What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-03-01 compared with 2020-02-27 · 131 added, 93 removed, 227 unchanged (50% of the section changed)

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As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Atara Biotherapeutics is a leading off-the-shelf, allogeneic T-cell immunotherapy company that is developing novel treatments for patients with cancer, autoimmune and viral diseases.

We have several T-cell immunotherapies in clinical development and are progressing a next-generation allogeneic chimeric antigen receptor T-cell, or CAR T program.

Atara Biotherapeutics is a pioneer in T-cell immunotherapy, leveraging its novel allogeneic EBV T-cell platform to develop transformative therapies for patients with serious diseases, including solid tumors, hematologic cancers and autoimmune disease.

With our lead program in Phase 3 clinical development, we are the most advanced allogeneic T-cell immunotherapy company and intend to rapidly deliver off-the-shelf treatments to patients with high unmet medical need.

Our platform leverages the unique biology of EBV T cells and has the capability to treat a wide range of EBV-driven diseases or other serious diseases through incorporation of engineered CARs or TCRs.

Atara is applying this one platform to create a robust pipeline.

Our strategic priorities are:

Atara’s most advanced T-cell immunotherapy, tab-cel ® (tabelecleucel), currently in Phase 3 development for patients with Epstein-Barr virus, or EBV, associated post-transplant lymphoproliferative disease, or EBV+ PTLD, who have failed rituximab or rituximab plus chemotherapy, as well as other EBV-associated hematologic malignancies and solid tumors;

Atara’s most advanced T-cell immunotherapy, tab-cel ® (tabelecleucel), currently in Phase 3 development for patients with EBV+ PTLD who have failed rituximab or rituximab plus chemotherapy, as well as other EBV-driven diseases;

T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of multiple sclerosis;

ATA2271/ATA3271 :

CAR T immunotherapy targeting mesothelin, with autologous (ATA2271) to allogeneic (ATA3271) development planned ;

Allogeneic CAR T targeting CD19 as proof-of-concept for our next generation technologies and EBV T-cell CAR T platform.

CAR T Programs :

Autologous CAR T immunotherapy targeting solid tumors expressing the tumor antigen mesothelin, which is partnered with Bayer;

Allogeneic CAR T therapy targeting mesothelin, which is partnered with Bayer;

Allogeneic CAR T targeting CD19 and being developed as a potential best-in-class product, based on a next generation 1XX co-stimulatory domain and the innate advantages of EBV T cells as the foundation for an allogeneic CAR T platform.

Our T-cell immunotherapy platform includes the capability to progress both allogeneic and autologous programs and is potentially applicable to a broad array of targets and diseases.

Our off-the-shelf, allogeneic T-cell platform allows for rapid delivery of a T-cell immunotherapy product that has been manufactured in advance and stored in inventory, with each manufactured lot of cells providing therapy for numerous potential patients.

This differs from autologous treatments, in which each patient’s own cells must be extracted, modified outside the body and then delivered back to the patient.

For tab-cel ® , we utilize a proprietary cell selection algorithm to select the appropriate set of cells for use based on a patient’s unique immune profile.

This matching process is designed to allow our cells to be administered without the pre-treatment that is required for some therapies and to reduce monitoring following administration.

In addition, our manufacturing facility is capable of producing multiple types of therapies and Atara MatchMe™, our proprietary T-cell order management platform, is being developed to provide patient care teams with access to therapy.

We have entered into research collaborations with leading academic institutions such as Memorial Sloan Kettering Cancer Center, or MSK, the Council of the Queensland Institute of Medical Research, or QIMR Berghofer, and H.

Lee Moffitt Cancer Center and Research Institute, or Moffitt, to acquire rights to novel and proprietary technologies and programs.

We recognize that our clinical studies may not be available to all patients and we have established expanded access and compassionate use programs in instances where there is a significant patient need.

Our off-the-shelf, allogeneic T-cell platform allows for rapid delivery of a T-cell immunotherapy product manufactured in advance of patient need and stored in inventory, with each manufactured lot of cells providing therapy for numerous potential patients.

This differs from autologous treatments, in which each patient’s own cells must be extracted, genetically modified outside the body and then delivered back to the patient, requiring a complex logistics network.

For our allogeneic programs, we select the appropriate set of cells for use based on a patient’s unique immune profile.

In December 2020, we entered into the Bayer License Agreement, pursuant to which we granted to Bayer an exclusive, field-limited license under the applicable patents and know-how owned or controlled by us and our affiliates covering or related to ATA2271 and ATA3271.

Under the terms of the Bayer License Agreement, we will be responsible at our cost for all mutually agreed preclinical and clinical activities for ATA2271 through the first in human Phase 1 clinical study in collaboration with MSK, following which Bayer will be responsible for the further development of ATA2271 at its cost.

Bayer will be responsible for the development of ATA3271, except for certain mutually agreed preclinical, translational, manufacturing and supply chain activities to be performed by us relating to ATA3271, in each case at Bayer’s cost.

Bayer will also be solely responsible for commercializing the Licensed Products at its cost.

We have also entered into research collaborations with leading academic institutions such as MSK, QIMR Berghofer and Moffitt pursuant to which we acquired rights to novel and proprietary technologies and programs.

Our manufacturing facility in Thousand Oaks, California has the flexibility to manufacture multiple T-cell and CAR T immunotherapies while integrating research and process science functions to enable increased collaboration for rapid product development.

Our research and development and process and analytical development labs are currently supporting preclinical development activities.

Our facility is designed to global regulatory standards, and the required facility commissioning and qualification activities to support clinical manufacturing are complete.

Commercial production qualification activities for our facility are progressing well and, together with our contracted manufacturing partner, are aligned with our planned commercial product supply strategy.

In December 2019, we entered into a Commercial Manufacturing Services Agreement, or the Manufacturing Agreement , w ith Cognate , effective as of January 2020 .

The Manufacturing Agreement supersedes the DMSA Agreement with Cognate and governs similar manufacturing services provided for under the DMSA Agreement with similar terms.

Specifically, pursuant to the Manufacturing Agreement, Cognate provides manufacturing services for certain of our product candidates.

We are currently in the process of completing our facility’s commercial production qualification activities for tab-cel ® while building inventory according to our commercial product supply strategy.

In addition to our manufacturing facility, we also work with Cognate pursuant to the Manufacturing Agreement that we entered into in December 2019 .

P ursuant to the Manufacturing Agreement, Cognate provides manufacturing services for certain of our product candidates.

The initial term of the Manufacturing Agreement runs until December 31, 2021 and is renewable with Cognate’s approval for an additional one - year period.

We may terminate the Manufacturing Agreement for convenience on six months’ written notice to Cognate, or immediately if Cognate is unable to perform the services under the Manufacturing Agreement or fails to obtain or maintain certain necessary approvals.

The Manufacturing Agreement includes standard mutual termination rights for uncured breach or insolvency, or a force majeure event preventing the performance of services for at least ninety days.

In connection with the entry into the Manufacturing Agreement, we and Cognate also entered into a Fifth Amendment to the DMSA Agreement, which amended the expiration date of the DMSA Agreement to December 31, 2019.

We have a limited operating history.

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Our net losses were $306.6 million, $291.0 million and $230.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

As of December 31, 2019, we had an accumulated deficit of $818.0 million.

As of December 31, 2020, we had an accumulated deficit of $1.1 billion.

Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative expenses associated with our operations.

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Financial Overview

We have never generated revenues and have incurred losses since inception.

We do not expect to receive any revenues from any product candidates that we develop until we obtain regulatory approval and commercialize our products or enter into collaborative agreements with third parties.

We have never generated revenues from the sale of products and have incurred losses since inception.

We do not expect to receive any revenue from product sales unless and until we obtain regulatory approval for and commercialize one of our current or future product candidates.

Further, we have not generated any revenue to date from the Bayer License Agreement.

We expect that any revenue we generate from our Bayer License Agreement and any future collaboration and research and license partners will fluctuate from year to year as a result of the timing and number of milestones and other payments.

Research and Development Expenses

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process development, testing and manufacturing of drug supply to support clinical studies and IND-enabling studies;

continuing to develop product candidates based on our next-generation CAR T programs;

continuing development of ATA188 in progressive MS;

continuing to develop our product candidates in additional indications, including tab-cel ® for NPC and EBV+ cancers;

continuing to develop product candidates based on our next-generation CAR T programs;

continuing to develop our product candidates in additional indications, including tab-cel ® for EBV+ cancers;

continuing to develop other preclinical product candidates;

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the scope, rate of progress, and expenses of our ongoing clinical studies, potential additional clinical studies and other research and development activities;

the potential review or reanalysis of our clinical study results;

future clinical study results;

uncertainties in clinical study enrollment rates or discontinuation rates of patients;

uncertainties in clinical study enrollment rates or discontinuation rates of patients, including any potential impact of the COVID-19 pandemic;

potential additional safety monitoring or other studies requested by regulatory agencies;

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significant and changing government regulation;

disruptions caused by man-made or natural disasters or public health pandemics or epidemics, including, for example, the COVID-19 pandemic;

the timing and receipt of any regulatory approvals, as well as potential post-market requirements.

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General and administrative expenses consist primarily of compensation and benefits for legal, human resources, finance, commercial and other general and administrative employees, including stock-based compensation;

outside professional service costs, including legal, patent, human resources, audit and accounting services;

professional services costs, including legal, patent, human resources, audit and accounting services;

other outside services and consulting costs, including those related to pre-commercial activities;

and information technology and facilities costs.

We anticipate that our general and administrative expenses will continue to increase in the future to support our continued research and development and the potential commercialization of one or more of our product candidates.

Interest and Other Income, net

Interest and other income, net consists primarily of interest earned on our cash, cash equivalents and short-term investments.

Our provision for (benefit from) income taxes consists primarily of income taxes in U.S.

state and foreign jurisdictions.

Our effective tax rate was 0% for the years ended December 31, 2020, 2019, and 2018.

Critical Accounting Policies and Significant Judgments and Estimates

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Our significant judgments and estimates are detailed below, and our significant accounting policies are more fully described in Note 2 of the accompanying consolidated financial statements .

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

R evenue Recognition

Revenue from research activities under our research, development, and license agreements is recognized when our customer obtains control of the promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

Revenue generated from our research, development, and license agreements is not subject to repayment and typically includes upfront fees, development, regulatory and commercial milestone payments and royalties on the licensee’s future product sales.

Our research, development, and license agreements may include the transfer of intellectual property rights in the form of licenses, promises to provide research and development services and promises to participate on certain development committees with the collaboration party.

We assess whether the promises in these agreements are considered distinct performance obligations that should be accounted for separately.

Judgment is required to determine whether licenses to our intellectual property are distinct from the research and development services or participation on development committees.

The transaction price in each agreement is allocated to the identified performance obligations based on the standalone selling price (SSP) of each distinct performance obligation.

Due to the early stage of our licensed technology, the license of such technology is typically combined with the research and development services and committee participation as one combined performance obligation.

Revenue associated with nonrefundable upfront license fees where the license fees and research and development activities cannot be accounted for as separate performance obligations is deferred and recognized as revenue over the expected period of performance using a cost-based input method.

We utilize judgment to assess the pattern of delivery of the performance obligation.

A cost-based input method of revenue recognition requires management to make estimates of costs to complete our performance obligations.

In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates.

The cumulative effect of revisions to estimated costs to complete our performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated.

A significant change in the assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.

At the inception of each agreement that includes development, regulatory or commercial milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price by using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

The transaction price is allocated to each performance obligation in the agreement based on relative SSP.

We typically determine SSPs using an adjusted market assessment approach model.

Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

At the end of each subsequent reporting period, we re-evaluate the probability of achievement of each such milestone and any related constraint, and if necessary, adjust our estimates of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

Certain judgments affect the application of our revenue recognition policy.

For example, we record short-term and long-term deferred revenue based on our best estimate of when such revenue will be recognized.

Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months, and long-term deferred revenue consists of amounts that we do not expect will be recognized in the next 12 months.

This estimate is based on the our current operating plan and, if our operating plan should change in the future, we may recognize a different amount of deferred revenue over the next 12-month period

Accrued Research and Development Expenses

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Stock-based Compensation

We have stock-based compensation programs, which include restricted stock agreements, or RSAs;

restricted stock units, or RSUs;

We have stock-based compensation programs, which include restricted stock units (RSUs);

stock options and an employee stock purchase plan.

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Financial Statements and Supplementary Data of this report for a complete discussion of our stock-based compensation programs.

We account for stock-based compensation expense, including the expense for RSAs, grants of RSUs and stock options that may be settled in shares of our common stock, based on the fair values of the equity instruments issued.

We account for stock-based compensation expense, including the expense for grants of RSUs and stock options that may be settled in shares of our common stock, based on the fair values of the equity instruments issued.

The fair value is determined on the measurement date, which is generally the date of grant.

The fair value for our RSAs is their intrinsic value, which is the difference between the fair value of the underlying stock at the measurement date and the purchase price.

The fair value of our RSUs is the fair value of the underlying stock at the measurement date.

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The fair value of our common stock is based on observable market prices.

For awards with performance-based vesting criteria, we assess the probability of the achievement of the performance conditions at the end of each reporting period and begin to recognize the share-based compensation costs when it becomes probable that the performance conditions will be met.

For awards that are subject to both service and performance conditions, no expense is recognized until it is probable that performance conditions will be met.

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expense.

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Atara recorded a valuation allowance of approximately $287.3 million as of December 31, 2020 related primarily to net operating losses, capitalized expenses and stock-based compensation.

Our provision for (benefit from) income taxes consists primarily of income taxes in U.S.

state and foreign jurisdictions.

Our effective tax rate was 0% for the years ended December 31, 2019, 2018, and 2017.

Results of Operations

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Year ended December 31,

(Decrease) Increase

Increase (Decrease)

2020 compared to 2019

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Tab-cel ® expenses were $61.2 million in 2020 as compared to $49.2 million in 2019 and $50.8 million in 2018.

Tab-cel ® expenses decreased slightly in 2019 due to higher clinical trial and manufacturing costs in 2018 related to the ramp up of the MATCH and ALLELE Phase 3 clinical studies for patients with EBV+ PTLD .

T he increase in 2018 was primarily due to clinical study, manufacturing and outside service costs related to the MATCH and ALLELE Phase 3 clinical studies, which were initiated in December 2017.

We anticipate that tab-cel ® expenses will increase in 2020 due to the addition of trial sites outside of the U.S., as well as the initiation of our Phase 2 multi-cohort study.

Tab-cel ® expenses increased in 2020 due to clinical trials and process performance qualification activities at our manufacturing facility, as well as increased activity to support our tab-cel ® BLA filing .

T he slight decrease in 2019 as compared to 2018 was primarily due to higher clinical trial and manufacturing costs in 2018 related to the ramp up of the MATCH and ALLELE Phase 3 clinical studies for patients with EBV+ PTLD.

ATA188, CAR T and other program expenses were $25.1 million in 2020 as compared to $34.9 million in 2019 and $30.2 million in 2018.

The decrease in 2020 was primarily due to lower clinical study, manufacturing and other outside services costs for programs that are no longer in active development.

The increase in 2019 was primarily related to research and manufacturing process development costs related to our CAR T programs;

increased clinical study, manufacturing and other outside service costs related to the Phase 1 clinical study of ATA188 for patients with PMS;

and the ATA190 program .

The increase in 2018 was primarily related to (a) one-time license fees of $12.5 million incurred in the fourth quarter of 2018 for exclusive rights to a next-generation allogeneic CAR T program targeting mesothelin from MSK , which were paid in the first quarter of 2019, (b) an aggregate of $3.4 million of license fees paid to MSK and Moffitt during the year for other CAR T immunotherapy technology, (c) the exercise of the option to license ATA190 from QIMR Berghofer and (d) clinical study, manufacturing and other outside service costs related to the Phase 1 clinical study of ATA188 for patients with PMS.

We anticipate that ATA188, CAR T and other program expenses will increase in 2020, primarily driven by higher costs associated with research and manufacturing process development costs related to our CAR T programs and increased clinical study, manufacturing and other outside service costs related to the enrollment in the Phase 1b portion of our clinical study of ATA188 for patients with PMS .

and other programs .

Employee and overhead expenses were $158.3 million in 2020 as compared to $132.0 million in 2019 and $86.5 million in 2018.

The increases in 2019 and 2018 were primarily a result of higher payroll and related costs and higher facility-related expenses in support of our continuing expansion of research and development and manufacturing activities.

Payroll and related costs increased by $29.6 million in 2019 as compared to 2018 and by $29.7 million in 2018 as compared to 2017, primarily due to increased headcount.

Facility-related expenses increased by $10.4 million in 2019 as compared to 2018, and by $10.6 million in 2018 as compared to 2017, primarily due to higher rent, depreciation expense and IT costs to support the continued expansion of research and manufacturing process development.

Professional service costs increased by $5.6 million in 2019 as compared to 2018, and by $7.9 million in 2018 as compared to 2017, due to our continued expansion of research and development activities.

We anticipate that employee and overhead expenses will continue to increase in 2020 as we continue to expand research and development and manufacturing activities and increase average headcount to support the expansion of such activities.

The increases were primarily due to higher compensation-related costs from increased headcount and higher facility-related costs in support of our continuing expansion of research and development activities.

Payroll and related costs increased by $21.2 million in 2020 as compared to 2019 and by $29.6 million in 2019 as compared to 2018.

Facility-related costs increased by $5.1 million in 2020 as compared to 2019 and by $10.4 million in 2019 as compared to 2018.

Outside service costs remained consistent in 2020 as compared to 2019 and increased by $5.6 million in 2019 as compared to 2018.

Total research and development expenses for 2020 were not significantly impacted as a result of the COVID-19 pandemic.

General and administrative expenses

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Year ended December 31,

(Decrease) Increase

2020 compared to 2019

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(in thousands)

General and administrative

General and administrative expenses

General and administrative expenses were $64.4 million in 2020 as compared to $79.6 million in 2019 and $69.7 million in 2018.

The decrease of $15.2 million in 2020 was primarily due to decreases of $10.1 million in outside services costs and $5.1 million in non-cash stock-based compensation expenses.

The increase of $9.9 million in 2019 was primarily due to increases in compensation-related costs driven by increased headcount.

The increase of $29.3 million in 2018 was primarily due to a $13.2 million increase in compensation-related costs driven by increased headcount and a $17.3 million increase in professional and outside services costs.

We expect that general and administrative costs will increase in 2020, primarily due to higher average headcount and other outside service costs.

Total general and administrative expenses for 2020 were not significantly impacted as a result of the COVID-19 pandemic.

Quarterly Results of Operations Data (unaudited)

The following table sets forth our unaudited consolidated statement of operations data for each of the eight quarters in the period ended December 31, 2019 .

The following table sets forth our unaudited consolidated statement of operations data for each of the quarterly periods in the years ended December 31, 2020 and 2019.

The unaudited quarterly statement of operations data set forth below have been prepared on a basis consistent with our audited annual consolidated financial statements in this Annual Report on Form 10-K and include, in our opinion, all normal recurring adjustments necessary for a fair statement of the financial information contained in those statements.

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Loss before provision for income taxes

Provision for (benefit from) income taxes

Provision for income taxes

Other comprehensive (loss) gain:

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Loss before provision for income taxes

Provision for (benefit from) income taxes

Provision for income taxes

Other comprehensive gain (loss):

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Sources of Liquidity

Since our inception in 2012, we have funded our operations primarily through the issuance of common stock and preferred stock.

Since our inception in 2012, we have funded our operations primarily through the issuance of common and preferred stock, issuance of pre-funded warrants to purchase common stock and upfront fees from the Bayer License Agreement.

In December 20 20, we completed an underwritten public offering of 5 , 102 , 041 shares of common stock at a public offering price of $ 24 .

50 per share and pre-funded warrants to purchase 2, 040 , 816 shares of common stock at a public offering price of $ 24 .

49 99 per warrant.

We received net proceeds of approximately $ 164 .

3 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us .

In the second quarter of 2020, we completed an underwritten public offering of 14,958,039 shares, inclusive of the exercise of the full option granted to the underwriters, of common stock at a public offering price of $11.32 per share and pre-funded warrants to purchase 2,866,961 shares of common stock at a public offering price of $11.3199 per warrant.

We received net proceeds of approximately $189.3 million after deducting underwriting discounts and commissions and offering expenses payable by us.

In July 2019, we completed an underwritten public offering of 6,871,727 shares of common stock at a public offering price of $15.28 per share and pre-funded warrants to purchase 2,945,026 shares of common stock at a public offering price of $15.2799 per warrant.

We received aggregate net proceeds of approximately $140.7 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

In February 2019, we entered into a sales agreement , or the 2019 ATM Facility , with Cowen and Company, LLC, or Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent.

The issuance and sale of these shares by us pursuant to the 2019 ATM Facility are deemed “at the market” offerings defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act, and are registered under the Securities Act.

We pay a commission of up to 3.0% of gross sales proceeds of any common stock sold under the 2019 ATM Facility.

During the year ended December 31 , 2019 , we sold an aggregate of 3,135,347 shares of common stock under the 2019 ATM Facility , at an average price of $1 6 .

09 per share , for gross proceeds of $ 50.5 million and net proceeds of $48.9 million, after deducting commissions and other offering expenses payable by us .

During January 2020, we sold an additional aggregate of 1,371,216 shares of common stock under the 2019 ATM Facility, at an average price of $15.77 per share, for gross proceeds of $21.6 million and net proceeds of $21.1 million, after deducting commissions and other offering expenses payable by us.

As of December 31, 2019, we had approximately $49.5 million of common stock remaining to be sold under the 2019 ATM Facility, and as of January 31, 2020, we had approximately $27.9 million of common stock remaining to be sold under the 2019 ATM Facility.

In February 2020, we entered into a new sales agreement, or the 2020 ATM Facility, with Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent.

We received aggregate net proceeds of approximately $140.7 million after deducting underwriting discounts and commissions and offering expenses payable by us.

In February 2019, we entered into a sales agreement (the 2019 ATM Facility) with Cowen and Company, LLC (Cowen), which provided for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent.

The issuance and sale of these shares by us pursuant to the 2019 ATM Facility were deemed “at the market” offerings defined in Rule 415 under the Securities Act of 1933, as amended (the Securities Act), and were registered under the Securities Act.

We paid a commission of up to 3.0% of gross sales proceeds of the common stock sold under the 2019 ATM Facility.

In February 2020, we entered into a new sales agreement (the 2020 ATM Facility) with Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent.

The 2020 ATM Facility is separate from and does not replace the 2019 ATM Facility in any way.

The issuance and sale of these shares by us pursuant to the 2020 ATM Facility are deemed “at the market” offerings and are registered under the Securities Act of 1933, as amended.

We will pay a commission of up to 3.0% of gross sales proceeds of any common stock sold under the 2020 ATM Facility.

The issuance and sale of these shares by us pursuant to the 2020 ATM Facility are deemed “at the market” offerings and are registered under the Securities Act.

We pay a commission of up to 3.0% of gross sales proceeds of any common stock sold under the 2020 ATM Facility.

During the year ended December 31, 2020, we sold an aggregate of 4,785,514 shares of common stock under the ATM facilities, at an average price of $14.60 per share for net proceeds of $68.0 million, after deducting commissions and other offering expenses payable by us.

On January 3, 2020, we received net proceeds of approximately $1.2 million from sales of shares of our common stock under the 2019 ATM Facility that occurred during December 2019.

As of December 31, 2020, we have fully utilized the 2019 ATM Facility and $79.7 million of common stock remained available to be sold under the 2020 ATM Facility, subject to certain conditions as specified in the agreement.

We have incurred losses and negative cash flows from operations in each year since inception.

As of December 31, 2019 , we had an accumulated deficit of $818.0 million.

We do not expect to receive any revenues from any product candidates that we develop until we obtain regulatory approval and commercialize our products.

As such, we anticipate that we will continue to incur losses the foreseeable future.

We do not expect to receive any revenues from the sale of products unless and until we obtain regulatory approval for and commercialize any of our product candidates.

As such, we anticipate that we will continue to incur losses in the foreseeable future.

Additionally, as a result of the COVID-19 pandemic, we have experienced, and may experience in the future, disruptions that could severely impact our business, preclinical studies and clinical trials.

We expect that our operating expenses will continue to increase.

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We may borrow funds on terms that may include restrictive covenants, including covenants that restrict the operation of our business, liens on assets, high effective interest rates and repayment provisions that reduce cash resources and limit future access to capital markets.

In addition, we expect to continue to opportunistically seek access to the equity capital markets to support our development efforts and operations, including by utilizing our ATM facilities.

In addition, we expect to continue to opportunistically seek access to additional funds through additional public or private equity offerings or debt financings including by utilizing the 2020 ATM Facility, through potential collaborations, partnering or other strategic arrangements, or a combination of the foregoing.

However, the trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic.

As a consequence, we may face difficulties raising capital through sales of our common stock or such sales may be on unfavorable terms.

We may face similar difficulties in obtaining funding through debt financing or other arrangements.

To the extent that we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution.

To the extent that we raise additional funds through collaboration or partnering arrangements, we may be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grant licenses on terms that are not favorable to us, or issue equity that may be substantially dilutive to our stockholders.

To the extent that we raise additional funds through collaboration or partnering arrangements, we may be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grant licenses or other rights on terms that are not favorable to us, or issue equity that may be substantially dilutive to our stockholders.

Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.

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Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities.

We expect that existing cash, cash equivalents and short-term investments as of December 31, 2019, together with the net proceeds from our sale of common stock under the 2019 ATM Facility in January 2020, will be sufficient to fund our planned operations into the second quarter of 2021.

Our cash, cash equivalents and short-term investments balances as of the dates indicated were as follows:

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Financing activities

Net increase (decrease) in cash, cash equivalents and

restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Operating activities

Net cash used in operating activities was $180.8 million in 2020 as compared to $235.6 million in 2019.

The increase of $55.8 million was primarily due to a $60.3 million increase in net loss and a $19.2 million increase in net operating assets, partially offset by a $17.9 million increase in stock-based compensation, a $3.3 million increase in depreciation and amortization expense, and a $1.0 million increase in loss on disposals of property and equipment.

The decrease of $54.9 million was primarily due to $52.9 million received as a result of the Bayer License Agreement, a $14.9 million increase in other net operating liabilities and a $2.2 million increase in the amortization of investment premiums, partially offset by a $15.6 million increase in net loss.

Net cash used in operating activities was $235.6 million in 2019 as compared to $179.8 million in 2018.

The increase of $92.3 million was primarily due to a $111.2 million increase in net loss and a $2.6 million increase in the accretion of investment discounts, partially offset by a $10.7 million increase stock-based compensation, a $2.8 million increase in depreciation expense, a $0.2 million increase in non-cash interest expense, and an increase in changes in operating assets and liabilities of $7.8 million.

Investing activities

Net cash provided by investing activities in 2019 consisted primarily of $336.3 million received from maturities and sales of available-for-sale securities, partially offset by $270.2 million used to purchase available-for-sale securities and $5.7 million in purchases of property and equipment.

Net cash used in investing activities in 2020 consisted primarily of $425.9 million used to purchase available-for-sale securities and $4.5 million in purchases of property and equipment, partially offset by $309.7 million received from maturities and sales of available-for-sale securities.

Net cash used in investing activities in 2018 consisted primarily of $466.5 million used to purchase available-for-sale securities and $35.9 million used to purchase property and equipment, partially offset by $306.1 million received from maturities and sales of available-for-sale securities.

Net cash provided by investing activities in 2017 consisted primarily of $296.6 million received from maturities and sales of available-for-sale securities, partially offset by $176.5 million used to purchase available-for-sale securities and $20.2 million used to purchase property and equipment.

Financing activities

Net cash provided by financing activities in 2019 consisted primarily of $140.9 million of net proceeds received from the underwritten public offering of common stock and pre-funded warrants in July 2019, $47.7 million of net proceeds from our ATM facilities and $7.4 million of net proceeds from employee stock award transactions, partially offset by $6.7 million of taxes paid related to the net share settlement of RSUs.

Net cash provided by financing activities in 2018 consisted of $293.3 million of aggregate net proceeds from the underwritten public offerings in January and March 2018, $47.6 million of net proceeds from the 2017 ATM Facility and $24.7 million of net proceeds from employee stock award transactions, partially offset by $7.5 million of taxes paid related to the net share settlement of restricted stock and $0.5 million of principal payments on capital lease obligations.

Net cash provided by financing activities in 2017 consisted of $19.2 million of net proceeds from our 2017 ATM Facility and $1.2 million of net proceeds from employee stock award transactions, partially offset by $0.4 million of taxes paid related to the net share settlement of restricted stock.

Net cash provided by financing activities in 2020 consisted primarily of $353.8 million of aggregate net proceeds received from the two underwritten public offerings of common stock and pre-funded warrants, $69.2 million of net proceeds from ATM facilities

7 million of net proceeds from employee stock award transactions, partially offset by $ 1.5 million of taxes paid related to the net share settlement of RSUs.

Net cash provided by financing activities in 2019 consisted primarily of $140.9 million of net proceeds received from an underwritten public offering of common stock and pre-funded warrants, $47.7 million of net proceeds from ATM facilities and $7.4 million of net proceeds from employee stock award transactions, partially offset by $6.7 million of taxes paid related to the net share settlement of RSUs.

Net cash provided by financing activities in 2018 consisted of $293.3 million of aggregate net proceeds from the underwritten public offerings in January and March 2018, $47.6 million of net proceeds from ATM facilities and $24.7 million of net proceeds from employee stock award transactions, partially offset by $7.5 million of taxes paid related to the net share settlement of restricted stock and $0.5 million of principal payments on capital lease obligations.

Operating Capital Requirements and Plan of Operations

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We do not know when, or if, we will generate any revenue from product sales.

We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize one of our current or future product candidates.

We do not expect to generate any revenue from product sales unless and until we obtain regulatory approval for and commercialize one of our current or future product candidates.

We anticipate that we will continue to generate losses for the foreseeable future, and we expect the accumulated losses to increase as we continue the development of and seek regulatory approvals for our product candidates and begin to commercialize any approved products.

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We anticipate that we will need to raise substantial additional funding in connection with our continuing and expected expansion of our operations.

We expect that our existing cash, cash equivalents and short-term investments as of December 31, 2019, together with net proceeds from our 2019 ATM Facility in January 2020, will be sufficient to fund our planned operations into the second quarter of 2021.

We expect that our existing cash, cash equivalents and short-term investments as of December 31, 2020, together with projected revenue from U.S.

tab-cel ® sales, if approved, will be sufficient to fund our operations into 2023, including expenses related to the BLA filing and potential commercial launch of tab-cel ® in the U.S.

In order to complete the process of obtaining regulatory approval for any of our product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we will require substantial additional funding.

In addition, we expect to continue to opportunistically seek access to additional funds through additional public or private equity offerings or debt financings, through potential collaborations, partnering or other strategic arrangements, or a combination of the foregoing.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect.

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Our future funding requirements will depend on many factors, including, but not limited to :

the timing and costs of our ongoing and planned clinical and preclinical studies for our product candidates;

the timing, costs and results of our ongoing and planned clinical and preclinical studies for our product candidates, including any potential impact of the COVID-19 pandemic;

our success in establishing and scaling commercial manufacturing capabilities;

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subject to receipt of regulatory approval, costs associated with the commercialization of our product candidates and the amount of revenues received from commercial sales of our product candidates;

the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish;

the cost of hiring and compensating the headcount necessary to support our business;

the timing of proceeds from the Bayer License Agreement, as well as the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish;

the amount and timing of any payments we may be required to make in connection with the licensing, filing, prosecution, maintenance, defense and enforcement of any patents or patent applications or other intellectual property rights;

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the timing of capital expenditures, including the qualification of our manufacturing facility.

Until we are able to generate a sufficient amount of product revenue and generate positive net cash flows from operations, which we may never do, meeting our long-term capital requirements is in large part reliant on access to public and private equity and debt capital markets, augmented by cash generated from operations and interest income earned on the investment of our cash balances.

We expect to continue to seek access to the equity and debt capital markets to support our development efforts and operations.

extent that we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution.

To the extent that we raise additional funds through collaboration or partnering arrangements, we may be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grant licenses or other rights on terms that are not favorable to us, or issue equity that may be substantially dilutive to our stockholders.

As a result of economic conditions, general global economic uncertainty, political change and other factors, including the ongoing COVID-19 pandemic, we do not know whether additional capital will be available when needed, or that, if available, we will be able to obtain additional capital on reasonable terms.

If we are unable to raise additional capital due to the volatile global financial markets, general economic uncertainty or other factors, we will be forced to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates.

Contractual Obligations and Commitments

We lease our corporate headquarters in South San Francisco, California under a non-cancellable lease agreement for approximately 13,670 square feet of office space.

The lease expires in April 2021.

In October 2020, we entered into an amendment of this lease to extend the lease term by one year and an option to extend the lease for an additional five years.

The amended lease expires in May 2022.

In February 2017, we entered into a lease agreement for approximately 90,580 square feet of office, lab and cellular therapy manufacturing space in Thousand Oaks, California.

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We have the option to extend the lease for an additional period of five years after the initial term.

In May 2019, we entered into a new lease agreement for our approximately 8,400 square feet of office and lab space in Aurora, Colorado.

In May 2019, we entered into a new lease agreement for approximately 8,800 square feet of office and lab space in Aurora, Colorado.

The term of this lease expires in April 2024.

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Off-Balance Sheet Arrangements

We did not have, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC, during the periods presented.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

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