What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-02 · 136 added, 103 removed, 551 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

2023 December 31,

23 unchanged sentences

Preferred stock, $ 0.001 par value:

10,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

no shares were issued and outstanding as of June 30, 2023 and December 31, 2022

10,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

no shares were issued and outstanding as of September 30, 2023 and December 31, 2022

Common stock, $ 0.001 par value:

400,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

167,133,664 and 144,438,304 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

400,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

168,175,221 and 144,438,304 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,059,333 1,911,632

7 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Interest and other income, net 6,205 1,002 12,042 1,809

Other (expenses) income ( 1,249 ) 1,492 ( 2,942 ) 1,142

Total other income, net 2,529 1,807 2,895 1,949

Other expenses ( 4,545 ) ( 1,661 ) ( 7,487 ) ( 519 )

Total other income (expense), net 1,660 ( 659 ) 4,555 1,290

Net loss ( 61,315 ) ( 83,148 ) ( 238,008 ) ( 237,785 )

32 unchanged sentences

Balance - June 30, 2023 167,133,664 167 2,039,263 ( 1,412,673 ) ( 3,851 ) 622,906

Issuance of common stock from ATM offering, net of offering costs of $ 50.0 thousand

606,235 1 3,193 — — 3,194

Issuance of common stock upon exercise of stock options and vesting of RSUs

204,116 — 326 — — 326

Vesting of early exercised common stock

— — 432 — — 432

Stock-based compensation — — 15,354 — — 15,354

Employee stock purchase plan 231,206 — 765 — — 765

Net loss — — — ( 61,315 ) — ( 61,315 )

Net unrealized gain on available-for-sale investments

— — — — 1,440 1,440

Balance - September 30, 2023 168,175,221 $ 168 $ 2,059,333 $ ( 1,473,988 ) $ ( 2,411 ) $ 583,102

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

29 unchanged sentences

Balance - June 30, 2022 143,723,171 144 1,871,262 ( 1,057,985 ) ( 11,472 ) 801,949

Issuance of common stock upon exercise of stock options and vesting of RSUs

177,678 — 135 — — 135

Vesting of early exercised common stock

— — 432 — — 432

Stock-based compensation — — 21,148 — — 21,148

Employee stock purchase plan 130,739 — 931 — — 931

Net loss — — — ( 83,148 ) — ( 83,148 )

Net unrealized gain on available-for-sale investments

— — — — ( 1,486 ) ( 1,486 )

Balance - September 30, 2022 144,031,588 $ 144 $ 1,893,908 $ ( 1,141,133 ) $ ( 12,958 ) $ 739,961

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

5 unchanged sentences

Non-cash rent expense 504 2,193

Share of loss from equity method investment 2,907 2,309

Share of loss from, and impairment of, equity method investment 7,452 3,959

Changes in operating assets and liabilities:

34 unchanged sentences

Public Offerings

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.

In November 2019, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), as amended on November 2, 2022 and November 2, 2023, under which the Company may from time-to-time issue and sell shares of its common stock through Cowen in at-the-market (ATM) offerings.

The aggregate compensation payable to Cowen as the Company's sales agent equals up to 3.0 % of the gross sales price of the shares sold through Cowen pursuant to the sales agreement.

During the three months ended June 2023, the Company sold an aggregate of 20,288,330 shares of common stock in ATM offerings resulting in net proceeds of $ 87.9 million.

As of June 30, 2023, $ 77.9 million remains available for sale under the sales agreement with Cowen.

During the nine months ended September 30, 2023, the Company sold an aggregate of 20,894,565 shares of common stock in ATM offerings resulting in net proceeds of $ 91.1 million.

Need for Additional Capital

1 unchanged sentence

The Company’s ultimate success depends on the outcome of its research and development activities as well as the ability to commercialize the Company's product candidates.

The Company had cash and cash equivalents and investments of $ 544.5 million as of June 30, 2023.

Since inception through June 30, 2023, the Company has incurred cumulative net losses of $ 1.4 billion.

The Company had cash and cash equivalents and investments of $ 497.7 million as of September 30, 2023.

Since inception through September 30, 2023, the Company has incurred cumulative net losses of $ 1.5 billion.

Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.

9 unchanged sentences

All material intercompany balances and transactions have been eliminated during consolidation.

The condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of stockholders’ equity as of June 30, 2023 and 2022, the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other future annual or interim period.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited

financial statements and related notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2023.

The condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022, the condensed consolidated statements of stockholders’ equity as of September 30, 2023 and 2022, the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other future annual or interim period.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2023.

Use of Estimates

The preparation of condensed 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.

The preparation of condensed 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 condensed consolidated financial statements and the reported amounts of expenses during the reporting period.

Significant estimates and assumptions made in the accompanying condensed 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.

2 unchanged sentences

Significant Accounting Policies

There have been no significant changes to the accounting policies during the three and six months ended June 30, 2023, as compared to the significant accounting policies described in Note 1 of the “Notes to Financial Statements” in the Company’s audited financial statements included in its Annual Report.

There have been no significant changes to the accounting policies during the three and nine months ended September 30, 2023, as compared to the significant accounting policies described in Note 1 of the “Notes to Financial Statements” in the Company’s audited financial statements included in its Annual Report.

Recently Adopted Accounting Pronouncements

7 unchanged sentences

treasury securities which are classified as Level 1.

There were no Level 3 assets or liabilities as of June 30, 2023 and as of December 31, 2022.

Financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of June 30, 2023 and as of December 31, 2022 are presented in the following tables:

June 30, 2023

There were no Level 3 assets or liabilities as of September 30, 2023 and as of December 31, 2022.

Financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of September 30, 2023 and as of December 31, 2022 are presented in the following tables:

September 30, 2023

Level 1 Level 2 Level 3 Fair Value

2 unchanged sentences

Money market funds (1) $ 50,937 $ — $ — $ 50,937

Commercial paper — 13,990 — 13,990

Corporate bonds — 86,179 — 86,179

14 unchanged sentences

Financial Instruments

The fair value and amortized cost of cash equivalents and available-for-sale securities by major security type as of June 30, 2023 and as of December 31, 2022 are presented in the following tables:

June 30, 2023

The fair value and amortized cost of cash equivalents and available-for-sale securities by major security type as of September 30, 2023 and as of December 31, 2022 are presented in the following tables:

September 30, 2023

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

1 unchanged sentence

Money market funds $ 50,937 $ — $ — $ 50,937

Commercial paper 13,992 — ( 2 ) 13,990

Corporate bonds 86,734 3 ( 558 ) 86,179

21 unchanged sentences

Total cash equivalents and investments $ 526,327

As of June 30, 2023, the remaining contractual maturities of available-for-sale securities were less than 2 years.

Realized losses on available-for-sale securities for the three and six months ended June 30, 2023 were zero and $ 1.0 million, respectively.

There were no significant realized losses on available-for-sale securities for the three and six months ended June 30, 2022.

As of June 30, 2023, unrealized losses on available-for-sale securities are not attributed to credit risk.

As of September 30, 2023, the remaining contractual maturities of available-for-sale securities were less than 2 years.

Realized losses on available-for-sale securities for the three and nine months ended September 30, 2023 were zero and $ 1.0 million, respectively.

There were no significant realized losses on available-for-sale securities for the three and nine months ended September 30, 2022.

As of September 30, 2023, unrealized losses on available-for-sale securities are not attributed to credit risk.

The Company believes that it is more likely than not that investments in an unrealized loss position will be held until maturity and all interest and principal will be received.

The Company 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 June 30, 2023 and December 31, 2022, securities with a fair value of $ 191.8 million and $ 329.4 million, respectively, were in a continuous net unrealized loss position for more than 12 months.

As of September 30, 2023 and December 31, 2022, securities with a fair value of $ 81.0 million and $ 329.4 million, 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 June 30, 2023 and December 31, 2022, the Company recognized $ 1.1 million and $ 1.8 million, respectively, of accrued interest receivable from available-for-sale securities within prepaid expenses and other current assets on the consolidated balance sheets.

As of September 30, 2023 and December 31, 2022, the Company recognized $ 1.6 million and $ 1.8 million, respectively, of accrued interest receivable from available-for-sale securities within prepaid expenses and other current assets on the condensed consolidated balance sheets.

Balance Sheet Components

1 unchanged sentence

Property and Equipment consist of the following:

September 30,

2023 December 31,

16 unchanged sentences

In October 2019, the Territory was expanded to all countries in the world.

No milestone or royalty payments were made in the three and six months ended June 30, 2023 or 2022.

No milestone or royalty payments were made in the three and nine months ended September 30, 2023 or 2022.

Pfizer is also eligible to receive, on a product-by-product and country-by-country basis, royalties in single-digit percentages on annual net sales for products covered by the Pfizer Agreement.

6 unchanged sentences

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.

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).

14 unchanged sentences

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

For the three and six months ended June 30, 2023 and 2022, zero costs were incurred related to the achievement of a clinical development milestone under this agreement.

For the three and nine months ended September 30, 2023 and 2022, zero costs were incurred related to the achievement of a clinical development milestone under this agreement.

License and Collaboration Agreement with Servier

18 unchanged sentences

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 three and six months ended June 30, 2023, the Company recorded $ 0.5 million and $ 0.4 million, respectively, of net cost recoveries under the cost-sharing terms of the Servier Agreement as a reduction to research and development expenses.

For the three and six months ended June 30, 2022, the Company recorded $ 11.6 million and $ 16.7 million, respectively, of net cost recoveries.

As of June 30, 2023 and December 31, 2022, amounts due from Servier of zero and $ 1.5 million, respectively, were recorded in other current assets in the accompanying condensed consolidated balance sheets.

For the three and nine months ended September 30, 2023, the Company recorded $ 0.1 million and $ 0.4 million, respectively, of net cost recoveries under the cost-sharing terms of the Servier Agreement as a reduction to research and development expenses.

For the three and nine months ended September 30, 2022, the Company recorded $ 3.8 million and $ 20.4 million, respectively, of net cost recoveries.

As of September 30, 2023, no amounts due from Servier were recorded in the condensed consolidated balance sheet.

As of December 31, 2022, amounts due from Servier of $ 1.5 million were recorded in other current assets in the accompanying condensed consolidated balance sheet.

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.

11 unchanged sentences

The Notch Agreement includes a research collaboration to conduct research and pre-clinical development activities to generate engineered cells directed to Allogene’s exclusive targets, which will be conducted in accordance with an agreed research plan and budget under the oversight of a joint development committee.

Allogene will reimburse Notch’s costs incurred in accordance with such plan and budget.

Allogene will reimburse Notch’s costs incurred in

accordance with such plan and budget.

The term of the research collaboration will expire upon the earlier of (i) the fifth anniversary of the date of the Notch Agreement, (ii) at Allogene’s election, following the joint development committee’s determination that for each exclusive target, Notch has met certain success criteria, or (iii) the joint development committee’s determination that the research collaboration cannot be reasonably pursued against any exclusive target due to technical infeasibility or safety issues.

5 unchanged sentences

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

The Company did not have a controlling interest in Notch as of June 30, 2023, and continued to account for its investment in Notch as an equity method investment.

The Company did not have a controlling interest in Notch as of September 30, 2023, and continued to account for its investment in Notch as an equity method investment.

Under the Notch Agreement, Notch will be eligible to receive up to $ 7.25 million upon achieving certain agreed research milestones, up to $ 4.0 million per exclusive target upon achieving certain pre-clinical development milestones, and up to $ 283.0 million per exclusive target and cell type (i.e., T cell or NK cell) upon achieving certain clinical, regulatory and commercial milestones.

4 unchanged sentences

Either party may also terminate the Collaboration Agreement with written notice upon material breach by the other party, if such breach has not been cured within a defined period of receiving such notice, or in the event of the other party’s insolvency.

For the three and six months ended June 30, 2023, the Company recorded $ 0.8 million and $ 1.8 million, respectively, in collaboration costs as research and development expenses.

For the three and six months ended June 30, 2022, the Company recorded $ 0.9 million and $ 1.7 million, respectively, in collaboration costs as research and development expenses.

For the three months ended September 30, 2023, no collaboration costs were recorded by the Company.

For the nine months ended September 30, 2023, the Company recorded $ 1.8 million in collaboration costs as research and development expenses.

For the three and nine months ended September 30, 2022, the Company recorded $ 1.0 million and $ 2.8 million, respectively, in collaboration costs as research and development expenses.

For the three and nine months ended September 30, 2023, the Company recorded $ 3.0 million in other expenses as impairment loss on its equity method investment in Notch.

No impairment loss was recorded in 2022.

Strategic Alliance with The University of Texas MD Anderson Cancer Center

3 unchanged sentences

Payment of this funding is contingent on mutual agreement to study orders in order for any study to be included under the alliance.

The Company made an upfront payment of $ 3.0 million to MD Anderson in the year ended December 31, 2020.

The Company made an upfront payment of $ 3.0 million to MD Anderson in the year ended December 31, 2020 and made an additional upfront payment of $ 3.0 million to MD Anderson in October 2023.

The Company is obligated to make further payments to MD Anderson each year upon the anniversary of the agreement effective date through the duration of the agreement term.

3 unchanged sentences

Where any legal or regulatory authorization is finally withdrawn or terminated, the relevant study will also terminate automatically.

For the three and six months ended June 30, 2023, the Company recorded $ 0.6 million and $ 1.0 million, respectively, in collaboration costs as research and development expenses.

For the three and six months ended June 30, 2022, the Company recorded $ 0.6 million and $ 0.9 million, respectively, in collaboration costs as research and development expenses.

For the three and nine months ended September 30, 2023, the Company recorded $ 0.2 million and $ 1.2 million, respectively, in collaboration costs as research and development expenses.

For the three and nine months ended September 30, 2022, the Company recorded $ 0.2 million and $ 1.1 million, respectively, in collaboration costs as research and development expenses.

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

18 unchanged sentences

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.

1 unchanged sentence

Funds received in advance are recorded as deferred revenue and will be recognized as the performance obligations are satisfied.

The Company has determined that Allogene Overland is a variable interest entity as of June 30, 2023 and December 31, 2022, respectively.

The Company has determined that Allogene Overland is a variable interest entity as of September 30, 2023 and December 31, 2022, respectively.

The Company does not have the power to independently direct the activities which most significantly affect Allogene Overland's economic performance.

Accordingly, the Company did not consolidate Allogene Overland because the Company determined that it was not the primary beneficiary.

For the three and six months ended June 30, 2023 and 2022, the Company recognized less than $ 0.1 million of collaboration revenue.

For the three and nine months ended September 30, 2023, the Company recognized less than $ 0.1 million and $ 0.1 million, respectively, of collaboration revenue.

For the three and nine months ended September 30, 2022, the Company recognized less than $ 0.1 million and $ 0.2 million, respectively, of collaboration revenue.

Revenue recognized was due to delivery of the know-how performance obligations.

For the three and six months ended June 30, 2023, the Company recorded less than $ 0.1 million of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

For the three and six months ended June 30, 2022, the Company recorded zero and $ 0.3 million, respectively, of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

For the three months ended September 30, 2023, no net cost recoveries were recorded by the Company.

For the nine months ended September 30, 2023, the Company recorded less than $ 0.1 million of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

For the three and nine

months ended September 30, 2022, the Company recorded $ 0.3 million and $ 0.6 million, respectively, of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

Collaboration and License Agreement with Antion

9 unchanged sentences

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

In July 2023, the Company and Antion entered into an amendment to the Antion Collaboration and License Agreement.

Under the terms of this amendment, Antion's exclusivity obligation relating to the collaboration was terminated;

however, Antion agreed to certain restrictions on its ability to pursue products directed against specific targets.

Also, in lieu of the Company's prior obligation to make a $ 3.0 million investment in Antion following the completion of certain milestones, the Company agreed to make a $ 2.0 million investment in Antion's preferred stock and acquired warrants to purchase an additional $ 3.0 million of Antion's preferred stock.

The Company accounts for the fair value of the new investment of $ 1.0 million as an equity investment and the remaining $ 1.0 million was recorded as research and development expense.

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.

1 unchanged sentence

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 three and six months ended June 30, 2023, the Company recorded $ 1.3 million and $ 1.8 million, respectively, in research and development expenses related to collaboration costs.

For the three and six months ended June 30, 2022, the Company recorded $ 0.4 million and $ 3.9 million, respectively, in research and development expenses related to the upfront payment and collaboration costs.

For the three and six months ended June 30, 2023, $ 0.1 million in costs were incurred related to the achievement of a milestone under the Antion Collaboration and License Agreement.

For the three and six months ended June 30, 2022, zero costs were incurred related to the achievement of milestone under the Antion Collaboration and License Agreement.

As of June 30, 2023 and December 31, 2022, research and development expenses recorded in accrued and other liabilities were $ 1.4 million and $ 0.5 million, respectively.

As of June 30, 2023 and December 31, 2022, the Company's total equity investment in Antion was $ 3.0 million and is recognized in other long-term assets in the condensed consolidated balance sheets.

On July 11, 2023, the Company and Antion entered into an amendment to the Antion Collaboration and License Agreement.

Under the terms of this amendment, Antion's exclusivity obligation relating to the collaboration was terminated;

however, Antion agreed to certain restrictions on its ability to pursue products directed against specific targets.

Also, in lieu of the

Company’s prior obligation to make a $ 3 million investment in Antion following the completion of certain milestones, the Company agreed to make a $ 2 million investment in Antion’s preferred shares and acquired warrants to purchase an additional $ 3 million of Antion’s preferred shares.

For the three months ended September 30, 2023, no collaboration costs were recorded by the Company.

For the nine months ended September 30, 2023, the Company recorded $ 1.8 million in research and development expenses related to collaboration costs.

For the three and nine months ended September 30, 2022, the Company recorded $ 0.6 million and $ 4.5 million, respectively, in research and development expenses related to the upfront payment and collaboration costs.

For the three and nine months ended September 30, 2023, $ 0.4 million in costs were incurred related to the achievement of a milestone under the Antion Collaboration and License Agreement.

For the three and nine months ended September 30, 2022, no costs were incurred related to the achievement of milestone under the Antion Collaboration and License Agreement.

As of September 30, 2023 and December 31, 2022, research and development expenses recorded in accrued and other liabilities were $ 0.4 million and $ 0.5 million, respectively.

As of September 30, 2023 and December 31, 2022, the Company's total equity investment in Antion was $ 4.0 million and $ 3.0 million, respectively, and is recognized in other long-term assets in the condensed consolidated balance sheets.

Commitments and Contingencies

3 unchanged sentences

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.

In December 2021, the Company amended its lease agreement to lease an additional 47,566

square feet of office and laboratory space in South San Francisco, California, as part of the same building as the Company’s current headquarters.

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

12 unchanged sentences

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

Restricted cash related to letters of credit due to landlords was $ 6.0 million as of June 30, 2023 and December 31, 2022.

Restricted cash related to letters of credit due to landlords was $ 6.0 million as of September 30, 2023 and December 31, 2022.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Operating lease liabilities

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Total lease costs $ 3,767 $ 3,793 $ 11,486 $ 9,944

Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2023 was $ 6.0 million and was included in net cash used in operating activities in the Company's condensed consolidated statements of cash flows.

The undiscounted future non-cancellable lease payments under the Company's operating leases as of June 30, 2023 were as follows:

Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 30, 2023 was $ 9.0 million and was included in net cash used in operating activities in the Company's condensed consolidated statements of cash flows.

The undiscounted future non-cancellable lease payments under the Company's operating leases as of September 30, 2023 were as follows:

Year ending December 31:

8 unchanged sentences

The weighted average discount rate used to determine the operating lease liability was 6.89 %.

As of June 30, 2023, the weighted average remaining lease term for our operating leases is 9.50 years.

As of September 30, 2023, the weighted average remaining lease term for our operating leases is 9.27 years.

Other Commitments

3 unchanged sentences

Termination of the agreement by the Company will result in a termination payment due of approximately $ 4.3 million.

In connection with the agreement, the Company maintains a letter of credit for the benefit of the service provider in the amount of $ 4.3 million which is recorded as restricted cash in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022.

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

1 unchanged sentence

These agreements require payment of annual license fees and may include conditional milestone payments for achievement of specific research, clinical and commercial events, and royalty payments.

The timing and likelihood of any significant conditional milestone payments or royalty payments becoming due was not probable as of June 30, 2023.

The timing and likelihood of any significant conditional milestone payments or royalty payments becoming due was not probable as of September 30, 2023.

The Company enters into contracts in the normal course of business that includes arrangements with clinical research organizations, vendors for preclinical research and vendors for manufacturing.

These agreements generally allow for cancellation with notice.

As of June 30, 2023, the Company had non-cancellable purchase commitments of $ 0.4 million.

As of September 30, 2023, the Company had non-cancellable purchase commitments of $ 4.0 million.

Equity Method Investments

5 unchanged sentences

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 June 30, 2023 and December 31, 2022 was $ 9.9 million and $ 12.8 million, respectively, and the Company accounted for the investment using the equity method of accounting.

During the three and six months ended June 30, 2023 and 2022, the Company recognized its share of Notch's net loss under the other expenses caption within the condensed consolidated statements of operations.

The Company’s total equity investment in Notch as of September 30, 2023 and December 31, 2022 was $ 5.4 million and $ 12.8 million, respectively, and the Company accounted for the investment using the equity method of accounting.

During the three and nine months ended September 30, 2023 and 2022, the Company recognized its share of Notch's net loss under the other expenses caption within the condensed consolidated statements of operations.

During the three and nine months ended September 30, 2023, the Company recognized $ 3.0 million of impairment loss under the other expenses caption within the condensed consolidated statements of operations.

No impairment loss was recorded in 2022.

Allogene Overland Biopharm (CY) Limited

1 unchanged sentence

The Company accounts for its investment in Allogene Overland as an equity method investment at carrying value.

The Company's total equity investment in Allogene Overland was zero as of June 30, 2023 and December 31, 2022.

The Company’s equity investment in Allogene Overland as of June 30, 2023 and December 31, 2022 had a zero carryover basis.

The Company's total equity investment in Allogene Overland was zero as of September 30, 2023 and December 31, 2022.

The Company’s equity investment in Allogene Overland as of September 30, 2023 and December 31, 2022 had a zero carryover basis.

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

11 unchanged sentences

This requirement is applicable to incentive stock options only.

As of June 30, 2023, there were 6,377,914 shares reserved by the Company under the 2018 Plan for the future issuance of equity awards.

As of September 30, 2023, there were 6,730,462 shares reserved by the Company under the 2018 Plan for the future issuance of equity awards.

Stock Option Exchange Program

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Forfeited ( 4,097,851 ) 10.85

Balance, June 30, 2023 21,943,774 $ 10.62 7.86 $ 2,142

Exercisable, June 30, 2023 13,354,883 $ 12.35 7.14 $ 2,135

Vested and expected to vest, June 30, 2023 21,943,774 $ 10.62 7.86 $ 2,142

The aggregate intrinsic values of options 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 June 30, 2023.

For the six months ended June 30, 2023, the estimated weighted-average grant-date fair value of employee options granted was $ 3.55 per share.

As of June 30, 2023, there was $ 77.2 million of unrecognized stock-based compensation related to unvested stock options, which is expected to be recognized over a weighted-average period of 2 years, 248 days .

Balance, September 30, 2023 21,989,462 $ 10.37 7.61 $ 673

Exercisable, September 30, 2023 13,651,398 $ 12.33 6.95 $ 673

Vested and expected to vest, September 30, 2023 21,989,462 $ 10.37 7.61 $ —

For the nine months ended September 30, 2023, the estimated weighted-average grant-date fair value of employee options granted was $ 3.45 per share.

As of September 30, 2023, there was $ 67.0 million of unrecognized stock-based compensation related to unvested stock options, which is expected to be recognized over a weighted-average period of 2 years, 198 days .

The fair value of employee, consultant and director stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

Six Months Ended June 30,

Nine Months Ended September 30,

Expected term in years 5.27 - 6.08

26 unchanged sentences

Forfeited ( 2,993,273 ) 9.35

Unvested June 30, 2023 12,833,995 $ 7.74 2.34 $ 63,785

Vested and expected to vest, June 30, 2023 12,833,995 $ 7.74 2.34 $ 63,785

As of June 30, 2023, there was $ 71.9 million of unrecognized stock-based compensation related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2 years, 223 days .

For the six months ended June 2023, the Company granted 3,015,272 performance-based restricted stock units and 1,939,646 restricted stock units with a market condition to certain executive officers and other employees pursuant to the 2018 Plan.

Unvested September 30, 2023 12,169,837 $ 7.29 2.14 $ 38,578

Vested and expected to vest, September 30, 2023 12,169,837 $ 7.29 2.14 $ 38,578

As of September 30, 2023, there was $ 60.1 million of unrecognized stock-based compensation related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2 years, 176 days .

For the nine months ended September 30, 2023, the Company granted 3,069,751 performance-based restricted stock units and 1,994,125 restricted stock units with a market condition to certain executive officers and other employees pursuant to the 2018 Plan.

These awards are subject to the holders' continuous service to the Company through each applicable vesting event.

Through June 30, 2023, the Company believes that the achievement of the requisite performance conditions for these awards are not probable.

As a result, no compensation expense has been recognized related to the performance-based restricted stock units in the quarter ended June 30, 2023.

The Company recognized $ 0.9 million in stock-based compensation expense related to the restricted units with a market condition for the six months ended June 30, 2023.

Through September 30, 2023, the Company believes that the achievement of the requisite performance conditions for these awards are not probable.

As a result, no compensation expense has been recognized related to the performance-based restricted stock units in the quarter ended September 30, 2023.

The Company recognized $ 1.5 million in stock-based compensation expense related to the restricted units with a market condition for the nine months ended September 30, 2023.

Total stock-based compensation expense related to stock options, restricted stock units, employee stock purchase plan and vesting of the founders’ common stock was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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In May 2021, 293,594 options were early exercised, resulting in proceeds of $ 5.3 million.

As of June 30, 2023 and December 31, 2022, there was $ 1.5 million and $ 1.9 million, respectively, recorded in accrued and other liabilities and zero and $ 0.6 million, respectively, recorded in other long-term liabilities related to shares held by employees and directors that were subject to repurchase.

As of September 30, 2023 and December 31, 2022, there was $ 1.1 million and $ 1.9 million, respectively, recorded in accrued and other liabilities and zero and $ 0.6 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 condensed consolidated financial statements but the shares which are subject to future vesting conditions are not included in the calculation of earnings per share.

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

For the three and six months ended June 30, 2023 and 2022, the Company recognized less than $ 0.1 million of collaboration revenue under this agreement.

For the three and nine months ended September 30, 2023, the Company recognized less than $ 0.1 million and $ 0.1 million, respectively, of collaboration revenue under this agreement.

For the three and nine months ended September 30, 2022, the Company recognized less than $ 0.1 million and $ 0.2 million, respectively, of collaboration revenue.

For the three months ended September 30, 2023, no net cost recoveries were recorded by the Company.

For the three and nine months ended September 30, 2022, the Company recorded $ 0.3 million and $ 0.6 million, respectively, of net cost recoveries under the terms of the license agreement as a reduction to research and development expenses.

Sublease Agreement

5 unchanged sentences

The Company’s executive chairman, Arie Belldegrun, M.D., FACS, is a trustee of the Belldegrun Family Trust, which controls Bellco Capital Advisors Inc.

The total right of use asset and associated liability recorded related to this related party lease was $ 0.1 million and $ 0.2 million at June 30, 2023 and December 31, 2022, respectively.

The total right of use asset and associated liability recorded related to this related party lease was $ 0.1 million and $ 0.2 million at September 30, 2023 and December 31, 2022, respectively.

In February 2023, the Company subleased an additional 2,030 square feet of office space in Los Angeles, California, from Bellco.

6 unchanged sentences

In June 2018, the Company entered into a services agreement with Two River Consulting, LLC (Two River), a firm affiliated with the Company’s President and Chief Executive Officer, the Company’s Executive Chair of the board of directors, and a director of the Company to provide various managerial, clinical development, administrative, accounting and financial services to the Company.

The costs incurred for services provided under this agreement were $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2023, respectively.

The costs incurred for services provided under this agreement were $ 0.3 million and $ 0.5 million for the three and six months ended June 30, 2022, respectively.

The costs incurred for services provided under this agreement were $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2023, respectively.

The costs incurred for services provided under this agreement were $ 0.1 million and $ 0.6 million for the three and nine months ended September 30, 2022, respectively.

In August 2018, the Company entered into a consulting agreement with Bellco.

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The Company also reimburses Bellco for out-of-pocket expenses incurred in performing the services.

The costs incurred for services provided, bonus, and out-of-pocket expenses incurred under this consulting agreement were $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2023, respectively.

The costs incurred for services provided and out-of-pocket expenses incurred under this consulting agreement were $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2022, respectively.

The costs incurred for services provided, bonus, and out-of-pocket expenses incurred under this consulting agreement were $ 0.3 million and $ 0.7 million for the three and nine months ended September 30, 2023, respectively.

The costs incurred for services provided and out-of-pocket expenses incurred under this consulting agreement were $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2022, respectively.

The Company has a history of losses and expects to record a loss in 2023.

2 unchanged sentences

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the period presented due to their anti-dilutive effect:

September 30,

Stock options to purchase common stock 21,989,462 18,122,447

5 unchanged sentences

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 1. Financial Statements