential payments by the Company to Servier of up to € 80.0 million upon achievement of certain net sales milestones for each licensed product. Should Servier’s rights and obligations under the Servier-Cellectis Agreement be assigned to the Company, these milestone payments would terminate, and the Company would assume Servier’s milestone payment obligations to Cellectis. In the absence of any such assignment, Servier will remain responsible for making milestone payments that may be due to Cellectis under the Servier-Cellectis Agreement.
The Company transferred € 20.0 million into an escrow account in connection with a potential future milestone payment, which is included in the remaining € 60.0 million in milestone payments referenced above for the initial indication for cema-cel. Such milestone payment will be triggered, if at all, upon the occurrence of one of these events: (1) the Company doses the first subject in its first phase 3 clinical study for a CD19 CAR T product that is a licensed product under the Servier Agreement, (2) the Company submits a phase 2 clinical study for a licensed product to the U.S. Food and Drug Administration or the European Medicines Agency, and such phase 2 clinical study is accepted for regulatory approval as a pivotal study, or (3) a final and definitive decision of a tribunal or court finding that under the Servier-Cellectis Agreement the milestone has occurred and the € 20.0 million payment is due to Cellectis. As of December 31, 2025, the Company recorded € 20.0 million as deposit placed in escrow in the consolidated balance sheets. On December 15, 2025, Cellectis publicly reported that an arbitral tribunal issued a decision providing for a partial termination of the Servier-Cellectis Agreement with respect to UCART19V1, which is the same as ALLO-501, a product candidate which the Company previously abandoned in favor of cema-cel (formerly known as ALLO-501A). As a result of that decision, the Company's Servier license covering UCART19V1/ALLO-501 was automatically terminated. The arbitration decision requires Cellectis, at the Company's request, to engage in good-faith discussions regarding the granting of a direct license to UCART19V1/ALLO-501 resulting in the € 20.0 million in escrow to be remitted to the Company pursuant to the terms of the Servier Amendment. As of December 31, 2025, the Company maintained the € 20.0 million as deposit placed in escrow in the consolidated balance sheets and recognized $ 2.7 million gain on foreign currency in interest and other income, net for the year ended December 31, 2025. On February 13, 2026, the € 20.0 million balance in escrow was remitted to the Company.
The Company is obligated to pay to Servier royalties on annual net sales of any licensed products that are commercialized by the Company that are directed at CD19. Such royalties include tiered royalties on annual net sales in the United States and a flat royalty on annual net sales in territories outside the United States. The United States royalty rates are in a range from the low tens to the mid teen percentages, and the ex-U.S. royalty rate is 10 %. Such royalties may be reduced for interchangeable drug entry, expiration of patent rights and amounts paid pursuant to licenses of third-party patents. This royalty obligation begins upon the first commercial sale of such product in a given country and ends after the later of a defined number of years or the expiration of the last to expire licensed patent covering the product in such country. The net effect of the Servier Amendment is that the Company’s royalty rate in the United States for the first half of the first tier of net sales was increased by a low single digit percentage as compared to the Original Servier Agreement. Should Servier’s rights and obligations under the Servier-Cellectis Agreement be assigned to the Company, each tier of royalty rates in the United States to Servier would be reduced by 10 %, the ex-U.S. royalties to Servier would terminate, and the Company would assume Servier’s royalty obligations to Cellectis. In the absence of any such assignment, Servier will remain responsible for making royalty payments that may be due to Cellectis under the Servier-Cellectis Agreement.
The parties agreed that co-development performed by the Company and Servier under the Servier Agreement, including all development performed by Servier and for product candidates that the Company was co-developing with Servier (for which specified development costs were split under the Original Servier Agreement with the Company responsible for 60 % and Servier responsible for 40 %), including the CD19 Products, ceased as of December 15, 2022, and that all development costs incurred by either party after that date shall be borne solely by such party.
The parties agreed to waive any and all outstanding claims that were asserted relating to alleged violations of the Original Servier Agreement, including all claims that such party was entitled to various payments or refunds from the other
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party under the Original Servier Agreement, and any and all claims that either party now has or may have in the future related to such outstanding claims, and mutual releases with respect to such claims were granted.
The Company recorded zero and $ 5.4 million in research and development expenses upon achievement of a regulatory milestone for the years ended December 31, 2025 and 2024, respectively.
Research Collaboration and License Agreement with Roche (formerly Notch Therapeutics)
On November 1, 2019, the Company entered into a Collaboration and License Agreement (the Notch Agreement) with Notch Therapeutics Inc. (Notch), pursuant to which Notch granted to Allogene an exclusive, worldwide, royalty-bearing, sublicensable license under certain of Notch’s intellectual property to develop, make, use, sell, import, and otherwise commercialize therapeutic gene-edited T cell and/or natural killer (NK) cell products from induced pluripotent stem cells directed at certain CAR targets for initial application in non-Hodgkin lymphoma, acute lymphoblastic leukemia and multiple myeloma.
In connection with the Notch Agreement, the Company made a $ 10.0 million upfront payment and made equity investments in Notch, including a $ 5.0 million seed investment. The Company made additional investments in Notch totaling $ 17.7 million in 2021. Following these transactions, the Company's share in Notch was 23 % on a voting interest basis.
On January 25, 2024, the Company entered into an Amended and Restated Collaboration and License Agreement under which the Company has relinquished its exclusive rights to all original CAR targets except one, limited its option right to one additional CAR target and became entitled to a percentage of certain third party upfront and/or milestone payments (up oto a stated cap) and a low, single-digit royalty on net sales if Notch out-licenses any released targets.
On May 17, 2024, the Company entered into an Amendment No. 1 to Amended and Restated Collaboration and License Agreement in connection with Notch's Series B financing. As a result of that financing and amendment, the Company's ownership increased to 13 %, the Company waived its right to appoint a member of the Notch's board of directors (retaining board observation rights), and the Company no longer has any significant influence over Notch. Accordingly, effective May 17, 2024, the Company accounted for its investment in Notch as an equity investment measured at cost less any impairment.
On March 31, 2025, the Company entered into a Second Amendment to Amended and Restated Collaboration and License Agreement in connection with F. Hoffmann-La Roche AG’s acquisition of Notch. The amendment clarified defined certain terms, extended certain technology time periods, and clarified the scope of Allogene’s exclusive rights. Notch dissolved on September 2, 2025 and final proceeds were distributed to the Company.
The only remaining elements of the Notch relationship is that the Company retains its rights for the one original CAR target that it did not relinquish, and may receive the above-mentioned contingent payments if any released target is further partnered or commercialized. With respect to those rights, each party has standard rights to terminate for breach or insolvency, and the Company can also terminate unilaterally for any with prior notice.
For the period from January 1, 2024 through May 17, 2024, the Company recognized its share of Notch’s net loss of $ 1.7 million under the other income and expense, net caption within the consolidated statements of operations. During the year ended December 31, 2024, the Company recognized $ 2.0 million of impairment loss under the other income and expense, net caption. As of December 31, 2025 and 2024, the Company's equity investment in Notch was zero . For the year ended December 31, 2025, the Company recorded $ 0.3 million in other income and expenses, net representing the final dissolution distribution of its equity investment in Notch.
Strategic Alliance with The University of Texas MD Anderson Cancer Center
On October 6, 2020, the Company entered into a strategic five-year collaboration agreement with The University of Texas MD Anderson Cancer Center (MD Anderson) for the preclinical and clinical investigation of allogeneic CAR T cell product candidates. In August 2025, the Company extended the term on the agreement for an additional year. The Company and MD Anderson are collaborating on the design and conduct of preclinical and clinical studies with oversight from a joint steering committee.
Under the terms of the agreement, the Company has committed up to $ 15.0 million of funding for the duration of the agreement, of which $ 6.0 million remains. Payment of this funding is contingent on mutual agreement to study orders in order for any study to be included under the alliance. The Company is committed to make further payments to MD Anderson each year upon the anniversary of the agreement effective date through the duration of the agreement term, however, if MD Anderson has sufficient funds to continue the agreed-upon research projects, the Company may defer the additional payment to a later date. These costs are expensed to research and development as MD Anderson renders the services under the strategic alliance.
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The agreement may be terminated by either party for material breach by the other party. Individual studies may be terminated for, among other things, material breach, health and safety concerns or where the institutional review board, the review board at the clinical site with oversight of the clinical study, requests termination of any study. Where any legal or regulatory authorization is finally withdrawn or terminated, the relevant study will also terminate automatically.
Collaboration costs recorded as research and development expenses were $ 0.9 million and $ 1.6 million for the years ended December 31, 2025 and 2024, respectively.
Investment in and License Agreement with Overland Therapeutics, Inc.
Allogene Overland Biopharm (CY) Limited (Allogene Overland), later renamed Overland Therapeutics Inc. (Overland Therapeutics), was initially established as a joint venture by the Company and Overland Pharmaceuticals (CY) Inc. (Overland) pursuant to a Share Purchase Agreement (Share Purchase Agreement), dated December 14, 2020. Concurrently, on December 14, 2020, the Company entered into a License Agreement (License Agreement) with Allogene Overland for the purpose of developing, manufacturing and commercializing certain allogeneic CAR T cell therapies for patients in greater China, Taiwan, South Korea and Singapore (the JV Territory).
Pursuant to the Share Purchase Agreement, the Company and Overland acquired Seed Preferred Shares of Allogene Overland representing 49 % and 51 %, respectively, of Allogene Overland’s outstanding stock for $ 117.0 million in upfront and certain quarterly cash payments to support operations of Allogene Overland. The Company received $ 40.0 million from Allogene Overland as partial consideration for the License Agreement. Until the Organizational Restructuring (as defined below), the Company and Overland were the sole equity holders in Allogene Overland.
Pursuant to the License Agreement, the Company granted Allogene Overland an exclusive license to develop, manufacture and commercialize certain allogeneic CAR T cell candidates directed at four targets, BCMA, CD70, FLT3, and DLL3 (Overland Licensed Products), in the JV Territory. As consideration, the Company would also be entitled to additional regulatory milestone payments of up to $ 40.0 million and, subject to certain conditions, tiered low-to-mid single-digit sales royalties. Subsequent to entering into the License Agreement, Allogene Overland assigned the License Agreement to a wholly-owned subsidiary, Allogene Overland BioPharm (HK) Limited (Allogene Overland HK). On April 1, 2022, Allogene Overland HK assigned the License Agreement to Allogene Overland Biopharm (PRC) Co., Limited (Allogene Overland PRC).
On May 24, 2024, the Company, Overland, and Allogene Overland entered into a Share Exchange Agreement (Share Exchange Agreement) pursuant to which Overland’s cell therapy business merged into Allogene Overland (the Organizational Restructuring).
Under the Share Exchange Agreement, Allogene Overland acquired from Overland a 100 % equity interest in Overland Pharmaceuticals (U.S.) Inc. (Overland U.S.). Overland U.S. includes certain research and development, clinical, and general and administrative staff, as well as select cell therapy assets, including its lead program, OL-101, an autologous GPRC5D-BCMA bispecific dual targeting CAR T for refractory multiple myeloma. Upon completion of the closing of the share exchange, Overland U.S. became a wholly owned subsidiary of Allogene Overland, Overland’s ownership increased to 82 % and the Company’s ownership decreased to 18 %. Under a separate agreement between Overland and HH BioPharma Holdings Ltd. (HBP) executed on May 24, 2024, Overland distributed all Series Seed Preferred Shares of Allogene Overland held by Overland to HBP and HBP has assumed all rights and obligations attached to such shares and all rights and obligations of Overland under the Share Exchange Agreement.
In connection with the Organizational Restructuring, on May 24, 2024, the Company and Allogene Overland PRC, entered into a First Amendment to the License Agreement (the License Amendment) to amend and supplement certain provisions of the License Agreement. Under the License Amendment, the Company continues to grant Allogene Overland PRC an exclusive license to develop, manufacture, and commercialize the Licensed Products in the JV Territory, with the Company retaining exclusive rights to the Licensed Products outside the JV Territory, and the royalty obligations to the Company were amended to a flat mid single-digit royalty on net sales in the JV Territory that are no longer subject to reductions. The License Amendment also provides the Company with additional rights to terminate the License Agreement in its entirety or with respect to the relevant Overland Licensed Products if Allogene Overland PRC fails to initiate manufacturing technology transfer with respect to an Overland Licensed Product as agreed in the License Amendment, or if HBP commits a funding default or a material breach of its representations, warranties, or covenants under the Share Exchange Agreement. The License Amendment also provides that the License Agreement will terminate automatically if the Company’s ownership in Allogene Overland falls below 7.5 % (other than due to the Company’s sale of the shares of Allogene Overland), unless at that time Allogene Overland PRC and the Company have mutually agreed on the manufacturing technology transfer plan for the Overland Licensed Products and Allogene Overland PRC elects to continue the license for such Overland Licensed Products with increased milestones and royalties. Under the License Amendment terms such increased milestones and royalties consist of up to $ 115.0 million in milestone payments for each Overland Licensed Product and tiered mid single-digit to low double-digit royalties on net sales in the JV Territory.
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As part of the Organizational Restructuring, Allogene Overland was renamed Overland Therapeutics Inc. (Overland Therapeutics).
Based on the License Agreement, promises that the Company concluded were distinct performance obligations included: (1) the license of intellectual property and delivery of know-how, (2) the manufacturing license, related know-how and support, (3) know-how developed in future periods, and (4) participation in the joint steering committee.
In order to determine the transaction price, the Company evaluated all the consideration to be received over the duration of the contract. Fixed consideration exists in the form of the upfront payment and Seed Preferred Shares in Overland Therapeutics. Regulatory milestones and royalties were considered variable consideration. The Company constrains the estimated variable consideration when it assesses it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. Milestone fees were constrained and not included in the transaction price due to the uncertainties of research and development. The Company re-evaluates the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
The Company estimated the fair value of the shares of Seed Preferred Stock at $ 79.0 million, using probability adjusted future cash infusions based on the upfront and certain quarterly cash payments of $ 117.0 million committed by Overland. The probability for the future quarterly cash payments of 65 % was developed based on consideration of the Company's expectations for future cash infusions from Overland and was applied on a cumulative basis for each quarterly payment. The present value of the future quarterly cash payments was estimated using 11.9 % annual discount rate. The fair value measurement is based on significant inputs not observable in the market and, therefore, represents a Level 3 measurement.
The Company determined that the initial transaction price consists of the upfront payment of $ 40.0 million and noncash consideration of $ 79.0 million received in the form of the shares of Seed Preferred Stock. The allocation of the transaction price is performed based on standalone selling prices, which are based on estimated amounts that the Company would charge for a performance obligation if it were sold separately. The initial transaction price of $ 119.0 million was allocated as follows: (i) $ 114.0 million to the license of intellectual property and know-how, which was recognized upon grant of license and delivery of know-how in the consolidated financial statements for the year ended December 31, 2021 when the know-how was delivered; (ii) $ 2.3 million to the manufacturing license, related know-how and support, which will be recognized as services are delivered; (iii) $ 2.1 million to the know-how developed in future periods, which will be recognized as services are delivered, and (iv) $ 0.6 million to participation in the joint steering committee, which will be recognized over time as the services are delivered. Funds received in advance are recorded as deferred revenue and will be recognized as the performance obligations are satisfied.
Based on the License Amendment, the Company determined that the remaining transaction price was $ 4.6 million and it was allocated as follows: (i) $ 1.9 million to the manufacturing license, related know-how and support, which will be recognized as services are delivered and (ii) $ 2.7 million to the know-how developed in future periods, which will be recognized as services are delivered.
The Company determined that Overland Therapeutics is a variable interest entity as of December 31, 2025 and 2024. The Company does not have the power to direct the activities which most significantly affect Overland Therapeutics’ economic performance. Accordingly, the Company did not consolidate Overland Therapeutics because the Company determined that it was not the primary beneficiary. After the Organizational Restructuring, the Company has 20 % voting rights of Overland Therapeutics’ board of directors. The Company concluded that it has significant influence over Overland Therapeutics and continued to account for its investment in Overland Therapeutics as an equity method investment. In connection with the Organizational Restructuring, the Company recorded an increase in its equity method investment in Overland Therapeutics and corresponding gain of $ 1.1 million, which was offset by its share of Overland Therapeutics' net loss of $ 1.1 million under the other income and expense, net caption within the consolidated statement of operations. The Company’s total equity investment in Overland Therapeutics was zero as of December 31, 2025 and 2024. Collaboration revenue was zero and less than $ 0.1 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, $ 4.6 million of deferred revenue was recorded in other long-term liabilities.
Collaboration and License Agreement with Antion
On January 5, 2022, the Company entered into an exclusive collaboration and global license agreement (Antion Collaboration and License Agreement) with Antion Biosciences SA (Antion) for Antion’s miRNA technology (miCAR), to advance multiplex gene silencing as an additional tool to develop next generation allogeneic CAR T products. Pursuant to the agreement, Antion will exclusively collaborate with the Company on oncology products for a defined period. The Company will also have exclusive worldwide rights to commercialize products incorporating Antion technology developed during the collaboration.
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The Antion Collaboration and License Agreement includes an exclusive research collaboration to conduct research and development of the use of Antion’s proprietary technologies to produce certain products for a defined period, which will be conducted in accordance with an agreed research plan and budget under the oversight of a joint steering committee. The Company will reimburse Antion's costs incurred in accordance with such plan and budget.
In connection with the execution of the Antion Collaboration and License Agreement, the Company made an upfront payment to Antion of $ 3.5 million in return for a license to access Antion's technology in order to conduct research pursuant to the agreement. The upfront payment was fully recognized as research and development expense as the license had no foreseeable alternative future use. In addition, the Company made a $ 3.0 million investment in Antion's preferred stock. The Company accounts for its investment in Antion's preferred stock as an equity investment measured at cost less any impairment. In connection with this investment, a Company representative was appointed to Antion’s Board of Directors.
In July 2023, the Company and Antion entered into an amendment to the Antion Collaboration and License Agreement. Under the terms of this amendment, Antion's exclusivity obligation relating to the collaboration was terminated; however, Antion agreed to certain restrictions on its ability to pursue products directed against specific targets. Also, in lieu of the Company's prior obligation to make a $ 3.0 million investment in Antion following the completion of certain milestones, the Company agreed to make a $ 2.0 million investment in Antion's preferred stock and acquired warrants to purchase an additional $ 3.0 million of Antion's preferred stock.
Under the Antion Collaboration and License Agreement, Antion will be eligible to receive up to $ 35.3 million for four products upon achievement of certain development and regulatory milestones. For each additional product, Antion will be eligible to receive $ 2.0 million upon achievement of a regulatory milestone. Antion is also entitled to receive a low single-digit royalty on the Company’s sales of licensed products, subject to certain reductions.
For the years ended December 31, 2025 and 2024, the Company recorded zero in research and development expenses related to the upfront payment and collaboration costs. For the years ended December 31, 2025 and 2024, no milestones were achieved under the Antion Collaboration and License Agreement.
Strategic Collaboration Agreement with Foresight Diagnostics
On January 3, 2024, the Company entered into a Strategic Collaboration Agreement with Foresight Diagnostics, Inc. (Foresight Diagnostics) (the Foresight Agreement). Foresight Diagnostics was acquired by Natera, Inc. (Natera) in December 2025 and continues to operate as a standalone subsidiary. Pursuant to the Foresight Agreement, the parties have agreed to collaborate on a non-exclusive basis in the development of Foresight Diagnostics’ minimal residual disease (MRD) assay based on their PhasED-Seq Circulating Tumor DNA Platform as an in vitro diagnostic to identify the MRD+ patient population to be enrolled in the Company’s planned ALPHA3 trial of cema-cel, for treatment of large B-cell lymphoma (LBCL). Under the Foresight Agreement, the Company has agreed to use its commercially reasonable efforts to obtain regulatory approval of cema-cel, and Foresight Diagnostics has agreed to use its commercially reasonable efforts to obtain regulatory approval of its CLARITY TM MRD assay for use as an in vitro diagnostic with cema-cel. Under the Foresight Agreement, the Company has agreed to fund approximately $ 26.2 million in MRD assay development costs, milestone payments for regulatory submissions and assay utilization to process clinical samples.
On February 19, 2025, the Company entered into an Amended and Restated Strategic Collaboration Agreement with Foresight Diagnostics which expands its collaboration to include the development of Foresight Diagnostics’ MRD assay as a companion diagnostic for use with cema-cel as part of a possible EU and/or UK clinical development program, and as part of an expansion of ALPHA3 to Canadian and Australian clinical trial sites in support of the U.S. clinical development program. In total, the Company has agreed to fund approximately $ 37.3 million in MRD assay development costs, milestone payments for U.S., and certain international regulatory submissions and assay utilization costs to process clinical samples, all in addition to the financial commitments under the Foresight Agreement.
Clinical trial milestones recorded as research and development expenses were $ 5.8 million and $ 3.5 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, $ 1.4 million and $ 1.0 million, respectively, were recorded in accrued and other liabilities.
Note 7. Commitments and Contingencies
Leases
In August 2018, the Company entered into an operating lease agreement (HQ Lease) for office and laboratory space which consists of approximately 68,000 square feet located in South San Francisco, California. In December 2021, the Company amended its lease agreement to lease an additional 47,566 square feet of office and laboratory space in South San Francisco, California, as part of the same building as the Company’s current headquarters. The lease term commenced in April
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2022. The rent payments for the expansion premises began in August 2022. The lease term for both the existing and expansion premises will expire on March 31, 2032 with an option to extend the term for eight years which is not reasonably assured of exercise.
In October 2018, the Company entered into an operating lease agreement for office and laboratory space which consists of 14,943 square feet located in South San Francisco, California. The lease term will expire March 31, 2032 with an option to extend the term for eight years which is not reasonably assured of exercise.
In February 2019, the Company entered into a lease agreement for approximately 118,000 square feet of space to develop a cell therapy manufacturing facility in Newark, California. The lease term will expire on July 31, 2036 with two ten-year options to extend the lease, both of which are not reasonably assured of exercise.
In February 2023, the Company entered into a sublease with Bellco Capital Advisors Inc. (Bellco) for 2,218 square feet of office space in Los Angeles, California. The sublease term is 115 months, subject to certain early termination rights. The sublease commenced on January 1, 2024.
The Company maintains letters of credit for the benefit of landlords which is disclosed as restricted cash in the consolidated balance sheets. Restricted cash related to letters of credit due to landlords was $ 6.0 million as of December 31, 2025 and 2024.
The balance sheet classification of the Company's lease liabilities were as follows:
December 31, 2025 December 31, 2024
(in thousands)
Operating lease liabilities
Current portion included in accrued and other current liabilities $ 8,208 $ 7,509
Long-term portion of lease liabilities 75,045 83,247
Total operating lease liabilities $ 83,253 $ 90,756
The components of lease costs for operating leases, which were recognized in operating expenses, were as follows:
Year Ended December 31,
2025 2024
(in thousands)
Operating lease cost $ 9,774 $ 11,468
Variable lease cost 2,507 3,105
Total lease costs $ 12,281 $ 14,573
Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2025 was $ 12.9 million and was included in net cash used in operating activities in the Company's consolidated statements of cash flows.
The undiscounted future non-cancellable lease payments under the Company's operating leases as of December 31, 2025 is as follows:
Year ending December 31: (in thousands)
2026 $ 13,164
2027 13,613
2028 14,078
2029 15,480
2030 and thereafter 49,910
Total undiscounted lease payments 106,245
Less: Present value adjustment ( 22,992 )
Total $ 83,253
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company uses its estimated incremental borrowing rate. The weighted average discount rate used to determine the operating lease liability was 6.49 %. As of December 31, 2025, the weighted average remaining lease term for the Company's operating leases is 7.17 years.
In December 2024 and January 2025, the Company entered into non-cancelable agreements under which it subleased approximately 46,011 square feet of its HQ Lease to two unaffiliated companies. In July 2025, the Company entered into a non-
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cancelable agreement under which it subleased one of its leased buildings in South San Francisco to one unaffiliated company. As a result of continued market deterioration there was a trigger of an additional indicator of impairment of the Company’s leased property and leasehold improvements, as described further in Note 5, which resulted in the recognition of a long-lived asset impairment charge of $ 1.0 million and $ 15.7 million for the years ended December 31, 2025 and 2024, respectively.
During the year ended December 31, 2025 and 2024, the Company recognized $ 2.6 million and $ 0.1 million in sublease income, respectively, under the interest and other income, net caption within the condensed consolidated statements of operations.
Certain lease agreements require the Company to return designated areas of leased space to its original condition upon termination of the lease agreement. At the inception of such leases, the Company records an asset retirement obligation and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. To determine the fair value of the obligation, the Company estimates the cost for a third-party to perform the restoration work. In subsequent periods, for each asset retirement obligation, the Company records interest expense to accrete the asset retirement obligation liability to full value and depreciate each capitalized asset retirement obligation asset, both over the term of the associated lease agreement. Asset retirement obligations were $ 0.7 million as of December 31, 2025 and 2024.
Other Commitments
Solar Power Purchase and Energy Services Agreement
In July 2020, the Company entered into a Solar Power Purchase and Energy Services Agreement for the installation and operation of a solar photovoltaic generating system and battery energy storage system at the Company's cell therapy manufacturing facility in Newark, California. The agreement has a term of 20 years and commenced in September 2022. The Company is obligated to pay for electricity generated from the system at an agreed rate for the duration of the agreement term. Termination of the agreement by the Company will result in a termination payment due of approximately $ 4.3 million. In connection with the agreement, the Company maintains a letter of credit for the benefit of the service provider in the amount of $ 4.3 million which is recorded as restricted cash in the consolidated balance sheets as of December 31, 2025 and 2024.
License Agreements for Intellectual Property
The Company has entered into certain license agreements for intellectual property which is used as part of its development and manufacturing processes. Each of these respective agreements are generally cancellable by the Company. These agreements require payment of annual license fees and may include conditional milestone payments for achievement of specific research, clinical and commercial events, and royalty payments. The timing and likelihood of any significant conditional milestone payments or royalty payments becoming due was not probable as of December 31, 2025 and 2024.
Contingencies
In the ordinary course of business, the Company or its business partners may be subject to legal claims and regulatory actions that could have a material adverse effect on its business or financial position. The Company assesses its potential liability in such situations by analyzing the possible outcomes of various litigation, regulatory, and settlement strategies. If the Company determines that a material loss is probable and its amount can be reasonably estimated, it will accrue an amount equal to the estimated loss. As of December 31, 2025 and 2024, the Company did not accrue any estimated losses related to its ongoing legal proceedings.
Indemnification
In accordance with the Company’s amended and restated certificate of incorporation and amended and restated bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving in such capacity. There have been no claims to date, and the Company has a directors and officers liability insurance policy that may enable it to recover a portion of any amounts paid for future claims.
Note 8. Stockholders’ Equity
Preferred Stock
Pursuant to the Amended and Restated Certificate of Incorporation filed on October 15, 2018, as amended, the Company is authorized to issue a total of 10,000,000 shares of preferred stock, of which no shares were issued and outstanding at December 31, 2025 and 2024.
Common Stock
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Pursuant to the Certificate of Amendment of Amended and Restated Certificate of Incorporation filed on June 17, 2022, the Company is authorized to issue a total of 400,000,000 shares of common stock, of which 229,413,523 and 212,210,597 shares were issued and outstanding at December 31, 2025 and 2024, respectively.
Common stockholders are entitled to dividends if and when declared by the Company’s Board of Directors subject to the prior rights of the preferred stockholders. As of December 31, 2025 and 2024, no dividends on common stock had been declared by the Company’s Board of Directors.
Note 9. Stock-Based Compensation
2018 Equity Incentive Plan
In June 2018, the Company adopted its 2018 Equity Incentive Plan (Prior 2018 Plan). The Prior 2018 Plan provided for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Company’s Board of Directors and consultants of the Company under terms and provisions established by the Company’s Board of Directors. In September 2018, the Board of Directors adopted a new amended and restated 2018 Equity Incentive Plan as a successor to and continuation of the Prior 2018 Plan, which became effective in October 2018 (the 2018 Plan), which authorized additional shares for issuance and provided for an automatic annual increase to the number of shares issuable under the 2018 Plan by an amount equal to 5 % of the total number of shares of common stock outstanding on December 31 st of the preceding calendar year. The term of any stock option granted under the 2018 Plan cannot exceed 10 years. The Company generally grants stock-based awards with service conditions only. Options granted typically vest over a four-year period but may be granted with different vesting terms. Restricted Stock Units granted typically vest annually over a four-year period but may be granted with different vesting terms. Options shall not have an exercise price less than 100 % of the fair market value of the Company’s common stock on the grant date. If the individual possesses more than 10 % of the combined voting power of all classes of stock of the Company, the exercise price shall not be less than 110 % of the fair market value of a common share of stock on the date of grant. This requirement is applicable to incentive stock options only.
As of December 31, 2025 and 2024, there were 6,187,819 and 8,838,676 shares reserved by the Company under the 2018 Plan for the future issuance of equity awards.
Stock Option Exchange Program
On June 21, 2022, the Company commenced an offer to exchange certain eligible options held by eligible employees of the Company for new options (the Exchange Offer). The Exchange Offer expired on July 19, 2022. Pursuant to the Exchange Offer, 199 eligible holders elected to exchange, and the Company accepted for cancellation, eligible options to purchase an aggregate of 3,666,600 shares of the Company’s common stock, representing approximately 93.5 % of the total shares of common stock underlying the eligible options. On July 19, 2022, immediately following the expiration of the Exchange Offer, the Company granted new options to purchase 3,666,600 shares of common stock, pursuant to the terms of the Exchange Offer and the 2018 Plan. The exercise price of the new options granted pursuant to the Exchange Offer was $ 13.31 per share, which was the closing price of the common stock on the Nasdaq Global Select Market on the grant date of the new options. The new options are subject to a new three-year vesting schedule, vesting in equal annual installments over the vesting term. Each new option has a maximum term of seven years .
The exchange of stock options was treated as a modification for accounting purposes. The incremental expense of $ 5.2 million for the modified options was calculated using a lattice option pricing model. The incremental expense and the unamortized expense remaining on the exchanged options as of the modification date are being recognized over the new three-year service period.
Stock Option Activity
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The following summarizes option activity under the 2018 Plan:
Outstanding Options
Number of
Options
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contract
Term
Aggregate
Intrinsic
Value
(in years) (in thousands)
Balance as of December 31, 2024 24,184,884 $ 8.14 7.53 $ 1
Options granted 9,731,523 1.83 8.28
Options exercised — — —
Options forfeited ( 2,778,330 ) 6.51
Balance as of December 31, 2025 31,138,077 $ 6.31 7.17 $ 97
Exercisable as of December 31, 2025 20,293,071 $ 8.54 6.26 $ 6
Vested and expected to vest as of December 31, 2025 31,138,077 $ 6.31 7.17 $ 97
The aggregate intrinsic values of options exercised, outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on the Nasdaq Global Select Market on December 31, 2025. The aggregate intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was zero and $ 0.6 million, respectively. During the years ended December 31, 2025 and 2024, the estimated weighted-average grant-date fair value of employee options granted was $ 1.26 per share and $ 2.05 per share, respectively. As of December 31, 2025 and 2024, there was $ 21.1 million and $ 35.5 million, respectively, of unrecognized stock-based compensation related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.46 years and 1.85 years, respectively.
The fair value of employee, consultant and director stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:
Year Ended December 31,
2025 2024
Fair value of common stock $ 0.76 - $ 1.99
$ 1.40 - $ 3.32
Expected term in years 5.15 - 6.08
5.02 - 6.25
Expected volatility 73.66 % - 80.17 %
72.85 % - 74.09 %
Expected risk-free interest rate 3.73 % - 4.40 %
3.42 % - 4.32 %
Expected dividend 0 % 0 %
The Black-Scholes option-pricing model and the lattice option pricing model require the use of subjective assumptions which determine the fair value of stock-based awards. These assumptions include:
Fair value of common stock — For all grants subsequent to the Company’s IPO in October 2018, the fair value of common stock was determined by taking the closing price per share of common stock per Nasdaq.
Expected term — The expected term represents the period that stock-based awards are expected to be outstanding. The expected term for option grants is determined using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the stock-based awards.
Expected volatility — Prior to November 2024, the Company used an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have sufficient trading history for its common stock. For grants subsequent to October 2024, the Company uses an average historical stock price volatility of its common stock as it accumulated sufficient historical stock price data.
Risk-free interest rate —The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.
Expected dividend —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero .
Expected exercise barrier - The modified options are assumed to be exercised upon vesting and when the ratio of stock market price to exercise price reaches $ 2.57 , or expiration, whichever is earlier.
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Restricted Stock Unit Activity
The following summarizes restricted stock unit activity under the 2018 Plan:
Outstanding Restricted Stock Units
Restricted Stock Units Weighted- Average Grant Date Fair Value per Share Weighted Average Remaining Vesting Life Aggregate Intrinsic Value
(in years) (in thousands)
Balance as of December 31, 2024 13,343,793 $ 4.87 1.58 $ 28,422
Granted 10,147,144 1.78 4.36
Released ( 3,123,760 ) 6.13
Forfeited ( 3,838,951 ) 3.79
Balance as of December 31, 2025 16,528,226 $ 2.99 2.39 $ 22,644
Expected to vest as of December 31, 2025 16,528,226 $ 2.99 2.39 $ 22,644
Vested and unreleased as of December 31, 2025 238,500 $ 1.29 $ 327
For the year ended December 31, 2025, the Company granted 2,433,312 performance-based restricted stock units to certain executive officers and other employees pursuant to the 2018 Plan. These awards are subject to the holders' continuous service to the Company through each applicable vesting event. Through December 31, 2025, the Company believes that the achievement of the requisite performance conditions for these awards are not probable. As a result, no compensation expense has been recognized related to the performance-based restricted stock units in the year ended December 31, 2025. The Company recognized $ 0.1 million and $ 2.4 million in stock-based compensation expense related to the restricted units with a market condition for the years ended December 31, 2025 and 2024, respectively.
For the years ended December 31, 2025 and 2024, total fair value of vested restricted stock units, performance based restricted stock units and restricted stock units with a market condition as of their grant dates was $ 19.5 million and $ 20.6 million, respectively. As of December 31, 2025 and 2024, there was $ 19.4 million and $ 33.7 million, respectively, of unrecognized stock-based compensation which is expected to be recognized over a weighted average period of 2.39 years and 2.10 years, respectively.
Awards granted to members of the Company’s Board of Directors includes restricted stock units. Effective April 11, 2025, non-employee directors may elect to defer receipt of their vested restricted stock units. Directors who make a deferral election will have no rights as stockholders of the Company with respect to amounts deferred. The restricted stock units deferred will be released on the 30th day following the director's separation from service or on the date of a Section 409A Change of Control, which ever is earlier. Certain members of the Board of Directors have elected to defer receipt of their awards and the total number of vested and unreleased deferred restricted stock units held by the non-employee directors was 238,500 as of December 31, 2025.
Employee Stock Purchase Plan
In October 2018, the stockholders approved the 2018 Employee Stock Purchase Plan (ESPP), which initially reserved 1,160,000 shares of the Company's common stock for employee purchases under terms and provisions established by the Board of Directors. Effective January 1, 2025 and 2024, the number of shares authorized under the ESPP for employee purchases increased by 2,122,105 and 1,686,422 shares, respectively. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. Under the current offering adopted pursuant to the ESPP, each offering period is approximately 24 months, which is generally divided into four purchase periods of approximately six months .
Employees are eligible to participate if they are employed by the Company. Under the ESPP, employees may purchase common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value of common stock on the first trading day of each offering period or on the purchase date. The ESPP provides for consecutive, overlapping 24 -month offering periods. The offering periods are scheduled to start on the first trading day on or after March 16 or September 16 of each year, except for the first offering period which commenced on October 11, 2018, the first trading day after the effective date of the Company’s registration statement. Contributions under the ESPP are limited to a maximum of 15 % of an employee’s eligible compensation.
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The fair values of the rights granted under the ESPP were calculated using the following assumptions:
Year ended December 31,
2025 2024
Expected term (in years) 0.50 – 2.00
0.50 – 2.00
Volatility 80.44 % – 106.07 %
76.16 % – 88.69 %
Risk-free interest rate 3.51 % – 4.20 %
3.49 % – 5.25 %
Dividend yield 0 % 0 %
Stock-based compensation expense
For the years ended December 31, 2025 and 2024, the following table presents stock-based compensation expense related to stock options, restricted stock units, and employee stock purchase plans that was recorded as research and development and general and administrative expense in its consolidated statements of operations and comprehensive loss:
Year Ended December 31,
2025 2024
(in thousands)
Research and development $ 12,908 $ 20,421
General and administrative 24,733 31,322
Total stock-based compensation $ 37,641 $ 51,743
Note 10. Related Party Transactions
Collaboration Revenue and Equity Method Investment
In December 2020, the Company entered into the License Agreement with Overland Therapeutics, a corporate joint venture entity and related party (refer to Note 6). The License Agreement was subsequently assigned to a wholly owned subsidiary of Allogene Overland, Allogene Overland HK. On April 1, 2022, Allogene Overland HK assigned the License Agreement to Allogene Overland Biopharm (PRC) Co., Limited. On May 24, 2024, the License Agreement was amended.
Consulting Agreements
In August 2018, the Company entered into a consulting agreement with Bellco Capital LLC (Bellco). Pursuant to the consulting agreement, Bellco provides certain services for the Company, which are performed by Dr. Belldegrun, the Company's executive chair, and inc lude without limitation, providing advice and analysis with respect to the Company’s business, business strategy and potential opportunities in the field of allogeneic CAR T cell therapy and any other aspect of the CAR T cell therapy business as the Company may agree. In consideration for these services, the Company paid Bellco $ 38,583 per month in arrears commencing January 2021 and $ 40,217 per month in arrears commencing January 2022. The Company may also, at its discretion, pay Bellco an annual performance award in an amount up to 60 % of the aggregate compensation payable to Bellco in a calendar year. The Company also reimburses Bellco for out of pocket expenses incurred in performing the services. The costs incurred for services provided, bonus and out-of-pocket expenses incurred under this consulting agreement were $ 0.8 million and $ 0.7 million for the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2025 and 2024, the amounts due to Bellco of $ 0.3 million and $ 0.2 million, respectively, were recorded in accrued and other current liabilities in the accompanying consolidated balance sheets.
Sublease Agreements
In December 2018, the Company entered into a sublease with Bellco Capital LLC (Bellco) for 1,293 square feet of office space in Los Angeles, California for a three year term. On April 1, 2020, Bellco assumed all rights, title, interests and obligations under the sublease from Bellco. In November 2021, the sublease was extended to June 30, 2025. The sublease was amended, effective in July 2022, to move to a nearby location, with office space of 737 square feet. The Company’s executive chairman, Arie Belldegrun, M.D., is a trustee of the Belldegrun Family Trust, which controls Bellco. In 2023, the Company exercised its early termination right under the sublease agreement and the sublease was terminated effective December 31, 2023.
In February 2023, the Company entered into a new subleased agreement with Bellco for 2,218 square feet of office space in Los Angeles, California, from Bellco. The sublease term is 115 months, subject to certain early termination rights. The sublease commenced on January 1, 2024. The total right of use asset and associated liability recorded related to this related
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party lease was $ 2.0 million and $ 2.3 million, respectively, as of December 31, 2025. The Company paid approximately $ 0.2 million towards its share of the security deposit. For the year ended December 31, 2025, the Company recorded $ 0.4 million of rent expense related to this lease.
Note 11. 401(k) Plan
In April 2018, the Company began to sponsor a 401(k) retirement savings plan for the benefit of its employees. All employees are eligible to participate, provided they meet the requirements of the plan. The Company made contributions to the plan for eligible participants, and recorded contribution expenses of $ 1.6 million and $ 1.9 million for the years ended December 31, 2025 and 2024, respectively.
Note 12. Income Taxes
The Company has incurred net operating losses for all the periods presented. The Company has not recorded any benefit of such net operating loss carryforwards in the accompanying consolidated financial statements.
Income (loss) before provision for income taxes for each of the fiscal periods presented is summarized as follows:
Year Ended December 31,
2025 2024
(in thousands)
Domestic $ ( 190,886 ) $ ( 257,147 )
Foreign — —
Loss before provision for income taxes $ ( 190,886 ) $ ( 257,147 )
The Company's income tax expense consists of the following:
Year Ended December 31,
2025 2024
(in thousands)
Current:
Federal $ — $ —
State — —
— —
Deferred:
Federal — 443
State — —
— 443
Provision (benefit) for income taxes $ — $ 443
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Reconciliation of the benefit for income taxes, upon retrospective adoption of ASU 2023-09, calculated at the statutory rate to the Company's benefit for income taxes is as follows:
Year Ended December 31,
(in thousands) 2025 2024
Amount Percentage Amount Percentage
Tax benefit at federal statutory rate $ ( 40,086 ) 21.00 % $ ( 54,001 ) 21.00 %
Research tax credits ( 1,783 ) 0.93 % ( 2,793 ) 1.08 %
Change in valuation allowance 35,414 ( 18.55 ) % 47,172 ( 18.34 ) %
Nontaxable or nondeductible items:
Stock-based compensation 6,280 ( 3.29 ) % 9,413 ( 3.66 ) %
Other 175 ( 0.09 ) % 209 ( 0.08 ) %
Other adjustments — — % 443 ( 0.17 ) %
Benefit for income taxes $ — — % $ 443 ( 0.17 ) %
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.
Significant components of the Company's deferred tax assets and liabilities are as follows:
Year Ended December 31,
2025 2024
(in thousands)
Deferred tax assets:
Net operating loss carryforwards $ 315,470 $ 243,798
Tax credit carryforwards 37,726 37,108
Intangibles 10,099 10,757
Accrued expenses 2,682 2,710
Lease liabilities 23,297 22,085
Stock based compensation 25,952 21,871
Investments 23,429 26,009
Capitalized Research & Development 63,696 89,090
Other 10,577 2,396
Total deferred tax assets 512,928 455,824
Deferred tax liabilities:
Right of use leased assets ( 11,162 ) ( 11,000 )
Other — ( 36 )
Total deferred tax liabilities ( 11,162 ) ( 11,036 )
Net deferred tax assets 501,766 444,788
Valuation allowance ( 501,766 ) ( 444,788 )
Net deferred tax assets $ — $ —
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Due to the lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $ 57.0 million and $ 45.2 million during the years ended December 31, 2025 and 2024, respectively.
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The following table sets forth the Company's federal and state NOL carryforwards and federal research and development tax credits as of December 31, 2025:
Amount Expiration
(in thousands)
Net operating losses, federal $ 1,121,330 Indefinite
Net operating losses, federal $ 2 2037
Net operating losses, state $ 1,146,511 2037-2045
Tax credits, federal $ 34,011 2038-2045
Tax credits, state $ 26,538 Indefinite
California Competes Tax credits, state $ 6,000 2026 -2027
Current federal and California tax laws include substantial restrictions on the utilization of NOLs and tax credit carryforwards in the event of an ownership change of a corporation. Accordingly, the Company's ability to utilize NOLs and tax credit carryforwards may be limited as a result of such ownership changes. Such a limitation could result in the expiration of carryforwards before they are utilized.
Effective June 27, 2024 California's Senate Bill 167 (SB 167) introduced pivotal tax changes, including the suspension of NOLs for businesses earning over $1 million and a cap on business tax credits at $5 million. In addition, on June 29, 2024 Senate Bill 175 (SB 175) introduced an allowance for refunds on a range of tax credits—including, for the first time, the R&D credit. SB 167, which contains several tax measures, includes provisions that retroactively suspend California net operating losses (NOL) and limit the use of business tax credits for tax years beginning on and after January 1, 2024, and before January 1, 2027. SB 175 states that for taxable years beginning on or after January 1, 2024, and before January 1, 2027, taxpayers can receive a refundable credit equal to 20% of the qualified credits that could have been taken if the $5 million limitation under SB 167 had not been imposed. The Company evaluated the impact of SB 167 and determined that the legislation did not materially impact the Company’s income tax provision for the year ended December 31, 2025.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law, extending key provisions of the 2017 Tax Cuts and Jobs Act. Included in the legislation are provisions that allow for the immediate expensing of domestic research and development expenses and certain capital expenditures. The Company will continue to evaluate the impact of the new legislation, however there has been no material impact on the Company’s financial statements for the year ended December 31, 2025.
It is the Company’s policy to include penalties and interest expense related to income taxes as a component of interest and other income, net, as necessary. As of December 31, 2025 and 2024, there were no accrued interest and penalties related to uncertain tax positions. The reversal of the uncertain tax benefits would not affect the effective tax rate to the extent that the Company continues to maintain a full valuation allowance against its deferred tax assets. Unrecognized tax benefits may change during the next 12 months for items that arise in the ordinary course of business.
The Company applied the provisions of ASC 740 to account for uncertain income tax positions . A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 31,
2025 2024
(in thousands)
Balance at beginning of the year: $ 22,015 $ 18,895
Additions based on tax positions related to current year 2,205 3,120
Additions to tax position of prior year — —
Reductions to tax position of prior years — —
Lapse of the applicable statute of limitations — —
Balance at end of the year $ 24,220 $ 22,015
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Note 13. Net Loss and Net Loss Per Share
The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share data):
Year Ended December 31,
2025 2024
Numerator:
Net loss $ ( 190,886 ) $ ( 257,590 )
Denominator:
Weighted average common shares outstanding 220,622,669 194,811,756
Net loss per share, basic and diluted $ ( 0.87 ) $ ( 1.32 )
Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive securities would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:
Year Ended December 31,
2025 2024
Stock options to purchase common stock 31,138,077 24,184,884
Restricted stock units outstanding (excluding vested but unreleased shares, which are included in weighted-average common shares outstanding ) 16,289,726 13,343,793
Expected shares purchased under Employee Stock Purchase Plan 1,548,757 1,913,748
Total 48,976,560 39,442,425
Note 14. Segment Reporting
The Company has one reportable segment related to developing and commercializing genetically engineered allogeneic T cell product candidates for the treatment of cancer and autoimmune diseases. The segment derives its current revenues from research and development collaborations.
The CEO, as the chief operating decision maker, manages and allocates resources for the Company’s operations at a consolidated company basis by assessing how to best deploy available resources across functions and research and development projects. The CEO uses consolidated, single-segment financial information for purposes of evaluating performance, planning and forecasting future period financial results, and allocating resources.
The table below is the summary of the segment profit or loss information, including the significant segment expenses (in thousands):
Years Ended December 31,
2025 2024
Collaboration revenue - related party $ — $ 22
Significant operating expenses:
Cema-cel 23,374 36,369
All other development costs 20,340 23,937
Payroll 62,905 70,862
Facilities & IT-related spend 28,408 31,727
Supporting external spend 20,698 27,337
Other operating expenses 53,590 82,989
Total operating expenses 209,315 273,221
Other income (Expense), net 18,429 16,052
Loss before income taxes ( 190,886 ) ( 257,147 )
Benefit (expense) from income taxes — ( 443 )
Net loss ( 190,886 ) ( 257,590 )
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Cema-cel includes external development and clinical trial costs related to ALPHA3, ALPHA2, CLL, and ALLO-501 programs. All other development costs include external development and clinical trial costs related to ALLO-329, ALLO-316, ALLO-647, BCMA, and other programs. Supporting external spend includes professional services, research and development lab supplies and other supporting activities related to the research and development and other business operations. Other operating expenses are primarily related to non-cash expenses such as stock-based compensation, impairment, and depreciation and amortization. The measure of segment assets is reported on the consolidated balance sheets as total assets. Primarily, all revenue generated and all long-lived assets are maintained in the United States.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.