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 March 31, 2022. 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 immunotherapy 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. For our allogeneic programs, we select the appropriate set of cells for use based on a patient’s unique immune profile. 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. 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; (iii) a Quality Agreement; and (iv) a Technology Transfer Agreement, in each case, with Bayer, to further advance our collaboration with Bayer. 20 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. 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. • 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. 21 • 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. and EU. Data from this study is expected in 2023. • 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. ATA188 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 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. 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 . 22 ATA3219 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 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 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. 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 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 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. 23 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 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 March 31, 2022, our cash, cash equivalents and short-term investments totaled $301.8 million, which we intend to use to fund our operations. Revenues 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 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. 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. 24 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. 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 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. 25 Results of Operations Comparison of the Three Months Ended March 31, 2022 and 2021 Revenues Revenue consisted of the following in the periods presented: Three Months Ended March 31, Increase 2022 2021 (Decrease) (in thousands) License and collaboration revenue $ 7,314 $ 3,552 $ 3,762 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 Research and development expenses consisted of the following costs, by program, in the periods presented: Three Months Ended March 31, Increase 2022 2021 (Decrease) (in thousands) Tab-cel ® expenses $ 10,626 $ 11,953 $ (1,327 ) ATA188, CAR T and other program expenses 8,379 9,060 (681 ) Employee and overhead expenses 55,958 43,046 12,912 Total research and development expenses $ 74,963 $ 64,059 $ 10,904 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 March 31, Increase 2022 2021 (Decrease) (in thousands) General and administrative expenses $ 20,571 $ 17,738 $ 2,833 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. 26 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 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 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 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. 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 2021 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 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. Our cash, cash equivalents and short-term investments balances as of the dates indicated were as follows: March 31, December 31, 2022 2021 (in thousands) Cash and cash equivalents $ 101,669 $ 106,084 Short-term investments 200,142 264,984 Total cash, cash equivalents and short-term investments $ 301,811 $ 371,068 27 Cash Flows 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: Three Months Ended March 31, 2022 2021 (in thousands) Net cash (used in) provided by: Operating activities $ (84,529 ) $ (65,698 ) Investing activities 60,215 13,499 Financing activities 19,851 2,892 Net (decrease) increase in cash, cash equivalents and restricted cash $ (4,463 ) $ (49,307 ) Operating activities 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 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 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 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. 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 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. 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. 28 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 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. 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. 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 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. 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. 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 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. 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. 29 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 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. 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. 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. Item 3. 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.