What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-08-09 · 88 added, 89 removed, 214 unchanged (45% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

This discussion and other parts of this Quarterly Report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions.

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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 chimeric antigen receptors (CARs) or T-cell receptors (TCRs).

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

Atara is applying this one platform, that does not require TCR or HLA gene editing, to create a robust pipeline.

Our strategic priorities are:

Atara’s most advanced T-cell immunotherapy program, tab-cel ® (tabelecleucel), currently in Phase 3 development for patients with EBV-driven post-transplant lymphoproliferative disease (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;

Atara’s most advanced T-cell immunotherapy program, tab-cel ® (tabelecleucel), is partnered with Pierre Fabre Medicant (Pierre Fabre) for commercialization in Europe and select emerging markets and is currently in Phase 3 development for patients with EBV-driven post-transplant lymphoproliferative disease (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 primary and secondary progressive multiple sclerosis;

CAR T Programs :

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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.

We currently have on hand sufficient tab-cel drug product inventory to supply commercial demand, if approved, for at least 12 months .

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

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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 October 2021, we entered into the Commercialization Agreement with Pierre Fabre (Pierre Fabre Commercialization Agreement), pursuant to which we granted to Pierre Fabre an exclusive, field-limited license to commercialize and distribute tab-cel ® in Europe and select emerging markets in the Middle East, Africa, Eastern Europe and Central Asia following regulatory approval.

We will retain full rights to tab-cel ® in other major markets, including North America, Asia Pacific and Latin America.

Under the terms of the Pierre Fabre Commercialization Agreement, we are currently negotiating a Manufacturing and Supply Agreement as well as a number of ancillary agreements to further advance our collaboration with Pierre Fabre.

In December 2020, we entered into a Research, Development and License Agreement with Bayer (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.

In March 2021, as contemplated by the Bayer License Agreement, we entered into (i) a Manufacturing and Supply Agreement (Bayer Manufacturing Agreement);

(ii) a Pharmacovigilance Agreement;

Pharmacovigilance Agreement;

(iii) a Quality Agreement;

and (iv) a Technology Transfer Agreement (Bayer Tech Transfer Agreement), in each case, with Bayer, to further advance our collaboration with Bayer.

and (i v ) a Technology Transfer Agreement , in each case, with Bayer, to further advance our collaboration with Bayer.

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

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for treatment of EBV+ PTLD.

Based on recent meetings and interactions with the FDA we have gained clarity on specific next steps required for submission of the BLA, including on key methodologies for evaluating comparability between the product used in the pivotal ALLELE study and the intended commercial product.

The FDA provided feedback on specific next steps required for submission of the BLA, which are:

(i) Type B CMC meeting where we will provide data on substantially all lots made to date, which we believe should enable the FDA to make a final determination on the data package to support comparability;

and (ii) Type B clinical meeting to review updated clinical data from the ALLELE study.

We have requested such meetings with the FDA in order to progress towards BLA submission.

The FDA decided it cannot make a determination of comparability between material used in non-pivotal and pivotal studies, as analytical data is not available and cannot be generated for all lots manufactured at MSK and used in non-pivotal studies.

Consequently, we plan to submit clinical data from the pivotal ALLELE study and the non-pivotal studies as separate, non-pooled analyses in the anticipated BLA submission.

We completed a new data analysis from our ALLELE study as previously discussed with the FDA.

Top-line data with additional patients confirm a strong objective response rate (ORR) in line with prior results while demonstrating durability.

We plan to present new analysis from the ALLELE study at an oral session at the 63rd American Society of Hematology (ASH) Annual Meeting and Exposition in December 2021.

Top-line data with additional patients and extended follow up confirm a strong objective response rate (ORR) in line with prior results, demonstrate durability of response, and support the imminent MAA submission.

There were no new safety signals, consistent with previously published data.

We plan to discuss this new data with the FDA in the requested Type B clinical meeting.

We also plan to present this new data at an appropriate congress in the fourth quarter of 2021.

Based on the outcome of our recent and anticipated interactions with the FDA, we expect to complete the BLA submission for tab-cel ® in the first quarter of 2022.

We have adapted our investment in pre-commercial activities and are continuing our commercial readiness activities in anticipation of potential approval and commercialization of tab-cel ® in the U.S in the second half of 2022.

We presented an abstract at the American Transplant Congress in June 2021 from a combined long-term overall survival (OS) analysis from three clinical studies of tab-cel ® demonstrating that patients with EBV+ PTLD, following SOT (solid organ transplant), that is relapsed or refractory to initial treatment, derived similar OS benefit of greater than 80 percent at two years whether they achieved complete or partial response with tab-cel ® .

Following recent Rapporteur, Co-Rapporteur and pre-submission meetings with the EMA, we have completed the necessary regulatory and compliance steps needed to, and we expect to, submit an EU marketing authorization application (MAA) for tab-cel ® in patients with EBV+ PTLD in November 2021.

We will also present additional data on tab-cel through several abstracts, including a second oral presentation on long term overall survival from Phase 2 and multi-center EAP studies.

Following interactions with the EMA, we expect to submit an EU marketing authorization application (MAA) for tab-cel ® in patients with EBV+ PTLD imminently.

We anticipate a decision with respect to potential approval of the MAA in the second half of 2022.

We are in ongoing discussions with potential partners for the commercialization of tab-cel ® in Europe.

We continue to pursue development of tab-cel ® in additional patient populations, with an initial focus on immunodeficiency-associated lymphoproliferative diseases (IA-LPDs), given the commonality of their EBV-driven mechanism of disease in immunocompromised patients, high unmet medical need and positive clinical data to date with tab-cel ® .

In October 2021, we entered into the Pierre Fabre Commercialization Agreement, pursuant to which we granted to Pierre Fabre an exclusive, field-limited license to commercialize and distribute tab-cel ® in Europe and select emerging markets in the Middle East, Africa, Eastern Europe and Central Asia following regulatory approval.

We will retain full rights to tab-cel ® in other major markets, including North America, Asia Pacific and Latin America.

We continue to make progress through recent Type B meetings with the FDA.

Based on these meetings and other recent interactions, we have gained clarity and alignment on key comparability methodology.

We will provide additional analyses on existing CMC data to the FDA.

The FDA has not requested additional studies or manufacturing lots.

We plan to have further interactions with the FDA in the first quarter of 2022 and plan to complete the BLA submission for tab-cel ® in the second quarter of 2022.

We continue to pursue development of tab-cel ® in additional patient populations, with a primary focus on immunodeficiency-associated lymphoproliferative diseases (IA-LPDs), given the commonality of their EBV-driven mechanism of disease in immunocompromised patients, high unmet medical need and positive clinical data to date with tab-cel ® .

We are actively opening sites and enrolling patients in our Phase 2 multi-cohort study in six patient populations, including four within IA-LPDs and two in other EBV-driven diseases, in both the U.S.

Data from this study is expected in 2023.

We intend to generate additional translational data in EBV-driven nasopharyngeal carcinoma (NPC) in 2021 for patients with platinum-resistant or recurrent EBV-driven NPC.

We plan to share data from the NPC study at an appropriate forum in the future.

We continue to progress our development of ATA188, an allogeneic T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of multiple sclerosis (MS).

We are currently progressing an open-label extension (OLE) of our open label, single arm, multi-center, multi-national Phase 1 study with allogeneic ATA188 for patients with progressive forms of MS (PMS).

We will present long-term two-year clinical data from the OLE and translation data from the Phase 1 study in October 2021 at the 37 th Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS).

The ECTRIMS presentation will feature updated clinical and new imaging biomarker data considered to reflect the state of myelination in the central nervous system, known as magnetization transfer ratio (MTR).

Due to the evolving treatment landscape of EBV-driven nasopharyngeal carcinoma (NPC), we are reassessing our approach and the development and regulatory pathways for patients with platinum resistant or recurrent EBV-drive NPC.

We continue to progress our development of ATA188, an allogeneic T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of primary and secondary progressive multiple sclerosis (MS).

We presented long-term two-year clinical data from the OLE and translation data from the Phase 1 study in October 2021 at the 37 th Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS).

The ECTRIMS presentation feature d updated clinical and new imaging biomarker data considered to reflect the state of myelination in the central nervous system, known as magnetization transfer ratio (MTR).

MTR may provide important insights into the mechanism of expanded disability status scale (EDSS) improvement in our clinical assessment of ATA188.

We continue to enroll patients in a Phase 2, randomized, double-blind, placebo-controlled trial (EMBOLD) evaluating the efficacy and safety of ATA188 in patients with PMS .

We continue to enroll patients in a Phase 2, randomized, double-blind, placebo-controlled dose-expansion trial (EMBOLD) evaluating the efficacy and safety of ATA188 in patients with PMS .

We plan to conduct an interim analysis of the EMBOLD study in the first half of 2022 to assess efficacy and safety.

We plan to communicate our decision on next steps for the program, including rationale, while maintaining the integrity of the study.

We expect to complete planned enrollment in the first half of 2022.

We will present a poster on PMS fatigue and an oral presentation on the ongoing EMBOLD study at the upcoming 2021 Annual Meeting of the Consortium of Multiple Sclerosis Centers (CMSC) in October.

We plan to present encore data at the 29th Annual Meeting of the European Charcot Foundation in November 2021, where we will present an overview of the methodology planned to determine the potential pharmacodynamic effect of ATA188, by quantifying a decrease of EBV infected cells following treatment with ATA188.

ATA2271/ATA3271

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Both programs were licensed to Bayer in December 2020, pursuant to an exclusive, field-limited license (the Bayer License Agreement).

In September 2020, MSK initiated an open-label, single-arm Phase 1 clinical study of ATA2271 for patients with advanced mesothelioma.

Enrollment has been completed for the first cohort and is nearly complete for the second cohort of this study.

We anticipate the first update on clinical data from this study to be presented at an appropriate forum in the fourth quarter of 2021.

MSK is currently conducting an open-label, single-arm Phase 1 clinical study of ATA2271 for patients with advanced mesothelioma.

We anticipate the first presentation of preclinical, clinical, and translational data from the lowest dose cohorts of this study will take place during a mini oral session at the European Society for Medical Oncology (ESMO) Immuno-Oncology Congress on December 9, 2021.

We continue to make progress on IND-enabling studies for ATA3271, an off-the-shelf, allogeneic CAR T therapy targeting mesothelin using a PD-1 DNR and 1XX CAR co-stimulatory signaling domain through our EBV T-cell platform, and we expect our partner Bayer to file the IND in the second half of 2022.

We plan to present preclinical data for ATA3271 at an appropriate forum in the fourth quarter of 2021.

We plan to present preclinical data for ATA3271 at the Society for Immunotherapy of Cancer (SITC) 36 th Annual Meeting, taking place November 10-14, 2021.

We are also developing ATA3219, an off-the-shelf, allogeneic CD19 CAR T immunotherapy targeting B-cell malignancies, as a potential best-in-class therapy without the need for TCR gene editing, using our next-generation 1XX CAR co-stimulatory domain and EBV T-cell platform.

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We are collaborating with Moffitt to develop ATA2431, a multi-targeted CAR T immunotherapy targeting B-cell malignancies.

We plan to return the acute myeloid leukemia (AML) program to Moffitt.

We returned the acute myeloid leukemia (AML) program to Moffitt in August 2021.

We are also collaborating with QIMR Berghofer on the development of ATA368 for patients with human papillomavirus (HPV) associated cancers.

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Pursuant 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 initial term of the Manufacturing Agreement, as amended, runs until May 31, 2022.

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.

In March 2021, Charles River Laboratories Inc.

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In addition to implementing measures designed to protect the health and safety of our workforce, our clinical study and operational teams are working closely with clinical sites to support the safety of site staff and patients as well as preserve data integrity and access to treatment as appropriate.

Where needed, remote study visits, leveraged tele-medicine, home health care, and other methods have been established to ensure continuity of care for patients while preserving key endpoint data.

Where needed, remote study visits, tele-medicine, home health care, and other methods have been leveraged to ensure continuity of care for patients while preserving key endpoint data.

To date, the COVID-19 pandemic has not materially impacted our or our partners’ clinical, research and development, regulatory and manufacturing operations or timelines.

We have experienced, and may continue to experience, some transient delays in clinical study operations, as a result of the evolving impact of the ongoing COVID-19 pandemic.

For example, due to the COVID-19 pandemic, in April 2020 we temporarily paused the screening and enrollment of patients in our EMBOLD study.

We were able to resume such activities and enrolled the first patient in the study in June 2020.

Our Phase 2 multi-cohort study of tab-cel ® has experienced some delays in clinical trial site initiation activities, but we do not believe this study has been significantly impacted.

Our Phase 3 clinical trial of tab-cel ® in patients with EBV+ PTLD has not been significantly impacted by the ongoing COVID-19 pandemic, and most sites are currently open for patient enrollment.

However, at the onset of the pandemic, we experienced, and depending on the evolving impacts of the ongoing COVID-19 pandemic, we may again experience, some transient delays in clinical study operations, as a result COVID-19.

The full extent to which the COVID-19 pandemic may impact our business and operations is subject to future developments which are uncertain and difficult to predict.

Further quarantines, shelter-in-place or similar restrictions and other actions taken or imposed by foreign, federal, state and local governments could adversely impact our or our partners’ clinical, research and development, regulatory and manufacturing operations or timelines.

We continue to monitor the impact of the COVID-19 pandemic on our business and operations and will seek to adjust our activities as appropriate.

In addition, the pandemic could result in significant and prolonged disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect the financial resources available to us.

We continue to monitor the impact of the COVID-19 pandemic on our business and operations and will adjust our activities as appropriate.

For additional information about risks and uncertainties related to the COVID-19 pandemic that may impact our business, financial condition and operations, see the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report on Form 10-Q.

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Since our inception in 2012, we have devoted substantially all of our resources to identify, acquire and develop our product candidates, including conducting preclinical and clinical studies, acquiring or manufacturing materials for clinical studies, constructing our manufacturing facility and providing general and administrative support for these operations.

Our net losses were $162.1 million and $151.0 million for the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, we had an accumulated deficit of $1.3 billion.

Our net losses were $246.8 million and $225.3 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, we had an accumulated deficit of $1.4 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.

As of June 30, 2021, our cash, cash equivalents and short-term investments totaled $373.4 million, which we intend to use to fund our operations.

As of September 30, 2021, our cash, cash equivalents and short-term investments totaled $357.2 million, which we intend to use to fund our operations.

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.

Our revenues to date are derived solely from agreements with Bayer related to upfront license fees, fees for research, process development and translational activities and technology transfer fees.

We expect that any revenue we generate from our Bayer Agreements 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.

Our revenues to date are derived solely from agreements with Bayer and Pierre Fabre related to upfront license fees, fees for research, process development and translational activities and technology transfer fees.

We expect that any revenue we generate from our Bayer Agreements, the Pierre Fabre Commercialization 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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continuing to initiate sites and enroll patients in our Phase 3 clinical study of tab-cel ® for the treatment of patients with EBV+ PTLD after HCT and SOT who have failed rituximab;

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

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

continuing development of ATA188 in PMS;

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Critical Accounting Policies and Significant Judgments and Estimates

There have been no significant changes to our critical accounting policies and significant judgments and estimates during the six months ended June 30, 2021 from those disclosed in our management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

There have been no significant changes to our critical accounting policies and significant judgments and estimates during the nine months ended September 30, 2021 from those disclosed in our management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2021 and 2020

Comparison of the Three and Nine Months Ended September 30, 2021 and 2020

Revenue consisted of the following in the periods presented:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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License and collaboration revenue

License and collaboration revenue for the three months and six months ended June 30, 2021 consisted of revenue related to the recognition of upfront license fees, fees for research, process development and translational activities, and technology transfer and manufacturing service fees under the Bayer Agreements.

License and collaboration revenue for the three months and nine months ended September 30, 2021 consisted of revenue related to the recognition of upfront license fees, fees for research, process development and translational activities, and technology transfer and manufacturing service fees under the Bayer Agreements.

No revenue was recognized in 2020.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Total research and development expenses

Tab-cel ® expenses were $12.8 million and $24.7 million in the three and six months ended June 30, 2021, respectively, as compared to $14.9 million and $29.7 million in the comparative 2020 periods.

Tab-cel ® expenses were $12.1 million and $36.9 million in the three and nine months ended September 30, 2021, respectively, as compared to $15.7 million and $45.4 million in the comparative 2020 periods.

The decreases in 2021 were primarily due to higher production activities in 2020 related to the build-up of our tab-cel ® inventory.

ATA188, CAR T and other program expenses were $7.6 million and $16.7 million in the three and six months ended June 30, 2021, respectively, as compared to $6.1 million and $10.2 million in the comparative 2020 periods.

The increases were primarily related to milestone and license fees due to MSK and QIMR, and an increase in research and clinical trial costs to further advance ATA188 and our CAR T programs .

Employee and overhead expenses were $48.1 million and $91.1 million in the three and six months ended June 30, 2021, respectively, as compared to $40.6 million and $79.3 million in the comparative 2020 periods.

ATA188, CAR T and other program expenses were $7.4 million and $24.1 million in the three and nine months ended September 30, 2021, respectively, as compared to $4.1 million and $14.3 million in the comparative 2020 periods.

The increase in the three months ended September 30, 2021 was primarily due to increased research and clinical trial costs related to our ATA188 and CAR T programs.

The increase in the nine months ended September 30, 2021 was primarily related to milestone and license fees due to MSK and QIMR, and an increase in research and clinical trial costs to further advance ATA188 and our CAR T programs .

Employee and overhead expenses were $50.7 million and $141.8 million in the three and nine months ended September 30, 2021, respectively, as compared to $40.0 million and $119.3 million in the comparative 2020 periods.

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

Relative to the 2020 comparative period, for the three months ended June 30, 2021, payroll and related costs increased by $3.4 million, facility-related costs increased by $2.7 million and outside services costs increased by $1.4 million.

Relative to the 2020 comparative period, for the six months ended June 30, 2021, payroll and related costs increased by $6.2 million, facility-related costs increased by $3.9 million and outside services costs increased by $1.7 million.

Total research and development expenses for the six months ended June 30, 2021 and 2020 were not significantly impacted as a result of the COVID-19 pandemic.

For the three months ended September 30, 2021, payroll and related costs increased by $5.6 million, facility-related costs increased by $3.9 million and outside services costs increased by $1.2 million.

For the nine months ended September 30, 2021, payroll and related costs increased by $11.8 million, facility-related costs increased by $7.8 million and outside services costs increased by $2.9 million.

Total research and development expenses for the nine months ended September 30, 2021 and 2020 were not significantly impacted as a result of the COVID-19 pandemic.

General and administrative expenses

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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General and administrative expenses

General and administrative expenses increased to $19.4 million and $37.1 million in the three and six months ended June 30, 2021, respectively, as compared to $16.4 million and $33.4 million in the comparative 2020 periods.

The increases were primarily driven by activities to support our anticipated tab-cel ® launch.

Total general and administrative expenses for the six months ended June 30, 2021 and 2020 were not significantly impacted as a result of the COVID-19 pandemic.

General and administrative expenses increased to $19.8 million and $57.0 million in the three and nine months ended September 30, 2021, respectively, as compared to $14.8 million and $48.3 million in the comparative 2020 periods.

The increases were primarily driven by higher compensation-related costs from increased headcount and activities to support our anticipated tab-cel ® launch.

Total general and administrative expenses for the nine months ended September 30, 2021 and 2020 were not significantly impacted as a result of the COVID-19 pandemic.

Liquidity and Capital Resources

Sources of Liquidity

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 February 2020, we entered into a sales agreement (the 2020 ATM Facility) with Cowen and Company, LLC (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.

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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 six months ended June 30, 2021, we sold an aggregate of 145,630 shares of common stock under the 2020 ATM Facility, at an average price of $17.31 per share for net proceeds of $2.4 million, after deducting commissions and other offering expenses payable by us.

As of June 30, 2021, we have $77.1 million of common stock remained available to be sold under the 2020 ATM Facility, subject to certain conditions as specified in the agreement.

During the three months ended September 30, 2021, we sold an aggregate of 3,258,909 shares of common stock under the 2020 ATM Facility, at an average price of $15.33 per share for gross proceeds of $49.9 million and net proceeds of $48.7 million, after deducting commissions and other offering expenses payable by us.

For the nine months ended September 30, 2021, we sold an aggregate of 3,404,539 shares of common stock under ATM facilities, at an average price of $15.41 per share, for gross proceeds of $52.5 million and net proceeds of $51.2 million, after deducting commissions and other offering expenses payable by us.

On October 1, 2021, we received the remaining net proceeds of approximately $2.3 million from sales of shares of common stock under the 2020 ATM Facility that occurred during September 2021.

As of September 30, 2021, we have $27.2 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.

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

Additionally, as a result of the ongoing and evolving 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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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 or other rights 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 June 30, 2021, will be sufficient to fund our planned operations into 2023.

We expect that existing cash, cash equivalents and short-term investments as of September 30, 2021, together with the $45.0 million upfront payment received in connection with the Pierre Fabre Commercialization Agreement, will be sufficient to fund our planned operations into the second quarter of 2023.

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

September 30,

(in thousands)

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Total cash, cash equivalents and short-term investments

Comparison of the Six Months Ended June 30, 2021 and 2020

Comparison of the Nine Months Ended September 30, 2021 and 2020

The following table details the primary sources and uses of cash for each of the periods set forth below:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Operating activities

Net cash used in operating activities was $127.3 million in the six months ended June 30, 2021 as compared to $123.7 million in the comparative 2020 period.

Net cash used in operating activities was $186.3 million in the nine months ended September 30, 2021 as compared to $176.6 million in the comparative 2020 period.

The increase of $9.6 million was primarily due to a $21.5 million increase in net loss, partially offset by a $10.3 million decrease in net working capital usage.

Investing activities

Net cash provided by investing activities in the six months ended June 30, 2021 consisted of $208.5 million received from maturities and sales of available-for-sale securities, partially offset by $158.9 million used to purchase available-for-sale securities and $4.3 million in purchases of property and equipment.

Net cash provided by investing activities in the nine months ended September 30, 2021 consisted of $279.5 million received from maturities and sales of available-for-sale securities, offset by $224.8 million used to purchase available-for-sale securities and $8.1 million in purchases of property and equipment.

Net cash used in investing activities in the comparative 2020 period consisted of $279.2 million used to purchase available-for-sale securities and $3.9 million in purchases of property and equipment, partially offset by $199.3 million received from maturities and sales of available-for-sale securities.

Financing activities

Net cash provided by financing activities in the six months ended June 30, 2021 consisted primarily of $2.4 million of net proceeds received from ATM facilities and $4.3 million from employee stock award transactions, partially offset by $1.2 million of taxes paid related to the net share settlement of RSUs.

Net cash provided by financing activities in the nine months ended September 30, 2021 consisted primarily of $48.7 million of net proceeds received from ATM facilities and $5.2 million from employee stock award transactions, partially offset by $1.2 million of taxes paid related to the net share settlement of RSUs.

Net cash provided by financing activities in the comparative 2020 period consisted primarily of $189.3 million of net proceeds received from an underwritten public offering of common stock and pre-funded warrants, $58.0 million of net proceeds received from ATM facilities and $3.4 million from employee stock award transactions, partially offset by $1.5 million of taxes paid related to the net share settlement of RSUs.

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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 June 30, 2021 will be sufficient to fund our planned operations into 2023.

We expect that our existing cash, cash equivalents and short-term investments as of September 30, 2021, together with the $45.0 million upfront payment received in connection with the Pierre Fabre Commercialization Agreement, will be sufficient to fund our planned operations into the second quarter of 2023.

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.

3 unchanged sentences

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

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;

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

our success in establishing and scaling commercial manufacturing capabilities;

2 unchanged sentences

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 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 timing of proceeds from the Bayer License Agreement and the Pierre Fabre Commercialization 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;

25 unchanged sentences

In March 2021, we entered into a new lease agreement for approximately 33,659 square feet of office, lab and warehouse space in Thousand Oaks, California.

The initial 10.5-year term of this lease is scheduled to commence in August 2021 and the contractual obligations during the initial term are $ 19.1 million in aggregate.

The initial 10.5-year term of this lease commenced in August 2021 and the contractual obligations during the initial term are $21.0 million in aggregate.

We have the option to extend this lease for two additional five-year periods after the initial term.

4 unchanged sentences

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.

Quantitative and Qualitative Disclosures about Market Risk

During the six months ended June 30, 2021, there were no material changes to our interest rate risk disclosures, market risk disclosures and foreign currency exchange rate risk disclosures reported in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis