What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-03 compared with 2022-11-02 · 93 added, 87 removed, 184 unchanged (49% of the section changed)

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These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements .

We are a clinical-stage immuno-oncology company pioneering the development of genetically engineered allogeneic T cell therapies for the treatment of cancer.

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

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

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

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 us with the right to elect a license to the CD19 Products outside of the United States (Ex-US Option) and does not otherwise affect our current exclusive license for the development and commercialization of CD19 Products in the United States.

Upon any exercise of the Ex-US Option by us, our potential milestone payments with respect to ALLO-501A would increase for any first dosing in Phase 2, first dosing in Phase 3 and regulatory approval by €46 million in the aggregate.

In addition, upon any such exercise of the Ex-US Option, Servier's obligation to reimburse us for 40% of the development costs for CD19 Products would cease.

See “Risk Factors—Servier’s Discontinuation of its involvement in the development of CD19 Products may have adverse consequences.*”

We are conducting long-term follow-up in our Phase 1 clinical trial (the ALPHA trial) of ALLO-501 in patients with relapsed or refractory (R/R) non-Hodgkin lymphoma (NHL).

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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 recently initiated a Phase 2 clinical trial for ALLO-501A (the ALPHA2 trial) in R/R large B cell lymphoma (LBCL).

We conducted an extensive Phase 1 program designed to evaluate and optimize all aspects of our therapy, including multiple doses and schedules of ALLO-501A and one of our lymphodepletion agents, ALLO-647.

In addition, we conducted a review of the Phase 1 program, which determined a manufacturing process associated with robust clinical performance.

Our selected manufacturing process, named Alloy, will be deployed in the ALPHA2 trial and the EXPAND trial discussed below.

The Phase 2 trial will begin with previously manufactured material from our prior contract manufacturing organization and we may transition to product from our manufacturing facility during the course of the ALPHA2 and EXPAND trials.

In the fourth quarter of 2022, we initiated a Phase 2 clinical trial for ALLO-501A (the ALPHA2 trial) in R/R large B cell lymphoma (LBCL).

The single-arm ALPHA2 trial will utilize a single dose of ALLO-501A at 120 million CAR+ cells with a lymphodepletion regimen comprised of fludarabine (30 mg/m2/day x 3 days) and cyclophosphamide (300 mg/m2/day x 3 days) plus ALLO-647 (90 mg).

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The primary endpoint is objective response rate (ORR) and the key secondary endpoint is duration of response (DoR).

We are also in the process of initiating the EXPAND trial, which is expected to enroll approximately 70 patients with R/R LBCL and is intended to demonstrate the contribution of ALLO-647 to the overall benefit of the lymphodepletion regimen.

We recently initiated the EXPAND trial, which is expected to enroll approximately 70 patients with R/R LBCL and is intended to demonstrate the overall contribution of ALLO-647 to the benefit to risk ratio of the lymphodepletion regimen for ALLO-501A.

Patients will be randomized to receive the same single 120 million CAR+ cell dose of ALLO-501A as in the ALPHA2 trial and either lymphodepletion with fludarabine and cyclophosphamide (control arm) or the lymphodepletion regimen of the ALPHA2 trial (active arm).

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TurboCAR technology allows cytokine signaling to be engineered selectively into CAR T cells and has shown the ability to improve the potency and persistence of the cells and to delay exhaustion of the cells in preclinical models.

We are currently reviewing and optimizing the manufacturing process for our BCMA program and are not enrolling patients in the UNIVERSAL and IGNITE trials at this time.

We also continue to advance the 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).

Subject to results from the TRAVERSE trial, we may investigate the use of ALLO-316 for other solid tumor and hematologic indications.

We are planning an Allogene R&D Showcase on November 29, 2022 to provide an update on certain of our research and development programs, including additional data from the ALPHA, ALPHA2 and UNIVERSAL trials.

Enrollment of patients and the ability to conduct patient follow-up has been adversely impacted by the COVID-19 pandemic.

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 evolve.

Subject to ongoing results in the TRAVERSE trial, we intend to complete planned dose exploration and initiate expansion cohort enrollment in 2023.

Since inception, we have had significant operating losses.

Our net losses were $83.1 million and $237.8 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, we had an accumulated deficit of $1.1 billion.

As of September 30, 2022, we had $637.3 million in cash and cash equivalents and investments.

Our net losses were $98.7 million for the three months ended March 31, 2023.

As of March 31, 2023, we had an accumulated deficit of $1,334.7 million.

As of March 31, 2023, we had $514.0 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.

Recent Developments

In April 2023, we announced interim data from the TRAVERSE trial.

As of the March 23, 2023 data cutoff, 19 patients were enrolled in the Phase 1 trial, 10 of whom had RCC confirmed to express CD70.

The median time from enrollment to the start of therapy was five days.

In the ongoing dose escalation phase of the TRAVERSE trial, patients will receive lymphodepletion followed by ALLO-316 at one of four cell dose levels (DL1= 40M cells, DL2= 80M cells, DL3=120M cells, DL4= 240M cells).

The data reported to date is primarily from the DL1 and DL2 cohorts.

Anti-tumor activity was primarily observed in patients with tumors confirmed to express CD70.

Among 18 patients evaluable for efficacy, the disease control rate (DCR) was 89%.

In the 10 patients whose tumors were known to express CD70, the disease control rate was 100%, which included three patients who achieved partial remission (two confirmed, one unconfirmed).

The longest response lasted until month eight.

There was a trend toward greater tumor shrinkage in patients with higher levels of CD70 expression.

(n=18) CD70+ Patients

Overall Response Rate (ORR), n (%) 3 (17) 3 (30)

Disease Control Rate (DCR), n (%) 16 (89) 10 (100)

There were 19 patients evaluable for safety.

To date, ALLO-316 has demonstrated an adverse event profile generally consistent with autologous CAR T therapies.

One dose-limiting toxicity of Grade 3 autoimmune hepatitis occurred in the second dose level.

Cytokine release syndrome (CRS) was all low-grade with the exception of one Grade 3.

Neurotoxicity, which is now defined more broadly, was generally low grade and reversible with most events being fatigue or headache.

There were no cases of immune effector cell-associated neurotoxicity syndrome (ICANS).

Infections occurred in eight patients of which four were Grade 3+ including one Grade 5 respiratory failure due to Covid-19 infection deemed unrelated to study treatment.

Grade 3+ prolonged cytopenia was observed in three patients (16%).

There were no cases of graft-versus-host disease (GvHD).

CRS 11 (58) 1 (5)

Infusion-Related Reaction 1 (5) 0

Neurotoxicity 13 (68) 2 (11)

Infection 8 (42) 4 (21)

Prolonged Gr3+ Cytopenia 0 3 (16)

The Dagger technology, which is a feature of ALLO-316, is designed to resist rejection of AlloCAR T cells by the host immune cells, thereby supporting expansion and enabling a prolonged window of persistence during which AlloCAR T cells can target and destroy cancer cells.

Initial translational data from the TRAVERSE trial demonstrates the suppression of host T cells and marked peak expansion of ALLO-316 despite the relatively low cell doses tested.

In addition to ALLO-316, we plan to deploy Dagger technology to potentially enhance the persistence and activity of next generation AlloCAR T products.

Our Research and Development and License Agreements

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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 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 October 2015, Pfizer entered into an Exclusive License and Collaboration Agreement (Servier Agreement) with Servier 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.

In October 2019, we agreed to waive our rights to the one additional target.

In addition, upon any such exercise of the Ex-US Option, Servier's obligation to reimburse us for 40% of the development costs for CD19 Products would cease.

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

Moreover, in December 2022, Servier sent us a notice for material breach due to our purported refusal to allow an audit of certain manufacturing costs under our cost share arrangement.

While we do not believe Servier has such an audit right, we are currently progressing such audit with Servier to recover outstanding manufacturing costs owed by Servier to us.

For more information, see “Risk Factors—Servier’s Discontinuation of its involvement in the development of CD19 Products and our disputes with Servier may have adverse consequences."

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

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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.

In February 2021, we made an additional $15.9 million investment in

Notch's Series A preferred stock.

In October 2021, we made an additional $1.8 million investment in Notch's common stock.

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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

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).

Overland subsequently assigned the Licensed Agreement to a wholly-owned subsidiary, Allogene Overland BioPharm (HK) Limited (Allogene Overland HK).

Allogene Overland subsequently assigned the License Agreement to a wholly owned subsidiary, Allogene Overland BioPharm (HK) Limited (Allogene Overland HK).

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

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Components of Results of Operations

As of September 30, 2022, our revenue has been exclusively generated from our collaboration and license agreement with Allogene Overland Biopharm (PRC) Co., Limited.

As of March 31, 2023, our revenue has been exclusively generated from our collaboration and license agreement with Allogene Overland Biopharm (PRC) Co., Limited.

See Note 6 to our financial statements appearing elsewhere in this Quarterly Report for more information related to our recognition of revenue and the Allogene Overland Biopharm (PRC) Co., Limited agreement.

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

Research and development expenses for the three and nine months ended September 30, 2022 included costs associated with our clinical and preclinical stage pipeline candidates and research into newer technologies.

Research and development expenses for the three months ended March 31, 2023 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 to date relate to costs incurred for the development of our most advanced product candidates and include:

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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 prior development of UCART19, including for the long-term follow-up of patients in the CALM and PALL clinical trials of UCART19.

We accrue for costs

incurred by monitoring the status of clinical trials and the invoices received from Servier.

We adjust our accrual as actual costs become known.

Pending any exercise by us of the Ex-US Option, Servier is required to reimburse us for 40% of the costs associated with the development of ALLO-501 and ALLO-501A.

Collaboration expenses and cost reimbursement are recorded on a net basis as a research and development expense in our condensed consolidated statements of operations and comprehensive loss.

We have reimbursed Servier for 60% of the costs associated with the prior development of UCART19, including for the long-term follow-up of patients in the CALM and PALL clinical trials of UCART19.

We believe Servier is required to reimburse us for 40% of the costs associated with the development of ALLO-501 and ALLO-501A.

Research and development activities are central to our business model.

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General and administrative costs are expensed as incurred, and we accrue for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from our service providers, and adjusting our accruals as actual costs become known.

We expect our general and administrative expenses to increase over the next several years to support our continued research and development activities, manufacturing activities, potential commercialization of our product candidates and the increased costs of operating as a public company, including additional compliance-related expenses as a result of no longer

being an emerging growth company.

These increases are anticipated to include increased costs related to the hiring of additional personnel, developing commercial infrastructure, fees to outside consultants, lawyers and accountants, and increased costs associated with being a public company such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, complying with and advancing environmental, social and governance matters, and insurance and investor relations costs.

These increases are anticipated to include increased costs related to the hiring of additional personnel, developing commercial infrastructure, fees to outside consultants, lawyers and accountants, and costs associated with being a public company such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, complying with and advancing environmental, social and governance matters, and insurance and investor relations costs.

Other Income (Expense), Net:

Interest and Other Income, Net

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

Other Expense

Other Expenses

Other expense consists of non-operating expenses, including our share of equity investments' net losses for the period.

Results of Operations

Comparison of the Three Months Ended September 30, 2022 and 2021

The following sets forth our results of operations for the three months ended September 30, 2022 and 2021 (dollars in thousands):

Three Months Ended September 30, Change

2022 2021 $ %

Collaboration revenue - related party $ 49 $ 49 $ — — %

Operating expenses:

Research and development 63,641 58,720 4,921 8 %

General and administrative 18,897 18,999 (102) (1) %

Total operating expenses 82,538 77,719 4,819 6 %

Loss from operations (82,489) (77,670) (4,819) 6 %

Other income (expense), net:

Interest and other income, net 1,002 393 609 155 %

Other expenses (1,661) (909) (752) 83 %

Total other income (expense), net (659) (516) (143) 28 %

Net Loss $ (83,148) $ (78,186) $ (4,962) 6 %

Collaboration revenue - related party

Collaboration revenue was less than $0.1 million for the three months ended September 30, 2022 and 2021.

Revenue recognized in the three months ended September 30, 2022 and 2021 was due to the delivery of the know-how performance obligations related to the License Agreement entered into with Allogene Overland on December 14, 2020.

Research and Development Expenses

Research and development expenses were $63.6 million and $58.7 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $4.9 million was driven primarily by an increase in personnel related costs of $5.9 million, of which $0.9 million was stock-based compensation expense, and an increase in facilities costs and depreciation expense of $4.3 million, offset by a $5.9 million decrease in external costs relating to the advancement of our product candidates primarily due to the timing of development activities and manufacturing runs.

General and Administrative Expenses

General and administrative expenses were $18.9 million and $19.0 million for the three months ended September 30, 2022 and 2021, respectively.

The decrease of $0.1 million was primarily due to a decrease in business and consulting fees of $1.4 million, offset by a $0.9 million increase in personnel related costs.

Interest and Other Income, Net

Interest and other income, net was $1.0 million and $0.4 million for the three months ended September 30, 2022 and 2021, respectively.

Comparison of the Nine Months Ended September 30, 2022 and 2021

The following sets forth our results of operations for the nine months ended September 30, 2022 and 2021 (dollars in thousands):

Nine Months Ended September 30, Change

Comparison of the Three Months Ended March 31, 2023 and 2022

The following sets forth our results of operations for the three months ended March 31, 2023 and 2022 (dollars in thousands):

Three Months Ended March 31, Change

2023 2022 $ %

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Net Loss $ (98,704) $ (79,850) $ (18,854) 24 %

* - Percentage is not meaningful

Collaboration revenue - related party

Collaboration revenue was $0.2 million and $38.4 million for the nine months ended September 30, 2022 and 2021, respectively.

The decrease of $38.2 million was due to the revenue recognized related to the license of intellectual property and delivery of the know-how performance obligation, which was delivered in the first quarter of 2021, under the License Agreement entered into with Allogene Overland in December 2020.

Collaboration revenue was less than $0.1 million for the three months ended March 31, 2023 and 2022.

Revenue recognized in the three months ended March 31, 2023 and 2022 was due to the delivery of the know-how performance obligations related to the License Agreement entered into with Allogene Overland on December 14, 2020.

Research and Development Expenses

Research and development expenses were $181.0 million and $166.2 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $14.8 million was driven primarily by an increase in personnel related costs of $18.5 million, of which $6.6 million was stock-based compensation expense, and an increase in facilities costs and depreciation expense of $14.0 million, offset by a $20.3 million decrease in external costs relating to the advancement of our product candidates due to the timing of development activities and manufacturing runs.

Research and development expenses were $80.2 million and $60.2 million for the three months ended March 31, 2023 and 2022, respectively.

The increase of $20.1 million was driven primarily by an increase in external costs relating to the advancement of our product candidates due to the timing of development activities and manufacturing runs of $16.9 million and an increase in facilities costs and depreciation expense of $1.6 million.

General and Administrative Expenses

General and administrative expenses were $58.3 million and $54.1 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $4.2 million was primarily due to an increase in personnel related costs of $5.0 million, of which $1.0 million was stock-based compensation expense, and an increase in expenses related to corporate communications of $1.2 million, offset by a $2.0 million decrease in business and consulting fees.

General and administrative expenses were $18.9 million and $19.9 million for the three months ended March 31, 2023 and 2022, respectively.

The decrease of $1.0 million was primarily due to an decrease in personnel related costs of $0.7 million and a decrease in expenses related to corporate communications of $0.3 million.

Interest and Other Income, Net

Interest and other income, net was $1.8 million and $1.5 million for the nine months ended September 30, 2022 and 2021, respectively.

Interest and other income, net was $2.1 million and $0.5 million for the three months ended March 31, 2023 and 2022, respectively.

The increase of $1.6 million was due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Liquidity and Capital Resources

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

As of September 30, 2022, we had $637.3 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.

As of March 31, 2023, we had $514.0 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 be sufficient to fund our operations for at least the next 12 months 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, net proceeds from our IPO, our at-the-market (ATM) offerings, our June 2020 underwritten public offering, and upfront cash payment of $40.0 million received in December 2020 pursuant to our License Agreement with Allogene Overland.

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 ATM offerings for an aggregate offering price of up to $250.0 million.

As of September 30, 2022, $167.3 million remains available for sale under the sales agreement with Cowen.

In November 2019, we entered into a sales agreement with Cowen and Company, LLC (Cowen), as amended on November 2, 2022, 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, 2023, $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.

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

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Financing activities 1,731 1,814

Net increase (decrease) in cash, cash equivalents and restricted cash $ (98,957) $ 6,670

Net increase (decrease) in cash and cash equivalents and restricted cash $ 48,027 $ (88,800)

Operating Activities

During the nine months ended September 30, 2022, cash used in operating activities of $158.4 million was attributable to a net loss of $237.8 million, partially offset by non-cash charges of $86.5 million and an increase of $7.1 million in our net operating assets and liabilities.

During the three months ended March 31, 2023, cash used in operating activities of $66.6 million was attributable to a net loss of $98.7 million, partially offset by non-cash charges of $24.7 million and a decrease of $7.4 million in our net operating assets and liabilities.

The non-cash charges consisted primarily of stock-based compensation expense of $18.8 million, depreciation of $3.5 million, our share of equity investments' net losses for the period of $1.7 million, net amortization and accretion on investment securities of $0.5 million, and non-cash rent expense of $0.2 million.

The change in operating assets and liabilities was primarily due to a $3.2 million increase in other long-term assets, a $2.8 million increase in prepaid expenses and other current assets, a $1.4 million decrease in accrued and other current liabilities, and a $2.1 million decrease in other long-term liabilities, offset by a $1.9 million increase in accounts payable and a $0.5 million increase in deferred revenue.

The change in operating assets and liabilities was primarily due to a $5.7 million increase in accrued and other current liabilities, a $1.3 million decrease in prepaid expenses and other current assets, and a $1.1 million increase in accounts payable, offset by a $0.6 million decrease in deferred revenue.

During the three months ended March 31, 2022, cash used in operating activities of $68.2 million was attributable to a net loss of $79.9 million, partially offset by non-cash charges of $31.6 million and an increase of $20.0 million in our net operating assets and liabilities.

The non-cash charges consisted primarily of stock-based compensation expense of $22.3 million, our share of equity investments' net losses for the period of $3.8 million, depreciation of $3.7 million, net amortization and accretion on investment securities of $1.3 million, and non-cash rent expense of $0.5 million.

The change in operating assets and liabilities was primarily due to a $9.0 million decrease in accrued and other current liabilities, a $6.7 million increase in prepaid expenses and other current assets, and a $3.1 million increase in other long-term assets, offset by a $0.6 million decrease in other long-term liabilities, and a $0.5 million decrease in accounts payable.

Investing Activities

During the nine months ended September 30, 2022, net cash provided by investing activities of $56.6 million was related to cash provided by investment maturities of $260.4 million, offset by cash used in purchases of investments of $200.3 million and cash used in the purchase of property and equipment of $3.5 million.

During the three months ended March 31, 2023, net cash provided by investing activities of $112.9 million was related to cash provided by investment maturities of $143.4 million and cash provided by proceeds from sales of investments of $5.6 million, offset by cash used in the purchase of investments of $35.1 million and cash used in the purchase of property and equipment of $1.0 million.

During the three months ended March 31, 2022, net cash used in investing activities of $22.4 million was related to cash used in purchases of investments of $89.2 million and cash used in the purchase of property and equipment of $1.9 million, offset by cash provided by investment maturities of $68.7 million.

Financing Activities

During the nine months ended September 30, 2022, cash provided by financing activities of $2.9 million was related to $2.5 million of cash provided by the sale of common stock through our employee stock purchase plan and $0.4 million of cash provided by the issuance of common stock upon exercise of stock options.

During the three months ended March 31, 2023, cash provided by financing activities of $1.7 million was related to cash provided by the sale of common stock through our employee stock purchase plan.

During the three months ended March 31, 2022, cash provided by financing activities of $1.8 million was related to $1.5 million of cash provided by the sale of common stock through our employee stock purchase plan and $0.3 million of cash provided by the issuance of common stock upon exercise of stock options.

Material Cash Commitments and Requirements

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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, 2022, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales.

As of March 31, 2023, 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 Note 6 to our condensed consolidated financial statements included elsewhere in this report.

Our operating lease obligations primarily consist of lease payments on our research, lab and office facilities in South San Francisco, California, as well as lease payments on our cell manufacturing facility in Newark, California.

For additional information regarding our lease obligations, see Note 7 to our condensed consolidated financial statements included elsewhere in this report.

Additionally, we have entered into agreements with third-party contract manufacturers for the manufacture and processing of certain of our product candidates for clinical testing purposes, and we have entered and will enter 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 September 30, 2022, the Company had non-cancellable purchase commitments of $0.4 million.

As of March 31, 2023, the Company had non-cancellable purchase commitments of $0.3 million.

On October 6, 2020, we announced we entered into a strategic five-year collaboration agreement with MD Anderson for the preclinical and clinical investigation of allogeneic CAR T cell product candidates.

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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.

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

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted

accounting principles.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods.

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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