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Item 7. Management’s Discussion and Analysis

2025-03-13 compared with 2024-03-14 · 129 added, 317 removed, 196 unchanged (69% of the section changed)

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

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

Earlier this year, however, we announced our 2024 Platform Vision under which we are now focusing on four core programs.

We are currently focused on developing cemacabtagene ansegedleucel (cema-cel, previously ALLO-501A) in large B-cell lymphoma (LBCL) and chronic lymphocytic leukemia (CLL).

We plan to initiate a pivotal Phase 2 clinical trial (ALPHA3) in mid-2024 for cema-cel as part of a first line (1L) treatment plan for newly diagnosed and treated LBCL patients who are likely to relapse and need further therapy.

Last year we announced our 2024 Platform Vision under which we are now focusing on three core programs.

We are currently focused on developing cemacabtagene ansegedleucel (cema-cel, previously ALLO-501A) in large B-cell lymphoma (LBCL).

In June 2024, we initiated a pivotal Phase 2 clinical trial (ALPHA3) for cema-cel as part of a first line (1L) treatment plan for newly diagnosed and treated LBCL patients who are likely to relapse and need further therapy, and we now have 40 sites activated.

The design of the ALPHA3 1L consolidation trial builds upon the results demonstrated in the Phase 1 ALPHA2 trial and leverages an investigational diagnostic test developed by Foresight Diagnostics, Inc.

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The study will randomize approximately 240 patients who achieve a complete response or partial response to 1L therapy, but who are MRD positive.

The patients will be randomized to either consolidation with cema-cel or the current standard of care, which is observation.

The design, with a primary endpoint of event free survival (EFS), will initially include two lymphodepletion arms (one with standard fludarabine and cyclophosphamide plus ALLO-647 and one with standard fludarabine and cyclophosphamide but without ALLO-647).

One lymphodepletion arm will be discontinued following a planned interim analysis in mid-2025 designed to select the most appropriate regimen for this patient population.

Patients will be randomized to receive either consolidation with cema-cel or the current standard of care, which is observation.

The study design, which has event free survival (EFS) as its primary endpoint, initially includes two lymphodepletion arms:

standard fludarabine and cyclophosphamide plus ALLO-647

standard fludarabine and cyclophosphamide without ALLO-647

One of these lymphodepletion arms will be discontinued following a planned interim analysis designed to identify the most appropriate regimen for this patient population.

An initial safety and futility interim analysis will occur once 12 patients in each arm have been enrolled and followed for MRD conversion.

If both treatment arms perform better than the control arm according to the futility criteria, but neither treatment arm shows a trend toward superiority relative to the other in this interim analysis, additional patients may be enrolled and analyzed before we select the final lymphodepletion regimen.

The selection of the lymphodepletion regimen is anticipated around mid-2025, depending on the interim analyses results and overall trial progress.

Efficacy analyses are expected to occur in 2026, and will include the Independent Data Safety Monitoring Board (IDSMB) interim EFS analysis in the first half of 2026 and the data readout of the primary EFS analysis is expected around year-end 2026.

A biologics license application (BLA) submission is targeted for 2027.

In view of the potential of the earlier line ALPHA3 trial, we have deprioritized the third line (3L) LBCL ALPHA2 and EXPAND trials.

We have initiated the Phase 1b cohort of our ALPHA2 trial to evaluate cema-cel following lymphodepletion with fludarabine/cyclophosphamide and ALLO-647 in patients with relapsed/refractory chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL).

This cohort will include up to 40 patients, and we expect to release initial data by year-end 2024.

We are enrolling a Phase 1 clinical trial (TRAVERSE) of ALLO-316, an allogeneic CAR T cell product candidate targeting CD70, in adult patients with advanced or metastatic RCC.

We presented interim results from the TRAVERSE trial at the American Association of Cancer Research (AACR) Annual Meeting in April 2023.

We have implemented a protocol

amendment that incorporates a diagnostic and treatment algorithm into the study design.

We have completed enrollment in an expansion cohort in a Phase 1b clinical trial (TRAVERSE) of ALLO-316, an allogeneic CAR T cell product candidate targeting CD70, in adult patients with advanced or metastatic clear cell renal cell carcinoma (RCC).

On October 29, 2024, we announced that we had received Regenerative Medicine Advanced Therapy (RMAT) designation for ALLO-316 for adult patients with advanced or metastatic RCC.

We have implemented a protocol amendment that incorporates a diagnostic and treatment algorithm into the study design.

The algorithm is designed to mitigate the treatment-associated hyperinflammatory response without compromising the CAR T function needed to eradicate solid tumors.

The next update from this trial is planned for a medical forum in the second quarter of 2024 and will discuss the algorithm.

A more robust data update from the ongoing trial with the updated protocol is planned for later in 2024.

In November 2024, we provided a data update from patients with CD70 positive RCC, and highlighted that the newly implemented diagnostic and management algorithm appears effective in abating IEC-HS while preserving CAR T efficacy.

Additional data from dose escalation cohorts, as well as a Phase 1b expansion cohort, was presented at the 2024 International Kidney Cancer Symposium (IKCS, November 8, 2024) and the Society for Immunotherapy of Cancer’s (SITC) Annual Meeting (November 9, 2024).

As of the October 14, 2024, data cutoff, 39 patients had been enrolled in the ongoing Phase 1 trial, of which 26 were confirmed to have CD70 positive RCC and were evaluable for efficacy outcomes.

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

Data from dose escalation cohorts and ongoing Phase 1b expansion cohort are included in the presentations.

The Phase 1b expansion cohort is evaluating safety and efficacy of ALLO-316 at DL2 (80M CAR T cells) following a standard FC500 (fludarabine (30 mg/m2/day) and cyclophosphamide (500 mg/m2/d) for three days) lymphodepletion regimen.

The Phase 1b expansion cohort has now completed enrollment with 20 patients enrolled.

We are now pausing further standard dosing pending durability results for the enrolled patients.

Additional data from the Phase 1b expansion cohort is expected to be announced in mid-2025.

We are developing ALLO-329, a next-generation allogeneic CAR T cell product candidate targeting both CD19 and CD70 for the treatment of certain autoimmune diseases (AID).

Inclusion of an anti-CD70 CAR in ALLO-329 incorporates the Dagger® technology, which is designed to reduce or eliminate the need for standard chemotherapy by preventing premature rejection while targeting CD19+ B-cells and CD70+ activated T-cells, both of which play a role in AID.

Initiation of this Phase 1 trial with ALLO-329 is expected in early 2025.

We are developing an anti-CD52 monoclonal antibody, ALLO-647, which is a proprietary component of our lymphodepletion regimen.

In January 2025, we announced that the FDA has cleared our investigational new drug (IND) application for a Phase 1 rheumatology basket study of ALLO-329 (RESOLUTION trial).

Our RESOLUTION trial will evaluate the safety and efficacy of ALLO-329 across multiple autoimmune diseases, including systemic lupus erythematosus (SLE) (including lupus nephritis), idiopathic inflammatory myopathies, and systemic sclerosis.

We expect to initiate the Phase 1 trial with ALLO-329 in mid-2025 and anticipate having proof-of-concept around year-end 2025.

We are developing an anti-CD52 monoclonal antibody, ALLO-647, which is a proprietary component of our oncology lymphodepletion regimen.

ALLO-647 may be able to reduce the likelihood of a patient’s immune system rejecting the engineered allogeneic T cells for a sufficient period of time to enable a window of persistence during which our engineered allogeneic T cells can actively target and destroy cancer cells.

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Patients will be randomized to receive cema-cel and a lymphodepletion regimen with fludarabine and cyclophosphamide either with or without ALLO-647.

We plan to select the lymphodepletion regimen with which we will complete enrollment in the study (Part B) in the first half of 2025.

While we have additional programs in our pipeline, our development priorities are focused on cema-cel (1L Consolidation and CLL), ALLO-316, and ALLO-329.

We will explore opportunities to partner with collaborators on product candidates across our pipeline.

On January 4, 2024, our board of directors approved a reduction in our workforce of approximately 22% of our employees in connection with our pipeline prioritization and clinical development strategy.

As described above, one of these lymphodepletion arms will be discontinued following a planned interim analysis designed to identify the most appropriate regimen for this patient population.

The selection of the final regimen with which we will complete enrollment in the study (Part B) is anticipated around mid-2025, depending on the interim analyses results and overall trial progress.

While we have additional programs in our pipeline, our clinical development priorities are focused on cema-cel (1L Consolidation), ALLO-316 and ALLO-329.

The development of our other product candidates is currently focused on pre-clinical studies, including studies of BCMA and DLL3 CARs with and without our CD70 Dagger® protein, and various manufacturing improvements that may be applicable to such product candidates, we continue to explore opportunities to partner with collaborators on product candidates across our pipeline.

In May 2024, we entered into an Amendment and Settlement Agreement (the Servier Amendment) under which we expanded the geographic territory for our CD19 license to include the European Union and the United Kingdom.

The Servier Amendment also grants us an option to further expand the licensed territory to include China and Japan upon the objective showing of sufficient resources to develop licensed products in those countries, which could be met through the Company entering into a strategic partnership covering those countries.

Later this year, we plan to seek scientific advice from European and UK regulatory authorities to assist us with finalizing our regulatory strategy for the EU and the UK.

Additionally, in February 2025, we entered into an Amended and Restated Strategic Collaboration Agreement with Foresight Diagnostics which expands our collaboration to enable the development of Foresight Diagnostics’ MRD assay as a companion diagnostic in the EU, UK, Canada and Australia in support of Allogene’s clinical development of cema-cel.

Since inception, we have had significant operating losses.

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As of December 31, 2024, we had an accumulated deficit of $1.8 billion.

As of December 31, 2023, we had $448.7 million in cash and cash equivalents and investments and we expect our cash runway to fund operations into 2026.

As of December 31, 2024, we had $373.1 million in cash and cash equivalents and investments and we expect our cash runway to fund operations into the second half of 2026.

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

Our Research and Development and License Agreements

Our License and Collaboration Agreements

Below is a summary of the key terms for certain of our licenses and collaboration agreements.

For a more detailed description of these agreements, see Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Asset Contribution Agreement with Pfizer

In April 2018, we entered into an Asset Contribution Agreement (Pfizer Agreement) with Pfizer pursuant to which we acquired certain assets and assumed certain liabilities from Pfizer, including agreements with Cellectis and Servier as described below, and other intellectual property for the development and administration of CAR T cells for the treatment of cancer.

See Note 6 to our consolidated financial statements included elsewhere in this Annual Report for further description of the Pfizer Agreement.

In April 2018, we entered into an Asset Contribution Agreement (the Pfizer Agreement) with Pfizer pursuant to which we acquired certain assets and assumed certain liabilities from Pfizer, including agreements with Cellectis S.A.

(Cellectis) and Servier as described below, and other intellectual property for the development and administration of CAR T cells for the treatment of cancer.

Research Collaboration and License Agreement with Cellectis

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

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

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

Exclusive License and Collaboration Agreement with Servier

In October 2015, Pfizer entered into 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 March 2019, we terminated the agreement with Cellectis and entered into a new license agreement with Cellectis (the Cellectis Agreement).

Under the Cellectis Agreement, Cellectis granted us 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.

Exclusive License Agreement with Servier

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

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

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

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 cema-cel (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.

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 submitted to a review of our manufacturing costs of CD19 Products to recover outstanding manufacturing costs owed by Servier to us.

In July 2023, Servier sent us a second notice for material breach alleging that we overcharged Servier based on Servier and its accounting firm’s review of costs eligible for cost-sharing under the Servier Agreement.

We disagree with the material breach allegations and we are disputing such allegations.

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

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

In May 2024, we entered into an Amendment and Settlement Agreement (the Servier Amendment) with Servier under which we:

(1) expanded our territory under the Original Servier Agreement to include the European Union and the United Kingdom, and provides for an option to further expand our territory to include China and Japan, (2) waived certain of our rights to elect to convert certain of our license rights to a worldwide license, (3) revised our future milestone payments to coincide with Servier’s milestone payments to Cellectis under the Servier-Cellectis Agreement, (4) agreed to pre-pay a future €20 million milestone payment into an escrow account, and (5) increased the United States tiered royalty rates to a range from the low tens to the mid teen percentages, and agreed to an ex-U.S.

royalty rate of 10%.

For more information, see “Risk Factors— Servier’s discontinuation of its involvement in the development of CD19 Products and Servier's disputes with Cellectis, or future disputes with us, may have adverse consequences."

Collaboration and License Agreement with Notch

On November 1, 2019, we entered into a Collaboration and License Agreement (the Notch Agreement) with Notch Therapeutics Inc.

(Notch), pursuant to which Notch granted us an exclusive, worldwide, royalty-bearing, sublicensable license under certain of Notch’s intellectual property to develop, make, use, sell, import, and otherwise commercialize therapeutic gene-edited T cell and/or natural killer cell products from induced pluripotent stem cells directed at certain CAR targets for initial application in NHL, B-cell precursor acute lymphoblastic leukemia (ALL) and multiple myeloma.

gene-edited T cell and/or natural killer cell products from induced pluripotent stem cells directed at certain CAR targets for initial application in NHL, B-cell precursor acute lymphoblastic leukemia (ALL) and multiple myeloma.

In addition, Notch has granted us an option to add certain specified targets to our exclusive license in exchange for an agreed upon per-target option fee.

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

In connection with the execution of the Notch Agreement, we made an upfront payment to Notch of $10.0 million.

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

Immediately following this transaction, our share in Notch was 23.0% on a voting interest basis.

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

On January 25, 2024, we entered into an Amended and Restated Collaboration and License Agreement (the Amended Notch Agreement) with Notch.

The Amended Notch Agreement amends and restates the Notch Agreement, dated as of November 1, 2019.

The Amended Notch Agreement amends and restates the Notch Agreement.

Under the Amended Notch Agreement, we have relinquished our exclusive rights to all original CAR targets (the Released Targets) except for one CAR target, and have agreed to limit our option right to only one additional CAR target.

If the option is exercised, we will have a minimum funding commitment for the overall development program.

If Notch subsequently out-licenses any of the Released Targets, we will be entitled to receive a percentage of upfront and/or milestone payments associated therewith up to a set cap, and will be entitled to a low, single-digit royalty on net sales of products containing a Released Target.

In addition, with respect to our previous equity investments in Notch, the Amended Notch Agreement grants us certain anti-dilution protections up to certain limits for certain pre-IPO equity financings.

If Notch subsequently out-licenses any of the Released Targets (whether through an out-license, partnership, sale, or other transaction), we will be entitled to receive a percentage of upfront and/or milestone payments associated therewith up to a set cap of $30.0 million, and will be entitled to a low, single-digit royalty on net sales of products containing a Released Target.

In January 2025, Notch announced that securing additional investment and/or additional partners to take their research forward remains challenging, and therefore they significantly reduced their workforce to preserve cash and provide the time to explore alternate paths forward.

Strategic Alliance with The University of Texas MD Anderson Cancer Center

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

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

License Agreement with Allogene Overland Biopharm (CY) Limited

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

(Overland), pursuant to a Share

Purchase Agreement, dated December 14, 2020, for the purpose of developing, manufacturing and commercializing certain allogeneic CAR T cell therapies for patients in greater China, Taiwan, South Korea and Singapore (the JV Territory).

License Agreement with Allogene Overland Biopharm (PRC) Co., Limited

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

(Overland), pursuant to a Share Purchase Agreement (Share Purchase Agreement), dated December 14, 2020, for the purpose of developing, manufacturing and commercializing certain allogeneic CAR T cell therapies directed at four targets, BCMA, CD70, FLT3 and DLL3 (Overland Licensed Products) for patients in greater China, Taiwan, South Korea and Singapore (the JV Territory).

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.

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

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

On May 24, 2024, we, Overland and Allogene Overland entered into a Share Exchange Agreement (Share Exchange Agreement) pursuant to which Overland’s cell therapy business merged into Allogene Overland (the Organizational Restructuring).

Under a separate agreement between Overland and HH BioPharma Holdings Ltd.

(HBP) executed on May 24, 2024, Overland distributed all Series Seed Preferred Shares of Allogene Overland held by Overland to HBP and HBP has assumed all rights and obligations attached to such shares and all rights and obligations of Overland under the Share Exchange Agreement.

In connection with the Organizational Restructuring, on May 24, 2024, we and Allogene Overland PRC entered into a First Amendment to Exclusive License Agreement (the License Amendment) to amend and supplement certain provisions of the License Agreement.

Under the License Amendment, we continue to grant Allogene Overland PRC an exclusive license to develop, manufacture, and commercialize the Overland Licensed Products in the Territory, with us retaining exclusive rights to the Overland Licensed Products outside the JV Territory, and the royalty obligations to us were amended to a flat mid single-digit royalty on net sales in the JV Territory that are no longer subject to reductions as previously provided.

The License Amendment also provides us with additional rights to terminate the License Agreement in its entirety or with respect to the relevant Overland Licensed Product(s) if Allogene Overland PRC fails to initiate manufacturing technology transfer with respect to an Overland Licensed Product as agreed in the License Amendment, or if HBP commits a funding default or a material breach of its representations, warranties, or covenants under the Share Exchange Agreement.

The License Amendment also provides that the License Agreement will terminate automatically if our ownership in Allogene Overland falls below 7.5% (other than due to our sale of the shares of Allogene Overland), unless at that time we and Allogene Overland PRC have mutually agreed on the manufacturing technology transfer plan for the Overland Licensed Product(s) and Allogene Overland PRC elects to continue the license for such Overland Licensed Product(s) with increased milestones and royalties.

Under the License Amendment terms such increased milestones and royalties consist of up to $115 million in milestone payments for each Overland Licensed Product and tiered mid single-digit to low double-digit royalties on net sales in the JV Territory.

As part of the Organizational Restructuring, Allogene Overland was renamed to Overland Therapeutics Inc.

(Overland Therapeutics).

Collaboration and License Agreement with Antion

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On July 11, 2023, we entered into an amendment to the Antion Collaboration and License Agreement, which included a $2.0 million investment in Antion’s preferred shares and the acquisition of warrants to purchase an additional $3.0 million of Antion’s preferred shares.

See Note 6 to our consolidated financial statements included elsewhere in this Annual Report for further description of the Antion Agreement and the July 2023 amendment.

Strategic Collaboration Agreement with Foresight Diagnostics

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(Foresight Diagnostics).

Pursuant to the Foresight Agreement, the parties have agreed to collaborate on a non-exclusive basis in the development of Foresight Diagnostics' MRD assay as an in vitro diagnostic to identify the MRD+ patient population to be enrolled in our planned ALPHA3 trial of cemacabtagene ansegedleucel, or cema-cel (previously known as ALLO-501A) for treatment of large B cell lymphoma (LBCL).

Under the Foresight Agreement, we have agreed to use the commercially reasonable efforts to obtain regulatory approval of cema-cel, and Foresight Diagnostics has agreed to use its commercially reasonable efforts to obtain regulatory approval of an MRD assay for use as an in vitro diagnostic with cema-cel.

Pursuant to the Foresight Agreement, the parties have agreed to collaborate on a non-exclusive basis in the development of Foresight Diagnostics’ MRD assay as an in vitro diagnostic to identify the MRD+ patient population to be enrolled in our ALPHA3 trial of cemacabtagene ansegedleucel, or cema-cel (previously known as ALLO-501A) for treatment of large B cell lymphoma (LBCL).

Under the Foresight Agreement, we have agreed to use commercially reasonable efforts to obtain regulatory approval of cema-cel, and Foresight Diagnostics has agreed to use commercially reasonable efforts to obtain regulatory approval of an MRD assay for use as an in vitro diagnostic with cema-cel.

On February 19, 2025, we entered into an Amended and Restated Strategic Collaboration Agreement with Foresight Diagnostics which expands our collaboration to include the development of Foresight Diagnostics’ MRD assay as a companion diagnostic for use with cema-cel as part of a possible EU and/or UK clinical development program, and as part of an expansion of ALPHA3 to Canadian and Australian clinical trial sites in support of our US clinical development program.

In total, we have agreed to fund approximately $37.3 million in MRD assay development costs, milestone payments for U.S., and certain international regulatory submissions and assay utilization costs to process clinical samples.

Components of Results of Operations

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

See Notes 1 and 6 to our consolidated financial statements appearing elsewhere in this Annual Report for more information related to our recognition of revenue and the Allogene Overland agreement.

As of December 31, 2024, our revenue has been exclusively generated from the License Agreement with Overland Therapeutics.

See Note 6 to our consolidated financial statements appearing elsewhere in this Annual Report for more information related to our recognition of revenue and the License Agreement.

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

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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 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 cema-cel.

Research and development activities are central to our business model.

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• the number of sites included in the trials;

• the number of patients we are required to screen with eligibility tests (e.g.

MRD assays) in order to reach our enrollment targets;

• the countries in which the trials are conducted;

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Because our product candidates are still in clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of product candidates or whether, or when, we may achieve profitability.

We do not track most of our external research and development expenses by programs or product candidates because most of our external research and development expenses could be used for different programs or product candidates.

General and Administrative

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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 operating as a public 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 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:

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

Other Income (Expenses)

Other income (expenses) consists of non-operating income and expenses, including primarily our share of net losses for the period from, and impairment of, our equity method investments and impairment of our equity investment.

Interest Expense

Interest expense related to the California Institute of Regenerative Medicine (CIRM) award is accrued upon cash receipt.

Other Expenses, net

Other expenses, net consist of non-operating income and expenses, including primarily our share of net losses for the period from, and impairment of, our equity method investments and impairment of our equity investments.

Results of Operations

Comparison of the Years Ended December 31, 2024 and 2023

The following sets forth our results of operations for the years ended December 31, 2023, 2022, and 2021 (in thousands):

The following sets forth our results of operations for the years ended December 31, 2024 and 2023 (dollars in thousands):

Year Ended December 31, Change

2023 2022 2021 2023 vs 2022 2022 vs 2021

(As Restated) (As Restated)

2024 2023 $ %

Collaboration revenue - related party $ 22 $ 95 $ (73) (77) %

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Interest and other income, net 20,153 18,307 1,846 10 %

Other expenses (17,835) (9,444) (3,573) (8,391) (5,871)

Interest expense (181) — (181) (100) %

Other expenses, net

(3,920) (17,835) 13,915 (78) %

Total other income (expense), net 16,052 472 15,580 3,301 %

Loss before income taxes (257,147) (327,265) 70,118 (21) %

Income tax expense (443) — (443) (100) %

Net loss $ (257,590) $ (327,265) $ 69,675 (21) %

Collaboration revenue - related party

Collaboration revenue was $0.1 million and $0.2 million for the years ended December 31, 2023 and 2022, respectively.

Revenue recognized in the years ended December 31, 2023 and 2022 was mainly due to participation in the joint steering committee performance obligation related to the License Agreement entered into with Allogene Overland on December 14, 2020.

Collaboration revenue was $0.2 million and $114.1 million for the years ended December 31, 2022 and 2021, respectively.

The decrease of $113.9 million was due to the revenue recognized related to the license of intellectual property and delivery of the know-how, which was delivered in the first quarter of 2021, under the License Agreement entered into with Allogene Overland in December 2020.

Revenue recognized in the years ended December 31, 2024 and 2023 was mainly due to participation in the joint steering committee performance obligation related to the License Agreement entered into with Overland Therapeutics on December 14, 2020.

Research and Development Expenses

The following table shows the primary components of our research and development expenses for the periods presented:

Year Ended December 31, Change

2023 2022 2021 2023 vs.

2022 2022 vs.

Year Ended December 31,

2024 2023 Change

Personnel $ 79,993 $ 112,457 $ (32,464)

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Our research and development expenses included $91.1 million of internal expense and $101.2 million of external expenses for the year ended December 31, 2024.

Of the $101.2 million of the external expenses for the year ended December 31, 2024, $36.4 million was related to our cema-cel program.

Our research and development expenses included $119.0 million of internal expenses and $123.9 million of external expenses for the year ended December 31, 2023.

Research and development expenses were $242.9 million and $256.4 million for the years ended December 31, 2023 and 2022, respectively.

The net decrease of $13.5 million was primarily due to a decrease in personnel related costs of $17.1 million, of which $13.5 million was decreased stock-based compensation expense, offset by an increase in external costs related to the advancement of our product candidates of $3.4 million due to the timing of process development activities and manufacturing runs.

Of the $123.9 million of the external expenses for the year ended December 31, 2023, $43.2 million was related to our cema-cel program.

Research and development expenses were $192.3 million and $242.9 million for the years ended December 31, 2024 and 2023, respectively.

The net increase of $36.2 million was primarily due to an increase in building rent and facilities costs of $14.2 million, an increase in personnel related costs of $16.7 million, of which $3.5 million was increased stock-based compensation expense, and an increase in external costs relating to the advancement of our product candidates of $2.3 million due to the timing of process development activities and manufacturing runs.

The net decrease of $50.6 million was primarily due to a decrease in personnel related costs of $32.5 million, of which $11.5 million was decreased stock-based compensation expense, external costs related to the advancement of our product candidates of $12.4 million due to the timing of process development activities and manufacturing runs and facilities, depreciation, and other expense of $5.8 million.

General and Administrative Expenses

General and administrative expenses were $65.2 million and $71.7 million for the years ended December 31, 2024 and 2023, respectively.

The net decrease of $7.6 million was primarily due to a decrease in personnel related costs of $5.7 million, of which $4.1 million was decreased stock-based compensation expense, and a decrease in expenses related to corporate communications of $1.8 million.

General and administrative expenses were $79.3 million and $74.1 million for the years ended December 31, 2022 and 2021, respectively.

The net increase of $5.2 million was primarily due to an increase in personnel related costs of $3.4 million, an increase in expenses related to corporate communications of $2.8 million, partially offset by a $1.5 million decrease in business and consulting fees.

The net decrease of $6.5 million was primarily due to a decrease in personnel related costs of $5.3 million, of which $2.7 million was decreased stock-based compensation expense, and a decrease in legal and professional services of $1.2 million.

Impairment of long-lived asset

In December 2023, we made a decision to sublease one of our leased buildings in South San Francisco.

We vacated and ceased occupancy of this building in December 2023 and currently we are actively marketing the leased building for sublease.

We determined that the change in how this property is being used could indicate impairment and recorded long-lived asset impairment loss based on the performed impairment analysis.

During the year ended December 31, 2024, we recorded impairments as the carrying values of sublet property asset groups were not recoverable due to the market conditions.

During the year ended December 31, 2024, we recognized total impairment charge of $15.7 million.

During the year ended December 31, 2023, we recorded impairments as the carrying values of sublet property asset groups were not recoverable due to the change in how this property was being used.

During the year ended December 31, 2023 we recognized total impairment charge of $13.2 million.

Interest and Other Income, Net

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The $1.9 million increase was primarily due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Interest and other income, net was $4.6 million and $1.7 million for the years ended December 31, 2022 and 2021, respectively.

The $2.9 million increase was due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Other expenses

Other expenses were $17.8 million and $9.4 million for the years ended December 31, 2023 and 2022, respectively.

The $8.4 million increase was primarily due to impairment loss of $7.0 million related to our equity method investment and equity investment recorded for the year ended December 31, 2023.

Other expenses were $9.4 million and $3.6 million for the years ended December 31, 2022 and 2021, respectively.

The $5.9 million increase was primarily due to higher share of net losses in our equity method investments.

Quarterly Discussion and Analysis

The following discussion should be read in conjunction with our accompanying restated unaudited interim condensed consolidated financial statements disclosed in Part II.

Financial Statements and Supplementary Data, Note 15 "Selected Quarterly Financial Data (Unaudited)", of this Annual Report.

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

Three Months Ended March 31, Change

2023 2022 $ %

(As Restated) (As Restated)

Collaboration revenue - related party $ 30 $ 39 $ (9) (23) %

Operating expenses:

Research and development 80,238 60,156 20,082 33 %

General and administrative 18,884 19,897 (1,013) (5) %

Total operating expenses 99,122 80,053 19,069 24 %

Loss from operations (99,092) (80,014) (19,078) 24 %

Other income (expense), net:

Interest and other income, net 2,059 492 1,567 318 %

Other income (expenses), net (2,936) 914 (3,850) (421) %

Total other income (expense), net (877) 1,406 (2,283) (162) %

Net loss (99,969) (78,608) (21,361) 27 %

Collaboration revenue - related party

Collaboration revenue recognized for the three months ended March 31, 2023 and 2022 was mainly due to participation in the joint steering committee performance obligation related to the License Agreement entered into with Allogene Overland on December 14, 2020.

Research and Development Expenses

The following table shows the primary components of our research and development expenses for the periods presented:

Three Months Ended March 31,

2023 2022 Change

Personnel $ 34,173 $ 33,079 $ 1,094

Development costs 31,261 14,323 16,938

Facilities and depreciation 11,193 10,070 1,123

Other 3,611 2,684 927

Total research and development expenses 80,238 60,156 20,082

Our research and development expenses included $35.2 million of internal expenses and $45.0 million of external expenses for the three months ended March 31, 2023.

Our research and development expenses included $33.9 million of internal expenses and $26.2 million of external expenses for the three months ended March 31, 2022.

Research and development expenses were $80.2 million and $60.1 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 $1.1 million.

General and Administrative Expense

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.

Interest and Other Income, Net

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 primarily due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Other income (expenses), Net

Other expenses were $2.9 million for the three months ended March 31, 2023 and other income was $0.9 million for the three months ended March 31, 2022.

The increase in other expenses of $3.8 million was primarily due to higher share of net losses in our equity method investments.

The following sets forth our results of operations for the three and six months ended June 30, 2023 and 2022 (in thousands):

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

2023 2022 $ 2023 2022 $

(As Restated) (As Restated) (As Restated) (As Restated)

Collaboration revenue - related party $ 22 $ 64 $ (42) $ 52 $ 103 $ (51)

Operating expenses:

Research and development 62,038 57,171 4,867 142,276 117,327 24,949

General and administrative 18,524 19,509 (985) 37,408 39,406 (1,998)

Total operating expenses 80,562 76,680 3,882 179,684 156,733 22,951

Loss from operations (80,540) (76,616) (3,924) (179,632) (156,630) (23,002)

Other income (expense), net:

Interest and other income, net 3,778 315 3,463 5,837 807 5,030

Other expenses (2,470) (3,990) 1,520 (5,406) (3,076) (2,330)

Total other income (expense), net 1,308 (3,675) 4,983 431 (2,269) 2,700

Net loss (79,232) (80,291) 1,059 (179,201) (158,899) (20,302)

Collaboration revenue - related party

Collaboration revenue recognized for the three and six months ended June 30, 2023 and 2022 was mainly due to participation in the joint steering committee performance obligation related to the License Agreement entered into with Allogene Overland on December 14, 2020.

Research and Development Expenses

The following table shows the primary components of our research and development expenses for the periods presented:

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

2023 2022 Change 2023 2022 Change

Personnel $ 29,574 $ 34,926 $ (5,352) $ 63,748 $ 68,005 $ (4,257)

Development costs 18,218 8,078 10,140 49,479 22,401 27,078

Facilities and depreciation 11,457 11,039 418 22,650 21,110 1,540

Other 2,789 3,128 (339) 6,399 5,811 588

Total research and development expenses 62,038 57,171 4,867 142,276 117,327 24,949

Our research and development expenses included $31.1 million of internal expenses and $30.9 million of external expenses for the three months ended June 30, 2023.

Our research and development expenses included $36.1 million of internal expenses and $21.1 million of external expenses for the three months ended June 30, 2022.

Research and development expenses were $62.0 million and $57.2 million for the three months ended June 30, 2023 and 2022, respectively.

The increase of $4.9 million was driven primarily by a decrease in Servier cost recoveries of $11.0 million, offset by a decrease in personnel related costs of $5.4 million and a decrease in external costs relating to the advancement of our product candidates due to the timing of development activities and manufacturing runs of $0.9 million.

Our research and development expenses included $66.3 million of internal expenses and $75.9 million of external expenses for the six months ended June 30, 2023.

Our research and development expenses included $70.1 million of internal expenses and $47.2 million of external expenses for the six months ended June 30, 2022.

Research and development expenses were $142.3 million and $117.3 million for the six months ended June 30, 2023 and 2022, respectively.

The increase of $24.9 million was driven primarily by a decrease in Servier cost recoveries of $16.1 million and an increase in external costs relating to the advancement of our product candidates due to the timing of development activities and manufacturing runs of $11.0 million, offset by a decrease in personnel related costs of $4.3 million.

General and Administrative Expense

General and administrative expenses were $18.5 million and $19.5 million for the three months ended June 30, 2023 and 2022, respectively.

The decrease of $1.0 million was primarily due to a decrease in personnel related costs of $0.4 million and a decrease in expenses related to corporate communications and outside services of $0.3 million.

General and administrative expenses were $37.4 million and $39.4 million for the six months ended June 30, 2023 and 2022, respectively.

The decrease of $2.0 million was primarily due to a decrease in personnel related costs of $1.4 million and a decrease in expenses related to corporate communications and outside services of $0.6 million.

Interest and Other Income, Net

Interest and other income, net was $3.8 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively.

The increase of $3.5 million was primarily due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Interest and other income, net was $5.8 million and $0.8 million for the six months ended June 30, 2023 and 2022, respectively.

The increase of $5.0 million was primarily due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Other expenses

Other expenses were $2.5 million and $4.0 million for the three months ended June 30, 2023 and 2022, respectively.

The decrease of $1.5 million was primarily due to lower share of net losses in our equity method investments.

Other expenses were $5.4 million and $3.1 million for the six months ended June 30, 2023 and 2022, respectively.

The increase of $2.3 million was primarily due to higher share of net losses in our equity method investments.

The following sets forth our results of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):

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

2023 2022 $ 2023 2022 $

(As Restated) (As Restated) (As Restated) (As Restated)

Collaboration revenue - related party $ 22 $ 27 $ (5) $ 74 $ 130 $ (56)

Operating expenses:

Research and development 45,977 63,641 (17,664) 188,253 180,968 7,285

General and administrative 17,041 18,897 (1,856) 54,449 58,303 (3,854)

Total operating expenses 63,018 82,538 (19,520) 242,702 239,271 3,431

Loss from operations (62,996) (82,511) 19,515 (242,628) (239,141) (3,487)

Other income (expense), net:

Interest and other income, net 6,205 1,002 5,203 12,042 1,809 10,233

Other expenses (5,496) (2,733) (2,763) (10,902) (5,809) (5,093)

Total other income (expense), net 709 (1,731) 2,440 1,140 (4,000) 5,140

Net loss (62,287) (84,242) 21,955 (241,488) (243,141) 1,653

Collaboration revenue - related party

Collaboration revenue recognized for the three and nine months ended September 30, 2023 and 2022 was mainly due to participation in the joint steering committee performance obligation related to the License Agreement entered into with Allogene Overland on December 14, 2020.

Research and Development Expenses

The following table shows the primary components of our research and development expenses for the periods presented:

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

2023 2022 Change 2023 2022 Change

Personnel $ 26,170 $ 32,748 $ (6,578) $ 89,917 $ 100,753 $ (10,836)

Development costs 6,494 16,799 (10,305) 55,973 39,200 16,773

Facilities and depreciation 11,104 11,349 (245) 33,754 32,459 1,295

Other 2,209 2,745 (536) 8,609 8,556 53

Total research and development expenses 45,977 63,641 (17,664) 188,253 180,968 7,285

Our research and development expenses included $28.1 million of internal expenses and $17.9 million of external expenses for the three months ended September 30, 2023.

Our research and development expenses included $33.6 million of internal expenses and $30.0 million of external expenses for the three months ended September 30, 2022.

Research and development expenses were $46.0 million and $63.6 million for the three months ended September 30, 2023 and 2022, respectively.

The decrease of $17.7 million was driven primarily by a decrease in external costs relating to the advancement of our product candidates due to the timing of development activities and manufacturing runs of $10.3 million and a decrease in personnel related costs of $6.6 million, of which $4.3 million was stock-based compensation expense.

Our research and development expenses included $94.5 million of internal expenses and $93.8 million of external expenses for the nine months ended September 30, 2023.

Our research and development expenses included $103.8 million of internal expenses and $77.2 million of external expenses for the nine months ended September 30, 2022.

Research and development expenses were $188.3 million and $181.0 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase of $7.3 million was driven primarily by a decrease in Servier cost recoveries of $19.7 million and an increase in facilities costs of $1.3 million, offset by a decrease in personnel related costs of $10.8 million, of which $12.4 million was a decrease in stock-based compensation expense, and a decrease in external costs relating to the advancement of our product candidates due to the timing of development activities and manufacturing runs of $2.9 million.

General and Administrative Expense

General and administrative expenses were $17.0 million and $18.9 million for the three months ended September 30, 2023 and 2022, respectively.

The decrease of $1.9 million was primarily due to a decrease in personnel related costs of $2.1 million, of which $1.5 million was stock-based compensation expense.

General and administrative expenses were $54.4 million and $58.3 million for the nine months ended September 30, 2023 and 2022, respectively.

The decrease of $3.9 million was primarily due to a decrease in personnel related costs of $3.6 million, of which $3.3 million was stock-based compensation expense.

Interest and Other Income, Net

Interest and other income, net was $6.2 million and $1.0 million for the three months ended September 30, 2023 and 2022, respectively.

The increase of $5.2 million was primarily due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Interest and other income, net was $12.0 million and $1.8 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase of $10.2 million was primarily due to higher yields and a corresponding increase in the interest earned on our cash, cash equivalents and investments.

Other expenses

Other expenses were $5.5 million and $2.7 million for the three months ended September 30, 2023 and 2022, respectively.

The increase of $2.8 million was primarily due to impairment loss related to our equity method investment recorded for the three months ended September 30, 2023.

Other expenses were $10.9 million and $5.8 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase of $5.1 million was primarily due to higher share of net losses and impairment of our equity method investments.

Interest expense

Interest expense was related to the CIRM award proceeds received for the year ended December 31, 2024.

No such interest expense was recorded for the year ended December 31, 2023.

Other expenses, net

Other expenses, net were $3.9 million and $17.8 million for the years ended December 31, 2024 and 2023, respectively.

The $13.9 million decrease was primarily due to lower share of net losses in our equity method investments of $9.0 million and lower impairment losses of $5.0 million related to our equity method investment and equity investment.

Liquidity and Capital Resources

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As of December 31, 2024, we had $373.1 million in cash, cash equivalents and investments.

We believe that the aggregate of our current cash, 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 Annual Report on Form 10-K 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.

We believe that the aggregate of our current cash, 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 Annual Report on Form 10-K 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, an upfront cash payment of $40.0 million received in December 2020 pursuant to our License Agreement with Overland Therapeutics, and our May 2024 registered offering.

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

During the year ended December 31, 2023, we sold an aggregate of 20,894,565 shares of common stock in ATM offerings resulting in net proceeds of $91.1 million.

During the years ended December 31, 2024 and 2023, we sold an aggregate of 2,539,134 and 20,894,565 shares of common stock, respectively, in ATM offerings resulting in net proceeds of $6.8 million and $91.1 million, respectively.

The specified dollar limit on the amount of common stock that may be sold under the sales agreement was removed pursuant to the November 2, 2023 amendment to the sales agreement.

In May 2024, we completed an underwritten offering pursuant to which we issued and sold 37,931,035 shares of our common stock.

We received net proceeds of $105.2 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

Capital Resources

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Year Ended December 31,

2023 2022 2021

(in thousands)

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During the year ended December 31, 2024, cash used in operating activities of $200.3 million was attributable to a net loss of $257.6 million, substantially offset by non-cash charges of $82.1 million and a net change of $24.8 million in our net operating assets and liabilities.

The non-cash charges consisted primarily of stock-based compensation of $66.0 million, depreciation and amortization of $14.2 million, share of losses from equity method investments of $10.7 million, impairment of long-lived assets of $13.2 million, impairment of equity investment and equity method investment of $7.0 million, net amortization and accretion on investment securities of $6.8 million, and non-cash rent expense of $0.6 million.

The net change in operating assets and liabilities was primarily due to a $7.5 million decrease in accounts payable, a $6.8 million decrease in accrued and other current liabilities, a $1.5 million increase in other long-term assets, and a $0.6 million decrease in other long-term liabilities, offset by a $1.1 million decrease in prepaid expenses and other current assets.

The non-cash charges consisted primarily of stock-based compensation of $51.7 million, impairment of long-lived assets of $15.7 million, depreciation and amortization of $13.6 million, non-cash rent expense of $5.3 million, impairment of equity investment and equity method investment of $2.0 million, and share of losses from equity method investments of $1.7 million, partially offset by net amortization and accretion on investment securities of $8.3 million.

The net change in operating assets and liabilities was primarily due to deposit placed in escrow related to the Servier Amendment of $20.8 million, decrease in operating lease liabilities of $6.3 million, decrease in accounts payable of $0.5 million, increase in

prepaid expenses and other current assets of $0.5 million and decrease in accrued and other current liabilities of $1.3 million, partially offset by decrease in other long-term assets of $4.3 million, and increase in other long-term liabilities of $0.3 million.

During the year ended December 31, 2023, cash used in operating activities of $237.7 million was attributable to a net loss of $327.3 million, substantially offset by non-cash charges of $110.8 million and a net change of $21.3 million in our net operating assets and liabilities.

The non-cash charges consisted primarily of stock-based compensation of $83.6 million, depreciation and amortization of $14.3 million, share of losses from equity method investments of $12.9 million, net amortization and accretion on investment securities of $2.9 million, and non-cash rent expense of $2.4 million.

The net change in operating assets and liabilities was primarily due to a $4.9 million increase in accounts payable, a $2.5 million decrease in prepaid expense and other current assets, and a $1.7 million increase in accrued and other current liabilities, offset by an increase in other long-term assets of $3.3 million and a decrease in other long-term liabilities of $1.9 million.

During the year ended December 31, 2021, cash used in operating activities of $184.8 million was attributable to a net loss of $182.1 million, a net change of $31.9 million in our net operating assets and liabilities substantially offset by non-cash charges of $29.2 million.

The non-cash charges consisted primarily of stock-based compensation of $80.8 million, non-cash collaboration revenue from related party of $75.7 million, depreciation and amortization of $10.5 million, net amortization and accretion on investment securities of $7.0 million, share of losses from equity method investments of 4.1 million, and non-cash rent expense of $2.6 million.

The net change in operating assets and liabilities was primarily due to a $38.3 million decrease in deferred revenue within current liabilities, a $0.8 million decrease in accounts payable, and a $0.6 million increase in other long-term assets, offset by a $3.7 million increase in accrued and other current liabilities, a $3.2 million decrease in prepaid expenses and other current assets and a $0.9 million increase in other long-term liabilities.

The non-cash charges consisted primarily of stock-based compensation of $66.0 million, depreciation and amortization of $14.2 million, impairment of long-lived assets of $13.2 million, share of losses from equity method investments of $10.7 million, impairment of equity investment and equity method investment of $7.0 million, net amortization and accretion on investment securities of $6.8 million, and non-cash rent expense of $6.6 million.

The net change in operating assets and liabilities was primarily due to decrease in accounts payable of $7.5 million, decrease in accrued and other current liabilities of $6.8 million, decrease in operating lease liabilities of $6.0 million, increase in other long-term assets of $1.5 million and decrease in other long-term liabilities of $0.6 million, partially offset by decrease in prepaid expense and other current assets of $1.1 million.

Investing Activities

During the year ended December 31, 2023, net cash provided by investing activities of $163.3 million was related to cash inflows from maturities of investments of $597.8 million and cash provided by investment sales of $5.6 million, offset by the purchase of investments of $438.6 million and purchases of property and equipment of $1.5 million.

During the year ended December 31, 2022, net cash provided by investing activities of $106.2 million was related to cash inflows from maturities of investments of $359.5 million, offset by the purchase of investments of $248.1 million and purchases of property and equipment of $5.2 million.

During the year ended December 31, 2021, net cash used in investing activities of $163.7 million was related to cash inflows from maturities of investments of $728.4 million, offset by the purchase of investments of $525.6 million, purchases of property and equipment of $21.4 million, and purchase of stock in equity method investment of $17.7 million.

During the year ended December 31, 2024, net cash provided by investing activities of $75.7 million was related to cash inflows from maturities of investments of $432.5 million and cash provided by investment sales of $5.4 million, partially offset by the purchase of investments of $361.5 million and purchases of property and equipment of $0.7 million.

During the year ended December 31, 2023, net cash provided by investing activities of $163.3 million was related to cash inflows from maturities of investments of $597.8 million and cash provided by investment sales of $5.6 million, partially offset by the purchase of investments of $438.6 million and purchases of property and equipment of $1.5 million.

Financing Activities

During the year ended December 31, 2023, net cash provided by financing activities of $95.7 million was related to $91.1 million in net proceeds from the issuance of common stock through ATM transactions, $2.5 million of cash provided by the sale of common stock through our employee stock purchase plan, and $2.1 million of cash provided by the issuance of common stock upon exercise of stock options.

During the year ended December 31, 2022, net cash provided by financing activities of $3.0 million was related to proceeds from the employee stock purchase plan of $2.5 million and proceeds from the issuance of common stock upon the exercise of stock options of $0.5 million.

During the year ended December 31, 2021, net cash provided by financing activities of $12.0 million was related to proceeds from the issuance of common stock upon the exercise of stock options of $8.3 million and proceeds from the employee stock purchase plan of $3.6 million.

During the year ended December 31, 2024, net cash provided by financing activities of $116.7 million was related to net proceeds from the issuance of common stock through our May 2024 registered offering of $105.3 million, net proceeds from the issuance of common stock through ATM transactions of $6.8 million, proceeds from the CIRM award of $2.3 million, proceeds from the sale of common stock through our employee stock purchase plan of $1.5 million, and proceeds from the issuance of common stock upon exercise of stock options of $0.8 million.

During the year ended December 31, 2023, net cash provided by financing activities of $95.7 million was related to net proceeds from the issuance of common stock through ATM transactions of $91.1 million, proceeds from the sales of common stock through our employee stock purchase plan of $2.5 million, and proceeds from the issuance of common stock upon the exercise of stock options of $2.1 million.

Contractual Obligations and Commitments

Material Cash Commitments and Requirements

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

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

Under these agreements we are required to make milestone payments upon successful completion of certain regulatory and sales milestones on a target-by-target and country-by-country basis.

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For additional information regarding our lease obligations, see Note 7 to our consolidated financial statements included elsewhere in this Annual 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 December 31, 2023, we had non-cancellable purchase commitments of $2.1 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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Under the terms of the agreement, we have committed up to $15.0 million of funding for the duration of the agreement.

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

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

We 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.

We are 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.

We are committed to make further payments to MD Anderson each year upon the anniversary of the agreement effective date through the duration of the agreement term, however, if MD Anderson has sufficient funds to continue the agreed-upon research projects, we may defer the additional payment to a later date.

The agreement may be terminated by either party for material breach by the other party.

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Actual results may differ from these estimates under different assumptions or conditions.

We believe that the assumptions and estimates associated with accrued research and development expenditures, revenue recognition, research and development expenses, stock-based compensation and leases have the most significant impact on our consolidated financial statements.

We believe that the assumptions and estimates associated with accrued research and development expenditures, stock-based compensation and impairment of long-lived assets have the most significant impact on our consolidated financial statements.

Therefore, we consider these to be our critical accounting policies and estimates.

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As actual costs become known, we adjust its accrued liabilities.

We have not experienced any material differences between accrued costs and actual costs incurred since our inception.

Revenue Recognition

Our revenue is generated through collaboration research and license agreements.

The terms of these agreements may contain multiple deliverables which may include (i) grant of licenses, (ii) transfer of know-how, (iii) research and development activities, (iii) clinical manufacturing, and (iv) product supply.

The payment terms of these agreements may include nonrefundable upfront fees, payments for research and development activities, payments based upon the achievement of certain milestones, royalty payments based on product sales derived from the collaboration, and payments for supplying product.

We analyze our collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (ASC 808) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities.

This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement.

For collaboration arrangements within the scope of ASC 808 that contain multiple elements, we first determine 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 we determine should be accounted for under ASC 606, we assess which activities in our 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.

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.

We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service.

A portion of the consideration should be allocated to each distinct performance obligation.

The total consideration which we expect to collect in exchange for our products is an estimate and may be fixed or variable.

We constrain the estimated variable consideration when we assess it is probable that a significant reversal

in the amount of cumulative revenue recognized may occur in future periods.

The transaction price is re-evaluated, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

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

Revenue is recognized when, or as, performance obligations in the contracts are satisfied, in the amount reflecting the expected consideration to be received from the goods or services transferred to the customers.

Funds received in advance are recorded as deferred revenue and are recognized as the related performance obligation is satisfied.

Research and Development Expenses

We expense research and development costs as incurred.

Acquired intangible assets are expensed as research and development costs if, at the time of payment, the technology is under development;

is not approved by the FDA or other regulatory agencies for marketing;

has not reached technical feasibility;

or otherwise has no foreseeable alternative future use.

Research and development expenses also include costs incurred for internal and sponsored and collaborative research and development activities.

Research and development costs consist of salaries and benefits, including associated stock-based compensation, and laboratory supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities on our behalf.

Costs associated with co-development activities performed under the various license and collaboration agreements, including milestones achieved, are included in research and development expenses.

Stock-Based Compensation

We recognize compensation costs related to stock-based awards granted to employees and directors, including stock options, based on the estimated fair value of the awards on the date of grant.

We estimate the grant date fair value, and the resulting stock-based compensation, using the Black-Scholes option-pricing model, the lattice option pricing model or Monte Carlo simulation, whichever provides us the more precise grant fair value.

The gr ant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

The Black-Scholes option-pricing model and the lattice option pricing model require the use of subjective assumptions to determine the fair value of stock-based awards.

These assumptions include:

‑ Expected term — The expected term represents the period that stock-based awards are expected to be outstanding.

The expected term for option grants is determined using the simplified method.

The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the stock-based awards.

‑ Expected volatility — We use an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends, in addition to some consideration to our own stock price volatility.

We continue to utilize comparable public companies as part of this process as we do not have sufficient trading history for our common stock.

We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.

‑ Risk-free interest rate —The risk-free interest rate is based on the U.S.

Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

‑ Expected dividend —We have never paid dividends on our common stock and have no plans to pay dividends on our common stock.

Therefore, we used an expected dividend yield of zero.

‑ Expected exercise barrier —The modified options in accordance with the Stock Option Exchange Program 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 additional information regarding our Stock Option Exchange Program, see Note 10 to our consolidated financial statements included elsewhere in this Annual Report.

For the years ended December 31, 2023, 2022 and 2021, stock-based compensation was $66.0 million, $83.6 million and $80.8 million, respectively.

For the years ended December 31, 2024, and 2023, stock-based compensation was $51.7 million, and $66.0 million, respectively.

As of December 31, 2024 and 2023, we had $69.2 million and $108.7 million, respectively, of total unrecognized stock-based compensation.

We early adopted Accounting Standards Update (ASU) No.

2016-02, Leases as of January 1, 2018.

For our long-term operating leases, we recognized right-of-use assets and lease liabilities on our consolidated balance sheet.

The lease liabilities are determined as the present value of future lease payments using an estimated rate of interest that we would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement date.

The right-of-use assets are based on the liability adjusted for any prepaid or deferred rent.

For each lease, the lease term at the commencement date is determined by considering whether renewal options and termination options are reasonably assured of exercise.

Rent expense for the operating lease is recognized on a straight-line basis over the lease term and is included in operating expenses on the consolidated statements of operations and comprehensive loss.

Variable lease payments include lease operating expenses.

We elected to exclude from our consolidated balance sheets recognition of leases having a term of 12 months or less (short-term leases) and elected to not separate lease components and non-lease components for our long-term real estate leases.

Impairment of Long-lived Assets

Our long-lived assets, including right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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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-K

Item 7. Management’s Discussion and Analysis