What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-04 · 108 added, 111 removed, 191 unchanged (53% 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 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.

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

Allogeneic CAR T therapy currently in preclinical development targeting mesothelin, which is partnered with Bayer;

Allogeneic CAR T immunotherapy currently in preclinical development targeting mesothelin, which is partnered with Bayer;

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.

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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.

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 .

Our CMOs are currently in the process of completing commercial production qualification activities for tab-cel while we build 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.

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

Pharmacovigilance Agreement;

(ii) a 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.

and (iv) 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 .

Our research facilities in Thousand Oaks, California (ARC) and Denver, Colorado contain our translational and pre-clinical sciences, analytical development and process science functions.

These facilities support our product pipeline, process development and leverage our allogeneic cell therapy platform to drive innovation.

In January, 2022, we entered into an asset purchase agreement with FUJIFILM Diosynth Biotechnologies California, Inc.

(FDB) and, for certain limited purposes, FUJIFILM Holdings America Corporation, to sell all of the Company’s right, title and interest in and to certain assets related to the Atara T-Cell Operations and Manufacturing facility (ATOM Facility) located in Thousand Oaks, California for $100 million in cash, subject to potential post-closing adjustments pursuant to the asset purchase agreement (the Fujifilm Transaction).

The closing of the Fujifilm Transaction occurred on April 4, 2022, at which time we assigned the lease for the ATOM Facility to FDB in connection with the closing of the Fujifilm Transaction.

We also entered into a Master Services and Supply Agreement with FDB (Fujifilm MSA) which became effective upon the closing and could extend for up to 10 years.

Pursuant to the Fujifilm MSA, FDB will supply us with specified quantities of our cell therapy products (if approved) and product candidates, manufactured in accordance with cGMP standards.

The Fujifilm MSA does not obligate us to purchase products (if approved) and product candidates exclusively from FDB.

We currently have on hand sufficient tab-cel drug product inventory to supply commercial demand, if approved and subject to the specifications set forth in such approval, for at least 12 months.

In addition to the Fujifilm MSA, we also work with Charles River Laboratories (CRL) pursuant to the Manufacturing Agreement that we entered into with Cognate in December 2019.

In March 2021, CRL acquired Cognate.

Pursuant to the Manufacturing Agreement, CRL provides manufacturing services for certain of our product candidates.

The initial term of the Manufacturing Agreement, as amended, runs until May 31, 2022, and we are in negotiations with CRL to extend the term of the Manufacturing Agreement.

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.

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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.

In the first quarter of 2022, the EMA transitioned our EU marketing authorization application (MAA) for tab-cel in patients with EBV+ PTLD from accelerated assessment to standard assessment.

The EMA informed us additional time was needed to adequately review our responses to the EMA’s questions.

We anticipate a decision with respect to potential approval of the MAA in the fourth quarter of 2022.

In connection with a potential BLA submission for tab-cel in the United States, we have been in discussions with the FDA on the content of chemistry, manufacturing and controls (CMC) module 3, including the assessment of comparability between the product used in the pivotal ALLELE study and that intended for commercialization.

In late February 2022, we held a Type B CMC meeting with the FDA to discuss and potentially align on comparability between commercial and pivotal clinical trial process versions.

We did not reach alignment with the FDA on comparability and the FDA has recommended we conduct an additional clinical study with commercial product as FDA does not agree that comparability has been demonstrated between product used in the pivotal ALLELE study and the intended commercial product.

We remain in active dialogue with the FDA and have made further progress on discussing proposals to enable a potential BLA filing that does not require a new Phase 3 clinical study.

We continue to adapt our investment in pre-commercial activities and are continuing our commercial readiness activities based on expected timing 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.

We continue to open sites and enroll 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.

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 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).

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.

Due to the evolving treatment landscape of EBV-driven nasopharyngeal carcinoma (NPC), we are not actively conducting any development activities while we reassess our approach and the development and regulatory pathways for patients with platinum resistant or recurrent EBV-driven NPC.

We continue to progress our development of ATA188, which has received fast track designation from the FDA for treatment of primary progressive MS (PPMS) and secondary progressive MS (SPMS), 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 of allogeneic ATA188 for patients with PPMS and SPMS.

We continue to advance enrollment in our Phase 2, randomized, double-blind, placebo-controlled dose-expansion trial (EMBOLD) to evaluate the efficacy and safety of ATA188 in patients with PPMS and SPMS.

We plan to conduct a formal interim analysis of the EMBOLD study (IA) in June 2022 to assess efficacy, safety and biomarker data to further inform our current development strategy and whether adjustments to sample size are needed.

We expect to complete target enrollment in the EMBOLD study soon after conducting the IA.

After the IA is conducted, we plan to communicate next steps for the program in July 2022, including rationale, while maintaining the integrity of the EMBOLD study.

We also plan to meet with the FDA following the IA to share the data and to discuss next steps for the development pathway.

In March 2022, we conducted a EBV and MS Day, where we presented updated Phase 1 and OLE data that demonstrated 20 out of 24 patients have had either EDSS improvement or EDSS stability throughout their observation in the study with up to 42 months follow-up;

33% of patients in the high-dose cohorts achieved confirmed expanded disability status scale (EDSS) improvement at the 12-month timepoint.

ATA2271/ATA3271

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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.

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 .

In February 2022, MSK notified the FDA of a fatal serious adverse event (SAE) in a patient treated in the third, higher dose cohort in this study.

MSK has voluntarily paused enrollment of new patients in this study on a temporary basis while additional information regarding this case is gathered and reviewed.

The FDA notified MSK of its agreement with MSK’s decision.

MSK continues to analyze the data and we expect MSK to share the results with the FDA when appropriate, in addition to any intended informed consent and/or protocol amendments.

Subject to the outcome of this review and resumption of enrollment of new patients in this study, we expect to provide a data update from this Phase 1 study in the second half of 2022.

We continue to advance 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.

We expect our partner Bayer to file the IND in the fourth quarter of 2022.

We do not believe the temporary pause in the ATA2271 study enrollment impacts the IND-enabling work to advance ATA3271, a separate, off-the-shelf, allogeneic CAR T therapy.

In preclinical data for ATA3271, we observed anti-tumor activity that we believe indicates functional persistence and significant survival benefit, and we found no evidence of allocytotoxicity in vivo, suggesting that allogeneic MSLN-CAR-engineered EBV T cells are a promising approach for the treatment of MSLN-positive cancers .

We are also developing ATA3219, a potential best-in-class, allogeneic CD19 CAR T immunotherapy targeting B-cell malignancies, leveraging our next-generation 1XX CAR co-stimulatory signaling domain and EBV T-cell platform and does not require TCR or human leukocyte antigen (HLA) gene editing.

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 fourth quarter of 2022.

Additional Programs and Platform Expansion Activities

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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 are also collaborating with QIMR Berghofer to develop a potential next generation EBV vaccine which is differentiated from earlier EBV vaccine efforts that solely focused on B cell responses to EBV.

We believe our platform will have utility beyond the current set of targets to which it has been directed.

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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

Manufacturing Agreement or fails to obtain or maintain certain necessary approvals.

In March 2021, Charles River Laboratories Inc.

(CRL) acquired Cognate.

On January 26, 2022, we entered into an asset purchase agreement with FDB, and, for certain limited purposes, FUJIFILM Holdings America Corporation, to sell all of the Company’s right, title and interest in and to certain assets related to the ATOM Facility for $100 million in cash, pursuant to the Fujifilm Transaction.

The closing of the Fujifilm Transaction occurred on April 4, 2022.

We also entered into the Fujifilm MSA which became effective upon the closing and could extend for up to 10 years.

Pursuant to the Fujifilm MSA, FDB will supply us with specified quantities of our cell therapy products (if approved) and product candidates, manufactured in accordance with cGMP standards.

The Fujifilm MSA does not obligate us to purchase products (if approved) and product candidates exclusively from FDB.

We currently have on hand sufficient tab-cel drug product inventory to supply commercial demand, if approved and subject to the specifications set forth in such approval, for at least 12 months.

In addition to the Fujifilm MSA, we also work with CRL pursuant to the Manufacturing Agreement that we entered into with Cognate in December 2019.

In March 2021, CRL acquired Cognate.

Pursuant to the Manufacturing Agreement, CRL provides manufacturing services for certain of our product candidates.

The initial term of the Manufacturing Agreement, as amended, runs until May 31, 2022, and we are in negotiations with CRL to extend the term of the Manufacturing Agreement.

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.

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 laboratory functions in order to advance key research, development and manufacturing priorities.

We implemented safety protocols and procedures to support our onsite workforce.

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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.

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 and providing general and administrative support for these operations.

Our net losses were $88.1 million and $78.3 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we had an accumulated deficit of $1.6 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.

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

As of March 31, 2022, our cash, cash equivalents and short-term investments totaled $301.8 million, which we intend to use to fund our operations.

We have never generated revenues from the commercial 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.

Our revenues to date are derived solely from agreements with Bayer and Pierre Fabre and include 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.

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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 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.

There have been no significant changes to our critical accounting policies and significant judgments and estimates during the three months ended March 31, 2022 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, 2021 filed with the SEC on February 28, 2022.

Results of Operations

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

Comparison of the Three Months Ended March 31, 2022 and 2021

Revenue consisted of the following in the periods presented:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

License and collaboration revenue

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.

License and collaboration revenue increased to $7.3 million for the three months ended March 31, 2022 compared to $3.6 million for the three months ended March 31, 2021.

The increase primarily related to additional revenue recognized under the Bayer Agreements.

Research and development expenses

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Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Tab-cel ® expenses

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Total research and development expenses

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 .

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.

Tab-cel expenses were $10.6 million in the three months ended March 31, 2022, as compared to $12.0 million in the comparative 2021 period.

The decrease in 2022 was primarily due to lower clinical trial and manufacturing spend.

ATA188, CAR T and other program expenses were $8.4 million in the three months ended March 31, 2022, as compared to $9.1 million in the comparative 2021 period.

The decrease in the three months ended March 31, 2022 was primarily due to milestone and license fees for MSK recorded in the 2021 period related to the ATA2271 CAR T program, partially offset by higher ATA188 clinical trial and development related costs in the 2022 period.

Employee and overhead expenses were $56.0 million in the three months ended March 31, 2022, as compared to $43.0 million in the comparative 2021 period.

The increase was 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 March 31, 2022, payroll and related costs increased by $8.9 million, facility-related costs increased by $2.9 million and outside services costs increased by $1.1 million.

Total research and development expenses for the three months ended March 31, 2022 and 2021 were not significantly impacted as a result of the COVID-19 pandemic.

General and administrative expenses

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

General and administrative expenses

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.

General and administrative expenses increased to $20.6 million in the three months ended March 31, 2022, as compared to $17.7 million in the comparative 2021 period.

The increase was primarily driven by higher compensation-related costs from increased headcount.

Total general and administrative expenses for the three months ended March 31 , 2022 and 2021 were not significantly impacted as a result of the COVID-19 pandemic .

Liquidity and Capital Resources

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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.

In November 2021, we entered into a sales agreement (the 2021 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 pay a commission of up to 3.0% of gross sales proceeds of any common stock sold under the 2021 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.

During the three months ended March 31, 2022, we sold an aggregate of 1,319,878 shares of common stock under the 2021 ATM Facility, at an average price of $15.88 per share for gross proceeds of $21.0 million and net proceeds of $20.5 million, after deducting commissions and other offering expenses payable by us.

As of March 31, 2022, we have $57.4 million of common stock remained available to be sold under the 2021 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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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 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 Nine Months Ended September 30, 2021 and 2020

Comparison of the Three Months Ended March 31, 2022 and 2021

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

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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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.

Net cash used in operating activities was $84.5 million in the three months ended March 31, 2022 as compared to $65.7 million in the comparative 2021 period.

The increase of $18.8 million was primarily due to a $9.8 million increase in net loss and a $9.0 million increase 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.

Net cash provided by investing activities in the three months ended March 31, 2022 consisted of $89.2 million received from maturities and sales of available-for-sale securities, offset by $26.4 million used to purchase available-for-sale securities and $2.6 million in purchases of property and equipment.

Net cash provided by investing activities in the comparative 2021 period consisted of $109.8 million used to purchase available-for-sale, partially offset by $94.1 million used to purchase available-for-sale securities and $2.2 million in purchases of property and equipment.

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.

Net cash provided by financing activities in the three months ended March 31, 2022 consisted primarily of $20.5 million of net proceeds received from ATM facilities, partially offset by $0.6 million of taxes paid related to the net share settlement of RSUs.

Net cash provided by financing activities in the comparative 2021 period consisted primarily of $2.5 million of net proceeds received from the ATM facilities and $1.7 million of net proceeds from employee stock award transactions, partially offset by $1.2 million of taxes paid related to the net share settlement of RSUs.

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.

To date, we have not generated any revenue from commercial product sales.

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

We do not expect to generate any revenue from commercial 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 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.

We expect that our existing cash, cash equivalents and short-term investments as of March 31, 2022, together with the $100.0 million received from FDB on April 4, 2022, will be sufficient to fund our planned operations into the fourth 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.

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the extent to which we in-license or acquire other products and technologies;

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

the timing of capital expenditures, including the qualification of our CMOs’ manufacturing facilities.

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.

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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.

In October 2020, we entered into an amendment of this lease to extend the lease term by one year and in December 2021, we entered into a further amendment to extend the lease for an additional three years.

The amended lease expires in May 2025.

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 contractual obligations during the extended lease term are not material.

In connection with this lease, we are required to issue a letter of credit in the amount of $0.1 million to the landlord, which is recorded as restricted cash in our condensed consolidated balance sheet.

In February 2017, we entered into a lease agreement (ATOM Lease) 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.

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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 April 2022, we assigned the ATOM Lease to FDB in connection with the closing of the Fujifilm Transaction.

In November 2018, we entered into a lease agreement for approximately 51,160 square feet of office space in Thousand Oaks, California.

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In March 2021, we entered into a new lease agreement for approximately 3 3 ,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.

The initial 10.5-year term of this lease commence d in August 2021 and the contractual obligations during the initial term are $ 2 1 .

0 million in aggregate.

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

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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.

Other than the assignment of the ATOM Lease described above, 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, 2021 filed with the SEC on February 28, 2022.

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.

Quantitative and Qualitative Disclosures about Market Risk

During the three months ended March 31, 2022, 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, 2021 filed with the SEC on February 28, 2022.

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