Atara Biotherapeutics, Inc. 10-Q

Item 2. 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 September 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. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly 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. Overview Atara Biotherapeutics is a pioneer in T-cell immunotherapy, leveraging its novel allogeneic Epstein-Barr virus (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 chimeric antigen receptors (CARs) or T-cell receptors (TCRs). Atara is applying this one platform, that does not require TCR or HLA gene editing, to create a robust pipeline. Our strategic priorities are: • Tab-cel ® : 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; • ATA188 : T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of primary and secondary progressive multiple sclerosis; • CAR T Programs : o ATA2271 : Autologous CAR T immunotherapy targeting solid tumors expressing the tumor antigen mesothelin, which is partnered with Bayer AG (Bayer); o ATA3271 : Allogeneic CAR T therapy currently in preclinical development targeting mesothelin, which is partnered with Bayer; and o ATA3219 : Allogeneic CAR T targeting CD19, currently in preclinical development, 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 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. 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. In addition, our manufacturing facility 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 . 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 19 Pharmacovigilance Agreement; (iii) a Quality Agreement; 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. Lee Moffitt Cancer Center and Research Institute (Moffitt) pursuant to which we acquired rights to novel and proprietary technologies and programs. Pipeline Tab-cel ® We continue to advance development of tab-cel ® in a Phase 3 clinical trial for patients with EBV+ PTLD (ALLELE), which has received Breakthrough Therapy Designation (BTD) in the U.S. for treatment of rituximab-refractory EBV-associated lymphoproliferative disorders, PRIority MEdicines (PRIME) designation in the European Union (EU), and orphan drug designation in the U.S. for treatment of EBV+ PTLD. • 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 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. • 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 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. • 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. and EU. Data from this study is expected in 2023. • 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. ATA188 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 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 primary and secondary progressive forms of MS (PMS). • 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). 20 • 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 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 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 Our next-generation CAR T immunotherapy programs include autologous ATA2271 and allogeneic ATA3271 targeting mesothelin, which is a tumor antigen expressed on a number of solid tumors including mesothelioma, ovarian cancer, pancreatic cancer, non-small cell lung cancer and other tumors over-expressing mesothelin. Both programs were licensed to Bayer in December 2020, pursuant to an exclusive, field-limited license (the Bayer License Agreement). • 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 the Society for Immunotherapy of Cancer (SITC) 36 th Annual Meeting, taking place November 10-14, 2021. ATA3219 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. • We continue to make progress on IND-enabling studies and plan to submit an IND for ATA3219 for patients with B-cell malignancies in the first quarter of 2022 . Additional Programs and Platform Expansion Activities In addition to the prioritized programs described above, we have a number of preclinical programs. We are collaborating with Moffitt to develop ATA2431, a multi-targeted CAR T immunotherapy targeting B-cell malignancies. 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. We believe our platform will have utility beyond the current set of targets to which it has been directed. We continue to evaluate additional product candidates, including those derived from collaborations with our partners . We also continue to evaluate opportunities to license or acquire additional product candidates or technologies to enhance our existing platform. Manufacturing In addition to our manufacturing facility in Thousand Oaks, California, we also work with Cognate BioServices, Inc. (Cognate) pursuant to a Commercial Manufacturing Services Agreement (the Manufacturing Agreement) that we entered into in December 2019 . Pursuant to the Manufacturing Agreement, Cognate provides manufacturing services for certain of our product candidates. 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 21 Manufacturing Agreement or fails to obtain or maintain certain necessary approvals. In March 2021, Charles River Laboratories Inc. (CRL) acquired Cognate. COVID-19 Business Update We continue to closely monitor the impact of the ongoing and evolving COVID-19 pandemic on our business and operations and have taken steps designed to ensure the health and safety of our employees, staff, clinical site staff and patients and to maintain business continuity. Based on guidance issued by federal, state and local authorities, we have temporarily transitioned most of our workforce to a remote, work-from-home model, while maintaining essential in-person manufacturing and laboratory functions in order to advance key research, development and manufacturing priorities. We implemented safety protocols and procedures to support our onsite workforce. 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, 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. 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. 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. Financial Overview We have a limited operating history. 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 $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 September 30, 2021, our cash, cash equivalents and short-term investments totaled $357.2 million, which we intend to use to fund our operations. Revenues 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 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. 22 Research and Development Expenses The largest component of our total operating expenses since inception has been our investment in research and development activities, including the preclinical and clinical development of our product candidates. Research and development expenses consist primarily of compensation and benefits for research and development employees, including stock-based compensation; expenses incurred under agreements with contract research organizations and investigative sites that conduct preclinical and clinical studies; the costs of acquiring and manufacturing clinical study materials and other supplies; payments under licensing and research and development agreements; other outside services and consulting costs; and facilities, information technology and overhead expenses. Research and development costs are expensed as incurred. We plan to continue investment in the development of our product candidates. Our current planned research and development activities include the following: • 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 and IND-enabling studies; • continuing development of ATA188 in PMS; • 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 pre-clinical product candidates; and • leveraging our relationships and experience to in-license or acquire additional product candidates or technologies. In addition, we believe it is important to invest in the development of new product candidates to continue to build the value of our product candidate pipeline and our business. We plan to continue to advance our most promising early product candidates into preclinical development with the objective to advance these early-stage programs to human clinical studies over the next several years. Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs, and timing of clinical studies and development of our product candidates will depend on a variety of factors, including: • the availability of qualified drug supply for use in our ongoing Phase 3 or other clinical studies; • 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, including any potential impact of the COVID-19 pandemic; • potential additional safety monitoring or other studies requested by regulatory agencies; • changing medical practice patterns related to the indications we are investigating; • 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; and • the timing and receipt of any regulatory approvals, as well as potential post-market requirements. The process of conducting the necessary clinical research to obtain approval from the FDA and other regulators is costly and time consuming and the successful development of our product candidates is highly uncertain. The risks and uncertainties associated with our research and development projects are discussed more fully in the section of this report titled “1A. Risk Factors.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. 23 General and Administrative Expenses 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; 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 . Interest and Other Income (Expense), net Interest and other income (expense), net consists primarily of interest earned on our cash, cash equivalents and short-term investments and translation gains and losses on transactions denominated in foreign currencies. 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 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 Nine Months Ended September 30, 2021 and 2020 Revenues Revenue consisted of the following in the periods presented: Three Months Ended Nine Months Ended September 30, Increase September 30, Increase 2021 2020 (Decrease) 2021 2020 (Decrease) (in thousands) (in thousands) License and collaboration revenue $ 5,370 $ — $ 5,370 $ 12,792 $ — $ 12,792 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. Research and development expenses Research and development expenses consisted of the following costs, by program, in the periods presented: Three Months Ended Nine Months Ended September 30, Increase September 30, Increase 2021 2020 (Decrease) 2021 2020 (Decrease) (in thousands) (in thousands) Tab-cel ® expenses $ 12,127 $ 15,723 $ (3,596 ) $ 36,874 $ 45,426 $ (8,552 ) ATA188, CAR T and other program expenses 7,481 4,127 3,354 24,134 14,339 9,795 Employee and overhead expenses 50,725 40,027 10,698 141,859 119,331 22,528 Total research and development expenses $ 70,333 $ 59,877 $ 10,456 $ 202,867 $ 179,096 $ 23,771 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 $7.4 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 . 24 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. 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 Nine Months Ended September 30, Increase September 30, Increase 2021 2020 (Decrease) 2021 2020 (Decrease) (in thousands) (in thousands) General and administrative expenses $ 19,849 $ 14,829 $ 5,020 $ 56,984 $ 48,259 $ 8,725 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 and the Pierre Fabre Commercialization 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. 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 (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 2020 ATM Facility. 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. 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. We expect that our operating expenses will continue to increase. As a result, we will need additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. 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 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. To the extent that we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. To the extent that we 25 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. Currently, our cash, cash equivalents and short-term investments are held in bank and custodial accounts and consist of money market funds, U.S. 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 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, December 31, 2021 2020 (in thousands) Cash and cash equivalents $ 113,209 $ 200,404 Short-term investments 244,036 300,255 Total cash, cash equivalents and short-term investments $ 357,245 $ 500,659 Cash Flows 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: Nine Months Ended September 30, 2021 2020 (in thousands) Net cash (used in) provided by: Operating activities $ (186,253 ) $ (176,639 ) Investing activities 46,582 (83,836 ) Financing activities 52,476 248,778 Net (decrease) increase in cash, cash equivalents and restricted cash $ (87,195 ) $ (11,697 ) Operating activities 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 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 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. 26 Operating Capital Requirements and Plan of Operations To date, we have not generated any revenue from product sales. We do not know when, or if, we will generate any revenue from product sales. 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. We are subject to all of the risks inherent in the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. 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 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. 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. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. 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; • our success in establishing and scaling commercial manufacturing capabilities; • the number and characteristics of product candidates that we pursue; • the outcome, timing and costs of seeking regulatory approvals; • 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 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; • the extent to which we in-license or acquire other products and technologies; and • 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. 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. 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. 27 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. 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. The initial 15-year term of this lease commenced in February 2018, and the contractual obligations during the initial term are $16.4 million in aggregate. We have the option to extend this lease for two additional periods of ten and nine years, respectively, after the initial term. In connection with this lease, we were required to issue a letter of credit in the amount of $1.2 million to the landlord, which is recorded as long-term restricted cash in our condensed consolidated balance sheet. In November 2018, we entered into a lease agreement for approximately 51,160 square feet of office space in Thousand Oaks, California. The initial term of this lease expires in February 2026. The contractual obligations during the initial term are $8.5 million in aggregate. 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 approximately 8,800 square feet of office and lab space in Aurora, Colorado. The initial term of this lease expires in April 2024. In February 2021, we further amended this lease to add an additional 2,861 square feet of lab space. The contractual obligations during the lease term are not material. We have the option to extend this lease for two additional five-year periods after the initial term. 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 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. Our contractual obligations primarily consist of our obligations under non-cancellable operating and finance leases and contracts we enter into in the normal course of business with clinical research organizations for clinical studies, with contract manufacturing organizations for clinical supplies, and with other vendors for preclinical studies and supplies and other services and products for operating purposes. These contracts generally provide for termination on notice, with the exception of one of our contract manufacturing agreements which we may terminate for convenience upon six months’ written notice. With the exception of the aforementioned lease agreement entered into during the first quarter of 2021, there have been no material changes to our contractual obligations and commitments reported in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021. 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.