What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-05-05 compared with 2020-11-04 · 103 added, 92 removed, 146 unchanged (57% of the section changed)

10 unchanged sentences

We are developing a pipeline of off-the-shelf T cell product candidates that are designed to target and kill cancer cells.

Our 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.

Our 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.

We believe this key difference will enable us to deliver readily available treatments faster, more reliably, at greater scale, and to more patients.

We have a deep pipeline of allogeneic chimeric antigen receptor (CAR) T cell product candidates targeting multiple promising antigens in a host of hematological malignancies and solid tumors.

Pursuant to the Exclusive Collaboration and License Agreement with Servier (Servier Agreement), we have exclusive rights to UCART19, ALLO-501 and ALLO-501A, CAR T cell product candidates targeting CD19, in the United States while Servier retains exclusive rights for all other countries.

UCART19, ALLO-501 and ALLO-501A use Cellectis technologies under which Servier holds an exclusive worldwide license from Cellectis.

Servier sponsored two Phase 1 clinical trials of UCART19 in patients with relapsed/refractory (R/R) B-cell precursor acute lymphoblastic leukemia (ALL), one for adult patients (the CALM trial) and one for pediatric patients (the PALL trial).

As the Servier-sponsored trials have been completed or are near completion, Servier has determined that no new patients will be enrolled in the PALL study.

All patients from both studies will continue the long-term follow-up as planned.

We and Servier are reviewing our development strategy for ALL.

Pursuant to the Exclusive Collaboration and License Agreement with Servier (Servier Agreement), we have exclusive rights to ALLO-501 and ALLO-501A, CAR T cell product candidates targeting CD19, in the United States, while Servier retains exclusive rights for these product candidates for all other countries.

ALLO-501 and ALLO-501A use Cellectis S.A.

(Cellectis) technologies under which Servier holds an exclusive worldwide license from Cellectis.

We are sponsoring a Phase 1 clinical trial (the ALPHA trial) of ALLO-501 in patients with R/R non-Hodgkin lymphoma (NHL).

We reported initial data from the ALPHA trial at the American Society of Clinical Oncology annual meeting on May 29, 2020.

We are continuing the ALPHA trial to further explore and optimize the lymphodepletion regimen and treatment.

We are also progressing the development of the second-generation version of ALLO-501, known as ALLO-501A.

We have removed rituximab recognition domains in ALLO-501A, which we believe will potentially facilitate treatment of more patients, as rituximab is a typical part of a treatment regimen for a patient with NHL.

We initiated a Phase 1/2 clinical trial for ALLO-501A (the ALPHA2 trial) in the second quarter of 2020 and plan to progress to the Phase 2 portion of the trial in 2021.

We initiated a Phase 1 clinical trial (the UNIVERSAL trial) of ALLO-715, an allogeneic CAR T cell product candidate targeting B-cell maturation antigen (BCMA), in adult patients with R/R multiple myeloma in the third quarter of 2019.

We expect to report initial data from the UNIVERSAL trial in the fourth quarter of 2020.

In addition, in January 2020, we entered into a clinical trial collaboration agreement with SpringWorks Therapeutics, Inc.

We initiated a Phase 1/2 clinical trial for ALLO-501A (the ALPHA2 trial) in the second quarter of 2020.

We plan to report updated data from the ALPHA trial and initial data from the ALPHA2 trial on May 19, 2021.

We also plan to continue to progress the ALPHA and ALPHA2 trials and, subject to data, we plan to progress to the Phase 2 portion of the ALPHA2 trial by the end of 2021.

We are progressing three programs targeting B-cell maturation antigen (BCMA) for the treatment of multiple myeloma.

We initiated a Phase 1 clinical trial (the UNIVERSAL trial) of ALLO-715 in adult patients with R/R multiple myeloma in the third quarter of 2019 and presented initial clinical data at the American Society of Hematology annual meeting in December 2020.

Based on preliminary clinical data, the U.S.

Food and Drug Administration (FDA) granted Regenerative Medicine Advanced Therapy (RMAT) designation for ALLO-715 for the treatment of adult patients with R/R multiple myeloma after three or more prior lines of therapies.

RMAT does not change the standards for approval but may expedite the development or approval process.

In January 2020, we entered into a clinical trial collaboration agreement with SpringWorks

Therapeutics, Inc.

(SpringWorks) to evaluate ALLO-715 in combination with SpringWorks’ investigational gamma secretase inhibitor, nirogacestat, in patients with R/R multiple myeloma.

We plan to file an investigational new drug application by the end of 2020 to initiate this combination trial.

We are continuing to enroll patients in the ALPHA trial, ALPHA2 trial and UNIVERSAL trial, however, enrollment of new patients in all three trials and the ability to conduct patient follow-up is being adversely impacted by the COVID-19 pandemic.

We have also limited the number of staff working onsite at our headquarters.

Construction of our manufacturing facility in Newark, California, was interrupted for a period of time and may in the future be interrupted due to the COVID-19 pandemic.

In the first quarter of 2021, we initiated this combination trial as part of the UNIVERSAL trial.

Finally, we are advancing ALLO-605, an allogeneic CAR T cell product candidate targeting BCMA and our first product candidate to incorporate our TurboCAR technology.

The FDA recently cleared our investigational new drug application (IND) to initiate a Phase 1 clinical trial (the IGNITE trial) of ALLO-605.

We expect to initiate the IGNITE trial in mid-2021.

We recently initiated a Phase 1 clinical trial (the TRAVERSE trial) of ALLO-316, an allogeneic CAR T cell product candidate targeting CD70, in adult patients with advanced or metastatic clear cell renal cell carcinoma (ccRCC).

We are continuing to enroll patients in the ALPHA trial, ALPHA2 trial, UNIVERSAL trial and TRAVERSE trial, however, enrollment of new patients in our trials and the ability to conduct patient follow-up is being adversely impacted by the COVID-19 pandemic.

We have also limited the number of staff working at our facilities.

The exact timing of delays and overall impact of the COVID-19 pandemic to our business, preclinical studies and clinical trials is currently unknown, and we are monitoring the pandemic as it continues to rapidly evolve.

Since inception, we have had significant operating losses.

Our net losses were $66.2 million and $181.7 million for the three and nine months ended September 30, 2020.

As of September 30, 2020, we had an accumulated deficit of $577.8 million.

As of September 30, 2020, we had $1.0 billion in cash and cash equivalents and investments.

We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase.

Our net losses were $33.0 million for the three months ended March 31, 2021.

As of March 31, 2021, we had an accumulated deficit of $679.4 million.

As of March 31, 2021, we had $964.2 million in cash and cash equivalents and investments.

We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses and general and administrative expenses will continue to increase.

Our Research and Development and License Agreements

3 unchanged sentences

Research Collaboration and License Agreement with Cellectis

In June 2014, Pfizer entered into a Research Collaboration and License Agreement (the Original Cellectis Agreement) with Cellectis S.A.

In June 2014, Pfizer entered into a Research Collaboration and License Agreement with Cellectis.

In April 2018, Pfizer assigned the agreement to us pursuant to the Pfizer Agreement.

On March 8, 2019, we entered into a License Agreement (the Cellectis Agreement) with Cellectis.

In connection with the execution of the Cellectis Agreement, on March 8, 2019, we and Cellectis also entered into a letter agreement, pursuant to which we 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.

The material rights and obligations of the parties under the Cellectis Agreement are otherwise consistent with the material rights and obligations of the parties under the Original Cellectis Agreement.

See Note 6 to our condensed consolidated financial statements included elsewhere in this report for further description of the Cellectis Agreement.

In March 2019, we terminated the agreement with Cellectis and entered into a new license agreement with Cellectis.

See Note 6 to our condensed consolidated financial statements included elsewhere in this report for further descriptions of the prior agreement with Cellectis and the new license agreement with Cellectis.

Exclusive License and Collaboration Agreement with Servier

In October 2015, Pfizer entered into the Servier Agreement to develop, manufacture and commercialize certain allogeneic anti-CD19 CAR products, including UCART19, in the United States with the option to obtain the rights over additional allogeneic anti-CD19 CAR product candidates and for allogeneic CAR T cell product candidates directed against one additional target.

In October 2015, Pfizer entered into the Servier Agreement to develop, manufacture and commercialize certain allogeneic anti-CD19 CAR products, including UCART19, in the United States with the option to obtain the rights over certain additional allogeneic anti-CD19 CAR product candidates and for allogeneic CAR T cell product candidates directed against one additional target.

In April 2018, Pfizer assigned the agreement to us pursuant to the Pfizer Agreement.

8 unchanged sentences

In addition, we made a $5.0 million investment in Notch’s series seed convertible preferred stock, resulting in us having a 25% ownership interest in Notch’s outstanding capital stock on a fully diluted basis immediately following the investment.

In February 2021, we made an additional $15.9 million investment in Notch's Series A preferred stock.

Immediately following this transaction, our share in Notch was 20.7% on a voting interest basis.

See Note 6 to our condensed consolidated financial statements included elsewhere in this report for further description of the Notch Agreement.

Transition Services Agreement

In connection with the closing of the Pfizer Agreement, we entered into a Transition Services Agreement (TSA) with Pfizer in April 2018, pursuant to which we obtained from Pfizer certain (i) research and development services, including services relating to testing, studies, and clinical trials, project management services, laboratory equipment and operations services, animal care services, data storage services and regulatory strategy services, and (ii) general and administrative services, including business technology services, compliance services, finance/accounting services, and procurement, manufacturing and supply chain services, with respect to the assets that we purchased from Pfizer.

Under the TSA, Pfizer also

provided us with certain facilities and facility management services.

The services were provided by certain employees of Pfizer as independent contractors of Allogene.

We believe that it was helpful for Pfizer to provide such services to us under the TSA to help facilitate the efficient operation of our business after the asset purchase.

Pfizer began providing the services in May 2018 and the TSA was terminated in September 2019.

Strategic Alliance with The University of Texas MD Anderson Cancer Center

On October 6, 2020, we 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.

See Note 6 to our consolidated financial statements included elsewhere in this report for further description of the agreement with MD Anderson.

License Agreement with Allogene Overland Biopharm (CY) Limited

On December 14, 2020, we entered into a License Agreement with Allogene Overland Biopharm (CY) Limited (Allogene Overland), a joint venture established by us and Overland Pharmaceuticals (CY) Inc.

(Overland), pursuant to a Share Purchase Agreement, dated December 14, 2020, 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, we acquired Seed Preferred Shares in Allogene Overland representing 49% of Allogene Overland's outstanding stock as partial consideration for the License Agreement, and Overland acquired Seed Preferred Shares representing 51% of Allogene Overland's outstanding stock for $117.0 million in upfront and certain quarterly cash payments, to support operations of Allogene Overland.

As of March 31, 2021, Allogene and Overland are the sole equity holders in Allogene Overland.

The Company received $40 million from Allogene Overland as partial consideration for the License Agreement .

Pursuant to the License Agreement, we 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, in the JV Territory.

As consideration, we 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.

Promises that we concluded were distinct performance obligations in the License Agreement included:

(1) the license of intellectual property and delivery of know-how, (2) the manufacturing license, related know-how and support, (3) if and when available know-how developed in future periods, and (4) participation in the joint steering committee.

In order to determine the transaction price, we evaluated all the payments to be received during the duration of the contract.

Fixed consideration exists in the form of the upfront payment.

Regulatory milestones and royalties were considered variable consideration.

We constrain the estimated variable consideration when we assess 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.

We re-evaluate 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 shares of Series Seed Preferred Stock were accounted for as part of our joint venture and equity method accounting upon formation of the joint venture, and as such, were excluded from the transaction price.

We determined that the initial transaction price consists of the upfront payment of $40.0 million.

The allocation of the transaction price is performed based on standalone selling prices, which are based on estimated amounts that we would charge for a performance obligation if it were sold separately .

The transaction price allocated to the license of intellectual property and delivery of know-how will be recognized upon grant of license and delivery of know-how.

The transaction price allocated to (i) the manufacturing license, related know-how and support services, (ii) if and when available know-how developed in future periods, and (iii) participation in the joint steering committee, 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.

We recognized $38.3 million of the upfront payment of $40.0 million as collaboration revenue for the quarter ending on March 31, 2021 .

See Note 6 to our condensed consolidated financial statements included elsewhere in this report for further description of the License Agreement and Share Purchase Agreement with Allogene Overland.

Components of Results of Operations

As of March 31, 2021, our revenue has been exclusively generated from our collaboration and license agreement with Allogene Overland Biopharm (CY) limited (Allogene Overland).

See Notes 2 and 6 to our financial statements appearing elsewhere in this Quarterly Report for more information related to our recognition of revenue and the Allogene Overland agreement.

In the future, we may generate revenue from a combination of product sales, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches.

We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees, milestone and other payments, and the amount and timing of payments that we receive upon the sale of our products, to the extent any are successfully commercialized.

If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval of them, our ability to generate future revenue, and our results of operations and financial position, will be materially adversely affected.

Operating Expenses

Research and Development

To date, our research and development expenses have related primarily to discovery efforts and preclinical and clinical development of our product candidates.

Research and development expenses for the three and nine months ended September 30, 2020 included costs associated with our clinical and preclinical stage pipeline candidates and research into newer technologies.

To date, our research and development expenses have related primarily to discovery efforts and preclinical and clinical development, and manufacturing of our product candidates.

Research and development expenses for the three months ended March 31, 2021 included costs associated with our clinical and preclinical stage pipeline candidates and research into newer

technologies.

The most significant research and development expenses for the year relate to costs incurred for the development of our most advanced product candidates and include:

9 unchanged sentences

Where contingent milestone payments are due to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are achieved.

We are required to reimburse Servier for 60% of the costs associated with the development of UCART19, including for the CALM and PALL clinical trials.

We are required to reimburse Servier for 60% of the costs associated with the prior development of UCART19, including for the CALM and PALL clinical trials of UCART19.

We accrue for costs incurred by monitoring the status of the CALM and PALL clinical trials and the invoices received from Servier.

31 unchanged sentences

Interest and Other Income, Net

Interest and other income, net consists of interest earned on our cash equivalents and investments, as well as investment gains and losses recognized during the period.

Interest and other income, net consists of interest earned on our cash, cash equivalents and investments, as well as investment gains and losses recognized during the period.

Other Expense

1 unchanged sentence

Results of Operations

Comparison of the Three Months Ended September 30, 2020 and 2019

The following sets forth our results of operations for the three months ended September 30, 2020 and 2019 (dollars in thousands):

Three Months Ended September 30, Change

Comparison of the Three Months Ended March 31, 2021 and 2020

The following sets forth our results of operations for the three months ended March 31, 2021 and 2020 (dollars in thousands):

Three Months Ended March 31, Change

2021 2020 $ %

Collaboration revenue - related party $ 38,345 $ — $ 38,345 —

Operating expenses:

10 unchanged sentences

Net Loss $ (33,015) $ (54,480) $ 21,465 (39) %

Research and Development Expenses

Research and development expenses were $51.4 million and $40.0 million for the three months ended September 30, 2020 and 2019, respectively.

The increase of $11.4 million was driven primarily by an increase in personnel related costs of $7.6 million, of which $3.3 million was increased stock-based compensation expense, an increase in external costs relating to the advancement of our product candidates of $3.8 million, and an increase in building rent and facilities costs of $0.5 million, offset by a decrease in travel related costs of $0.3 million due to the impact of the COVID-19 pandemic and a decrease in TSA expenses of $0.1 million.

General and Administrative Expenses

General and administrative expenses were $16.6 million and $15.0 million for the three months ended September 30, 2020 and 2019, respectively.

The net increase of $1.6 million was primarily due to an increase in personnel related costs of $1.8 million, of which $1.7 million was increased stock-based compensation expense, and an increase in building rent and facilities costs of $0.6 million, offset by a decrease in TSA expenses of $0.6 million.

Interest and Other Income, Net

Interest and other income, net was $2.0 million and $4.3 million for the three months ended September 30, 2020 and 2019, respectively.

The decrease of $2.3 million was due to lower interest earned on our cash, cash equivalents and investments.

Comparison of the Nine Months Ended September 30, 2020 and 2019

The following sets forth our results of operations for the nine months ended September 30, 2020 and 2019 (dollars in thousands):

Nine Months Ended September 30, Change

2020 2019 $ %

Operating expenses:

Research and development $ 140,759 $ 95,172 $ 45,587 48 %

General and administrative 48,122 42,261 5,861 14 %

Total operating expenses 188,881 137,433 51,448 37 %

Loss from operations (188,881) (137,433) (51,448) 37 %

Other income (expense), net:

Interest and other income, net 7,606 13,693 (6,087) (44) %

Other expenses (376) — (376) —

Total other income (expense), net 7,230 13,693 (6,463) (47) %

Loss before income taxes (181,651) (123,740) (57,911) 47 %

Benefit from income tax — 176 (176) (100) %

Net Loss $ (181,651) $ (123,564) $ (58,087) 47 %

Collaboration revenue - related party

Collaboration revenue was $38.3 million and zero for the three months ended March 31, 2021 and 2020, respectively.

The increase of $38.3 million was due to collaboration revenue recognized pursuant to the license agreement with Allogene Overland.

Research and Development Expenses

Research and development expenses were $140.8 million and $95.2 million for the nine months ended September 30, 2020 and 2019, respectively.

The increase of $45.6 million was driven primarily by an increase in personnel related costs of $23.9 million, of which $10.5 million was increased stock-based compensation expense, an increase in external costs relating to the advancement of our product candidates of $18.9 million, and an increase in building rent and facilities costs of $4.7 million, offset by a decrease in TSA expenses of $1.2 million and a decrease in travel related costs of $0.7 million due to the impact of the COVID-19 pandemic.

Research and development expenses were $55.2 million and $42.0 million for the three months ended March 31, 2021 and 2020, respectively.

The increase of $13.1 million was driven primarily by an increase in personnel related costs of $6.6 million, of which $1.3 million was increased stock-based compensation expense, an increase in external costs relating to the advancement of our product candidates of $5.1 million, and an increase in building rent and facilities costs of $1.7 million, offset by a decrease in travel related costs of $0.1 million due to the impact of the COVID-19 pandemic.

General and Administrative Expenses

General and administrative expenses were $48.1 million and $42.3 million for the nine months ended September 30, 2020 and 2019, respectively.

The net increase of $5.9 million was primarily due to an increase in personnel related costs of $7.2 million, of which $6.2 million was increased stock-based compensation expense, an increase in building rent and facilities costs of $2.0 million, and an increase in business and consulting fees of $0.9 million, offset by a decrease in TSA expenses of $3.9 million.

General and administrative expenses were $16.4 million and $15.6 million for the three months ended March 31, 2021 and 2020, respectively.

The net increase of $0.7 million was primarily due to an increase in personnel related costs of $1.8 million, of which $1.3 million was increased stock-based compensation expense, offset by a decrease in business expenses and professional service fees of $0.7 million and a decrease in building rent and facilities costs of $0.3 million.

Interest and Other Income, Net

Interest and other income, net was $7.6 million and $13.7 million for the nine months ended September 30, 2020 and 2019, respectively.

Interest and other income, net was $0.5 million and $3.3 million for the three months ended March 31, 2021 and 2020, respectively.

The decrease of $2.8 million was due to lower interest earned on our cash, cash equivalents and investments.

1 unchanged sentence

To date, we have incurred significant net losses and negative cash flows from operations.

As of September 30, 2020, we had $1.0 billion in cash and cash equivalents and investments.

As of March 31, 2021, we had $964.2 million in cash and cash equivalents and investments.

We anticipate that the aggregate of our current cash and cash equivalents and investments available for operations will enable us to maintain our operations for a period of at least one year from the date this Quarterly Report on Form 10-Q is filed with the SEC.

Our operations have been financed primarily by net proceeds from the sale and issuance of our convertible preferred stock, the issuance of convertible promissory notes and net proceeds from our IPO.

Our operations have been financed primarily by net proceeds from the sale and issuance of our convertible preferred stock, the issuance of convertible promissory notes, net proceeds from our IPO, our at-the-market (ATM) offerings, and our June 2020 underwritten public offering.

In connection with our IPO in 2018, we sold an aggregate of 20,700,000 shares of our common stock (inclusive of 2,700,000 shares of common stock pursuant to the over-allotment option granted to the underwriters) at a price of $18.00 per share and received approximately $343.3 million in net proceeds.

In November 2019, we entered into a sales agreement with Cowen and Company, LLC (Cowen) under which we may from time to time issue and sell shares of our common stock through Cowen in at-the-market (ATM) offerings for an aggregate offering price of up to $250.0 million.

From November 2019 to December 31, 2019, we sold an aggregate of 1,965,082 shares of common stock in ATM offerings resulting in net proceeds of $54.2 million, after deducting commissions and offering costs of $1.6 million.

In January 2020, we sold an aggregate of 570,839 shares of our common stock in ATM offerings resulting in net proceeds of $14.8 million.

In June 2020, we sold 13,457,447 shares of our common stock, which included 1,755,319 shares

sold pursuant to the full exercise of the underwriters' option to purchase additional shares, in an underwritten public offering at a price of $47.00 per share, which resulted in net proceeds of approximately $595.7 million after deducting the underwriting discounts and commissions and other expenses.

Capital Resources

In November 2019, we

entered into a sales agreement with Cowen and Company, LLC (Cowen) under which we may from time to time issue and sell shares of our common stock through Cowen in ATM offerings for an aggregate offering price of up to $250.0 million.

During the year ended December 31, 2020, we sold an aggregate of 848,663 shares of common stock in ATM offerings resulting in net proceeds of $26.2 million.

As of March 31, 2021, $167.3 million remains available for sale under the sales agreement with Cowen.

In June 2020, we sold 13,457,447 shares of our common stock, which included 1,755,319 shares sold pursuant to the full exercise of the underwriters' option to purchase additional shares, in an underwritten public offering at a price of $47.00 per share, which resulted in net proceeds of approximately $595.7 million after deducting the underwriting discounts and commissions and other expenses.

Our primary use of cash is to fund construction projects for our manufacturing facility and operating expenses, which consist primarily of clinical manufacturing and research and development expenditures related to our lead product candidates, other research efforts, and to a lesser extent, general and administrative expenditures.

8 unchanged sentences

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

5 unchanged sentences

Operating Activities

During the nine months ended September 30, 2020, cash used in operating activities of $105.1 million was attributable to a net loss of $181.7 million, partially offset by non-cash charges of $57.6 million and an increase of $18.9 million in our net operating assets and liabilities.

The non-cash charges consisted primarily of stock compensation expense of $48.8 million, depreciation of $5.6 million, net amortization and accretion on investment securities of $1.4 million and non-cash rent expense of $1.2 million.

The change in operating assets and liabilities was primarily due to a $16.2 million increase in accrued and other current liabilities, a $2.0 million decrease in other long-term assets, a $1.7 million increase in accounts payable, a $0.7 million decrease in prepaid expenses and other current assets, offset by a $1.6 million decrease in other long-term liabilities.

During the three months ended March 31, 2021, cash used in operating activities of $49.3 million was attributable to a net loss of $33.0 million, partially offset by non-cash charges of $23.0 million and an increase of $39.3 million in our net operating assets and liabilities.

The non-cash charges consisted primarily of stock compensation expense of $16.8 million, non-cash rent expense of $2.0 million, depreciation of $1.9 million and net amortization and accretion on investment securities of $1.9 million.

The change in operating assets and liabilities was primarily due to a $38.8 million decrease in deferred revenue, a $4.3 million decrease in accrued and other current liabilities, a $0.8 million increase in other long-term assets and a $0.3 million decrease in other long-term liabilities, offset by a $4.2 million increase in accounts payable and a $0.7 million decrease in prepaid expenses and other current assets.

Investing Activities

During the nine months ended September 30, 2020, net cash used in investing activities of $527.3 million was related to cash provided by investment maturities of $371.8 million and investment sales of $4.9 million, offset by cash used in purchases of investments of $855.4 million and purchases of property and equipment of $48.6 million.

During the three months ended March 31, 2021, net cash used in investing activities of $96.8 million was related to cash provided by investment maturities of $268.2 million, offset by cash used in purchases of investments of $149.1 million,

cash used in the purchase of stock in equity method investment of $15.9 million and cash used in the purchase of property and equipment of $6.5 million.

Financing Activities

During the nine months ended September 30, 2020, cash provided by financing activities of $620.6 million was related to net proceeds from the issuance of common stock through a public offering of $595.7 million, net proceeds from the issuance

of common stock through ATM transactions of $14.8 million, $7.2 million of cash provided by the issuance of common stock upon exercise of stock options and $2.8 million of cash provided by the sale of common stock through the employee stock purchase plan.

During the three months ended March 31, 2021, cash provided by financing activities of $6.0 million was related to $4.1 million of cash provided by the issuance of common stock upon exercise of stock options and $2.0 million of cash provided by the sale of common stock through the employee stock purchase plan.

Contractual Obligations and Commitments

For our contractual obligations and commitments as of December 31, 2019, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations” in our Annual Report.

For our contractual obligations and commitments as of December 31, 2020, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligation and Commitments” in our Annual Report.

Our commitments primarily consist of obligations under our agreements with Pfizer, Cellectis, Servier and Notch.

1 unchanged sentence

The payment obligations under the license agreements are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and we will be required to make development milestone payments and royalty payments in connection with the sale of products developed under these agreements.

As of September 30, 2020, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales.

As of March 31, 2021, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales.

For additional information regarding our agreements, see “—Our Research and Development and License Agreements” above.

1 unchanged sentence

These agreements generally provide for termination or cancellation, other than for costs already incurred.

As of September 30, 2020, the Company had non-cancellable purchase commitments of $ 3.9 million.

As of March 31, 2021, the Company had non-cancellable purchase commitments of $4.1 million.

In July 2020, we 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 our manufacturing facility in Newark, California.

The agreement has a term of 20 years and is expected to commence in the second quarter of 2021.

We are 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 us will result in a termination payment due of approximately $4.3 million.

In connection with the agreement, we maintain a letter of credit for the benefit of the service provider in the amount of $4.3 million.

We also have a Change in Control and Severance Plan that require the funding of specific payments, if certain events occur, such as a change of control and the termination of employment without cause.

10 unchanged sentences

Recent Accounting Pronouncements

Please refer to Note 2 to our unaudited condensed consolidated financial statements appearing under Part 1, Item 1 of this report for a discussion of new accounting standards updates that may impact us.

Please refer to Note 2 to our unaudited condensed consolidated financial statements appearing under Part 1, Item 1 of this report for a discussion of new accounting standards and updates that may impact us.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis