What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-02-23 · 150 added, 158 removed, 836 unchanged (27% of the section changed)

13 unchanged sentences

We have audited the accompanying consolidated balance sheets of Allogene Therapeutics, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, statements of stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021 and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued Clinical Trial Expenses

Description of the Matter

As discussed in Note 1 liabilities are recorded for estimated unpaid costs of research and development activities conducted by the Company and its third-party service providers, which include the conduct of preclinical and clinical studies, and contract manufacturing activities.

Accrued research and development expenses were $13.5 million as of December 31, 2021 and includes the estimated costs of accrued clinical trial expenses incurred but not yet invoiced under agreements with investigative clinical trial sites that conduct research and development activities on behalf of the Company (“Accrued Clinical Trial Expenses”).

The accrual for these Accrued Clinical Trial Expenses is determined after consideration of several factors, including estimates of the work completed.

Auditing these Accrued Clinical Trial Expenses was complex due to the required analysis of extensive data in determining the estimated unpaid expenses.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of relevant controls over the Company’s determination of Accrued Clinical Trial Expenses, including controls over the determination of significant assumptions and the completeness and accuracy of the data used in determining these accrued costs.

Our audit procedures included, among others, testing the accuracy and completeness of the inputs used in management’s analysis to determine Accrued Clinical Trial Expenses.

We verified that the accrued amounts were in accordance the terms and conditions of the underlying agreements and the information provided by third-party service providers.

We also evaluated management’s estimates of the progress of the clinical trials by making direct inquiries of the Company’s personnel that oversee the clinical trials.

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.

Redwood City, California

San Mateo, California

February 28, 2023

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Common stock, $ 0.001 par value:

200,000,000 authorized as of December 31, 2021 and December 31, 2020;

400,000,000 and 200,000,000 shares authorized as of December 31, 2022 and December 31, 2021, respectively;

144,438,304 and 142,623,065 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

1 unchanged sentence

Accumulated deficit ( 1,235,980 ) ( 903,348 )

Accumulated other comprehensive (loss) income ( 2,567 ) 268

Accumulated other comprehensive loss ( 9,926 ) ( 2,567 )

Total stockholders’ equity 665,870 916,406

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Total other income (expense), net 2,817 ( 1,213 ) 8,022

Loss before income taxes ( 257,005 ) ( 250,221 ) ( 184,925 )

Benefit from income taxes — — 331

Net loss ( 332,632 ) ( 257,005 ) ( 250,221 )

Other comprehensive income:

Net unrealized (loss) gain on available-for-sale investments, net of tax ( 2,835 ) ( 877 ) 839

Net unrealized loss on available-for-sale investments ( 7,359 ) ( 2,835 ) ( 877 )

Net comprehensive loss $ ( 339,991 ) $ ( 259,840 ) $ ( 251,098 )

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Balance — December 31, 2019 124,267,358 124 1,023,876 ( 396,122 ) 1,145 629,023

Issuance of common stock upon exercise of stock options and vesting of RSU's

711,623 1 2,958 — — 2,959

Issuance of common stock upon exercise of stock options and vesting of RSUs 1,725,695 2 8,813 — — 8,815

Vesting of early exercised common stock — — 2,840 — — 2,840

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Employee stock purchase plan 175,142 — 2,843 — — 2,843

Issuance of common stock from ATM offering, net of commissions and offering costs of $ 1.6 million

Issuance of common stock from public ATM offering, net of commissions and offering costs of $ 0.6 million

848,663 1 26,202 — — 26,203

Issuance of common stock from public offering, net of commissions and offering costs of $ 36.8 million

13,457,447 13 595,717 — — 595,730

Net loss — — — ( 250,221 ) — ( 250,221 )

Net unrealized gain on available-for-sale investments — — — — 839 839

Net unrealized loss on available-for-sale investments — — — — ( 877 ) ( 877 )

Balance — December 31, 2020 140,474,305 140 1,725,552 ( 646,343 ) 268 1,079,617

Issuance of common stock upon exercise of stock options and vesting of RSU's

1,725,695 2 8,813 — — 8,815

Issuance of common stock upon exercise of stock options and vesting of RSUs 1,961,554 2 8,344 — — 8,346

Vesting of early exercised common stock — — 3,848 — — 3,848

— — 2,840 — — 2,840

Stock-based compensation — — 80,818 — — 80,818

— — 65,261 — — 65,261

Employee stock purchase plan 187,206 — 3,617 — — 3,617

175,142 — 2,843 — — 2,843

Issuance of common stock from ATM offering, net of commissions and offering costs of $ 0.6 million

848,663 1 26,202 — — 26,203

Issuance of common stock from public offering, net of commissions and offering costs of $ 36.8 million

13,457,447 13 595,717 — — 595,730

— — — ( 250,221 ) — ( 250,221 )

Net loss — — — ( 257,005 ) — ( 257,005 )

Net unrealized loss on available-for-sale investments — — — — ( 2,835 ) ( 2,835 )

— — — — ( 877 ) ( 877 )

Balance — December 31, 2021 142,623,065 142 1,822,179 ( 903,348 ) ( 2,567 ) 916,406

25 unchanged sentences

Non-cash rent expense 2,433 2,611 3,955

Income tax benefit — — ( 331 )

Share of losses from equity method investments 5,188 3,444 1,154

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Capitalized cloud computing costs included in accounts payable and accrued and other current liabilities $ 415 $ — $ 584

Deferred offering costs included in accounts payable and accrued and other current liabilities $ — $ — $ 135

Supplemental disclosure:

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(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 therapies for the treatment of cancer.

Allogene is a clinical-stage immuno-oncology company pioneering the development of genetically engineered allogeneic T cell product candidates for the treatment of cancer.

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

Public Offerings

In November 2019, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), 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 for an aggregate offering price of up to $ 250.0 million.

In November 2019, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), as amended on November 2, 2022, 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 for an aggregate offering price of up to $ 250.0 million.

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 it pursuant to the sales agreement.

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.

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

As of December 31, 2022, $ 167.3 million remains available for sale under the sales agreement with Cowen.

In June 2020, the Company sold 13,457,447 shares of its 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 gross proceeds of approximately $ 632.5 million.

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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).

The Company cannot at this time predict the specific extent, duration, or full impact that the ongoing COVID-19 pandemic will have on its financial condition and operations, including ongoing and planned clinical trials.

The impact of the COVID-19 pandemic on the financial performance of the Company will depend on future developments, including the duration and spread of the pandemic and related governmental advisories and restrictions.

These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain.

If business conditions, financial markets and/or the overall economy are impacted for an extended period, the Company’s results may be adversely affected.

Basis of Presentation

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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, and certain accruals.

uncertainties, 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.

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As of December 31, 2022 and 2021, the Company has not experienced any 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, dependency on the clinical and 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 and untested manufacturing capabilities.

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.

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.

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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 judged to be other than temporary, if any, on available-for-sale securities are included in interest and other income, net.

Realized gains and

losses and declines in fair value judged 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.

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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 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.

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Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized.

A valuation allowance is provided when it is

more likely than not that some portion or all of a deferred tax asset will not be realized.

A valuation allowance is provided when it is 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.

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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 to estimate the fair value of its stock-based awards.

The Company uses the Black-Scholes option-pricing model or the lattice option pricing model to estimate the fair value of its stock-based awards.

Stock-based compensation is recognized using the straight-line method.

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If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset.

There were impairment losses related to equipment disposals of less than $ 0.1 million and $ 0.2 million for the years ended December 31, 2021 and 2019, respectively.

There were impairment losses related to equipment disposals of less than $ 0.1 million for each of the years ended December 31, 2022 and 2021, respectively.

There were no impairment losses related to equipment disposals for the year ended December 31, 2020.

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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 Topic 606.

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 determine the transaction price of the arrangement, which includes the assessment of the probability of achievement of future milestones and other potential consideration.

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.

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 and recognized as revenue when, or as, the performance obligation is satisfied.

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Recently Adopted Accounting Pronouncements

In January 2020, the FASB issued Accounting Standard Update No.

2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), which clarifies the interactions between Topics 321 and 323 in applying or discontinuing the equity method of accounting for investments.

This guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.

The Company adopted this standard on January 1, 2021 on a prospective basis.

Adoption of the new guidance had no significant impact on the Company's consolidated financial statements.

There have been no new accounting pronouncements issued or effective that are expected to have a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

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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, 2021 and 2020, securities with a fair value of zero and $ 5.0 million, respectively, were in a continuous net unrealized loss position for more than 12 months.

As of December 31, 2022 and 2021, securities with a fair value of $ 329.4 million and zero , respectively, 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.

As of December 31, 2021 and 2020, the Company recognized $ 1.9 million and $ 2.8 million of accrued interest receivable from available-for-sale securities within prepaid expenses and other current assets on the consolidated balance sheets.

As of December 31, 2022 and 2021, the Company recognized $ 1.8 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.

Balance Sheet Components

3 unchanged sentences

Laboratory equipment 32,601 29,666

Computers equipment and purchased software 4,373 4,088

Computer equipment and purchased software 4,533 4,373

Furniture and fixtures 4,012 3,920

4 unchanged sentences

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $ 14.3 million, $ 10.5 million and $ 7.4 million, respectively.

Disposals of property and equipment were less than $ 0.1 million, zero and $ 0.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Disposals of property and equipment were less than $ 0.1 million for the years ended December 31, 2022 and 2021.

Disposals of property and equipment were zero for the year ended December 31, 2020.

Accrued Liabilities

3 unchanged sentences

Accrued research and development expenses 11,790 13,521

Accrued property and equipment — 7,475

Accrued lease liability 6,002 3,200

Unvested shares liability 1,898 2,904

17 unchanged sentences

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, FLT3, DLL3 and CD70 (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 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, 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

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).

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All costs the Company incurred in connection with this agreement were recognized as research and development expenses in the consolidated statement of operations.

For the years ended December 31, 2021 and 2019, $ 10 million and $ 5 million, respectively, of costs were incurred related to the achievement of clinical development milestones under this agreement.

Zero clinical development milestones were achieved for the year ended December 31, 2020.

For the years ended December 31, 2022 and 2020, zero clinical development milestones were achieved.

For the year ended December 31, 2021, $ 10.0 million of costs were incurred related to the achievement of clinical development milestones under this agreement.

License and Collaboration Agreement with Servier

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In October 2019, the Company agreed to waive its rights to the one additional target.

Under the Servier Agreement, the Company has an exclusive license to develop, manufacture and commercialize UCART19 in the field of anti-tumor adoptive immunotherapy in the United States, with an exclusive option to obtain the same rights for additional product candidates in the United States and, if Servier does not elect to pursue development or commercialization of those product candidates in certain markets outside of the United States pursuant to its license, outside of the United States as well.

Under the Servier Agreement, the Company has an exclusive license to develop, manufacture and commercialize UCART19, ALLO-501 and ALLO-501A in the field of anti-tumor adoptive immunotherapy in the United States, with an exclusive option to obtain the same rights for additional product candidates in the United States and, if Servier does not elect to pursue development or commercialization of those product candidates in certain markets outside of the United States pursuant to its license, outside of the United States as well.

The Company is not required to make any additional payments to Servier to exercise an option.

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Unless earlier terminated in accordance with the Servier Agreement, the Servier Agreement will continue, on a licensed product-by-licensed product and country-by-country basis, until the Servier Royalty Term with respect to the sale of such licensed product in such country expires.

For the years ended December 31, 2021 and 2020, the Company recorded $ 17.1 million and $ 8.5 million, respectively, of net cost recoveries under the cost-sharing terms as a reduction to research and development expenses.

For the year ended December 31, 2019, the Company recorded $ 7.3 million of costs incurred under the collaboration agreement with Servier as research and development expenses.

For the years ended December 31, 2022, 2021 and 2020, the Company recorded $ 19.9 million, $ 17.1 million, and $ 8.5 million, respectively, of net cost recoveries under the cost-sharing terms of the Servier Agreement as a reduction to research and development expenses.

As of December 31, 2022 and 2021, amounts due from Servier of $ 1.5 million and $ 4.1 million, respectively, were recorded in other current assets in the accompanying consolidated balance sheets.

For the year ended December 31, 2022, $ 8.0 million in costs were incurred related to the achievement of a clinical development milestone under the Servier Agreement.

Zero clinical development milestones were achieved for the years ended December 31, 2021 and 2020.

On September 15, 2022, Servier sent a notice of discontinuation (Discontinuation) of its involvement in the development of all licensed products directed against CD19, including UCART19, ALLO-501 and ALLO-501A (collectively, CD19 Products), pursuant to the Servier Agreement.

Servier’s Discontinuation provides the Company with the right to elect a license to the CD19 Products outside of the United States (Ex-US Option) and does not otherwise affect the Company's current exclusive license for the development and commercialization of CD19 Products in the United States.

However, Servier has disputed the implications of the Discontinuation, namely whether development cost contributions continue and the timeframe during which the Company has the right to elect a license to CD19 Products outside of the United States.

In December 2022, Servier sent the Company a notice for material breach due to the Company's purported refusal to allow an audit of certain manufacturing costs under the cost share arrangement.

While the Company does not believe Servier has such an audit right, the Company is currently progressing such audit with Servier to recover outstanding manufacturing costs owed by Servier to the Company.

Research Collaboration and License Agreement with Notch Therapeutics

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For the year ended December 31, 2021, $ 0.3 million in costs were incurred related to the achievement of a research milestone under this agreement.

Zero milestones were achieved for the years ended December 31, 2022 and 2020.

Strategic Alliance with The University of Texas MD Anderson Cancer Center

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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.

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.

For the years ended December 31, 2021 and 2020, the Company recorded $ 1.0 million and zero , respectively, in collaboration costs as research and development expenses.

For the years ended December 31, 2022, 2021, and 2020, the Company recorded $ 1.4 million, $ 1.0 million, and zero , respectively, in collaboration costs under this agreement as research and development expenses.

Joint Venture and License Agreement with Allogene Overland Biopharm (CY) Limited

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Subsequent to entering into the License Agreement, Allogene Overland assigned the License Agreement to a wholly-owned subsidiary, Allogene Overland BioPharm (HK) Limited.

On April 1, 2022, Allogene Overland HK assigned the License Agreement to Allogene Overland Biopharm (PRC) Co., Limited.

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

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The Company 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 the Company would charge for a performance obligation if it were sold separately .

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 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.

4 unchanged sentences

Accordingly, for the years ended December 31, 2022 and 2021, the Company did not consolidate Allogene Overland because the Company determined that it was not the primary beneficiary.

For the years ended December 31, 2021 and 2020, the Company recognized $ 38.5 million and zero , respectively, of collaboration revenue, primarily related to the delivery of a performance obligation consisting of a license of intellectual property and related know-how which was delivered in the first quarter of 2021.

For the year ended December 31, 2020, the Company recorded the $ 40.0 million upfront cash payment received from Allogene Overland as deferred revenue, of which $ 39.0 million was current, on the consolidated balance sheet.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 0.2 million, $ 38.5 million and zero , respectively, of collaboration revenue, primarily related to the delivery of a performance obligation consisting of a license of intellectual property and related know-how which was delivered in the first quarter of 2021.

For the year ended December 31, 2022, the Company recorded $ 0.7 million of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

For the years ended December 31, 2021 and 2020, the Company recorded zero net cost recoveries.

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.

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 and is expected to make an additional $ 3.0 million investment in Antion's preferred stock upon achievement of an agreed milestone.

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.

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 year ended December 31, 2022, the Company recorded $ 5.0 million in research and development expenses related to the upfront payment and collaboration costs, of which $ 0.5 million is recorded in accrued and other liabilities as of December 31, 2022.

The Company's total equity investment in Antion was $ 3.0 million as of December 31, 2022 and is recognized in other long-term assets in the consolidated balance sheets.

Commitments and Contingencies

In August 2018, the Company entered into an operating lease agreement (HQ Lease) for new office and laboratory space which consists of approximately 68,000 square feet located in South San Francisco, California.

The lease term was 127 months beginning August 2018 through February 2029 with an option to extend the term for seven years which was not reasonably assured of exercise.

The Company has made certain tenant improvements, including the addition of laboratory space, and has received $ 5.0 million of tenant improvement allowances up to December 31, 2021.

The lease term was 127 months beginning August 2018 through February 2029 with an option to extend the term for 7 years which was not reasonably assured of exercise.

The Company has made certain tenant improvements, including the addition of laboratory space, and has

received $ 5.0 million of tenant improvement allowances up to December 31, 2022.

The rent payments began on March 1, 2019 after an abatement period.

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 is 120 months and is expected to commence in April 2022.

The rent payments for the expansion premises are expected to begin in August 2022 after an abatement period.

The lease term for the existing premises was also extended and the lease 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 new office and laboratory space which consists of 14,943 square feet located in South San Francisco, California.

The lease term was 124 months beginning November 2018 through February 2029, with an option to extend the term for another seven years which was not reasonably assured of exercise.

The lease term commenced in April 2022 and is for a period of 120 months.

The rent payments for the expansion premises began in August 2022 after an abatement period.

The lease term for the existing premises was also extended and the lease for both the existing and expansion premises will expire on March 31, 2032 with an option to extend the term for 8 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 was 124 months beginning November 2018 through February 2029, with an option to extend the term for another 7 years which was not reasonably assured of exercise.

The Company has made certain tenant improvements, including the upgrading of current office and laboratory space with a lease incentive allowance of $ 0.8 million.

1 unchanged sentence

In December 2021, the Company amended its lease agreement to extend the term of the lease to be co-terminus with the HQ Lease.

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.

The lease term will expire March 31, 2032 with an option to extend the term for 8 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 is 188 months beginning November 2020 through July 2036.

The lease term is 188 months and began in November 2020.

Upon certain conditions, the Company has two ten-year options to extend the lease, both of which are not reasonably assured of exercise.

The Company received $ 2.7 million of tenant improvement allowances.

The Company has received $ 3.0 million of tenant improvement allowances for costs related to the design and construction of certain Company improvements.

The Company maintains letters of credit for the benefit of landlords which is disclosed as restricted cash in the consolidated balance sheet.

Restricted cash related to letters of credit due to landlords was $ 6.0 million and $ 5.2 million as of December 31, 2021 and 2020, respectively.

Restricted cash related to letters of credit due to landlords was $ 6.0 million as of December 31, 2022 and 2021.

The balance sheet classification of our lease liabilities were as follows (in thousands):

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The components of lease costs for operating leases, which were recognized in operating expenses, were as follows (in thousands):

Twelve Months Ended December 31,

Year Ended December 31,

2022 2021 2020

2 unchanged sentences

Total lease costs $ 13,803 $ 9,142 $ 8,772

Cash paid for amounts included in the measurement of lease liabilities for the twelve months ended December 31, 2021 was $ 6.0 million and was included in net cash used in operating activities in our consolidated statements of cash flows.

The undiscounted future non-cancellable lease payments under our operating leases as of December 31, 2021 is as follows:

Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2022 was $ 9.5 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, 2022 is as follows:

Year ending December 31:

(in thousands)

2023 $ 12,049

2027 and thereafter 90,492

1 unchanged sentence

Present value adjustment ( 39,310 )

Tenant improvement allowance ( 325 )

Total $ 101,124

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, we use our estimated incremental borrowing rate.

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 6.20 %.

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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, we estimate the cost for a third-party to perform the restoration work.

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.

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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 is expected to commence in the first half of 2022.

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 disclosed as restricted cash in the consolidated balance sheets as of December 31, 2021 and 2020.

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, 2022 and 2021.

License Agreements for Intellectual Property

The Company has entered into certain license agreements for intellectual property which is used as part of our development and manufacturing processes.

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.

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Purchase Commitments

In the normal course of business, the Company enters into various purchase commitments with third-party contract manufacturers for the manufacture and processing of our product candidates and related raw materials, and we have entered into other contracts in the normal course of business with contract research organizations for clinical trials and other vendors for other services and products for operating purposes.

These agreements generally provide for termination or cancellation, other

than for costs already incurred.

In the normal course of business, the Company enters into various purchase commitments with third-party contract manufacturers for the manufacture and processing of our product candidates and related raw materials, and the Company has entered into other contracts in the normal course of business with contract research organizations for clinical trials and other vendors for other services and products for operating purposes.

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

As of December 31, 2022, the Company had non-cancellable purchase commitments of $ 0.3 million.

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Immediately following this transaction, the Company's share in Notch was 23.0 % on a voting interest basis.

The Company’s total equity investment in Notch as of December 31, 2021 and 2020 was $ 18.0 million and $ 3.7 million, respectively, based on the cost method of accounting.

The Company’s total equity investment in Notch as of December 31, 2022 and 2021 was $ 12.8 million and $ 18.0 million, respectively, and the Company accounted for the investment using the equity method of accounting.

During the years ended December 31, 2022, 2021 and 2020, the Company recognized its share of Notch's net loss under the other expenses caption within the consolidated statement of operations.

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The Company's total equity investment in Allogene Overland was zero as of December 31, 2022.

The Company’s equity investment in Allogene Overland as of December 31, 2021 had a zero carryover basis.

The Company’s equity investment in Allogene Overland as of December 31, 2022 and 2021 had a zero carryover basis.

Therefore, the Company did not account for its share of losses incurred by Allogene Overland.

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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, 2022 and 2021.

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 200,000,000 shares of common stock, of which 142,623,065 and 140,474,305 shares were issued and outstanding at December 31, 2021 and 2020, respectively.

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 144,438,304 and 142,623,065 shares were issued and outstanding at December 31, 2022 and 2021, 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.

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In June 2018, the Company adopted its 2018 Equity Incentive Plan (Prior 2018 Plan).

The 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.

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.

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As of December 31, 2022 and 2021, there were 12,932,861 and 15,801,927 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

7 unchanged sentences

Options forfeited ( 1,167,444 ) 19.88

Cancelled under the Option Exchange ( 3,666,600 ) $ 26.82

Granted under the Option Exchange 3,666,600 $ 13.31

Balance, December 31, 2022 17,569,575 $ 12.90 7.73 $ 6,658

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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, 2022.

During the years ended December 31, 2021 and 2020, the estimated weighted-average grant-date fair value of employee options granted was $ 18.79 per share and $ 13.79 per share, respectively.

The aggregate intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 1.9 million, $ 21.9 million and $ 36.3 million, respectively.

During the years ended December 31, 2022, 2021 and 2020, the estimated weighted-average grant-date fair value of employee options granted was $ 9.97 per share, $ 18.79 per share and $ 13.79 per share, respectively.

As of December 31, 2022 and 2021, there was $ 83.2 million and $ 75.5 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 years, 256 days and 2 years, 176 days , respectively.

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Expected dividend 0 % 0 %

The Black-Scholes option-pricing model requires the use of subjective assumptions which determine the fair value of stock-based awards.

The fair value of the new options granted under the Option Exchange program was estimated at the date of grant using a lattice option pricing model with the following assumptions:

expected volatility of 73.74 %, expected risk-free rate of 3.06 %, expected dividends of 0 % and expected exercise barrier of 2.57 .

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:

11 unchanged sentences

Therefore, the Company used an expected dividend yield of zero .

For the years ended December 31, 2021 and 2020, total stock-based compensation expense related to stock options was $ 38.2 million and $ 31.8 million, respectively.

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.

For the years ended December 31, 2022, 2021 and 2020, total stock-based compensation expense related to stock options was $ 42.2 million, $ 38.2 million and $ 31.8 million, respectively.

Restricted Stock Unit Activity

9 unchanged sentences

Vested and expected to vest, December 31, 2022 5,493,406 $ 16.86 1.54 $ 34,554

For the year ended December 31, 2019, the Company granted 57,361 performance based restricted stock units to a certain executive officer pursuant to the 2018 Plan.

These performance awards are subject to the holder's continued service to the Company through each applicable vesting event.

During the year ended December 31, 2021, the Company determined that the achievement of the first requisite performance condition for these awards was probable, and as a result, recognized $ 0.5 million in stock-based compensation expense related to these awards as of December 31, 2021.

For the years ended December 31, 2021 and 2020, total stock-based compensation expense related to restricted stock units and performance based restricted stock units was $ 26.6 million and $ 17.2 million, respectively.

For the years ended December 31, 2022, 2021 and 2020, total stock-based compensation expense related to restricted stock units and performance based restricted stock units was $ 34.3 million, $ 26.6 million and $ 17.2 million, respectively .

For the years ended December 31, 2022, 2021 and 2020, total fair value of vested restricted stock units and performance based restricted stock units as of their grant dates was $ 32.8 million, $ 18.5 million and $ 13.4 million, respectively.

As of December 31, 2022 and 2021, there was $ 70.5 million and $ 90.7 million, respectively, of unrecognized stock-based compensation which is expected to be recognized over a weighted average period of 2.55 years.

Employee Stock Purchase Plan

In October 2018, the shareholders approved the 2018 Employee Stock Purchase Plan (ESPP), which initially reserved 1,160,000 shares of our common stock for employee purchases under terms and provisions established by the Board of Directors.

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, 2022 and 2021, the number of shares authorized under the ESPP for employee purchases increased by 1,426,230 and 1,404,743 shares respectively.

2 unchanged sentences

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.

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.

9 unchanged sentences

Dividend yield — —

For the years ended December 31, 2021 and 2020, total stock-based compensation expense related to ESPP was $ 2.3 million and $ 2.5 million, respectively.

For the years ended December 31, 2022, 2021 and 2020, total stock-based compensation expense related to ESPP was $ 3.6 million, $ 2.3 million and $ 2.5 million, respectively.

Founders’ Stock

3 unchanged sentences

For the years ended December 31, 2022, 2021 and 2020, $ 3.4 million, $ 13.7 million, and $ 13.7 million of stock-based compensation expense was recognized related to the vesting of 1,514,424 , 6,057,695 , and 6,057,684 shares, respectively, of founders' stock.

At December 31, 2021 and 2020, there was $ 3.4 million and $ 17.1 million of unrecognized stock-based compensation expense related to 1,514,424 and 7,572,119 shares of unvested founders’ stock which is expected to be recognized over 3 months and 15 months, respectively.

At December 31, 2021, there was $ 3.4 million of unrecognized stock-based compensation expense related to 1,514,424 shares of unvested founders’ stock which was recognized over 3 months.

At December 31, 2022, there was no unrecognized stock-based compensation expense.

The weighted-average fair value at grant date for founders’ stock was $ 2.27 per share.

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The proceeds are reclassified to paid-in capital as the repurchase right lapses.

During the years ended December 31, 2021 and 2020, 293,594 and zero options were early exercised.

As of December 31, 2021 and 2020, there was $ 2.9 million and $ 2.8 million recorded in accrued and other liabilities and $ 2.5 million and $ 1.1 million recorded in other long-term liabilities related to shares held by employees and directors that were subject to repurchase.

During the years ended December 31, 2022 and 2021, zero and 293,594 options were early exercised, respectively.

As of December 31, 2022 and 2021, there was $ 1.9 million and $ 2.9 million, respectively, recorded in accrued and other liabilities and $ 0.6 million and $ 2.5 million, respectively, recorded in other long-term liabilities related to shares held by employees and directors that were subject to repurchase.

The underlying shares are shown as outstanding in the consolidated financial statements since the exercise date but the shares which are subject to future vesting conditions are not included in the calculation of earnings per share.

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is a wholly-owned subsidiary of Pfizer formed for the purpose of holding certain assets owned or controlled by Pfizer or its direct or indirect subsidiaries.

In April 2018, the Company and Pfizer entered into a transition services agreement (the Pfizer TSA) for Pfizer to provide professional services to the Company related to research and development, project management, and other administrative functions.

In September 2019, the Company and Pfizer terminated the Pfizer TSA.

For the years ended December 31, 2021 and 2020, zero costs were incurred under the Pfizer TSA.

For the year ended December 31, 2019, the costs incurred under the Pfizer TSA were $ 4.5 million.

The Company also purchased certain lab supplies and services from Pfizer in connection with its research and development activities.

For the years ended December 31, 2021 and 2020, zero lab supplies and services were purchased from Pfizer.

For the year ended December 31, 2019, total lab supplies and services purchased from Pfizer were $ 1.4 million.

Based on a Form 4 filed on April 4, 2022 by PF Equity Holdings 2 B.V., Pfizer held the 22,032,040 shares as of March 31, 2022.

During the years ended December 31, 2022 and 2020, the Company sold zero in excess raw materials to Pfizer.

During the year ended December 31, 2021, the Company sold $ 0.1 million in excess raw materials to Pfizer.

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The license agreement was subsequently assigned to a wholly-owned subsidiary of Allogene Overland, Allogene Overland BioPharm (HK) Limited.

During the years ended December 31, 2021 and 2020, the Company recognized $ 38.5 million and zero , respectively, of collaboration revenue under this arrangement.

For the years ended December 31, 2021 and 2020, the Company recorded $ 0.2 million and zero , respectively, of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

On April 1, 2022, Allogene Overland HK assigned the License Agreement to Allogene Overland Biopharm (PRC) Co., Limited.

During the years ended December 31, 2022 and 2021, the Company recognized $ 0.2 million and $ 38.5 million, respectively, of collaboration revenue under this arrangement.

For the year ended December 31, 2022, 2021 and 2020, the Company recorded $ 0.7 million, $ 0.2 million, and zero , respectively, of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

Consulting Agreements

3 unchanged sentences

Pursuant to the consulting agreement, Bellco provides certain services for the Company, which are performed by Dr.

Belldegrun and include 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 $ 33,333 per month in arrears commencing January 2019, $ 37,000 per month in arrears commencing January 2020, and $ 38,583 per month in arrears commencing January 2021.

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 $ 37,000 per month in arrears commencing January 2020, and $ 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.

1 unchanged sentence

The costs incurred for services provided, bonus and out-of-pocket expenses incurred under this consulting agreement were $ 0.8 million, $ 0.7 million and $ 0.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, amounts due to Bellco of $ 0.3 million and $ 0.3 million, respectively, were recorded in accrued and other current liabilities in the accompanying consolidated balance sheets.

As of December 31, 2022 and 2021, amounts due to Bellco of $ 0.3 million were recorded in accrued and other current liabilities in the accompanying consolidated balance sheets.

Sublease Agreements

3 unchanged sentences

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 chair, Arie Belldegrun, M.D., FACS, is a trustee of the Belldegrun Family Trust, which controls Bellco Capital Advisors Inc.

4 unchanged sentences

In September 2019, the Company entered into an amendment to the sublease agreement and increased the subleased space to 2,907 square feet.

In October 2020, the sublease agreement between the Company and ByHeart was terminated.

Sublease income for the years ended December 31, 2021 and 2020 was zero and $ 0.3 million, respectively, and was recognized as other income.

In October 2020, the sublease agreement between the Company and ByHeart was

Sublease income for the years ended December 31, 2022 and 2021 was zero .

Sublease income for the year ended December 31, 2020 was $ 0.3 million, and was recognized as other income.

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 $ 1.8 million, $ 1.4 million and $ 0.9 million related to matched contributions for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company made contributions to the plan for eligible participants, and recorded contribution expenses of $ 2.3 million, $ 1.8 million and $ 1.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company has incurred net operating losses for all the periods presented.

1 unchanged sentence

The Company has established a full valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets.

Year Ended December 31,

2021 2020 2019

(in thousands)

Federal $ — $ — $ —

Federal — — ( 251 )

State — — ( 81 )

Benefit for income taxes $ — $ — $ ( 331 )

Reconciliation of the benefit for income taxes calculated at the statutory rate to our benefit for income taxes is as follows:

22 unchanged sentences

Investments 5,443 1,543 175

Capitalized R&D 43,145 — —

Other 765 358 12

3 unchanged sentences

Right of use leased assets ( 23,392 ) ( 12,969 ) ( 11,556 )

Investments — — ( 393 )

Other ( 244 ) ( 71 ) —

6 unchanged sentences

The valuation allowance increased by approximately $ 99.9 million, $ 52.3 million and $ 72.5 million during the years ended December 31, 2022, 2021 and 2020, respectively.

The following table sets forth our federal and state NOL carryforwards and federal research and development tax credits as of December 31, 2021:

The following table sets forth the Company's federal and state NOL carryforwards and federal research and development tax credits as of December 31, 2022:

Amount Expiration

18 unchanged sentences

For the years ended December 31, 2022, 2021 and 2020, the Company recorded a tax benefit of zero .

For the year ended December 31, 2019, the Company recorded a tax benefit of $ 0.3 million, in other comprehensive income, related to available-for-sale securities.

We apply the provisions of ASC Topic 740 to account for uncertain income tax positions .

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Subsequent Events

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.

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 $ 3.3 million.

In addition, the Company made a $ 3.0 million investment in Antion's preferred stock.

In connection with this investment, a Company representative was appointed to Antion’s Board of Directors.

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 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data